0001185185-19-000537.txt : 20190415 0001185185-19-000537.hdr.sgml : 20190415 20190415171319 ACCESSION NUMBER: 0001185185-19-000537 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 88 CONFORMED PERIOD OF REPORT: 20190228 FILED AS OF DATE: 20190415 DATE AS OF CHANGE: 20190415 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CLS Holdings USA, Inc. CENTRAL INDEX KEY: 0001522222 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISCELLANEOUS RETAIL [5900] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-55546 FILM NUMBER: 19749250 BUSINESS ADDRESS: STREET 1: 11767 SOUTH DIXIE HIGHWAY, SUITE 115 CITY: MIAMI STATE: FL ZIP: 33156 BUSINESS PHONE: 888-438-9132 MAIL ADDRESS: STREET 1: 11767 SOUTH DIXIE HIGHWAY, SUITE 115 CITY: MIAMI STATE: FL ZIP: 33156 FORMER COMPANY: FORMER CONFORMED NAME: Adelt Design, Inc. DATE OF NAME CHANGE: 20110601 10-Q 1 cls20190228_10q.htm FORM 10-Q cls20190228_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 


 

FORM 10-Q 

 


 

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended February 28, 2019

 

or

 

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 

 

Commission File Number: 000-55546

 

CLS HOLDINGS USA, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

45-1352286

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

 

11767 South Dixie Highway, Suite 115, Miami, Florida 33156

(Address of principal executive offices) (Zip Code)

 

(888) 438-9132

Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒    No ☐

  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒    No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer,  a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

(Check One):

Large Accelerated filer ☐

Accelerated filer                   ☐

Non-accelerated filer    ☐

(Do not check if a smaller reporting company)

Smaller reporting company ☒

Emerging growth company ☐

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐    No ☒

 

State the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 125,814,107 shares of $0.0001 par value common stock outstanding as of April 12, 2019.

 

 

 

 

CLS HOLDINGS USA, INC.

 

FORM 10-Q

Quarterly Period Ended February 28, 2019

 

TABLE OF CONTENTS

 

 

Page

 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

  3

 

 

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements

  4

 

Consolidated Balance Sheets as of February 28, 2019 (Unaudited) and May 31, 2018

  4

 

Condensed Consolidated Statements of Operations for the Three and Nine Months ended February 28, 2019 and 2018 (Unaudited)

  5

 

Consolidated Statement of Stockholders’ Equity

6

 

Condensed Consolidated Statements of Cash Flows for the Nine Months ended February 28, 2019 and 2018 (Unaudited)

7

 

Notes to the Consolidated Financial Statements (Unaudited)

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

39

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

58

Item 4.

Controls and Procedures

58

 

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

59

Item 1A.

Risk Factors

59

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

59

Item 3.

Defaults Upon Senior Securities

59

Item 4.

Mine Safety Disclosures

59

Item 5.

Other Information

59

Item 6.

Exhibits

59

 

 

SIGNATURES

60

 

 

 

EXPLANATORY NOTE

 

Unless otherwise noted, references in this registration statement to “CLS Holdings USA, Inc.,” the “Company,” “we,” “our” or “us” means CLS Holdings USA, Inc. and its subsidiaries.

 

FORWARD-LOOKING STATEMENTS

 

This document contains forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. These statements relate to anticipated future events, future results of operations or future financial performance. These forward-looking statements include, but are not limited to, statements relating to our ability to finance our planned operations and proposed acquisitions, market acceptance of our services and product offerings, our ability to commence and complete expansion plans and buildouts on schedule and on budget, and our ability to protect and commercialize our intellectual property. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “will,” “should,” “intends,” “expects,” “plans,” “goals,” “projects,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these terms or other comparable terminology.

 

These forward-looking statements are only predictions, are uncertain and involve substantial known and unknown risks, uncertainties and other factors which may cause our (or our industry’s) actual results, levels of activity or performance to be materially different from any future results, levels of activity or performance expressed or implied by these forward-looking statements.

 

We cannot guarantee future results, levels of activity or performance. You should not place undue reliance on these forward-looking statements, which speak only as of the date that they were made. These cautionary statements should be considered together with any written or oral forward-looking statements that we may issue in the future. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to reflect actual results, later events or circumstances or to reflect the occurrence of unanticipated events.

 

AVAILABLE INFORMATION

 

We file annual, quarterly and special reports and other information with the Securities and Exchange Commission (“SEC”) that can be obtained from the SEC by telephoning 1-800-SEC-0330. The Company’s filings are also available through the SEC’s Electronic Data Gathering Analysis and Retrieval System, known as EDGAR, through the SEC’s website (www.sec.gov).

 

 

 

Item 1. Financial Statements.

CLS HOLDINGS USA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 

ASSETS

               

Current assets

               

    Cash and cash equivalents

  $ 11,972,015     $ 52,964  

    Accounts receivable

    295,013       -  

    Inventory

    605,796       -  

    Prepaid expenses and other current assets

    712,739       1,410  

    Redemption premium in transit

    964,788       -  

      Total current assets

    14,550,351       54,374  
                 

Investment

    -       2,050,000  

Note receivable

    5,150,000       -  

Interest receivable

    99,618       -  

Property, plant and equipment, net of accumulated depreciation of $494,439 and $2,674

    1,547,164       -  

Intangible assets, net of accumulated amortization of $62,856 and $828

    1,577,344       898  

Goodwill

    25,742,899       -  

Other assets

    160,450       -  
                 

Total assets

  $ 48,827,826     $ 2,105,272  
                 

LIABILITIES AND STOCKHOLDERS' EQUITY

               

Current liabilities

               

     Accounts payable and accrued liabilities

  $ 1,394,353     $ 826,621  

     Accrued compensation, related party

    53,750       120,417  

     Due to related party

    17,930       17,930  

     Accrued interest

    558,401       24,748  

     Accrued interest, related party

    6,305       5,143  

     Notes payable, net of discount of $100,536 and $0

    3,899,464       310,000  

     Notes payable, related parties

    -       75,137  

     Deferred rent obligation

    137,707       -  

     Convertible notes payable, net of discount of $351,883 and $561,599

    398,117       43,401  

     Contingent liability

    678,111       -  

     Derivative liability

    -       1,265,751  
                 

          Total current liabilities

    7,144,138       2,689,148  
                 

Noncurrent liabilities

               

      Accrued interest, long-term

    -       -  

     Convertible notes payable - Long Term, net of discount of $7,678,852 and $65,918

    10,190,148       41,072  

     Convertible notes payable, related parties, net of discount of $0 and $733,928

    -       2,832  
                 

Total Liabilities

    17,334,286       2,733,052  
                 

Commitments and contingencies

    -       -  
                 

Stockholder's equity

               

Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued

    -       -  

Common stock, $0.0001 par value; 250,000,000 shares authorized; 125,814,107 and 50,128,972 shares issued and outstanding at February 28, 2019 and May 31, 2018, respectively

    12,583       5,013  

   Additional paid-in capital

    73,890,916       17,628,717  

   Common stock subscribed

    346,784       307,584  

   Accumulated deficit

    (42,756,743

)

    (18,569,094

)

      Total stockholder's equity (deficit)

    31,493,540       (627,780

)

                 

Total liabilities and stockholders' equity (deficit)

  $ 48,827,826     $ 2,105,272  

 

See accompanying notes to these financial statements.

 

 

CLS HOLDINGS USA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

For the Three

   

For the Three

   

For the Nine

   

For the Nine

 
   

Months Ended

   

Months Ended

   

Months Ended

   

Months Ended

 
   

February 28, 2019

   

February 28, 2018

   

February 28, 2019

   

February 28, 2018

 
                                 
                                 

Revenue

  $ 2,372,790     $ -     $ 5,529,053     $ -  

Cost of goods sold

    1,438,424       -       3,245,035       -  

Gross margin

    934,366       -       2,284,018       -  
                                 

Selling, general and administrative expenses

    5,102,871       1,214,971       23,472,037       1,831,554  

Total operating expenses

    5,102,871       1,214,971       23,472,037       1,831,554  
                                 

Operating loss

    (4,168,505

)

    (1,214,971

)

    (21,188,019

)

    (1,831,554

)

                                 

Other (income) expense:

                               

Interest expense, net

    662,961       1,434,314       2,999,630       2,316,145  

Gain on settlement of debt

    -       -       -       (3,480

)

Loss on modification of debt

    -       -       -       29,145  

Loss on note exchange

    -       -       -       404,082  

Loss on extinguishment of debt

    -       -       -       989,032  

Change in fair value of derivative

    -       (148,227

)

    -       25,863  

Total other expense

    662,961       1,286,087       2,999,630       3,760,787  
                                 

Income (Loss) before income taxes

    (4,831,466

)

    (2,501,058

)

    (24,187,649

)

    (5,592,341

)

                                 

Income tax expense

    -       -       -       -  
                                 

Net income (loss)

  $ (4,831,466

)

  $ (2,501,058

)

  $ (24,187,649

)

  $ (5,592,341

)

                                 

Net income (loss) per share - basic

  $ (0.04

)

  $ (0.06

)

  $ (0.25

)

  $ (0.16

)

                                 

Net income (loss) per share - diluted

  $ (0.04

)

  $ (0.06

)

  $ (0.25

)

  $ (0.16

)

                                 

Weighted average shares outstanding - basic

    124,346,650       39,126,944       95,132,835       35,654,299  
                                 

Weighted average shares outstanding - diluted

    124,346,650       39,126,944       95,132,835       35,654,299  

 

See accompanying notes to these financial statements.

 

 

CLS HOLDINGS USA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

 

                   

Additional

                         
   

Common Stock

   

Paid In

   

Stock

   

Accumulated

         
   

Amount

   

Value

   

Capital

   

Payable

   

Deficit

   

Total

 

Balance, May 31, 2017

    32,852,944     $ 3,286     $ 7,032,836     $ 68,950     $ (8,991,610

)

  $ (1,886,538

)

Common stock issued to consultant for services

    374,000       37       264,283       25,313       -       289,633  

Common stock issued for debt exchange

    6,000,000       600       2,353,437       -       -       2,354,037  

Common stock issued as commitment fees

    250,000       25       94,975       -       -       95,000  

Common stock issued to officer

    -       -       -       213,321       -       213,321  

Common stock issued for cash, net of issuance costs

    5,473,000       547       1,460,368       -       -       1,460,915  

Common stock issued for conversion of debt

    5,179,028       518       1,617,928       -       -       1,618,446  

Warrants issued with debt

    -       -       1,804,470       -       -       1,804,470  

Settlement of derivative liability

                    442,775                       442,775  

Placement agent warrants

    -       -       503,655       -       -       503,655  

Warrants issued to consultants

    -       -       294,173       -       -       294,173  

Discount on notes from beneficial conversion feature

    -       -       1,758,741       -       -       1,758,741  

Imputed interest

    -       -       1,076       -       -       1,076  

Net loss - 12 months

    -       -       -       -       (9,577,484

)

    (9,577,484

)

Balance, May 31, 2018

    50,128,972     $ 5,013     $ 17,628,717     $ 307,584     $ (18,569,094

)

  $ (627,780

)

                                                 

Common stock issued for conversion of debt

    3,697,511       370       1,295,320       -       -       1,295,690  

Common stock issued in connection with Oasis acquisition

    22,058,823       2,206       15,438,970       -       -       15,441,176  

Common stock issued to consultant

    731,250       73       515,240       (25,313

)

    -       490,000  

Common stock issued to officer

    600,000       60       263,940       (213,320

)

    -       50,680  

Common stock to be issued to officer

    -       -       -       277,833       -       277,833  

Common stock issued for cash

    14,375,000       1,438       5,748,562       -       -       5,750,000  

Special Warrants issued for cash

    -       -       9,785,978       -       -       9,785,978  

Cashless exercise of warrant

    129,412       13       (13

)

    -       -       -  

Warrant issued due to penalty

    -       -       941,972       -       -       941,972  

Warrants issued as compensation for offering

    -       -       2,369,830       -       -       2,369,830  

Units issued as compensation for offering

    559,750       56       557,279                       557,335  

Warrants issued to placement agent

    -       -       1,413,300       -       -       1,413,300  

Special warrant issued due to penalty

    -       -       7,142,550       -       -       7,142,550  

Common stock issued for exercise of special warrants

    33,463,838       3,347       (3,347

)

    -               -  

Cashless exercise of warrant

    19,551       2       (2

)

    -       -       -  

Common stock shares issued for settlement

    50,000       5       47,495       -       -       47,500  

Foreign currency transaction loss on equity offering

    -       -       403,588       -       -       403,588  

Discount on notes from beneficial conversion feature

    -       -       9,039,096       -       -       9,039,096  

Reclassification of derivative upon adoption of ASU 2017-11

    -       -       1,265,751       -       -       1,265,751  

Derivative valuation of reset event

    -       -       35,883       -       -       35,883  

Imputed interest

    -       -       807       -       -       807  

Net loss - 9 months

    -       -       -       -       (24,187,649

)

    (24,187,649

)

Balance, February 28, 2019

    125,814,107     $ 12,583     $ 73,890,916     $ 346,784     $ (42,756,743

)

  $ 31,493,540  

 

 

 

CLS HOLDINGS USA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   

For the Nine

   

For the Nine

 
   

Months Ended

   

Months Ended

 
   

February 28, 2019

   

February 28, 2018

 

CASH FLOWS FROM OPERATING ACTIVITIES

               

Net income (loss)

  $ (24,187,649

)

  $ (5,592,341

)

Adjustments to reconcile net loss to net cash used in operating activities:

               

Imputed interest

    807       804  

Change in fair value of derivative

    -       25,863  

Warrants issued to placement agent

    3,783,130       610,414  

Warrants and Special Warrants issued to penalty

    8,084,522       -  

Units issued to placement agent

    557,335          

Non-cash offering costs of equity financing

    403,588       -  

Fair value of shares vested by officers

    328,513       55,000  

Fair value of shares issued to consultants

    490,000       -  

Fair value of shares issued in settlement

    47,500       -  

Loss on modification of debt

    -       29,145  

(Gain) loss on note exchange

    -       404,082  

Loss on extinguishment of debt

    -       989,032  

Gain on settlement of Account Payable

    -       (3,480

)

Expense from derivative triggering event

    12,659       -  

Amortization of debt discounts

    2,481,674       1,391,110  

Amortization of deferred financing costs

    -       22,569  

Depreciation and amortization expense

    184,068       993  

Changes in assets and liabilities:

               

Accounts receivable

    (259,576

)

    -  

Interest receivable

    (99,618

)

    -  

Inventory

    (199,843

)

    -  

Prepaid expenses

    (608,090

)

    (11,188

)

Other assets

    -       50,000  

Redemption premium in transit

    (964,788

)

    (46,000

)

Accounts payable and accrued expenses

    (353,832

)

    937,895  

Accrued compensation

    (16,667

)

    167,584  

Due to related parties

    (50,000

)

    -  

Accrued interest, related party

    5,943       87,966  

Accrued interest

    588,312       21,045  

Deferred rent liability

    1,667       (49,565

)

Net cash used in operating activities

    (9,770,345

)

    (909,072

)

                 

CASH FLOWS FROM INVESTING ACTIVITIES

               

Payments to purchase property, plant and equipment

    (735,234

)

    -  

Payments to acquire note receivable

    (5,150,000

)

    -  

Payment for investment in Alternative Solutions, net of cash received of $14,612

    (5,982,710

)

    (2,050,000

)

Net cash used in investing activities

    (11,867,944

)

    (2,050,000

)

                 

CASH FLOWS FROM FINANCING ACTIVITIES

               

Proceeds from related party convertible notes payable

    -       601,070  

Proceeds from related party notes payable

    211,700       -  

Proceeds from notes payable

    -       410,000  

Proceeds from convertible notes payable

    18,369,000       880,000  

Principal payments on notes payable

    (310,000

)

    -  

Principal payments on related party notes payable

    (211,838

)

    -  

Principal payments on convertible notes payable

    (37,500

)

    -  

Proceeds from sale of equity

    15,535,978       1,012,425  

Net cash provided by financing activities

    33,557,340       2,903,495  
                 

Net increase in cash and cash equivalents

    11,919,051       (55,577

)

                 

Cash and cash equivalents at beginning of period

    52,964       78,310  
                 

Cash and cash equivalents at end of period

  $ 11,972,015     $ 22,733  
                 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

               

Interest paid

  $ 8,964     $ -  

Income taxes paid

  $ -     $ -  
                 

NON-CASH INVESTING AND FINANCING ACTIVITIES:

               

Convertible note issued for unpaid accrued salary

  $ 75,000     $ 112,500  

Related party notes payable reclassified as related party convertible notes payable

  $ -     $ 1,116,856  

Beneficial conversion feature on convertible notes

  $ 9,039,096     $ 1,681,946  

Note payable exchanged for common stock

  $ 1,295,690     $ 936,478  

Shares issued for settlement of accounts payable

  $ -     $ 6,000  

Discount on convertible notes payable due to derivative

    -     $ 1,321,862  

Charge to paid-in capital for par value of shares issued in cashless exercise of warrants

  $ 3,362     $ -  

Reclassify derivative liability to paid-in capital upon adoption of ASU 2017-11

  $ 1,265,751     $ -  

Shares issued for services from stock payable

  $ 25,313     $ -  

 

See accompanying notes to these financial statements. 

 

 

CLS HOLDINGS USA, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

February 28, 2019

(Unaudited)

 

Note 1 – Nature of Business and Significant Accounting Policies

 

Basis of Presentation

 

These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.

 

Principals of Consolidation

 

The accompanying consolidated financial statements include the accounts of CLS Holdings USA, Inc., and its wholly owned operating subsidiaries, CLS Nevada, Inc., (“CLS Nevada”), CLS Labs, Inc. (“CLS Labs”), CLS Labs Colorado, Inc. (“CLS Colorado”), CLS Massachusetts, Inc. (“CLS Massachusetts”), and Alternative Solutions, LLC (“Alternative Solutions”). Alternative Solutions is the sole owner of the following three entities (collectively, the “Oasis LLCs”): Serenity Wellness Center, LLC (“Serenity Wellness Center”); Serenity Wellness Products, LLC (“Serenity Wellness Products”); and Serenity Wellness Growers, LLC (“Serenity Wellness Growers”). All material intercompany transactions have been eliminated upon consolidation of these entities.

 

Nature of Business

 

CLS Holdings USA, Inc. (the “Company”) was originally incorporated as Adelt Design, Inc. (“Adelt”) on March 31, 2011 to manufacture and market carpet binding art. Production and marketing of carpet binding art never commenced.

 

On November 12, 2014, CLS Labs, Inc. (“CLS Labs”) acquired 10,000,000 shares, or 55.6%, of the outstanding shares of common stock of Adelt from its founder, Larry Adelt. On that date, Jeffrey Binder, the Chairman, President and Chief Executive Officer of CLS Labs, was appointed Chairman, President and Chief Executive Officer of the Company. On November 20, 2014, Adelt adopted amended and restated articles of incorporation, thereby changing its name to CLS Holdings USA, Inc. Effective December 10, 2014, the Company effected a reverse stock split of its issued and outstanding common stock at a ratio of 1-for-0.625 (the “Reverse Split”), wherein 0.625 shares of the Company’s common stock were issued in exchange for each share of common stock issued and outstanding. As a result, 6,250,000 shares of the Company’s common stock were issued to CLS Labs in exchange for the 10,000,000 shares that it owned by virtue of the above-referenced purchase from Larry Adelt.

 

On April 29, 2015, the Company, CLS Labs and CLS Merger Inc., a Nevada corporation and wholly owned subsidiary of CLS Holdings (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) and completed a merger, whereby CLS Merger Inc. merged with and into CLS Labs, with CLS Labs remaining as the surviving entity (the “Merger”). Upon the consummation of the Merger, the shares of the common stock of CLS Holdings owned by CLS Labs were extinguished and the former stockholders of CLS Labs were issued an aggregate of 15,000,000 (post Reverse Split) shares of common stock in CLS Holdings in exchange for their shares of common stock in CLS Labs. As a result of the Merger, the Company acquired the business of CLS Labs and abandoned its previous business. 

 

The Company has been issued a U.S. patent with respect to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates such as oils, waxes, edibles and shatter. These concentrates may be ingested in a number of ways, including through vaporization via electronic cigarettes (“e-cigarettes”), and used for a variety of pharmaceutical and other purposes. Internal testing of this extraction method and conversion process has revealed that it produces a cleaner, higher quality product and a significantly higher yield than the cannabinoid extraction processes currently existing in the marketplace. The Company has not commercialized its proprietary process or otherwise earned any revenues from it.  The Company plans to generate revenues through licensing, fee-for-service and joint venture arrangements related to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into saleable concentrates.

 

On December 4, 2017, the Company and Alternative Solutions, LLC entered into a Membership Interest Purchase Agreement (the “Acquisition Agreement”), as amended, for the Company to acquire the Oasis LLCs from Alternative Solutions. Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.  

 

 

 

Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.  At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (the “Oasis Note”), and 22,058,823 shares of its common stock (the “Purchase Price Shares”) (collectively, the “Closing Consideration”). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration.  The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018. The Company has adopted a fiscal year end of May 31st.

 

On October 31, 2018, the Company, CLS Massachusetts,, and In Good Health, Inc. (“IGH”), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the “Conversion”), entered into an Option Agreement (the “Option Agreement”). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the “Option”) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the “Option Period”). (See note 4). On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the “IGH Loan”), in the principal amount of $5,000,000 (the “IGH Loan Amount”), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the “IGH Loan Agreement”) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the “IGH Note Receivable”), which bears interest at the rate of 6% per annum and matures on October 31, 2021.

 

On September 13, 2018, we entered into a non-binding letter of intent (the “CannAssist LOI”) with CannAssist, LLC, a Massachusetts limited liability company (“CannAssist”), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the “Leicester Facility”). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.  The Company had cash and cash equivalents of $11,972,015 and $52,964 as of February 28, 2019 and May 31, 2018, respectively.

 

Allowance for Doubtful Accounts

 

The Company generates the majority of its revenues and corresponding accounts receivable from the sale of cannabis, and cannabis related products. The Company evaluates the collectability of its accounts receivable considering a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations to it, the Company records a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes reserves for bad debts based on past write-off experience and the length of time the receivables are past due. The Company had no bad debts expense during the three and nine months ended February 28, 2019 and 2018.

 

Segment Reporting

 

Under FASB ASC 280-10-50, the Company operates two business segments: Cannabis Dispensary Segment, and Cannabis Production Segment, and will evaluate additional segment disclosure requirements as it expands its operations.

 

 

Inventory

 

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable values. Our cannabis products consists of prepackaged purchased goods ready for resale, along with produced edibles and extracts developed under our production license. 

 

Property, Plant and Equipment

 

Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives.  Computer equipment is being depreciated over a three-year period.

 

Concentrations of Credit Risk

 

The Company maintains its cash in bank deposit accounts and other accounts, the balances of which at times may be uninsured or exceed federally insured limits. From time to time, some of the Company’s funds are also held by escrow agents; these funds may not be federally insured. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts.

 

Advertising and Marketing Costs

 

All costs associated with advertising and promoting products are expensed as incurred with the exception of the amortization of the cost of two major video productions. A music video and reality/lifestyle video were both produced in 2017. The remaining amount that hasn’t been expensed is listed on the schedule in Note 7. Total recognized advertising and promotion expenses were $381,082 and $26,549 for the three months ended February 28, 2019 and 2018, respectively; total recognized advertising and promotion expenses were $1,134,322 and $31,797 for the nine months ended February 28, 2019 and 2018, respectively.

 

Research and Development

 

Research and development expenses are charged to operations as incurred. The Company incurred no research and development costs for the three and nine months ended February 28, 2019 and 2018, respectively.

 

Income Taxes

 

The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. 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. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.

 

Fair Value of Financial Instruments

 

Pursuant to Accounting Standards Codification (“ASC”) No. 825 - Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying amount of the Company’s cash and cash equivalents, note receivable, notes payable, accounts payable and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of those financial instruments.

 

A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:

 

Level 1 - Quoted prices in active markets for identical assets or liabilities.

 

Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.

 

Level 3 - Significant unobservable inputs that cannot be corroborated by market data.

 

 

Derivative Financial Instruments

 

Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (see note 17).  On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.

 

Revenue Recognition

 

Revenue is primarily generated through the Company’s subsidiary, Serenity Wellness Center LLC, d/b/a Oasis Cannabis (“Oasis”). Oasis operates a 24-hour cannabis dispensary that recognizes revenue from the sale of medical and recreational cannabis products within the State of Nevada.

 

Revenue from the sale of cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.

 

The Company also recognizes revenue from Serenity Wellness Products LLC and Serenity Wellness Growers LLC, d/b/a City Trees. City Trees recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the State of Nevada:

 

 

Premium organic medical cannabis sold wholesale to licensed retailers

 

 

Recreational marijuana cannabis products sold wholesale to distributors and retailers

 

 

Extraction products such as oils and waxes derived from in-house cannabis production

 

 

Processing and extraction services for licensed medical cannabis cultivators in Nevada

 

 

High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Effective June 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605. Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of the service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.

 

There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended February 28, 2019.

 

Basic and Diluted Loss Per Share

 

Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock, and convertible debt. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.

 

 

The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.

 

A net loss causes all outstanding stock options and warrants to be antidilutive. As a result, the basic and dilutive losses per common share are the same for the three and nine months ended February 28, 2019 and 2018.

 

Commitments and Contingencies

 

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims brought to such legal counsel’s attention as well as the perceived merits of the amount of relief sought or expected to be sought therein.

 

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.  If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.

 

Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

 

Recent Accounting Pronouncements

 

Accounting standards promulgated by the Financial Accounting Standards Board (“FASB”) are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following is a summary of recent accounting developments.

 

In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230). The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted. The Company does not believe the implementation of this update has had a material impact on its financial statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.

 

In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for the Company on January 1, 2018, and will be applied prospectively to an award modified on or after the adoption date. The Company does not believe that this standard has had a material effect on its financial statements.

 

 

Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.

 

Adoption of Accounting Standards 

 

In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.

 

When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.

 

Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

 

On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.

 

Note 2 – Going Concern

 

As shown in the accompanying financial statements, the Company has incurred net losses from operations resulting in an accumulated deficit of $42,756,743 as of February 28, 2019. The Company’s auditors stated in their opinion on the Company’s financial statements for the year ended May 31, 2018 that there was substantial doubt about the Company’s ability to continue as a going concern, and that further losses were anticipated in the development of the Company’s business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company began generating revenue from operations with the Acquisition of Alternative Solutions on June 27, 2018 (note 3). Management intends to finance operating costs over the next twelve months with loans, the proceeds from the sale of securities, and/or revenues from operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

 

Note 3 – Acquisition of Alternative Solutions, LLC

 

On June 27, 2018, the Company closed on the purchase of all of the membership interests in Alternative Solutions and its three operating subsidiaries (collectively, the “Oasis LLCs”) from the members of such entities (other than Alternative Solutions).  The Oasis LLCs operate a fully integrated cannabis business in Las Vegas, Nevada, including a grow; extraction, conversion and processing facility; and a retail dispensary.  The closing occurred pursuant to a Membership Interest Purchase Agreement (the “Acquisition Agreement”) entered into between the Company and Alternative Solutions on December 4, 2017, as amended.  Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.  The revised structure of the transaction is referenced in the Oasis Note, which modified the Acquisition Agreement.

 

Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.  At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (see note 14), (the “Oasis Note”), and 22,058,823 shares of its common stock (see note 16), (the “Purchase Price Shares”) (collectively, the “Closing Consideration”). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration (see note 16).  The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018.

 

The number of Purchase Price Shares was equal to 80% of the offering price of the Company’s common stock in its last equity offering, which price was $0.34 per share.  The Oasis Note is secured by a first priority security interest over the membership interests in Alternative Solutions and the Oasis LLCs, as well as by the assets of the Oasis LLCs.  The Company also delivered a confession of judgment to a representative of the sellers that will become effective, in general, if the Company defaults under the Oasis Note.

 

A claim has been made that Oasis owes certain amounts to a consultant; Oasis disputes this claim.  If the Company makes any payments in connection with this claim post-closing, generally speaking, the Company will be entitled to deduct the present value of such payments from the principal amount due under the Oasis Note.  This claim has been accrued on the Company’s balance sheet as of February 28, 2019. 

 

The sellers are also entitled to a $1,000,000 payment from the Company on May 30, 2020 if the Oasis LLCs have maintained an average revenue of $20,000 per day during the 2019 calendar year. The fair value of this contingent consideration was $678,111 as determined by the Company’s outside valuation consultants. This amount is recorded as contingent liability on the Company’s balance sheet at February 28, 2019.

 

The acquisition date estimated fair value of the consideration transferred totaled $27,975,650, which consisted of the following:

 

Initial purchase price

  $ 2,050,000  

Cash paid in connection with transaction

    5,995,543  

Note payable

    3,810,820  

Contingent consideration

    678,111  

Common stock

    15,441,176  

Total purchase price

  $ 27,975,650  
         

Net tangible assets

  $ 595,151  

Intangible assets

    1,637,600  

Goodwill

    25,742,899  

Total purchase price

  $ 27,975,650  

 

 

The above estimated fair value of the intangible assets is based on a preliminary purchase price allocation prepared by a third party valuation expert.  During the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.  After the preliminary purchase price allocation period, the Company may record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined. 

 

Pro forma results

 

The following table sets forth the unaudited pro forma results of the Company as if the acquisition of the Oasis LLCs was effective on the first day of each of the three and nine months periods presented.  These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.

 

   

Three months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 2,372,790     $ 1,827,999  

Net loss

  $ (12,850,356

)

  $ (10,839,019

)

Basic net loss per share

  $ (0.10

)

  $ (0.17

)

Diluted net loss per share

  $ (0.10

)

  $ (0.17

)

Weighted average shares - basic

    124,346,650       62,460,767  

Weighted average shares - diluted

    124,346,650       62,460,767  

 

   

Nine months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 6,299,932     $ 5,139,455  

Net loss

  $ (24,402,155

)

  $ (14,632,294

)

Basic net loss per share

  $ (0.26

)

  $ (0.25

)

Diluted net loss per share

  $ (0.26

)

  $ (0.25

)

Weighted average shares - basic

    95,132,835       58,988,122  

Weighted average shares - diluted

    95,132,835       58,988,122  

 

Note 4 – Joint Venture and Option Transaction

 

 In Good Health

 

On October 31, 2018, the Company, CLS Massachusetts, Inc., a Massachusetts corporation and a wholly-owned subsidiary of the Company (“CLS Massachusetts”), and In Good Health, Inc. (“IGH”), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the “Conversion”), entered into an Option Agreement (the “Option Agreement”). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the “Option”) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the “Option Period”). If CLS Massachusetts exercises the Option, the Company, a wholly-owned subsidiary of the Company and IGH will enter into a merger agreement (the form of which has been agreed to by the parties) (the “IGH Merger Agreement”). At the effective time of the merger contemplated by the IGH Merger Agreement, CLS Massachusetts will pay a purchase price of $47,500,000, subject to reduction as provided in the IGH Merger Agreement, payable as follows: $35 million in cash, $7.5 million in the form of a five-year promissory note, and $5 million in the form of restricted common stock of the Company, plus $2.5 million as consideration for a non-competition agreement with IGH’s President, payable in the form of a five-year promissory note.

 

IGH and certain IGH stockholders holding sufficient aggregate voting power to approve the transactions contemplated by the IGH Merger Agreement have entered into agreements pursuant to which such stockholders have, among other things, agreed to vote in favor of such transactions.

 

 

On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the “IGH Loan”), in the principal amount of $5,000,000 (the “IGH Loan Amount”), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the “IGH Loan Agreement”) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the “IGH Note Receivable”), which bears interest at the rate of 6% per annum and matures on October 31, 2021.

 

To secure the obligations of IGH to the Company under the Loan Agreement and the IGH Note Receivable, the Company and IGH entered into a Security Agreement dated as of October 31, 2018 (the “IGH Security Agreement”), pursuant to which IGH granted to the Company a first priority lien on and security interest in all personal property of IGH.

 

If the Company does not exercise the Option on or prior to the date that is 30 days following the end of the Option Period, the Loan Amount will be reduced to $2,500,000 as a break-up fee (the “Break-Up Fee”), except in the event of a Purchase Exception (as defined in the Option Agreement), in which case the Break-Up Fee will not apply and there will be no reduction to the Loan Amount.

 

 CannAssist

 

On September 13, 2018, we entered into a non-binding letter of intent (the “CannAssist LOI”) with CannAssist, LLC, a Massachusetts limited liability company (“CannAssist”), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the “Leicester Facility”). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close.

 

On November 7, 2018, we amended the CannAssist LOI to extend the termination date to January 15, 2019 and further amended it effective January 15, 2019 to extend the termination date to July 1, 2019.

 

Note 5 – Accounts Receivable

 

Accounts receivable was $295,013 and $0 at February 28, 2019 and May 31, 2018, respectively. No allowance for doubtful accounts was necessary during the three and nine months ended February 28, 2019 and 2018.

 

Note 6 – Inventory

 

Inventory, consisting of material, overhead, labor, and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market, and consists of the following:

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Raw materials

  $ 295,822     $ -  

Finished goods

    309,974       -  

Total

  $ 605,796     $ -  

 

Raw materials consist of cannabis plants and the materials that are used in our production process prior to being tested and packaged for consumption. Finished goods consist of pre-packaged materials previously purchased from other licensed cultivators and our manufactured edibles and extracts.

 

 

Note 7 – Prepaid Expenses and Other Current Assets

 

Prepaid expenses consisted of the following at February 28, 2019 and May 31, 2018:

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Prepaid insurance

  $ 14,218     $ -  

Prepaid license fees

    130,412       -  

Prepaid legal fees

    16,410       1,410  

Prepaid fixed assets

    460,901          

Prepaid rent

    6,961          

Deposits on inventory

    83,837       -  

Total

  $ 712,739     $ 1,410  

 

Note 8 – Redemption Premium in Transit

 

During the three months ended February 28, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note. The redemption date is March 1, 2019, and the redemption amount is shown as a current asset on the Company’s balance sheet as of February 28, 2019.

 

Note 9 – Notes Receivable

 

PRH Note Receivable

 

During the year ended May 31, 2015, the Company loaned $500,000 (the “PRH Note”) to Picture Rock Holdings, LLC, a Colorado limited liability company (“PRH”).  Pursuant to the PRH Note, as amended by the parties effective June 30, 2015, October 31, 2015, April 11, 2016, and May 31, 2016, PRH was expected to repay the principal due under the PRH Note in twenty (20) equal quarterly installments of Twenty Five Thousand Dollars ($25,000) commencing in the month following the month in which PRH commenced generating revenue at the grow facility, which commencement was originally anticipated to occur in the first quarter of 2017, and continuing until paid in full.  We suspended our plans to operate in Colorado due to regulatory delays and have not yet determined when we will pursue them again.  Interest will accrue on the unpaid principal balance of the PRH Note at the rate of twelve percent (12%) per annum and will be paid quarterly in arrears commencing after such initial payment and continuing until paid in full.  All outstanding principal and any accumulated unpaid interest due under the PRH Note is due and payable on the five-year anniversary of the initial payment thereunder.  In the event of default as defined in the agreements underlying the PRH Note, all amounts under the PRH Note shall be due and payable at once.  During the year ended May 31, 2015, the Company recorded an impairment related to the note receivable in the amount of $500,000. 

 

During the year ended May 31, 2018, the Company received a payment of $50,000 on the PRH Note.  As a result, the Company has reduced the impairment of the note by $50,000 to reflect this payment.  The receivable is recorded on the balance sheet as of February 28, 2019 in the amount of $0, net of allowance in the amount of $450,000. 

 

IGH Note Receivable

 

On October 31, 2018, in connection with an option to purchase transaction (see note 4), the Company loaned $5,000,000 (the “IGH Note) to In Good Health, Inc., a Massachusetts not-for-profit corporation (“IGH”); on November 6, 2018, IGH converted to a for-profit corporation. This Note bears interest at the rate of 6% per annum. On March 1, 2020 (the “Initial Payment Date”), all accrued interest shall be added to the outstanding principal due hereunder and such amount shall be payable in eight equal quarterly installments, commencing on the Initial Payment Date, together with interest accruing after the Initial Payment Date. The IGH Note shall mature and all outstanding principal, accrued interest and any other amounts due hereunder, shall become due and payable in full on the third anniversary of the IGH Note. The IGH Note was issued in connection with a loan agreement and security agreement between the Company and IGH, and an option agreement between the Company and IGH, among others (the “IGH Option Agreement”), in both cases dated as of October 31, 2018 and the other agreements and documents executed and/or delivered in connection therewith (collectively the “IGH Loan Documents”), and is secured by the collateral described in the IGH Loan Documents and by such other collateral as may in the future be granted to the Company to secure the IGH Note. During the three months and nine ended February 28, 2019, the Company recorded interest income in the amount of $73,973 and $98,631, respectively, in connection with the IGH Note. At February 28, 2019, principal in the amount of $5,000,000 and interest receivable in the amount of $96,631 due under the IGH Note are classified as non-current assets on the Company’s balance sheet.

 

 

CannAssist Note Receivable

 

On January 29, 2019, the Company made a line of credit loan to CannAssist (the “CanAssist Note”), in the principal amount of up to $500,000. Any draws on the line of credit in excess of $150,000 will only be made in the sole discretion of the Company. The Loan bears interest at the rate of 8% per annum and is personally guaranteed by the two equity owners of CannAssist. Payments on the loan will commence on July 1, 2019 and the Note will mature on December 1, 2019. At February 28, 2019, the principal amount of $150,000 and interest receivable in the amount of $987 due under the CannAssist Note are classified as non-current assets on the Company’s balance sheet.

 

Note 10 – Property, Plant and Equipment

 

Property, plant and equipment consisted of the following at February 28, 2019 and May 31, 2018.

 

   

February 28, 

   

May 31,

 
   

2019

   

2018

 

Office equipment

    1,217,563       2,674  

Furniture and fixtures

    59,617       -  

Leasehold improvements

  $ 764,423     $ -  

Less: accumulated depreciation

    (494,439

)

    (2,674

)

Property, plant, and equipment, net

  $ 1,547,164     $ -  

 

During the nine months ended February 28, 2019, the Company acquired property, plant, and equipment with an aggregate fair value of $933,142 with the acquisition of Alternative Solutions, LLC. See note 3.

 

Depreciation of property, plant, and equipment was $45,045 and $223 for the three months ended February 28, 2019 and 2018 respectively. Depreciation of property, plant, and equipment was $121,212 and $669 for the nine months ended February 28, 2019 and 2018 respectively.

 

Note 11 – Intangible Assets

 

Intangible assets consisted of the following at February 28, 2019 and May 31, 2018.

 

February 28, 2019

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ 319,600     $ (15,981

)

  $ 303,619  

License & Customer Relations

    990,000       (24,750

)

    965,250  

Tradenames - Trademarks

    301,000       (15,051

)

    285,949  

Non-compete Agreements

    27,000       (6,750

)

    20,250  

Domain Names 

    2,600       (324

)

    2,276  

Total

  $ 1,640,020     $ (62,856

)

  $ 1,577,344  

 

May 31, 2018

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ -     $ -     $ -  

License & Customer Relations

    -       -       -  

Tradenames - Trademarks

    -       -       -  

Non-compete Agreements

    -       -       -  

Domain names

    1,726       (828

)

    898  

Total

  $ 1,726     $ (828

)

  $ 898  

 

 

Total amortization expense charged to operations for the three months ended February 28, 2019 and 2018 was $20,952 and $108, respectively.  Total amortization expense charged to operations for the nine months ended February 28, 2019 and 2018 was $62,856 and $324, respectively. 

 

Amount to be amortized during the twelve months ended February 28, 

       

2019

  $ 27,379  

2020

    164,103  

2021

    164,103  

2022

    164,103  

2023

    164,103  

Thereafter

    893,553  
    $ 1,577,344  

 

Note 12 – Other Assets

 

Other assets included the following as of February 28, 2019 and May 31, 2018, respectively:

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Security deposits

    160,450       -  
    $ 160,450     $ -  

 

Note 13 – Accounts Payable and Accrued Liabilities

 

Accrued expenses consisted of the following at February 28, 2019 and May 31, 2018:

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Trade accounts payable

  $ 655,518     $ 726,457  

Accrued payroll and payroll taxes

    281,584       44,465  

Accrued liabilities

    457,251       -  

Deferred rent liability 

    -       55,699  

Total

  $ 1,394,353     $ 826,621  

 

 

Note 14 – Notes Payable and Convertible Notes Payable

 

Notes Payable

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the “Blatt Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.

  $ -     $ 210,000  
                 

 On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the “AJG Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note.  

    -       100,000  
                 

The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (“Oasis Note”). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.  The note is due on December 4, 2019, but may be prepaid at any time without penalty.   The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs. 

 

The Company recognized an original issue discount of $189,180 on the Oasis Note.  During the nine months ended February 28, 2019, $88,644 of this discount was charged to operations.  During the nine months ended February 28, 2019, the Company accrued interest in the amount of $164,000 on the Oasis Note.

    4,000,000       -  
                 

Total – Notes Payable

  $ 4,000,000     $ 310,000  

Less: Discount

    (100,536

)

    -  

Notes Payable, Net of Discounts

  $ 3,899,464     $ 310,000  

Current portion

  $ 3,899,464     $ 310,000  

Long term portion

  $ -     $ -  

 

Related Party Convertible Demand Notes Payable

 

On May 31, 2017, the Company entered into an Omnibus Loan Amendment Agreement (the “Omnibus Loan Amendment”) with Jeffrey I. Binder, Frank Koretsky, Newcan Investment Partners LLC and CLS CO 2016, LLC (collectively, the “Insiders”).  Pursuant to the Omnibus Loan Amendment, the Company agreed with the Insiders to amend certain terms of loans the Insiders made to the Company for working capital purposes, which loans were initially demand loans, and, except for loans made in 2017, were later memorialized as convertible loans (the “Insider Loans”), in exchange for the agreement of the Insiders to convert all Insider Loans where funds were advanced prior to January 1, 2017, which totaled $2,537,750, plus $166,490 of accrued interest thereon, into an aggregate of 10,816,960 shares of the Company’s common stock at $0.25 per share, and forego the issuance of warrants to purchase the Company’s common stock upon conversion.  This resulted in the issuance of an additional 7,609,910 shares compared to the original number of shares issuable upon conversion of the Insider Loans prior to the Omnibus Loan Amendment. The Company valued the shares at $0.125, which was the market price of the Company’s stock at the conversion date, and charged the amount of $951,239 to loss on modification of debt during the twelve months ended May 31, 2017. The Company entered into the Omnibus Loan Amendment in order to ease the debt burden on the Company and prevent it from defaulting on the Insider Loans.

 

 

Pursuant to the Omnibus Loan Amendment, the following amendments were made to the Insider Loans: (a) the Company reduced the conversion price on the Insider Loans from between $0.75 and $1.07 per share of common stock to $0.25 per share of common stock, in those cases where the conversion price was greater than $0.25, which reduced conversion price exceeded the closing price of the common stock during the three months prior to the Omnibus Loan Amendment; (b) the Company deleted the requirement to issue warrants to purchase the Company’s common stock upon conversion of the Insider Loans; (c) the Company amended one Insider Loan to permit conversion of only the portion of the Insider Loan related to services that were provided to it prior to January 1, 2017; and (d) the Company amended the terms of the Insider Loans where funds were advanced on or after January 1, 2017, which Insider Loans were not converted into the Company’s common stock, to provide for, where not already the case, a 10% interest rate per annum, a $0.25 conversion price per share of common stock, and the deletion of the requirement that the Company issue warrants to purchase its common stock upon conversion of such Insider Loans.

 

On January 10, 2018, effective December 1, 2017, the Company entered into an Omnibus Amendment to Convertible Notes (the “Second Omnibus Loan Agreement”) with Jeffrey I. Binder, an officer and director of the Company, and Newcan Investment Partners LLC, an entity owned by Frank Koretsky, a director of the Company. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to either Mr. Binder or Newcan Investment Partners, LLC as of the date of the Agreement would be increased from $0.25 to $0.3125 per share of common stock.  The remaining terms of such notes remain unchanged.

 

The following tables summarize the Company’s loan balances at February 28, 2019 and May 31, 2018:

 

   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the “Binder Funding Notes”). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.  Also during the year ended May 31, 2018 the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.  During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, Mr. Binder advanced a total of $211,700 to the Company under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company made principal payments to in the amount of $211,837 under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,710 on the Binder Funding Notes. During the nine months ended February 28, 2019, discounts in the aggregate amount of $211,702 related to the beneficial conversion feature of the Binder Funding Notes were charged to additional-paid in capital and amortized to interest expense.

  $ -     $ 137  

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Notes payable to Newcan Investment Partners, LLC (“Newcan”), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the “Newcan Funding Notes”). The Newcan Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.).  During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (“Newcan Convertible Note 8”). During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.

    -       75,000  
                 

Total – Demand Convertible Notes Payable, Related Parties

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable,  Related Parties - Current portion

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable, Related Parties - Long term portion

  $ -     $ -  

 

 

 

Convertible Notes Payable, Related Parties

 

   

February 28,  

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to David Lamadrid (the “Lamadrid Note”) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.  The Lamadrid Note is due eighteen months from the date of issue.  Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $942 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.

 

During the nine months ended February 28, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the nine months ended February 28, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the nine months ended February 28, 2019 the remaining discount in the amount of $30,308 was charged to operations.

  $ -     $ 31,250  
                 

Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the “Binder Convertible Note 9”).  The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.  The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.

 

During the twelve months ended May 31, 2018 and 2017, interest in the amount of $565 and $0 was accrued on Binder Convertible Note 9, respectively. 

 

During the nine months ended February 28, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the nine months ended February 28, 2019, the Company made a principal payment in the amount of $37,500 on the Binder Convertible Note 9. During the nine months ended February 28, 2019 the remaining discount in the amount of $35,610 was charged to operations.

    -       37,500  

 

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the “Newcan Convertible Note 8”).  The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.  This note bears interest at the rate of 10% per annum.  No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.  Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.

 

During the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $1,603 on this note. During the nine months ended February 28, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $57,322 was charged to operations.

    -       -  
                 

Total – Convertible Notes Payable, Related Parties

  $ -     $ 68,750  

Less: Discount

    -       (65,918

)

Convertible Notes Payable, Related Parties, Net of Discounts

  $ -     $ 2,832  
                 

Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion

  $ -     $ 2,832  

Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion

    -       -  

 

 

 

Convertible Notes Payable

 

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to Darling Capital, LLC (the “Darling Note”) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.  The Darling Note is due eighteen months from the date of issue.  Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $40,427 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,447 on this note. During the nine months ended February 28, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the nine months ended February 28, 2019, the remaining discount in the amount of $509,573 was charged to operations.

  $ -     $ 550,000  
                 

Convertible promissory note payable to Efrat Investments, LLC (the “Efrat Note”) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.  The Efrat Note is due eighteen months from the date of issue.  Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $2,974 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $898 on this note. During the nine months ended February 28, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $52,026 was charged to operations.

    -       55,000  

 

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note”) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the twelve months ended May 31, 2018, $23,224 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.

 

During the nine months ended February 28, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000 was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.  Also during the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $39,068 on the YA II PN Note. During the nine months ended February 28, 2019, the holder of the YA II PN Note converted principal in the amount of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock.

    250,000       750,000  
                 

Unsecured convertible note issued to Jay Lasky (the “Lasky Note”), dated May 3, 2018 in the original principal amount of $25,000.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $149 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.

 

During the nine months ended February 28, 2019, $7,152 of the discount was charged to operations. Also during the nine months ended February 28, 2019, the Company accrued interest in the amount of $993 on this note. During the nine months ended February 28, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.

    -       25,000  

 

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note 2”) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the nine months ended February 28, 2019, $167,713 of this discount was charged to operations. Also during the nine months ended February 28 2019, the Company accrued interest in the amount of $29,041 on this note.

    500,000       -  
                 

Convertible debenture in the principal amount of $4,000,000 (the “U.S. Convertible Debenture 1”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1 is convertible into units (the “Convertible Debenture Units”) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 1 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the nine months ended February 28, 2019, $217 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $105,205 on the U.S. Convertible Debenture 1.

    4,000,000       -  
                 

Convertible debenture in the principal amount of $1,000,000 (the “U.S. Convertible Debenture 2”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the nine months ended February 28, 2019, $52 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $26,301 on the U.S. Convertible Debenture 2.

    1,000,000       -  

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture in the principal amount of $100,000 (the “U.S. Convertible Debenture 3”) dated October 24, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the nine months ended February 28, 2019, $60 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,784 on the U.S. Convertible Debenture 3.

    100,000       -  
                 

Convertible debenture in the principal amount of $532,000 (the “U.S. Convertible Debenture 4”) dated October 25, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the nine months ended February 28, 2019, $87 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $14,692 on the U.S. Convertible Debenture 4.

    532,000       -  
                 

Convertible debenture in the principal amount of $150,000 (the “U.S. Convertible Debenture 5”) dated October 26, 2018,  which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the nine months ended February 28, 2019, $67 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $4,110 on the U.S. Convertible Debenture 5.

    150,000       -  

 

 

 

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture payable in the principal amount of $75,000 (the “U.S. Convertible Debenture 6”) dated October 26, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the nine months ended February 28, 2019, $57 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,055 on the U.S. Convertible Debenture 6.

    75,000       -  
                 

Convertible debentures payable in the aggregate principal amount of $12,012,000 (the “Canaccord Debentures”) dated December 12, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures  are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the nine months ended February 28, 2019, $136 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $205,356 on the Canaccord Debentures.

    12,012,000       -  
                 

Total - Convertible Notes Payable

  $ 18,619,000     $ 1,380,000  

Less: Discount

    (8,030,735

)

    (1,295,527

)

Convertible Notes Payable, Net of Discounts

  $ 10,588,265     $ 84,473  
                 

Total - Convertible Notes Payable, Net of Discounts, Current Portion

  $ 398,117     $ 43,401  

Total - Convertible Notes Payable, Net of Discounts, Long-term Portion

  $ 10,190,148     $ 41,072  

 

Discounts on notes payable amortized to interest expense – 3 months ended February 28, 2019 and 2018, respectively

  $ 337,347     $ 818,254  

 

Discounts on notes payable amortized to interest expense – 9 months ended February 28, 2019 and 2018, respectively

  $ 2,481,674     $ 1,391,110  

 

 

 

Beneficial Conversion Features

 

The Darling Note, Efrat Note, Lamadrid Note and YA II PN Notes contain conversion features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income.  The derivative components of the notes were valued at issuance, at conversion, at restructure, and at each period end. 

 

Certain of the Company’s other convertible notes payable contain beneficial conversion features that are not derivatives, but which require valuation in order to determine the discount to the related convertible note payable. The value of these conversion features is calculated using the intrinsic value method, whereby the amount of the discount is calculated as the difference between the conversion price and the market price of the underlying common stock at the date of issuance multiplied by the number of shares issuable.

 

Note 15 – Contingent Liability

 

The terms of the Company’s acquisition of Alternative Solutions, LLC include a payment of $1,000,000 contingent upon the Oasis LLCs achieving certain revenue targets. (see note 3). The fair value of this contingent consideration at the time of the Acquisition Agreement was $678,111 as determined by the Company’s outside valuation consultants. Management has reviewed the value of the contingent consideration, and has concluded that no adjustment is necessary at February 28, 2019.

 

Note 16 – Stockholders’ Equity

 

The Company’s authorized capital stock consists of 250,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share. The Company had 125,814,107 and 50,128,972 shares of common stock issued and outstanding as of February 28, 2019, and May 31, 2018, respectively.

 

The Company recorded imputed interest of $268 and $265 during the three months ended February 28, 2019 and 2018 on related party payables due to a director and officer of the Company. The Company recorded imputed interest of $807 and $804 during the nine months ended February 28, 2019 and 2017 on related party payables due to a director and officer of the Company, and charged this amount to additional paid-in capital.

 

Stock Issued upon Conversion of Notes Payable

 

During the nine months ended February 28, 2019, Darling Capital, holder of a convertible promissory note, converted a total of $565,000, which consisted of $550,000 of principal and $15,000 of accrued interest, into 1,808,000 shares of common stock. 

 

During the nine months ended February 28, 2019, Efrat Investments, holder of a convertible promissory note, converted a total of $57,200, which consisted of $55,000 of principal and $2,200 of accrued interest, into 183,040 shares of common stock. 

 

During the nine months ended February 28, 2019, David Lamadrid, holder of a convertible promissory note, converted a total of $32,497, which consisted of $31,250 of principal and $1,247 of accrued interest, into 103,989 shares of common stock. 

 

During the nine months ended February 28, 2019, Jay Lasky, holder of a convertible promissory note, converted a total of $26,185, which consisted of $25,000 of principal and $1,185 of accrued interest, into 65,462 shares of common stock.

 

During the nine months ended February 28, 2019, Newcan, holder of a convertible promissory note, converted a total of $78,534, which consisted of $75,000 of principal and $3,534 of accrued interest, into 196,336 shares of common stock.

 

During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $280,247, which consisted of $250,000 of principal and $30,247 of accrued interest, into 700,616 shares of common stock.

 

 

During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $256,027 which consisted of $250,000 of principal and $6,027 of accrued interest, into 640,068 shares of common stock.

 

Stock Issued for Services

 

On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of the Company’s restricted common stock in recognition of Mr. Glashow’s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions.  The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.

 

On June 24, 2018, pursuant to the terms of a severance agreement between the Company and David Lamadrid, the Company issued 600,000 shares of restricted common stock to Mr. Lamadrid. These shares were valued at $264,000, $213,320 of which was previously expensed and the remaining $50,680 of which was charged to operations during the nine months ended February 28, 2019.

 

On September 11, 2018, the Company issued 31,250 shares of common stock with a fair value of $25,310 in exchange for legal services previously rendered to the Company. These shares were accrued on February 8, 2018, and were issued from stock payable.

 

Stock Issued for Acquisition

 

On June 27, 2018, the Company issued 22,058,823 shares of its common stock pursuant to the terms of the Alternative Solutions, LLC Acquisition Agreement.  These shares were valued at $15,441,176.  (See note 3).

 

Special Warrants Issued in Offering

 

On June 20, 2018, the Company executed an Agency Agreement with Canaccord Genuity Corp. and closed on a private offering of its special warrants for aggregate gross proceeds of C$13,037,859 (USD$9,785,978). Pursuant to the offering, the Company issued 28,973,020 special warrants at a price of C$0.45 (USD$0.34) per special warrant.  Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.

 

In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.

 

Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.  Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events. 

 

Because the Company did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, the unexercised special warrants were adjusted to entitle the holders to receive 1.1 units instead of one unit of the Company. This resulted in the issuance of an additional 3,042,167 units. This penalty was valued at $7,142,550 and was charged to operations during the three months ended August 31, 2018.

 

On February 28, 2019, all of the special warrants were automatically converted into 33,465,110 shares of common stock and warrants to purchase 33,465,110 shares of common stock for CD$0.65 per share.

 

 

Stock Issued in Navy Capital Offering

 

On July 31, 2018, the Company entered into a Subscription Agreement with Navy Capital Green International, Ltd, (the “Navy Capital Offering”) for 7,500,000 units at a price of $0.40 per unit, or an aggregate amount of $3,000,000.  The units collectively represent (i) 7,500,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of common stock at an exercise price of $0.60 per share of common stock. 

 

In connection with the Navy Capital Offering, between August 8, 2018 and August 10, 2018, the Company entered into five subscription agreements for a total of 6,875,000 units at a price of $0.40 per unit, or an aggregate purchase price of $2,750,000.  The units collectively represent (i) 6,875,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of common stock at an exercise price of $0.60 per share of common stock. 

 

Stock Issued to Officers

 

On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer.  These shares vested four months after issuance.  The shares were valued at $17,500, and were amortized over the vesting period.  As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019. 

 

On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.  These shares were valued at $350,000 and will be amortized over the vesting period.  As of February 28, 2019, $236,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019.

 

On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.  These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019.

 

Stock Issued upon Cashless Exercise of Warrants

 

On August 14, 2018, the Company issued 129,412 shares of common stock for the cashless conversion of 350,000 warrants at an exercise price of $0.75 per share.

 

On September 6, 2018, the Company issued 13,684 shares of common stock upon the cashless exercise of 40,000 warrants at an exercise price of $0.75 per share.

 

On November 14, 2018, the Company issued 5,867 shares of common stock upon the cashless exercise of 25,000 warrants at an exercise price of $0.75 per share.

 

Stock Issued for Settlement

 

On November 1, 2018, the Company issued 50,000 shares of common stock with a fair value of $47,500 pursuant to a legal settlement. There was no gain or loss associated with this transaction.

  

Stock Issued for Compensation for Debenture Offering

 

On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 559,750 shares of common stock as compensation for agent and advisory services. These shares were valued at $376,152, and this amount was charged to operations during the three months ended February 28, 2019.

 

 

Additional Paid-in Capital

 

During the nine months ended February 28, 2019, the Company recorded discounts on two convertible notes payable relating to beneficial conversion features in the aggregate amount of $362,500 on the YA II PN Note 2, and $58,594 on the Newcan Convertible Note 8. Also, during the nine months ended February 28, 2019, a reset event occurred with regard to the YAII PN Note.

 

During the nine months ended February 28, 2019, the Company recorded an original issue discount on the Serenity Wellness Note in the amount of $81,961.

 

On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in the previously issued convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to additional paid-in capital in the aggregate amount of $1,265,751. On June 20, 2018, a reset event occurred in connection with the YA II PN Note (see note 14), and the Company charged the change in fair value of the conversion feature in the amount of $35,833 to additional paid-in capital. This was considered a material modification of the note, and the Company created a new discount to this note in the amount of $750,000, which was charged to additional paid-in capital.

 

During the nine months ended February 28, 2019, the Company recorded discounts on six convertible debentures relating to beneficial conversion features as follows: a discount of $3,254,863 was recorded on the U.S. Convertible Debenture 1; a discount of $813,696 was recorded on the U.S. Convertible Debenture 2; a discount of $75,395 was recorded on the U.S. Convertible Debenture 3; a discount of $416,627 was recorded on the U.S. Convertible Debenture 4; a discount of $120,078 was recorded on the U.S. Convertible Debenture 5; a discount of $60,030 was recorded on the U.S. Convertible Debenture 6; and a discount of $2,938,690 was recorded on the Canaccord Debentures.

 

Warrants

 

On June 27, 2018, the Company incurred a penalty in connection with the WestPark Offering due to the late filing of the registration statement that included the resale of the securities that were sold in such offering.  As a result of the penalty, the Company issued three-year common stock warrants to purchase an aggregate of 1,368,250 shares of the Company’s common stock at an exercise price of $0.50 per share.   In addition, the Company reduced the exercise price of the common stock purchase warrants previously issued to the investors in the WestPark Offering from $0.75 per share to $0.50 per share.  The fair value of the penalty was $941,972; this amount was charged to operations during the three months ended August 31, 2018.

 

On June 20, 2018, in connection with the special warrant offering, the Company issued Canaccord Genuity Corp. 2,317,842 three-year broker warrants at an exercise price of C$0.45 per share as compensation.  Each warrant entitles the holder to purchase one unit, which consists of one share of common stock and a warrant to purchase one share of common stock, for C$0.65 per share. These warrants were valued at $1,495,373, and this amount was charged to operations during the three months ended August 31, 2018.

 

On July 20, 2018, in connection with the Company’s sale of a convertible debenture, the Company issued to YA II PN, Ltd. a five-year common stock purchase warrant to purchase 1,250,000 shares of the Company’s common stock at an initial exercise price of $0.60 per share. 

 

On August 6, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 7,500,000 shares of the Company’s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.

 

On August 8, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 6,875,000 shares of the Company’s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.

 

On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued Canaccord Genuity Corp. 1,074,720 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. The Company, in connection with the issuance of the Canaccord Debentures, issued National Bank Financials Inc. 268,680 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. These warrants were valued at $874,457, and this amount was charged to operations during the three months ended February 28, 2019.

 

 

On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 223,900 three-year agent and advisory warrants to Canaccord Genuity Corp. and 55,975 three-year agent and advisory warrants to National Bank Financials Inc. These warrants were valued at $181,183, and this amount was charged to operations during the three months ended February 28, 2019.

 

The following table summarizes the significant terms of warrants outstanding at February 28, 2019. These warrants were granted as part of financing agreements. This table does not include the special warrants; see Special Warrant section below:

 

 

Range of 

exercise

Prices

   

 

Number of 

warrants

Outstanding

   

 

Weighted 

average

remaining

contractual

life (years)

   

Weighted 

average

exercise

price of

outstanding 

Warrants

   

 

Number of

warrants 

Exercisable

   

Weighted

average

exercise

price of

exercisable 

Warrants

 
$ 0.49       35,782,952       2.73     $ 0.49       35,782,952     $ 0.49  
  0.50       2,736,500       2.98       0.50       2,736,500       0.50  
  0.60       17,500,000       2.76       0.60       17,500,000       0.60  
  0.75       1,042,738       2.37       0.75       1,042,738       0.75  
  0.80       1,343,400       2.79       0.80       1,343,400       0.80  
  1.10       279,875       2.79       1.10       279,875       1.10  
          58,685,465       2.74     $ 0.53       58,685,465     $ 0.53  

 

Transactions involving warrants are summarized as follows. This table does not include the special warrants; see Special Warrant section below.

 

   

Number of

Shares

   

Weighted

Average

Exercise

Price

 

Warrants outstanding at May 31, 2018

    4,700,988     $ 0.62  

Granted

    54,399,477     $ 0.53  

Exercised

    (415,000

)

  $ 0.75  

Cancelled / Expired

    -     $ -  

Warrants outstanding at February 28, 2019

    58,685,465     $ 0.53  

 

Special Warrants

 

On June 20, 2018, the Company sold 28,973,019 special warrants for net proceeds of US$9,785,978.   Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, known as Oasis Cannabis, which was June 28, 2018.

 

All of the special warrants were automatically exercised for units on November 30, 2018. Each unit consists of one share of the Company’s common stock and one three-year warrant to purchase one share of common stock at a price of C$0.65.

 

 

Note 17 – Fair Value of Financial Instruments

 

The Company has issued convertible notes containing beneficial conversion features to Darling, Efrat, David Lamadrid and YA II PN.  One of the features is a ratchet reset provision which, in general, reduces the conversion price should the Company issue equity with an effective price per share that is lower than the stated conversion price in the note. The Company accounts for the fair value of the conversion feature in accordance with ASC 815- Accounting for Derivatives and Hedging and Emerging Issues Task Force (“EITF”) 07-05- Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF 07-05”). The Company carries the embedded derivative on its balance sheet at fair value and accounts for any unrealized change in fair value as a component of its results of operations. The Company also has a contingent liability in connection with the acquisition of Alternative Solutions, (see note 3).

 

The following summarizes the Company’s financial liabilities that are recorded at fair value on a recurring basis at February 28, 2019 and May 31, 2018:

 

   

February 28, 2019

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Contingent liabilities 

  $ -     $ -     $ 678,111     $ 678,111  

 

   

May 31, 2018

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Derivative liabilities

  $ -     $ -     $ 1,265,751     $ 1,265,751  

 

The estimated fair values of the Company’s derivative liabilities are as follows:

 

   

Derivative

 
   

Liability

 

Liabilities Measured at Fair Value

       
         

Balance as of May 31, 2018

  $ 1,265,751  
         

Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018

    (1,265,751

)

         

Balance as of February 28, 2019

  $ -  

 

Note 18 – Commitments and Contingencies

 

In connection with the Company’s planned Colorado operations, on April 17, 2015, pursuant to an Industrial Lease Agreement (the “Lease”), CLS Labs Colorado leased 14,392 square feet of warehouse and office space (the “Leased Real Property”) in a building in Denver, Colorado where certain intended activities, including growing, extraction, conversion, assembly and packaging of cannabis and other plant materials, are permitted by and in compliance with state, city and local laws, rules, ordinances and regulations. The Lease had an initial term of seventy-two (72) months and provided CLS Labs Colorado with two options to extend the term of the lease by up to an aggregate of ten (10) additional years.  In August 2017, as a result of the Company’s decision to suspend its proposed operations in Colorado, CLS Labs Colorado asked its landlord to be relieved from its obligations under the Lease, but the parties have not yet reached an agreement on how to proceed.

 

In August 2017, the Company’s Colorado subsidiary received a demand letter from its Colorado landlord requesting the forfeiture of the $50,000 security deposit, $10,000 in expenses, $15,699 in remaining rent due under the lease agreement and $30,000 to buy out the remaining amounts due under the lease.  These expenses, which are a liability of the Company’s Colorado subsidiary, have been accrued on the balance sheet as of February 28, 2019.

 

 

Employment Agreements

 

CLS Labs and Jeffrey Binder entered into a five-year employment agreement effective October 1, 2014. Under the agreement, Mr. Binder serves as CLS Labs’ Chairman and Chief Executive Officer and is entitled to receive an annual salary of $150,000. Under the agreement, Mr. Binder is also entitled to receive a performance bonus equal to 2% of CLS Labs’ annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of CLS Labs’ common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million.  On April 28, 2015, CLS Labs and the Company entered into an addendum to Mr. Binder’s employment agreement whereby Mr. Binder agreed that following the merger of CLS Labs and a subsidiary of the Company, in addition to his obligations to CLS Labs, he would serve the Company and its subsidiaries in such roles as the Company may request.  In exchange, the Company agreed to assume the obligations of CLS Labs to grant Mr. Binder annual stock options, as referenced above.  Mr. Binder continues to receive an annual salary of $150,000 from CLS Labs for serving as its Chairman, President and Chief Executive Officer. On July 20, 2016, March 31, 2017, August 23, 2017, October 9, 2017, January 5, 2018 and April 6, 2018, the Company issued Mr. Binder convertible notes in exchange for $250,000, $112,500, $62,500, $39,521, $37,500 and $37,500 respectively, in deferred salary, among other amounts owed to Mr. Binder by the Company.  As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Binder in the amount of $0 and $37,500.  

  

Effective August 1, 2015, the Company and Alan Bonsett entered into a five-year employment agreement. Pursuant to the agreement, Mr. Bonsett commenced serving as the Company’s Chief Operating Officer on August 15, 2015. Under the agreement, Mr. Bonsett was entitled to receive an annual salary of $150,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company’s annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of the Company’s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million. Additionally, Mr. Bonsett received a one-time signing bonus of 250,000 (post Reverse-Split) shares of restricted common stock of the Company, valued at $327,500, which became fully vested one year from the effective date of the agreement. Mr. Bonsett, as an owner of Picture Rock Holdings, LLC (“PRH”), was expected to indirectly receive the benefits of the Colorado operations discussed above. Mr. Bonsett agreed to defer his salary effective July 1, 2017; at February 28, 2019, the Company had accrued compensation due to Mr. Bonsett in the amount of $37,500. On October 1, 2017, the Company and Mr. Bonsett, the Company’s Chief Operating Officer, mutually agreed to end his employment with the Company.  Mr. Bonsett may provide consulting services to the Company in the future on an as needed basis.

 

Effective November 30, 2017, the Company and Mr. Lamadrid entered into a one-year employment agreement. Pursuant to the agreement, Mr. Lamadrid commenced serving as the Company’s President and Chief Financial Officer on December 1, 2017. Under the agreement, Mr. Lamadrid was entitled to receive an annual salary of $175,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company’s annual EBITDA, and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of its annual EBITDA. Additionally, Mr. Lamadrid was entitled to a one-time signing bonus of 500,000 shares of restricted common stock of the Company, which were to become fully vested one year from the effective date of the agreement. On July 24, 2018, the Company and Mr. Lamadrid mutually agreed to terminate the employment agreement. Mr. Lamadrid resigned as President and Chief Financial Officer effective as of July 13, 2018. In connection with a severance agreement between the Company and Mr. Lamadrid, the Company paid certain amounts and issued 600,000 shares of common stock to Mr. Lamadrid, and the parties further agreed that neither party would have any further obligations under the Employment Agreement or otherwise after such date. 

 

On July 31, 2018, the Company and Mr. Sillitoe entered into a one-year employment agreement. Pursuant to the agreement, Mr. Sillitoe commenced serving as the Chief Executive Officer of CLS Nevada, Inc. effective July 1, 2018. Under the agreement, Mr. Sillitoe is entitled to receive an annual salary of $150,000. Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc. Additionally, Mr. Sillitoe is entitled to a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Sillitoe remains employed by the Company on such date. As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Sillitoe in the amount of $31,806 and $0.  

 

 

The Company and Mr.  Decatur entered into a one-year employment agreement on July 31, 2018.  Pursuant to the agreement, Mr. Decatur commenced serving as the Chief Operating Officer of CLS Nevada, Inc. on July 1, 2018.  Under the agreement, Mr. Decatur is entitled to receive an annual salary of $150,000.  Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’ common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc.  Additionally, Mr. Decatur is entitled to a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Decatur remains employed by the Company on such date.

 

At February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company, prior to his September 1, 2015 termination, in the amount of $16,250.

 

Note 19 – Related Party Transactions

 

As of February 28, 2019 and May 31, 2018, the Company owed the amount of $0 and $37,500, respectively, to Jeffrey Binder, its Chief Executive Officer, for accrued salary.

 

As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Alan Bonsett, a former officer of the Company prior to his October 1, 2017 separation, in the amount of $37,500 and $37,500, respectively.

 

As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company prior to his September 1, 2015 termination, in the amount of $16,250.

 

As of February 28, 2019 and May 31, 2018, the Company had related party payables in the amount of $17,930 due to officers and directors related to expenses paid on behalf of the Company. The Company imputed interest at the rate of 6% per annum on these liabilities, and recorded imputed interest expense on these liabilities in the amounts of $268 and $265 during the three months ended February 28, 2019 and 2018, respectively.  These interest accruals were charged to additional paid-in capital.

 

On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer. These share vested four months after issuance. The shares were valued at $17,500, and were amortized over the vesting period. As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations.

 

On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $355,000 and will be amortized over the vesting period. As of February 28, 2019, $236,667 had been charged to operations.

 

On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations.

 

On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of restricted common stock in recognition of Mr. Glashow’s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions. The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.

 

 

 

Note 20 – Subsequent Events

 

Mr. Glashow, a director of the Company since 2017, was appointed to serve as President and Chief Operating Officer commencing on March 1, 2019. The Company and Mr. Mr. Glashow entered into a two-year employment agreement and Mr. Glashow commenced serving as the Company’s President and Chief Operating Officer. Under the agreement, Mr. Glashow is entitled to receive an annual salary of $175,000. Further, he is entitled to receive a performance bonus equal to 1% of our annual EBITDA, and annual restricted stock awards in an amount equal to 1% of our annual EBITDA. Additionally, Mr. Glashow is entitled to a one-time signing bonus of 500,000 shares of our restricted common stock, half of which shall vest on March 1, 2020, and half of which shall vest on March 1, 2021.

 

Effective March 1, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note.

 

On March 11, 2019, the Company, through its wholly-owned subsidiary, CLS Massachusetts, Inc., entered into a membership interest purchase agreement with CannAssist, LLC. Pursuant to the terms of the Purchase Agreement, CLS Massachusetts agreed to purchase 80% of the membership interests in CannAssist for a purchase price of $25 million, which will be utilized to fund the build-out of CannAssist’s recreational cannabis grow facility at its leased premises and for initial working capital.

 

 

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

HISTORY AND OUTLOOK

 

We were incorporated on March 31, 2011 as Adelt Design, Inc. to manufacture and market carpet binding art. Production and marketing of carpet binding art never commenced.  On November 20, 2014, we adopted amended and restated articles of incorporation, thereby changing our name to CLS Holdings USA, Inc. Effective December 10, 2014, we effected a reverse stock split of our issued and outstanding common stock at a ratio of 1-for-0.625 (the “Reverse Split”), wherein 0.625 shares of our common stock were issued in exchange for each share of common stock issued and outstanding.

 

On April 29, 2015, the Company, CLS Labs and the “Merger Sub” consummated a merger, whereby the Merger Sub merged with and into CLS Labs, with CLS Labs remaining as the surviving entity. As a result of the merger, we acquired the business of CLS Labs and abandoned our previous business. .

 

CLS Labs was originally incorporated in the state of Nevada on May 1, 2014 under the name RJF Labs, Inc. before changing its name to CLS Labs, Inc. on October 24, 2014. It was formed to commercialize a proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates such as oils, waxes, edibles and shatter. These concentrates may be ingested in a number of ways, including through vaporization via electronic cigarettes (“e-cigarettes”), and used for a variety of pharmaceutical and other purposes. Testing in conjunction with two Colorado growers of this extraction method and conversion process has revealed that it produces a cleaner, higher quality product and a significantly higher yield than the cannabinoid extraction processes currently existing in the marketplace.

 

On April 17, 2015, CLS Labs took its first step toward commercializing its proprietary methods and processes by entering into certain agreements in Colorado through its wholly owned subsidiary, CLS Labs Colorado, with certain Colorado entities, including Picture Rock Holdings, LLC (“PRH”), an entity affiliated with one of our former officers,   During 2017, we suspended our plans to proceed with the Colorado operation due to regulatory delays and have not yet determined if or when we will pursue them again. 

 

We have been issued a U.S. patent with respect to our proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates such as oils, waxes, edibles and shatter. These concentrates may be ingested in a number of ways, including through vaporization via electronic cigarettes, and used for a variety of pharmaceutical and other purposes. Internal testing of this extraction method and conversion process has revealed that it produces a cleaner, higher quality product and a significantly higher yield than the cannabinoid extraction processes currently existing in the marketplace. We have not yet commercialized our proprietary process.  We plan to generate revenues through licensing, fee-for-service and joint venture arrangements related to our proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into saleable concentrates.

 

We intend to monetize our extraction and conversion method and generate revenues through (i) the licensing of our patented proprietary methods and processes to others, (ii) the processing of cannabis for others, and (iii) the purchase of cannabis and the processing and sale of cannabis-related products.  We plan to accomplish this through the acquisition of companies, the creation of joint ventures, through licensing agreements, and through fee-for-service arrangements with growers and dispensaries of cannabis products. We believe that we can establish a position as one of the premier cannabinoid extraction and processing companies in the industry. Assuming we do so, we then intend to explore the creation of our own brand of concentrates for consumer use, which we would sell wholesale to cannabis dispensaries. We believe that we can create a “gold standard” national brand by standardizing the testing, compliance and labeling of our products in an industry currently comprised of small, local businesses with erratic and unreliable product quality, testing practices and labeling. We also plan to offer consulting services through Cannabis Life Sciences Consulting, LLC, which will generate revenue by providing consulting services to cannabis-related businesses, including growers, dispensaries and laboratories, and driving business to our processing facilities.

 

On December 4, 2017, we entered into a Membership Interest Purchase Agreement (the “Acquisition Agreement”) with Alternative Solutions to acquire the outstanding equity interests in three of its subsidiaries (collectively, the “Oasis LLCs”), Serenity Wellness Center LLC d/b/a Oasis Medical Cannabis, Serenity Medical Growers LLC and Serenity Wellness Products LLC.  Pursuant to the Acquisition Agreement, as amended, we paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 on February 5, 2018, for an initial 10% of Alternative Solutions and each of the subsidiaries. At the closing of our purchase of the remaining 90% of the ownership interests in Alternative Solutions and the Oasis LLCs, which occurred on June 27, 2018, we paid the following consideration: $5,995,543 in cash, a $4.0 million promissory note due in December 2019, and $6,000,000 in shares of our common stock. The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because we assumed an additional $204,457 of liabilities.  The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs.  We received final regulatory approval to own the membership interests in the Oasis LLCs on December 12, 2018.

 

 

On January 4, 2018, the Attorney General of the United States issued new written guidance concerning the enforcement of federal laws relating to marijuana. The Attorney General’s memorandum stated that previous DOJ guidance specific to marijuana enforcement, including the memorandum issued by former Deputy Attorney General James Cole on August 29, 2013 (as amended on February 14, 2014, the “Cole Memo”) is unnecessary and is rescinded, effective immediately. The Cole Memo told federal prosecutors that in states that had legalized marijuana, they should use their prosecutorial discretion to focus not on businesses that comply with state regulations, but on illicit enterprises that create harms like selling drugs to children, operating with criminal gangs, and selling across state lines. In addition, since 2014, the federal budget has prohibited the DOJ from using federal funds to prosecute medical cannabis businesses pursuant to a budget rider, which must be renewed annually and is presently unrenewed due to the stalemate over funding the government for fiscal year 2019. The Attorney General has now advised that it will be left to the discretion of the local US attorneys in the various districts to decide how and when to enforce the federal marijuana laws. As a result of the Attorney General’s recent guidance, it is unclear whether and how US attorneys in states with medical and/or recreational marijuana laws will enforce federal laws relating to the prohibition of the possession, ownership or sale of marijuana, among other things. It is also unclear whether any states will challenge the Attorney General’s new pronouncement in the applicable courts. However, as a result of the Attorney General’s new guidance, some banks, clearing brokers and other businesses may cease or limit how they do business with companies in the marijuana business to avoid a possible violation of federal law. It is also possible that some US attorneys may begin enforcing federal laws to prevent marijuana businesses that are otherwise validly operating under state laws, from conducting business. Thus, regardless of whether the Attorney General’s new pronouncement is enforced or found to be lawful, it could have a material adverse impact on the marijuana industry, including our business. 

 

On October 31, 2018, the Company, CLS Massachusetts, Inc., a Massachusetts corporation and a wholly-owned subsidiary of the Company (“CLS Massachusetts”), and In Good Health, Inc., a Massachusetts not-for-profit corporation (“IGH”), which will convert to a for profit corporation within 10 business days following October 31, 2018, entered into an Option Agreement (the “IGH Option Agreement”). Under the terms of the IGH Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the “IGH Option”) during the period beginning on the earlier of the date that is one year after the effective date of the conversion and December 1, 2019 and ending on the date that is 60 days after such date. If CLS Massachusetts exercises the IGH Option, the Company, a wholly-owned subsidiary of the Company and IGH will enter into a merger agreement (the form of which has been agreed to by the parties) (the “IGH Merger Agreement”). At the effective time of the merger contemplated by the IGH Merger Agreement, CLS Massachusetts will pay a purchase price of $47,500,000, subject to reduction as provided in the IGH Merger Agreement, payable as follows: $35 million in cash, $7.5 million in the form of a five-year promissory note, and $5 million in the form of restricted common stock of the Company, plus $2.5 million as consideration for a non-competition agreement with IGH’s President, payable in the form of a five-year promissory note. IGH and certain IGH stockholders holding sufficient aggregate voting power to approve the transactions contemplated by the IGH Merger Agreement have entered into agreements pursuant to which such stockholders have, among other things, agreed to vote in favor of such transactions. On October 31, 2018, as consideration for the IGH Option, the Company made a loan to IGH, in the principal amount of $5,000,000, subject to the terms and conditions set forth in that certain loan agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender. The loan is evidenced by a secured promissory note of IGH, which bears interest at the rate of 6% per annum and matures on October 31, 2021. To secure the obligations of IGH to the Company under the loan agreement and the promissory note, the Company and IGH entered into a security agreement dated as of October 31, 2018, pursuant to which IGH granted to the Company a first priority lien on and security interest in all personal property of IGH. If the Company does not exercise the Option on or prior to the date that is 30 days following the end of the option period, the loan amount will be reduced to $2,500,000 as a break-up fee, subject to certain exceptions set forth in the IGH Option Agreement.

 

On September 13, 2018, we entered into a non-binding letter of intent (the “CannAssist LOI”) with CannAssist, LLC (“CannAssist”) setting forth the terms and conditions upon which we propose to acquire an 80% ownership interest in CannAssist. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the “Leicester Facility”). On November 7, 2018, we amended the CannAssist LOI to extend the termination date to January 15, 2019 and further amended it effective January 15, 2019 to extend the termination date to July 1, 2019.  The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of the 2018 Convertible Debenture Offering (defined below) to fund construction activities at the Leicester Facility.

 

On January 29, 2019, we made a line of credit loan to CannAssist, in the principal amount of up to $500,000, subject to the terms and conditions set forth in that certain Loan Agreement, dated as of January 29, 2019 between CannAssist as the Borrower and the Company as the Lender (the “Loan Agreement”). Any draws on the line of credit in excess of $150,000 will only be made in the sole discretion of the Company. The Loan is evidenced by a secured promissory note of CannAssist (the “CannAssist Note”), which bears interest at the rate of 8% per annum and is personally guaranteed by the two equity owners of CannAssist. Assuming we proceed with the joint venture, it is contemplated that this loan will be rolled into longer term financing and the personal guarantees will be extinguished. If we do not enter into the joint venture, payments on the loan will commence on July 1, 2019 and the CannAssist Note will mature on December 1, 2019.

 

 

To secure the obligations of CannAssist to us under the Loan Agreement and the CannAssist Note, the Company and CannAssist entered into a Security Agreement dated as of January 29, 2019, pursuant to which CannAssist granted to us a first priority lien on and security interest in all personal property of CannAssist.

 

On March 11, 2019, the Company, through our wholly-owned subsidiary, CLS Massachusetts, entered into a membership interest purchase agreement (the “CannAssist Purchase Agreement”) with CannAssist, each of the members of CannAssist, and David Noble, as the members’ representative. Mr. Noble currently serves as the President of IGH, an entity that we hold an option to acquire.

 

Pursuant to the terms of the CannAssist Purchase Agreement, CLS Massachusetts agreed to purchase 80% of the membership interests in CannAssist for a purchase price of $25 million (the “CannAssist Purchase Price”), which will be utilized to fund the build-out of CannAssist’s recreational cannabis grow facility at its leased premises and for initial working capital. The CannAssist Purchase Price will be delivered at the closing of the transactions contemplated by the CannAssist Purchase Agreement. Closing will occur no later than 10 business days after the last of the conditions to closing set forth in Article VII of the CannAssist Purchase Agreement have been satisfied or waived. These conditions include a requirement that CannAssist obtain a provisional license to operate a cannabis grow facility from state and city authorities and that these same authorities have approved a change of control application that permits CLS Massachusetts to own an 80% interest in CannAssist. The CannAssist Purchase Agreement contains customary representations, warranties, covenants, and indemnification provisions subject to certain limitations.

 

Concurrently with the execution of the CannAssist Purchase Agreement, CLS Massachusetts and the other two equity owners of CannAssist agreed upon the terms of an amended and restated operating agreement for CannAssist to be executed upon the closing of the CannAssist Purchase Agreement, and CannAssist entered into an Employment Agreement with Jon Napoli pursuant to which Mr. Napoli will serve as Chief Operating Officer of CannAssist for a term of 5 years, beginning on, and contingent upon, the closing of the transactions contemplated under the CannAssist Purchase Agreement.

 

We incurred a net loss of $9,577,484 for the year ended May 31, 2018, and $24,187,649 for the nine months ended February 28, 2019, resulting in an accumulated deficit as of May 31, 2018 of $18,569,094, which deficit increased to $42,756,743 as of February 28, 2019.  These conditions raise substantial doubt about our ability to continue as a going concern.

 

Results of Operations for the Three Months Ended February 28, 2019 and 2018

 

Revenues

 

We had revenue of $2,372,790 and $0 during the three months periods ended February 28, 2019 and February 28, 2018. The increase in revenue for the three months ended February 28, 2019 was due to our acquisition of the Oasis LLCs.  Our cannabis dispensary accounted for $1,415,260 of our revenue, and our cannabis production accounted for $957,532 of our revenue.

 

Cost of goods sold

 

Our cost of goods sold for the three months ended February 28, 2019 was $1,438,424 compared to cost of goods sold of $0 for the three months ended February 28, 2018. The increase in cost of goods sold for the three months ended February 28, 2019 was due to our acquisition of the Oasis LLCs. Cost of goods sold primarily consisted of $1,342,763 of product cost, $13,323 of licensing fees, $3,344 of supplies and materials, $34,961 of sales tax, $31,393 of other costs of goods sold, and $12,640 of freight. Our gross margin for the three months ended February 28, 2019 was 39%.

 

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased by $3,887,900, or approximately 320%, to $5,102,871 during the three months ended February 28, 2019, compared to $1,214,971 for the three months ended February 28, 2018. The increase in selling, general, and administrative costs was attributable primarily to the costs associated with the Oasis LLCs, which we acquired effective June 27, 2018. The following increases in selling, general, and administrative expenses were associated entirely with the Oasis LLCs: office and facilities expense increased by $179,828; depreciation and amortization increased by $57,775; and insurance expense increased by $88,359.  The following increases in selling, general, and administrative expenses were attributable primarily to the Oasis LLCs and partially to the ongoing implementation of other aspects of our business plan and for general corporate purposes: professional fees increased by $324,593; payroll and related costs increased by $639,519; sales, marketing, and advertising costs increased by $360,232; taxes and licenses increased by $37,776; and travel costs increased by $65,106.  The addition of the Oasis LLCs caused us to add $668,474 to payroll and related costs, and $96,211 to sales, marketing and advertising cost, which contributed to the increase in overall selling, general and administrative costs. The increase in stock-based compensation was largely related to restricted stock we granted to three of our officers, two of whom work with the Oasis LLCs.  Although we expect expenses related to fundraising activities to vary depending on our future growth, we expect operational general and administrative expenses to increase in future periods as we implement our business plan and commence operations.

 

Interest expense

 

Interest expense for the three months ended February 28, 2019 was $662,961, a decrease of $771,353, or 54%, compared to $1,434,314 for the three months ended February 28, 2018.  This decrease was primarily due to a decrease in accrued interest on notes payable, which decreased by $368,578 to $399,576, compared to $768,154 in the comparable period of the prior year due to a decrease in the principal amount of notes payable.  The decrease was also due to a decrease in amortization of discounts on certain of our convertible debt due to beneficial conversion features, which decreased by $273,677 to $337,348 compared to $611,025 in the comparable period of the prior year primarily due to debt conversions that occurred in the third quarter of fiscal 2018. Net interest expense also decreased due to interest income, which was $74,960 during the three months ended February 28, 2019; there was no interest income in the comparable period of the prior year. Interest income is attributable to interest on the IGH loan.  In addition, during the third quarter of fiscal 2019, interest on related party debt decreased by $34,953 compared to the comparable period of the prior year as a result of a decrease in the principal amount of related party notes and loans payable, and interest expense attributable to the amortization of deferred financing decreased by $19,450 compared to the comparable period of the prior year.

  

Change in fair value of derivative liability

 

During the three months ended February 28, 2018, we incurred a gain on the revaluation of derivative liability of $148,227 related to the reset provisions contains in certain of our convertible notes. On June 1, 2018, we adopted ASU 2017-11 and reclassified the aggregate amount of $1,295,751, which was the fair value of the reset provisions embedded in previously issued convertible notes payable and certain warrants with embedded anti-dilutive provisions, from liability to equity. Upon adoption of ASU 2017-11, we were no longer required to treat reset (anti-dilution) provisions as derivative liabilities.

 

Net loss

 

For the reasons above, we incurred a net loss for the three months ended February 28, 2019 of $4,831,466, which was an increase of $2,330,408, or approximately 93%, compared to a net loss of $2,501,058 during the three months ended February 28, 2018.

 

Results of Operations for the Nine Months Ended February 28, 2019 and 2018

 

Revenues

 

We had revenue of $5,529,053 and $0 during the nine months periods ended February 28, 2019 and February 28, 2018. The increase in revenue for the nine months ended February 28, 2019 was due to our acquisition of the Oasis LLCs.  Our cannabis dispensary accounted for $3,574,882 of our revenue, and our cannabis production accounted for $1,954,172 of our revenue.

 

Cost of goods sold

 

Our cost of goods sold for the nine months ended February 28, 2019 was $3,245,035, compared to cost of goods sold of $0 for the nine months ended February 28, 2018. The increase in cost of goods sold for the nine months ended February 28, 2019 was due to our acquisition of the Oasis LLCs. Cost of goods sold primarily consisted of $3,097,660 of product cost, $56,600 of licensing fees, $34,961 of sales tax, $31,393 of other costs of goods sold, $8,717 of supplies and materials, and $15,704 of freight. Our gross margin for the nine months ended February 28, 2019 was 41%.

 

 

Selling, general and administrative expenses

 

Selling, general and administrative expenses increased by $21,640,483, or approximately 1,182%, to $23,472,037 during the nine months ended February 28, 2019, compared to $1,831,554 for the nine months ended February 28, 2018. The increase in selling, general and administrative expenses for the nine months ended February 28, 2019 was primarily due to one-time financing and acquisition costs attributable to the acquisition of the Oasis LLCs, as well as ongoing operational costs of the Oasis LLCs. The one-time financing and acquisition costs consisted primarily of the following costs: the fair value of the special warrants and compensation broker warrants issued to Canaccord in connection with our sale of the special warrants in the amount of $4,438,090; the  fair value of additional warrants and special warrants issued due to the failure to meet certain registration statement filing requirements in connection with the Westpark offering and the Canaccord offering in the amount of $8,084,522; the fair value of 700,000 shares of common stock issued to Star Associates, which is affiliated with one of our directors, for services in connection with the Oasis transaction of $490,000; broker and agent fees and commissions in the amount of $2,350,993, and a foreign exchange loss on conversion of the Canaccord funds from Canadian to U.S. dollars in the amount of $403,588. 

 

The increase in selling, general, and administrative costs was also attributable to the costs associated with operating the Oasis LLCs, which we acquired effective June 27, 2018. The following increases in selling, general, and administrative expenses were associated entirely with the Oasis LLCs: office and facilities expense increased by $337,821; depreciation and amortization increased by $184,268; and insurance costs increased by $178,837. The following increases in selling, general, and administrative expenses were attributable partially to the Oasis LLCs and partially to the ongoing implementation of other aspects of our business plan and general corporate purposes: professional fees increased by $2,188,151, primarily due to the 2018 U.S. Convertible Debenture offering and the 2018 Canaccord Debenture offering; payroll and related costs increased by $1,636,650, of which $1,711,633 was attributable to Oasis; sales, marketing, and advertising costs increased by $1,108,224, of which $322,771 was directly attributable to Oasis; stock based compensation increased by $223,388, of which $230,388 was directly attributable to Oasis; travel costs increased by $212,489; and taxes and licenses increased by $167,478, which was directly attributable to Oasis. Although we expect expenses related to fundraising activities to vary depending on our future growth, we expect general and administrative expenses to increase in future periods as we implement our business plan and commence operations. 

 

Interest expense

 

Interest expense for the nine months ended February 28, 2019 was $2,999,630, an increase of $683,485, or 30%, compared to $2,316,145 for the nine months ended February 28, 2018.  We have recorded discounts on certain of our convertible debt due to beneficial conversion features. Interest expense in connection with the amortization of these discounts increased by $1,090,567 to $2,481,677, compared to $1,391,110 in the comparable period of fiscal 2018 primarily due to the conversion of a note payable, in which the remaining discount was expensed. The increase in interest expense during the nine months ended February 28, 2019 was partially offset by a decrease in accrued interest on notes payable by $170,166 to $610,824 compared to $780,990 in the comparable period of fiscal 2018. This decrease was the result of the removal of the derivative liability associated with the convertible notes payable. Interest on related party debt also decreased by $82,533 to $5,943 for the nine months ended February 28, 2019, compared to $88,476 for the comparable period of the prior year as a result of a decrease in the principal amount of related party notes payable.  Finally, net interest expense also decreased due to interest income, which was $99,618 during the third quarter of fiscal 2019; there was no interest income in the comparable period of the prior year. Interest income is attributable to interest on the IGH loan.

 

Gain on Settlement of Debt

 

During the nine months ended February 28, 2018, we recognized a gain on the settlement of accounts payable in the amount of $3,480 because we repaid an account using our common stock.  There was no comparable transaction during the nine months ended February 28, 2019.

 

Loss on Modification of Debt

 

During the nine months ended February 28, 2018, we recognized a loss on modification of debt in the amount of $29,145 related to the amendment of the Old Main 8% Note. There was no comparable transaction during the nine months ended February 28, 2019.

 

 

Loss on Note Exchange

 

During the nine months ended February 28, 2018, we recognized a loss on the exchange of debt in the amount of $404,082.  This loss related to the exchange of the April 2015 Note for our common stock. There was no comparable transaction during the comparable period of fiscal 2019.

 

Loss on Extinguishment of Debt

 

During the nine months ended February 28, 2018, we recognized a loss on the extinguishment of debt in the amount of $989,032.  This loss related to the exchange of the Old Main 8% Note for our common stock.  There was no comparable transaction during the nine months ended February 28, 2019.

 

Change in fair value of derivative liability

 

During the nine months ended February 28, 2018, we incurred a loss on the revaluation of derivative liability of $25,863 related to reset provisions contained in certain of our convertible notes. On June 1, 2018, we adopted ASU 2017-11 and reclassified the aggregate amount of $1,295,751, which is the fair value of the reset provisions embedded in previously issued convertible notes payable and certain warrants with embedded anti-dilutive provisions, from liability to equity. Upon adoption of ASU 2017-11, we were no longer required to treat reset (anti-dilution) provisions as derivative liabilities.

 

Net loss

 

For the reasons above, we incurred a net loss for the nine months ended February 28, 2019 of $24,187,649, which is an increase of $18,595,308, or approximately 333%, compared to a net loss of $5,592,341 during the nine months ended February 28, 2018.

 

Liquidity and Capital Resources

 

The following table summarizes our total current assets, liabilities and working capital at February 28, 2019 compared to May 31, 2018.

 

   

February 28,

2019

   

May 31,

2018

 

Current Assets

  $ 14,550,351     $ 54,374  

Current Liabilities

  $ 7,144,138     $ 2,689,148  

Working Capital (Deficit)

  $ 7,406,213     $ (2,634,774

)

 

At February 28, 2019, we had working capital of $7,406,213, an increase of $10,040,987 from the working capital deficit of ($2,634,774) we had at May 31, 2018. Our working capital at February 28, 2019 includes $11,972,015 of cash. The increase in working capital was a result of our successful financing activities during the nine months ended February 28, 2019, including $15,535,978 in proceeds from the sale of equity, $18,369,000 from the issuance of convertible notes, and $211,700 from the issuance of related party notes.   We are presently seeking to expand the Oasis and related City Trees businesses in Nevada and are considering other potential acquisitions, including our previously announced potential acquisitions in Massachusetts. Our working capital needs will likely continue to increase, which could result in future working capital deficits, until we complete at least phase 1 of our expansion plan at Oasis. We have operated at a loss since inception.

 

Cash flows used in operating activities were $9,770,345 during the nine months ended February 28, 2019 compared to $909,072 during the nine months ended February 28, 2018, an increase of $8,861,273 or 975%. The increase was primarily due to a net loss of $24,187,649, which was offset by approximately $12,828,575 of non-cash offering costs in connection with our fundraising activities; $866,013 of non-cash compensation paid primarily to officers and consultants; $2,481,674 of amortization of debt discounts, $184,068 of depreciation and amortization expense; and $12,659 of expense from a derivative triggering event.  In addition, there  was a change in the components of net working capital in the net amount of $1,956,492, primarily the result of a note redemption payment in transit in the amount of $964,788, and payments made to our agent in the amount of approximately $1,050,000 to purchase equipment for Oasis. The increase in cash used in operating activities is also related to the acquisition of the Oasis LLCs during fiscal 2019, which operated at a loss. We expect cash flows used in operating activities to improve in the next twelve months as the revenue generated by the Oasis LLCs increases.

 

Cash flows used in investing activities was $11,867,944 during the nine months ended February 28, 2019 compared to $0 during the nine months ended February 28, 2018.  The amounts used during the nine months ended February 28, 2019 consisted of the cash payment of $5,982,710, net of cash acquired of $14,612, in connection with our acquisition of the Oasis LLCs; $735,234 for the purchase of property, plant and equipment for Oasis related to the construction of the extraction and conversion plant, which is part of the expansion plan; and our loans to In Good Health and CannAssist in the aggregate amount of $5,150,000.

 

 

Cash flows provided by financing activities was $33,557,340 during the nine months ended February 28, 2019 compared to $2,903,495 during the nine months ended February 28, 2018.  The increase in cash flows provided by financing activities during the nine months ended February 28, 2019 was primarily due to our receipt of proceeds from the special warrant offering of $9,785,978 and from our sale of common stock of $5,750,000, our receipt of $18,369,000 from the issuance of convertible notes, and advances made by related parties of $211,700. This increase was partially offset by $310,000 due to principal payments on notes, $211,838 due to principal payments on related part notes and $37,500 due to principal payments on convertible related party notes.

 

Third Party Debt

 

The table below summarizes the status of our third party debt and reflects whether such debt remains outstanding, has been repaid, or has been converted into or exchanged for our common stock:

 

Name of Note

 

Original Principal Amount

 

Outstanding or Repaid

 

Payment Details

               

April 2015 Note

  $ 200,000  

Repaid

 

Repaid in part and exchanged in part

               

Old Main 8% Note

  $ 200,000  

Repaid

 

Exchanged for 4,500,000 shares

               

FirstFire Note

  $ 363,000  

Repaid

 

Repaid

               

Darling Capital Note

  $ 550,000  

Repaid

 

Converted into 1,808,000 shares

               

Efrat Investments Note

  $ 55,000  

Repaid

 

Converted into 183,040 shares

               

Todd Blatt

  $ 210,000  

Repaid

 

Repaid

               

AJG Group

  $ 100,000  

Repaid

 

Repaid

               

YA II PN Note

  $ 750,000  

Repaid

 

Repaid

    $ 250,000  

 Repaid

 

$250,000 plus interest converted into 700,616 shares of common stock.

    $ 250,000  

Repaid

 

$250,000 plus interest converted into 640,068 shares of common stock.

               

Oasis Note

  $ 4,000,000  

Outstanding

 

Due December 2019

               

2018 U.S. Convertible Debentures

  $ 5,857,000  

Outstanding

 

Due October 26- 31, 2021

               

Canaccord Debentures

  $ 12,012,000  

Outstanding

 

Due December 2021

 

April 2015 Note

 

On April 29, 2015, we issued a convertible promissory note (the "April 2015 Note") to an unaffiliated individual in the amount of $200,000.  Interest accrued on the April 2015 Note at a rate of 15% per annum. On the first anniversary of the April 2015 Note, all then-accrued interest was due thereunder. Thereafter, principal together with accrued interest was due in eight (8) equal quarterly payments, in arrears, commencing on July 1, 2016.  All outstanding principal and any accumulated unpaid interest thereon was due and payable on the third anniversary of note. At the holder's election, at any time prior to payment or prepayment of the April 2015 Note in full, all principal and accrued interest under the April 2015 Note could be converted in whole, but not in part, into our securities. For each dollar converted, the holder would receive two shares of common stock and a three-year warrant to purchase 1.33 shares of common stock at $0.75 per share.  During the year ended May 31, 2017, we repaid principal in the amount of $100,000 and interest in the amount of $53,837 on this note. 

 

On September 20, 2017, we entered into an exchange agreement, whereby we agreed to exchange the April 2015 Note for 1,500,000 shares of our common stock. The holder of the April 2015 Note had previously sold it for $105,219, which represented the balance due by us, to StarForce Media, Inc., an entity that is not affiliated with us.  We recognized a loss on this exchange in the amount of $404,082, which was charged to operations during the twelve months ended May 31, 2018.  We also

 

 

Old Main 8% Note and Equity Line

 

On March 18, 2016, we issued Old Main Capital, LLC (“Old Main”) an 8% Convertible Promissory Note (the “Old Main 8% Note”) in the principal amount of $200,000 for Old Main’s commitment to enter into an equity line transaction with us and prepare all of the related transaction documents. The Old Main 8% Note bore interest at the rate of 8% per annum. On October 6, 2016, we amended the Old Main 8% Note, among other documents (the “First Amendment”) to defer the commencement of amortization payments on the 8% Note so that they commenced at the earlier of February 3, 2017 or on the date the registration statement with respect to the underlying shares had been declared effective by the SEC.  On such date, we were required to begin to redeem 1/6th of the face amount of the Old Main 8% Note and any accrued but unpaid interest on a monthly basis. Such amortization payment could be made, at our option, in cash or, subject to certain conditions, in our common stock pursuant to a conversion rate equal to the lower of (a) $1.07 or (b) 75% of the lowest VWAP in the twenty (20) consecutive trading days ending on the trading day that is immediately prior to the applicable conversion date. 

  

On November 28, 2016, we entered into a Second Amendment to the Old Main 8% Note issued on March 18 (the “Second Amendment”) to amend the Old Main 8% Note, among other documents, as amended by the First Amendment, in certain respects.  Pursuant to the Second Amendment, among other things, the 8% Note was converted from an installment note to a “balloon” note, with all principal and interest on the 8% Note due on March 18, 2017; the Fixed Conversion Price associated with the Old Main 8% Note was changed to a variable conversion price equal to the lesser of the prior Fixed Conversion Price or 75% of the lowest VWAP in the fifteen trading days ending on the trading day immediately prior to the conversion date; our ability to repay the Old Main 8% Note with our common stock was deleted except pursuant to a voluntary conversion by Old Main; and Old Main was prohibited from selling, per trading day, an amount of our common stock in excess of the greater of $5,000 or 25% of the average number of shares of common stock sold per day for the five trading days preceding the day of sale multiplied by the average daily VWAP during the immediately preceding 5-trading day period.

 

On March 27, 2017, we entered into the third amendment to the Old Main 8% Note, which, among other things, increased the outstanding amount due under the Old Main 8% Note as of March 18, 2017 by 5%.  In exchange for doing so, Old Main agreed to extend the maturity of the Old Main 8% Note until July 1, 2017 and to suspend conversions under the 8% Note until July 1, 2017. 

 

On July 6, 2017, we entered into the fourth amendment to the Old Main 8% Note (the “Fourth Amendment”) to further amend the terms of the Old Main 8% Note.  Pursuant to the Fourth Amendment, the maturity date of the Old Main 8% Note was extended to July 15, 2017 and the outstanding balance of the Old Main 8% Note as of June 30, 2017 was increased by multiplying it by 1.075.  The Fourth Amendment was effective on June 30, 2017.

 

On August 23, 2017, we entered into the fifth amendment to the Old Main 8% Note (the “Fifth Amendment”) to further amend the terms of the Old Main 8% Note.  Pursuant to the Fifth Amendment, the maturity date of the Old Main 8% Note was extended to September 15, 2017 and the outstanding balance remained unchanged.  The Fifth Amendment was effective on July 15, 2017.

 

On September 25, 2017, but effective as of September 15, 2017, we entered into an exchange agreement, whereby we agreed to exchange the Old Main 8% Note for 4,500,000 shares of our common stock. Pursuant to an oral agreement with the original holder of the Old Main 8% Note, principal due under the 8% note was increased by $96,862 to a total of $322,612 prior to the date on which the exchange of the Old Main 8% Note for common stock occurred.

 

On April 18, 2016, we also entered into an equity line agreement with Old Main whereby we may issue and sell to Old Main, at our option from time to time, up to $4,000,000 of our common stock at a purchase price equal to 80% of the lowest VWAP of the common stock during a five day “Valuation Period.”

 

On October 6, 2016, we entered into an amendment to the equity line Agreement to amend the new commitment period, which is 24 months from the date of this amendment.  Second, the equity line agreement was amended to prohibit us from delivering a subsequent put notice from the beginning of any “Valuation Period” until the fourth trading day immediately following the closing associated with the prior put notice.  Third, the beneficial ownership limitation was amended to increase the beneficial ownership limitation to 9.99% and to remove the ability of Old Main to increase or decrease the beneficial ownership limitation. We have not “put” any common stock to Old Main under the equity line Agreement.

 

 

FirstFire Note

 

On November 15, 2017, we entered into a securities purchase agreement with FirstFire Global Opportunities Fund, LLC (“FirstFire”), whereby FirstFire agreed to purchase a 5% senior convertible promissory note in the aggregate principal amount of $363,000 (the “FirstFire Note”) from us due, subject to the terms therein, seven (7) months from the date of issuance, for a purchase price of $330,000.

 

The FirstFire Note bore interest at the rate of 5% per annum. Any past due accrued and unpaid interest to be paid under the FirstFire Note was to bear interest at the lesser of 15% per annum or the maximum rate permitted by applicable law. At any time prior to the 180th day following the date of issuance, we could prepay all or any portion of the principal amount of the FirstFire Note and any accrued and unpaid interest by paying the following amounts:  (i) within the initial 90 days after the date of issuance: 115% multiplied by the principal amount then due plus accrued interest; and (ii) from the 91st day through the 180th day after the date of issuance: 125% multiplied by the principal amount then due plus accrued interest.

 

The FirstFire Note was convertible at any time into shares of our common stock, at the option of the holder, at an initial conversion rate equal $0.40 per share of common stock (the “Fixed Conversion Price”).  Any time on or after the 180th day after the issuance of the FirstFire Note, the conversion price would equal the lower of (a) the Fixed Conversion Price or (b) 75% of the lowest traded price of our common stock in the 20 consecutive trading days immediately prior to the day that we receive the applicable conversion notice.

 

On the closing date, we also issued FirstFire a three-year common stock purchase warrant to purchase 350,000 shares of our common stock at an initial exercise price of $0.75 per share and agreed to issue FirstFire promptly following the closing date 250,000 shares of our restricted common stock as a commitment fee to enter into the purchase agreement and prepare all of the related transaction documents. During the three months ended February 28, 2018, an event occurred that triggered the reduction of the FirstFire Fixed Conversion Price from $0.40 per share to $0.3125 per share.

 

On May 9, 2018, we entered into an amendment to the FirstFire Note, whereby we agreed to make a $50,000 payment on or before May 14, 2018 and a $450,000 payment on or before May 31, 2018 to repay the FirstFire Note in full.  We also agreed to issue an additional warrant to purchase 25,000 shares of our common stock.  In exchange, the note holder agreed that it would not convert the FirstFire Note until after May 31, 2018.  During the twelve months ended May 31, 2018, we made payments of $500,000 on this note, which amounts repaid the FirstFire Note in full.

 

Darling Capital Note

 

On February 5, 2018, we entered into a securities purchase agreement with Darling Capital LLC (“Darling”) whereby Darling agreed to purchase an 8% convertible promissory note in the aggregate principal amount of $550,000 (the “Darling Note”) from us due, subject to the terms therein, eighteen (18) months from the date of issuance, for a purchase price of $500,000.

 

Darling could, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. On the closing date, we also issued Darling a three-year common stock purchase warrant to purchase 400,000 shares of our common stock at an initial exercise price of $0.75 per share.

 

On June 12, 2018, we received a conversion notice from Darling notifying us that it had converted $550,000 in principal and $15,000 of accrued interest into 1,808,000 shares of our common stock.

 

Efrat Investments Note

 

On February 16, 2018, we entered into a securities purchase agreement with Efrat Investments LLC (“Efrat”) whereby Efrat agreed to purchase an 8% convertible promissory note in the aggregate principal amount of $55,000 (the “Efrat Note”) from us due, subject to the terms therein, eighteen (18) months from the date of issuance, for a purchase price of $50,000.

 

Efrat could, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. On the closing date, we also issued Efrat a three-year common stock purchase warrant to purchase 40,000 shares of our common stock at an initial exercise price of $0.75 per share.

 

On August 9, 2018, we received a conversion notice from Efrat notifying us that it had converted $55,000 in principal and $2,200 of accrued interest into 183,040 shares of our common stock.

 

 

The YA II PN, Ltd. Notes

 

On May 11, 2018, we entered into a securities purchase agreement with YA II PN Ltd. (“YA II”), pursuant to which we agreed to sell to YA II, in two closings, (i) convertible debentures in the aggregate principal amount of $1,250,000, plus accrued interest, which may be converted into shares of our common stock, at the discretion of either YA II or us in accordance with the terms of the debentures, and (ii) five-year warrants to purchase an aggregate of 3,125,000 shares of our common stock at $0.60 per share of common stock. At the first closing, which occurred on May 14, 2018, we issued a $750,000 debenture to YA II and warrants to purchase 1,875,000 shares of our common stock. At the second closing, which occurred on July 20, 2018, we issued a $500,000 debenture to YA II and warrants to purchase 1,250,000 additional shares of our common stock.

 

The debentures bear interest at the rate of 8% per annum. If an event of default occurs and for so long as such event of default remains uncured, the interest rate on the debentures shall immediately become 15% per annum and shall remain at such increased interest rate until the applicable event of default is cured.

 

Commencing on December 1, 2018 and on the first day of each month thereafter through July 1, 2019, , subject to certain exceptions, we shall pay to YA II one-eighth of the principal amount of the debentures, plus accrued and outstanding interest (the “Installment Amount”), plus 20% of the of the Installment Amount for Installment Amounts due within 180 days following the date of execution of the purchase agreement, and 25% of the Installment Amount for Installment Amounts due thereafter in cash or by converting such Installment Amount into shares of our common stock. if we have met the applicable conditions for such a conversion and as long as the conversion does not exceed certain maximum amounts. Each Installment Amount will be deferred to the maturity date if the daily dollar volume-weighted average price of our common stock equals or exceeds $0.40 per share for each of the 10 consecutive days preceding the fifth trading day prior to the respective installment date.

 

Pursuant to the terms of the debentures, YA II may elect to convert any portion of the principal and accrued interest under the debentures into our common stock at a fixed conversion price of $0.40 per share. The fixed conversion price may change if certain dilutive events or issuances occur. In addition, we may, at our sole discretion, make an Installment Payment using our common stock if certain conditions have been met. In such case, the applicable conversion price would be equal to 75% of the VWAP of our Common Dtock during the fifteen consecutive trading days immediately preceding such conversion. During the three months ended August 31, 2018, a reset event occurred. As a result, the conversion price of the first YA II PN Note, in the principal amount of $750,000, was reduced to $0.34 per share of common stock. 

 

During the nine months ended February 28, 2019, YA II converted a total of $536,275, which consisted of $500,000 of principal and $36,275 of accrued interest, into 1,340,684 shares of common stock.

 

On March 1, 2019, we redeemed all of the convertible debentures issued to YA II in full for total cash consideration of $964,787.

 

Blatt Note

 

On February 7, 2018, we issued a note payable to Todd Blatt in the amount of $210,000.  This note accrued interest at a rate of 6% per annum and was due on February 7, 2019. This note along with $5,627 of accrued interest was paid on July 20, 2018.

 

AJG Group Note

 

On February 7, 2018, we issued a note payable to AJG Group in the amount of $200,000.  This note accrued interest at a rate of 6% per annum and was due on February 7, 2019.  We made a principal payment in the amount of $100,000 on this note on March 30, 2018; we then made an additional principal payment of $100,000, together with accrued interest in the amount of $3,337, on July 9, 2018.

 

 

Oasis Note

 

On June 27, 2018, we closed on the purchase of the remaining 90% of the membership interests of Alternative Solutions and the Oasis LLCs.  The closing occurred pursuant to the Acquisition Agreement dated December 4, 2017, as amended. On such date, we made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (the “Oasis Note”), and 22,058,823 shares of its common stock. The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because we assumed an additional $204,457 in liabilities. The Oasis Note bears interest at the rate of 6% per annum.  The Oasis Note may be prepaid at any time without penalty.  The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs. We received final regulatory approval to own the membership interests in the Oasis LLCs on December 12, 2018.

 

2018 U.S. Convertible Debenture Offering

 

Between October 25, 2018 and November 2, 2018, we entered into six subscription agreements, pursuant to which we agreed to sell, for an aggregate purchase price of $5,857,000, $5,857,000 in original principal amount of convertible debentures in minimum denominations of $1,000 each.  The debentures bear interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen (18) months following their issuance, being payable by increasing the then-outstanding principal amount of the debentures. The debentures mature on a date that is three years following their issuance.  The debentures are convertible into units at a conversion price of $0.80 per unit.  Each unit consists of (i) one share of our common stock, par value $.001 and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  The debentures have other features, such as mandatory conversion in the event our common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company.  The debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other unsecured obligations of the Company.  Navy Capital and its affiliates purchased $5,000,000 in principal amount of debentures, with the remaining $857,000 in principal amount being purchased by several unaffiliated purchasers.

 

If the debentures are converted, the warrants that would be issued are exercisable from time to time, in whole or in part for three years. The warrants have anti-dilution provisions that provide for an adjustment to the exercise price in the event of a future sale of our common stock at a lower price, subject to certain exceptions as set forth in the warrant. The warrants also provide that we can force their exercise at any time after the bid price of our common stock exceeds $2.20 for a period of 20 consecutive business days.

 

2018 Canaccord Debenture Offering

 

On December 12, 2018, we entered into an agency agreement with two Canadian agents regarding a private offering of up to $40 million of convertible debentures of the Company at an issue price of $1,000 per debenture. The agents sold the convertible debentures on a commercially reasonable efforts private placement basis.  Each debenture is convertible into units of the Company at the option of the holder at a conversion price of $0.80 per unit at any time prior to the close of business on the last business day immediately preceding the maturity date of the debentures, being the date that is three (3) years from the closing date of the offering (the “2018 Canaccord Debenture Offering”). Each unit will be comprised of one share of common stock and a warrant to purchase one-half of a share of common stock. Each warrant will be exercisable for one share of common stock at a price of $1.10 per warrant for a period of 36 months from the closing date.

  

We closed the 2018 Canaccord Debenture Offering on December 12, 2018, issuing $12,012,000 million in 8% senior unsecured convertible debentures at the initial closing.  At the closing, we paid the agents: (A)(i) a cash fee of $354,000 for advisory services provided to us in connection with the offering; (ii) a cash commission of $720,720, equivalent to 6.0% of the aggregate gross proceeds received at the closing of the offering; (B)(i) an aggregate of 184,375 units for advisory services; and (ii) a corporate finance fee equal to 375,375 units, which is the number of units equal to 2.5% of the aggregate gross proceeds received at the closing of the offering divided by the conversion price; and (C)(i) an aggregate of 442,500 advisory warrants; and (ii) 900,900 broker warrants, which was equal to 6.0% of the gross proceeds received at the closing of the offering divided by the conversion price.

 

 

The debentures are unsecured obligations of the Company, rank pari passu in right of payment of principal and interest and were issued pursuant to the terms of a debenture indenture, dated December 12, 2018, between the Company and Odyssey Trust Company as the debenture trustee. The debentures bear interest at a rate of 8% per annum from the closing date, payable on the last business day of each calendar quarter. For a period of 18 months from the closing date, any interest payable shall automatically accrue and be capitalized to the principal amount of the debentures and shall thereafter be deemed to be part of the principal amount of the convertible debentures.

 

Beginning on the date that is four (4) months plus one (1) day following the closing date, we may force the conversion of all of the principal amount of the then outstanding debentures at the conversion price on not less than 30 days’ notice should the daily volume weighted average trading price of our common stock be greater than $1.20 per share for the preceding 10 consecutive trading days.

 

Upon a change of control of the Company, holders of the debentures have the right to require us to repurchase their debentures at a price equal to 105% of the principal amount of the debentures then outstanding plus accrued and unpaid interest thereon. The debentures also contain standard anti-dilution provisions.

 

If, at the time of exercise of any warrant in accordance with the warrant indenture, there is no effective registration statement under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) covering the resale by the holder of a portion of the shares of common stock to be issued upon exercise of the warrant, or the prospectus contained therein is not available for the resale of the shares of common stock by the holder under the U.S. Securities Act by reason of a blackout or suspension of use thereof, then the warrants may be exercised, in part for that portion of the shares of common stock not registered for resale by the holder under an effective registration statement or in whole in the case of the prospectus not being available for the resale of such shares of common stock, at such time by means of a “cashless exercise” in which the holder shall be entitled to receive a number of shares of common stock equal to the quotient obtained by dividing [(A-B) (X)] by (A), where: A = the last volume weighted average price (“VWAP”) for the trading day immediately preceding the time of delivery of the exercise form giving rise to the applicable “cashless exercise”; B = the exercise price of the warrant; and X = the number of shares of common stock that would be issuable upon exercise of the warrant in accordance with the terms of such warrant if such exercise were by means of a cash exercise rather than a cashless exercise.

 

Pursuant to the agency agreement, we granted the agents an option to increase the offering by an additional $6 million in principal amount of debentures, which option was not exercised by the agents prior to the closing date of the offering.

 

We intend to use the net proceeds of the 2018 Canaccord Debenture Offering to make certain payments in connection with the CannAssist Purchase Agreement, to complete phase I of the expansion plan for the Oasis LLCs and/or for general working capital purposes.

 

Related Party Debt

 

David Lamadrid Note

 

On February 26, 2018, we entered into a securities purchase agreement with Mr. David Lamadrid (“Lamadrid”), our former President and Chief Financial Officer, whereby Mr. Lamadrid agreed to purchase an 8% convertible promissory note in the aggregate principal amount of $31,250 (the “Lamadrid Note”) from us due, subject to the terms therein, eighteen (18) months from the date of issuance.

 

Mr. Lamadrid could, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. On the closing date, we also issued Mr. Lamadrid a three-year common stock purchase warrant to purchase 25,000 shares of our common stock at an initial exercise price of $0.75 per share.

 

On August 21, 2018, we received a conversion notice from Mr. Lamadrid notifying us that he had converted $31,250 in principal and $1,247 of accrued interest into 103,989 shares of our common stock.

 

 

Koretsky and Affiliate Notes

 

Between August 11, 2015 and May 31, 2017, we borrowed an aggregate of $1,657,000 from Frank Koretsky, a director of the Company, and $150,000 from CLS CO 2016, LLC and $465,000 from Newcan Investment Partners, LLC (“Newcan”), two entities that are affiliated with Mr. Koretsky.  These loans were unsecured, accrued interest between 6% and 15% per year, were due either on demand or within three years after the date of the applicable note, and, in some cases, were convertible into shares of our common stock and warrants at rates between $0.25 and 1.07 per share.  Effective on May 31, 2017, we entered into the Omnibus Loan Amendment Agreement, whereby the portion of these loans that was advanced prior to December 31, 2017 was converted into our common stock, together with accrued interest on these loans.  As a result of these conversions, Mr. Koretsky, CLS CO 2016. LLC and Newcan converted an aggregate of $1,485,000, $150,000, and $460,000 in principal, and $130,069, 49,247 and $7,747 in accrued interest, into an aggregate of 6,460,276, 636,988 and 1,870,988 shares of common stock at $0.25 per share.  Pursuant to the Omnibus Loan Amendment Agreement, the conversion rate on all of the loans made by Mr. Koretsky, CO CLS 2016, LLC and Newcan was reduced, if applicable, to $0.25 per share and Mr. Koretsky and his affiliates gave up the right to receive warrants upon conversion.  Thus, each of Mr. Koretsky, CLS CO 2016, LLC and Newcan received 4,560,849, 488,159 and 1,433,841 shares of common stock in excess of what they would have received had they converted their loans into common stock prior to the effective date of the Omnibus Loan Amendment Agreement.

 

Between June 1, 2017 and May 31, 2018, we borrowed an aggregate of $145,000 from Newcan Investment Partners, LLC, an entity that is affiliated with Mr. Koretsky.  These loans were unsecured, accrued interest at 10% per year, were due either on demand or within three years after the date of the applicable note, and were convertible into shares of our common stock and warrants at $0.25 per share.  On January 10, 2018, effective December 1, 2017, we entered into the Second Omnibus Loan Agreement with Newcan and Mr. Binder. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to Newcan as of the date of the agreement would be increased from $0.25 to $0.3125 per share of common stock.  The remaining terms of such notes remain unchanged. Following the Second Omnibus Loan Agreement, on March 12, 2018, Newcan converted all of its outstanding convertible loans, which totaled $956,658 in principal and $98,098 in accrued interest, into a total of 3,375,220 shares of our common stock.

 

On August 6, 2018, we issued a convertible promissory note to Newcan, an entity owned by Frank Koretsky, a director of the Company, in the amount of $75,000.00 (the “Newcan Convertible Note 8”), to finalize the terms of repayment with respect to a certain loan made to the Company by Newcan on May 4, 2018, which was converted into 196,336 shares of common stock on October 23, 2018. 

 

Binder Notes

 

Between June 1, 2015 and May 31, 2017, we borrowed an aggregate of $251,800 from Jeffrey Binder, a director and officer of the Company.  These loans were unsecured, accrued interest between 6% and 10% per year, were due either on demand or within three years after the date of the applicable note, and, in some cases, were convertible into shares of our common stock and warrants at rates between $.25 and 1.07 per share.  Effective on May 31, 2017, we entered into the Omnibus Loan Amendment Agreement, whereby the portion of these loans that was advanced prior to May 31, 2017 was converted into our common stock, together with accrued interest on these loans.  As a result of these conversions, Mr. Binder converted an aggregate of $442,750 in principal and $19,427 in accrued interest, into an aggregate of 1,848,708 shares of common stock at $.25 per share.  Pursuant to the Omnibus Loan Amendment Agreement, the conversion rate on all of the loans made by Mr. Binder was reduced, if applicable, to $.25 per share and Mr. Binder gave up the right to receive warrants upon conversion.  Thus, Mr. Binder received 1,127,061 shares of common stock in excess of what he would have received had he converted his loans into common stock prior to the effective date of the Omnibus Loan Amendment Agreement.

 

Between June 1, 2017 and March 31, 2018, we borrowed an aggregate of $204,881 from Mr. Binder.  These loans were unsecured, accrued interest at 10% per year, were due either on demand or within three years after the date of the applicable note, and were convertible into shares of our common stock and warrants at $0.25 per share.  On January 10, 2018, effective December 1, 2017, we entered into the Second Omnibus Loan Agreement with Newcan and Mr. Binder. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to Mr. Binder as of the date of the agreement would be increased from $0.25 to $0.3125 per share of common stock.  The remaining terms of such notes remain unchanged. Following the Second Omnibus Loan Agreement, on March 12, 2018, Mr. Binder converted all of his outstanding convertible loans, which totaled $464,698 in principal and $43,058 in accrued interest, into a total of 1,624,819 shares of our common stock.

 

On April 6, 2018, we issued Binder Convertible Note 9, in the amount of $37,500, to Mr. Binder with respect to certain compensation payable to Mr. Binder as of February 28, 2018, which was repaid in full on August 7, 2018

 

 

Omnibus Loan Amendment Agreements

 

On May 31, 2017, we entered into an Omnibus Loan Amendment Agreement (the “Omnibus Loan Amendment”) with Jeffrey I. Binder, Frank Koretsky, Newcan Investment Partners LLC and CLS CO 2016, LLC (collectively, the “Insiders”).  Pursuant to the Omnibus Loan Amendment, we agreed with the Insiders to amend certain terms of loans the Insiders made to us for working capital purposes, which loans were initially demand loans, and, except for certain loans made in 2017, were later memorialized as convertible loans (the “Insider Loans”), in exchange for the agreement of the Insiders to convert all Insider Loans where funds were advanced prior to January 1, 2017, which total $2,537,750, plus $166,490 of accrued interest thereon, into an aggregate of 10,816,960 shares of our common stock, and forego the issuance of warrants to purchase our common stock upon conversion.  This resulted in the issuance of an additional 7,609,910 shares compared to the original number of shares issuable upon conversion of the Insider Loans prior to the Omnibus Loan Agreement. We valued the shares at $0.125, which was the market price of our stock at the conversion date, and charged the amount of $951,239 to loss on modification of debt during the twelve months ended May 31, 2017.

 

We entered into the Omnibus Loan Amendment in order to ease the debt burden on us and prevent us from defaulting on the Insider Loans. Pursuant to the Omnibus Loan Amendment, the following amendments were made to the Insider Loans: (a) we reduced the conversion price on the Insider Loans from between $0.75 and $1.07 per share of common stock to $0.25 per share of common stock, in those cases where the conversion price was greater than $0.25, which reduced conversion price exceeds the closing price of the common stock during the last three months; (b) we deleted the requirement to issue warrants to purchase our common stock upon conversion of the Insider Loans; (c) we amended one Insider Loan to permit conversion of only the portion of the Insider Loan related to services that were provided to us prior to January 1, 2017; and (d) we amended the terms of the Insider Loans where funds were advanced on or after January 1, 2017, which Insider Loans were not converted into our common stock, to provide for, where not already the case, a 10% interest rate per annum, a $0.25 conversion price per share of common stock, and the deletion of the requirement that we issue warrants to purchase our common stock upon conversion of such Insider Loans.

 

On January 10, 2018, effective December 1, 2017, we entered into the Second Omnibus Loan Agreement with Jeffrey I. Binder, an officer and director of the Company, and Newcan, an entity owned by Frank Koretsky, a director of the Company. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to either Mr. Binder or Newcan as of the date of the such agreement would be increased from $0.25 to $0.3125 per share of common stock.  The remaining terms of such notes remain unchanged.

 

Sales of Equity 

 

WestPark Offering

 

During February and March 2018, we held four closings of the WestPark Offering, whereby we sold units for $1.25 per unit.  Each unit consisted of four shares of common stock and one warrant to purchase one share of our common stock for $0.75 per share.  We sold a total of 1,368,250 units in the WestPark Offering for aggregate gross proceeds of $1,710,313, and aggregate net proceeds of $1,460,918 after deduction of placement agent commissions, a non-accountable expense allowance and expenses associated with the offering. We also issued WestPark Capital, Inc., as placement agent, a five-year warrant to purchase 205,238 units at a price of $1.25 per unit. The unit warrant were valued at $503,655, which amount was charged to operations during the twelve months ended May 31, 2018. We used the proceeds of the WestPark Offering towards deposits due in connection with our acquisition of Oasis Cannabis and for general corporate purposes. During the three months ended August 31, 2018, we issued 1,368,250 four-year warrants at an exercise price of $0.50 per share at a fair value of $941,972 to the investors in the Westpark Offering as a penalty for failure to timely file a registration statement with respect to  the securities we sold to them in the Westpark Offering.

 

The Canaccord Special Warrant Offering

 

On June 20, 2018, we executed an agency agreement with Canaccord Genuity Corp. and closed on a private offering of our special warrants for aggregate gross proceeds of CD$13,037,859 (USD$9,785,978).  In connection therewith, we also entered into a special warrant indenture and a warrant indenture with Odyssey Trust Company, as special warrant agent and warrant agent.

  

Pursuant to the offering, we issued 28,973,014 special warrants at a price of CD$0.45 (USD$0.34) per special warrant.  Each special warrant was automatically exercised, for no additional consideration, into units on November 30, 2018.

 

 

 

Each unit consisted of one share of common stock and a warrant to purchase one share of common stock.  Each warrant was to be exercisable at a price of CD$0.65 for three years after our common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events. Because we did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, each special warrant entitled the holder to receive 1.1 units (instead of one (1) unit); provided, however, that any fractional entitlement to penalty units was rounded down to the nearest whole penalty unit. All special warrants were automatically exercised on November 30, 2018.

 

In connection with the special warrant offering, we paid a cash commission and other fees equal to CD$1,413,267 (USD$1,060,773), a corporate finance fee equal to 1,448,651 special warrants with a fair value of USD$1,413,300, and 2,317,842 broker warrants. Each broker warrant entitles the holder thereof to acquire one unit at a price of CD$0.45 per unit for a period of 36 months from the date that our common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. Our common stock commenced trading on the Canadian Stock Exchange on January 7, 2019. During the three months ended August 31, 2018, we also issued investors 3,042,167 special warrants with a fair value of $7,142,550 as a penalty for failure to timely effect a Canadian prospectus with regard to the securities underlying the special warrants.

 

We used the proceeds for the Canaccord special warrant offering to close the purchase of Oasis and for general corporate purposes.

 

The Navy Capital Investors

 

Effective July 31, 2018, we entered into a subscription agreement with Navy Capital Green International, Ltd., a British Virgin Islands limited company (“Navy Capital”), pursuant to which we agreed to sell to Navy Capital, for a purchase price of $3,000,000, 7,500,000 Units ($0.40 per unit), representing (i) 7,500,000 shares of our common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of our common stock (the “Navy Warrant Shares”) at an exercise price of $0.60 per share of common stock.  The closing occurred on August 6, 2018. In the subscription agreement, we also agreed to file, on or before November 1, 2018, a registration statement with the SEC registering the shares of common stock and Navy Warrant Shares issued to Navy Capital. If we fail to file the registration statement on or before that date, we must issue to Navy Capital an additional number of units equal to ten percent (10%) of the units originally subscribed for by Navy Capital (which will include additional warrants at the original exercise price). The warrant is exercisable from time to time, in whole or in part for three years. The warrant has anti-dilution provisions that provide for an adjustment to the exercise price in the event of a future sale of common stock at a lower price, subject to certain exceptions as set forth in the warrant. The warrant also provides that it is callable at any time after the bid price of our common stock exceeds 120% of the exercise price of the warrant for a period of 20 consecutive business days.

 

Between August 8, 2018 and August 10, 2018, we entered into five subscription agreements, pursuant to which we sold, for an aggregate purchase price of $2,750,000, 6,875,000 Units ($0.40 per unit), representing (i) 6,875,000 shares of our common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of our common stock at an exercise price of $0.60 per share of common stock.  The balance of the terms set forth in the subscription agreements are the same as the terms in the Navy Capital subscription agreement summarized above.

 

We plan to use the proceeds of the Navy Capital offering to fund a portion of the planned expansions at our City Trees and Oasis businesses in Nevada and for general corporate purposes.

 

Liquidity and Capital Needs

 

 Over the next twelve months we will likely require additional capital to cover our projected corporate level cash flow deficits, the implementation of our business plan, including the expansion of our Nevada operation, and the development of other revenue sources, including the potential transactions in connection with the Option Agreement and the CannAssist Purchase Agreement.

 

 

During the next twelve months we expect to complete phase 1 and possibly phase 2 of our expansion plan, which includes the substantial expansion of our grow facility in Nevada. At present, we estimate that we will require up to $3,000,000 to complete phase 1 and up to $2,000,000 to complete phase 2 of this expansion (excluding development of the greenhouse expansion). We expect to fund the cost of this expansion from a portion of the proceeds of the 2018 Canaccord Debenture Offering. We also plan to use the proceeds from this offering to fund certain payments associated with our two proposed Massachusetts acquisitions. We hold an option to purchase IGH for a purchase price that includes $35 million in cash and entered into the CannAssist Purchase Agreement for a purchase price of $25 million in cash, each of which we plan to fund with the proceeds of future equity sales, warrant exercise proceeds and/or loans. Although we believe we will be successful in raising the capital required to close these acquisitions, we have not entered into any definitive agreements with respect to such fundraising and there can be no assurances that we will be able to raise the necessary funds.  We may also pursue additional acquisitions in the next twelve months but we have not entered into any definitive agreements with respect to either additional acquisitions or the capital necessary to finance them.

 

Although our revenues are expected to grow as we expand our operations, our revenues only recently exceeded our Oasis operating costs and we do not yet exceed our Oasis operating costs and corporate overhead. Although we believe we have funds sufficient to sustain our operations at their current level, if we require additional cash, we expect to obtain the necessary funds as described above; however, our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through additional debt and/or equity investments and acquisitions in our industry, successfully execute our business strategy, including our planned expansion and acquisitions, and successfully navigate any changes that may arise in the cannabis regulatory environment. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.

 

Although PRH made one payment to us during fiscal 2018, because we do not know when we will re-visit commencing operations in Colorado, there can be no assurance that PRH will ever generate sufficient cash to repay the $500,000 loan from CLS Labs Colorado or to meet PRH’s obligations under the Licensing Agreement or PRH Equipment Lease. Further, due to the delays we encountered with the construction of our Colorado processing facility, we have placed our proposed Colorado operations on hold and will pursue revenue producing opportunities in other states. 

 

Oasis Cannabis Transaction

 

On December 4, 2017, we entered into the Acquisition Agreement, with Alternative Solutions for us to acquire all of the outstanding equity interests in Alternative Solutions and the Oasis LLCs.  Pursuant to the Acquisition Agreement, we paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 approximately 45 days thereafter and were to receive, upon receipt of applicable regulatory approvals, an initial 10% of each of the Oasis LLCs. Regulatory approvals were received and the 10% membership interests were transferred to us.

 

On June 27, 2018, we closed on the purchase of the remaining 90% of the membership interests in Alternative Solutions and the Oasis LLCs from the owners thereof (excluding Alternative Solutions). The closing consideration was as follows: $5,995,543 in cash, a $4.0 million promissory note due in December 2019, known as the Oasis Note, and $6,000,000 in shares of our common stock. The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities.

 

The number of shares to be issued was computed as follows: $6,000,000 divided by the lower of $1.00 or the conversion price to receive one share of our common stock in our first equity offering of a certain minimum size that commenced in 2018, multiplied by 80%.  This price was determined to be $0.272 per share. The Oasis Note is secured by a first priority security interest over our membership interests in Alternative Solutions and the Oasis LLCs, and by the assets of each of the Oasis LLCs and Alternative Solutions. We also delivered a confession of judgment to a representative of the former owners of Alternative Solutions and the Oasis LLCs (other than Alternative Solutions) that will generally become effective in the event of any event of default under the Oasis Note.

 

A claim has been made that Oasis owes certain amounts to a consultant; Oasis disputes this claim. If we make any payments in connection with this claim post-closing, generally speaking, we will be entitled to deduct the present value of such payments from the principal amount due under the Oasis Note.  This claim has been accrued on the Company’s balance sheet as of February 28, 2019.

 

In May 2020, the former owners of Alternative Solutions and the Oasis LLCs (other than Alternative Solutions) will also be entitled to a $1,000,000 payment from us if the existing dispensary operated by an Oasis LLC has maintained an average revenue of $20,000 per day during the 2019 calendar year. The estimated value of this contingent liability has been accrued on the Company’s balance sheet as of February 28, 2019 as well.

 

 

The transfer of 90% of the membership interests in Alternative Solutions and the Oasis LLCs to us was approved by the State of Nevada on December 12, 2018.

 

Consulting Agreements

 

On July 24, 2018, we issued 700,000 shares of common stock with a fair value of $490,000 to Star Associates for services in connection with the Oasis acquisition. Star Associates is controlled by Andrew Glashow, a director (and current officer) of the Company.

 

Going Concern

 

Our financial statements were prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred continuous losses from operations since inception, have an accumulated deficit of $42,827,826 but had working capital of $7,406,213 at February 28, 2019. The report of our independent auditors for the year ended May 31, 2018, contained a going concern qualification. Our ability to continue as a going concern must be considered in light of the problems, expenses, and complications frequently encountered by early stage companies.

 

Our ability to continue as a going concern is dependent on our ability to generate sufficient cash from operations to meet our cash needs, to borrow capital and to sell equity to support our plans to acquire operating businesses, open processing facilities and finance ongoing operations. There can be no assurance, however, that we will be successful in our efforts to raise additional debt or equity capital and/or that cash generated by our future operations will be adequate to meet our needs. 

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. 

 

 

Critical Accounting Estimates

 

Management uses various estimates and assumptions in preparing our financial statements in accordance with generally accepted accounting principles. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Accounting estimates that are the most important to the presentation of our results of operations and financial condition, and which require the greatest use of judgment by management, are designated as our critical accounting estimates. We have the following critical accounting estimates:

 

Estimates and assumptions used in the valuation of derivative liabilities: Management utilizes a lattice model to estimate the fair value of derivative liabilities. The model includes subjective assumptions that can materially affect the fair value estimates.

 

Recently Issued Accounting Standards 

 

Accounting standards promulgated by the Financial Accounting Standards Board (the “FASB”) are subject to change. Changes in such standards may have an impact on our future financial statements. The following are a summary of recent accounting developments.

 

In August 2016, the FASB issued Accounting Standards Update (an “ASU”) 2016-15, Statement of Cash Flows (Topic 230). The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update was effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. We do not believe that the implementation of this update has had a material impact on our financial statements.

 

In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for us on January 1, 2020. The amendments in this ASU will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.

 

In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for us on January 1, 2018, and will be applied prospectively to an award modified on or after the adoption date. We do not believe that the implementation of this update has had a material impact on our financial statements.

 

Effective June 1, 2018, we adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers. Under ASC 606, we recognize revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on our financial statements as a result of adopting Topic 606.

 

In July 2017, FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.

 

 

When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.

 

Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.

 

On June 1, 2018, we adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.

 

Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.

 

 

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

This item is not applicable as we are currently considered a smaller reporting company.

 

Item 4. Controls and Procedures.

 

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit pursuant to the requirements of the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, among other things, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate, to allow timely decisions regarding required disclosure.

 

Evaluation of Disclosure Controls and Procedures

 

Jeffrey Binder, our Chief Executive Officer and Frank Tarantino, our Chief Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report.  Based on their evaluation, Mr. Binder and Mr. Tarantino concluded that our disclosure controls and procedures are not effective in timely alerting them to material information relating to us that is required to be included in our periodic SEC filings and ensuring that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure, for the following reasons:

 

●         We do not have an independent board of directors or adequate segregation of duties;

 

●         We have not established a formal written policy for the approval, identification and authorization of related party transactions

 

and

 

●         We do not have an independent body to oversee our internal controls over financial reporting and lack segregation of duties due to our limited resources.

 

We plan to rectify these weaknesses by implementing an independent board of directors and hiring additional accounting personnel once we have additional resources to do so.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal controls over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We know of no material pending legal proceedings to which the Company is a party or of which any of its property is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

 

Item 1A. Risk Factors.

 

This item is not applicable as we are currently considered a smaller reporting company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

On April 7, 2019, in connection with an employment contract between Alternative Solutions LLC and Gregg Carlson, we agreed to issue 50,000 shares of restricted common stock to Mr. Carlson.  The issuance of these shares was exempt from registration under the U.S. Securities Act because the shares were granted in a private offering.  All other issuances and sales of unregistered securities during the reporting period were previously reported on Form 8-K.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

None.

 

Item 5. Other Information.

 

None.

 

Item 6. Exhibits.

 

31.1 

Certification by the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act

 

 

31.2 

Certification by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act

 

 

32.1

Certification by the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

 

 

32.2

Certification by the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

 

 

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SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

CLS HOLDINGS USA, INC.

 

 

 

 

 

Date: April 15, 2019

By:

/s/ Jeffrey I. Binder

 

 

 

Jeffrey I. Binder

 

 

 

Chairman and Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

 

 

 

 

Date: April 15, 2019

By:

/s/ Frank Tarantino

 

 

 

Frank Tarantino

 

 

 

Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

 

 

 

 

60

 

 

 

EX-31.1 2 ex_140427.htm EXHIBIT 31.1 ex_140427.htm

 

 

EXHIBIT 31.1

 

CERTIFICATION BY THE PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Jeffrey I. Binder, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of CLS Holdings USA, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.     As the registrant’s certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

April 15, 2019

 

/s/ Jeffrey I. Binder

 

 

 

Jeffrey I. Binder

Chairman and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

 

 

 

 

EX-31.2 3 ex_140428.htm EXHIBIT 31.2 ex_140428.htm

 

 

EXHIBIT 31.2

 

CERTIFICATION BY THE PRINCIPAL FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Frank Tarantino, certify that:

 

1.     I have reviewed this Quarterly Report on Form 10-Q of CLS Holdings USA, Inc.;

 

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.     As the registrant’s certifying officer, I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control for financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.     As the registrant certifying officer, I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

 

 

 

April 15, 2019

 

/s/ Frank Tarantino

 

 

 

Frank Tarantino Chief Financial Officer

(Principal Financial and Accounting Officer)

 

 

 

 

 

EX-32.1 4 ex_140429.htm EXHIBIT 32.1 ex_140429.htm

 

 

EXHIBIT 32.1

 

Certification by the Principal Executive Officer Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

I, Jeffrey I. Binder, certify pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the Quarterly Report on Form 10-Q of CLS Holdings USA, Inc. (the “Company”) for the quarter ended February 28, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 

 

Date: April 15, 2019

 

/s/ Jeffrey I. Binder

 

 

 

Jeffrey I. Binder

Chairman and Chief Executive Officer

 

 

 

(Principal Executive Officer)

 

 

A signed original copy of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

 

EX-32.2 5 ex_140430.htm EXHIBIT 32.2 ex_140430.htm

 

 

EXHIBIT 32.2

 

Certification by the Principal Financial Officer Pursuant to

18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

I, Frank Tarantino, certify pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the Quarterly Report on Form 10-Q of CLS Holdings USA, Inc. (the “Company”) for the quarter ended February 28, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

 

 

 

 

Date: April 15 2019

 

/s/ Frank Tarantino

 

 

 

Frank Tarantino Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

 

A signed original copy of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

 

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Nature of Business and Significant Accounting Policies</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Basis of Presentation</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Principals of Consolidation</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The accompanying consolidated financial statements include the accounts of CLS Holdings USA, Inc., and its wholly owned operating subsidiaries, CLS Nevada, Inc., (&#x201c;CLS Nevada&#x201d;), CLS Labs, Inc. (&#x201c;CLS Labs&#x201d;), CLS Labs Colorado, Inc. (&#x201c;CLS Colorado&#x201d;), CLS Massachusetts, Inc. (&#x201c;CLS Massachusetts&#x201d;), and Alternative Solutions, LLC (&#x201c;Alternative Solutions&#x201d;). Alternative Solutions is the sole owner of the following three entities (collectively, the &#x201c;Oasis LLCs&#x201d;): Serenity Wellness Center, LLC (&#x201c;Serenity Wellness Center&#x201d;); Serenity Wellness Products, LLC (&#x201c;Serenity Wellness Products&#x201d;); and Serenity Wellness Growers, LLC (&#x201c;Serenity Wellness Growers&#x201d;). All material intercompany transactions have been eliminated upon consolidation of these entities.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Nature of Business</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">CLS Holdings USA, Inc. (the &#x201c;Company&#x201d;) was originally incorporated as Adelt Design, Inc. (&#x201c;Adelt&#x201d;) on March 31, 2011 to manufacture and market carpet binding art. Production and marketing of carpet binding art never commenced.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On November 12, 2014, CLS Labs, Inc. (&#x201c;CLS Labs&#x201d;) acquired 10,000,000 shares, or 55.6%, of the outstanding shares of common stock of Adelt from its founder, Larry Adelt. On that date, Jeffrey Binder, the Chairman, President and Chief Executive Officer of CLS Labs, was appointed Chairman, President and Chief Executive Officer of the Company. On November 20, 2014, Adelt adopted amended and restated articles of incorporation, thereby changing its name to CLS Holdings USA, Inc. Effective December 10, 2014, the Company effected a reverse stock split of its issued and outstanding common stock at a ratio of 1-for-0.625 (the &#x201c;Reverse Split&#x201d;), wherein 0.625 shares of the Company&#x2019;s common stock were issued in exchange for each share of common stock issued and outstanding. As a result, 6,250,000 shares of the Company&#x2019;s common stock were issued to CLS Labs in exchange for the 10,000,000 shares that it owned by virtue of the above-referenced purchase from Larry Adelt.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On April 29, 2015, the Company, CLS Labs and CLS Merger Inc., a Nevada corporation and wholly owned subsidiary of CLS Holdings (&#x201c;Merger Sub&#x201d;), entered into an Agreement and Plan of Merger (the &#x201c;Merger Agreement&#x201d;) and completed a merger, whereby CLS Merger Inc. merged with and into CLS Labs, with CLS Labs remaining as the surviving entity (the &#x201c;Merger&#x201d;). Upon the consummation of the Merger, the shares of the common stock of CLS Holdings owned by CLS Labs were extinguished and the former stockholders of CLS Labs were issued an aggregate of 15,000,000 (post Reverse Split) shares of common stock in CLS Holdings in exchange for their shares of common stock in CLS Labs. As a result of the Merger, the Company acquired the business of CLS Labs and abandoned its previous business.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company has been issued a U.S. patent with respect to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates such as oils, waxes, edibles and shatter. These concentrates may be ingested in a number of ways, including through vaporization via electronic cigarettes (&#x201c;e-cigarettes&#x201d;), and used for a variety of pharmaceutical and other purposes. Internal testing of this extraction method and conversion process has revealed that it produces a cleaner, higher quality product and a significantly higher yield than the cannabinoid extraction processes currently existing in the marketplace. The Company has not commercialized its proprietary process or otherwise earned any revenues from it.&#xa0;&#xa0;The Company plans to generate revenues through licensing, fee-for-service and joint venture arrangements related to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into saleable concentrates.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On December 4, 2017, the Company and Alternative Solutions, LLC entered into a Membership Interest Purchase Agreement (the &#x201c;Acquisition Agreement&#x201d;), as amended, for the Company to acquire the Oasis LLCs from Alternative Solutions.&#xa0;Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.&#xa0;&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.&#xa0; At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (the &#x201c;Oasis Note&#x201d;), and 22,058,823 shares of its common stock (the &#x201c;Purchase Price Shares&#x201d;) (collectively, the &#x201c;Closing Consideration&#x201d;). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration.&#xa0; The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018.&#xa0;The Company has adopted a fiscal year end of May 31st.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:28.5pt;">On October 31, 2018, the Company, CLS Massachusetts,, and In Good Health, Inc. (&#x201c;IGH&#x201d;), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the &#x201c;Conversion&#x201d;), entered into an Option Agreement (the &#x201c;Option Agreement&#x201d;). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the &#x201c;Option&#x201d;) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the &#x201c;Option Period&#x201d;). (See note 4). On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the &#x201c;IGH Loan&#x201d;), in the principal amount of $5,000,000 (the &#x201c;IGH Loan Amount&#x201d;), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the &#x201c;IGH Loan Agreement&#x201d;) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the &#x201c;IGH Note Receivable&#x201d;), which bears interest at the rate of 6% per annum and matures on October 31, 2021.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 28.5pt;">On September 13, 2018, we entered into a non-binding letter of intent (the &#x201c;CannAssist LOI&#x201d;) with CannAssist, LLC, a Massachusetts limited liability company (&#x201c;CannAssist&#x201d;), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the &#x201c;Leicester Facility&#x201d;). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Use of Estimates</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Cash and Cash Equivalents</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.&#xa0;&#xa0;The Company had cash and cash equivalents of $11,972,015 and $52,964 as of February 28, 2019 and May 31, 2018, respectively.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Allowance for Doubtful Accounts</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company generates the majority of its revenues and corresponding accounts receivable from the sale of cannabis, and cannabis related products. The Company evaluates the collectability of its accounts receivable considering a combination of factors. In circumstances where it is aware of a specific customer&#x2019;s inability to meet its financial obligations to it, the Company records a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes reserves for bad debts based on past write-off experience and the length of time the receivables are past due. The Company had no bad debts expense during the three and nine months ended February 28, 2019 and 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Segment Reporting</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Under FASB ASC 280-10-50, the Company operates two business segments: Cannabis Dispensary Segment, and Cannabis Production Segment, and will evaluate additional segment disclosure requirements as it expands its operations.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Inventory</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable values. Our cannabis products consists of prepackaged purchased goods ready for resale, along with produced edibles and extracts developed under our production license.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Property, Plant and Equipment</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives.&#xa0;&#xa0;Computer equipment is being depreciated over a three-year period.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Concentrations of Credit Risk</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company maintains its cash in bank deposit accounts and other accounts, the balances of which at times may be uninsured or exceed federally insured limits. From time to time, some of the Company&#x2019;s funds are also held by escrow agents; these funds may not be federally insured. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Advertising and Marketing Costs</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">All costs associated with advertising and promoting products are expensed as incurred with the exception of the amortization of the cost of two major video productions. A music video and reality/lifestyle video were both produced in 2017. The remaining amount that hasn&#x2019;t been expensed is listed on the schedule in Note 7. Total recognized advertising and promotion expenses were $381,082 and $26,549 for the three months ended February 28, 2019 and 2018, respectively; total recognized advertising and promotion expenses were $1,134,322 and $31,797 for the nine months ended February 28, 2019 and 2018, respectively.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Research and Development</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Research and development expenses are charged to operations as incurred. The Company incurred no research and development costs for the three and nine months ended February 28, 2019 and 2018, respectively.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Income Taxes</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company&#x2019;s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. 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. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Fair Value of Financial Instruments</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Pursuant to Accounting Standards Codification (&#x201c;ASC&#x201d;) No. 825 - Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying amount of the Company&#x2019;s cash and cash equivalents, note receivable, notes payable, accounts payable and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of those financial instruments.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 1 - Quoted prices in active markets for identical assets or liabilities.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 3 - Significant unobservable inputs that cannot be corroborated by market data.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Derivative Financial Instruments </font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management&#x2019;s judgment and may impact net income (see note 17).&#xa0; On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Revenue Recognition </font></p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Revenue is primarily generated through the Company&#x2019;s subsidiary, Serenity Wellness Center LLC, d/b/a Oasis Cannabis (&#x201c;Oasis&#x201d;). Oasis operates a 24-hour cannabis dispensary that recognizes revenue from the sale of medical and recreational cannabis products within the State of Nevada.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Revenue from the sale of cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">The Company also recognizes revenue from Serenity Wellness Products LLC and Serenity Wellness Growers LLC, d/b/a City Trees. City Trees recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the State of Nevada:</p><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Premium organic medical cannabis sold wholesale to licensed retailers</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Recreational marijuana cannabis products sold wholesale to distributors and retailers</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Extraction products such as oils and waxes derived from in-house cannabis production</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Processing and extraction services for licensed medical cannabis cultivators in Nevada</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada</p> </td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective June 1, 2018, the Company adopted ASC 606 &#x2014; Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 &#x2014; Revenue Recognition. Under ASC 605. Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of the service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">There was no impact on the Company&#x2019;s financial statements as a result of adopting Topic 606 for the three and nine months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Basic and Diluted Loss Per Share</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock, and convertible debt. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A net loss causes all outstanding stock options and warrants to be antidilutive. As a result, the basic and dilutive losses per common share are the same for the three and nine months ended February 28, 2019 and 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Commitments and Contingencies</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.&#xa0;&#xa0;The Company&#x2019;s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.&#xa0;&#xa0;In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company&#x2019;s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims brought to such legal counsel&#x2019;s attention as well as the perceived merits of the amount of relief sought or expected to be sought therein.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company&#x2019;s financial statements.&#xa0;&#xa0;If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Recent Accounting Pronouncements</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Accounting standards promulgated by the Financial Accounting Standards Board (&#x201c;FASB&#x201d;) are subject to change. Changes in such standards may have an impact on the Company&#x2019;s future financial statements. The following is a summary of recent accounting developments.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In August 2016, the FASB&#xa0;issued Accounting Standards Update (&#x201c;ASU&#x201d;) 2016-15,&#xa0;<i>Statement of Cash Flows (Topic 230).</i>&#xa0;The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted. The Company does not believe the implementation of this update has had a material impact on its financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In January 2017, the FASB issued ASU No. 2017-04,&#xa0;<i>Simplifying the Test for Goodwill Impairment</i>, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit&#x2019;s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for&#xa0;the Company&#xa0;on January 1, 2020. The amendments in this ASU&#xa0;will&#xa0;be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In May 2017, the FASB issued ASU No. 2017-09,&#xa0;<i>Stock Compensation - Scope of Modification Accounting</i>, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity&#xa0;account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for&#xa0;the Company&#xa0;on January 1, 2018, and&#xa0;will&#xa0;be applied prospectively to an award modified on or after the adoption date. The Company does not believe that this standard has had a material effect on its financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective June 1, 2018, the Company adopted Accounting Standards Codification (&#x201c;ASC&#x201d;) 606 &#x2014; Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 &#x2014; Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company&#x2019;s financial statements as a result of adopting Topic 606.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i>Adoption of Accounting Standards&#xa0;</i></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity&#x2019;s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt&#x2014;Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.</p><br/></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Basis of Presentation</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Principals of Consolidation</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The accompanying consolidated financial statements include the accounts of CLS Holdings USA, Inc., and its wholly owned operating subsidiaries, CLS Nevada, Inc., (&#x201c;CLS Nevada&#x201d;), CLS Labs, Inc. (&#x201c;CLS Labs&#x201d;), CLS Labs Colorado, Inc. (&#x201c;CLS Colorado&#x201d;), CLS Massachusetts, Inc. (&#x201c;CLS Massachusetts&#x201d;), and Alternative Solutions, LLC (&#x201c;Alternative Solutions&#x201d;). Alternative Solutions is the sole owner of the following three entities (collectively, the &#x201c;Oasis LLCs&#x201d;): Serenity Wellness Center, LLC (&#x201c;Serenity Wellness Center&#x201d;); Serenity Wellness Products, LLC (&#x201c;Serenity Wellness Products&#x201d;); and Serenity Wellness Growers, LLC (&#x201c;Serenity Wellness Growers&#x201d;). All material intercompany transactions have been eliminated upon consolidation of these entities.</p></div> 0.625 6250000 10000000 15000000 250000 1800000 0.10 0.90 5995543 4000000 22058823 6200000 204457 5000000 0.06 0.80 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Use of Estimates</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Cash and Cash Equivalents</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.&#xa0;&#xa0;The Company had cash and cash equivalents of $11,972,015 and $52,964 as of February 28, 2019 and May 31, 2018, respectively.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Allowance for Doubtful Accounts</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company generates the majority of its revenues and corresponding accounts receivable from the sale of cannabis, and cannabis related products. The Company evaluates the collectability of its accounts receivable considering a combination of factors. In circumstances where it is aware of a specific customer&#x2019;s inability to meet its financial obligations to it, the Company records a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes reserves for bad debts based on past write-off experience and the length of time the receivables are past due. The Company had no bad debts expense during the three and nine months ended February 28, 2019 and 2018.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Segment Reporting</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Under FASB ASC 280-10-50, the Company operates two business segments: Cannabis Dispensary Segment, and Cannabis Production Segment, and will evaluate additional segment disclosure requirements as it expands its operations.</p></div> 2 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Inventory</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable values. Our cannabis products consists of prepackaged purchased goods ready for resale, along with produced edibles and extracts developed under our production license.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Property, Plant and Equipment</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives.&#xa0;&#xa0;Computer equipment is being depreciated over a three-year period.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Concentrations of Credit Risk</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company maintains its cash in bank deposit accounts and other accounts, the balances of which at times may be uninsured or exceed federally insured limits. From time to time, some of the Company&#x2019;s funds are also held by escrow agents; these funds may not be federally insured. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Advertising and Marketing Costs</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">All costs associated with advertising and promoting products are expensed as incurred with the exception of the amortization of the cost of two major video productions. A music video and reality/lifestyle video were both produced in 2017. The remaining amount that hasn&#x2019;t been expensed is listed on the schedule in Note 7. Total recognized advertising and promotion expenses were $381,082 and $26,549 for the three months ended February 28, 2019 and 2018, respectively; total recognized advertising and promotion expenses were $1,134,322 and $31,797 for the nine months ended February 28, 2019 and 2018, respectively.</p></div> 381082 26549 1134322 31797 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Research and Development</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Research and development expenses are charged to operations as incurred. The Company incurred no research and development costs for the three and nine months ended February 28, 2019 and 2018, respectively.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Income Taxes</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company&#x2019;s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. 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. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Fair Value of Financial Instruments</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Pursuant to Accounting Standards Codification (&#x201c;ASC&#x201d;) No. 825 - Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying amount of the Company&#x2019;s cash and cash equivalents, note receivable, notes payable, accounts payable and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of those financial instruments.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 1 - Quoted prices in active markets for identical assets or liabilities.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Level 3 - Significant unobservable inputs that cannot be corroborated by market data.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Derivative Financial Instruments </font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management&#x2019;s judgment and may impact net income (see note 17).&#xa0; On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Revenue Recognition </font></p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Revenue is primarily generated through the Company&#x2019;s subsidiary, Serenity Wellness Center LLC, d/b/a Oasis Cannabis (&#x201c;Oasis&#x201d;). Oasis operates a 24-hour cannabis dispensary that recognizes revenue from the sale of medical and recreational cannabis products within the State of Nevada.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Revenue from the sale of cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">The Company also recognizes revenue from Serenity Wellness Products LLC and Serenity Wellness Growers LLC, d/b/a City Trees. City Trees recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the State of Nevada:</p><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Premium organic medical cannabis sold wholesale to licensed retailers</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Recreational marijuana cannabis products sold wholesale to distributors and retailers</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Extraction products such as oils and waxes derived from in-house cannabis production</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Processing and extraction services for licensed medical cannabis cultivators in Nevada</p> </td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" style="width:100%;text-indent:0;font-family:'Times New Roman', Times, serif;font-size:10pt;"> <tr> <td style="vertical-align:middle;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> </td> <td style="vertical-align:top;width:1.7%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#x25cf;</p> </td> <td style="vertical-align:top;width:96.6%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada</p> </td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective June 1, 2018, the Company adopted ASC 606 &#x2014; Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 &#x2014; Revenue Recognition. Under ASC 605. Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of the service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">There was no impact on the Company&#x2019;s financial statements as a result of adopting Topic 606 for the three and nine months ended February 28, 2019</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Basic and Diluted Loss Per Share</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock, and convertible debt. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A net loss causes all outstanding stock options and warrants to be antidilutive. As a result, the basic and dilutive losses per common share are the same for the three and nine months ended February 28, 2019 and 2018.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Commitments and Contingencies</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.&#xa0;&#xa0;The Company&#x2019;s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.&#xa0;&#xa0;In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company&#x2019;s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims brought to such legal counsel&#x2019;s attention as well as the perceived merits of the amount of relief sought or expected to be sought therein.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company&#x2019;s financial statements.&#xa0;&#xa0;If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.</p></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Recent Accounting Pronouncements</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Accounting standards promulgated by the Financial Accounting Standards Board (&#x201c;FASB&#x201d;) are subject to change. Changes in such standards may have an impact on the Company&#x2019;s future financial statements. The following is a summary of recent accounting developments.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In August 2016, the FASB&#xa0;issued Accounting Standards Update (&#x201c;ASU&#x201d;) 2016-15,&#xa0;<i>Statement of Cash Flows (Topic 230).</i>&#xa0;The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted. The Company does not believe the implementation of this update has had a material impact on its financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In January 2017, the FASB issued ASU No. 2017-04,&#xa0;<i>Simplifying the Test for Goodwill Impairment</i>, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit&#x2019;s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for&#xa0;the Company&#xa0;on January 1, 2020. The amendments in this ASU&#xa0;will&#xa0;be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In May 2017, the FASB issued ASU No. 2017-09,&#xa0;<i>Stock Compensation - Scope of Modification Accounting</i>, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity&#xa0;account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for&#xa0;the Company&#xa0;on January 1, 2018, and&#xa0;will&#xa0;be applied prospectively to an award modified on or after the adoption date. The Company does not believe that this standard has had a material effect on its financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective June 1, 2018, the Company adopted Accounting Standards Codification (&#x201c;ASC&#x201d;) 606 &#x2014; Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 &#x2014; Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company&#x2019;s financial statements as a result of adopting Topic 606.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><i>Adoption of Accounting Standards&#xa0;</i></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity&#x2019;s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt&#x2014;Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.</p></div> 1265751 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 2&#xa0;&#x2013; Going Concern</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As shown in the accompanying financial statements, the Company has incurred net losses from operations resulting in an accumulated deficit of $42,756,743 as of February 28, 2019. The Company&#x2019;s auditors stated in their opinion on the Company&#x2019;s financial statements for the year ended May 31, 2018 that there was substantial doubt about the Company&#x2019;s ability to continue as a going concern, and that further losses were anticipated in the development of the Company&#x2019;s business raising substantial doubt about the Company&#x2019;s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company began generating revenue from operations with the Acquisition of Alternative Solutions on June 27, 2018 (note 3). Management intends to finance operating costs over the next twelve months with loans, the proceeds from the sale of securities, and/or revenues from operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.</p><br/></div> <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 3&#xa0;&#x2013; Acquisition of Alternative Solutions, LLC</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 27, 2018, the Company closed on the purchase of all of the membership interests in Alternative Solutions and its three operating subsidiaries (collectively, the &#x201c;Oasis LLCs&#x201d;) from the members of such entities (other than Alternative Solutions).&#xa0; The Oasis LLCs operate a fully integrated cannabis business in Las Vegas, Nevada, including a grow; extraction, conversion and processing facility; and a retail dispensary.&#xa0; The closing occurred pursuant to a Membership Interest Purchase Agreement (the &#x201c;Acquisition Agreement&#x201d;) entered into between the Company and Alternative Solutions on December 4, 2017, as amended.&#xa0; Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.&#xa0; The revised structure of the transaction is referenced in the Oasis Note, which modified the Acquisition Agreement.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.&#xa0; At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (see note 14), (the &#x201c;Oasis Note&#x201d;), and 22,058,823 shares of its common stock (see note 16), (the &#x201c;Purchase Price Shares&#x201d;) (collectively, the &#x201c;Closing Consideration&#x201d;). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration (see note 16).&#xa0; The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The number of Purchase Price Shares was equal to 80% of the offering price of the Company&#x2019;s common stock in its last equity offering, which price was $0.34 per share.&#xa0; The Oasis Note is secured by a first priority security interest over the membership interests in Alternative Solutions and the Oasis LLCs, as well as by the assets of the Oasis LLCs.&#xa0; The Company also delivered a confession of judgment to a representative of the sellers that will become effective, in general, if the Company defaults under the Oasis Note.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">A claim has been made that Oasis owes certain amounts to a consultant; Oasis disputes this claim. &#xa0;If the Company makes any payments in connection with this claim post-closing, generally speaking, the Company will be entitled to deduct the present value of such payments from the principal amount due under the Oasis Note.&#xa0; This claim has been accrued on the Company&#x2019;s balance sheet as of February 28, 2019.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The sellers are also entitled to a $1,000,000 payment from the Company on May 30, 2020 if the Oasis LLCs have maintained an average revenue of $20,000 per day during the 2019 calendar year. The fair value of this contingent consideration was $678,111 as determined by the Company&#x2019;s outside valuation consultants. This amount is recorded as contingent liability on the Company&#x2019;s balance sheet at February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The acquisition date estimated fair value of the consideration transferred totaled $27,975,650, which consisted of the following:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 81%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Initial purchase price</p> </td> <td id="new_id-2587" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2588" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2589" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,050,000</td> <td id="new_id-2590" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Cash paid in connection with transaction</p> </td> <td id="new_id-2591" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2592" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2593" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">5,995,543</td> <td id="new_id-2594" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Note payable</p> </td> <td id="new_id-2595" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2596" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2597" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">3,810,820</td> <td id="new_id-2598" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Contingent consideration</p> </td> <td id="new_id-2599" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2600" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2601" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-2602" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Common stock</p> </td> <td id="new_id-2603" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2604" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2605" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">15,441,176</td> <td id="new_id-2606" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total purchase price</p> </td> <td id="new_id-2607" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2608" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2609" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">27,975,650</td> <td id="new_id-2610" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td>&#xa0;</td> <td id="new_id-2611">&#xa0;</td> <td id="new_id-2612">&#xa0;</td> <td id="new_id-2613">&#xa0;</td> <td id="new_id-2614">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net tangible assets</p> </td> <td id="new_id-2615" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2616" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2617" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">595,151</td> <td id="new_id-2618" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intangible assets</p> </td> <td id="new_id-2619" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2620" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2621" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,637,600</td> <td id="new_id-2622" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Goodwill</p> </td> <td id="new_id-2623" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2624" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2625" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">25,742,899</td> <td id="new_id-2626" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total purchase price</p> </td> <td id="new_id-2627" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2628" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2629" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">27,975,650</td> <td id="new_id-2630" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:35.9pt;">The above estimated fair value of the intangible assets is based on a preliminary purchase price allocation prepared by a third party valuation expert.&#xa0; During the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.&#xa0;&#xa0;After the preliminary purchase price allocation period, the Company may record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Pro forma results</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:35.9pt;">The following table sets forth the unaudited pro forma results of the Company as if the acquisition of the Oasis LLCs was effective on the first day of each of the three and nine months periods presented.&#xa0;&#xa0;These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2631" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="6" id="new_id-2632" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Three months ended February 28,</b></b></p> </td> <td id="new_id-2633" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2634" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2635" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2636" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2637" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2638" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2639" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2640" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2641" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2642" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2643" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2644" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2645" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Revenues</p> </td> <td id="new_id-2646" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2647" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2648" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,372,790</td> <td id="new_id-2649" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2650" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2651" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2652" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,827,999</td> <td id="new_id-2653" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net loss</p> </td> <td id="new_id-2654" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2655" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2656" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(12,850,356</td> <td id="new_id-2657" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2658" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2659" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2660" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(10,839,019</td> <td id="new_id-2661" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Basic net loss per share</p> </td> <td id="new_id-2662" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2663" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2664" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.10</td> <td id="new_id-2665" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2666" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2667" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2668" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.17</td> <td id="new_id-2669" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Diluted net loss per share</p> </td> <td id="new_id-2670" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2671" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2672" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.10</td> <td id="new_id-2673" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2674" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2675" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2676" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.17</td> <td id="new_id-2677" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - basic</p> </td> <td id="new_id-2678" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2679" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2680" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">124,346,650</td> <td id="new_id-2681" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2682" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2683" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2684" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">62,460,767</td> <td id="new_id-2685" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - diluted</p> </td> <td id="new_id-2686" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2687" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2688" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">124,346,650</td> <td id="new_id-2689" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2690" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2691" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2692" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">62,460,767</td> <td id="new_id-2693" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2694" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="6" id="new_id-2695" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Nine months ended February 28,</b></b></p> </td> <td id="new_id-2696" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2697" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2698" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2699" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2700" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2701" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2702" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2703" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2704" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2705" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2706" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2707" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2708" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Revenues</p> </td> <td id="new_id-2709" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2710" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2711" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">6,299,932</td> <td id="new_id-2712" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2713" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2714" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2715" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">5,139,455</td> <td id="new_id-2716" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net loss</p> </td> <td id="new_id-2717" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2718" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2719" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(24,402,155</td> <td id="new_id-2720" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2721" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2722" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2723" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(14,632,294</td> <td id="new_id-2724" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Basic net loss per share</p> </td> <td id="new_id-2725" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2726" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2727" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.26</td> <td id="new_id-2728" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2729" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2730" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2731" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.25</td> <td id="new_id-2732" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Diluted net loss per share</p> </td> <td id="new_id-2733" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2734" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2735" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.26</td> <td id="new_id-2736" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2737" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2738" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2739" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.25</td> <td id="new_id-2740" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - basic</p> </td> <td id="new_id-2741" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2742" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2743" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">95,132,835</td> <td id="new_id-2744" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2745" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2746" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2747" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">58,988,122</td> <td id="new_id-2748" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - diluted</p> </td> <td id="new_id-2749" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2750" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2751" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">95,132,835</td> <td id="new_id-2752" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2753" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2754" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2755" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">58,988,122</td> <td id="new_id-2756" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> 3 The number of Purchase Price Shares was equal to 80% of the offering price of the Company&#x2019;s common stock in its last equity offering, which price was $0.34 per share. 1000000 20000 678111 27975650 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> The acquisition date estimated fair value of the consideration transferred totaled $27,975,650, which consisted of the following:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 81%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Initial purchase price</p> </td> <td id="new_id-2587" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2588" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2589" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,050,000</td> <td id="new_id-2590" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Cash paid in connection with transaction</p> </td> <td id="new_id-2591" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2592" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2593" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">5,995,543</td> <td id="new_id-2594" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Note payable</p> </td> <td id="new_id-2595" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2596" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2597" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">3,810,820</td> <td id="new_id-2598" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Contingent consideration</p> </td> <td id="new_id-2599" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2600" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2601" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-2602" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Common stock</p> </td> <td id="new_id-2603" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2604" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2605" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">15,441,176</td> <td id="new_id-2606" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total purchase price</p> </td> <td id="new_id-2607" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2608" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2609" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">27,975,650</td> <td id="new_id-2610" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td>&#xa0;</td> <td id="new_id-2611">&#xa0;</td> <td id="new_id-2612">&#xa0;</td> <td id="new_id-2613">&#xa0;</td> <td id="new_id-2614">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net tangible assets</p> </td> <td id="new_id-2615" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2616" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2617" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">595,151</td> <td id="new_id-2618" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intangible assets</p> </td> <td id="new_id-2619" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2620" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2621" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,637,600</td> <td id="new_id-2622" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Goodwill</p> </td> <td id="new_id-2623" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2624" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2625" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">25,742,899</td> <td id="new_id-2626" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total purchase price</p> </td> <td id="new_id-2627" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2628" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2629" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">27,975,650</td> <td id="new_id-2630" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 2050000 3810820 678111 15441176 595151 1637600 25742899 27975650 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2631" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="6" id="new_id-2632" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Three months ended February 28,</b></b></p> </td> <td id="new_id-2633" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2634" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2635" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2636" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2637" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2638" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2639" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2640" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2641" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2642" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2643" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2644" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2645" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Revenues</p> </td> <td id="new_id-2646" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2647" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2648" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,372,790</td> <td id="new_id-2649" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2650" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2651" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2652" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,827,999</td> <td id="new_id-2653" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net loss</p> </td> <td id="new_id-2654" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2655" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2656" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(12,850,356</td> <td id="new_id-2657" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2658" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2659" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2660" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(10,839,019</td> <td id="new_id-2661" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Basic net loss per share</p> </td> <td id="new_id-2662" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2663" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2664" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.10</td> <td id="new_id-2665" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2666" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2667" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2668" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.17</td> <td id="new_id-2669" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Diluted net loss per share</p> </td> <td id="new_id-2670" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2671" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2672" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.10</td> <td id="new_id-2673" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2674" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2675" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2676" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.17</td> <td id="new_id-2677" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - basic</p> </td> <td id="new_id-2678" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2679" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2680" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">124,346,650</td> <td id="new_id-2681" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2682" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2683" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2684" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">62,460,767</td> <td id="new_id-2685" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - diluted</p> </td> <td id="new_id-2686" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2687" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2688" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">124,346,650</td> <td id="new_id-2689" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2690" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2691" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2692" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">62,460,767</td> <td id="new_id-2693" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2694" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="6" id="new_id-2695" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Nine months ended February 28,</b></b></p> </td> <td id="new_id-2696" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2697" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2698" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2699" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2700" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2701" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2702" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2703" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2704" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2705" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2706" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2707" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">(unaudited)</p> </td> <td id="new_id-2708" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Revenues</p> </td> <td id="new_id-2709" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2710" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2711" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">6,299,932</td> <td id="new_id-2712" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2713" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2714" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2715" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">5,139,455</td> <td id="new_id-2716" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Net loss</p> </td> <td id="new_id-2717" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2718" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2719" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(24,402,155</td> <td id="new_id-2720" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2721" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2722" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2723" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(14,632,294</td> <td id="new_id-2724" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Basic net loss per share</p> </td> <td id="new_id-2725" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2726" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2727" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.26</td> <td id="new_id-2728" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2729" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2730" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2731" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.25</td> <td id="new_id-2732" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Diluted net loss per share</p> </td> <td id="new_id-2733" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2734" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2735" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.26</td> <td id="new_id-2736" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2737" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2738" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2739" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(0.25</td> <td id="new_id-2740" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - basic</p> </td> <td id="new_id-2741" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2742" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2743" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">95,132,835</td> <td id="new_id-2744" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2745" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2746" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2747" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">58,988,122</td> <td id="new_id-2748" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Weighted average shares - diluted</p> </td> <td id="new_id-2749" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2750" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2751" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">95,132,835</td> <td id="new_id-2752" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2753" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2754" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2755" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">58,988,122</td> <td id="new_id-2756" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 2372790 1827999 6299932 5139455 -12850356 -10839019 -24402155 -14632294 -0.10 -0.17 -0.26 -0.25 -0.10 -0.17 -0.26 -0.25 124346650 62460767 95132835 58988122 124346650 62460767 95132835 58988122 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 4 &#x2013; Joint Venture and Option Transaction </b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>&#xa0;</b><font style="text-decoration:underline">In Good Health</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On October 31, 2018, the Company, CLS Massachusetts, Inc., a Massachusetts corporation and a wholly-owned subsidiary of the Company (&#x201c;CLS Massachusetts&#x201d;), and In Good Health, Inc. (&#x201c;IGH&#x201d;), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the &#x201c;Conversion&#x201d;), entered into an Option Agreement (the &#x201c;Option Agreement&#x201d;). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the &#x201c;Option&#x201d;) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the &#x201c;Option Period&#x201d;). If CLS Massachusetts exercises the Option, the Company, a wholly-owned subsidiary of the Company and IGH will enter into a merger agreement (the form of which has been agreed to by the parties) (the &#x201c;IGH Merger Agreement&#x201d;). At the effective time of the merger contemplated by the IGH Merger Agreement, CLS Massachusetts will pay a purchase price of $47,500,000, subject to reduction as provided in the IGH Merger Agreement, payable as follows: $35 million in cash, $7.5 million in the form of a five-year promissory note, and $5 million in the form of restricted common stock of the Company, plus $2.5 million as consideration for a non-competition agreement with IGH&#x2019;s President, payable in the form of a five-year promissory note.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">IGH and certain IGH stockholders holding sufficient aggregate voting power to approve the transactions contemplated by the IGH Merger Agreement have entered into agreements pursuant to which such stockholders have, among other things, agreed to vote in favor of such transactions.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the &#x201c;IGH Loan&#x201d;), in the principal amount of $5,000,000 (the &#x201c;IGH Loan Amount&#x201d;), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the &#x201c;IGH Loan Agreement&#x201d;) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the &#x201c;IGH Note Receivable&#x201d;), which bears interest at the rate of 6% per annum and matures on October 31, 2021.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">To secure the obligations of IGH to the Company under the Loan Agreement and the IGH Note Receivable, the Company and IGH entered into a Security Agreement dated as of October 31, 2018 (the &#x201c;IGH Security Agreement&#x201d;), pursuant to which IGH granted to the Company a first priority lien on and security interest in all personal property of IGH.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">If the Company does not exercise the Option on or prior to the date that is 30 days following the end of the Option Period, the Loan Amount will be reduced to $2,500,000 as a break-up fee (the &#x201c;Break-Up Fee&#x201d;), except in the event of a Purchase Exception (as defined in the Option Agreement), in which case the Break-Up Fee will not apply and there will be no reduction to the Loan Amount.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;<font style="text-decoration:underline">CannAssist</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On September 13, 2018, we entered into a non-binding letter of intent (the &#x201c;CannAssist LOI&#x201d;) with CannAssist, LLC, a Massachusetts limited liability company (&#x201c;CannAssist&#x201d;), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the &#x201c;Leicester Facility&#x201d;). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On November 7, 2018, we amended the CannAssist LOI to extend the termination date to January 15, 2019 and further amended it effective January 15, 2019 to extend the termination date to July 1, 2019.</p><br/></div> 47500000 35000000 7500000 $5 2500000 5000000 0.06 2500000 0.80 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 5&#xa0;&#x2013; Accounts Receivable</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Accounts receivable was $295,013 and $0 at February 28, 2019 and May 31, 2018, respectively. No allowance for doubtful accounts was necessary during the three and nine months ended February 28, 2019 and 2018.</p><br/></div> 0 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 6&#xa0;&#x2013; Inventory</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Inventory, consisting of material, overhead, labor, and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market, and consists of the following:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2757" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2758" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-2759" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2760" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2761" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2762" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2763" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2764" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2765" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2766" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2767" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2768" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Raw materials</p> </td> <td id="new_id-2769" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2770" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2771" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">295,822</td> <td id="new_id-2772" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2773" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2774" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2775" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2776" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Finished goods</p> </td> <td id="new_id-2777" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2778" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2779" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">309,974</td> <td id="new_id-2780" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2781" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2782" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2783" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-2784" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-2785" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2786" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2787" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">605,796</td> <td id="new_id-2788" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2789" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2790" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2791" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-2792" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Raw materials consist of cannabis plants and the materials that are used in our production process prior to being tested and packaged for consumption. Finished goods consist of pre-packaged materials previously purchased from other licensed cultivators and our manufactured edibles and extracts.</p><br/></div> <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Inventory, consisting of material, overhead, labor, and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market, and consists of the following:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2757" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2758" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-2759" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2760" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2761" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2762" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2763" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2764" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2765" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2766" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2767" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2768" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Raw materials</p> </td> <td id="new_id-2769" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2770" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2771" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">295,822</td> <td id="new_id-2772" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2773" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2774" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2775" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2776" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Finished goods</p> </td> <td id="new_id-2777" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2778" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2779" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">309,974</td> <td id="new_id-2780" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2781" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2782" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2783" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-2784" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-2785" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2786" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2787" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">605,796</td> <td id="new_id-2788" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2789" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2790" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2791" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-2792" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 295822 0 309974 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 7&#xa0;&#x2013; Prepaid Expenses and Other Current Assets</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Prepaid expenses consisted of the following at February 28, 2019 and May 31, 2018:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2793" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2794" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-2795" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2796" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2797" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2798" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2799" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2800" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2801" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2802" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2803" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2804" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid insurance</p> </td> <td id="new_id-2805" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2806" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2807" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">14,218</td> <td id="new_id-2808" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2809" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2810" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2811" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2812" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid license fees</p> </td> <td id="new_id-2813" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2814" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2815" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">130,412</td> <td id="new_id-2816" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2817" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2818" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2819" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2820" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid legal fees</p> </td> <td id="new_id-2821" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2822" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2823" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">16,410</td> <td id="new_id-2824" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2825" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2826" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2827" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,410</td> <td id="new_id-2828" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid fixed assets</p> </td> <td id="new_id-2829" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2830" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2831" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">460,901</td> <td id="new_id-2832" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2833" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2834" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2835" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2836" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid rent</p> </td> <td id="new_id-2837" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2838" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2839" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">6,961</td> <td id="new_id-2840" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2841" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2842" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2843" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2844" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Deposits on inventory</p> </td> <td id="new_id-2845" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2846" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2847" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">83,837</td> <td id="new_id-2848" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2849" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2850" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2851" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-2852" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-2853" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2854" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2855" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">712,739</td> <td id="new_id-2856" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2857" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2858" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2859" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,410</td> <td id="new_id-2860" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Prepaid expenses consisted of the following at February 28, 2019 and May 31, 2018:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2793" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2794" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-2795" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2796" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2797" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2798" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2799" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2800" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2801" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2802" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2803" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2804" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid insurance</p> </td> <td id="new_id-2805" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2806" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2807" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">14,218</td> <td id="new_id-2808" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2809" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2810" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2811" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2812" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid license fees</p> </td> <td id="new_id-2813" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2814" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2815" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">130,412</td> <td id="new_id-2816" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2817" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2818" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2819" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2820" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid legal fees</p> </td> <td id="new_id-2821" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2822" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2823" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">16,410</td> <td id="new_id-2824" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2825" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2826" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2827" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,410</td> <td id="new_id-2828" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid fixed assets</p> </td> <td id="new_id-2829" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2830" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2831" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">460,901</td> <td id="new_id-2832" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2833" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2834" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2835" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2836" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Prepaid rent</p> </td> <td id="new_id-2837" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2838" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2839" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">6,961</td> <td id="new_id-2840" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2841" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2842" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2843" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2844" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Deposits on inventory</p> </td> <td id="new_id-2845" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2846" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2847" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">83,837</td> <td id="new_id-2848" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2849" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2850" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2851" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-2852" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-2853" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2854" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2855" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">712,739</td> <td id="new_id-2856" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2857" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2858" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2859" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,410</td> <td id="new_id-2860" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 14218 0 130412 0 16410 1410 460901 0 6961 0 83837 0 712739 1410 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 8 &#x2013; Redemption Premium in Transit</b></p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">During the three months ended February 28, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note. The redemption date is March 1, 2019, and the redemption amount is shown as a current asset on the Company&#x2019;s balance sheet as of February 28, 2019.</p><br/></div> 2 250000 62500 2630 500000 125000 24658 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note </b><b>9</b><b>&#xa0;&#x2013; Notes Receivable</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">PRH Note Receivable</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the year ended May 31, 2015, the Company loaned $500,000 (the &#x201c;PRH Note&#x201d;) to Picture Rock Holdings, LLC, a Colorado limited liability company (&#x201c;PRH&#x201d;).&#xa0; Pursuant to the PRH Note, as amended by the parties effective June 30, 2015, October 31, 2015, April 11, 2016, and May 31, 2016, PRH was expected to repay the principal due under the PRH Note in twenty (20) equal quarterly installments of Twenty Five Thousand Dollars ($25,000) commencing in the month following the month in which PRH commenced generating revenue at the grow facility, which commencement was originally anticipated to occur in the first quarter of 2017, and continuing until paid in full.&#xa0; We suspended our plans to operate in Colorado due to regulatory delays and have not yet determined when we will pursue them again.&#xa0;&#xa0;Interest will accrue on the unpaid principal balance of the PRH Note at the rate of twelve percent (12%) per annum and will be paid quarterly in arrears commencing after such initial payment and continuing until paid in full.&#xa0;&#xa0;All outstanding principal and any accumulated unpaid interest due under the PRH Note is due and payable on the five-year anniversary of the initial payment thereunder.&#xa0; In the event of default as defined in the agreements underlying the PRH Note, all amounts under the PRH Note shall be due and payable at once.&#xa0;&#xa0;During the year ended May 31, 2015, the Company recorded an impairment related to the note receivable in the amount of $500,000.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the year ended May 31, 2018, the Company received a payment of $50,000 on the PRH Note.&#xa0; As a result, the Company has reduced the impairment of the note by $50,000 to reflect this payment.&#xa0; The receivable is recorded on the balance sheet as of February 28, 2019 in the amount of $0, net of allowance in the amount of $450,000.<b>&#xa0;</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">IGH Note Receivable</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On October 31, 2018, in connection with an option to purchase transaction (see note 4), the Company loaned $5,000,000 (the &#x201c;IGH Note) to In Good Health, Inc., a Massachusetts not-for-profit corporation (&#x201c;IGH&#x201d;); on November 6, 2018, IGH converted to a for-profit corporation. This Note bears interest at the rate of 6% per annum. On March 1, 2020 (the &#x201c;Initial Payment Date&#x201d;), all accrued interest shall be added to the outstanding principal due hereunder and such amount shall be payable in eight equal quarterly installments, commencing on the Initial Payment Date, together with interest accruing after the Initial Payment Date. The IGH Note shall mature and all outstanding principal, accrued interest and any other amounts due hereunder, shall become due and payable in full on the third anniversary of the IGH Note. The IGH Note was issued in connection with a loan agreement and security agreement between the Company and IGH, and an option agreement between the Company and IGH, among others (the &#x201c;IGH Option Agreement&#x201d;), in both cases dated as of October 31, 2018 and the other agreements and documents executed and/or delivered in connection therewith (collectively the &#x201c;IGH Loan Documents&#x201d;), and is secured by the collateral described in the IGH Loan Documents and by such other collateral as may in the future be granted to the Company to secure the IGH Note. During the three months and nine ended February 28, 2019, the Company recorded interest income in the amount of $73,973 and $98,631, respectively, in connection with the IGH Note. At February 28, 2019, principal in the amount of $5,000,000 and interest receivable in the amount of $96,631 due under the IGH Note are classified as non-current assets on the Company&#x2019;s balance sheet.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">CannAssist Note Receivable</font></p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">On January 29, 2019, the Company made a line of credit loan to CannAssist (the &#x201c;CanAssist Note&#x201d;), in the principal amount of up to $500,000. Any draws on the line of credit in excess of $150,000 will only be made in the sole discretion of the Company. The Loan bears interest at the rate of 8% per annum and is personally guaranteed by the two equity owners of CannAssist. Payments on the loan will commence on July 1, 2019 and the Note will mature on December 1, 2019. At February 28, 2019, the principal amount of $150,000 and interest receivable in the amount of $987 due under the CannAssist Note are classified as non-current assets on the Company&#x2019;s balance sheet.</p><br/></div> 500000 Pursuant to the PRH Note, as amended by the parties effective June 30, 2015, October 31, 2015, April 11, 2016, and May 31, 2016, PRH was expected to repay the principal due under the PRH Note in twenty (20) equal quarterly installments of Twenty Five Thousand Dollars ($25,000) commencing in the month following the month in which PRH commenced generating revenue at the grow facility, which commencement was originally anticipated to occur in the first quarter of 2017, and continuing until paid in full.&#xa0; We suspended our plans to operate in Colorado due to regulatory delays and have not yet determined when we will pursue them again.&#xa0;&#xa0;Interest will accrue on the unpaid principal balance of the PRH Note at the rate of twelve percent (12%) per annum and will be paid quarterly in arrears commencing after such initial payment and continuing until paid in full.&#xa0;&#xa0;All outstanding principal and any accumulated unpaid interest due under the PRH Note is due and payable on the five-year anniversary of the initial payment thereunder. 0.12 500000 50000 0 450000 5000000 8 73973 98631 5000000 96631 500000 150000 0.08 150000 987 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note </b><b>10</b><b> &#x2013; Property, Plant and Equipment</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Property, plant and equipment consisted of the following at February 28, 2019 and May 31, 2018.</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2861" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2862" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,&#xa0;</b></b></p> </td> <td id="new_id-2863" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2864" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2865" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2866" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2867" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2868" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2869" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2870" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2871" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2872" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Office equipment</p> </td> <td id="new_id-2873" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2874" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2875" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,217,563</td> <td id="new_id-2876" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2877" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2878" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2879" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,674</td> <td id="new_id-2880" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Furniture and fixtures</p> </td> <td id="new_id-2881" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2882" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2883" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">59,617</td> <td id="new_id-2884" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2885" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2886" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2887" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2888" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Leasehold improvements</p> </td> <td id="new_id-2889" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2890" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2891" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">764,423</td> <td id="new_id-2892" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2893" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2894" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2895" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2896" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: accumulated depreciation</p> </td> <td id="new_id-2897" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2898" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2899" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(494,439</td> <td id="new_id-2900" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2901" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2902" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2903" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(2,674</td> <td id="new_id-2904" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Property, plant, and equipment, net</p> </td> <td id="new_id-2905" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2906" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2907" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,547,164</td> <td id="new_id-2908" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2909" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2910" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2911" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-2912" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, the Company acquired property, plant, and equipment with an aggregate fair value of $933,142 with the acquisition of Alternative Solutions, LLC. See note 3.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Depreciation of property, plant, and equipment was $45,045 and $223 for the three months ended February 28, 2019 and 2018 respectively. Depreciation of property, plant, and equipment was $121,212 and $669 for the nine months ended February 28, 2019 and 2018 respectively.</p><br/></div> 933142 45045 223 121212 669 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Property, plant and equipment consisted of the following at February 28, 2019 and May 31, 2018.<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2861" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2862" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,&#xa0;</b></b></p> </td> <td id="new_id-2863" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2864" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2865" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-2866" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2867" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2868" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-2869" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2870" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2871" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-2872" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Office equipment</p> </td> <td id="new_id-2873" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2874" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2875" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,217,563</td> <td id="new_id-2876" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2877" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2878" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2879" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,674</td> <td id="new_id-2880" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Furniture and fixtures</p> </td> <td id="new_id-2881" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2882" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2883" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">59,617</td> <td id="new_id-2884" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2885" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2886" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2887" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2888" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Leasehold improvements</p> </td> <td id="new_id-2889" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2890" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2891" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">764,423</td> <td id="new_id-2892" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2893" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2894" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2895" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-2896" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: accumulated depreciation</p> </td> <td id="new_id-2897" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2898" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2899" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(494,439</td> <td id="new_id-2900" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2901" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2902" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2903" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(2,674</td> <td id="new_id-2904" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Property, plant, and equipment, net</p> </td> <td id="new_id-2905" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2906" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2907" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,547,164</td> <td id="new_id-2908" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2909" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2910" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-2911" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-2912" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 1217563 2674 59617 0 764423 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note&#xa0;1</b><b>1</b><b>&#xa0;&#x2013; Intangible Assets</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Intangible assets consisted of the following at February 28, 2019 and May 31, 2018.</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 43%; border-bottom: thin solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b>February 28, 2019</b></p> </td> <td id="new_id-2913" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2914" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2915" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2916" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2917" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2918" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2919" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2920" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2921" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2922" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2923" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2924" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2925" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2926" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2927" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2928" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2929" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2930" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Accumulated</b></b></p> </td> <td id="new_id-2931" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2932" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2933" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2934" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2935" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2936" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2937" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Gross</b></b></p> </td> <td id="new_id-2938" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2939" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2940" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Amortization</b></b></p> </td> <td id="new_id-2941" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2942" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2943" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Net</b></b></p> </td> <td id="new_id-2944" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intellectual Property</p> </td> <td id="new_id-2945" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2946" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2947" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">319,600</td> <td id="new_id-2948" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2949" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2950" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2951" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(15,981</td> <td id="new_id-2952" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2953" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2954" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2955" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">303,619</td> <td id="new_id-2956" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">License &amp; Customer Relations</p> </td> <td id="new_id-2957" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2958" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2959" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">990,000</td> <td id="new_id-2960" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2961" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2962" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2963" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(24,750</td> <td id="new_id-2964" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2965" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2966" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2967" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">965,250</td> <td id="new_id-2968" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Tradenames - Trademarks</p> </td> <td id="new_id-2969" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2970" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2971" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">301,000</td> <td id="new_id-2972" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2973" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2974" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2975" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(15,051</td> <td id="new_id-2976" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2977" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2978" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2979" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">285,949</td> <td id="new_id-2980" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Non-compete Agreements</p> </td> <td id="new_id-2981" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2982" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2983" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">27,000</td> <td id="new_id-2984" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2985" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2986" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2987" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(6,750</td> <td id="new_id-2988" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2989" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2990" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2991" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">20,250</td> <td id="new_id-2992" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Domain Names&#xa0;</p> </td> <td id="new_id-2993" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2994" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2995" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,600</td> <td id="new_id-2996" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2997" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2998" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2999" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(324</td> <td id="new_id-3000" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3001" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3002" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3003" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,276</td> <td id="new_id-3004" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3005" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3006" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3007" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,640,020</td> <td id="new_id-3008" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3009" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3010" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3011" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">(62,856</td> <td id="new_id-3012" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3013" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3014" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3015" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,577,344</td> <td id="new_id-3016" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 43%; border-bottom: thin solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b>May 31, 2018</b></p> </td> <td id="new_id-3017" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3018" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3019" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3020" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3021" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3022" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3023" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3024" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3025" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3026" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3027" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3028" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3029" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3030" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3031" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3032" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3033" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3034" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Accumulated</b></b></p> </td> <td id="new_id-3035" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3036" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3037" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3038" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3039" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3040" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3041" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Gross</b></b></p> </td> <td id="new_id-3042" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3043" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3044" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Amortization</b></b></p> </td> <td id="new_id-3045" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3046" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3047" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Net</b></b></p> </td> <td id="new_id-3048" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intellectual Property</p> </td> <td id="new_id-3049" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3050" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3051" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3052" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3053" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3054" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3055" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3056" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3057" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3058" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3059" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3060" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">License &amp; Customer Relations</p> </td> <td id="new_id-3061" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3062" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3063" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3064" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3065" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3066" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3067" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3068" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3069" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3070" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3071" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3072" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Tradenames - Trademarks</p> </td> <td id="new_id-3073" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3074" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3075" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3076" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3077" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3078" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3079" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3080" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3081" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3082" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3083" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3084" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Non-compete Agreements</p> </td> <td id="new_id-3085" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3086" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3087" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3088" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3089" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3090" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3091" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3092" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3093" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3094" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3095" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3096" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Domain names</p> </td> <td id="new_id-3097" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3098" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3099" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,726</td> <td id="new_id-3100" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3101" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3102" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3103" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(828</td> <td id="new_id-3104" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3105" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3106" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3107" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">898</td> <td id="new_id-3108" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3109" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3110" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3111" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,726</td> <td id="new_id-3112" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3113" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3114" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3115" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">(828</td> <td id="new_id-3116" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3117" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3118" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3119" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">898</td> <td id="new_id-3120" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Total amortization expense charged to operations for the three months ended February 28, 2019 and 2018 was $20,952 and $108, respectively.&#xa0; Total amortization expense charged to operations for the nine months ended February 28, 2019 and 2018 was $62,856 and $324, respectively.&#xa0;</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 25%; margin-left: 25%; width: 50%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Amount to be amortized during the twelve months ended February 28,&#xa0;</p> </td> <td id="new_id-3121" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> <td id="new_id-3122" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> <td id="new_id-3123" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 30%;">&#xa0;</td> <td id="new_id-3124" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2019</p> </td> <td id="new_id-3125" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3126" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3127" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">27,379</td> <td id="new_id-3128" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2020</p> </td> <td id="new_id-3129" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3130" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3131" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3132" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2021</p> </td> <td id="new_id-3133" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3134" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3135" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3136" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2022</p> </td> <td id="new_id-3137" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3138" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3139" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3140" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2023</p> </td> <td id="new_id-3141" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3142" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3143" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3144" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">Thereafter</p> </td> <td id="new_id-3145" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3146" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3147" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">893,553</td> <td id="new_id-3148" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 64%;">&#xa0;</td> <td id="new_id-3149" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3150" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3151" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,577,344</td> <td id="new_id-3152" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> 20952 108 62856 324 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Intangible assets consisted of the following at February 28, 2019 and May 31, 2018.<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 43%; border-bottom: thin solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b>February 28, 2019</b></p> </td> <td id="new_id-2913" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2914" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2915" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2916" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2917" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2918" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2919" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2920" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2921" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2922" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2923" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2924" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2925" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2926" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2927" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2928" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2929" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2930" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Accumulated</b></b></p> </td> <td id="new_id-2931" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2932" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2933" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2934" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-2935" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2936" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2937" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Gross</b></b></p> </td> <td id="new_id-2938" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2939" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2940" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Amortization</b></b></p> </td> <td id="new_id-2941" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-2942" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-2943" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Net</b></b></p> </td> <td id="new_id-2944" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intellectual Property</p> </td> <td id="new_id-2945" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2946" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2947" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">319,600</td> <td id="new_id-2948" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2949" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2950" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2951" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(15,981</td> <td id="new_id-2952" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2953" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2954" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-2955" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">303,619</td> <td id="new_id-2956" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">License &amp; Customer Relations</p> </td> <td id="new_id-2957" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2958" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2959" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">990,000</td> <td id="new_id-2960" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2961" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2962" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2963" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(24,750</td> <td id="new_id-2964" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2965" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2966" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2967" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">965,250</td> <td id="new_id-2968" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Tradenames - Trademarks</p> </td> <td id="new_id-2969" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2970" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2971" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">301,000</td> <td id="new_id-2972" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2973" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2974" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2975" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(15,051</td> <td id="new_id-2976" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2977" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2978" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2979" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">285,949</td> <td id="new_id-2980" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Non-compete Agreements</p> </td> <td id="new_id-2981" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2982" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2983" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">27,000</td> <td id="new_id-2984" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2985" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2986" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2987" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(6,750</td> <td id="new_id-2988" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-2989" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2990" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2991" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">20,250</td> <td id="new_id-2992" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Domain Names&#xa0;</p> </td> <td id="new_id-2993" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2994" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2995" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,600</td> <td id="new_id-2996" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-2997" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-2998" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-2999" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(324</td> <td id="new_id-3000" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3001" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3002" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3003" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2,276</td> <td id="new_id-3004" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3005" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3006" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3007" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,640,020</td> <td id="new_id-3008" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3009" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3010" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3011" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">(62,856</td> <td id="new_id-3012" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3013" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3014" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3015" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,577,344</td> <td id="new_id-3016" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 43%; border-bottom: thin solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b>May 31, 2018</b></p> </td> <td id="new_id-3017" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3018" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3019" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3020" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3021" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3022" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3023" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3024" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3025" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3026" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3027" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3028" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3029" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3030" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3031" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3032" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3033" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3034" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Accumulated</b></b></p> </td> <td id="new_id-3035" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3036" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3037" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3038" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> <td id="new_id-3039" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"><b>&#xa0;</b></td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3040" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3041" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Gross</b></b></p> </td> <td id="new_id-3042" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3043" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3044" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Amortization</b></b></p> </td> <td id="new_id-3045" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3046" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3047" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Net</b></b></p> </td> <td id="new_id-3048" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Intellectual Property</p> </td> <td id="new_id-3049" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3050" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3051" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3052" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3053" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3054" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3055" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3056" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3057" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3058" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3059" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3060" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">License &amp; Customer Relations</p> </td> <td id="new_id-3061" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3062" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3063" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3064" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3065" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3066" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3067" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3068" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3069" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3070" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3071" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3072" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Tradenames - Trademarks</p> </td> <td id="new_id-3073" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3074" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3075" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3076" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3077" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3078" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3079" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3080" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3081" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3082" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3083" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3084" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Non-compete Agreements</p> </td> <td id="new_id-3085" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3086" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3087" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3088" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3089" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3090" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3091" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3092" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3093" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3094" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3095" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3096" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Domain names</p> </td> <td id="new_id-3097" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3098" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3099" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1,726</td> <td id="new_id-3100" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3101" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3102" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3103" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(828</td> <td id="new_id-3104" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3105" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3106" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3107" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">898</td> <td id="new_id-3108" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3109" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3110" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3111" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,726</td> <td id="new_id-3112" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3113" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3114" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3115" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">(828</td> <td id="new_id-3116" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 3px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3117" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3118" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3119" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">898</td> <td id="new_id-3120" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 319600 15981 303619 990000 24750 965250 301000 15051 285949 27000 6750 20250 2600 324 2276 1640020 1577344 0 0 0 0 0 0 0 0 0 0 0 0 1726 828 898 1726 898 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Total amortization expense charged to operations for the nine months ended February 28, 2019 and 2018 was $62,856 and $324, respectively.<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 25%; margin-left: 25%; width: 50%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Amount to be amortized during the twelve months ended February 28,&#xa0;</p> </td> <td id="new_id-3121" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> <td id="new_id-3122" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> <td id="new_id-3123" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 30%;">&#xa0;</td> <td id="new_id-3124" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 2%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2019</p> </td> <td id="new_id-3125" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3126" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3127" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">27,379</td> <td id="new_id-3128" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2020</p> </td> <td id="new_id-3129" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3130" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3131" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3132" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2021</p> </td> <td id="new_id-3133" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3134" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3135" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3136" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2022</p> </td> <td id="new_id-3137" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3138" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3139" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3140" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">2023</p> </td> <td id="new_id-3141" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3142" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3143" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">164,103</td> <td id="new_id-3144" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 64%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:right;">Thereafter</p> </td> <td id="new_id-3145" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3146" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3147" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">893,553</td> <td id="new_id-3148" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 64%;">&#xa0;</td> <td id="new_id-3149" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3150" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3151" style="width: 30%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,577,344</td> <td id="new_id-3152" style="width: 2%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 27379 164103 164103 164103 164103 893553 1577344 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 1</b><b>2</b><b>&#xa0;&#x2013; Other Assets</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Other assets included the following as of February 28, 2019 and May 31, 2018, respectively:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3153" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3154" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> </td> <td id="new_id-3155" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3156" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3157" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3158" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3159" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3160" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3161" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3162" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3163" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3164" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Security deposits</p> </td> <td id="new_id-3165" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3166" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3167" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">160,450</td> <td id="new_id-3168" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3169" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3170" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3171" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3172" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3173" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3174" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3175" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">160,450</td> <td id="new_id-3176" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3177" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3178" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3179" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3180" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Other assets included the following as of February 28, 2019 and May 31, 2018, respectively:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3153" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3154" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> </td> <td id="new_id-3155" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3156" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3157" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3158" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3159" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3160" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3161" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3162" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3163" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3164" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Security deposits</p> </td> <td id="new_id-3165" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3166" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3167" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">160,450</td> <td id="new_id-3168" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3169" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3170" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3171" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3172" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3173" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3174" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3175" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">160,450</td> <td id="new_id-3176" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3177" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3178" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3179" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3180" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 160450 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note&#xa0;1</b><b>3</b><b>&#xa0;&#x2013; Accounts Payable and Accrued Liabilities</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Accrued expenses consisted of the following at February 28, 2019 and May 31, 2018:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3181" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3182" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3183" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3184" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3185" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3186" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3187" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3188" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3189" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3190" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3191" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3192" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Trade accounts payable</p> </td> <td id="new_id-3193" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3194" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td id="new_id-3195" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">655,518</td> <td id="new_id-3196" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3197" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3198" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3199" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">726,457</td> <td id="new_id-3200" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Accrued payroll and payroll taxes</p> </td> <td id="new_id-3201" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3202" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3203" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">281,584</td> <td id="new_id-3204" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3205" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3206" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3207" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">44,465</td> <td id="new_id-3208" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Accrued liabilities</p> </td> <td id="new_id-3209" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3210" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3211" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">457,251</td> <td id="new_id-3212" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3213" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3214" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3215" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3216" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Deferred rent liability&#xa0;</p> </td> <td id="new_id-3217" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3218" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3219" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3220" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3221" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3222" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3223" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">55,699</td> <td id="new_id-3224" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3225" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3226" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3227" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,394,353</td> <td id="new_id-3228" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3229" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3230" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3231" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">826,621</td> <td id="new_id-3232" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Accrued expenses consisted of the following at February 28, 2019 and May 31, 2018:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3181" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3182" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3183" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3184" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3185" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3186" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3187" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3188" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3189" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3190" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3191" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3192" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Trade accounts payable</p> </td> <td id="new_id-3193" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3194" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">$</td> <td id="new_id-3195" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">655,518</td> <td id="new_id-3196" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3197" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3198" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3199" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">726,457</td> <td id="new_id-3200" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Accrued payroll and payroll taxes</p> </td> <td id="new_id-3201" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3202" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3203" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">281,584</td> <td id="new_id-3204" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3205" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3206" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3207" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">44,465</td> <td id="new_id-3208" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Accrued liabilities</p> </td> <td id="new_id-3209" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3210" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3211" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">457,251</td> <td id="new_id-3212" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3213" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3214" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3215" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3216" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Deferred rent liability&#xa0;</p> </td> <td id="new_id-3217" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3218" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3219" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3220" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3221" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3222" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3223" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">55,699</td> <td id="new_id-3224" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total</p> </td> <td id="new_id-3225" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3226" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3227" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">1,394,353</td> <td id="new_id-3228" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3229" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3230" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3231" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">826,621</td> <td id="new_id-3232" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 655518 726457 281584 44465 457251 0 0 55699 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note&#xa0;1</b><b>4</b><b>&#xa0;&#x2013; Notes Payable&#xa0;and Convertible Notes Payable</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Notes Payable</font></p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3233" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3234" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3235" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3236" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3237" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3238" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3239" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3240" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3241" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3242" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3243" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3244" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3245">&#xa0;</td> <td id="new_id-3246">&#xa0;</td> <td id="new_id-3247">&#xa0;</td> <td id="new_id-3248">&#xa0;</td> <td id="new_id-3249">&#xa0;</td> <td id="new_id-3250">&#xa0;</td> <td id="new_id-3251">&#xa0;</td> <td id="new_id-3252">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the &#x201c;Blatt Note&#x201d;).&#xa0; This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.</p> </td> <td id="new_id-3253" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3254" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3255" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3256" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3257" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3258" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3259" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">210,000</td> <td id="new_id-3260" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3261">&#xa0;</td> <td id="new_id-3262">&#xa0;</td> <td id="new_id-3263">&#xa0;</td> <td id="new_id-3264">&#xa0;</td> <td id="new_id-3265">&#xa0;</td> <td id="new_id-3266">&#xa0;</td> <td id="new_id-3267">&#xa0;</td> <td id="new_id-3268">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the &#x201c;AJG Note&#x201d;).&#xa0; This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note. &#xa0;</p> </td> <td id="new_id-3269" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3270" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3271" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3272" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3273" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3274" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3275" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">100,000</td> <td id="new_id-3276" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3277">&#xa0;</td> <td id="new_id-3278">&#xa0;</td> <td id="new_id-3279">&#xa0;</td> <td id="new_id-3280">&#xa0;</td> <td id="new_id-3281">&#xa0;</td> <td id="new_id-3282">&#xa0;</td> <td id="new_id-3283">&#xa0;</td> <td id="new_id-3284">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (&#x201c;Oasis Note&#x201d;). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.&#xa0; The note is due on December 4, 2019, but may be prepaid at any time without penalty.&#xa0;&#xa0; The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs.&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">The Company recognized an original issue discount of $189,180 on the Oasis Note.&#xa0; During the nine months ended February 28, 2019, $88,644 of this discount was charged to operations.&#xa0; During the nine months ended February 28, 2019, the Company accrued interest in the amount of $164,000 on the Oasis&#xa0;Note.</p> </td> <td id="new_id-3285" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3286" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3287" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">4,000,000</td> <td id="new_id-3288" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3289" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3290" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3291" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3292" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3293">&#xa0;</td> <td id="new_id-3294">&#xa0;</td> <td id="new_id-3295">&#xa0;</td> <td id="new_id-3296">&#xa0;</td> <td id="new_id-3297">&#xa0;</td> <td id="new_id-3298">&#xa0;</td> <td id="new_id-3299">&#xa0;</td> <td id="new_id-3300">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013;&#xa0;Notes Payable</p> </td> <td id="new_id-3301" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3302" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3303" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,000,000</td> <td id="new_id-3304" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3305" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3306" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3307" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">310,000</td> <td id="new_id-3308" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3309" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3310" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3311" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(100,536</td> <td id="new_id-3312" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3313" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3314" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3315" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3316" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Notes Payable, Net of Discounts</p> </td> <td id="new_id-3317" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3318" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3319" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">3,899,464</td> <td id="new_id-3320" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3321" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3322" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3323" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">310,000</td> <td id="new_id-3324" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Current portion</p> </td> <td id="new_id-3325" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3326" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-3327" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,899,464</td> <td id="new_id-3328" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3329" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3330" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-3331" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">310,000</td> <td id="new_id-3332" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Long term portion</p> </td> <td id="new_id-3333" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3334" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3335" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3336" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3337" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3338" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3339" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3340" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Related Party Convertible Demand Notes Payable</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On May 31, 2017, the Company entered into an Omnibus Loan Amendment Agreement (the &#x201c;Omnibus Loan Amendment&#x201d;) with Jeffrey I. Binder, Frank Koretsky, Newcan Investment Partners LLC and CLS CO 2016, LLC (collectively, the &#x201c;Insiders&#x201d;).&#xa0; Pursuant to the Omnibus Loan Amendment, the Company agreed with the Insiders to amend certain terms of loans the Insiders made to the Company for working capital purposes, which loans were initially demand loans, and, except for loans made in 2017, were later memorialized as convertible loans (the &#x201c;Insider Loans&#x201d;), in exchange for the agreement of the Insiders to convert all Insider Loans where funds were advanced prior to January 1, 2017, which totaled $2,537,750, plus $166,490 of accrued interest thereon, into an aggregate of 10,816,960 shares of the Company&#x2019;s common stock&#xa0;at $0.25 per share, and forego the issuance of warrants to purchase the Company&#x2019;s common stock upon conversion.&#xa0; This resulted in the issuance of an additional 7,609,910 shares compared to the original number of shares issuable upon conversion of the Insider Loans prior to the Omnibus Loan Amendment. The Company valued the shares at&#xa0;$0.125, which was the market price of the Company&#x2019;s stock at the conversion date, and charged the amount of $951,239 to loss on modification of debt during the twelve months ended May 31, 2017. The Company entered into the Omnibus Loan Amendment in order to ease the debt burden on the Company and prevent it from defaulting on the Insider Loans.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Pursuant to the Omnibus Loan Amendment, the following amendments were made to the Insider Loans: (a) the Company reduced the conversion price on the Insider Loans from between $0.75 and $1.07 per share of common stock to $0.25 per share of common stock, in those cases where the conversion price was greater than $0.25, which reduced conversion price exceeded the closing price of the common stock during the three months prior to the Omnibus Loan Amendment; (b) the Company deleted the requirement to issue warrants to purchase the Company&#x2019;s common stock upon conversion of the Insider Loans; (c) the Company amended one Insider Loan to permit conversion of only the portion of the Insider Loan related to services that were provided to it prior to January 1, 2017; and (d) the Company amended the terms of the Insider Loans where funds were advanced on or after January 1, 2017, which Insider Loans were not converted into the Company&#x2019;s common stock, to provide for, where not already the case, a 10% interest rate per annum, a $0.25 conversion price per share of common stock, and the deletion of the requirement that the Company issue warrants to purchase its common stock upon conversion of such Insider Loans.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On January 10, 2018, effective December 1, 2017, the Company entered into an Omnibus Amendment to Convertible Notes (the &#x201c;Second Omnibus Loan Agreement&#x201d;) with Jeffrey I. Binder, an officer and director of the Company, and Newcan Investment Partners LLC, an entity owned by Frank Koretsky, a director of the Company. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to either Mr. Binder or Newcan Investment Partners, LLC as of the date of the Agreement would be increased from $0.25 to $0.3125 per share of common stock.&#xa0; The remaining terms of such notes remain unchanged.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">The following tables summarize the Company&#x2019;s loan balances at February 28, 2019 and May 31, 2018:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3341" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3342" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3343" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3344" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3345" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3346" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3347" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3348" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3349" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3350" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3351" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3352" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3353">&#xa0;</td> <td id="new_id-3354">&#xa0;</td> <td id="new_id-3355">&#xa0;</td> <td id="new_id-3356">&#xa0;</td> <td id="new_id-3357">&#xa0;</td> <td id="new_id-3358">&#xa0;</td> <td id="new_id-3359">&#xa0;</td> <td id="new_id-3360">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the &#x201c;Binder Funding Notes&#x201d;). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.&#xa0;&#xa0;Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share&#xa0;and a&#xa0;discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.&#xa0; Also during the year ended May 31, 2018 the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.&#xa0; During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, Mr. Binder advanced a total of $211,700 to the Company under the Binder Funding Notes. During the nine months ended February 28, 2019,&#xa0;the Company made principal payments to in the amount of $211,837 under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,710 on the Binder Funding Notes. During the nine months ended February 28, 2019, discounts in the aggregate amount of $211,702 related to the beneficial conversion feature of the Binder Funding Notes were charged to additional-paid in capital and amortized to interest expense.</p> </td> <td id="new_id-3361" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3362" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3363" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3364" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3365" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3366" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3367" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">137</td> <td id="new_id-3368" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3369" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3370" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3371" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3372" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3373" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3374" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3375">&#xa0;</td> <td id="new_id-3376">&#xa0;</td> <td id="new_id-3377">&#xa0;</td> <td id="new_id-3378">&#xa0;</td> <td id="new_id-3379">&#xa0;</td> <td id="new_id-3380">&#xa0;</td> <td id="new_id-3381">&#xa0;</td> <td id="new_id-3382">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Notes payable to Newcan Investment Partners, LLC (&#x201c;Newcan&#x201d;), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the &#x201c;Newcan Funding Notes&#x201d;). The Newcan Funding Notes bear interest at a rate of&#xa0;10% per annum, have no maturity date and are due on demand.&#xa0; Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.).&#xa0; During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (&#x201c;Newcan Convertible Note 8&#x201d;). During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.</p> </td> <td id="new_id-3383" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3384" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3385" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3386" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3387" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3388" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3389" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">75,000</td> <td id="new_id-3390" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3391">&#xa0;</td> <td id="new_id-3392">&#xa0;</td> <td id="new_id-3393">&#xa0;</td> <td id="new_id-3394">&#xa0;</td> <td id="new_id-3395">&#xa0;</td> <td id="new_id-3396">&#xa0;</td> <td id="new_id-3397">&#xa0;</td> <td id="new_id-3398">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable, Related Parties</p> </td> <td id="new_id-3399" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3400" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3401" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3402" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3403" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3404" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3405" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">75,137</td> <td id="new_id-3406" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable,&#xa0; Related Parties - Current portion</p> </td> <td id="new_id-3407" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3408" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3409" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3410" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3411" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3412" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3413" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">75,137</td> <td id="new_id-3414" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable, Related Parties - Long term portion</p> </td> <td id="new_id-3415" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3416" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3417" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3418" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3419" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3420" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3421" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3422" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Convertible Notes Payable, Related Parties</font></p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3423" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3424" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, &#xa0;</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3425" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3426" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3427" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3428" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3429">&#xa0;</td> <td id="new_id-3430">&#xa0;</td> <td id="new_id-3431">&#xa0;</td> <td id="new_id-3432">&#xa0;</td> <td id="new_id-3433">&#xa0;</td> <td id="new_id-3434">&#xa0;</td> <td id="new_id-3435">&#xa0;</td> <td id="new_id-3436">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to David Lamadrid (the &#x201c;Lamadrid Note&#x201d;) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.&#xa0; The Lamadrid Note is due eighteen months from the date of issue.&#xa0; Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $942 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the nine months ended February 28, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the nine months ended February 28, 2019 the remaining discount in the amount of $30,308 was charged to operations.</p> </td> <td id="new_id-3437" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3438" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3439" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3440" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3441" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3442" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3443" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">31,250</td> <td id="new_id-3444" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3445">&#xa0;</td> <td id="new_id-3446">&#xa0;</td> <td id="new_id-3447">&#xa0;</td> <td id="new_id-3448">&#xa0;</td> <td id="new_id-3449">&#xa0;</td> <td id="new_id-3450">&#xa0;</td> <td id="new_id-3451">&#xa0;</td> <td id="new_id-3452">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the &#x201c;Binder Convertible Note 9&#x201d;).&#xa0; The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.&#xa0; Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.&#xa0; This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.&#xa0; The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018 and 2017, interest in the amount of $565 and $0 was accrued on Binder Convertible Note 9, respectively.&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the nine months ended February 28, 2019, the Company made a principal payment in the amount of $37,500 on the Binder Convertible Note 9. During the nine months ended February 28, 2019 the remaining discount in the amount of $35,610 was charged to operations.</p> </td> <td id="new_id-3453" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3454" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3455" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3456" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3457" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3458" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3459" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">37,500</td> <td id="new_id-3460" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3461" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3462" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3463" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3464" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3465" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3466" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3467">&#xa0;</td> <td id="new_id-3468">&#xa0;</td> <td id="new_id-3469">&#xa0;</td> <td id="new_id-3470">&#xa0;</td> <td id="new_id-3471">&#xa0;</td> <td id="new_id-3472">&#xa0;</td> <td id="new_id-3473">&#xa0;</td> <td id="new_id-3474">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the &#x201c;Newcan Convertible Note 8&#x201d;).&#xa0; The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.&#xa0; Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.&#xa0; This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.&#xa0; The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $1,603 on this note.&#xa0;During the nine months ended February 28, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $57,322 was charged to operations.</p> </td> <td id="new_id-3475" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3476" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3477" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3478" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3479" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3480" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3481" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3482" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3483">&#xa0;</td> <td id="new_id-3484">&#xa0;</td> <td id="new_id-3485">&#xa0;</td> <td id="new_id-3486">&#xa0;</td> <td id="new_id-3487">&#xa0;</td> <td id="new_id-3488">&#xa0;</td> <td id="new_id-3489">&#xa0;</td> <td id="new_id-3490">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Convertible Notes Payable, Related Parties</p> </td> <td id="new_id-3491" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3492" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3493" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3494" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3495" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3496" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3497" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">68,750</td> <td id="new_id-3498" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3499" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3500" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3501" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3502" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3503" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3504" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3505" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(65,918</td> <td id="new_id-3506" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts</p> </td> <td id="new_id-3507" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3508" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3509" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3510" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3511" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3512" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3513" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,832</td> <td id="new_id-3514" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3515">&#xa0;</td> <td id="new_id-3516">&#xa0;</td> <td id="new_id-3517">&#xa0;</td> <td id="new_id-3518">&#xa0;</td> <td id="new_id-3519">&#xa0;</td> <td id="new_id-3520">&#xa0;</td> <td id="new_id-3521">&#xa0;</td> <td id="new_id-3522">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion</p> </td> <td id="new_id-3523" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3524" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3525" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3526" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3527" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3528" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3529" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,832</td> <td id="new_id-3530" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion</p> </td> <td id="new_id-3531" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3532" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3533" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3534" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3535" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3536" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3537" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3538" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Convertible Notes Payable</font></p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3539" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3540" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3541" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3542" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3543" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3544" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3545">&#xa0;</td> <td id="new_id-3546">&#xa0;</td> <td id="new_id-3547">&#xa0;</td> <td id="new_id-3548">&#xa0;</td> <td id="new_id-3549">&#xa0;</td> <td id="new_id-3550">&#xa0;</td> <td id="new_id-3551">&#xa0;</td> <td id="new_id-3552">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to Darling Capital, LLC (the &#x201c;Darling Note&#x201d;) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.&#xa0; The Darling Note is due eighteen months from the date of issue.&#xa0; Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $40,427 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,447 on this note. During the nine months ended February 28, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the&#xa0;nine months ended February 28, 2019, the remaining discount in the amount of $509,573 was charged to operations.</p> </td> <td id="new_id-3553" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3554" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3555" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3556" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3557" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3558" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3559" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">550,000</td> <td id="new_id-3560" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3561">&#xa0;</td> <td id="new_id-3562">&#xa0;</td> <td id="new_id-3563">&#xa0;</td> <td id="new_id-3564">&#xa0;</td> <td id="new_id-3565">&#xa0;</td> <td id="new_id-3566">&#xa0;</td> <td id="new_id-3567">&#xa0;</td> <td id="new_id-3568">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to Efrat Investments, LLC (the &#x201c;Efrat Note&#x201d;) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.&#xa0; The Efrat Note is due eighteen months from the date of issue.&#xa0; Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $2,974 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the&#xa0;nine months ended February 28, 2019, the Company accrued interest in the amount of $898 on this note. During the nine months ended February 28, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the&#xa0;nine months ended February 28, 2019, the remaining discount in the amount of $52,026 was charged to operations.</p> </td> <td id="new_id-3569" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3570" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3571" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3572" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3573" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3574" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3575" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">55,000</td> <td id="new_id-3576" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3577" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3578" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3579" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3580" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3581" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3582" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3583">&#xa0;</td> <td id="new_id-3584">&#xa0;</td> <td id="new_id-3585">&#xa0;</td> <td id="new_id-3586">&#xa0;</td> <td id="new_id-3587">&#xa0;</td> <td id="new_id-3588">&#xa0;</td> <td id="new_id-3589">&#xa0;</td> <td id="new_id-3590">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to YA II PN, Ltd. (the &#x201c;YA II PN Note&#x201d;) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.&#xa0; YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.&#xa0; The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.&#xa0;&#xa0;Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the twelve months ended May 31, 2018, $23,224 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000&#xa0;was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.&#xa0; Also during the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $39,068 on the YA II PN Note. During the nine months ended February 28, 2019, the holder of&#xa0;the YA II PN Note converted principal in the amount&#xa0;of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock.</p> </td> <td id="new_id-3591" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3592" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3593" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">250,000</td> <td id="new_id-3594" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3595" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3596" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3597" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">750,000</td> <td id="new_id-3598" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3599">&#xa0;</td> <td id="new_id-3600">&#xa0;</td> <td id="new_id-3601">&#xa0;</td> <td id="new_id-3602">&#xa0;</td> <td id="new_id-3603">&#xa0;</td> <td id="new_id-3604">&#xa0;</td> <td id="new_id-3605">&#xa0;</td> <td id="new_id-3606">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Jay Lasky (the &#x201c;Lasky Note&#x201d;), dated May 3, 2018 in the original principal amount of $25,000.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.&#xa0; Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.&#xa0; The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.&#xa0; The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $149 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, $7,152 of the discount was charged to operations. Also during the nine months ended February 28, 2019, the Company accrued interest in the amount of $993 on this note. During the nine&#xa0;months ended February 28, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.</p> </td> <td id="new_id-3607" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3608" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3609" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3610" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3611" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3612" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3613" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">25,000</td> <td id="new_id-3614" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3615" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3616" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3617" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3618" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3619" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3620" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3621">&#xa0;</td> <td id="new_id-3622">&#xa0;</td> <td id="new_id-3623">&#xa0;</td> <td id="new_id-3624">&#xa0;</td> <td id="new_id-3625">&#xa0;</td> <td id="new_id-3626">&#xa0;</td> <td id="new_id-3627">&#xa0;</td> <td id="new_id-3628">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to YA II PN, Ltd. (the &#x201c;YA II PN Note 2&#x201d;) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.&#xa0; YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.&#xa0; The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.&#xa0;&#xa0;Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the nine months ended February 28, 2019, $167,713 of this discount was charged to operations.&#xa0;Also during the nine months ended February 28 2019, the Company accrued interest in the amount of $29,041 on this note.</p> </td> <td id="new_id-3629" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3630" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3631" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">500,000</td> <td id="new_id-3632" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3633" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3634" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3635" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3636" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3637">&#xa0;</td> <td id="new_id-3638">&#xa0;</td> <td id="new_id-3639">&#xa0;</td> <td id="new_id-3640">&#xa0;</td> <td id="new_id-3641">&#xa0;</td> <td id="new_id-3642">&#xa0;</td> <td id="new_id-3643">&#xa0;</td> <td id="new_id-3644">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $4,000,000 (the &#x201c;U.S. Convertible Debenture 1&#x201d;) dated October 31, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1&#xa0;is convertible into units (the &#x201c;Convertible Debenture Units&#x201d;) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 1&#xa0;is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the nine months ended February 28, 2019, $217 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $105,205 on the U.S. Convertible Debenture 1.</p> </td> <td id="new_id-3645" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3646" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3647" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,000,000</td> <td id="new_id-3648" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3649" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3650" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3651" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3652" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3653">&#xa0;</td> <td id="new_id-3654">&#xa0;</td> <td id="new_id-3655">&#xa0;</td> <td id="new_id-3656">&#xa0;</td> <td id="new_id-3657">&#xa0;</td> <td id="new_id-3658">&#xa0;</td> <td id="new_id-3659">&#xa0;</td> <td id="new_id-3660">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $1,000,000 (the &#x201c;U.S. Convertible Debenture 2&#x201d;) dated October 31, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the nine months ended February 28, 2019, $52 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $26,301 on the U.S. Convertible Debenture 2.</p> </td> <td id="new_id-3661" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3662" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3663" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,000,000</td> <td id="new_id-3664" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3665" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3666" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3667" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3668" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3669" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3670" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3671" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3672" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3673" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3674" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3675">&#xa0;</td> <td id="new_id-3676">&#xa0;</td> <td id="new_id-3677">&#xa0;</td> <td id="new_id-3678">&#xa0;</td> <td id="new_id-3679">&#xa0;</td> <td id="new_id-3680">&#xa0;</td> <td id="new_id-3681">&#xa0;</td> <td id="new_id-3682">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $100,000 (the &#x201c;U.S. Convertible Debenture 3&#x201d;) dated October 24, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the nine months ended February 28, 2019, $60 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,784 on the U.S. Convertible Debenture 3.</p> </td> <td id="new_id-3683" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3684" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3685" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">100,000</td> <td id="new_id-3686" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3687" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3688" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3689" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3690" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3691">&#xa0;</td> <td id="new_id-3692">&#xa0;</td> <td id="new_id-3693">&#xa0;</td> <td id="new_id-3694">&#xa0;</td> <td id="new_id-3695">&#xa0;</td> <td id="new_id-3696">&#xa0;</td> <td id="new_id-3697">&#xa0;</td> <td id="new_id-3698">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $532,000 (the &#x201c;U.S. Convertible Debenture 4&#x201d;) dated October 25, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the nine months ended February 28, 2019, $87 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $14,692 on the U.S. Convertible Debenture 4.</p> </td> <td id="new_id-3699" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3700" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3701" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">532,000</td> <td id="new_id-3702" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3703" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3704" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3705" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3706" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3707">&#xa0;</td> <td id="new_id-3708">&#xa0;</td> <td id="new_id-3709">&#xa0;</td> <td id="new_id-3710">&#xa0;</td> <td id="new_id-3711">&#xa0;</td> <td id="new_id-3712">&#xa0;</td> <td id="new_id-3713">&#xa0;</td> <td id="new_id-3714">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $150,000 (the &#x201c;U.S. Convertible Debenture 5&#x201d;) dated October 26, 2018,&#xa0;&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and&#xa0;ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the nine months ended February 28, 2019, $67 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $4,110 on the U.S. Convertible Debenture 5.</p> </td> <td id="new_id-3715" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3716" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3717" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">150,000</td> <td id="new_id-3718" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3719" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3720" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3721" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3722" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3723" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3724" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3725" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3726" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3727" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3728" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3729">&#xa0;</td> <td id="new_id-3730">&#xa0;</td> <td id="new_id-3731">&#xa0;</td> <td id="new_id-3732">&#xa0;</td> <td id="new_id-3733">&#xa0;</td> <td id="new_id-3734">&#xa0;</td> <td id="new_id-3735">&#xa0;</td> <td id="new_id-3736">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture payable in the principal amount of $75,000 (the &#x201c;U.S. Convertible Debenture 6&#x201d;) dated October 26, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock,&#xa0;and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the nine months ended February 28, 2019, $57 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,055 on the U.S. Convertible Debenture 6.</p> </td> <td id="new_id-3737" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3738" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3739" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">75,000</td> <td id="new_id-3740" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3741" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3742" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3743" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3744" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3745">&#xa0;</td> <td id="new_id-3746">&#xa0;</td> <td id="new_id-3747">&#xa0;</td> <td id="new_id-3748">&#xa0;</td> <td id="new_id-3749">&#xa0;</td> <td id="new_id-3750">&#xa0;</td> <td id="new_id-3751">&#xa0;</td> <td id="new_id-3752">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debentures payable in the aggregate principal amount of $12,012,000 (the &#x201c;Canaccord Debentures&#x201d;) dated December 12, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature&#xa0;on a date that is three years following issuance. The Canaccord Debentures &#xa0;are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock,&#xa0;and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the nine months ended February 28, 2019, $136 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $205,356 on the Canaccord Debentures.</p> </td> <td id="new_id-3753" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3754" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3755" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">12,012,000</td> <td id="new_id-3756" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3757" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3758" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3759" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3760" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3761">&#xa0;</td> <td id="new_id-3762">&#xa0;</td> <td id="new_id-3763">&#xa0;</td> <td id="new_id-3764">&#xa0;</td> <td id="new_id-3765">&#xa0;</td> <td id="new_id-3766">&#xa0;</td> <td id="new_id-3767">&#xa0;</td> <td id="new_id-3768">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable</p> </td> <td id="new_id-3769" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3770" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3771" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">18,619,000</td> <td id="new_id-3772" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3773" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3774" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3775" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,380,000</td> <td id="new_id-3776" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3777" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3778" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3779" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(8,030,735</td> <td id="new_id-3780" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3781" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3782" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3783" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(1,295,527</td> <td id="new_id-3784" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Net of Discounts</p> </td> <td id="new_id-3785" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3786" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3787" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">10,588,265</td> <td id="new_id-3788" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3789" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3790" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3791" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">84,473</td> <td id="new_id-3792" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3793">&#xa0;</td> <td id="new_id-3794">&#xa0;</td> <td id="new_id-3795">&#xa0;</td> <td id="new_id-3796">&#xa0;</td> <td id="new_id-3797">&#xa0;</td> <td id="new_id-3798">&#xa0;</td> <td id="new_id-3799">&#xa0;</td> <td id="new_id-3800">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable, Net of Discounts, Current Portion</p> </td> <td id="new_id-3801" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3802" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3803" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">398,117</td> <td id="new_id-3804" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3805" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3806" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3807" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">43,401</td> <td id="new_id-3808" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable, Net of Discounts, Long-term Portion</p> </td> <td id="new_id-3809" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3810" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3811" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">10,190,148</td> <td id="new_id-3812" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3813" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3814" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3815" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">41,072</td> <td id="new_id-3816" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Discounts on notes payable amortized to interest expense &#x2013; 3 months ended February 28, 2019 and 2018, respectively</p> </td> <td id="new_id-3817" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3818" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3819" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">337,347</td> <td id="new_id-3820" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3821" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3822" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3823" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">818,254</td> <td id="new_id-3824" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Discounts on notes payable amortized to interest expense &#x2013; 9 months ended February 28, 2019 and 2018, respectively</p> </td> <td id="new_id-3825" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3826" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3827" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,481,674</td> <td id="new_id-3828" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3829" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3830" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3831" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,391,110</td> <td id="new_id-3832" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><i>Beneficial Conversion Features</i></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Darling Note, Efrat Note, Lamadrid Note and YA II PN Notes contain conversion features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management&#x2019;s judgment and may impact net income.&#xa0; The derivative components of the notes were valued at issuance, at conversion, at restructure, and at each period end.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Certain of the Company&#x2019;s other convertible notes payable contain beneficial conversion features that are not derivatives, but which require valuation in order to determine the discount to the related convertible note payable. The value of these conversion features is calculated using the intrinsic value method, whereby the amount of the discount is calculated as the difference between the conversion price and the market price of the underlying common stock at the date of issuance multiplied by the number of shares issuable.</p><br/></div> 2537750 166490 10816960 0.25 7609910 0.125 -951239 0.75 1.07 0.0025 0.10 0.3125 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3233" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3234" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3235" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3236" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3237" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3238" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3239" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3240" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3241" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3242" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3243" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3244" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3245">&#xa0;</td> <td id="new_id-3246">&#xa0;</td> <td id="new_id-3247">&#xa0;</td> <td id="new_id-3248">&#xa0;</td> <td id="new_id-3249">&#xa0;</td> <td id="new_id-3250">&#xa0;</td> <td id="new_id-3251">&#xa0;</td> <td id="new_id-3252">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the &#x201c;Blatt Note&#x201d;).&#xa0; This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.</p> </td> <td id="new_id-3253" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3254" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3255" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3256" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3257" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3258" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3259" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">210,000</td> <td id="new_id-3260" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3261">&#xa0;</td> <td id="new_id-3262">&#xa0;</td> <td id="new_id-3263">&#xa0;</td> <td id="new_id-3264">&#xa0;</td> <td id="new_id-3265">&#xa0;</td> <td id="new_id-3266">&#xa0;</td> <td id="new_id-3267">&#xa0;</td> <td id="new_id-3268">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the &#x201c;AJG Note&#x201d;).&#xa0; This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note. &#xa0;</p> </td> <td id="new_id-3269" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3270" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3271" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3272" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3273" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3274" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3275" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">100,000</td> <td id="new_id-3276" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3277">&#xa0;</td> <td id="new_id-3278">&#xa0;</td> <td id="new_id-3279">&#xa0;</td> <td id="new_id-3280">&#xa0;</td> <td id="new_id-3281">&#xa0;</td> <td id="new_id-3282">&#xa0;</td> <td id="new_id-3283">&#xa0;</td> <td id="new_id-3284">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (&#x201c;Oasis Note&#x201d;). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.&#xa0; The note is due on December 4, 2019, but may be prepaid at any time without penalty.&#xa0;&#xa0; The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs.&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">The Company recognized an original issue discount of $189,180 on the Oasis Note.&#xa0; During the nine months ended February 28, 2019, $88,644 of this discount was charged to operations.&#xa0; During the nine months ended February 28, 2019, the Company accrued interest in the amount of $164,000 on the Oasis&#xa0;Note.</p> </td> <td id="new_id-3285" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3286" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3287" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">4,000,000</td> <td id="new_id-3288" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3289" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3290" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3291" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3292" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3293">&#xa0;</td> <td id="new_id-3294">&#xa0;</td> <td id="new_id-3295">&#xa0;</td> <td id="new_id-3296">&#xa0;</td> <td id="new_id-3297">&#xa0;</td> <td id="new_id-3298">&#xa0;</td> <td id="new_id-3299">&#xa0;</td> <td id="new_id-3300">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013;&#xa0;Notes Payable</p> </td> <td id="new_id-3301" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3302" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3303" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,000,000</td> <td id="new_id-3304" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3305" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3306" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3307" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">310,000</td> <td id="new_id-3308" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3309" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3310" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3311" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(100,536</td> <td id="new_id-3312" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3313" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3314" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3315" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3316" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Notes Payable, Net of Discounts</p> </td> <td id="new_id-3317" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3318" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3319" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">3,899,464</td> <td id="new_id-3320" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3321" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3322" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3323" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">310,000</td> <td id="new_id-3324" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Current portion</p> </td> <td id="new_id-3325" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3326" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-3327" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">3,899,464</td> <td id="new_id-3328" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3329" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3330" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-3331" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">310,000</td> <td id="new_id-3332" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Long term portion</p> </td> <td id="new_id-3333" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3334" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3335" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3336" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3337" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3338" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3339" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3340" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 0 210000 0 100000 4000000 0 4000000 310000 100536 0 3899464 310000 0 0 210000 0.06 2019-02-07 1726 210000 5627 200000 0.06 2019-02-07 641 100000 3337 4000000 0.06 2019-12-04 secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs 189180 88644 164000 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> The following tables summarize the Company&#x2019;s loan balances at February 28, 2019 and May 31, 2018:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3341" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3342" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> </td> <td id="new_id-3343" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3344" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3345" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> </td> <td id="new_id-3346" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3347" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3348" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3349" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3350" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3351" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3352" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3353">&#xa0;</td> <td id="new_id-3354">&#xa0;</td> <td id="new_id-3355">&#xa0;</td> <td id="new_id-3356">&#xa0;</td> <td id="new_id-3357">&#xa0;</td> <td id="new_id-3358">&#xa0;</td> <td id="new_id-3359">&#xa0;</td> <td id="new_id-3360">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the &#x201c;Binder Funding Notes&#x201d;). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.&#xa0;&#xa0;Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share&#xa0;and a&#xa0;discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.&#xa0; Also during the year ended May 31, 2018 the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.&#xa0; During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, Mr. Binder advanced a total of $211,700 to the Company under the Binder Funding Notes. During the nine months ended February 28, 2019,&#xa0;the Company made principal payments to in the amount of $211,837 under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,710 on the Binder Funding Notes. During the nine months ended February 28, 2019, discounts in the aggregate amount of $211,702 related to the beneficial conversion feature of the Binder Funding Notes were charged to additional-paid in capital and amortized to interest expense.</p> </td> <td id="new_id-3361" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3362" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3363" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3364" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3365" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3366" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3367" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">137</td> <td id="new_id-3368" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3369" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3370" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3371" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3372" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3373" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3374" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3375">&#xa0;</td> <td id="new_id-3376">&#xa0;</td> <td id="new_id-3377">&#xa0;</td> <td id="new_id-3378">&#xa0;</td> <td id="new_id-3379">&#xa0;</td> <td id="new_id-3380">&#xa0;</td> <td id="new_id-3381">&#xa0;</td> <td id="new_id-3382">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Notes payable to Newcan Investment Partners, LLC (&#x201c;Newcan&#x201d;), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the &#x201c;Newcan Funding Notes&#x201d;). The Newcan Funding Notes bear interest at a rate of&#xa0;10% per annum, have no maturity date and are due on demand.&#xa0; Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.).&#xa0; During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (&#x201c;Newcan Convertible Note 8&#x201d;). During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.</p> </td> <td id="new_id-3383" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3384" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3385" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3386" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3387" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3388" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3389" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">75,000</td> <td id="new_id-3390" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3391">&#xa0;</td> <td id="new_id-3392">&#xa0;</td> <td id="new_id-3393">&#xa0;</td> <td id="new_id-3394">&#xa0;</td> <td id="new_id-3395">&#xa0;</td> <td id="new_id-3396">&#xa0;</td> <td id="new_id-3397">&#xa0;</td> <td id="new_id-3398">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable, Related Parties</p> </td> <td id="new_id-3399" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3400" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3401" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3402" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3403" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3404" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3405" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">75,137</td> <td id="new_id-3406" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable,&#xa0; Related Parties - Current portion</p> </td> <td id="new_id-3407" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3408" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3409" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3410" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3411" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3412" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3413" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">75,137</td> <td id="new_id-3414" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Demand Convertible Notes Payable, Related Parties - Long term portion</p> </td> <td id="new_id-3415" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3416" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3417" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3418" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3419" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3420" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3421" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3422" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 137 0 75000 75137 0 0 211700 440579 0.10 0.10 5188 1710 7364 280198 211702 385637 211837 237794 0.3125 0.3125 0 290000 1931 25018 75000 836658 0.10 0.10 1377 16681 0.3125 0.3125 210120 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3423" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3424" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, &#xa0;</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3425" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3426" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3427" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3428" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3429">&#xa0;</td> <td id="new_id-3430">&#xa0;</td> <td id="new_id-3431">&#xa0;</td> <td id="new_id-3432">&#xa0;</td> <td id="new_id-3433">&#xa0;</td> <td id="new_id-3434">&#xa0;</td> <td id="new_id-3435">&#xa0;</td> <td id="new_id-3436">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to David Lamadrid (the &#x201c;Lamadrid Note&#x201d;) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.&#xa0; The Lamadrid Note is due eighteen months from the date of issue.&#xa0; Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $942 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the nine months ended February 28, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the nine months ended February 28, 2019 the remaining discount in the amount of $30,308 was charged to operations.</p> </td> <td id="new_id-3437" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3438" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3439" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3440" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3441" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3442" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3443" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">31,250</td> <td id="new_id-3444" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3445">&#xa0;</td> <td id="new_id-3446">&#xa0;</td> <td id="new_id-3447">&#xa0;</td> <td id="new_id-3448">&#xa0;</td> <td id="new_id-3449">&#xa0;</td> <td id="new_id-3450">&#xa0;</td> <td id="new_id-3451">&#xa0;</td> <td id="new_id-3452">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the &#x201c;Binder Convertible Note 9&#x201d;).&#xa0; The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.&#xa0; Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.&#xa0; This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.&#xa0; The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the twelve months ended May 31, 2018 and 2017, interest in the amount of $565 and $0 was accrued on Binder Convertible Note 9, respectively.&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the nine months ended February 28, 2019, the Company made a principal payment in the amount of $37,500 on the Binder Convertible Note 9. During the nine months ended February 28, 2019 the remaining discount in the amount of $35,610 was charged to operations.</p> </td> <td id="new_id-3453" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3454" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3455" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3456" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3457" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3458" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3459" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">37,500</td> <td id="new_id-3460" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3461" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3462" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3463" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3464" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3465" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3466" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3467">&#xa0;</td> <td id="new_id-3468">&#xa0;</td> <td id="new_id-3469">&#xa0;</td> <td id="new_id-3470">&#xa0;</td> <td id="new_id-3471">&#xa0;</td> <td id="new_id-3472">&#xa0;</td> <td id="new_id-3473">&#xa0;</td> <td id="new_id-3474">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the &#x201c;Newcan Convertible Note 8&#x201d;).&#xa0; The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.&#xa0; Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.&#xa0; This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.&#xa0; The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $1,603 on this note.&#xa0;During the nine months ended February 28, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $57,322 was charged to operations.</p> </td> <td id="new_id-3475" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3476" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3477" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3478" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3479" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3480" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3481" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3482" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3483">&#xa0;</td> <td id="new_id-3484">&#xa0;</td> <td id="new_id-3485">&#xa0;</td> <td id="new_id-3486">&#xa0;</td> <td id="new_id-3487">&#xa0;</td> <td id="new_id-3488">&#xa0;</td> <td id="new_id-3489">&#xa0;</td> <td id="new_id-3490">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total &#x2013; Convertible Notes Payable, Related Parties</p> </td> <td id="new_id-3491" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3492" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3493" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3494" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3495" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3496" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3497" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">68,750</td> <td id="new_id-3498" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3499" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3500" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3501" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3502" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3503" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3504" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3505" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(65,918</td> <td id="new_id-3506" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts</p> </td> <td id="new_id-3507" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3508" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3509" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-3510" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3511" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3512" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3513" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2,832</td> <td id="new_id-3514" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3515">&#xa0;</td> <td id="new_id-3516">&#xa0;</td> <td id="new_id-3517">&#xa0;</td> <td id="new_id-3518">&#xa0;</td> <td id="new_id-3519">&#xa0;</td> <td id="new_id-3520">&#xa0;</td> <td id="new_id-3521">&#xa0;</td> <td id="new_id-3522">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion</p> </td> <td id="new_id-3523" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3524" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3525" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3526" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3527" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3528" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3529" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,832</td> <td id="new_id-3530" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion</p> </td> <td id="new_id-3531" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3532" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3533" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3534" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3535" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3536" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3537" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3538" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3539" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3540" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3541" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3542" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3543" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3544" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3545">&#xa0;</td> <td id="new_id-3546">&#xa0;</td> <td id="new_id-3547">&#xa0;</td> <td id="new_id-3548">&#xa0;</td> <td id="new_id-3549">&#xa0;</td> <td id="new_id-3550">&#xa0;</td> <td id="new_id-3551">&#xa0;</td> <td id="new_id-3552">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to Darling Capital, LLC (the &#x201c;Darling Note&#x201d;) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.&#xa0; The Darling Note is due eighteen months from the date of issue.&#xa0; Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $40,427 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,447 on this note. During the nine months ended February 28, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the&#xa0;nine months ended February 28, 2019, the remaining discount in the amount of $509,573 was charged to operations.</p> </td> <td id="new_id-3553" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3554" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3555" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3556" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3557" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3558" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3559" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">550,000</td> <td id="new_id-3560" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3561">&#xa0;</td> <td id="new_id-3562">&#xa0;</td> <td id="new_id-3563">&#xa0;</td> <td id="new_id-3564">&#xa0;</td> <td id="new_id-3565">&#xa0;</td> <td id="new_id-3566">&#xa0;</td> <td id="new_id-3567">&#xa0;</td> <td id="new_id-3568">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to Efrat Investments, LLC (the &#x201c;Efrat Note&#x201d;) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.&#xa0; The Efrat Note is due eighteen months from the date of issue.&#xa0; Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $2,974 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the&#xa0;nine months ended February 28, 2019, the Company accrued interest in the amount of $898 on this note. During the nine months ended February 28, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the&#xa0;nine months ended February 28, 2019, the remaining discount in the amount of $52,026 was charged to operations.</p> </td> <td id="new_id-3569" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3570" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3571" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3572" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3573" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3574" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3575" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">55,000</td> <td id="new_id-3576" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3577" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3578" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, </b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3579" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3580" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3581" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3582" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3583">&#xa0;</td> <td id="new_id-3584">&#xa0;</td> <td id="new_id-3585">&#xa0;</td> <td id="new_id-3586">&#xa0;</td> <td id="new_id-3587">&#xa0;</td> <td id="new_id-3588">&#xa0;</td> <td id="new_id-3589">&#xa0;</td> <td id="new_id-3590">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to YA II PN, Ltd. (the &#x201c;YA II PN Note&#x201d;) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.&#xa0; YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.&#xa0; The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.&#xa0;&#xa0;Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the twelve months ended May 31, 2018, $23,224 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000&#xa0;was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.&#xa0; Also during the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $39,068 on the YA II PN Note. During the nine months ended February 28, 2019, the holder of&#xa0;the YA II PN Note converted principal in the amount&#xa0;of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock.</p> </td> <td id="new_id-3591" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3592" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3593" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">250,000</td> <td id="new_id-3594" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3595" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3596" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3597" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">750,000</td> <td id="new_id-3598" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3599">&#xa0;</td> <td id="new_id-3600">&#xa0;</td> <td id="new_id-3601">&#xa0;</td> <td id="new_id-3602">&#xa0;</td> <td id="new_id-3603">&#xa0;</td> <td id="new_id-3604">&#xa0;</td> <td id="new_id-3605">&#xa0;</td> <td id="new_id-3606">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Unsecured convertible note issued to Jay Lasky (the &#x201c;Lasky Note&#x201d;), dated May 3, 2018 in the original principal amount of $25,000.&#xa0; This note bears interest at the rate of 10% per annum.&#xa0; No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.&#xa0; Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.&#xa0; The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.&#xa0; The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.&#xa0; During the twelve months ended May 31, 2018, $149 of this discount was charged to operations.&#xa0; During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">During the nine months ended February 28, 2019, $7,152 of the discount was charged to operations. Also during the nine months ended February 28, 2019, the Company accrued interest in the amount of $993 on this note. During the nine&#xa0;months ended February 28, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.</p> </td> <td id="new_id-3607" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3608" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3609" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3610" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3611" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3612" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3613" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">25,000</td> <td id="new_id-3614" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3615" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3616" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3617" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3618" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3619" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3620" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3621">&#xa0;</td> <td id="new_id-3622">&#xa0;</td> <td id="new_id-3623">&#xa0;</td> <td id="new_id-3624">&#xa0;</td> <td id="new_id-3625">&#xa0;</td> <td id="new_id-3626">&#xa0;</td> <td id="new_id-3627">&#xa0;</td> <td id="new_id-3628">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible promissory note payable to YA II PN, Ltd. (the &#x201c;YA II PN Note 2&#x201d;) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.&#xa0; YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.&#xa0; The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.&#xa0;&#xa0;Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the nine months ended February 28, 2019, $167,713 of this discount was charged to operations.&#xa0;Also during the nine months ended February 28 2019, the Company accrued interest in the amount of $29,041 on this note.</p> </td> <td id="new_id-3629" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3630" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3631" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">500,000</td> <td id="new_id-3632" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3633" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3634" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3635" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3636" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3637">&#xa0;</td> <td id="new_id-3638">&#xa0;</td> <td id="new_id-3639">&#xa0;</td> <td id="new_id-3640">&#xa0;</td> <td id="new_id-3641">&#xa0;</td> <td id="new_id-3642">&#xa0;</td> <td id="new_id-3643">&#xa0;</td> <td id="new_id-3644">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $4,000,000 (the &#x201c;U.S. Convertible Debenture 1&#x201d;) dated October 31, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1&#xa0;is convertible into units (the &#x201c;Convertible Debenture Units&#x201d;) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 1&#xa0;is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the nine months ended February 28, 2019, $217 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $105,205 on the U.S. Convertible Debenture 1.</p> </td> <td id="new_id-3645" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3646" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3647" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,000,000</td> <td id="new_id-3648" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3649" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3650" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3651" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3652" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3653">&#xa0;</td> <td id="new_id-3654">&#xa0;</td> <td id="new_id-3655">&#xa0;</td> <td id="new_id-3656">&#xa0;</td> <td id="new_id-3657">&#xa0;</td> <td id="new_id-3658">&#xa0;</td> <td id="new_id-3659">&#xa0;</td> <td id="new_id-3660">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $1,000,000 (the &#x201c;U.S. Convertible Debenture 2&#x201d;) dated October 31, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the nine months ended February 28, 2019, $52 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $26,301 on the U.S. Convertible Debenture 2.</p> </td> <td id="new_id-3661" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3662" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3663" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,000,000</td> <td id="new_id-3664" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3665" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3666" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3667" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3668" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3669" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3670" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3671" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3672" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3673" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3674" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3675">&#xa0;</td> <td id="new_id-3676">&#xa0;</td> <td id="new_id-3677">&#xa0;</td> <td id="new_id-3678">&#xa0;</td> <td id="new_id-3679">&#xa0;</td> <td id="new_id-3680">&#xa0;</td> <td id="new_id-3681">&#xa0;</td> <td id="new_id-3682">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $100,000 (the &#x201c;U.S. Convertible Debenture 3&#x201d;) dated October 24, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the nine months ended February 28, 2019, $60 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,784 on the U.S. Convertible Debenture 3.</p> </td> <td id="new_id-3683" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3684" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3685" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">100,000</td> <td id="new_id-3686" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3687" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3688" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3689" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3690" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3691">&#xa0;</td> <td id="new_id-3692">&#xa0;</td> <td id="new_id-3693">&#xa0;</td> <td id="new_id-3694">&#xa0;</td> <td id="new_id-3695">&#xa0;</td> <td id="new_id-3696">&#xa0;</td> <td id="new_id-3697">&#xa0;</td> <td id="new_id-3698">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $532,000 (the &#x201c;U.S. Convertible Debenture 4&#x201d;) dated October 25, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the nine months ended February 28, 2019, $87 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $14,692 on the U.S. Convertible Debenture 4.</p> </td> <td id="new_id-3699" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3700" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3701" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">532,000</td> <td id="new_id-3702" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3703" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3704" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3705" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3706" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3707">&#xa0;</td> <td id="new_id-3708">&#xa0;</td> <td id="new_id-3709">&#xa0;</td> <td id="new_id-3710">&#xa0;</td> <td id="new_id-3711">&#xa0;</td> <td id="new_id-3712">&#xa0;</td> <td id="new_id-3713">&#xa0;</td> <td id="new_id-3714">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture in the principal amount of $150,000 (the &#x201c;U.S. Convertible Debenture 5&#x201d;) dated October 26, 2018,&#xa0;&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and&#xa0;ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the nine months ended February 28, 2019, $67 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $4,110 on the U.S. Convertible Debenture 5.</p> </td> <td id="new_id-3715" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3716" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3717" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">150,000</td> <td id="new_id-3718" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3719" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3720" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3721" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3722" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3723" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3724" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2019</b></b></p> </td> <td id="new_id-3725" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-3726" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-3727" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31,</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>2018</b></b></p> </td> <td id="new_id-3728" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-3729">&#xa0;</td> <td id="new_id-3730">&#xa0;</td> <td id="new_id-3731">&#xa0;</td> <td id="new_id-3732">&#xa0;</td> <td id="new_id-3733">&#xa0;</td> <td id="new_id-3734">&#xa0;</td> <td id="new_id-3735">&#xa0;</td> <td id="new_id-3736">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 70%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debenture payable in the principal amount of $75,000 (the &#x201c;U.S. Convertible Debenture 6&#x201d;) dated October 26, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6&#xa0;is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock,&#xa0;and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the nine months ended February 28, 2019, $57 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,055 on the U.S. Convertible Debenture 6.</p> </td> <td id="new_id-3737" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3738" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3739" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">75,000</td> <td id="new_id-3740" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3741" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3742" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3743" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-3744" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3745">&#xa0;</td> <td id="new_id-3746">&#xa0;</td> <td id="new_id-3747">&#xa0;</td> <td id="new_id-3748">&#xa0;</td> <td id="new_id-3749">&#xa0;</td> <td id="new_id-3750">&#xa0;</td> <td id="new_id-3751">&#xa0;</td> <td id="new_id-3752">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: justify; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;">Convertible debentures payable in the aggregate principal amount of $12,012,000 (the &#x201c;Canaccord Debentures&#x201d;) dated December 12, 2018,&#xa0;which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature&#xa0;on a date that is three years following issuance. The Canaccord Debentures &#xa0;are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company&#x2019;s common stock,&#xa0;and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a &#x201c;Change in Control&#x201d; of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank&#xa0;<i>pari passu</i>&#xa0;in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the nine months ended February 28, 2019, $136 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $205,356 on the Canaccord Debentures.</p> </td> <td id="new_id-3753" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3754" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3755" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">12,012,000</td> <td id="new_id-3756" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3757" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3758" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3759" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-3760" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3761">&#xa0;</td> <td id="new_id-3762">&#xa0;</td> <td id="new_id-3763">&#xa0;</td> <td id="new_id-3764">&#xa0;</td> <td id="new_id-3765">&#xa0;</td> <td id="new_id-3766">&#xa0;</td> <td id="new_id-3767">&#xa0;</td> <td id="new_id-3768">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable</p> </td> <td id="new_id-3769" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3770" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3771" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">18,619,000</td> <td id="new_id-3772" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3773" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3774" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3775" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,380,000</td> <td id="new_id-3776" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Less: Discount</p> </td> <td id="new_id-3777" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3778" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3779" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(8,030,735</td> <td id="new_id-3780" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-3781" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3782" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3783" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(1,295,527</td> <td id="new_id-3784" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Convertible Notes Payable, Net of Discounts</p> </td> <td id="new_id-3785" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3786" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3787" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">10,588,265</td> <td id="new_id-3788" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3789" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3790" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-3791" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">84,473</td> <td id="new_id-3792" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-3793">&#xa0;</td> <td id="new_id-3794">&#xa0;</td> <td id="new_id-3795">&#xa0;</td> <td id="new_id-3796">&#xa0;</td> <td id="new_id-3797">&#xa0;</td> <td id="new_id-3798">&#xa0;</td> <td id="new_id-3799">&#xa0;</td> <td id="new_id-3800">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable, Net of Discounts, Current Portion</p> </td> <td id="new_id-3801" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3802" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3803" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">398,117</td> <td id="new_id-3804" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3805" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3806" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3807" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">43,401</td> <td id="new_id-3808" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Total - Convertible Notes Payable, Net of Discounts, Long-term Portion</p> </td> <td id="new_id-3809" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3810" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3811" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">10,190,148</td> <td id="new_id-3812" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3813" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3814" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3815" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">41,072</td> <td id="new_id-3816" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 0 31250 0 37500 0 0 0 68750 0 65918 0 2832 0 2832 0 0 0 550000 0 55000 250000 750000 0 25000 500000 0 4000000 0 1000000 0 100000 0 532000 0 150000 0 75000 0 12012000 18619000 1380000 8030735 1295527 10588265 84473 31250 31250 0.08 0.08 eighteen months eighteen months 0.3125 0.3125 31250 30308 685 562 32497 31250 1247 103989 699 565 No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. 0.10 0.10 37500 37500 37500 37500 0.3125 0.3125 35610 75000 0.10 2018-08-06 No interest payments are required until January 1, 2020, at which time all of the accrued interest becomes due and payable. Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full. 0.40 58594 1603 57322 78534 75000 3534 196336 500000 500000 2018-02-05 2018-02-05 50000 50000 0.3125 0.3125 550000 509573 40427 1447 13863 565000 550000 15000 1808000 2018-02-12 2018-02-12 0.08 0.08 50000 50000 5000 5000 0.3125 0.3125 55000 898 1302 52026 2974 57200 55000 2200 183040 2018-05-14 2018-05-14 0.08 0.08 750000 750000 November 14, 2019 November 14, 2019 0.34 0.40 750000 23224 2795 2018-05-03 2018-05-03 25000 25000 0.10 0.10 No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. 0.40 0.40 7301 7152 149 993 192 26185 25000 1185 65462 2018-07-20 0.08 500000 November 14, 2019 0.40 362500 Commencing on December 1, 2018, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. 4000000 2018-10-31 0.08 0.80 The U.S. Convertible Debenture 1 is convertible into units (the "Convertible Debenture Units") at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. P3Y 3254896 1000000 2018-10-31 0.08 0.80 The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. P3Y 813724 28 100000 2018-10-24 0.08 0.80 The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. P3Y 75415 532000 2018-10-25 0.08 0.80 The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. P3Y 416653 150000 2018-10-26 0.08 0.80 The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. P3Y 120100 75000 2018-10-26 0.08 0.80 The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10 P3Y 60049 12012000 2018-12-12 0.08 P3Y The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. 2938690 136 205356 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> <table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 70%;"> <p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Discounts on notes payable amortized to interest expense &#x2013; 3 months ended February 28, 2019 and 2018, respectively</p> </td> <td id="new_id-3817" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3818" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3819" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">337,347</td> <td id="new_id-3820" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3821" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3822" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3823" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">818,254</td> <td id="new_id-3824" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;"> <p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-top: 0pt; margin-bottom: 0pt;">Discounts on notes payable amortized to interest expense &#x2013; 9 months ended February 28, 2019 and 2018, respectively</p> </td> <td id="new_id-3825" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3826" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3827" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,481,674</td> <td id="new_id-3828" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3829" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3830" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3831" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,391,110</td> <td id="new_id-3832" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 337347 818254 2481674 1391110 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 1</b><b>5</b><b>&#xa0;&#x2013; Contingent Liability</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The terms of the Company&#x2019;s acquisition of Alternative Solutions, LLC include a payment of $1,000,000 contingent upon the Oasis LLCs achieving certain revenue targets. (see note 3). The fair value of this contingent consideration at the time of the Acquisition Agreement was $678,111 as determined by the Company&#x2019;s outside valuation consultants. Management has reviewed the value of the contingent consideration, and has concluded that no adjustment is necessary at February 28, 2019.</p><br/></div> 1000000 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 1</b><b>6</b><b>&#xa0;&#x2013; Stockholders&#x2019; Equity</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company&#x2019;s authorized capital stock consists of 250,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share.&#xa0;The Company had 125,814,107&#xa0;and 50,128,972 shares of common stock issued and outstanding as of February 28, 2019, and May 31, 2018, respectively.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company recorded imputed interest of $268 and $265 during the three months ended February 28, 2019 and 2018 on related party payables due to a director and officer of the Company. The Company recorded imputed interest of $807 and $804 during the nine months ended February 28, 2019 and 2017 on related party payables due to a director and officer of the Company, and charged this amount to additional paid-in capital.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued upon Conversion of Notes Payable</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, Darling Capital, holder of a convertible promissory note, converted a total of $565,000, which consisted of $550,000 of principal and $15,000 of accrued interest, into 1,808,000 shares of common stock.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, Efrat Investments, holder of a convertible promissory note, converted a total of $57,200, which consisted of $55,000 of principal and $2,200 of accrued interest, into 183,040 shares of common stock.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, David Lamadrid, holder of a convertible promissory note, converted a total of $32,497, which consisted of $31,250 of principal and $1,247 of accrued interest, into 103,989 shares of common stock.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, Jay Lasky, holder of a convertible promissory note, converted a total of $26,185, which consisted of $25,000 of principal and $1,185 of accrued interest, into 65,462 shares of common stock.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, Newcan, holder of a convertible promissory note, converted a total of $78,534, which consisted of $75,000 of principal and $3,534 of accrued interest, into 196,336 shares of common stock.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $280,247, which consisted of $250,000 of principal and $30,247 of accrued interest, into 700,616 shares of common stock.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $256,027 which consisted of $250,000 of principal and $6,027 of accrued interest, into 640,068 shares of common stock.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued for Services</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:35.9pt;">On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of the Company&#x2019;s restricted common stock in recognition of Mr. Glashow&#x2019;s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions.&#xa0; The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 24, 2018, pursuant to the terms of a severance agreement between the Company and David Lamadrid, the Company issued 600,000 shares of restricted common stock to Mr. Lamadrid. These shares were valued at $264,000, $213,320 of which was previously expensed and the remaining $50,680 of which was charged to operations during the nine months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:28.5pt;">On September 11, 2018, the Company&#xa0;issued 31,250 shares of common stock with a fair value of $25,310 in exchange for legal services previously rendered to the Company. These shares were accrued on February 8, 2018, and were issued from stock payable.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued for Acquisition </font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 27, 2018, the Company issued 22,058,823 shares of its common stock pursuant to the terms of the Alternative Solutions, LLC Acquisition Agreement.&#xa0; These shares were valued at $15,441,176.&#xa0; (See note 3).</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Special Warrants Issued in Offering</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 20, 2018, the Company executed an Agency Agreement with Canaccord Genuity Corp. and closed on a private offering of its special warrants for aggregate gross proceeds of C$13,037,859 (USD$9,785,978). Pursuant to the offering, the Company issued 28,973,020 special warrants at a price of C$0.45 (USD$0.34) per special warrant.&#xa0; Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.&#xa0; Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Because the Company did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, the unexercised special warrants were adjusted to entitle the holders to receive 1.1 units instead of one unit of the Company. This resulted in the issuance of an additional 3,042,167 units. This penalty was valued at $7,142,550 and was charged to operations during the three months ended August 31, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;text-indent:36pt;">On February 28, 2019, all of the special warrants were automatically converted into 33,465,110 shares of common stock and warrants to purchase 33,465,110 shares of common stock for CD$0.65 per share.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued in Navy Capital Offering</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company entered into a Subscription Agreement with Navy Capital Green International, Ltd, (the &#x201c;Navy Capital Offering&#x201d;) for 7,500,000 units at a price of $0.40 per unit, or an aggregate amount of $3,000,000.&#xa0; The units collectively represent (i) 7,500,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of common stock at an exercise price of $0.60 per share of common stock.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In connection with the Navy Capital Offering, between August 8, 2018 and August 10, 2018, the Company entered into five subscription agreements for a total of 6,875,000 units at a price of $0.40 per unit, or an aggregate purchase price of $2,750,000.&#xa0; The units collectively represent (i) 6,875,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of common stock at an exercise price of $0.60 per share of common stock.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued to Officers</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer.&#xa0; These shares vested four months after issuance.&#xa0; The shares were valued at $17,500, and were amortized over the vesting period.&#xa0; As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations, and is carried as Common Stock Subscribed on the Company&#x2019;s balance sheet at February 28, 2019.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.&#xa0; These shares were valued at $350,000 and will be amortized over the vesting period.&#xa0; As of February 28, 2019, $236,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company&#x2019;s balance sheet at February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.&#xa0; These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company&#x2019;s balance sheet at February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued upon Cashless Exercise of Warrants</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On August 14, 2018, the Company issued 129,412 shares of common stock for the cashless conversion of 350,000 warrants at an exercise price of $0.75 per share.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On September 6, 2018, the Company issued 13,684 shares of common stock upon the cashless exercise of 40,000 warrants at an exercise price of $0.75 per share.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On November 14, 2018, the Company issued 5,867 shares of common stock upon the cashless exercise of 25,000 warrants at an exercise price of $0.75 per share.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued for Settlement</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On November 1, 2018, the Company issued 50,000 shares of common stock with a fair value of $47,500 pursuant to a legal settlement.&#xa0;There was no gain or loss associated with this transaction.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Stock Issued for Compensation for Debenture Offering</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 559,750 shares of common stock as compensation for agent and advisory services. These shares were valued at $376,152, and this amount was charged to operations during the three months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Additional Paid-in Capital </font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, the Company recorded discounts on two convertible notes payable relating to beneficial conversion features in the aggregate amount of $362,500 on the YA II PN Note 2, and $58,594 on the Newcan Convertible Note 8. Also, during the nine months ended February 28, 2019, a reset event occurred with regard to the YAII PN Note.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, the Company recorded an original issue discount on the Serenity Wellness Note in the amount of $81,961.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in the previously issued convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to additional paid-in capital in the aggregate amount of $1,265,751. On June 20, 2018, a reset event occurred in connection with the YA II PN Note (see note 14), and the Company charged the change in fair value of the conversion feature in the amount of $35,833 to additional paid-in capital. This was considered a material modification of the note, and the Company created a new discount to this note in the amount of $750,000, which was charged to additional paid-in capital.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">During the nine months ended February 28, 2019, the Company recorded discounts on six convertible debentures relating to beneficial conversion features as follows: a discount of $3,254,863 was recorded on the U.S. Convertible Debenture 1; a discount of $813,696 was recorded on the U.S. Convertible Debenture 2; a discount of $75,395 was recorded on the U.S. Convertible Debenture 3; a discount of $416,627 was recorded on the U.S. Convertible Debenture 4; a discount of $120,078 was recorded on the U.S. Convertible Debenture 5; a discount of $60,030 was recorded on the U.S. Convertible Debenture 6; and a discount of $2,938,690 was recorded on the Canaccord Debentures.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Warrants</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 27, 2018, the Company incurred a penalty in connection with the WestPark Offering due to the late filing of the registration statement that included the resale of the securities that were sold in such offering.&#xa0; As a result of the penalty, the Company issued three-year common stock warrants to purchase an aggregate of 1,368,250 shares of the Company&#x2019;s common stock at an exercise price of $0.50 per share. &#xa0;&#xa0;In addition, the Company reduced the exercise price of the common stock purchase warrants previously issued to the investors in the WestPark Offering from $0.75 per share to $0.50 per share.&#xa0; The fair value of the penalty was $941,972; this amount was charged to operations during the three months ended August 31, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 20, 2018, in connection with the special warrant offering, the Company issued Canaccord Genuity Corp. 2,317,842 three-year broker warrants at an exercise price of C$0.45 per share as compensation.&#xa0; Each warrant entitles the holder to purchase one unit, which consists of one share of common stock and a warrant to purchase one share of common stock, for C$0.65 per share. These warrants were valued at $1,495,373, and this amount was charged to operations during the three months ended August 31, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 20, 2018, in connection with the Company&#x2019;s sale of a convertible debenture, the Company issued to YA II PN, Ltd. a five-year common stock purchase warrant to purchase 1,250,000 shares of the Company&#x2019;s common stock at an initial exercise price of $0.60 per share.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On August 6, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 7,500,000 shares of the Company&#x2019;s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On August 8, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 6,875,000 shares of the Company&#x2019;s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued Canaccord Genuity Corp. 1,074,720 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. The Company, in connection with the issuance of the Canaccord Debentures, issued National Bank Financials Inc. 268,680 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. These warrants were valued at $874,457, and this amount was charged to operations during the three months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 223,900 three-year agent and advisory warrants to Canaccord Genuity Corp. and 55,975 three-year agent and advisory warrants to National Bank Financials Inc. These warrants were valued at $181,183, and this amount was charged to operations during the three months ended February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The following table summarizes the significant terms of warrants outstanding at February 28, 2019. These warrants were granted as part of financing agreements. This table does not include the special warrants; see Special Warrant section below:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td colspan="2" id="new_id-3833" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Range of</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Prices</b></b></p> </td> <td id="new_id-3834" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3835" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3836" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>warrants</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Outstanding</b></b></p> </td> <td id="new_id-3837" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3838" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3839" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>remaining</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>contractual</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>life (years)</b></b></p> </td> <td id="new_id-3840" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3841" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3842" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted&#xa0;</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>price of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>outstanding</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Warrants</b></b></p> </td> <td id="new_id-3843" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3844" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3845" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>warrants</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Exercisable</b></b></p> </td> <td id="new_id-3846" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3847" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3848" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>price of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercisable</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Warrants</b></b></p> </td> <td id="new_id-3849" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3850" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3851" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3852" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3853" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3854" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3855" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">35,782,952</td> <td id="new_id-3856" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3857" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3858" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3859" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.73</td> <td id="new_id-3860" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3861" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3862" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3863" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3864" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3865" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3866" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3867" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">35,782,952</td> <td id="new_id-3868" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3869" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3870" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3871" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3872" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3873" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3874" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3875" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3876" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3877" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3878" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,736,500</td> <td id="new_id-3879" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3880" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3881" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3882" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.98</td> <td id="new_id-3883" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3884" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3885" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3886" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3887" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3888" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3889" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3890" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,736,500</td> <td id="new_id-3891" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3892" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3893" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3894" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3895" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3896" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3897" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3898" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3899" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3900" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3901" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">17,500,000</td> <td id="new_id-3902" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3903" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3904" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3905" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.76</td> <td id="new_id-3906" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3907" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3908" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3909" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3910" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3911" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3912" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3913" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">17,500,000</td> <td id="new_id-3914" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3915" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3916" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3917" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3918" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3919" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3920" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3921" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3922" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3923" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3924" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,042,738</td> <td id="new_id-3925" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3926" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3927" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3928" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.37</td> <td id="new_id-3929" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3930" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3931" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3932" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3933" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3934" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3935" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3936" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,042,738</td> <td id="new_id-3937" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3938" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3939" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3940" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3941" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3942" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3943" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3944" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3945" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3946" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3947" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,343,400</td> <td id="new_id-3948" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3949" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3950" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3951" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.79</td> <td id="new_id-3952" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3953" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3954" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3955" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3956" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3957" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3958" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3959" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,343,400</td> <td id="new_id-3960" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3961" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3962" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3963" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3964" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3965" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3966" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1.10</td> <td id="new_id-3967" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3968" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3969" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3970" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">279,875</td> <td id="new_id-3971" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3972" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3973" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3974" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2.79</td> <td id="new_id-3975" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3976" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3977" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3978" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1.10</td> <td id="new_id-3979" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3980" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3981" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3982" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">279,875</td> <td id="new_id-3983" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3984" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3985" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3986" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1.10</td> <td id="new_id-3987" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3988" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td id="new_id-3989" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 13%;">&#xa0;</td> <td id="new_id-3990" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; width: 1%;">&#xa0;</td> <td id="new_id-3991" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3992" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3993" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-3994" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3995" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3996" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3997" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2.74</td> <td id="new_id-3998" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3999" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4000" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4001" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4002" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4003" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4004" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4005" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-4006" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4007" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4008" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4009" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4010" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Transactions involving warrants are summarized as follows. This table does not include the special warrants; see Special Warrant section below.</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4011" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4012" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Shares</b></b></p> </td> <td id="new_id-4013" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4014" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4015" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Price</b></b></p> </td> <td id="new_id-4016" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Warrants outstanding at May 31, 2018</p> </td> <td id="new_id-4017" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4018" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4019" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,700,988</td> <td id="new_id-4020" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4021" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4022" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4023" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.62</td> <td id="new_id-4024" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Granted</p> </td> <td id="new_id-4025" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4026" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4027" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">54,399,477</td> <td id="new_id-4028" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4029" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4030" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4031" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.53</td> <td id="new_id-4032" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Exercised</p> </td> <td id="new_id-4033" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4034" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4035" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(415,000</td> <td id="new_id-4036" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-4037" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4038" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4039" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-4040" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Cancelled / Expired</p> </td> <td id="new_id-4041" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4042" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4043" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-4044" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4045" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4046" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-4047" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-4048" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Warrants outstanding at February 28, 2019</p> </td> <td id="new_id-4049" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4050" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4051" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-4052" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4053" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4054" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4055" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4056" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><font style="text-decoration:underline">Special Warrants</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On June 20, 2018, the Company sold 28,973,019 special warrants for net proceeds of US$9,785,978.&#xa0; &#xa0;Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, known as Oasis Cannabis, which was June 28, 2018.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">All of the special warrants were automatically exercised for units on November 30, 2018. Each unit consists of one share of the Company&#x2019;s common stock and one three-year warrant to purchase one share of common stock at a price of C$0.65.</p><br/></div> 50128972 268 265 565000 550000 15000 1808000 57200 55000 2200 183040 32497 31250 1247 103989 26185 25000 1185 65462 78534 75000 3534 196336 280247 250000 30247 700616 256027 250000 6027 640068 250000 700000 490000 600000 264000 213320 50680 31250 25310 22058823 15441176 13037859 9785978 28973020 0.45 0.34 Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.&#xa0; Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events 1043028 799053 1448651 2317842 1495373 1413300 0.65 P3Y the Company did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, the unexercised special warrants were adjusted to entitle the holders to receive 1.1 units instead of one unit of the Company. 3042167 7142550 33465110 33465110 0.65 7500000 0.40 3000000 The units collectively represent (i) 7,500,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of common stock at an exercise price of $0.60 per share of common stock 5 6875000 0.40 2750000 The units collectively represent (i) 6,875,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of common stock at an exercise price of $0.60 per share of common stock 25000 P4M 17500 17500 500000 P1Y 350000 236667 50000 P1Y 35000 23667 129412 350000 0.75 13684 40000 0.75 5867 25000 0.75 50000 47500 362500 58594 81961 1265751 35833 750000 3254863 813696 75395 416627 120078 60030 2938690 1368250 0.50 0.75 941972 2317842 P3Y 0.45 1495373 P5Y 1250000 0.60 P3Y 7500000 0.60 6875000 0.60 1074720 0.80 268680 0.80 874457 559750 Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. 1.10 223900 P3Y 55975 P3Y 181183 P3Y <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> The following table summarizes the significant terms of warrants outstanding at February 28, 2019. These warrants were granted as part of financing agreements. This table does not include the special warrants; see Special Warrant section below:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td colspan="2" id="new_id-3833" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Range of</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Prices</b></b></p> </td> <td id="new_id-3834" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3835" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3836" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>warrants</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Outstanding</b></b></p> </td> <td id="new_id-3837" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3838" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3839" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>remaining</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>contractual</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>life (years)</b></b></p> </td> <td id="new_id-3840" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3841" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3842" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted&#xa0;</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>price of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>outstanding</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Warrants</b></b></p> </td> <td id="new_id-3843" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3844" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3845" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;">&#xa0;</p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>warrants</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Exercisable</b></b></p> </td> <td id="new_id-3846" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> <td id="new_id-3847" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td colspan="2" id="new_id-3848" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0); width: 1%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>price of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>exercisable</b>&#xa0;</b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Warrants</b></b></p> </td> <td id="new_id-3849" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; width: 1%;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3850" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3851" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3852" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3853" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3854" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3855" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">35,782,952</td> <td id="new_id-3856" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3857" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3858" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3859" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.73</td> <td id="new_id-3860" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3861" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3862" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3863" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3864" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3865" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3866" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3867" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">35,782,952</td> <td id="new_id-3868" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3869" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3870" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-3871" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.49</td> <td id="new_id-3872" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3873" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3874" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3875" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3876" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3877" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3878" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,736,500</td> <td id="new_id-3879" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3880" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3881" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3882" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.98</td> <td id="new_id-3883" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3884" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3885" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3886" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3887" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3888" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3889" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3890" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2,736,500</td> <td id="new_id-3891" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3892" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3893" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3894" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.50</td> <td id="new_id-3895" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3896" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3897" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3898" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3899" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3900" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3901" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">17,500,000</td> <td id="new_id-3902" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3903" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3904" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3905" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.76</td> <td id="new_id-3906" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3907" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3908" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3909" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3910" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3911" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3912" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3913" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">17,500,000</td> <td id="new_id-3914" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3915" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3916" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3917" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.60</td> <td id="new_id-3918" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3919" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3920" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3921" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3922" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3923" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3924" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,042,738</td> <td id="new_id-3925" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3926" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3927" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3928" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.37</td> <td id="new_id-3929" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3930" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3931" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3932" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3933" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3934" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3935" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3936" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,042,738</td> <td id="new_id-3937" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3938" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3939" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3940" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-3941" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3942" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3943" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3944" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3945" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3946" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3947" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,343,400</td> <td id="new_id-3948" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3949" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3950" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3951" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">2.79</td> <td id="new_id-3952" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3953" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3954" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3955" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3956" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3957" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3958" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3959" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,343,400</td> <td id="new_id-3960" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3961" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3962" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3963" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.80</td> <td id="new_id-3964" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td id="new_id-3965" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3966" style="width: 13%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1.10</td> <td id="new_id-3967" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3968" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3969" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3970" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">279,875</td> <td id="new_id-3971" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3972" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3973" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3974" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">2.79</td> <td id="new_id-3975" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3976" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3977" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3978" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1.10</td> <td id="new_id-3979" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3980" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3981" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3982" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">279,875</td> <td id="new_id-3983" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3984" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3985" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3986" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">1.10</td> <td id="new_id-3987" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td id="new_id-3988" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 1%;">&#xa0;</td> <td id="new_id-3989" style="text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; width: 13%;">&#xa0;</td> <td id="new_id-3990" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; width: 1%;">&#xa0;</td> <td id="new_id-3991" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3992" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3993" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-3994" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3995" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-3996" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-3997" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">2.74</td> <td id="new_id-3998" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-3999" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4000" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4001" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4002" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4003" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4004" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4005" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-4006" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4007" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4008" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4009" style="width: 14%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4010" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 0.49 35782952 P2Y266D 0.49 35782952 0.49 0.50 2736500 P2Y357D 0.50 2736500 0.50 0.60 17500000 P2Y277D 0.60 17500000 0.60 0.75 1042738 P2Y135D 0.75 1042738 0.75 0.80 1343400 P2Y288D 0.80 1343400 0.80 1.10 279875 P2Y288D 1.10 279875 1.10 58685465 P2Y270D 0.53 58685465 0.53 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> Transactions involving warrants are summarized as follows. This table does not include the special warrants; see Special Warrant section below.<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4011" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4012" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Number of</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Shares</b></b></p> </td> <td id="new_id-4013" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4014" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4015" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Weighted</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Average</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Exercise</b></b></p> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Price</b></b></p> </td> <td id="new_id-4016" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 62%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Warrants outstanding at May 31, 2018</p> </td> <td id="new_id-4017" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4018" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4019" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">4,700,988</td> <td id="new_id-4020" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4021" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4022" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4023" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.62</td> <td id="new_id-4024" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Granted</p> </td> <td id="new_id-4025" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4026" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4027" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">54,399,477</td> <td id="new_id-4028" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4029" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4030" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4031" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.53</td> <td id="new_id-4032" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Exercised</p> </td> <td id="new_id-4033" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4034" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4035" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">(415,000</td> <td id="new_id-4036" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> <td id="new_id-4037" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4038" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4039" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">0.75</td> <td id="new_id-4040" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Cancelled / Expired</p> </td> <td id="new_id-4041" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4042" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4043" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-4044" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4045" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4046" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">$</td> <td id="new_id-4047" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">-</td> <td id="new_id-4048" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Warrants outstanding at February 28, 2019</p> </td> <td id="new_id-4049" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4050" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 3px double rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4051" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">58,685,465</td> <td id="new_id-4052" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4053" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4054" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4055" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">0.53</td> <td id="new_id-4056" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 4700988 0.62 54399477 0.53 415000 0.75 0 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;"><b>Note 1</b><b>7</b><b> &#x2013; Fair Value of Financial Instruments</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company has issued convertible notes containing beneficial conversion features to Darling, Efrat, David Lamadrid and YA II PN.&#xa0; One of the features is a ratchet reset provision which, in general, reduces the conversion price should the Company issue equity with an effective price per share that is lower than the stated conversion price in the note. The Company accounts for the fair value of the conversion feature in accordance with ASC 815- Accounting for Derivatives and Hedging and Emerging Issues Task Force (&#x201c;EITF&#x201d;) 07-05- Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity&#x2019;s Own Stock (&#x201c;EITF 07-05&#x201d;). The Company carries the embedded derivative on its balance sheet at fair value and accounts for any unrealized change in fair value as a component of its results of operations. The Company also has a contingent liability in connection with the acquisition of Alternative Solutions, (see note 3).</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The following summarizes the Company&#x2019;s financial liabilities that are recorded at fair value on a recurring basis at February 28, 2019 and May 31, 2018:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4057" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="14" id="new_id-4058" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, 2019</b></b></p> </td> <td id="new_id-4059" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4060" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4061" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 1</b></b></p> </td> <td id="new_id-4062" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4063" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4064" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 2</b></b></p> </td> <td id="new_id-4065" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4066" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4067" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 3</b></b></p> </td> <td id="new_id-4068" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4069" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4070" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Total</b></b></p> </td> <td id="new_id-4071" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 40%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities</p> </td> <td id="new_id-4072" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4073" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4074" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4075" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4076" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4077" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4078" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4079" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4080" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4081" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4082" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4083" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4084" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4085" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4086" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4087" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Contingent liabilities&#xa0;</p> </td> <td id="new_id-4088" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4089" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4090" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4091" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4092" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4093" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4094" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4095" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4096" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4097" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4098" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-4099" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4100" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4101" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4102" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-4103" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4104" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="14" id="new_id-4105" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31, 2018</b></b></p> </td> <td id="new_id-4106" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4107" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4108" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 1</b></b></p> </td> <td id="new_id-4109" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4110" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4111" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 2</b></b></p> </td> <td id="new_id-4112" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4113" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4114" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 3</b></b></p> </td> <td id="new_id-4115" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4116" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4117" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Total</b></b></p> </td> <td id="new_id-4118" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 40%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities</p> </td> <td id="new_id-4119" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4120" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4121" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4122" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4123" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4124" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4125" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4126" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4127" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4128" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4129" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4130" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4131" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4132" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4133" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4134" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Derivative liabilities</p> </td> <td id="new_id-4135" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4136" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4137" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4138" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4139" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4140" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4141" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4142" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4143" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4144" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4145" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4146" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4147" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4148" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4149" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4150" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The estimated fair values of the Company&#x2019;s derivative liabilities are as follows:</p><br/><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4151" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4152" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Derivative</b></b></p> </td> <td id="new_id-4153" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4154" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4155" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Liability</b></b></p> </td> <td id="new_id-4156" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 81%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities Measured at Fair Value</p> </td> <td id="new_id-4157" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4158" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4159" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4160" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-4161">&#xa0;</td> <td id="new_id-4162">&#xa0;</td> <td id="new_id-4163">&#xa0;</td> <td id="new_id-4164">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Balance as of May 31, 2018</p> </td> <td id="new_id-4165" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4166" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4167" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4168" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-4169">&#xa0;</td> <td id="new_id-4170">&#xa0;</td> <td id="new_id-4171">&#xa0;</td> <td id="new_id-4172">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018</p> </td> <td id="new_id-4173" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4174" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4175" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(1,265,751</td> <td id="new_id-4176" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-4177">&#xa0;</td> <td id="new_id-4178">&#xa0;</td> <td id="new_id-4179">&#xa0;</td> <td id="new_id-4180">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Balance as of February 28, 2019</p> </td> <td id="new_id-4181" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4182" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4183" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-4184" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><br/></div> <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> The following summarizes the Company&#x2019;s financial liabilities that are recorded at fair value on a recurring basis at February 28, 2019 and May 31, 2018:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4057" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="14" id="new_id-4058" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>February 28, 2019</b></b></p> </td> <td id="new_id-4059" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4060" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4061" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 1</b></b></p> </td> <td id="new_id-4062" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4063" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4064" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 2</b></b></p> </td> <td id="new_id-4065" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4066" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4067" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 3</b></b></p> </td> <td id="new_id-4068" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4069" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4070" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Total</b></b></p> </td> <td id="new_id-4071" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 40%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities</p> </td> <td id="new_id-4072" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4073" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4074" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4075" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4076" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4077" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4078" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4079" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4080" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4081" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4082" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4083" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4084" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4085" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4086" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4087" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Contingent liabilities&#xa0;</p> </td> <td id="new_id-4088" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4089" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4090" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4091" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4092" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4093" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4094" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4095" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4096" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4097" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4098" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-4099" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4100" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4101" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4102" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">678,111</td> <td id="new_id-4103" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="width: 100%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4104" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="14" id="new_id-4105" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>May 31, 2018</b></b></p> </td> <td id="new_id-4106" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4107" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4108" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 1</b></b></p> </td> <td id="new_id-4109" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4110" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4111" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 2</b></b></p> </td> <td id="new_id-4112" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4113" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4114" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Level 3</b></b></p> </td> <td id="new_id-4115" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> <td id="new_id-4116" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4117" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Total</b></b></p> </td> <td id="new_id-4118" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 40%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities</p> </td> <td id="new_id-4119" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4120" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4121" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4122" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4123" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4124" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4125" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4126" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4127" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4128" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4129" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4130" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4131" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4132" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4133" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4134" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Derivative liabilities</p> </td> <td id="new_id-4135" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4136" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4137" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4138" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4139" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4140" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4141" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">-</td> <td id="new_id-4142" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4143" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4144" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4145" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4146" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> <td id="new_id-4147" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4148" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4149" style="width: 12%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4150" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 0 0 678111 678111 0 0 1265751 1265751 <div style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; "> The estimated fair values of the Company&#x2019;s derivative liabilities are as follows:<br /><br /><table border="0" cellpadding="0" cellspacing="0" class="finTable" style="margin-right: 10%; margin-left: 10%; width: 80%; font-size: 10pt; font-family: &quot;Times New Roman&quot;, Times, serif; text-indent: 0px;"> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4151" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4152" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Derivative</b></b></p> </td> <td id="new_id-4153" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4154" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td colspan="2" id="new_id-4155" style="text-align: center; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:center;"><b><b>Liability</b></b></p> </td> <td id="new_id-4156" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 1px;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; width: 81%;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Liabilities Measured at Fair Value</p> </td> <td id="new_id-4157" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4158" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4159" style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4160" style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> </tr> <tr style="vertical-align: bottom;"> <td>&#xa0;</td> <td id="new_id-4161">&#xa0;</td> <td id="new_id-4162">&#xa0;</td> <td id="new_id-4163">&#xa0;</td> <td id="new_id-4164">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Balance as of May 31, 2018</p> </td> <td id="new_id-4165" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4166" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">$</td> <td id="new_id-4167" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;">1,265,751</td> <td id="new_id-4168" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-4169">&#xa0;</td> <td id="new_id-4170">&#xa0;</td> <td id="new_id-4171">&#xa0;</td> <td id="new_id-4172">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018</p> </td> <td id="new_id-4173" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4174" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; border-bottom: 1px solid rgb(0, 0, 0);">&#xa0;</td> <td id="new_id-4175" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 1px solid rgb(0, 0, 0);">(1,265,751</td> <td id="new_id-4176" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; padding-bottom: 1px; white-space: nowrap;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">)</p> </td> </tr> <tr style="vertical-align: bottom; background-color: rgb(255, 255, 255);"> <td>&#xa0;</td> <td id="new_id-4177">&#xa0;</td> <td id="new_id-4178">&#xa0;</td> <td id="new_id-4179">&#xa0;</td> <td id="new_id-4180">&#xa0;</td> </tr> <tr style="vertical-align: bottom; background-color: rgb(204, 238, 255);"> <td style="text-align: left; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt;"> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:left;">Balance as of February 28, 2019</p> </td> <td id="new_id-4181" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt;">&#xa0;</td> <td id="new_id-4182" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">$</td> <td id="new_id-4183" style="width: 16%; text-align: right; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin-left: 0pt; border-bottom: 3px double rgb(0, 0, 0);">-</td> <td id="new_id-4184" style="width: 1%; font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; padding-bottom: 3px; margin-left: 0pt; white-space: nowrap;">&#xa0;</td> </tr> </table></div> 1265751 1265751 0 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note 1</b><b>8</b><b>&#xa0;&#x2013; Commitments and Contingencies</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In connection with the Company&#x2019;s planned Colorado operations, on April 17, 2015, pursuant to an Industrial Lease Agreement (the &#x201c;Lease&#x201d;), CLS Labs Colorado leased 14,392 square feet of warehouse and office space (the &#x201c;Leased Real Property&#x201d;) in a building in Denver, Colorado where certain intended activities, including growing, extraction, conversion, assembly and packaging of cannabis and other plant materials, are permitted by and in compliance with state, city and local laws, rules, ordinances and regulations. The Lease had an initial term of seventy-two (72) months and provided CLS Labs Colorado with two options to extend the term of the lease by up to an aggregate of ten (10) additional years.&#xa0; In August 2017, as a result of the Company&#x2019;s decision to suspend its proposed operations in Colorado, CLS Labs Colorado asked&#xa0;its landlord&#xa0;to be relieved from its obligations under the Lease, but the parties have not yet reached an agreement on how to proceed.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">In August 2017, the Company&#x2019;s Colorado subsidiary received a demand letter from its Colorado landlord requesting the forfeiture of the $50,000 security deposit, $10,000 in expenses, $15,699 in remaining rent due under the lease agreement and $30,000 to buy out the remaining amounts due under the lease.&#xa0; These expenses, which are a liability of the Company&#x2019;s Colorado subsidiary, have been accrued on the balance sheet as of February 28, 2019.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><font style="text-decoration:underline">Employment Agreements</font></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">CLS Labs and Jeffrey Binder entered into a five-year employment agreement effective October 1, 2014. Under the agreement, Mr. Binder serves as CLS Labs&#x2019; Chairman and Chief Executive Officer and is entitled to receive an annual salary of $150,000. Under the agreement, Mr. Binder is also entitled to receive a performance bonus equal to 2% of CLS Labs&#x2019; annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of CLS Labs&#x2019; common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million.&#xa0; On April 28, 2015, CLS Labs and the Company entered into an addendum to Mr. Binder&#x2019;s employment agreement whereby Mr. Binder agreed that following the merger of CLS Labs and a subsidiary of the Company, in addition to his obligations to CLS Labs, he would serve the Company and its subsidiaries in such roles as the Company may request.&#xa0; In exchange, the Company agreed to assume the obligations of CLS Labs to grant Mr. Binder annual stock options, as referenced above.&#xa0; Mr. Binder continues to receive an annual salary of $150,000 from CLS Labs for serving as its Chairman, President and Chief Executive Officer. On July 20, 2016, March 31, 2017, August 23, 2017, October 9, 2017, January 5, 2018&#xa0;and April 6, 2018, the Company issued Mr. Binder convertible notes in exchange for $250,000, $112,500, $62,500, $39,521, $37,500 and $37,500 respectively, in deferred salary, among other amounts owed to Mr. Binder by the Company.&#xa0; As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Binder in the amount of $0 and $37,500. &#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective August 1, 2015, the Company and Alan Bonsett entered into a five-year employment agreement. Pursuant to the agreement, Mr. Bonsett commenced serving as the Company&#x2019;s Chief Operating Officer on August 15, 2015. Under the agreement, Mr. Bonsett was entitled to receive an annual salary of $150,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company&#x2019;s annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of the Company&#x2019;s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million. Additionally, Mr. Bonsett received a one-time signing bonus of 250,000 (post Reverse-Split) shares of restricted common stock of the Company, valued at $327,500, which became fully vested one year from the effective date of the agreement. Mr. Bonsett, as an owner of Picture Rock Holdings, LLC (&#x201c;PRH&#x201d;), was expected to indirectly receive the benefits of the Colorado operations discussed above. Mr. Bonsett agreed to defer his salary effective July 1, 2017; at February 28, 2019, the Company had accrued compensation due to Mr. Bonsett in the amount of $37,500. On October 1, 2017, the Company and Mr. Bonsett, the Company&#x2019;s Chief Operating Officer, mutually agreed to end his employment with the Company.&#xa0; Mr. Bonsett may provide consulting services to the Company in the future on an as needed basis.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">Effective November 30, 2017, the Company and Mr. Lamadrid entered into a one-year employment agreement. Pursuant to the agreement, Mr. Lamadrid commenced serving as the Company&#x2019;s President and Chief Financial Officer on December 1, 2017. Under the agreement, Mr. Lamadrid was entitled to receive an annual salary of $175,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company&#x2019;s annual EBITDA, and annual restricted stock awards of the Company&#x2019;s common stock in an amount equal to 3% of its annual EBITDA.&#xa0;Additionally, Mr. Lamadrid was entitled to a one-time signing bonus of 500,000 shares of restricted common stock of the Company, which were to become fully vested one year from the effective date of the agreement. On July 24, 2018, the Company and Mr. Lamadrid mutually agreed to terminate the employment agreement. Mr. Lamadrid resigned as President and Chief Financial Officer effective as of July 13, 2018. In connection with a severance agreement between the Company and Mr. Lamadrid, the Company paid certain amounts and issued 600,000 shares of common stock to Mr. Lamadrid, and the parties further agreed that neither party would have any further obligations under the Employment Agreement or otherwise after such date.&#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company and Mr. Sillitoe entered into a one-year employment agreement. Pursuant to the agreement, Mr. Sillitoe commenced serving as the Chief Executive Officer of CLS Nevada, Inc. effective July 1, 2018. Under the agreement, Mr. Sillitoe is entitled to receive an annual salary of $150,000. Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company&#x2019;s common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc. Additionally, Mr. Sillitoe is entitled to a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Sillitoe remains employed by the Company on such date. As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Sillitoe in the amount of $31,806 and $0. &#xa0;</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">The Company and Mr.&#xa0; Decatur entered into a one-year employment agreement on July 31, 2018.&#xa0; Pursuant to the agreement, Mr. Decatur commenced serving as the Chief Operating Officer of CLS Nevada, Inc. on July 1, 2018.&#xa0; Under the agreement, Mr. Decatur is entitled to receive an annual salary of $150,000.&#xa0; Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company&#x2019; common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc.&#xa0; Additionally, Mr. Decatur is entitled to a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Decatur remains employed by the Company on such date.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">At February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company, prior to his September 1, 2015 termination, in the amount of $16,250.</p><br/></div> 14392 P72M P10Y 50000 10000 15699 30000 P5Y 150000 performance bonus equal to 2% of CLS Labs&#x2019; annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of CLS Labs&#x2019; common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million annual stock options, exercisable at the fair market value of CLS Labs&#x2019; common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million 250000 112500 62500 39521 37500 37500 0 37500 P5Y 150000 performance bonus equal to 2% of the Company&#x2019;s annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of the Company&#x2019;s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million annual stock options, exercisable at the fair market value of the Company&#x2019;s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million 250000 327500 P1Y 37500 175000 performance bonus equal to 2% of the Company&#x2019;s annual EBITDA, and annual restricted stock awards of the Company&#x2019;s common stock in an amount equal to 3% of its annual EBITDA annual restricted stock awards of the Company&#x2019;s common stock in an amount equal to 3% of its annual EBITDA 500000 P1Y 600000 150000 performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company&#x2019;s common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc 500000 P1Y 31806 0 150000 performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company&#x2019; common stock in an amount equal to 3% of the annual EBITDA 16250 16250 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note&#xa0;1</b><b>9</b><b> &#x2013; Related Party Transactions</b></p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As of February 28, 2019 and May 31, 2018, the Company owed the amount of $0&#xa0;and $37,500, respectively, to Jeffrey Binder, its Chief Executive Officer, for accrued salary.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Alan Bonsett, a former officer of the Company prior to his October 1, 2017 separation, in the amount of $37,500 and $37,500, respectively.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company prior to his September 1, 2015 termination, in the amount of $16,250.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">As of February 28, 2019 and May 31, 2018, the Company had related party payables in the amount of $17,930 due to officers and directors related to expenses paid on behalf of the Company. The Company imputed&#xa0;interest at the rate of 6% per annum on these liabilities, and recorded imputed interest expense on these liabilities in the amounts of $268 and $265 during the three months ended&#xa0;February 28, 2019 and 2018, respectively.&#xa0; These interest accruals were charged to additional paid-in capital.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer. These share vested four months after issuance. The shares were valued at $17,500, and were amortized over the vesting period. As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $355,000 and will be amortized over the vesting period. As of February 28, 2019, $236,667 had been charged to operations.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of restricted common stock in recognition of Mr. Glashow&#x2019;s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions.&#xa0;The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.</p><br/></div> 37500 37500 16250 16250 17930 17930 0.06 25000 four months after issuance 17500 17500 355000 236667 23667 250000 700000 490000000000 <div style="font-family: 'Times New Roman', Times, serif; font-size: 10pt; "> <p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;"><b>Note </b><b>20</b><b>&#xa0;&#x2013; Subsequent Events</b></p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Mr. Glashow, a director of the Company since 2017, was appointed to serve as President and Chief Operating Officer commencing on March 1, 2019. The Company and Mr. Mr. Glashow entered into a two-year employment agreement and Mr. Glashow commenced serving as the Company&#x2019;s President and Chief Operating Officer. Under the agreement, Mr. Glashow is entitled to receive an annual salary of $175,000. Further, he is entitled to receive a performance bonus equal to 1% of our annual EBITDA, and annual restricted stock awards in an amount equal to 1% of our annual EBITDA.&#xa0;Additionally, Mr. Glashow is entitled to a one-time signing bonus of 500,000 shares of our restricted common stock, half of which shall vest on March 1, 2020, and half of which shall vest on March 1, 2021.</p><br/><p style="font-family: &quot;Times New Roman&quot;, Times, serif; font-size: 10pt; margin: 0pt; text-align: justify; text-indent: 36pt;">Effective March 1, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note.</p><br/><p style="font-family:'Times New Roman', Times, serif;font-size:10pt;margin:0pt;text-align:justify;text-indent:36pt;">On March 11, 2019, the Company, through its wholly-owned subsidiary, CLS Massachusetts, Inc., entered into a membership interest purchase agreement with CannAssist, LLC. 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Disclosure - Note 10 - Property, Plant and Equipment (Tables) link:presentationLink link:definitionLink link:calculationLink 031 - Disclosure - Note 11 - Intangible Assets (Tables) link:presentationLink link:definitionLink link:calculationLink 032 - Disclosure - Note 12 - Other Assets (Tables) link:presentationLink link:definitionLink link:calculationLink 033 - Disclosure - Note 13 - Accounts Payable and Accrued Liabilities (Tables) link:presentationLink link:definitionLink link:calculationLink 034 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Tables) link:presentationLink link:definitionLink link:calculationLink 035 - Disclosure - Note 16 - Stockholders' Equity (Tables) link:presentationLink link:definitionLink link:calculationLink 036 - Disclosure - Note 17 - Fair Value of Financial Instruments (Tables) link:presentationLink link:definitionLink link:calculationLink 037 - Disclosure - Note 1 - Nature of Business and Significant Accounting Policies (Details) link:presentationLink link:definitionLink link:calculationLink 038 - Disclosure - Note 2 - Going Concern (Details) link:presentationLink link:definitionLink link:calculationLink 039 - Disclosure - Note 3 - Acquisition of Alternative Solutions, LLC (Details) link:presentationLink link:definitionLink link:calculationLink 040 - Disclosure - Note 3 - Acquisition of Alternative Solutions, LLC (Details) - Schedule of Business Acquisitions, by Acquisition link:presentationLink link:definitionLink link:calculationLink 041 - Disclosure - Note 3 - Acquisition of Alternative Solutions, LLC (Details) - Business Acquisition, Pro Forma Information link:presentationLink link:definitionLink link:calculationLink 042 - Disclosure - Note 4 - Joint Venture and Option Transaction (Details) link:presentationLink link:definitionLink link:calculationLink 043 - Disclosure - Note 5 - Accounts Receivable (Details) link:presentationLink link:definitionLink link:calculationLink 044 - Disclosure - Note 6 - Inventory (Details) - Schedule of Inventory, Current link:presentationLink link:definitionLink link:calculationLink 045 - Disclosure - Note 7 - Prepaid Expenses and Other Current Assets (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets link:presentationLink link:definitionLink link:calculationLink 046 - Disclosure - Note 8 - Redemption Premium in Transit (Details) link:presentationLink link:definitionLink link:calculationLink 047 - Disclosure - Note 9 - Notes Receivable (Details) link:presentationLink link:definitionLink link:calculationLink 048 - Disclosure - Note 10 - Property, Plant and Equipment (Details) link:presentationLink link:definitionLink link:calculationLink 049 - Disclosure - Note 10 - Property, Plant and Equipment (Details) - Property, Plant and Equipment link:presentationLink link:definitionLink link:calculationLink 050 - Disclosure - Note 11 - Intangible Assets (Details) link:presentationLink link:definitionLink link:calculationLink 051 - Disclosure - Note 11 - Intangible Assets (Details) - Schedule of Finite-Lived Intangible Assets link:presentationLink link:definitionLink link:calculationLink 052 - Disclosure - Note 11 - Intangible Assets (Details) - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense link:presentationLink link:definitionLink link:calculationLink 053 - Disclosure - Note 12 - Other Assets (Details) - Schedule of Other Assets link:presentationLink link:definitionLink link:calculationLink 054 - Disclosure - Note 13 - Accounts Payable and Accrued Liabilities (Details) - Schedule of Accounts Payable and Accrued Liabilities link:presentationLink link:definitionLink link:calculationLink 055 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) link:presentationLink link:definitionLink link:calculationLink 056 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt link:presentationLink link:definitionLink link:calculationLink 057 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 058 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt link:presentationLink link:definitionLink link:calculationLink 059 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 060 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt link:presentationLink link:definitionLink link:calculationLink 061 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) link:presentationLink link:definitionLink link:calculationLink 062 - Disclosure - Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Amortization of Debt Discount link:presentationLink link:definitionLink link:calculationLink 063 - Disclosure - Note 15 - Contingent Liability (Details) link:presentationLink link:definitionLink link:calculationLink 064 - Disclosure - Note 16 - Stockholders' Equity (Details) link:presentationLink link:definitionLink link:calculationLink 065 - Disclosure - Note 16 - Stockholders' Equity (Details) - Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range link:presentationLink link:definitionLink link:calculationLink 066 - Disclosure - Note 16 - Stockholders' Equity (Details) - Schedule of Stockholders' Equity Note, Warrants or Rights link:presentationLink link:definitionLink link:calculationLink 067 - Disclosure - Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis link:presentationLink link:definitionLink link:calculationLink 068 - Disclosure - Note 17 - Fair Value of Financial Instruments (Details) - Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation link:presentationLink link:definitionLink link:calculationLink 069 - Disclosure - Note 18 - Commitments and Contingencies (Details) link:presentationLink link:definitionLink link:calculationLink 070 - Disclosure - Note 19 - Related Party Transactions (Details) link:presentationLink link:definitionLink link:calculationLink 071 - Disclosure - Note 20 - Subsequent Events (Details) link:presentationLink link:definitionLink link:calculationLink 000 - Document - Document And Entity Information link:presentationLink link:definitionLink link:calculationLink EX-101.CAL 8 clsh-20190228_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.DEF 9 clsh-20190228_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE EX-101.LAB 10 clsh-20190228_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.PRE 11 clsh-20190228_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 12 R1.htm IDEA: XBRL DOCUMENT v3.19.1
Document And Entity Information - shares
9 Months Ended
Feb. 28, 2019
Apr. 12, 2019
Document and Entity Information [Abstract]    
Entity Registrant Name CLS HOLDINGS USA, INC.  
Document Type 10-Q  
Current Fiscal Year End Date --05-31  
Entity Common Stock, Shares Outstanding   125,814,107
Amendment Flag false  
Entity Central Index Key 0001522222  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Feb. 28, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Ex Transition Period false  
XML 13 R2.htm IDEA: XBRL DOCUMENT v3.19.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
Feb. 28, 2019
May 31, 2018
Current assets    
Cash and cash equivalents $ 11,972,015 $ 52,964
Accounts receivable 295,013 0
Inventory 605,796 0
Prepaid expenses and other current assets 712,739 1,410
Redemption premium in transit 964,788 0
Total current assets 14,550,351 54,374
Investment 0 2,050,000
Note receivable 5,150,000 0
Interest receivable 99,618 0
Property, plant and equipment, net of accumulated depreciation of $494,439 and $2,674 1,547,164 0
Intangible assets, net of accumulated amortization of $62,856 and $828 1,577,344 898
Goodwill 25,742,899 0
Other assets 160,450 0
Total assets 48,827,826 2,105,272
Current liabilities    
Accounts payable and accrued liabilities 1,394,353 826,621
Accrued compensation, related party 53,750 120,417
Due to related party 17,930 17,930
Accrued interest 558,401 24,748
Accrued interest, related party 6,305 5,143
Notes payable, net of discount of $100,536 and $0 3,899,464 310,000
Notes payable, related parties 0 75,137
Deferred rent obligation 137,707 0
Convertible notes payable, net of discount of $351,883 and $561,599 398,117 43,401
Contingent liability 678,111 0
Derivative liability 0 1,265,751
Total current liabilities 7,144,138 2,689,148
Noncurrent liabilities    
Accrued interest, long-term 0 0
Convertible notes payable - Long Term, net of discount of $7,678,852 and $65,918 10,190,148 41,072
Convertible notes payable, related parties, net of discount of $0 and $733,928 0 2,832
Total Liabilities 17,334,286 2,733,052
Commitments and contingencies
Stockholder's equity    
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued 0 0
Common stock, $0.0001 par value; 250,000,000 shares authorized; 125,814,107 and 50,128,972 shares issued and outstanding at February 28, 2019 and May 31, 2018, respectively 12,583 5,013
Additional paid-in capital 73,890,916 17,628,717
Common stock subscribed 346,784 307,584
Accumulated deficit (42,756,743) (18,569,094)
Total stockholder's equity (deficit) 31,493,540 (627,780)
Total liabilities and stockholders' equity (deficit) $ 48,827,826 $ 2,105,272
XML 14 R3.htm IDEA: XBRL DOCUMENT v3.19.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - USD ($)
Feb. 28, 2019
May 31, 2018
Property, plant and equipment, accumulated depreciation $ 494,439 $ 2,674
Intangible assets, accumulated amortization 62,856 828
Notes payable, discount 100,536 0
Convertible notes payable - Long Term, discount 7,678,852 65,918
Convertible notes payable discount $ 100,536 $ 0
Preferred stock, par value (in Dollars per share) $ 0.001 $ 0.001
Preferred stock, shares authorized (in Shares) 20,000,000 20,000,000
Preferred stock, shares issued (in Shares) 0 0
Common stock, par value (in Dollars per share) $ 0.0001 $ 0.0001
Common stock, shares authorized (in Shares) 250,000,000 250,000,000
Common stock, shares issued (in Shares) 125,814,107 50,128,972
Common stock, outstanding (in Shares) 125,814,107 50,128,972
Convertible Debt [Member]    
Notes payable, discount $ 351,883 $ 561,599
Convertible Debt [Member] | Related Party Notes [Member]    
Convertible notes payable discount $ 0 $ 0
XML 15 R4.htm IDEA: XBRL DOCUMENT v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
3 Months Ended 9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Revenue $ 2,372,790 $ 0 $ 5,529,053 $ 0
Cost of goods sold 1,438,424 0 3,245,035 0
Gross margin 934,366 0 2,284,018 0
Selling, general and administrative expenses 5,102,871 1,214,971 23,472,037 1,831,554
Total operating expenses 5,102,871 1,214,971 23,472,037 1,831,554
Operating loss (4,168,505) (1,214,971) (21,188,019) (1,831,554)
Other (income) expense:        
Interest expense, net 662,961 1,434,314 2,999,630 2,316,145
Gain on settlement of debt 0 0 0 (3,480)
Loss on modification of debt 0 0 0 29,145
Loss on note exchange 0 0 0 404,082
Loss on extinguishment of debt 0 0 0 989,032
Change in fair value of derivative 0 (148,227) 0 25,863
Total other expense 662,961 1,286,087 2,999,630 3,760,787
Income (Loss) before income taxes (4,831,466) (2,501,058) (24,187,649) (5,592,341)
Income tax expense 0 0 0 0
Net income (loss) $ (4,831,466) $ (2,501,058) $ (24,187,649) $ (5,592,341)
Net income (loss) per share - basic (in Dollars per share) $ (0.04) $ (0.06) $ (0.25) $ (0.16)
Net income (loss) per share - diluted (in Dollars per share) $ (0.04) $ (0.06) $ (0.25) $ (0.16)
Weighted average shares outstanding - basic (in Shares) 124,346,650 39,126,944 95,132,835 35,654,299
Weighted average shares outstanding - diluted (in Shares) 124,346,650 39,126,944 95,132,835 35,654,299
XML 16 R5.htm IDEA: XBRL DOCUMENT v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) - USD ($)
Total
Oasis Acquisition [Member]
Warrants Issued with debt [Member]
Placement Agent Warrants [Member]
Warrants Issued to Consultants [Member]
Special Warrants Issued for Cash [Member]
Warrant Issued Due to Penalty [Member]
Warrants Issued as Compensation for Offering [Member]
Warrants issued to Placement Agent [Member]
Special Warrant Issued Due to Penalty [Member]
Exchangeable Debt [Member]
Commitment Fee [Member]
Issued to Officers [Member]
To Be Issued to Officers [Member]
Common Stock [Member]
Common Stock [Member]
Oasis Acquisition [Member]
Common Stock [Member]
Cashless Exercise of Warrant 1 [Member]
Common Stock [Member]
Cashless Exercise of Warrant 2 [Member]
Common Stock [Member]
Exchangeable Debt [Member]
Common Stock [Member]
Commitment Fee [Member]
Common Stock [Member]
Issued to Officers [Member]
Common Stock [Member]
Common Stock Issued for Exercise of Special Warrants [Member]
Additional Paid-in Capital [Member]
Additional Paid-in Capital [Member]
Oasis Acquisition [Member]
Additional Paid-in Capital [Member]
Warrants Issued with debt [Member]
Additional Paid-in Capital [Member]
Placement Agent Warrants [Member]
Additional Paid-in Capital [Member]
Warrants Issued to Consultants [Member]
Additional Paid-in Capital [Member]
Special Warrants Issued for Cash [Member]
Additional Paid-in Capital [Member]
Cashless Exercise of Warrant 1 [Member]
Additional Paid-in Capital [Member]
Warrant Issued Due to Penalty [Member]
Additional Paid-in Capital [Member]
Warrants Issued as Compensation for Offering [Member]
Additional Paid-in Capital [Member]
Warrants issued to Placement Agent [Member]
Additional Paid-in Capital [Member]
Special Warrant Issued Due to Penalty [Member]
Additional Paid-in Capital [Member]
Cashless Exercise of Warrant 2 [Member]
Additional Paid-in Capital [Member]
Exchangeable Debt [Member]
Additional Paid-in Capital [Member]
Commitment Fee [Member]
Additional Paid-in Capital [Member]
Issued to Officers [Member]
Additional Paid-in Capital [Member]
Common Stock Issued for Exercise of Special Warrants [Member]
Stock Payable [Member]
Stock Payable [Member]
Issued to Officers [Member]
Stock Payable [Member]
To Be Issued to Officers [Member]
Retained Earnings [Member]
Balance at May. 31, 2016 $ (1,886,538)                           $ 3,286               $ 7,032,836                               $ 68,950     $ (8,991,610)
Balance (in Shares) at May. 31, 2016                             32,852,944                                                      
Common stock issued to consultant 289,633                           $ 37               264,283                               25,313      
Common stock issued to consultant (in Shares)                             374,000                                                      
Common stock issued                     $ 2,354,037 $ 95,000 $ 213,321           $ 600 $ 25                             $ 2,353,437 $ 94,975       $ 213,321    
Common stock issued (in Shares)                                     6,000,000 250,000                                            
Common stock issued for cash 1,460,915                           $ 547               1,460,368                                      
Common stock issued for cash (in Shares)                             5,473,000                                                      
Common stock issued for conversion of debt 1,618,446                           $ 518               1,617,928                                      
Common stock issued for conversion of debt (in Shares)                             5,179,028                                                      
Warrants issued with debt     $ 1,804,470 $ 503,655 $ 294,173                                       $ 1,804,470 $ 503,655 $ 294,173                              
Discount on notes from beneficial conversion feature 1,758,741                                           1,758,741                                      
Imputed interest 1,076                                           1,076                                      
Net loss (9,577,484)                                                                                 (9,577,484)
Settlement of derivative liability 442,775                                           442,775                                      
Balance at May. 31, 2017 (627,780)                           $ 5,013               17,628,717                               307,584     (18,569,094)
Balance (in Shares) at May. 31, 2017                             50,128,972                                                      
Balance at May. 31, 2018 (627,780)                                                                                  
Common stock issued to consultant 490,000                           $ 73               515,240                               (25,313)      
Common stock issued to consultant (in Shares)                             731,250                                                      
Common stock issued 47,500                       $ 50,680 $ 277,833 $ 5           $ 60 $ 3,347 47,495                           $ 263,940 $ (3,347)   $ (213,320) $ 277,833  
Common stock issued (in Shares)                             50,000           600,000 33,463,838                                        
Foreign currency transaction loss on equity offering 403,588                                           403,588                                      
Common stock issued for cash 5,750,000                           $ 1,438               5,748,562                                      
Common stock issued for cash (in Shares)                             14,375,000                                                      
Common stock issued for conversion of debt 1,295,690                           $ 370               1,295,320                                      
Common stock issued for conversion of debt (in Shares)                             3,697,511                                                      
Common stock issued in connection with Oasis acquisition 25,313 $ 15,441,176                           $ 2,206               $ 15,438,970                                    
Common stock issued in connection with Oasis acquisition (in Shares)                               22,058,823                                                    
Warrants issued with debt           $ 9,785,978 $ 941,972 $ 2,369,830 $ 1,413,300 $ 7,142,550                                   $ 9,785,978   $ 941,972 $ 2,369,830 $ 1,413,300 $ 7,142,550                  
Units issued as compensation for offering 557,335                           $ 56               557,279                                      
Units issued as compensation for offering (in Shares)                             559,750                                                      
Cashless exercise of warrant                                 $ 13 $ 2                     $ (13)         $ (2)                
Cashless exercise of warrant (in Shares)                                 129,412 19,551                                                
Discount on notes from beneficial conversion feature 9,039,096                                           9,039,096                                      
Reclassification of derivative upon adoption of ASU 2017-11 | Accounting Standards Update 2017-11 [Member] 1,265,751                                           1,265,751                                      
Derivative valuation of reset event 35,883                                           35,883                                      
Imputed interest 807                                           807                                      
Net loss (24,187,649)                                                                                 (24,187,649)
Settlement of derivative liability 1,265,751                                                                                  
Balance at Feb. 28, 2019 $ 31,493,540                           $ 12,583               $ 73,890,916                               $ 346,784     $ (42,756,743)
Balance (in Shares) at Feb. 28, 2019                             125,814,107                                                      
XML 17 R6.htm IDEA: XBRL DOCUMENT v3.19.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
CASH FLOWS FROM OPERATING ACTIVITIES    
Net income (loss) $ (24,187,649) $ (5,592,341)
Adjustments to reconcile net loss to net cash used in operating activities:    
Imputed interest 807 804
Change in fair value of derivative 0 25,863
Warrants issued to placement agent 3,783,130 610,414
Warrants and Special Warrants issued to penalty 8,084,522 0
Units issued to placement agent 557,335 0
Non-cash offering costs of equity financing 403,588 0
Stock-based compensation 328,513 55,000
Fair value of shares issued to consultants 490,000 0
Fair value of shares issued in settlement 47,500 0
Gain / loss on modification of debt 0 29,145
(Gain) loss on note exchange 0 404,082
Loss on extinguishment of debt 0 989,032
(Gain) loss on note exchange 0 (3,480)
Expense from derivative triggering event 12,659 0
Amortization of debt discounts 2,481,674 1,391,110
Amortization of deferred financing costs 0 22,569
Depreciation and amortization expense 184,068 993
Changes in assets and liabilities:    
Accounts receivable (259,576) 0
Interest receivable (99,618) 0
Inventory (199,843) 0
Prepaid expenses (608,090) (11,188)
Other assets 0 50,000
Redemption premium in transit (964,788) (46,000)
Accounts payable and accrued expenses (353,832) 937,895
Accrued compensation (16,667) 167,584
Due to related parties (50,000) 0
Accrued interest, related party 5,943 87,966
Accrued interest 588,312 21,045
Deferred rent liability 1,667 (49,565)
Net cash used in operating activities (9,770,345) (909,072)
CASH FLOWS FROM INVESTING ACTIVITIES    
Payments to purchase property, plant and equipment (735,234) 0
Payments to acquire note receivable (5,150,000) 0
Payment for investment in Alternative Solutions, net of cash received of $14,612 (5,982,710) (2,050,000)
Net cash used in investing activities (11,867,944) (2,050,000)
CASH FLOWS FROM FINANCING ACTIVITIES    
Proceeds from related party convertible notes payable 0 601,070
Proceeds from related party notes payable 211,700 0
Proceeds from notes payable 0 410,000
Proceeds from convertible notes payable 18,369,000 880,000
Principal payments on notes payable (310,000) 0
Principal payments on related party notes payable (211,838) 0
Repayments of convertible notes payable (37,500) 0
Proceeds from sale of equity 15,535,978 1,012,425
Net cash provided by financing activities 33,557,340 2,903,495
Net increase in cash and cash equivalents 11,919,051 (55,577)
Cash and cash equivalents at beginning of period 52,964 78,310
Cash and cash equivalents at end of period 11,972,015 22,733
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:    
Interest paid 8,964 0
Income taxes paid 0 0
NON-CASH INVESTING AND FINANCING ACTIVITIES:    
Convertible note issued for unpaid accrued salary 75,000 112,500
Related party notes payable reclassified as related party convertible notes payable 0 1,116,856
Beneficial conversion feature on convertible notes 9,039,096 1,681,946
Note payable exchanged for common stock 1,295,690 936,478
Shares issued for settlement of accounts payable 0 6,000
Discount on convertible notes payable due to derivative 0 1,321,862
Charge to paid-in capital for par value of shares issued in cashless exercise of warrants 3,362 0
Reclassify derivative liability to paid-in capital upon adoption of ASU 2017-11 1,265,751 0
Shares issued for services from stock payable $ 25,313 $ 0
XML 18 R7.htm IDEA: XBRL DOCUMENT v3.19.1
Note 1 - Nature of Business and Significant Accounting Policies
9 Months Ended
Feb. 28, 2019
Accounting Policies [Abstract]  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block]

Note 1 – Nature of Business and Significant Accounting Policies


Basis of Presentation


These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.


Principals of Consolidation


The accompanying consolidated financial statements include the accounts of CLS Holdings USA, Inc., and its wholly owned operating subsidiaries, CLS Nevada, Inc., (“CLS Nevada”), CLS Labs, Inc. (“CLS Labs”), CLS Labs Colorado, Inc. (“CLS Colorado”), CLS Massachusetts, Inc. (“CLS Massachusetts”), and Alternative Solutions, LLC (“Alternative Solutions”). Alternative Solutions is the sole owner of the following three entities (collectively, the “Oasis LLCs”): Serenity Wellness Center, LLC (“Serenity Wellness Center”); Serenity Wellness Products, LLC (“Serenity Wellness Products”); and Serenity Wellness Growers, LLC (“Serenity Wellness Growers”). All material intercompany transactions have been eliminated upon consolidation of these entities.


Nature of Business


CLS Holdings USA, Inc. (the “Company”) was originally incorporated as Adelt Design, Inc. (“Adelt”) on March 31, 2011 to manufacture and market carpet binding art. Production and marketing of carpet binding art never commenced.


On November 12, 2014, CLS Labs, Inc. (“CLS Labs”) acquired 10,000,000 shares, or 55.6%, of the outstanding shares of common stock of Adelt from its founder, Larry Adelt. On that date, Jeffrey Binder, the Chairman, President and Chief Executive Officer of CLS Labs, was appointed Chairman, President and Chief Executive Officer of the Company. On November 20, 2014, Adelt adopted amended and restated articles of incorporation, thereby changing its name to CLS Holdings USA, Inc. Effective December 10, 2014, the Company effected a reverse stock split of its issued and outstanding common stock at a ratio of 1-for-0.625 (the “Reverse Split”), wherein 0.625 shares of the Company’s common stock were issued in exchange for each share of common stock issued and outstanding. As a result, 6,250,000 shares of the Company’s common stock were issued to CLS Labs in exchange for the 10,000,000 shares that it owned by virtue of the above-referenced purchase from Larry Adelt.


On April 29, 2015, the Company, CLS Labs and CLS Merger Inc., a Nevada corporation and wholly owned subsidiary of CLS Holdings (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) and completed a merger, whereby CLS Merger Inc. merged with and into CLS Labs, with CLS Labs remaining as the surviving entity (the “Merger”). Upon the consummation of the Merger, the shares of the common stock of CLS Holdings owned by CLS Labs were extinguished and the former stockholders of CLS Labs were issued an aggregate of 15,000,000 (post Reverse Split) shares of common stock in CLS Holdings in exchange for their shares of common stock in CLS Labs. As a result of the Merger, the Company acquired the business of CLS Labs and abandoned its previous business. 


The Company has been issued a U.S. patent with respect to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into concentrates such as oils, waxes, edibles and shatter. These concentrates may be ingested in a number of ways, including through vaporization via electronic cigarettes (“e-cigarettes”), and used for a variety of pharmaceutical and other purposes. Internal testing of this extraction method and conversion process has revealed that it produces a cleaner, higher quality product and a significantly higher yield than the cannabinoid extraction processes currently existing in the marketplace. The Company has not commercialized its proprietary process or otherwise earned any revenues from it.  The Company plans to generate revenues through licensing, fee-for-service and joint venture arrangements related to its proprietary method of extracting cannabinoids from cannabis plants and converting the resulting cannabinoid extracts into saleable concentrates.


On December 4, 2017, the Company and Alternative Solutions, LLC entered into a Membership Interest Purchase Agreement (the “Acquisition Agreement”), as amended, for the Company to acquire the Oasis LLCs from Alternative Solutions. Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.  


Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.  At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (the “Oasis Note”), and 22,058,823 shares of its common stock (the “Purchase Price Shares”) (collectively, the “Closing Consideration”). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration.  The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018. The Company has adopted a fiscal year end of May 31st.


On October 31, 2018, the Company, CLS Massachusetts,, and In Good Health, Inc. (“IGH”), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the “Conversion”), entered into an Option Agreement (the “Option Agreement”). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the “Option”) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the “Option Period”). (See note 4). On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the “IGH Loan”), in the principal amount of $5,000,000 (the “IGH Loan Amount”), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the “IGH Loan Agreement”) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the “IGH Note Receivable”), which bears interest at the rate of 6% per annum and matures on October 31, 2021.


On September 13, 2018, we entered into a non-binding letter of intent (the “CannAssist LOI”) with CannAssist, LLC, a Massachusetts limited liability company (“CannAssist”), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the “Leicester Facility”). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close


Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.


Cash and Cash Equivalents


The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.  The Company had cash and cash equivalents of $11,972,015 and $52,964 as of February 28, 2019 and May 31, 2018, respectively.


Allowance for Doubtful Accounts


The Company generates the majority of its revenues and corresponding accounts receivable from the sale of cannabis, and cannabis related products. The Company evaluates the collectability of its accounts receivable considering a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations to it, the Company records a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes reserves for bad debts based on past write-off experience and the length of time the receivables are past due. The Company had no bad debts expense during the three and nine months ended February 28, 2019 and 2018.


Segment Reporting


Under FASB ASC 280-10-50, the Company operates two business segments: Cannabis Dispensary Segment, and Cannabis Production Segment, and will evaluate additional segment disclosure requirements as it expands its operations.


Inventory


Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable values. Our cannabis products consists of prepackaged purchased goods ready for resale, along with produced edibles and extracts developed under our production license. 


Property, Plant and Equipment


Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives.  Computer equipment is being depreciated over a three-year period.


Concentrations of Credit Risk


The Company maintains its cash in bank deposit accounts and other accounts, the balances of which at times may be uninsured or exceed federally insured limits. From time to time, some of the Company’s funds are also held by escrow agents; these funds may not be federally insured. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts.


Advertising and Marketing Costs


All costs associated with advertising and promoting products are expensed as incurred with the exception of the amortization of the cost of two major video productions. A music video and reality/lifestyle video were both produced in 2017. The remaining amount that hasn’t been expensed is listed on the schedule in Note 7. Total recognized advertising and promotion expenses were $381,082 and $26,549 for the three months ended February 28, 2019 and 2018, respectively; total recognized advertising and promotion expenses were $1,134,322 and $31,797 for the nine months ended February 28, 2019 and 2018, respectively.


Research and Development


Research and development expenses are charged to operations as incurred. The Company incurred no research and development costs for the three and nine months ended February 28, 2019 and 2018, respectively.


Income Taxes


The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. 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. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.


Fair Value of Financial Instruments


Pursuant to Accounting Standards Codification (“ASC”) No. 825 - Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying amount of the Company’s cash and cash equivalents, note receivable, notes payable, accounts payable and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of those financial instruments.


A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:


Level 1 - Quoted prices in active markets for identical assets or liabilities.


Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.


Level 3 - Significant unobservable inputs that cannot be corroborated by market data.


Derivative Financial Instruments


Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (see note 17).  On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.


Revenue Recognition


Revenue is primarily generated through the Company’s subsidiary, Serenity Wellness Center LLC, d/b/a Oasis Cannabis (“Oasis”). Oasis operates a 24-hour cannabis dispensary that recognizes revenue from the sale of medical and recreational cannabis products within the State of Nevada.


Revenue from the sale of cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.


The Company also recognizes revenue from Serenity Wellness Products LLC and Serenity Wellness Growers LLC, d/b/a City Trees. City Trees recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the State of Nevada:


 

Premium organic medical cannabis sold wholesale to licensed retailers


 

Recreational marijuana cannabis products sold wholesale to distributors and retailers


 

Extraction products such as oils and waxes derived from in-house cannabis production


 

Processing and extraction services for licensed medical cannabis cultivators in Nevada


 

High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada


Effective June 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605. Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of the service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.


There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended February 28, 2019.


Basic and Diluted Loss Per Share


Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock, and convertible debt. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.


The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.


A net loss causes all outstanding stock options and warrants to be antidilutive. As a result, the basic and dilutive losses per common share are the same for the three and nine months ended February 28, 2019 and 2018.


Commitments and Contingencies


Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims brought to such legal counsel’s attention as well as the perceived merits of the amount of relief sought or expected to be sought therein.


If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.  If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.


Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.


Recent Accounting Pronouncements


Accounting standards promulgated by the Financial Accounting Standards Board (“FASB”) are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following is a summary of recent accounting developments.


In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230). The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted. The Company does not believe the implementation of this update has had a material impact on its financial statements.


In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.


In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for the Company on January 1, 2018, and will be applied prospectively to an award modified on or after the adoption date. The Company does not believe that this standard has had a material effect on its financial statements.


Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606.


Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.


Adoption of Accounting Standards 


In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.


When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.


Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.


On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.


XML 19 R8.htm IDEA: XBRL DOCUMENT v3.19.1
Note 2 - Going Concern
9 Months Ended
Feb. 28, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Substantial Doubt about Going Concern [Text Block]

Note 2 – Going Concern


As shown in the accompanying financial statements, the Company has incurred net losses from operations resulting in an accumulated deficit of $42,756,743 as of February 28, 2019. The Company’s auditors stated in their opinion on the Company’s financial statements for the year ended May 31, 2018 that there was substantial doubt about the Company’s ability to continue as a going concern, and that further losses were anticipated in the development of the Company’s business raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The Company began generating revenue from operations with the Acquisition of Alternative Solutions on June 27, 2018 (note 3). Management intends to finance operating costs over the next twelve months with loans, the proceeds from the sale of securities, and/or revenues from operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


XML 20 R9.htm IDEA: XBRL DOCUMENT v3.19.1
Note 3 - Acquisition of Alternative Solutions, LLC
9 Months Ended
Feb. 28, 2019
Business Combinations [Abstract]  
Business Combination Disclosure [Text Block]

Note 3 – Acquisition of Alternative Solutions, LLC


On June 27, 2018, the Company closed on the purchase of all of the membership interests in Alternative Solutions and its three operating subsidiaries (collectively, the “Oasis LLCs”) from the members of such entities (other than Alternative Solutions).  The Oasis LLCs operate a fully integrated cannabis business in Las Vegas, Nevada, including a grow; extraction, conversion and processing facility; and a retail dispensary.  The closing occurred pursuant to a Membership Interest Purchase Agreement (the “Acquisition Agreement”) entered into between the Company and Alternative Solutions on December 4, 2017, as amended.  Pursuant to the Acquisition Agreement, the Company initially contemplated acquiring all of the membership interests in the Oasis LLCs from Alternative Solutions. Just prior to closing, the parties agreed that the Company would instead acquire all of the membership interests in Alternative Solutions, the parent of the Oasis LLCs, from its members, and the membership interests in the Oasis LLCs owned by members other than Alternative Solutions.  The revised structure of the transaction is referenced in the Oasis Note, which modified the Acquisition Agreement.


Pursuant to the Acquisition Agreement, the Company paid a non-refundable deposit of $250,000 upon signing, which was followed by an additional payment of $1,800,000 paid in February 2018, for an initial 10% of each of the Oasis LLCs.  At that time, the Company applied for regulatory approval to own an interest in the Oasis LLCs, which approval was received. On June 27, 2018, the Company made the payments to indirectly acquire the remaining 90% of the Oasis LLCs, which were equal to cash in the amount of $5,995,543, a $4.0 million promissory note due in December 2019 (see note 14), (the “Oasis Note”), and 22,058,823 shares of its common stock (see note 16), (the “Purchase Price Shares”) (collectively, the “Closing Consideration”). The cash payment of $5,995,543 was less than the $6,200,000 payment originally contemplated because the Company assumed an additional $204,457 of liabilities. The Company used the proceeds of a Canadian private securities offering to fund the cash portion of the Closing Consideration (see note 16).  The Company then applied for regulatory approval to own the additional 90% in membership interests in the Oasis LLCs, which it received on December 12, 2018.


The number of Purchase Price Shares was equal to 80% of the offering price of the Company’s common stock in its last equity offering, which price was $0.34 per share.  The Oasis Note is secured by a first priority security interest over the membership interests in Alternative Solutions and the Oasis LLCs, as well as by the assets of the Oasis LLCs.  The Company also delivered a confession of judgment to a representative of the sellers that will become effective, in general, if the Company defaults under the Oasis Note.


A claim has been made that Oasis owes certain amounts to a consultant; Oasis disputes this claim.  If the Company makes any payments in connection with this claim post-closing, generally speaking, the Company will be entitled to deduct the present value of such payments from the principal amount due under the Oasis Note.  This claim has been accrued on the Company’s balance sheet as of February 28, 2019. 


The sellers are also entitled to a $1,000,000 payment from the Company on May 30, 2020 if the Oasis LLCs have maintained an average revenue of $20,000 per day during the 2019 calendar year. The fair value of this contingent consideration was $678,111 as determined by the Company’s outside valuation consultants. This amount is recorded as contingent liability on the Company’s balance sheet at February 28, 2019.


The acquisition date estimated fair value of the consideration transferred totaled $27,975,650, which consisted of the following:


Initial purchase price

  $ 2,050,000  

Cash paid in connection with transaction

    5,995,543  

Note payable

    3,810,820  

Contingent consideration

    678,111  

Common stock

    15,441,176  

Total purchase price

  $ 27,975,650  
         

Net tangible assets

  $ 595,151  

Intangible assets

    1,637,600  

Goodwill

    25,742,899  

Total purchase price

  $ 27,975,650  

The above estimated fair value of the intangible assets is based on a preliminary purchase price allocation prepared by a third party valuation expert.  During the preliminary purchase price allocation period, which may be up to one year from the business combination date, the Company may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill.  After the preliminary purchase price allocation period, the Company may record adjustments to assets acquired or liabilities assumed subsequent to the purchase price allocation period in its operating results in the period in which the adjustments were determined. 


Pro forma results


The following table sets forth the unaudited pro forma results of the Company as if the acquisition of the Oasis LLCs was effective on the first day of each of the three and nine months periods presented.  These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.


   

Three months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 2,372,790     $ 1,827,999  

Net loss

  $ (12,850,356

)

  $ (10,839,019

)

Basic net loss per share

  $ (0.10

)

  $ (0.17

)

Diluted net loss per share

  $ (0.10

)

  $ (0.17

)

Weighted average shares - basic

    124,346,650       62,460,767  

Weighted average shares - diluted

    124,346,650       62,460,767  

   

Nine months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 6,299,932     $ 5,139,455  

Net loss

  $ (24,402,155

)

  $ (14,632,294

)

Basic net loss per share

  $ (0.26

)

  $ (0.25

)

Diluted net loss per share

  $ (0.26

)

  $ (0.25

)

Weighted average shares - basic

    95,132,835       58,988,122  

Weighted average shares - diluted

    95,132,835       58,988,122  

XML 21 R10.htm IDEA: XBRL DOCUMENT v3.19.1
Note 4 - Joint Venture and Option Transaction
9 Months Ended
Feb. 28, 2019
Equity Method Investments and Joint Ventures [Abstract]  
Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 4 – Joint Venture and Option Transaction


 In Good Health


On October 31, 2018, the Company, CLS Massachusetts, Inc., a Massachusetts corporation and a wholly-owned subsidiary of the Company (“CLS Massachusetts”), and In Good Health, Inc. (“IGH”), a Massachusetts not-for-profit corporation, which converted to a for-profit corporation on November 6, 2018 (the “Conversion”), entered into an Option Agreement (the “Option Agreement”). Under the terms of the Option Agreement, CLS Massachusetts has an exclusive option to acquire all of the outstanding capital stock of IGH (the “Option”) during the period beginning on the earlier of the date that is one year after the effective date of the Conversion and December 1, 2019, and ending on the date that is 60 days after such date (the “Option Period”). If CLS Massachusetts exercises the Option, the Company, a wholly-owned subsidiary of the Company and IGH will enter into a merger agreement (the form of which has been agreed to by the parties) (the “IGH Merger Agreement”). At the effective time of the merger contemplated by the IGH Merger Agreement, CLS Massachusetts will pay a purchase price of $47,500,000, subject to reduction as provided in the IGH Merger Agreement, payable as follows: $35 million in cash, $7.5 million in the form of a five-year promissory note, and $5 million in the form of restricted common stock of the Company, plus $2.5 million as consideration for a non-competition agreement with IGH’s President, payable in the form of a five-year promissory note.


IGH and certain IGH stockholders holding sufficient aggregate voting power to approve the transactions contemplated by the IGH Merger Agreement have entered into agreements pursuant to which such stockholders have, among other things, agreed to vote in favor of such transactions.


On October 31, 2018, as consideration for the Option, the Company made a loan to IGH (the “IGH Loan”), in the principal amount of $5,000,000 (the “IGH Loan Amount”), subject to the terms and conditions set forth in that certain Loan Agreement, dated as of October 31, 2018 between IGH as the borrower and the Company as the lender (the “IGH Loan Agreement”) (see note 9). The IGH Loan is evidenced by a secured promissory note of IGH (the “IGH Note Receivable”), which bears interest at the rate of 6% per annum and matures on October 31, 2021.


To secure the obligations of IGH to the Company under the Loan Agreement and the IGH Note Receivable, the Company and IGH entered into a Security Agreement dated as of October 31, 2018 (the “IGH Security Agreement”), pursuant to which IGH granted to the Company a first priority lien on and security interest in all personal property of IGH.


If the Company does not exercise the Option on or prior to the date that is 30 days following the end of the Option Period, the Loan Amount will be reduced to $2,500,000 as a break-up fee (the “Break-Up Fee”), except in the event of a Purchase Exception (as defined in the Option Agreement), in which case the Break-Up Fee will not apply and there will be no reduction to the Loan Amount.


 CannAssist


On September 13, 2018, we entered into a non-binding letter of intent (the “CannAssist LOI”) with CannAssist, LLC, a Massachusetts limited liability company (“CannAssist”), setting forth the terms and conditions upon which we propose to form an 80/20 joint venture with CannAssist, of which we would own 80%. CannAssist plans to build out a recreationally licensed cultivation grow facility in Leicester, Massachusetts (the “Leicester Facility”). The planned Leicester Facility is in possession of its host community agreement and has applied for a recreational license and is awaiting state approval. We intend to use a portion of the net proceeds of our 2018 Convertible Debenture Offering to fund construction activities at the Leicester Facility. We have not entered into any definitive agreements regarding the transactions contemplated by the CannAssist LOI, and there is no guarantee that these transactions will close.


On November 7, 2018, we amended the CannAssist LOI to extend the termination date to January 15, 2019 and further amended it effective January 15, 2019 to extend the termination date to July 1, 2019.


XML 22 R11.htm IDEA: XBRL DOCUMENT v3.19.1
Note 5 - Accounts Receivable
9 Months Ended
Feb. 28, 2019
Receivables [Abstract]  
Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 5 – Accounts Receivable


Accounts receivable was $295,013 and $0 at February 28, 2019 and May 31, 2018, respectively. No allowance for doubtful accounts was necessary during the three and nine months ended February 28, 2019 and 2018.


XML 23 R12.htm IDEA: XBRL DOCUMENT v3.19.1
Note 6 - Inventory
9 Months Ended
Feb. 28, 2019
Inventory Disclosure [Abstract]  
Inventory Disclosure [Text Block]

Note 6 – Inventory


Inventory, consisting of material, overhead, labor, and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market, and consists of the following:


   

February 28,

   

May 31,

 
   

2019

   

2018

 

Raw materials

  $ 295,822     $ -  

Finished goods

    309,974       -  

Total

  $ 605,796     $ -  

Raw materials consist of cannabis plants and the materials that are used in our production process prior to being tested and packaged for consumption. Finished goods consist of pre-packaged materials previously purchased from other licensed cultivators and our manufactured edibles and extracts.


XML 24 R13.htm IDEA: XBRL DOCUMENT v3.19.1
Note 7 - Prepaid Expenses and Other Current Assets
9 Months Ended
Feb. 28, 2019
Disclosure Text Block Supplement [Abstract]  
Other Assets Disclosure [Text Block]

Note 7 – Prepaid Expenses and Other Current Assets


Prepaid expenses consisted of the following at February 28, 2019 and May 31, 2018:


   

February 28,

   

May 31,

 
   

2019

   

2018

 

Prepaid insurance

  $ 14,218     $ -  

Prepaid license fees

    130,412       -  

Prepaid legal fees

    16,410       1,410  

Prepaid fixed assets

    460,901          

Prepaid rent

    6,961          

Deposits on inventory

    83,837       -  

Total

  $ 712,739     $ 1,410  

XML 25 R14.htm IDEA: XBRL DOCUMENT v3.19.1
Note 8 - Redemption Premium in Transit
9 Months Ended
Feb. 28, 2019
Redemption Premium in Transit [Abstract]  
Redemption Premium in Transit [Text Block]

Note 8 – Redemption Premium in Transit


During the three months ended February 28, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note. The redemption date is March 1, 2019, and the redemption amount is shown as a current asset on the Company’s balance sheet as of February 28, 2019.


XML 26 R15.htm IDEA: XBRL DOCUMENT v3.19.1
Note 9 - Notes Receivable
9 Months Ended
Feb. 28, 2019
Disclosure Text Block Supplement [Abstract]  
Other Current Assets [Text Block]

Note 9 – Notes Receivable


PRH Note Receivable


During the year ended May 31, 2015, the Company loaned $500,000 (the “PRH Note”) to Picture Rock Holdings, LLC, a Colorado limited liability company (“PRH”).  Pursuant to the PRH Note, as amended by the parties effective June 30, 2015, October 31, 2015, April 11, 2016, and May 31, 2016, PRH was expected to repay the principal due under the PRH Note in twenty (20) equal quarterly installments of Twenty Five Thousand Dollars ($25,000) commencing in the month following the month in which PRH commenced generating revenue at the grow facility, which commencement was originally anticipated to occur in the first quarter of 2017, and continuing until paid in full.  We suspended our plans to operate in Colorado due to regulatory delays and have not yet determined when we will pursue them again.  Interest will accrue on the unpaid principal balance of the PRH Note at the rate of twelve percent (12%) per annum and will be paid quarterly in arrears commencing after such initial payment and continuing until paid in full.  All outstanding principal and any accumulated unpaid interest due under the PRH Note is due and payable on the five-year anniversary of the initial payment thereunder.  In the event of default as defined in the agreements underlying the PRH Note, all amounts under the PRH Note shall be due and payable at once.  During the year ended May 31, 2015, the Company recorded an impairment related to the note receivable in the amount of $500,000. 


During the year ended May 31, 2018, the Company received a payment of $50,000 on the PRH Note.  As a result, the Company has reduced the impairment of the note by $50,000 to reflect this payment.  The receivable is recorded on the balance sheet as of February 28, 2019 in the amount of $0, net of allowance in the amount of $450,000. 


IGH Note Receivable


On October 31, 2018, in connection with an option to purchase transaction (see note 4), the Company loaned $5,000,000 (the “IGH Note) to In Good Health, Inc., a Massachusetts not-for-profit corporation (“IGH”); on November 6, 2018, IGH converted to a for-profit corporation. This Note bears interest at the rate of 6% per annum. On March 1, 2020 (the “Initial Payment Date”), all accrued interest shall be added to the outstanding principal due hereunder and such amount shall be payable in eight equal quarterly installments, commencing on the Initial Payment Date, together with interest accruing after the Initial Payment Date. The IGH Note shall mature and all outstanding principal, accrued interest and any other amounts due hereunder, shall become due and payable in full on the third anniversary of the IGH Note. The IGH Note was issued in connection with a loan agreement and security agreement between the Company and IGH, and an option agreement between the Company and IGH, among others (the “IGH Option Agreement”), in both cases dated as of October 31, 2018 and the other agreements and documents executed and/or delivered in connection therewith (collectively the “IGH Loan Documents”), and is secured by the collateral described in the IGH Loan Documents and by such other collateral as may in the future be granted to the Company to secure the IGH Note. During the three months and nine ended February 28, 2019, the Company recorded interest income in the amount of $73,973 and $98,631, respectively, in connection with the IGH Note. At February 28, 2019, principal in the amount of $5,000,000 and interest receivable in the amount of $96,631 due under the IGH Note are classified as non-current assets on the Company’s balance sheet.


CannAssist Note Receivable


On January 29, 2019, the Company made a line of credit loan to CannAssist (the “CanAssist Note”), in the principal amount of up to $500,000. Any draws on the line of credit in excess of $150,000 will only be made in the sole discretion of the Company. The Loan bears interest at the rate of 8% per annum and is personally guaranteed by the two equity owners of CannAssist. Payments on the loan will commence on July 1, 2019 and the Note will mature on December 1, 2019. At February 28, 2019, the principal amount of $150,000 and interest receivable in the amount of $987 due under the CannAssist Note are classified as non-current assets on the Company’s balance sheet.


XML 27 R16.htm IDEA: XBRL DOCUMENT v3.19.1
Note 10 - Property, Plant and Equipment
9 Months Ended
Feb. 28, 2019
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment Disclosure [Text Block]

Note 10 – Property, Plant and Equipment


Property, plant and equipment consisted of the following at February 28, 2019 and May 31, 2018.


   

February 28, 

   

May 31,

 
   

2019

   

2018

 

Office equipment

    1,217,563       2,674  

Furniture and fixtures

    59,617       -  

Leasehold improvements

  $ 764,423     $ -  

Less: accumulated depreciation

    (494,439

)

    (2,674

)

Property, plant, and equipment, net

  $ 1,547,164     $ -  

During the nine months ended February 28, 2019, the Company acquired property, plant, and equipment with an aggregate fair value of $933,142 with the acquisition of Alternative Solutions, LLC. See note 3.


Depreciation of property, plant, and equipment was $45,045 and $223 for the three months ended February 28, 2019 and 2018 respectively. Depreciation of property, plant, and equipment was $121,212 and $669 for the nine months ended February 28, 2019 and 2018 respectively.


XML 28 R17.htm IDEA: XBRL DOCUMENT v3.19.1
Note 11 - Intangible Assets
9 Months Ended
Feb. 28, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Intangible Assets Disclosure [Text Block]

Note 11 – Intangible Assets


Intangible assets consisted of the following at February 28, 2019 and May 31, 2018.


February 28, 2019

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ 319,600     $ (15,981

)

  $ 303,619  

License & Customer Relations

    990,000       (24,750

)

    965,250  

Tradenames - Trademarks

    301,000       (15,051

)

    285,949  

Non-compete Agreements

    27,000       (6,750

)

    20,250  

Domain Names 

    2,600       (324

)

    2,276  

Total

  $ 1,640,020     $ (62,856

)

  $ 1,577,344  

May 31, 2018

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ -     $ -     $ -  

License & Customer Relations

    -       -       -  

Tradenames - Trademarks

    -       -       -  

Non-compete Agreements

    -       -       -  

Domain names

    1,726       (828

)

    898  

Total

  $ 1,726     $ (828

)

  $ 898  

Total amortization expense charged to operations for the three months ended February 28, 2019 and 2018 was $20,952 and $108, respectively.  Total amortization expense charged to operations for the nine months ended February 28, 2019 and 2018 was $62,856 and $324, respectively. 


Amount to be amortized during the twelve months ended February 28, 

       

2019

  $ 27,379  

2020

    164,103  

2021

    164,103  

2022

    164,103  

2023

    164,103  

Thereafter

    893,553  
    $ 1,577,344  

XML 29 R18.htm IDEA: XBRL DOCUMENT v3.19.1
Note 12 - Other Assets
9 Months Ended
Feb. 28, 2019
Other Non-current Assets Disclosure [Abstract]  
Other Non-current Assets Disclosure [Text Block]

Note 12 – Other Assets


Other assets included the following as of February 28, 2019 and May 31, 2018, respectively:


   

February 28,

   

May 31,

 
   

2019

   

2018

 

Security deposits

    160,450       -  
    $ 160,450     $ -  

XML 30 R19.htm IDEA: XBRL DOCUMENT v3.19.1
Note 13 - Accounts Payable and Accrued Liabilities
9 Months Ended
Feb. 28, 2019
Payables and Accruals [Abstract]  
Accounts Payable and Accrued Liabilities Disclosure [Text Block]

Note 13 – Accounts Payable and Accrued Liabilities


Accrued expenses consisted of the following at February 28, 2019 and May 31, 2018:


   

February 28,

   

May 31,

 
   

2019

   

2018

 

Trade accounts payable

  $ 655,518     $ 726,457  

Accrued payroll and payroll taxes

    281,584       44,465  

Accrued liabilities

    457,251       -  

Deferred rent liability 

    -       55,699  

Total

  $ 1,394,353     $ 826,621  

XML 31 R20.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable
9 Months Ended
Feb. 28, 2019
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

Note 14 – Notes Payable and Convertible Notes Payable


Notes Payable


   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the “Blatt Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.

  $ -     $ 210,000  
                 

 On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the “AJG Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note.  

    -       100,000  
                 

The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (“Oasis Note”). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.  The note is due on December 4, 2019, but may be prepaid at any time without penalty.   The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs. 

 

The Company recognized an original issue discount of $189,180 on the Oasis Note.  During the nine months ended February 28, 2019, $88,644 of this discount was charged to operations.  During the nine months ended February 28, 2019, the Company accrued interest in the amount of $164,000 on the Oasis Note.

    4,000,000       -  
                 

Total – Notes Payable

  $ 4,000,000     $ 310,000  

Less: Discount

    (100,536

)

    -  

Notes Payable, Net of Discounts

  $ 3,899,464     $ 310,000  

Current portion

  $ 3,899,464     $ 310,000  

Long term portion

  $ -     $ -  

Related Party Convertible Demand Notes Payable


On May 31, 2017, the Company entered into an Omnibus Loan Amendment Agreement (the “Omnibus Loan Amendment”) with Jeffrey I. Binder, Frank Koretsky, Newcan Investment Partners LLC and CLS CO 2016, LLC (collectively, the “Insiders”).  Pursuant to the Omnibus Loan Amendment, the Company agreed with the Insiders to amend certain terms of loans the Insiders made to the Company for working capital purposes, which loans were initially demand loans, and, except for loans made in 2017, were later memorialized as convertible loans (the “Insider Loans”), in exchange for the agreement of the Insiders to convert all Insider Loans where funds were advanced prior to January 1, 2017, which totaled $2,537,750, plus $166,490 of accrued interest thereon, into an aggregate of 10,816,960 shares of the Company’s common stock at $0.25 per share, and forego the issuance of warrants to purchase the Company’s common stock upon conversion.  This resulted in the issuance of an additional 7,609,910 shares compared to the original number of shares issuable upon conversion of the Insider Loans prior to the Omnibus Loan Amendment. The Company valued the shares at $0.125, which was the market price of the Company’s stock at the conversion date, and charged the amount of $951,239 to loss on modification of debt during the twelve months ended May 31, 2017. The Company entered into the Omnibus Loan Amendment in order to ease the debt burden on the Company and prevent it from defaulting on the Insider Loans.


Pursuant to the Omnibus Loan Amendment, the following amendments were made to the Insider Loans: (a) the Company reduced the conversion price on the Insider Loans from between $0.75 and $1.07 per share of common stock to $0.25 per share of common stock, in those cases where the conversion price was greater than $0.25, which reduced conversion price exceeded the closing price of the common stock during the three months prior to the Omnibus Loan Amendment; (b) the Company deleted the requirement to issue warrants to purchase the Company’s common stock upon conversion of the Insider Loans; (c) the Company amended one Insider Loan to permit conversion of only the portion of the Insider Loan related to services that were provided to it prior to January 1, 2017; and (d) the Company amended the terms of the Insider Loans where funds were advanced on or after January 1, 2017, which Insider Loans were not converted into the Company’s common stock, to provide for, where not already the case, a 10% interest rate per annum, a $0.25 conversion price per share of common stock, and the deletion of the requirement that the Company issue warrants to purchase its common stock upon conversion of such Insider Loans.


On January 10, 2018, effective December 1, 2017, the Company entered into an Omnibus Amendment to Convertible Notes (the “Second Omnibus Loan Agreement”) with Jeffrey I. Binder, an officer and director of the Company, and Newcan Investment Partners LLC, an entity owned by Frank Koretsky, a director of the Company. The Second Omnibus Loan Agreement provides that the conversion price of all outstanding convertible promissory notes issued to either Mr. Binder or Newcan Investment Partners, LLC as of the date of the Agreement would be increased from $0.25 to $0.3125 per share of common stock.  The remaining terms of such notes remain unchanged.


The following tables summarize the Company’s loan balances at February 28, 2019 and May 31, 2018:


   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the “Binder Funding Notes”). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.  Also during the year ended May 31, 2018 the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.  During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, Mr. Binder advanced a total of $211,700 to the Company under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company made principal payments to in the amount of $211,837 under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,710 on the Binder Funding Notes. During the nine months ended February 28, 2019, discounts in the aggregate amount of $211,702 related to the beneficial conversion feature of the Binder Funding Notes were charged to additional-paid in capital and amortized to interest expense.

  $ -     $ 137  

   

February 28,

2019

   

May 31,

2018

 
                 

Notes payable to Newcan Investment Partners, LLC (“Newcan”), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the “Newcan Funding Notes”). The Newcan Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.).  During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (“Newcan Convertible Note 8”). During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.

    -       75,000  
                 

Total – Demand Convertible Notes Payable, Related Parties

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable,  Related Parties - Current portion

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable, Related Parties - Long term portion

  $ -     $ -  

Convertible Notes Payable, Related Parties


   

February 28,  

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to David Lamadrid (the “Lamadrid Note”) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.  The Lamadrid Note is due eighteen months from the date of issue.  Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $942 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.

 

During the nine months ended February 28, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the nine months ended February 28, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the nine months ended February 28, 2019 the remaining discount in the amount of $30,308 was charged to operations.

  $ -     $ 31,250  
                 

Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the “Binder Convertible Note 9”).  The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.  The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.

 

During the twelve months ended May 31, 2018 and 2017, interest in the amount of $565 and $0 was accrued on Binder Convertible Note 9, respectively. 

 

During the nine months ended February 28, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the nine months ended February 28, 2019, the Company made a principal payment in the amount of $37,500 on the Binder Convertible Note 9. During the nine months ended February 28, 2019 the remaining discount in the amount of $35,610 was charged to operations.

    -       37,500  

   

February 28,

2019

   

May 31,

2018

 
                 

Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the “Newcan Convertible Note 8”).  The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.  This note bears interest at the rate of 10% per annum.  No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.  Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.

 

During the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $1,603 on this note. During the nine months ended February 28, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $57,322 was charged to operations.

    -       -  
                 

Total – Convertible Notes Payable, Related Parties

  $ -     $ 68,750  

Less: Discount

    -       (65,918

)

Convertible Notes Payable, Related Parties, Net of Discounts

  $ -     $ 2,832  
                 

Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion

  $ -     $ 2,832  

Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion

    -       -  

Convertible Notes Payable


   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to Darling Capital, LLC (the “Darling Note”) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.  The Darling Note is due eighteen months from the date of issue.  Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $40,427 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,447 on this note. During the nine months ended February 28, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the nine months ended February 28, 2019, the remaining discount in the amount of $509,573 was charged to operations.

  $ -     $ 550,000  
                 

Convertible promissory note payable to Efrat Investments, LLC (the “Efrat Note”) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.  The Efrat Note is due eighteen months from the date of issue.  Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $2,974 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $898 on this note. During the nine months ended February 28, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $52,026 was charged to operations.

    -       55,000  

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note”) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the twelve months ended May 31, 2018, $23,224 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.

 

During the nine months ended February 28, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000 was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.  Also during the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $39,068 on the YA II PN Note. During the nine months ended February 28, 2019, the holder of the YA II PN Note converted principal in the amount of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock.

    250,000       750,000  
                 

Unsecured convertible note issued to Jay Lasky (the “Lasky Note”), dated May 3, 2018 in the original principal amount of $25,000.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $149 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.

 

During the nine months ended February 28, 2019, $7,152 of the discount was charged to operations. Also during the nine months ended February 28, 2019, the Company accrued interest in the amount of $993 on this note. During the nine months ended February 28, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.

    -       25,000  

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note 2”) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the nine months ended February 28, 2019, $167,713 of this discount was charged to operations. Also during the nine months ended February 28 2019, the Company accrued interest in the amount of $29,041 on this note.

    500,000       -  
                 

Convertible debenture in the principal amount of $4,000,000 (the “U.S. Convertible Debenture 1”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1 is convertible into units (the “Convertible Debenture Units”) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 1 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the nine months ended February 28, 2019, $217 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $105,205 on the U.S. Convertible Debenture 1.

    4,000,000       -  
                 

Convertible debenture in the principal amount of $1,000,000 (the “U.S. Convertible Debenture 2”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the nine months ended February 28, 2019, $52 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $26,301 on the U.S. Convertible Debenture 2.

    1,000,000       -  

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture in the principal amount of $100,000 (the “U.S. Convertible Debenture 3”) dated October 24, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the nine months ended February 28, 2019, $60 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,784 on the U.S. Convertible Debenture 3.

    100,000       -  
                 

Convertible debenture in the principal amount of $532,000 (the “U.S. Convertible Debenture 4”) dated October 25, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the nine months ended February 28, 2019, $87 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $14,692 on the U.S. Convertible Debenture 4.

    532,000       -  
                 

Convertible debenture in the principal amount of $150,000 (the “U.S. Convertible Debenture 5”) dated October 26, 2018,  which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the nine months ended February 28, 2019, $67 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $4,110 on the U.S. Convertible Debenture 5.

    150,000       -  

   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture payable in the principal amount of $75,000 (the “U.S. Convertible Debenture 6”) dated October 26, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the nine months ended February 28, 2019, $57 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,055 on the U.S. Convertible Debenture 6.

    75,000       -  
                 

Convertible debentures payable in the aggregate principal amount of $12,012,000 (the “Canaccord Debentures”) dated December 12, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures  are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the nine months ended February 28, 2019, $136 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $205,356 on the Canaccord Debentures.

    12,012,000       -  
                 

Total - Convertible Notes Payable

  $ 18,619,000     $ 1,380,000  

Less: Discount

    (8,030,735

)

    (1,295,527

)

Convertible Notes Payable, Net of Discounts

  $ 10,588,265     $ 84,473  
                 

Total - Convertible Notes Payable, Net of Discounts, Current Portion

  $ 398,117     $ 43,401  

Total - Convertible Notes Payable, Net of Discounts, Long-term Portion

  $ 10,190,148     $ 41,072  

Discounts on notes payable amortized to interest expense – 3 months ended February 28, 2019 and 2018, respectively

  $ 337,347     $ 818,254  

Discounts on notes payable amortized to interest expense – 9 months ended February 28, 2019 and 2018, respectively

  $ 2,481,674     $ 1,391,110  

Beneficial Conversion Features


The Darling Note, Efrat Note, Lamadrid Note and YA II PN Notes contain conversion features that create derivative liabilities. The pricing model the Company uses for determining fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income.  The derivative components of the notes were valued at issuance, at conversion, at restructure, and at each period end. 


Certain of the Company’s other convertible notes payable contain beneficial conversion features that are not derivatives, but which require valuation in order to determine the discount to the related convertible note payable. The value of these conversion features is calculated using the intrinsic value method, whereby the amount of the discount is calculated as the difference between the conversion price and the market price of the underlying common stock at the date of issuance multiplied by the number of shares issuable.


XML 32 R21.htm IDEA: XBRL DOCUMENT v3.19.1
Note 15 - Contingent Liability
9 Months Ended
Feb. 28, 2019
Loss Contingency [Abstract]  
Contingencies Disclosure [Text Block]

Note 15 – Contingent Liability


The terms of the Company’s acquisition of Alternative Solutions, LLC include a payment of $1,000,000 contingent upon the Oasis LLCs achieving certain revenue targets. (see note 3). The fair value of this contingent consideration at the time of the Acquisition Agreement was $678,111 as determined by the Company’s outside valuation consultants. Management has reviewed the value of the contingent consideration, and has concluded that no adjustment is necessary at February 28, 2019.


XML 33 R22.htm IDEA: XBRL DOCUMENT v3.19.1
Note 16 - Stockholders' Equity
9 Months Ended
Feb. 28, 2019
Stockholders' Equity Note [Abstract]  
Stockholders' Equity Note Disclosure [Text Block]

Note 16 – Stockholders’ Equity


The Company’s authorized capital stock consists of 250,000,000 shares of common stock, par value $0.0001 per share and 20,000,000 shares of preferred stock, par value $0.001 per share. The Company had 125,814,107 and 50,128,972 shares of common stock issued and outstanding as of February 28, 2019, and May 31, 2018, respectively.


The Company recorded imputed interest of $268 and $265 during the three months ended February 28, 2019 and 2018 on related party payables due to a director and officer of the Company. The Company recorded imputed interest of $807 and $804 during the nine months ended February 28, 2019 and 2017 on related party payables due to a director and officer of the Company, and charged this amount to additional paid-in capital.


Stock Issued upon Conversion of Notes Payable


During the nine months ended February 28, 2019, Darling Capital, holder of a convertible promissory note, converted a total of $565,000, which consisted of $550,000 of principal and $15,000 of accrued interest, into 1,808,000 shares of common stock. 


During the nine months ended February 28, 2019, Efrat Investments, holder of a convertible promissory note, converted a total of $57,200, which consisted of $55,000 of principal and $2,200 of accrued interest, into 183,040 shares of common stock. 


During the nine months ended February 28, 2019, David Lamadrid, holder of a convertible promissory note, converted a total of $32,497, which consisted of $31,250 of principal and $1,247 of accrued interest, into 103,989 shares of common stock. 


During the nine months ended February 28, 2019, Jay Lasky, holder of a convertible promissory note, converted a total of $26,185, which consisted of $25,000 of principal and $1,185 of accrued interest, into 65,462 shares of common stock.


During the nine months ended February 28, 2019, Newcan, holder of a convertible promissory note, converted a total of $78,534, which consisted of $75,000 of principal and $3,534 of accrued interest, into 196,336 shares of common stock.


During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $280,247, which consisted of $250,000 of principal and $30,247 of accrued interest, into 700,616 shares of common stock.


During the nine months ended February 28, 2019, YA II PN, holder of a convertible promissory note, converted a total of $256,027 which consisted of $250,000 of principal and $6,027 of accrued interest, into 640,068 shares of common stock.


Stock Issued for Services


On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of the Company’s restricted common stock in recognition of Mr. Glashow’s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions.  The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.


On June 24, 2018, pursuant to the terms of a severance agreement between the Company and David Lamadrid, the Company issued 600,000 shares of restricted common stock to Mr. Lamadrid. These shares were valued at $264,000, $213,320 of which was previously expensed and the remaining $50,680 of which was charged to operations during the nine months ended February 28, 2019.


On September 11, 2018, the Company issued 31,250 shares of common stock with a fair value of $25,310 in exchange for legal services previously rendered to the Company. These shares were accrued on February 8, 2018, and were issued from stock payable.


Stock Issued for Acquisition


On June 27, 2018, the Company issued 22,058,823 shares of its common stock pursuant to the terms of the Alternative Solutions, LLC Acquisition Agreement.  These shares were valued at $15,441,176.  (See note 3).


Special Warrants Issued in Offering


On June 20, 2018, the Company executed an Agency Agreement with Canaccord Genuity Corp. and closed on a private offering of its special warrants for aggregate gross proceeds of C$13,037,859 (USD$9,785,978). Pursuant to the offering, the Company issued 28,973,020 special warrants at a price of C$0.45 (USD$0.34) per special warrant.  Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.


In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.


Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.  Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events. 


Because the Company did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, the unexercised special warrants were adjusted to entitle the holders to receive 1.1 units instead of one unit of the Company. This resulted in the issuance of an additional 3,042,167 units. This penalty was valued at $7,142,550 and was charged to operations during the three months ended August 31, 2018.


On February 28, 2019, all of the special warrants were automatically converted into 33,465,110 shares of common stock and warrants to purchase 33,465,110 shares of common stock for CD$0.65 per share.


Stock Issued in Navy Capital Offering


On July 31, 2018, the Company entered into a Subscription Agreement with Navy Capital Green International, Ltd, (the “Navy Capital Offering”) for 7,500,000 units at a price of $0.40 per unit, or an aggregate amount of $3,000,000.  The units collectively represent (i) 7,500,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of common stock at an exercise price of $0.60 per share of common stock. 


In connection with the Navy Capital Offering, between August 8, 2018 and August 10, 2018, the Company entered into five subscription agreements for a total of 6,875,000 units at a price of $0.40 per unit, or an aggregate purchase price of $2,750,000.  The units collectively represent (i) 6,875,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of common stock at an exercise price of $0.60 per share of common stock. 


Stock Issued to Officers


On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer.  These shares vested four months after issuance.  The shares were valued at $17,500, and were amortized over the vesting period.  As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019. 


On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.  These shares were valued at $350,000 and will be amortized over the vesting period.  As of February 28, 2019, $236,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019.


On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement.  These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations, and is carried as Common Stock Subscribed on the Company’s balance sheet at February 28, 2019.


Stock Issued upon Cashless Exercise of Warrants


On August 14, 2018, the Company issued 129,412 shares of common stock for the cashless conversion of 350,000 warrants at an exercise price of $0.75 per share.


On September 6, 2018, the Company issued 13,684 shares of common stock upon the cashless exercise of 40,000 warrants at an exercise price of $0.75 per share.


On November 14, 2018, the Company issued 5,867 shares of common stock upon the cashless exercise of 25,000 warrants at an exercise price of $0.75 per share.


Stock Issued for Settlement


On November 1, 2018, the Company issued 50,000 shares of common stock with a fair value of $47,500 pursuant to a legal settlement. There was no gain or loss associated with this transaction.


Stock Issued for Compensation for Debenture Offering


On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 559,750 shares of common stock as compensation for agent and advisory services. These shares were valued at $376,152, and this amount was charged to operations during the three months ended February 28, 2019.


Additional Paid-in Capital


During the nine months ended February 28, 2019, the Company recorded discounts on two convertible notes payable relating to beneficial conversion features in the aggregate amount of $362,500 on the YA II PN Note 2, and $58,594 on the Newcan Convertible Note 8. Also, during the nine months ended February 28, 2019, a reset event occurred with regard to the YAII PN Note.


During the nine months ended February 28, 2019, the Company recorded an original issue discount on the Serenity Wellness Note in the amount of $81,961.


On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in the previously issued convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to additional paid-in capital in the aggregate amount of $1,265,751. On June 20, 2018, a reset event occurred in connection with the YA II PN Note (see note 14), and the Company charged the change in fair value of the conversion feature in the amount of $35,833 to additional paid-in capital. This was considered a material modification of the note, and the Company created a new discount to this note in the amount of $750,000, which was charged to additional paid-in capital.


During the nine months ended February 28, 2019, the Company recorded discounts on six convertible debentures relating to beneficial conversion features as follows: a discount of $3,254,863 was recorded on the U.S. Convertible Debenture 1; a discount of $813,696 was recorded on the U.S. Convertible Debenture 2; a discount of $75,395 was recorded on the U.S. Convertible Debenture 3; a discount of $416,627 was recorded on the U.S. Convertible Debenture 4; a discount of $120,078 was recorded on the U.S. Convertible Debenture 5; a discount of $60,030 was recorded on the U.S. Convertible Debenture 6; and a discount of $2,938,690 was recorded on the Canaccord Debentures.


Warrants


On June 27, 2018, the Company incurred a penalty in connection with the WestPark Offering due to the late filing of the registration statement that included the resale of the securities that were sold in such offering.  As a result of the penalty, the Company issued three-year common stock warrants to purchase an aggregate of 1,368,250 shares of the Company’s common stock at an exercise price of $0.50 per share.   In addition, the Company reduced the exercise price of the common stock purchase warrants previously issued to the investors in the WestPark Offering from $0.75 per share to $0.50 per share.  The fair value of the penalty was $941,972; this amount was charged to operations during the three months ended August 31, 2018.


On June 20, 2018, in connection with the special warrant offering, the Company issued Canaccord Genuity Corp. 2,317,842 three-year broker warrants at an exercise price of C$0.45 per share as compensation.  Each warrant entitles the holder to purchase one unit, which consists of one share of common stock and a warrant to purchase one share of common stock, for C$0.65 per share. These warrants were valued at $1,495,373, and this amount was charged to operations during the three months ended August 31, 2018.


On July 20, 2018, in connection with the Company’s sale of a convertible debenture, the Company issued to YA II PN, Ltd. a five-year common stock purchase warrant to purchase 1,250,000 shares of the Company’s common stock at an initial exercise price of $0.60 per share. 


On August 6, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 7,500,000 shares of the Company’s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.


On August 8, 2018, the Company issued three-year common stock purchase warrants to purchase an aggregate of 6,875,000 shares of the Company’s common stock at an exercise price of $0.60 per share, to investors in the Navy Capital Offering.


On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued Canaccord Genuity Corp. 1,074,720 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. The Company, in connection with the issuance of the Canaccord Debentures, issued National Bank Financials Inc. 268,680 three-year agent and advisory warrants at an exercise price of $0.80 per share as compensation. These warrants were valued at $874,457, and this amount was charged to operations during the three months ended February 28, 2019.


On December 12, 2018, in connection with the issuance of the Canaccord Debentures, the Company issued 559,750 units as compensation for advisory and agent fees. Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock. As a result, the Company issued 223,900 three-year agent and advisory warrants to Canaccord Genuity Corp. and 55,975 three-year agent and advisory warrants to National Bank Financials Inc. These warrants were valued at $181,183, and this amount was charged to operations during the three months ended February 28, 2019.


The following table summarizes the significant terms of warrants outstanding at February 28, 2019. These warrants were granted as part of financing agreements. This table does not include the special warrants; see Special Warrant section below:


 

Range of 

exercise

Prices

   

 

Number of 

warrants

Outstanding

   

 

Weighted 

average

remaining

contractual

life (years)

   

Weighted 

average

exercise

price of

outstanding 

Warrants

   

 

Number of

warrants 

Exercisable

   

Weighted

average

exercise

price of

exercisable 

Warrants

 
$ 0.49       35,782,952       2.73     $ 0.49       35,782,952     $ 0.49  
  0.50       2,736,500       2.98       0.50       2,736,500       0.50  
  0.60       17,500,000       2.76       0.60       17,500,000       0.60  
  0.75       1,042,738       2.37       0.75       1,042,738       0.75  
  0.80       1,343,400       2.79       0.80       1,343,400       0.80  
  1.10       279,875       2.79       1.10       279,875       1.10  
          58,685,465       2.74     $ 0.53       58,685,465     $ 0.53  

Transactions involving warrants are summarized as follows. This table does not include the special warrants; see Special Warrant section below.


   

Number of

Shares

   

Weighted

Average

Exercise

Price

 

Warrants outstanding at May 31, 2018

    4,700,988     $ 0.62  

Granted

    54,399,477     $ 0.53  

Exercised

    (415,000

)

  $ 0.75  

Cancelled / Expired

    -     $ -  

Warrants outstanding at February 28, 2019

    58,685,465     $ 0.53  

Special Warrants


On June 20, 2018, the Company sold 28,973,019 special warrants for net proceeds of US$9,785,978.   Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, known as Oasis Cannabis, which was June 28, 2018.


All of the special warrants were automatically exercised for units on November 30, 2018. Each unit consists of one share of the Company’s common stock and one three-year warrant to purchase one share of common stock at a price of C$0.65.


XML 34 R23.htm IDEA: XBRL DOCUMENT v3.19.1
Note 17 - Fair Value of Financial Instruments
9 Months Ended
Feb. 28, 2019
Fair Value Disclosures [Abstract]  
Fair Value Disclosures [Text Block]

Note 17 – Fair Value of Financial Instruments


The Company has issued convertible notes containing beneficial conversion features to Darling, Efrat, David Lamadrid and YA II PN.  One of the features is a ratchet reset provision which, in general, reduces the conversion price should the Company issue equity with an effective price per share that is lower than the stated conversion price in the note. The Company accounts for the fair value of the conversion feature in accordance with ASC 815- Accounting for Derivatives and Hedging and Emerging Issues Task Force (“EITF”) 07-05- Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF 07-05”). The Company carries the embedded derivative on its balance sheet at fair value and accounts for any unrealized change in fair value as a component of its results of operations. The Company also has a contingent liability in connection with the acquisition of Alternative Solutions, (see note 3).


The following summarizes the Company’s financial liabilities that are recorded at fair value on a recurring basis at February 28, 2019 and May 31, 2018:


   

February 28, 2019

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Contingent liabilities 

  $ -     $ -     $ 678,111     $ 678,111  

   

May 31, 2018

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Derivative liabilities

  $ -     $ -     $ 1,265,751     $ 1,265,751  

The estimated fair values of the Company’s derivative liabilities are as follows:


   

Derivative

 
   

Liability

 

Liabilities Measured at Fair Value

       
         

Balance as of May 31, 2018

  $ 1,265,751  
         

Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018

    (1,265,751

)

         

Balance as of February 28, 2019

  $ -  

XML 35 R24.htm IDEA: XBRL DOCUMENT v3.19.1
Note 18 - Commitments and Contingencies
9 Months Ended
Feb. 28, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies Disclosure [Text Block]

Note 18 – Commitments and Contingencies


In connection with the Company’s planned Colorado operations, on April 17, 2015, pursuant to an Industrial Lease Agreement (the “Lease”), CLS Labs Colorado leased 14,392 square feet of warehouse and office space (the “Leased Real Property”) in a building in Denver, Colorado where certain intended activities, including growing, extraction, conversion, assembly and packaging of cannabis and other plant materials, are permitted by and in compliance with state, city and local laws, rules, ordinances and regulations. The Lease had an initial term of seventy-two (72) months and provided CLS Labs Colorado with two options to extend the term of the lease by up to an aggregate of ten (10) additional years.  In August 2017, as a result of the Company’s decision to suspend its proposed operations in Colorado, CLS Labs Colorado asked its landlord to be relieved from its obligations under the Lease, but the parties have not yet reached an agreement on how to proceed.


In August 2017, the Company’s Colorado subsidiary received a demand letter from its Colorado landlord requesting the forfeiture of the $50,000 security deposit, $10,000 in expenses, $15,699 in remaining rent due under the lease agreement and $30,000 to buy out the remaining amounts due under the lease.  These expenses, which are a liability of the Company’s Colorado subsidiary, have been accrued on the balance sheet as of February 28, 2019.


Employment Agreements


CLS Labs and Jeffrey Binder entered into a five-year employment agreement effective October 1, 2014. Under the agreement, Mr. Binder serves as CLS Labs’ Chairman and Chief Executive Officer and is entitled to receive an annual salary of $150,000. Under the agreement, Mr. Binder is also entitled to receive a performance bonus equal to 2% of CLS Labs’ annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of CLS Labs’ common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million.  On April 28, 2015, CLS Labs and the Company entered into an addendum to Mr. Binder’s employment agreement whereby Mr. Binder agreed that following the merger of CLS Labs and a subsidiary of the Company, in addition to his obligations to CLS Labs, he would serve the Company and its subsidiaries in such roles as the Company may request.  In exchange, the Company agreed to assume the obligations of CLS Labs to grant Mr. Binder annual stock options, as referenced above.  Mr. Binder continues to receive an annual salary of $150,000 from CLS Labs for serving as its Chairman, President and Chief Executive Officer. On July 20, 2016, March 31, 2017, August 23, 2017, October 9, 2017, January 5, 2018 and April 6, 2018, the Company issued Mr. Binder convertible notes in exchange for $250,000, $112,500, $62,500, $39,521, $37,500 and $37,500 respectively, in deferred salary, among other amounts owed to Mr. Binder by the Company.  As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Binder in the amount of $0 and $37,500.  


Effective August 1, 2015, the Company and Alan Bonsett entered into a five-year employment agreement. Pursuant to the agreement, Mr. Bonsett commenced serving as the Company’s Chief Operating Officer on August 15, 2015. Under the agreement, Mr. Bonsett was entitled to receive an annual salary of $150,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company’s annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of the Company’s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million. Additionally, Mr. Bonsett received a one-time signing bonus of 250,000 (post Reverse-Split) shares of restricted common stock of the Company, valued at $327,500, which became fully vested one year from the effective date of the agreement. Mr. Bonsett, as an owner of Picture Rock Holdings, LLC (“PRH”), was expected to indirectly receive the benefits of the Colorado operations discussed above. Mr. Bonsett agreed to defer his salary effective July 1, 2017; at February 28, 2019, the Company had accrued compensation due to Mr. Bonsett in the amount of $37,500. On October 1, 2017, the Company and Mr. Bonsett, the Company’s Chief Operating Officer, mutually agreed to end his employment with the Company.  Mr. Bonsett may provide consulting services to the Company in the future on an as needed basis.


Effective November 30, 2017, the Company and Mr. Lamadrid entered into a one-year employment agreement. Pursuant to the agreement, Mr. Lamadrid commenced serving as the Company’s President and Chief Financial Officer on December 1, 2017. Under the agreement, Mr. Lamadrid was entitled to receive an annual salary of $175,000. Further, he was entitled to receive a performance bonus equal to 2% of the Company’s annual EBITDA, and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of its annual EBITDA. Additionally, Mr. Lamadrid was entitled to a one-time signing bonus of 500,000 shares of restricted common stock of the Company, which were to become fully vested one year from the effective date of the agreement. On July 24, 2018, the Company and Mr. Lamadrid mutually agreed to terminate the employment agreement. Mr. Lamadrid resigned as President and Chief Financial Officer effective as of July 13, 2018. In connection with a severance agreement between the Company and Mr. Lamadrid, the Company paid certain amounts and issued 600,000 shares of common stock to Mr. Lamadrid, and the parties further agreed that neither party would have any further obligations under the Employment Agreement or otherwise after such date. 


On July 31, 2018, the Company and Mr. Sillitoe entered into a one-year employment agreement. Pursuant to the agreement, Mr. Sillitoe commenced serving as the Chief Executive Officer of CLS Nevada, Inc. effective July 1, 2018. Under the agreement, Mr. Sillitoe is entitled to receive an annual salary of $150,000. Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc. Additionally, Mr. Sillitoe is entitled to a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Sillitoe remains employed by the Company on such date. As of February 28, 2019 and May 31, 2018, the Company had accrued compensation due to Mr. Sillitoe in the amount of $31,806 and $0.  


The Company and Mr.  Decatur entered into a one-year employment agreement on July 31, 2018.  Pursuant to the agreement, Mr. Decatur commenced serving as the Chief Operating Officer of CLS Nevada, Inc. on July 1, 2018.  Under the agreement, Mr. Decatur is entitled to receive an annual salary of $150,000.  Further, he is entitled to receive a performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’ common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc.  Additionally, Mr. Decatur is entitled to a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement assuming Mr. Decatur remains employed by the Company on such date.


At February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company, prior to his September 1, 2015 termination, in the amount of $16,250.


XML 36 R25.htm IDEA: XBRL DOCUMENT v3.19.1
Note 19 - Related Party Transactions
9 Months Ended
Feb. 28, 2019
Related Party Transactions [Abstract]  
Related Party Transactions Disclosure [Text Block]

Note 19 – Related Party Transactions


As of February 28, 2019 and May 31, 2018, the Company owed the amount of $0 and $37,500, respectively, to Jeffrey Binder, its Chief Executive Officer, for accrued salary.


As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Alan Bonsett, a former officer of the Company prior to his October 1, 2017 separation, in the amount of $37,500 and $37,500, respectively.


As of February 28, 2019 and May 31, 2018, the Company had accrued salary due to Michael Abrams, a former officer of the Company prior to his September 1, 2015 termination, in the amount of $16,250.


As of February 28, 2019 and May 31, 2018, the Company had related party payables in the amount of $17,930 due to officers and directors related to expenses paid on behalf of the Company. The Company imputed interest at the rate of 6% per annum on these liabilities, and recorded imputed interest expense on these liabilities in the amounts of $268 and $265 during the three months ended February 28, 2019 and 2018, respectively.  These interest accruals were charged to additional paid-in capital.


On July 27, 2018, the Company granted 25,000 shares of restricted common stock to its Chief Financial Officer. These share vested four months after issuance. The shares were valued at $17,500, and were amortized over the vesting period. As of February 28, 2019, these shares had not been issued. As of February 28, 2019, $17,500 had been charged to operations.


On July 31, 2018, the Company granted the Chief Executive Officer of CLS Nevada, Inc. a one-time signing bonus of 500,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $355,000 and will be amortized over the vesting period. As of February 28, 2019, $236,667 had been charged to operations.


On July 31, 2018, the Company granted the Chief Operating Officer of CLS Nevada, Inc. a one-time signing bonus of 50,000 shares of restricted common stock, which shall become fully vested one year from the effective date of his employment agreement. These shares were valued at $35,000 and will be amortized over the vesting period. As of February 28, 2019, $23,667 had been charged to operations.


On July 24, 2018, the Company awarded Star Associates, LLC, a limited liability company owned by Andrew Glashow, a director of the Company, a cash payment in the amount of $250,000 and 700,000 shares of restricted common stock in recognition of Mr. Glashow’s efforts, through Star Associates, in successfully assisting the Company in negotiating and obtaining the financing necessary to acquire Alternative Solutions. The shares were valued at $490,000 and were charged to operations during the nine months ended February 28, 2019.


XML 37 R26.htm IDEA: XBRL DOCUMENT v3.19.1
Note 20 - Subsequent Events
9 Months Ended
Feb. 28, 2019
Subsequent Events [Abstract]  
Subsequent Events [Text Block]

Note 20 – Subsequent Events


Mr. Glashow, a director of the Company since 2017, was appointed to serve as President and Chief Operating Officer commencing on March 1, 2019. The Company and Mr. Mr. Glashow entered into a two-year employment agreement and Mr. Glashow commenced serving as the Company’s President and Chief Operating Officer. Under the agreement, Mr. Glashow is entitled to receive an annual salary of $175,000. Further, he is entitled to receive a performance bonus equal to 1% of our annual EBITDA, and annual restricted stock awards in an amount equal to 1% of our annual EBITDA. Additionally, Mr. Glashow is entitled to a one-time signing bonus of 500,000 shares of our restricted common stock, half of which shall vest on March 1, 2020, and half of which shall vest on March 1, 2021.


Effective March 1, 2019, the Company executed a redemption notice with respect to two of the convertible notes payable to redeem all outstanding principal, accrued interest and redemption premiums thereunder. The total amount due to the note holder is $964,788, which includes $250,000 in principal, $62,500 in redemption premium and $2,630 in accrued interest for one note, and $500,000 in principal, $125,000 in redemption premium and $24,658 in accrued interest for the other note.


On March 11, 2019, the Company, through its wholly-owned subsidiary, CLS Massachusetts, Inc., entered into a membership interest purchase agreement with CannAssist, LLC. Pursuant to the terms of the Purchase Agreement, CLS Massachusetts agreed to purchase 80% of the membership interests in CannAssist for a purchase price of $25 million, which will be utilized to fund the build-out of CannAssist’s recreational cannabis grow facility at its leased premises and for initial working capital.


XML 38 R27.htm IDEA: XBRL DOCUMENT v3.19.1
Accounting Policies, by Policy (Policies)
9 Months Ended
Feb. 28, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation


These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in US dollars.

Consolidation, Policy [Policy Text Block]

Principals of Consolidation


The accompanying consolidated financial statements include the accounts of CLS Holdings USA, Inc., and its wholly owned operating subsidiaries, CLS Nevada, Inc., (“CLS Nevada”), CLS Labs, Inc. (“CLS Labs”), CLS Labs Colorado, Inc. (“CLS Colorado”), CLS Massachusetts, Inc. (“CLS Massachusetts”), and Alternative Solutions, LLC (“Alternative Solutions”). Alternative Solutions is the sole owner of the following three entities (collectively, the “Oasis LLCs”): Serenity Wellness Center, LLC (“Serenity Wellness Center”); Serenity Wellness Products, LLC (“Serenity Wellness Products”); and Serenity Wellness Growers, LLC (“Serenity Wellness Growers”). All material intercompany transactions have been eliminated upon consolidation of these entities.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents


The Company considers all highly liquid investments with maturities of three months or less to be cash equivalents.  The Company had cash and cash equivalents of $11,972,015 and $52,964 as of February 28, 2019 and May 31, 2018, respectively.

Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block]

Allowance for Doubtful Accounts


The Company generates the majority of its revenues and corresponding accounts receivable from the sale of cannabis, and cannabis related products. The Company evaluates the collectability of its accounts receivable considering a combination of factors. In circumstances where it is aware of a specific customer’s inability to meet its financial obligations to it, the Company records a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount it reasonably believe will be collected. For all other customers, the Company recognizes reserves for bad debts based on past write-off experience and the length of time the receivables are past due. The Company had no bad debts expense during the three and nine months ended February 28, 2019 and 2018.

Segment Reporting, Policy [Policy Text Block]

Segment Reporting


Under FASB ASC 280-10-50, the Company operates two business segments: Cannabis Dispensary Segment, and Cannabis Production Segment, and will evaluate additional segment disclosure requirements as it expands its operations.

Inventory, Policy [Policy Text Block]

Inventory


Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable values. Our cannabis products consists of prepackaged purchased goods ready for resale, along with produced edibles and extracts developed under our production license.

Property, Plant and Equipment, Policy [Policy Text Block]

Property, Plant and Equipment


Property and equipment is recorded at the lower of cost or estimated net recoverable amount, and is depreciated using the straight-line method over the estimated useful lives.  Computer equipment is being depreciated over a three-year period.

Concentration Risk, Credit Risk, Policy [Policy Text Block]

Concentrations of Credit Risk


The Company maintains its cash in bank deposit accounts and other accounts, the balances of which at times may be uninsured or exceed federally insured limits. From time to time, some of the Company’s funds are also held by escrow agents; these funds may not be federally insured. The Company continually monitors its banking relationships and consequently has not experienced any losses in such accounts.

Advertising Costs, Policy [Policy Text Block]

Advertising and Marketing Costs


All costs associated with advertising and promoting products are expensed as incurred with the exception of the amortization of the cost of two major video productions. A music video and reality/lifestyle video were both produced in 2017. The remaining amount that hasn’t been expensed is listed on the schedule in Note 7. Total recognized advertising and promotion expenses were $381,082 and $26,549 for the three months ended February 28, 2019 and 2018, respectively; total recognized advertising and promotion expenses were $1,134,322 and $31,797 for the nine months ended February 28, 2019 and 2018, respectively.

Research, Development, and Computer Software, Policy [Policy Text Block]

Research and Development


Research and development expenses are charged to operations as incurred. The Company incurred no research and development costs for the three and nine months ended February 28, 2019 and 2018, respectively.

Income Tax, Policy [Policy Text Block]

Income Taxes


The Company accounts for income taxes using the asset and liability method, which requires the establishment of deferred tax assets and liabilities for the temporary differences between the financial reporting basis and the tax basis of the Company’s assets and liabilities at enacted tax rates expected to be in effect when such amounts are realized or settled. 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. A valuation allowance is provided to the extent deferred tax assets may not be recoverable after consideration of the future reversal of deferred tax liabilities, tax planning strategies, and projected future taxable income.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments


Pursuant to Accounting Standards Codification (“ASC”) No. 825 - Financial Instruments, the Company is required to estimate the fair value of all financial instruments included on its balance sheets. The carrying amount of the Company’s cash and cash equivalents, note receivable, notes payable, accounts payable and accrued expenses, none of which is held for trading, approximates their estimated fair values due to the short-term maturities of those financial instruments.


A three-tier fair value hierarchy is used to prioritize the inputs in measuring fair value as follows:


Level 1 - Quoted prices in active markets for identical assets or liabilities.


Level 2 - Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable, either directly or indirectly.


Level 3 - Significant unobservable inputs that cannot be corroborated by market data.

Derivatives, Policy [Policy Text Block]

Derivative Financial Instruments


Derivatives are recorded on the condensed consolidated balance sheet at fair value. The conversion features of the convertible notes are embedded derivatives and are separately valued and accounted for on the consolidated balance sheet with changes in fair value recognized during the period of change as a separate component of other income/expense. Fair values for exchange-traded securities and derivatives are based on quoted market prices. The pricing model the Company uses for determining the fair value of its derivatives is the Lattice Model. Valuations derived from this model are subject to ongoing internal and external verification and review. The model uses market-sourced inputs such as interest rates and stock price volatilities. Selection of these inputs involves management’s judgment and may impact net income (see note 17).  On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition


Revenue is primarily generated through the Company’s subsidiary, Serenity Wellness Center LLC, d/b/a Oasis Cannabis (“Oasis”). Oasis operates a 24-hour cannabis dispensary that recognizes revenue from the sale of medical and recreational cannabis products within the State of Nevada.


Revenue from the sale of cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.


The Company also recognizes revenue from Serenity Wellness Products LLC and Serenity Wellness Growers LLC, d/b/a City Trees. City Trees recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the State of Nevada:


 

Premium organic medical cannabis sold wholesale to licensed retailers


 

Recreational marijuana cannabis products sold wholesale to distributors and retailers


 

Extraction products such as oils and waxes derived from in-house cannabis production


 

Processing and extraction services for licensed medical cannabis cultivators in Nevada


 

High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada


Effective June 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identifying the contract with a customer; (2) identifying the performance obligations in the contract; (3) determining the transaction price; (4) allocating the transaction price to each performance obligation in the contract; and (5) recognizing revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605. Revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of the service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured.


There was no impact on the Company’s financial statements as a result of adopting Topic 606 for the three and nine months ended February 28, 2019

Earnings Per Share, Policy [Policy Text Block]

Basic and Diluted Loss Per Share


Basic net earnings per share is based on the weighted average number of shares outstanding during the period, while fully-diluted net earnings per share is based on the weighted average number of shares of common stock and potentially dilutive securities assumed to be outstanding during the period using the treasury stock method. Potentially dilutive securities consist of options and warrants to purchase common stock, and convertible debt. Basic and diluted net loss per share is computed based on the weighted average number of shares of common stock outstanding during the period.


The Company uses the treasury stock method to calculate the impact of outstanding stock options and warrants. Stock options and warrants for which the exercise price exceeds the average market price over the period have an anti-dilutive effect on earnings per common share and, accordingly, are excluded from the calculation.


A net loss causes all outstanding stock options and warrants to be antidilutive. As a result, the basic and dilutive losses per common share are the same for the three and nine months ended February 28, 2019 and 2018.

Commitments and Contingencies, Policy [Policy Text Block]

Commitments and Contingencies


Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur.  The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.  In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims brought to such legal counsel’s attention as well as the perceived merits of the amount of relief sought or expected to be sought therein.


If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements.  If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, would be disclosed.


Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements


Accounting standards promulgated by the Financial Accounting Standards Board (“FASB”) are subject to change. Changes in such standards may have an impact on the Company’s future financial statements. The following is a summary of recent accounting developments.


In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows (Topic 230). The update addresses eight specific cash flow issues and is intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for reporting periods beginning after December 15, 2017, including interim periods within the reporting period. Early adoption is permitted. The Company does not believe the implementation of this update has had a material impact on its financial statements.


In January 2017, the FASB issued ASU No. 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, current U.S. GAAP requires the performance of procedures to determine the fair value at the impairment testing date of assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. Instead, the amendments under this ASU require the goodwill impairment test to be performed by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. The ASU becomes effective for the Company on January 1, 2020. The amendments in this ASU will be applied on a prospective basis. Early adoption is permitted for interim or annual goodwill impairment tests performed.


In May 2017, the FASB issued ASU No. 2017-09, Stock Compensation - Scope of Modification Accounting, which provides guidance on which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The ASU requires that an entity account for the effects of a modification unless the fair value (or calculated value or intrinsic value, if used), vesting conditions and classification (as equity or liability) of the modified award are all the same as for the original award immediately before the modification. The ASU became effective for the Company on January 1, 2018, and will be applied prospectively to an award modified on or after the adoption date. The Company does not believe that this standard has had a material effect on its financial statements.


Effective June 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606 — Revenue from Contracts with Customers. Under ASC 606, the Company recognizes revenue from the commercial sales of products, licensing agreements and contracts to perform pilot studies by applying the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to each performance obligation in the contract; and (5) recognize revenue when each performance obligation is satisfied. For the comparative periods, revenue has not been adjusted and continues to be reported under ASC 605 — Revenue Recognition. Under ASC 605, revenue is recognized when the following criteria are met: (1) persuasive evidence of an arrangement exists; (2) the performance of service has been rendered to a customer or delivery has occurred; (3) the amount of fee to be paid by a customer is fixed and determinable; and (4) the collectability of the fee is reasonably assured. There was no impact on the Company’s financial statements as a result of adopting Topic 606.


Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the accompanying unaudited condensed consolidated financial statements.


Adoption of Accounting Standards 


In July 2017, the FASB issued ASU No. 2017-11, Earnings Per Share (Topic 260), Distinguishing Liabilities from Equity (Topic 480), Derivatives and Hedging (Topic 815). The amendments in Part I of this update change the classification analysis of certain equity-linked financial instruments (or embedded features) with down round features.


When determining whether certain financial instruments should be classified as liabilities or equity instruments, a down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. The amendments also clarify existing disclosure requirements for equity-classified instruments. As a result, a freestanding equity-linked financial instrument (or embedded conversion option) no longer would be accounted for as a derivative liability at fair value as a result of the existence of a down round feature. For freestanding equity classified financial instruments, the amendments require entities that present earnings per share (EPS) in accordance with Topic 260 to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features (in Subtopic 470-20, Debt—Debt with Conversion and Other Options), including related EPS guidance (in Topic 260). The amendments in Part II of this update recharacterize the indefinite deferral of certain provisions of Topic 480 that now are presented as pending content in the Codification, to a scope exception.


Those amendments do not have an accounting effect. For public business entities, the amendments in Part I of this update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all entities, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.


On June 1, 2018, the Company adopted ASU 2017-11 and accordingly reclassified the fair value of the reset provisions embedded in convertible notes payable and certain warrants with embedded anti-dilutive provisions from liability to equity in the aggregate amount of $1,265,751.

XML 39 R28.htm IDEA: XBRL DOCUMENT v3.19.1
Note 3 - Acquisition of Alternative Solutions, LLC (Tables)
9 Months Ended
Feb. 28, 2019
Business Combinations [Abstract]  
Schedule of Business Acquisitions, by Acquisition [Table Text Block]
The acquisition date estimated fair value of the consideration transferred totaled $27,975,650, which consisted of the following:

Initial purchase price

  $ 2,050,000  

Cash paid in connection with transaction

    5,995,543  

Note payable

    3,810,820  

Contingent consideration

    678,111  

Common stock

    15,441,176  

Total purchase price

  $ 27,975,650  
         

Net tangible assets

  $ 595,151  

Intangible assets

    1,637,600  

Goodwill

    25,742,899  

Total purchase price

  $ 27,975,650  
Business Acquisition, Pro Forma Information [Table Text Block]
These combined results are not necessarily indicative of the results that may have been achieved had the companies always been combined.

   

Three months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 2,372,790     $ 1,827,999  

Net loss

  $ (12,850,356

)

  $ (10,839,019

)

Basic net loss per share

  $ (0.10

)

  $ (0.17

)

Diluted net loss per share

  $ (0.10

)

  $ (0.17

)

Weighted average shares - basic

    124,346,650       62,460,767  

Weighted average shares - diluted

    124,346,650       62,460,767  
   

Nine months ended February 28,

 
   

2019

   

2018

 
   

(unaudited)

   

(unaudited)

 

Revenues

  $ 6,299,932     $ 5,139,455  

Net loss

  $ (24,402,155

)

  $ (14,632,294

)

Basic net loss per share

  $ (0.26

)

  $ (0.25

)

Diluted net loss per share

  $ (0.26

)

  $ (0.25

)

Weighted average shares - basic

    95,132,835       58,988,122  

Weighted average shares - diluted

    95,132,835       58,988,122  
XML 40 R29.htm IDEA: XBRL DOCUMENT v3.19.1
Note 6 - Inventory (Tables)
9 Months Ended
Feb. 28, 2019
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current [Table Text Block]
Inventory, consisting of material, overhead, labor, and manufacturing overhead, is stated at the lower of cost (first-in, first-out) or market, and consists of the following:

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Raw materials

  $ 295,822     $ -  

Finished goods

    309,974       -  

Total

  $ 605,796     $ -  
XML 41 R30.htm IDEA: XBRL DOCUMENT v3.19.1
Note 7 - Prepaid Expenses and Other Current Assets (Tables)
9 Months Ended
Feb. 28, 2019
Disclosure Text Block Supplement [Abstract]  
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Table Text Block]
Prepaid expenses consisted of the following at February 28, 2019 and May 31, 2018:

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Prepaid insurance

  $ 14,218     $ -  

Prepaid license fees

    130,412       -  

Prepaid legal fees

    16,410       1,410  

Prepaid fixed assets

    460,901          

Prepaid rent

    6,961          

Deposits on inventory

    83,837       -  

Total

  $ 712,739     $ 1,410  
XML 42 R31.htm IDEA: XBRL DOCUMENT v3.19.1
Note 10 - Property, Plant and Equipment (Tables)
9 Months Ended
Feb. 28, 2019
Property, Plant and Equipment [Abstract]  
Property, Plant and Equipment [Table Text Block]
Property, plant and equipment consisted of the following at February 28, 2019 and May 31, 2018.

   

February 28, 

   

May 31,

 
   

2019

   

2018

 

Office equipment

    1,217,563       2,674  

Furniture and fixtures

    59,617       -  

Leasehold improvements

  $ 764,423     $ -  

Less: accumulated depreciation

    (494,439

)

    (2,674

)

Property, plant, and equipment, net

  $ 1,547,164     $ -  
XML 43 R32.htm IDEA: XBRL DOCUMENT v3.19.1
Note 11 - Intangible Assets (Tables)
9 Months Ended
Feb. 28, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of Finite-Lived Intangible Assets [Table Text Block]
Intangible assets consisted of the following at February 28, 2019 and May 31, 2018.

February 28, 2019

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ 319,600     $ (15,981

)

  $ 303,619  

License & Customer Relations

    990,000       (24,750

)

    965,250  

Tradenames - Trademarks

    301,000       (15,051

)

    285,949  

Non-compete Agreements

    27,000       (6,750

)

    20,250  

Domain Names 

    2,600       (324

)

    2,276  

Total

  $ 1,640,020     $ (62,856

)

  $ 1,577,344  

May 31, 2018

                       
           

Accumulated

         
   

Gross

   

Amortization

   

Net

 

Intellectual Property

  $ -     $ -     $ -  

License & Customer Relations

    -       -       -  

Tradenames - Trademarks

    -       -       -  

Non-compete Agreements

    -       -       -  

Domain names

    1,726       (828

)

    898  

Total

  $ 1,726     $ (828

)

  $ 898  
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]
Total amortization expense charged to operations for the nine months ended February 28, 2019 and 2018 was $62,856 and $324, respectively.

Amount to be amortized during the twelve months ended February 28, 

       

2019

  $ 27,379  

2020

    164,103  

2021

    164,103  

2022

    164,103  

2023

    164,103  

Thereafter

    893,553  
    $ 1,577,344  
XML 44 R33.htm IDEA: XBRL DOCUMENT v3.19.1
Note 12 - Other Assets (Tables)
9 Months Ended
Feb. 28, 2019
Other Non-current Assets Disclosure [Abstract]  
Schedule of Other Assets [Table Text Block]
Other assets included the following as of February 28, 2019 and May 31, 2018, respectively:

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Security deposits

    160,450       -  
    $ 160,450     $ -  
XML 45 R34.htm IDEA: XBRL DOCUMENT v3.19.1
Note 13 - Accounts Payable and Accrued Liabilities (Tables)
9 Months Ended
Feb. 28, 2019
Payables and Accruals [Abstract]  
Schedule of Accounts Payable and Accrued Liabilities [Table Text Block]
Accrued expenses consisted of the following at February 28, 2019 and May 31, 2018:

   

February 28,

   

May 31,

 
   

2019

   

2018

 

Trade accounts payable

  $ 655,518     $ 726,457  

Accrued payroll and payroll taxes

    281,584       44,465  

Accrued liabilities

    457,251       -  

Deferred rent liability 

    -       55,699  

Total

  $ 1,394,353     $ 826,621  
XML 46 R35.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Tables)
9 Months Ended
Feb. 28, 2019
Debt Disclosure [Abstract]  
Schedule of Debt [Table Text Block]
   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the “Blatt Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.

  $ -     $ 210,000  
                 

 On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the “AJG Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note.  

    -       100,000  
                 

The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (“Oasis Note”). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.  The note is due on December 4, 2019, but may be prepaid at any time without penalty.   The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs. 

 

The Company recognized an original issue discount of $189,180 on the Oasis Note.  During the nine months ended February 28, 2019, $88,644 of this discount was charged to operations.  During the nine months ended February 28, 2019, the Company accrued interest in the amount of $164,000 on the Oasis Note.

    4,000,000       -  
                 

Total – Notes Payable

  $ 4,000,000     $ 310,000  

Less: Discount

    (100,536

)

    -  

Notes Payable, Net of Discounts

  $ 3,899,464     $ 310,000  

Current portion

  $ 3,899,464     $ 310,000  

Long term portion

  $ -     $ -  
Short-term Debt [Text Block]
The following tables summarize the Company’s loan balances at February 28, 2019 and May 31, 2018:

   

February 28,

   

May 31,

 
   

2019

   

2018

 
                 

Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the “Binder Funding Notes”). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.  Also during the year ended May 31, 2018 the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.  During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, Mr. Binder advanced a total of $211,700 to the Company under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company made principal payments to in the amount of $211,837 under the Binder Funding Notes. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,710 on the Binder Funding Notes. During the nine months ended February 28, 2019, discounts in the aggregate amount of $211,702 related to the beneficial conversion feature of the Binder Funding Notes were charged to additional-paid in capital and amortized to interest expense.

  $ -     $ 137  
   

February 28,

2019

   

May 31,

2018

 
                 

Notes payable to Newcan Investment Partners, LLC (“Newcan”), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the “Newcan Funding Notes”). The Newcan Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the twelve months ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.).  During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the nine months ended February 28, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (“Newcan Convertible Note 8”). During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.

    -       75,000  
                 

Total – Demand Convertible Notes Payable, Related Parties

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable,  Related Parties - Current portion

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable, Related Parties - Long term portion

  $ -     $ -  
Convertible Debt [Table Text Block]
   

February 28,  

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to David Lamadrid (the “Lamadrid Note”) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.  The Lamadrid Note is due eighteen months from the date of issue.  Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $942 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.

 

During the nine months ended February 28, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the nine months ended February 28, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the nine months ended February 28, 2019 the remaining discount in the amount of $30,308 was charged to operations.

  $ -     $ 31,250  
                 

Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the “Binder Convertible Note 9”).  The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.  The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.

 

During the twelve months ended May 31, 2018 and 2017, interest in the amount of $565 and $0 was accrued on Binder Convertible Note 9, respectively. 

 

During the nine months ended February 28, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the nine months ended February 28, 2019, the Company made a principal payment in the amount of $37,500 on the Binder Convertible Note 9. During the nine months ended February 28, 2019 the remaining discount in the amount of $35,610 was charged to operations.

    -       37,500  
   

February 28,

2019

   

May 31,

2018

 
                 

Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the “Newcan Convertible Note 8”).  The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.  This note bears interest at the rate of 10% per annum.  No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.  Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.

 

During the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $1,603 on this note. During the nine months ended February 28, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $57,322 was charged to operations.

    -       -  
                 

Total – Convertible Notes Payable, Related Parties

  $ -     $ 68,750  

Less: Discount

    -       (65,918

)

Convertible Notes Payable, Related Parties, Net of Discounts

  $ -     $ 2,832  
                 

Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion

  $ -     $ 2,832  

Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion

    -       -  
   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to Darling Capital, LLC (the “Darling Note”) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.  The Darling Note is due eighteen months from the date of issue.  Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $40,427 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $1,447 on this note. During the nine months ended February 28, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the nine months ended February 28, 2019, the remaining discount in the amount of $509,573 was charged to operations.

  $ -     $ 550,000  
                 

Convertible promissory note payable to Efrat Investments, LLC (the “Efrat Note”) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.  The Efrat Note is due eighteen months from the date of issue.  Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $2,974 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.

 

During the nine months ended February 28, 2019, the Company accrued interest in the amount of $898 on this note. During the nine months ended February 28, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the nine months ended February 28, 2019, the remaining discount in the amount of $52,026 was charged to operations.

    -       55,000  
   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note”) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the twelve months ended May 31, 2018, $23,224 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.

 

During the nine months ended February 28, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000 was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.  Also during the nine months ended February 28, 2019, the Company accrued interest expense in the amount of $39,068 on the YA II PN Note. During the nine months ended February 28, 2019, the holder of the YA II PN Note converted principal in the amount of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock.

    250,000       750,000  
                 

Unsecured convertible note issued to Jay Lasky (the “Lasky Note”), dated May 3, 2018 in the original principal amount of $25,000.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.  During the twelve months ended May 31, 2018, $149 of this discount was charged to operations.  During the twelve months ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.

 

During the nine months ended February 28, 2019, $7,152 of the discount was charged to operations. Also during the nine months ended February 28, 2019, the Company accrued interest in the amount of $993 on this note. During the nine months ended February 28, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.

    -       25,000  
   

February 28,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note 2”) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the nine months ended February 28, 2019, $167,713 of this discount was charged to operations. Also during the nine months ended February 28 2019, the Company accrued interest in the amount of $29,041 on this note.

    500,000       -  
                 

Convertible debenture in the principal amount of $4,000,000 (the “U.S. Convertible Debenture 1”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1 is convertible into units (the “Convertible Debenture Units”) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 1 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the nine months ended February 28, 2019, $217 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $105,205 on the U.S. Convertible Debenture 1.

    4,000,000       -  
                 

Convertible debenture in the principal amount of $1,000,000 (the “U.S. Convertible Debenture 2”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the nine months ended February 28, 2019, $52 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $26,301 on the U.S. Convertible Debenture 2.

    1,000,000       -  
   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture in the principal amount of $100,000 (the “U.S. Convertible Debenture 3”) dated October 24, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the nine months ended February 28, 2019, $60 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,784 on the U.S. Convertible Debenture 3.

    100,000       -  
                 

Convertible debenture in the principal amount of $532,000 (the “U.S. Convertible Debenture 4”) dated October 25, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the nine months ended February 28, 2019, $87 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $14,692 on the U.S. Convertible Debenture 4.

    532,000       -  
                 

Convertible debenture in the principal amount of $150,000 (the “U.S. Convertible Debenture 5”) dated October 26, 2018,  which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the nine months ended February 28, 2019, $67 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $4,110 on the U.S. Convertible Debenture 5.

    150,000       -  
   

February 28,

2019

   

May 31,

2018

 
                 

Convertible debenture payable in the principal amount of $75,000 (the “U.S. Convertible Debenture 6”) dated October 26, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the nine months ended February 28, 2019, $57 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $2,055 on the U.S. Convertible Debenture 6.

    75,000       -  
                 

Convertible debentures payable in the aggregate principal amount of $12,012,000 (the “Canaccord Debentures”) dated December 12, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures  are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the nine months ended February 28, 2019, $136 of this discount was charged to operations. During the nine months ended February 28, 2019, the Company accrued interest in the amount of $205,356 on the Canaccord Debentures.

    12,012,000       -  
                 

Total - Convertible Notes Payable

  $ 18,619,000     $ 1,380,000  

Less: Discount

    (8,030,735

)

    (1,295,527

)

Convertible Notes Payable, Net of Discounts

  $ 10,588,265     $ 84,473  
                 

Total - Convertible Notes Payable, Net of Discounts, Current Portion

  $ 398,117     $ 43,401  

Total - Convertible Notes Payable, Net of Discounts, Long-term Portion

  $ 10,190,148     $ 41,072  
Schedule of Amortization of Debt Discount [Table Text Block]

Discounts on notes payable amortized to interest expense – 3 months ended February 28, 2019 and 2018, respectively

  $ 337,347     $ 818,254  

Discounts on notes payable amortized to interest expense – 9 months ended February 28, 2019 and 2018, respectively

  $ 2,481,674     $ 1,391,110  
XML 47 R36.htm IDEA: XBRL DOCUMENT v3.19.1
Note 16 - Stockholders' Equity (Tables)
9 Months Ended
Feb. 28, 2019
Stockholders' Equity Note [Abstract]  
Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range [Table Text Block]
The following table summarizes the significant terms of warrants outstanding at February 28, 2019. These warrants were granted as part of financing agreements. This table does not include the special warrants; see Special Warrant section below:

 

Range of 

exercise

Prices

   

 

Number of 

warrants

Outstanding

   

 

Weighted 

average

remaining

contractual

life (years)

   

Weighted 

average

exercise

price of

outstanding 

Warrants

   

 

Number of

warrants 

Exercisable

   

Weighted

average

exercise

price of

exercisable 

Warrants

 
$ 0.49       35,782,952       2.73     $ 0.49       35,782,952     $ 0.49  
  0.50       2,736,500       2.98       0.50       2,736,500       0.50  
  0.60       17,500,000       2.76       0.60       17,500,000       0.60  
  0.75       1,042,738       2.37       0.75       1,042,738       0.75  
  0.80       1,343,400       2.79       0.80       1,343,400       0.80  
  1.10       279,875       2.79       1.10       279,875       1.10  
          58,685,465       2.74     $ 0.53       58,685,465     $ 0.53  
Schedule of Stockholders' Equity Note, Warrants or Rights [Table Text Block]
Transactions involving warrants are summarized as follows. This table does not include the special warrants; see Special Warrant section below.

   

Number of

Shares

   

Weighted

Average

Exercise

Price

 

Warrants outstanding at May 31, 2018

    4,700,988     $ 0.62  

Granted

    54,399,477     $ 0.53  

Exercised

    (415,000

)

  $ 0.75  

Cancelled / Expired

    -     $ -  

Warrants outstanding at February 28, 2019

    58,685,465     $ 0.53  
XML 48 R37.htm IDEA: XBRL DOCUMENT v3.19.1
Note 17 - Fair Value of Financial Instruments (Tables)
9 Months Ended
Feb. 28, 2019
Fair Value Disclosures [Abstract]  
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]
The following summarizes the Company’s financial liabilities that are recorded at fair value on a recurring basis at February 28, 2019 and May 31, 2018:

   

February 28, 2019

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Contingent liabilities 

  $ -     $ -     $ 678,111     $ 678,111  
   

May 31, 2018

 
   

Level 1

   

Level 2

   

Level 3

   

Total

 

Liabilities

                               

Derivative liabilities

  $ -     $ -     $ 1,265,751     $ 1,265,751  
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]
The estimated fair values of the Company’s derivative liabilities are as follows:

   

Derivative

 
   

Liability

 

Liabilities Measured at Fair Value

       
         

Balance as of May 31, 2018

  $ 1,265,751  
         

Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018

    (1,265,751

)

         

Balance as of February 28, 2019

  $ -  
XML 49 R38.htm IDEA: XBRL DOCUMENT v3.19.1
Note 1 - Nature of Business and Significant Accounting Policies (Details)
3 Months Ended 9 Months Ended
Sep. 13, 2018
Jun. 27, 2018
USD ($)
shares
Feb. 28, 2018
USD ($)
Dec. 04, 2017
USD ($)
Apr. 29, 2015
shares
Dec. 10, 2014
shares
Nov. 12, 2014
shares
Feb. 28, 2019
USD ($)
Feb. 28, 2018
USD ($)
Feb. 28, 2019
USD ($)
Feb. 28, 2018
USD ($)
Oct. 31, 2018
USD ($)
May 31, 2018
USD ($)
May 31, 2017
USD ($)
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Stockholders' Equity Note, Stock Split, Conversion Ratio           0.625                
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions     10.00%                      
Notes, Loans and Financing Receivable, Gross, Current                       $ 5,000,000    
Note Receviable, Interest Rate                       6.00%    
Joint Venture, Ownership Percentage 80.00%                          
Cash and Cash Equivalents, at Carrying Value     $ 22,733         $ 11,972,015 $ 22,733 $ 11,972,015 $ 22,733   $ 52,964 $ 78,310
Number of Reportable Segments                   2        
Advertising Expense               $ 381,082 $ 26,549 $ 1,134,322 $ 31,797      
Reverse Merger with CLS Labs [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Stock Issued During Period, Shares, New Issues (in Shares) | shares         15,000,000                  
Oasis Acquisition [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Payments to Acquire Businesses, Gross   $ 5,995,543                        
Debt Instrument, Face Amount   $ 4,000,000                        
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | shares   22,058,823                        
Liabilities Assumed   $ 204,457                        
Deposit [Member] | Oasis Acquisition [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Payments to Acquire Businesses, Gross       $ 250,000                    
Additional Payments [Member] | Oasis Acquisition [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Payments to Acquire Businesses, Gross     $ 1,800,000                      
Oasis Acquisition [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners   90.00%                        
Original Contemplated Transaction Payment [Member] | Oasis Acquisition [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Payments to Acquire Businesses, Gross   $ 6,200,000                        
Accounting Standards Update 2017-11 [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
New Accounting Pronouncement or Change in Accounting Principle, Effect of Adoption, Quantification                   $ 1,265,751        
Shares of CLS Holdings USA, Inc. [Member] | CLS Labs, Inc. [Member]                            
Note 1 - Nature of Business and Significant Accounting Policies (Details) [Line Items]                            
Subsidiary or Equity Method Investee, Cumulative Number of Shares Issued for All Transactions (in Shares) | shares           6,250,000 10,000,000              
XML 50 R39.htm IDEA: XBRL DOCUMENT v3.19.1
Note 2 - Going Concern (Details) - USD ($)
Feb. 28, 2019
May 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Retained Earnings (Accumulated Deficit) $ (42,756,743) $ (18,569,094)
XML 51 R40.htm IDEA: XBRL DOCUMENT v3.19.1
Note 3 - Acquisition of Alternative Solutions, LLC (Details)
Jun. 27, 2018
USD ($)
shares
Feb. 28, 2018
USD ($)
Dec. 04, 2017
USD ($)
Feb. 28, 2019
USD ($)
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Subsidiary or Equity Method Investee, Cumulative Percentage Ownership after All Transactions   10.00%    
Oasis Acquisition [Member]        
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Number of Subsidiaries     3  
Payments to Acquire Businesses, Gross $ 5,995,543      
Debt Instrument, Face Amount $ 4,000,000      
Business Acquisition, Equity Interest Issued or Issuable, Number of Shares (in Shares) | shares 22,058,823      
Liabilities Assumed $ 204,457      
Business Acquisition, Equity Interest Issued or Issuable, Description The number of Purchase Price Shares was equal to 80% of the offering price of the Company’s common stock in its last equity offering, which price was $0.34 per share.      
Business Combination, Contingent Consideration Arrangements, Change in Range of Outcomes, Contingent Consideration, Liability, Value, High $ 1,000,000      
Average Revenue, Maintained 20,000      
Business Combination, Contingent Consideration, Liability       $ 678,111
Business Combination, Consideration Transferred 27,975,650      
Deposit [Member] | Oasis Acquisition [Member]        
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Payments to Acquire Businesses, Gross     $ 250,000  
Additional Payments [Member] | Oasis Acquisition [Member]        
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Payments to Acquire Businesses, Gross   $ 1,800,000    
Original Contemplated Transaction Payment [Member] | Oasis Acquisition [Member]        
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Payments to Acquire Businesses, Gross $ 6,200,000      
Oasis Acquisition [Member]        
Note 3 - Acquisition of Alternative Solutions, LLC (Details) [Line Items]        
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners 90.00%      
XML 52 R41.htm IDEA: XBRL DOCUMENT v3.19.1
Note 3 - Acquisition of Alternative Solutions, LLC (Details) - Schedule of Business Acquisitions, by Acquisition - Oasis Acquisition [Member]
Jun. 27, 2018
USD ($)
Business Acquisition [Line Items]  
Initial purchase price $ 2,050,000
Cash paid in connection with transaction 5,995,543
Note payable 3,810,820
Contingent consideration 678,111
Common stock 15,441,176
Total purchase price 27,975,650
Net tangible assets 595,151
Intangible assets 1,637,600
Goodwill 25,742,899
Total purchase price $ 27,975,650
XML 53 R42.htm IDEA: XBRL DOCUMENT v3.19.1
Note 3 - Acquisition of Alternative Solutions, LLC (Details) - Business Acquisition, Pro Forma Information - USD ($)
3 Months Ended 9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Business Acquisition, Pro Forma Information [Abstract]        
Revenues $ 2,372,790 $ 1,827,999 $ 6,299,932 $ 5,139,455
Net loss $ (12,850,356) $ (10,839,019) $ (24,402,155) $ (14,632,294)
Basic net income per share $ (0.10) $ (0.17) $ (0.26) $ (0.25)
Diluted net income per share $ (0.10) $ (0.17) $ (0.26) $ (0.25)
Weighted average shares - basic 124,346,650 62,460,767 95,132,835 58,988,122
Weighted average shares - diluted 124,346,650 62,460,767 95,132,835 58,988,122
XML 54 R43.htm IDEA: XBRL DOCUMENT v3.19.1
Note 4 - Joint Venture and Option Transaction (Details) - USD ($)
Oct. 31, 2018
Feb. 28, 2019
Sep. 13, 2018
May 31, 2018
Note 4 - Joint Venture and Option Transaction (Details) [Line Items]        
Notes, Loans and Financing Receivable, Net, Current $ 5,000,000 $ 5,150,000   $ 0
In Good Health [Member]        
Note 4 - Joint Venture and Option Transaction (Details) [Line Items]        
Notes, Loans and Financing Receivable, Net, Current $ 5,000,000      
Note Receivable, Interest Rate, Stated Percentage 6.00%      
Option Agreement, Brake-Up Fee $ 2,500,000      
Option Agreement [Member] | In Good Health [Member]        
Note 4 - Joint Venture and Option Transaction (Details) [Line Items]        
Business Combination, Consideration Transferred 47,500,000      
Payments to Acquire Businesses, Gross 35,000,000      
Business Combination, Consideration Transferred, Liabilities Incurred $ 7,500,000      
Business Combination, Consideration Transferred, Equity Interests Issued and Issuable Fair Value Method $5      
Business Combination, Consideration Transferred, Other $ 2,500,000      
Joint Venture with CannAssist [Member] | Corporate Joint Venture [Member]        
Note 4 - Joint Venture and Option Transaction (Details) [Line Items]        
Equity Method Investment, Ownership Percentage     80.00%  
XML 55 R44.htm IDEA: XBRL DOCUMENT v3.19.1
Note 5 - Accounts Receivable (Details) - USD ($)
Feb. 28, 2019
May 31, 2018
Feb. 28, 2018
Receivables [Abstract]      
Accounts Receivable, Net, Current $ 295,013 $ 0  
Allowance for Doubtful Accounts Receivable, Current $ 0   $ 0
XML 56 R45.htm IDEA: XBRL DOCUMENT v3.19.1
Note 6 - Inventory (Details) - Schedule of Inventory, Current - USD ($)
Feb. 28, 2019
May 31, 2018
Schedule of Inventory, Current [Abstract]    
Raw materials $ 295,822 $ 0
Finished goods 309,974 0
Total $ 605,796 $ 0
XML 57 R46.htm IDEA: XBRL DOCUMENT v3.19.1
Note 7 - Prepaid Expenses and Other Current Assets (Details) - Deferred Costs, Capitalized, Prepaid, and Other Assets - USD ($)
Feb. 28, 2019
May 31, 2018
Deferred Costs, Capitalized, Prepaid, and Other Assets [Abstract]    
Prepaid insurance $ 14,218 $ 0
Prepaid license fees 130,412 0
Prepaid legal fees 16,410 1,410
Prepaid fixed assets 460,901 0
Prepaid rent 6,961 0
Deposits on inventory 83,837 0
Total $ 712,739 $ 1,410
XML 58 R47.htm IDEA: XBRL DOCUMENT v3.19.1
Note 8 - Redemption Premium in Transit (Details)
3 Months Ended 9 Months Ended
Feb. 28, 2019
USD ($)
Feb. 28, 2019
USD ($)
Feb. 28, 2018
USD ($)
May 31, 2018
USD ($)
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Number of Notes 2      
Other Assets, Current $ 964,788 $ 964,788   $ 0
Repayments of Convertible Debt   $ 37,500 $ 0  
YA II PN Note [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Debt, Redemption Premium 62,500      
YA II PN Note [Member] | Principal [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Repayments of Convertible Debt 250,000      
YA II PN Note [Member] | Accrued Interest [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Repayments of Convertible Debt 2,630      
YA II PN Note #2 [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Debt, Redemption Premium 125,000      
YA II PN Note #2 [Member] | Principal [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Repayments of Convertible Debt 500,000      
YA II PN Note #2 [Member] | Accrued Interest [Member]        
Note 8 - Redemption Premium in Transit (Details) [Line Items]        
Repayments of Convertible Debt $ 24,658      
XML 59 R48.htm IDEA: XBRL DOCUMENT v3.19.1
Note 9 - Notes Receivable (Details)
3 Months Ended 9 Months Ended 12 Months Ended
Jan. 29, 2019
USD ($)
Oct. 31, 2018
USD ($)
Feb. 28, 2019
USD ($)
Feb. 28, 2019
USD ($)
May 31, 2018
USD ($)
May 31, 2015
USD ($)
Feb. 28, 2018
USD ($)
Note 9 - Notes Receivable (Details) [Line Items]              
Allowance for Doubtful Accounts Receivable, Current     $ 0 $ 0     $ 0
Notes, Loans and Financing Receivable, Net, Current   $ 5,000,000 5,150,000 5,150,000 $ 0    
Note Receviable, Interest Rate   6.00%          
Note Receivbale, Number of Installments   8          
Interest Income, Operating     73,973 98,631      
Interest Receivable, Current     99,618 99,618 0    
Notes Receivable [Member] | Affiliated Entity [Member]              
Note 9 - Notes Receivable (Details) [Line Items]              
Financing Receivable, Gross           $ 500,000  
Loans and Leases Receivable, Description           Pursuant to the PRH Note, as amended by the parties effective June 30, 2015, October 31, 2015, April 11, 2016, and May 31, 2016, PRH was expected to repay the principal due under the PRH Note in twenty (20) equal quarterly installments of Twenty Five Thousand Dollars ($25,000) commencing in the month following the month in which PRH commenced generating revenue at the grow facility, which commencement was originally anticipated to occur in the first quarter of 2017, and continuing until paid in full.  We suspended our plans to operate in Colorado due to regulatory delays and have not yet determined when we will pursue them again.  Interest will accrue on the unpaid principal balance of the PRH Note at the rate of twelve percent (12%) per annum and will be paid quarterly in arrears commencing after such initial payment and continuing until paid in full.  All outstanding principal and any accumulated unpaid interest due under the PRH Note is due and payable on the five-year anniversary of the initial payment thereunder.  
Note Receivable, Interest Rate, Stated Percentage           12.00%  
Asset Impairment Charges           $ 500,000  
Proceeds from Collection of Notes Receivable         $ 50,000    
Financing Receivable, Net     0 0      
Allowance for Doubtful Accounts Receivable, Current     450,000 450,000      
IGH Note [Member]              
Note 9 - Notes Receivable (Details) [Line Items]              
Notes, Loans and Financing Receivable, Net, Current     5,000,000 5,000,000      
Interest Receivable, Current     96,631 96,631      
Loans Receivable [Member] | CannAssist LLC [Member] | Line of Credit [Member]              
Note 9 - Notes Receivable (Details) [Line Items]              
Financing Receivable, Gross $ 500,000            
Note Receviable, Interest Rate 8.00%            
Financing Receivable, Maximum Unconditional Drawing Amount $ 150,000            
Notes, Loans and Financing Receivable, Net, Noncurrent     150,000 150,000      
Interest Receivable, Noncurrent     $ 987 $ 987      
XML 60 R49.htm IDEA: XBRL DOCUMENT v3.19.1
Note 10 - Property, Plant and Equipment (Details) - USD ($)
3 Months Ended 9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Note 10 - Property, Plant and Equipment (Details) [Line Items]        
Depreciation $ 45,045 $ 223 $ 121,212 $ 669
Alternative Solutions, LLC [Member]        
Note 10 - Property, Plant and Equipment (Details) [Line Items]        
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment $ 933,142   $ 933,142  
XML 61 R50.htm IDEA: XBRL DOCUMENT v3.19.1
Note 10 - Property, Plant and Equipment (Details) - Property, Plant and Equipment - USD ($)
Feb. 28, 2019
May 31, 2018
Property, Plant and Equipment [Line Items]    
Less: accumulated depreciation $ (494,439) $ (2,674)
Property, plant, and equipment, net 1,547,164 0
Computer Equipment [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross 1,217,563 2,674
Furniture and Fixtures [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross 59,617 0
Leasehold Improvements [Member]    
Property, Plant and Equipment [Line Items]    
Property, plant, and equipment, gross $ 764,423 $ 0
XML 62 R51.htm IDEA: XBRL DOCUMENT v3.19.1
Note 11 - Intangible Assets (Details) - USD ($)
3 Months Ended 9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Goodwill and Intangible Assets Disclosure [Abstract]        
Amortization of Intangible Assets $ 20,952 $ 108 $ 62,856 $ 324
XML 63 R52.htm IDEA: XBRL DOCUMENT v3.19.1
Note 11 - Intangible Assets (Details) - Schedule of Finite-Lived Intangible Assets - USD ($)
Feb. 28, 2019
May 31, 2018
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross $ 1,640,020 $ 1,726
Intangible Assets, Accumulated Amortization (62,856) (828)
Intangible Assets, Net 1,577,344 898
Intellectual Property [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 319,600 0
Intangible Assets, Accumulated Amortization (15,981) 0
Intangible Assets, Net 303,619 0
Customer Relationships [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 990,000  
Intangible Assets, Accumulated Amortization (24,750)  
Intangible Assets, Net 965,250  
Trademarks and Trade Names [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 301,000  
Intangible Assets, Accumulated Amortization (15,051)  
Intangible Assets, Net 285,949  
Noncompete Agreements [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 27,000 0
Intangible Assets, Accumulated Amortization (6,750) 0
Intangible Assets, Net 20,250 0
Internet Domain Names [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross 2,600 1,726
Intangible Assets, Accumulated Amortization (324) (828)
Intangible Assets, Net $ 2,276 898
Customer-Related Intangible Assets [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross   0
Intangible Assets, Accumulated Amortization   0
Intangible Assets, Net   0
Goodwill [Member]    
Finite-Lived Intangible Assets [Line Items]    
Intangible Assets, Gross   0
Intangible Assets, Accumulated Amortization   0
Intangible Assets, Net   $ 0
XML 64 R53.htm IDEA: XBRL DOCUMENT v3.19.1
Note 11 - Intangible Assets (Details) - Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
Feb. 28, 2019
USD ($)
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]  
2019 $ 27,379
2020 164,103
2021 164,103
2022 164,103
2023 164,103
Thereafter 893,553
$ 1,577,344
XML 65 R54.htm IDEA: XBRL DOCUMENT v3.19.1
Note 12 - Other Assets (Details) - Schedule of Other Assets - USD ($)
Feb. 28, 2019
May 31, 2018
Schedule of Other Assets [Abstract]    
Security deposits $ 160,450 $ 0
Total Other Assets $ 160,450 $ 0
XML 66 R55.htm IDEA: XBRL DOCUMENT v3.19.1
Note 13 - Accounts Payable and Accrued Liabilities (Details) - Schedule of Accounts Payable and Accrued Liabilities - USD ($)
Feb. 28, 2019
May 31, 2018
Schedule of Accounts Payable and Accrued Liabilities [Abstract]    
Trade accounts payable $ 655,518 $ 726,457
Accrued payroll and payroll taxes 281,584 44,465
Accrued liabilities 457,251 0
Deferred rent liability 0 55,699
Total $ 1,394,353 $ 826,621
XML 67 R56.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - USD ($)
9 Months Ended 12 Months Ended
Nov. 01, 2018
Feb. 28, 2019
Feb. 28, 2018
May 31, 2017
May 31, 2018
Jan. 10, 2018
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Conversion, Original Debt, Amount (in Dollars)   $ 75,000 $ 112,500      
Debt Conversion, Converted Instrument, Shares Issued (in Shares)       10,816,960    
Debt Instrument, Convertible, Conversion Price       $ 0.25    
Stock Issued During Period, Shares, Other (in Shares) 50,000     7,609,910    
Shares Issued, Price Per Share       $ 0.125    
Other Nonoperating Gains (Losses) (in Dollars)       $ (951,239)    
Omnibus Loan Agreement [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Instrument, Convertible, Conversion Price         $ 0.10  
Debt Instrument, Interest Rate, Stated Percentage         0.25%  
Second Omnibus Loan Agreement [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Instrument, Convertible, Conversion Price           $ 0.3125
Principal [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Conversion, Original Debt, Amount (in Dollars)       2,537,750    
Accrued Interest [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Conversion, Original Debt, Amount (in Dollars)       $ 166,490    
Minimum [Member] | Omnibus Loan Agreement [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Instrument, Convertible, Conversion Price         $ 0.75  
Maximum [Member] | Omnibus Loan Agreement [Member]            
Note 14 - Notes Payable and Convertible Notes Payable (Details) [Line Items]            
Debt Instrument, Convertible, Conversion Price         $ 1.07  
XML 68 R57.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt - USD ($)
Feb. 28, 2019
May 31, 2018
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt [Line Items]    
Notes payable $ 4,000,000 $ 310,000
Less: Discount (100,536) 0
Notes Payable, Net of Discounts 3,899,464 310,000
Current portion 3,899,464 310,000
Long term portion 0 0
Loans Payable [Member] | Blatt Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt [Line Items]    
Notes payable 0 210,000
Loans Payable [Member] | AJG Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt [Line Items]    
Notes payable 0 100,000
Loans Payable [Member] | Oasis Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt [Line Items]    
Notes payable $ 4,000,000 $ 0
XML 69 R58.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt (Parentheticals) - Loans Payable [Member] - USD ($)
9 Months Ended 12 Months Ended
Feb. 28, 2019
May 31, 2018
Blatt Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt (Parentheticals) [Line Items]    
Note amount   $ 210,000
Note interest rate   6.00%
Note due   Feb. 07, 2019
Interest Accrued   $ 1,726
Principal payments   210,000
Interest payments   5,627
AJG Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt (Parentheticals) [Line Items]    
Note amount   $ 200,000
Note interest rate   6.00%
Note due   Feb. 07, 2019
Interest Accrued   $ 641
Principal payments   100,000
Interest payments   $ 3,337
Oasis Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Debt (Parentheticals) [Line Items]    
Note amount $ 4,000,000  
Note interest rate 6.00%  
Note due Dec. 04, 2019  
Interest Accrued $ 164,000  
Secured secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs  
Original Issue Discount $ 189,180  
Discount charged to operations $ 88,644  
XML 70 R59.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt - USD ($)
Feb. 28, 2019
May 31, 2018
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt [Line Items]    
Note payable   $ 75,137
Current portion $ 0 75,137
Long term portion 0 0
Newcan Funding Notes [Member] | Director [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt [Line Items]    
Note payable $ 0 75,000
Binder Funding Notes [Member] | Chief Executive Officer [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt [Line Items]    
Note payable   $ 137
XML 71 R60.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) - USD ($)
9 Months Ended 12 Months Ended
Feb. 28, 2019
May 31, 2018
Newcan Funding Notes [Member] | Director [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) [Line Items]    
New Notes Payable $ 0 $ 290,000
Interest Rate 10.00% 10.00%
Transferred $ 75,000 $ 836,658
Accrued interest $ 1,377 16,681
Beneficial conversion feature   $ 210,120
Conversion Rate (in Dollars per share) $ 0.3125 $ 0.3125
Binder Funding Notes [Member] | Chief Executive Officer [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) [Line Items]    
New Notes Payable $ 211,700 $ 440,579
Interest Rate 10.00% 10.00%
Accrued interest $ 1,710 $ 7,364
Beneficial conversion feature 211,702 385,637
Principal payments $ 211,837 $ 237,794
Conversion Rate (in Dollars per share) $ 0.3125 $ 0.3125
Binder Funding Notes [Member] | Accrued Interest [Member] | Chief Executive Officer [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) [Line Items]    
Transferred   $ 5,188
Binder Funding Notes [Member] | Principal [Member] | Chief Executive Officer [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) [Line Items]    
Transferred   280,198
Accrued Interest [Member] | Newcan Funding Notes [Member] | Accrued Interest [Member] | Director [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Short-term Debt (Parentheticals) [Line Items]    
Transferred $ 1,931 $ 25,018
XML 72 R61.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt - USD ($)
Feb. 28, 2019
May 31, 2018
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross $ 18,619,000 $ 1,380,000
Less: Discount (8,030,735) (1,295,527)
Convertible Notes Payable, Net of Discounts 10,588,265 84,473
Total - Convertible Notes Payable, Net of Discounts, Current Portion 398,117 43,401
Total - Convertible Notes Payable, Net of Discounts, Long-term Portion 10,190,148 41,072
Related Party Notes [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 68,750
Less: Discount 0 (65,918)
Convertible Notes Payable, Net of Discounts 0 2,832
Total - Convertible Notes Payable, Net of Discounts, Current Portion 0 2,832
Total - Convertible Notes Payable, Net of Discounts, Long-term Portion 0 0
Convertible Debt [Member] | Lamadrid Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 31,250
Convertible Debt [Member] | Binder Convertible Note 9 [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 37,500
Convertible Debt [Member] | Newcan Convertible Note 8 [Member] | Director [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 0
Convertible Debt [Member] | Darling Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 550,000
Convertible Debt [Member] | Efrat Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 55,000
Convertible Debt [Member] | YA II PN Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 250,000 750,000
Convertible Debt [Member] | Lasky Note [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 0 25,000
Convertible Debt [Member] | YA II PN Note #2 [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 500,000 0
Convertible Debt [Member] | Navy Capital Debenture 1 [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 4,000,000 0
Convertible Debt [Member] | Navy Capital Debenture 2 [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 1,000,000 0
Convertible Debt [Member] | Murray FA Debenture [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 100,000 0
Convertible Debt [Member] | Darling Capital Debenture [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 532,000 0
Convertible Debt [Member] | Sabharwal Debenture [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 150,000 0
Convertible Debt [Member] | Srinivasan Debenture [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross 75,000 $ 0
Convertible Debt [Member] | U.S. Convertible Debenture 7 [Member]    
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt [Line Items]    
Convertible Notes Payable, Gross $ 12,012,000  
XML 73 R62.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) - USD ($)
3 Months Ended 9 Months Ended 12 Months Ended
Feb. 28, 2019
Feb. 28, 2019
May 31, 2018
Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 32,497  
Converted, shares (in Shares)   103,989  
Newcan Convertible Note 8 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 78,534  
Converted, shares (in Shares)   196,336  
Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 565,000  
Converted, shares (in Shares)   1,808,000  
Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 57,200  
Converted, shares (in Shares)   183,040  
YA II PN Note [Member] | Accrued Interest [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Payment $ 2,630    
Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 26,185  
Converted, shares (in Shares)   65,462  
YA II PN Note #2 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 256,027  
Converted, shares (in Shares)   640,068  
YA II PN Note #2 [Member] | Accrued Interest [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Payment $ 24,658    
U.S. Convertible Debenture 7 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Interest rate 8.00% 8.00%  
Dated   Dec. 12, 2018  
Convertible Debt [Member] | Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 31,250 $ 31,250 $ 31,250
Interest rate 8.00% 8.00% 8.00%
Note due   eighteen months eighteen months
Conversion rate (in Dollars per share) $ 0.3125 $ 0.3125 $ 0.3125
Charged to operations     $ 31,250
Discount   $ 30,308 685
Accrued interest $ 562 562  
Converted   $ 32,497  
Converted, shares (in Shares)   103,989  
Convertible Debt [Member] | Binder Convertible Note 9 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 37,500 $ 37,500 $ 37,500
Interest rate 10.00% 10.00% 10.00%
Conversion rate (in Dollars per share) $ 0.3125 $ 0.3125 $ 0.3125
Charged to operations   $ 35,610  
Discount     $ 37,500
Accrued interest $ 699 $ 699 $ 565
Payments   No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.
Convertible Debt [Member] | Binder Convertible Note 9 [Member] | Accrued Interest [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Payment   $ 37,500  
Convertible Debt [Member] | Newcan Convertible Note 8 [Member] | Director [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 75,000 $ 75,000  
Interest rate 10.00% 10.00%  
Conversion rate (in Dollars per share) $ 0.40 $ 0.40  
Charged to operations   $ 58,594  
Accrued interest $ 1,603 1,603  
Converted   $ 78,534  
Converted, shares (in Shares)   196,336  
Payments   No interest payments are required until January 1, 2020, at which time all of the accrued interest becomes due and payable. Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.  
Dated   Aug. 06, 2018  
Interest expense   $ 57,322  
Convertible Debt [Member] | Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 500,000 $ 500,000 $ 500,000
Conversion rate (in Dollars per share) $ 0.3125 $ 0.3125 $ 0.3125
Charged to operations     $ 550,000
Discount   $ 509,573 40,427
Accrued interest $ 1,447 1,447 $ 13,863
Converted   $ 565,000  
Converted, shares (in Shares)   1,808,000  
Dated   Feb. 05, 2018 Feb. 05, 2018
Original issue discount 50,000 $ 50,000 $ 50,000
Convertible Debt [Member] | Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 50,000 $ 50,000 $ 50,000
Interest rate 8.00% 8.00% 8.00%
Conversion rate (in Dollars per share) $ 0.3125 $ 0.3125 $ 0.3125
Charged to operations     $ 55,000
Discount   $ 52,026 2,974
Accrued interest $ 898 898 $ 1,302
Converted   $ 57,200  
Converted, shares (in Shares)   183,040  
Dated   Feb. 12, 2018 Feb. 12, 2018
Original issue discount 5,000 $ 5,000 $ 5,000
Convertible Debt [Member] | YA II PN Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 750,000 $ 750,000 $ 750,000
Interest rate 8.00% 8.00% 8.00%
Note due   November 14, 2019 November 14, 2019
Conversion rate (in Dollars per share) $ 0.34 $ 0.34 $ 0.40
Charged to operations     $ 23,224
Discount     750,000
Accrued interest     $ 2,795
Dated   May 14, 2018 May 14, 2018
Convertible Debt [Member] | Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 25,000 $ 25,000 $ 25,000
Interest rate 10.00% 10.00% 10.00%
Conversion rate (in Dollars per share) $ 0.40 $ 0.40 $ 0.40
Charged to operations   $ 7,152 $ 149
Discount     7,301
Accrued interest $ 993 993 $ 192
Converted   $ 26,185  
Converted, shares (in Shares)   65,462  
Payments   No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full. No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable. Commencing October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.
Dated   May 03, 2018 May 03, 2018
Convertible Debt [Member] | YA II PN Note #2 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 500,000 $ 500,000  
Interest rate 8.00% 8.00%  
Note due   November 14, 2019  
Conversion rate (in Dollars per share) $ 0.40 $ 0.40  
Discount   $ 362,500  
Payments   Commencing on December 1, 2018, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full.  
Dated   Jul. 20, 2018  
Convertible Debt [Member] | Navy Capital Debenture 1 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 4,000,000 $ 4,000,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 3,254,896  
Dated   Oct. 31, 2018  
Convertible   The U.S. Convertible Debenture 1 is convertible into units (the "Convertible Debenture Units") at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Convertible Debt [Member] | Navy Capital Debenture 2 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 1,000,000 $ 1,000,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 813,724  
Discount   $ 28  
Dated   Oct. 31, 2018  
Convertible   The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Convertible Debt [Member] | Murray FA Debenture [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 100,000 $ 100,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 75,415  
Dated   Oct. 24, 2018  
Convertible   The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Convertible Debt [Member] | Darling Capital Debenture [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 532,000 $ 532,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 416,653  
Dated   Oct. 25, 2018  
Convertible   The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Convertible Debt [Member] | Sabharwal Debenture [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 150,000 $ 150,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 120,100  
Dated   Oct. 26, 2018  
Convertible   The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Convertible Debt [Member] | Srinivasan Debenture [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 75,000 $ 75,000  
Interest rate 8.00% 8.00%  
Conversion rate (in Dollars per share) $ 0.80 $ 0.80  
Charged to operations   $ 60,049  
Dated   Oct. 26, 2018  
Convertible   The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10  
Matures   3 years  
Convertible Debt [Member] | U.S. Convertible Debenture 7 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Amount $ 12,012,000 $ 12,012,000  
Charged to operations   136  
Discount   2,938,690  
Accrued interest $ 205,356 $ 205,356  
Convertible   The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company's common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10.  
Matures   3 years  
Principal [Member] | Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 31,250  
Principal [Member] | Newcan Convertible Note 8 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   75,000  
Principal [Member] | Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   550,000  
Principal [Member] | Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   55,000  
Principal [Member] | Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   25,000  
Principal [Member] | YA II PN Note #2 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   250,000  
Principal [Member] | Convertible Debt [Member] | Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   31,250  
Principal [Member] | Convertible Debt [Member] | Newcan Convertible Note 8 [Member] | Director [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   75,000  
Principal [Member] | Convertible Debt [Member] | Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   550,000  
Principal [Member] | Convertible Debt [Member] | Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   55,000  
Principal [Member] | Convertible Debt [Member] | Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   25,000  
Accrued Interest [Member] | Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   1,247  
Accrued Interest [Member] | Newcan Convertible Note 8 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   3,534  
Accrued Interest [Member] | Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   15,000  
Accrued Interest [Member] | Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   2,200  
Accrued Interest [Member] | Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   1,185  
Accrued Interest [Member] | YA II PN Note #2 [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   6,027  
Accrued Interest [Member] | Convertible Debt [Member] | Lamadrid Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   1,247  
Accrued Interest [Member] | Convertible Debt [Member] | Newcan Convertible Note 8 [Member] | Director [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   3,534  
Accrued Interest [Member] | Convertible Debt [Member] | Darling Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   15,000  
Accrued Interest [Member] | Convertible Debt [Member] | Efrat Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   2,200  
Accrued Interest [Member] | Convertible Debt [Member] | Lasky Note [Member]      
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Convertible Debt (Parentheticals) [Line Items]      
Converted   $ 1,185  
XML 74 R63.htm IDEA: XBRL DOCUMENT v3.19.1
Note 14 - Notes Payable and Convertible Notes Payable (Details) - Schedule of Amortization of Debt Discount - USD ($)
3 Months Ended 9 Months Ended
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
Schedule of Amortization of Debt Discount [Abstract]        
Discounts on notes payable amortized to interest expense $ 337,347 $ 818,254 $ 2,481,674 $ 1,391,110
XML 75 R64.htm IDEA: XBRL DOCUMENT v3.19.1
Note 15 - Contingent Liability (Details) - USD ($)
Feb. 28, 2019
May 31, 2018
Loss Contingency [Abstract]    
Business Combination, Liabilities Arising from Contingencies, Amount Recognized $ 1,000,000  
Business Combination, Contingent Consideration, Liability, Current $ 678,111 $ 0
XML 76 R65.htm IDEA: XBRL DOCUMENT v3.19.1
Note 16 - Stockholders' Equity (Details)
3 Months Ended 6 Months Ended 9 Months Ended 12 Months Ended
Dec. 12, 2018
USD ($)
$ / shares
shares
Nov. 14, 2018
$ / shares
shares
Nov. 01, 2018
USD ($)
shares
Sep. 11, 2018
USD ($)
shares
Sep. 06, 2018
$ / shares
shares
Aug. 20, 2018
USD ($)
shares
Aug. 14, 2018
$ / shares
shares
Aug. 10, 2018
USD ($)
$ / shares
shares
Aug. 06, 2018
$ / shares
shares
Jul. 31, 2018
USD ($)
$ / shares
shares
Jul. 27, 2018
USD ($)
shares
Jul. 24, 2018
USD ($)
shares
Jul. 20, 2018
$ / shares
shares
Jul. 01, 2018
shares
Jun. 27, 2018
USD ($)
$ / shares
shares
Jun. 26, 2018
USD ($)
$ / shares
Jun. 24, 2018
USD ($)
shares
Jun. 20, 2018
USD ($)
$ / shares
shares
Jun. 20, 2018
CAD ($)
shares
Jun. 01, 2018
USD ($)
Mar. 29, 2018
$ / shares
Aug. 01, 2015
USD ($)
shares
Feb. 28, 2019
USD ($)
$ / shares
shares
Nov. 30, 2018
USD ($)
Aug. 31, 2018
USD ($)
Feb. 28, 2018
USD ($)
Nov. 30, 2017
USD ($)
shares
Nov. 30, 2017
CAD ($)
shares
Nov. 30, 2018
USD ($)
Feb. 28, 2019
USD ($)
$ / shares
shares
Feb. 28, 2018
USD ($)
May 31, 2017
USD ($)
shares
Feb. 28, 2019
$ / shares
shares
Aug. 08, 2018
$ / shares
shares
Jun. 20, 2018
$ / shares
May 31, 2018
$ / shares
shares
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Common Stock, Shares Authorized (in Shares) | shares                                             250,000,000             250,000,000     250,000,000     250,000,000
Common Stock, Par or Stated Value Per Share (in Dollars per share) | $ / shares                                             $ 0.0001             $ 0.0001           $ 0.0001
Preferred Stock, Shares Authorized (in Shares) | shares                                             20,000,000             20,000,000     20,000,000     20,000,000
Preferred Stock, Par or Stated Value Per Share (in Dollars per share) | $ / shares                                             $ 0.001             $ 0.001           $ 0.001
Common Stock, Shares, Issued (in Shares) | shares                                             125,814,107             125,814,107     125,814,107     50,128,972
Common Stock, Shares, Outstanding (in Shares) | shares                                             125,814,107             125,814,107     125,814,107     50,128,972
Common Stock, Other Shares, Outstanding (in Shares) | shares                                                                       50,128,972
Imputed Interest, Debt                                             $ 268     $ 265       $ 807 $ 804          
Debt Conversion, Original Debt, Amount                                                           75,000 112,500          
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                               10,816,960        
Stock Issued During Period, Shares, Issued for Services (in Shares) | shares       31,250                                                                
Stock Issued During Period, Value, Issued for Services       $ 25,310                                                   490,000   $ 289,633        
Share-based Compensation                                                           490,000 0          
Stock Issued During Period, Value, Acquisitions                                                           25,313 0          
Proceeds from Issuance or Sale of Equity                                                           15,535,978 1,012,425          
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                             $ 0.50                                          
Other Noncash Expense                                                           8,084,522 0          
Number of Units to be Issued (in Shares) | shares               6,875,000   7,500,000                                                    
Unit, Price Per Unit (in Dollars per share) | $ / shares               $ 0.40   $ 0.40                                                    
Units, Value, Subscriptions               $ 2,750,000   $ 3,000,000                                                    
Unit, Description               The units collectively represent (i) 6,875,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 6,875,000 shares of common stock at an exercise price of $0.60 per share of common stock   The units collectively represent (i) 7,500,000 shares of common stock, and (ii) three-year warrants to purchase an aggregate of 7,500,000 shares of common stock at an exercise price of $0.60 per share of common stock                                                    
Number of Subscription Agreements               5                                                        
Allocated Share-based Compensation Expense                     $ 17,500                                     $ 328,513 $ 55,000          
Class of Warrant or Rights, Exercised (in Shares) | shares   25,000     40,000                                                 415,000            
Stock Issued During Period, Shares, Other (in Shares) | shares     50,000                                                         7,609,910        
Stock Issued During Period, Value, Other     $ 47,500                                                                  
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                   $ 750,000                       $ 9,039,096   $ 1,758,741        
                                                          81,961            
Adjustments to Additional Paid in Capital, Other                                   35,833                       807   1,076        
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | shares                             1,368,250                                          
Alternative Solutions, LLC [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Stock Issued During Period, Shares, Acquisitions (in Shares) | shares                             22,058,823                                          
Stock Issued During Period, Value, Acquisitions                             $ 15,441,176                                          
Affiliated Entity [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Payments for Commissions                       $ 250,000                                                
Stock Issued During Period, Shares, Issued for Services (in Shares) | shares                       700,000                                                
Stock Issued During Period, Value, Issued for Services                       $ 490,000                                                
Chief Financial Officer [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Stock Issued During Period, Shares, Share-based Compensation, Gross (in Shares) | shares                     25,000                                                  
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period                     4 months                                                  
Stock Issued During Period, Value, Share-based Compensation, Gross                     $ 17,500                                                  
Allocated Share-based Compensation Expense                                                           17,500            
One Time Signing Bonus [Member] | Chief Executive Officer [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period                   1 year       1 year                                            
Allocated Share-based Compensation Expense                   $ 236,667                                       236,667            
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares                   500,000       500,000                                            
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share) | $ / shares                   $ 355,000                     $ 350,000                              
One Time Signing Bonus [Member] | Chief Operating Officer [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period                   1 year                       1 year                            
Allocated Share-based Compensation Expense                   $ 23,667                       $ 327,500               23,667            
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares                   50,000                       250,000                            
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share) | $ / shares                   $ 35,000                                                    
Darling Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 565,000            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           1,808,000            
Adjustments to Additional Paid in Capital, Warrant Issued                               $ 941,972                                        
Efrat Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 57,200            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           183,040            
Lamadrid Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 32,497            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           103,989            
Lasky Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 26,185            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           65,462            
Newcan Convertible Note 8 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 78,534            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           196,336            
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           $ 58,594            
YA II PN, Ltd [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 280,247            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           700,616            
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           $ 362,500            
YA II PN Note #2 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 256,027            
Debt Conversion, Converted Instrument, Shares Issued (in Shares) | shares                                                           640,068            
Navy Capital Debenture 1 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           $ 3,254,863            
Navy Capital Debenture 2 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           813,696            
Murray FA Debenture [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           75,395            
Darling Capital Debenture [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           416,627            
Sabharwal Debenture [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           120,078            
Srinivasan Debenture [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           60,030            
U.S. Convertible Debenture 7 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                                           2,938,690            
Principal [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                               2,537,750        
Principal [Member] | Darling Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           550,000            
Principal [Member] | Efrat Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           55,000            
Principal [Member] | Lamadrid Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           31,250            
Principal [Member] | Lasky Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           25,000            
Principal [Member] | Newcan Convertible Note 8 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           75,000            
Principal [Member] | YA II PN, Ltd [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           250,000            
Principal [Member] | YA II PN Note #2 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           250,000            
Accrued Interest [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                               $ 166,490        
Accrued Interest [Member] | Darling Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           15,000            
Accrued Interest [Member] | Efrat Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           2,200            
Accrued Interest [Member] | Lamadrid Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           1,247            
Accrued Interest [Member] | Lasky Note [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           1,185            
Accrued Interest [Member] | Newcan Convertible Note 8 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           3,534            
Accrued Interest [Member] | YA II PN, Ltd [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           30,247            
Accrued Interest [Member] | YA II PN Note #2 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Debt Conversion, Original Debt, Amount                                                           $ 6,027            
Termination of Employment Agreement [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Stock Issued During Period, Shares, Issued for Services (in Shares) | shares                                 600,000                                      
Stock Issued During Period, Value, Issued for Services                                 $ 264,000                                      
Stock Issued, Previously Subscribed                                 $ 213,320                                      
Share-based Compensation                                                         $ 50,680              
Special Warrants [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Payments for Commissions                                                     $ 1,043,028 $ 799,053                
Proceeds from Issuance or Sale of Equity                                   $ 9,785,978 $ 13,037,859                                  
Class of Warrant or Rights, Granted (in Shares) | shares           3,042,167                       28,973,020 28,973,020                                  
Warrants Issued, Price Per Warrant | (per share)                                   $ 0.34                                 $ 0.45  
Warrant Description           the Company did not receive a receipt from the applicable Canadian securities authorities for the qualifying prospectus by August 20, 2018, the unexercised special warrants were adjusted to entitle the holders to receive 1.1 units instead of one unit of the Company.                       Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.  Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events Each special warrant was automatically exercisable, for no additional consideration, into units of the Company on the earlier of: (i) the date that was five business days following the date on which the Company obtained a receipt from the applicable securities regulatory authorities in each of the jurisdictions in Canada in which the special warrants were sold for a final prospectus qualifying the distribution of the units, which was intended to be no later than November 30, 2018, and (ii) the date that was four months and one day after the completion of the Company's acquisition of all of the membership interests in Alternative Solutions, LLC, known as Oasis Cannabis.In connection with the offering, the Company paid Canaccord Genuity Corp. a cash commission equal to C$1,043,028 (USD$799,053), a corporate finance fee equal to 1,448,651 special warrants, and 2,317,842 compensation broker warrants valued at $1,495,373. Each compensation broker warrant entitles the holder thereof to acquire one unit at a price of C$0.45 per unit for a period of 36 months from the date that the Company's common stock is listed on a recognized Canadian stock exchange, subject to adjustment in certain events. The 1,448,651 special warrants that were issued were valued at $1,413,300 and were charged to operations during the three months ended August 31, 2018.Upon exercise of the special warrants, each unit was to consist of one share of the Company's common stock and one warrant to purchase one share of common stock.  Each warrant was to be exercisable at a price of C$0.65 for three years after the Company's common stock was listed on a recognized Canadian stock exchange, subject to adjustment in certain events                                  
Class of Warrants or Rights, Value                                                     $ 1,495,373                  
Class of Warrant or Right, Exercise Price of Warrants or Rights | (per share)                                             $ 0.65             $ 0.65     $ 33,465,110   $ 0.65  
Warrant, Term of Warrants                                   3 years 3 years                                  
Other Noncash Expense           $ 7,142,550                                                            
Stock Issued During Period, Shares, New Issues (in Shares) | shares                                                           33,465,110            
Special Warrants [Member] | Finance Fee [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares                                                     1,448,651 1,448,651                
Class of Warrants or Rights, Value                                                 $ 1,413,300                      
Special Warrants [Member] | Compensation Warrants [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares                                                     2,317,842 2,317,842                
Adjustments to Additional Paid in Capital, Warrant Issued                                               $ 1,495,373                        
Cashless Exercise of Warrants [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares   $ 0.75     $ 0.75   $ 0.75                                                          
Stock Issued During Period, Shares, Conversion of Convertible Securities (in Shares) | shares   5,867     13,684   129,412                                                          
Class of Warrant or Rights, Exercised (in Shares) | shares             350,000                                                          
Reset Provisions Embedded in Convertible Notes [Member] | Accounting Standards Update 2017-11 [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Adjustments to Additional Paid in Capital, Convertible Debt with Conversion Feature                                       $ 1,265,751                                
Private Placement, Westpark Offering [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                               $ 0.75                                        
Broker Warrants [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares                                   2,317,842 2,317,842                                  
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                                   $ 0.45                                    
Warrants and Rights Outstanding, Term                                   3 years                                 3 years  
In Connection with Sale of Convertible Debt [Member] | YA II PN, Ltd [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                         $ 0.60                                              
Warrant, Term of Warrants                         5 years                                              
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | shares                         1,250,000                                              
Navy Green Capital Offering [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                 $ 0.60                                                      
Warrant, Term of Warrants                 3 years                                                      
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | shares                 7,500,000                                                      
Navy Green Capital and Ionic Venture Offering [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares                                                                   $ 0.60    
Class of Warrant or Right, Number of Securities Called by Warrants or Rights (in Shares) | shares                                                                   6,875,000    
Debenture Offering [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Warrants and Rights Outstanding $ 874,457                                                                      
Debenture Offering [Member] | Canaccord Genuity Corp. [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares 1,074,720                                                                      
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares $ 0.80                                                                      
Debenture Offering [Member] | National Bank Financials Inc [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares 268,680                                                                      
Class of Warrant or Right, Exercise Price of Warrants or Rights | $ / shares $ 0.80                                                                      
Warrants and Rights Outstanding, Term 3 years                                                                      
Debenture Offering, Advisory and Agent Fees [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Unit, Description Each unit is comprised of one share of common stock and one-half of one common stock purchase warrant at an exercise price of $1.10 per whole share of common stock.                                                                      
Warrants and Rights Outstanding $ 181,183                                                                      
Unit, Issued (in Shares) | shares 559,750                                                                      
Unit, Exercise Price (in Dollars per share) | $ / shares $ 1.10                                                                      
Debenture Offering, Advisory and Agent Fees [Member] | Canaccord Genuity Corp. [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares 223,900                                                                      
Warrants and Rights Outstanding, Term 3 years                                                                      
Debenture Offering, Advisory and Agent Fees [Member] | National Bank Financials Inc [Member]                                                                        
Note 16 - Stockholders' Equity (Details) [Line Items]                                                                        
Class of Warrant or Rights, Granted (in Shares) | shares 55,975                                                                      
Warrants and Rights Outstanding, Term 3 years                                                                      
XML 77 R66.htm IDEA: XBRL DOCUMENT v3.19.1
Note 16 - Stockholders' Equity (Details) - Schedule of Share-based Compensation, Shares Authorized under Stock Option Plans, by Exercise Price Range - $ / shares
9 Months Ended 12 Months Ended
Feb. 28, 2019
May 31, 2018
Jun. 27, 2018
May 31, 2017
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price     $ 0.50  
Number of warrants outstanding (in Shares) 58,685,465     4,700,988
Weighted average remaining contractual life 2 years 270 days      
Weighted average exercise price of outstanding warrants $ 0.53 $ 0.62    
Number of warrants exercisable (in Shares) 58,685,465      
Weighted average exercise price of exercisable warrants $ 0.53      
Warrants Exercisable at $0.49 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 0.49      
Number of warrants outstanding (in Shares) 35,782,952      
Weighted average remaining contractual life 2 years 266 days      
Weighted average exercise price of outstanding warrants $ 0.49      
Number of warrants exercisable (in Shares) 35,782,952      
Weighted average exercise price of exercisable warrants $ 0.49      
Warrants Exercisable at $0.50 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 0.50      
Number of warrants outstanding (in Shares) 2,736,500      
Weighted average remaining contractual life 2 years 357 days      
Weighted average exercise price of outstanding warrants $ 0.50      
Number of warrants exercisable (in Shares) 2,736,500      
Weighted average exercise price of exercisable warrants $ 0.50      
Warrant Exercisable at $0.60 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 0.60      
Number of warrants outstanding (in Shares) 17,500,000      
Weighted average remaining contractual life 2 years 277 days      
Weighted average exercise price of outstanding warrants $ 0.60      
Number of warrants exercisable (in Shares) 17,500,000      
Weighted average exercise price of exercisable warrants $ 0.60      
Warrant Exercisable at $0.75 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 0.75      
Number of warrants outstanding (in Shares) 1,042,738      
Weighted average remaining contractual life 2 years 135 days      
Weighted average exercise price of outstanding warrants $ 0.75      
Number of warrants exercisable (in Shares) 1,042,738      
Weighted average exercise price of exercisable warrants $ 0.75      
Warrant Exercisable at $0.80 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 0.80      
Number of warrants outstanding (in Shares) 1,343,400      
Weighted average remaining contractual life 2 years 288 days      
Weighted average exercise price of outstanding warrants $ 0.80      
Number of warrants exercisable (in Shares) 1,343,400      
Weighted average exercise price of exercisable warrants $ 0.80      
Warrant Exercisable at $1.10 [Member]        
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]        
Exercise Price $ 1.10      
Number of warrants outstanding (in Shares) 279,875      
Weighted average remaining contractual life 2 years 288 days      
Weighted average exercise price of outstanding warrants $ 1.10      
Number of warrants exercisable (in Shares) 279,875      
Weighted average exercise price of exercisable warrants $ 1.10      
XML 78 R67.htm IDEA: XBRL DOCUMENT v3.19.1
Note 16 - Stockholders' Equity (Details) - Schedule of Stockholders' Equity Note, Warrants or Rights - $ / shares
9 Months Ended 12 Months Ended
Nov. 14, 2018
Sep. 06, 2018
Feb. 28, 2019
May 31, 2018
Schedule of Stockholders' Equity Note, Warrants or Rights [Abstract]        
Warrants outstanding, Number of Shares       4,700,988
Warrants outstanding, Weighted Average Exercise Price     $ 0.53 $ 0.62
Granted, Number of Shares     54,399,477  
Granted, Weighted Average Exercise Price     $ 0.53  
Exercised, Number of Shares (25,000) (40,000) (415,000)  
Exercised, Weighted Average Exercise Price     $ 0.75  
Cancelled / Expired, Number of Shares     0  
Cancelled / Expired, Weighted Average Exercise Price     $ 0  
Warrants outstanding, Number of Shares     58,685,465  
XML 79 R68.htm IDEA: XBRL DOCUMENT v3.19.1
Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis - USD ($)
Nov. 30, 2018
May 31, 2018
Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]    
Derivative liabilities $ 678,111 $ 1,265,751
Fair Value, Inputs, Level 1 [Member]    
Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]    
Derivative liabilities 0 0
Fair Value, Inputs, Level 2 [Member]    
Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]    
Derivative liabilities 0 0
Fair Value, Inputs, Level 3 [Member]    
Note 17 - Fair Value of Financial Instruments (Details) - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]    
Derivative liabilities $ 678,111 $ 1,265,751
XML 80 R69.htm IDEA: XBRL DOCUMENT v3.19.1
Note 17 - Fair Value of Financial Instruments (Details) - Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation
9 Months Ended
Feb. 28, 2019
USD ($)
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Abstract]  
Balance $ 1,265,751
Transfers out due to the adoption of ASU 2017-11 effective June 1, 2018 (1,265,751)
Balance $ 0
XML 81 R70.htm IDEA: XBRL DOCUMENT v3.19.1
Note 18 - Commitments and Contingencies (Details)
9 Months Ended 12 Months Ended
Jul. 31, 2018
USD ($)
shares
Jul. 27, 2018
USD ($)
Jul. 01, 2018
USD ($)
shares
Apr. 06, 2018
USD ($)
Jan. 05, 2018
USD ($)
Nov. 30, 2017
USD ($)
shares
Oct. 09, 2017
USD ($)
Aug. 23, 2017
USD ($)
Jul. 20, 2016
USD ($)
Mar. 31, 2016
USD ($)
Aug. 01, 2015
USD ($)
shares
Oct. 01, 2014
USD ($)
Feb. 28, 2019
USD ($)
shares
Feb. 28, 2018
USD ($)
May 31, 2018
USD ($)
Apr. 17, 2017
ft²
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Loss Contingency Accrual, Provision                             $ 10,000  
Debt Conversion, Original Debt, Amount                         $ 75,000 $ 112,500    
Employee-related Liabilities, Current                         281,584   44,465  
Allocated Share-based Compensation Expense   $ 17,500                     328,513 $ 55,000    
Chief Executive Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Employment Agreement, Term                       5 years        
Salary and Wage, Officer, Excluding Cost of Good and Service Sold     $ 150,000                 $ 150,000        
Deferred Compensation Arrangement with Individual, Description     performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of the annual EBITDA of CLS Nevada, Inc                 performance bonus equal to 2% of CLS Labs’ annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of CLS Labs’ common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million        
Share-based Compensation Arrangement by Share-based Payment Award, Description                       annual stock options, exercisable at the fair market value of CLS Labs’ common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million        
Employee-related Liabilities, Current                         0   37,500  
Accrued Salaries                         $ 31,806   0  
Chief Operating Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Employment Agreement, Term                     5 years          
Salary and Wage, Officer, Excluding Cost of Good and Service Sold $ 150,000                   $ 150,000          
Deferred Compensation Arrangement with Individual, Description performance bonus equal to 2% of the annual EBITDA of CLS Nevada, Inc., and annual restricted stock awards of the Company’ common stock in an amount equal to 3% of the annual EBITDA                   performance bonus equal to 2% of the Company’s annual EBITDA, up to a maximum annual cash compensation of $1 million (including his base salary), and annual stock options, exercisable at the fair market value of the Company’s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million          
Share-based Compensation Arrangement by Share-based Payment Award, Description                     annual stock options, exercisable at the fair market value of the Company’s common stock on the date of grant, in an amount equal to 2% of its annual EBITDA up to $42.5 million and 4% of its annual EBITDA in excess of $42.5 million          
Employee-related Liabilities, Current           $ 37,500                    
President and Chief Financial Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Salary and Wage, Officer, Excluding Cost of Good and Service Sold           $ 175,000                    
Deferred Compensation Arrangement with Individual, Description           performance bonus equal to 2% of the Company’s annual EBITDA, and annual restricted stock awards of the Company’s common stock in an amount equal to 3% of its annual EBITDA                    
Share-based Compensation Arrangement by Share-based Payment Award, Description           annual restricted stock awards of the Company’s common stock in an amount equal to 3% of its annual EBITDA                    
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures (in Shares) | shares                         600,000      
Former Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Employee-related Liabilities, Current                         $ 16,250   16,250  
Building [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Area of Real Estate Property (in Square Feet) | ft²                               14,392
Lessee, Operating Lease, Term of Contract                               72 months
Lessee, Operating Lease, Renewal Term                               10 years
Deposit [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Loss Contingency Accrual, Provision                             50,000  
Rent Expense [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Loss Contingency Accrual, Provision                             15,699  
Remaining Amounts Due Under Lease [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Loss Contingency Accrual, Provision                             $ 30,000  
One Time Signing Bonus [Member] | Chief Executive Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares 500,000   500,000                          
Allocated Share-based Compensation Expense $ 236,667                       236,667      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 1 year   1 year                          
One Time Signing Bonus [Member] | Chief Operating Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares 50,000                   250,000          
Allocated Share-based Compensation Expense $ 23,667                   $ 327,500   $ 23,667      
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 1 year                   1 year          
One Time Signing Bonus [Member] | President and Chief Financial Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares           500,000                    
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period           1 year                    
Unpaid Accrued Salary Converted to Convertible Note [Member] | Convertible Debt [Member] | Chief Executive Officer [Member]                                
Note 18 - Commitments and Contingencies (Details) [Line Items]                                
Debt Conversion, Original Debt, Amount       $ 37,500 $ 37,500   $ 39,521 $ 62,500 $ 250,000 $ 112,500            
XML 82 R71.htm IDEA: XBRL DOCUMENT v3.19.1
Note 19 - Related Party Transactions (Details) - USD ($)
3 Months Ended 9 Months Ended
Jul. 31, 2018
Jul. 27, 2018
Jul. 24, 2018
Jul. 01, 2018
Mar. 29, 2018
Aug. 01, 2015
Feb. 28, 2019
Feb. 28, 2018
Feb. 28, 2019
Feb. 28, 2018
May 31, 2018
Nov. 30, 2017
Note 19 - Related Party Transactions (Details) [Line Items]                        
Employee-related Liabilities, Current             $ 281,584   $ 281,584   $ 44,465  
Due to Related Parties, Current             17,930   17,930   17,930  
Imputed Interest, Debt             268 $ 265 807 $ 804    
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights   four months after issuance                    
Stock Issued During Period, Value, Restricted Stock Award, Gross   $ 17,500                    
Allocated Share-based Compensation Expense   $ 17,500             328,513 $ 55,000    
Chief Executive Officer [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Employee-related Liabilities, Current             0   0   37,500  
Former Officer Prior to his October 1, 2017 Seperation [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Employee-related Liabilities, Current             37,500   37,500   37,500  
Former Officer Prior to his September 1, 2015 Seperation [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Employee-related Liabilities, Current             16,250   16,250   16,250  
Officers and Directors [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Due to Related Parties, Current             $ 17,930   17,930   $ 17,930  
Debt Instrument, Interest Rate, Stated Percentage                     6.00%  
Affiliated Entity [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Payments for Commissions     $ 250,000                  
Affiliated Entity [Member] | For Introducing Us to Alternative Solutions [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares)     700,000                  
Stock Issued During Period, Value, Restricted Stock Award, Gross     $ 490,000,000,000                  
Payments for Commissions     $ 250,000                  
Chief Operating Officer [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Employee-related Liabilities, Current                       $ 37,500
One Time Signing Bonus [Member] | Chief Executive Officer [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Allocated Share-based Compensation Expense $ 236,667               236,667      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) 500,000     500,000                
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 1 year     1 year                
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share) $ 355,000       $ 350,000              
One Time Signing Bonus [Member] | Chief Operating Officer [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Allocated Share-based Compensation Expense $ 23,667         $ 327,500     $ 23,667      
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) 50,000         250,000            
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period 1 year         1 year            
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value (in Dollars per share) $ 35,000                      
Notes Receivable [Member] | Affiliated Entity [Member]                        
Note 19 - Related Party Transactions (Details) [Line Items]                        
Stock Issued During Period, Shares, Restricted Stock Award, Gross (in Shares)   25,000                    
XML 83 R72.htm IDEA: XBRL DOCUMENT v3.19.1
Note 20 - Subsequent Events (Details) - Subsequent Event [Member]
Mar. 11, 2019
USD ($)
Mar. 01, 2019
USD ($)
shares
Note 20 - Subsequent Events (Details) [Line Items]    
Number of Notes   2
Other Assets, Current   $ 964,788
President and Chief Operating Officer [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Employment Agreement, Term   2 years
Salary and Wage, Officer, Excluding Cost of Good and Service Sold   $ 175,000
Deferred Compensation Arrangement with Individual, Description   performance bonus equal to 1% of our annual EBITDA, and annual restricted stock awards in an amount equal to 1% of our annual EBITDA
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period (in Shares) | shares   500,000
CLS Massachusetts, Inc. [Member] | CannAssist LLC [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Equity Method Investment, Ownership Percentage 80.00%  
Business Combination, Consideration Transferred $ 25,000,000  
YA II PN Note [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Debt, Redemption Premium   $ 62,500
YA II PN Note [Member] | Principal [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Repayments of Convertible Debt   250,000
YA II PN Note [Member] | Accrued Interest [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Repayments of Convertible Debt   2,630
YA II PN Note #2 [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Debt, Redemption Premium   125,000
YA II PN Note #2 [Member] | Principal [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Repayments of Convertible Debt   500,000
YA II PN Note #2 [Member] | Accrued Interest [Member]    
Note 20 - Subsequent Events (Details) [Line Items]    
Repayments of Convertible Debt   $ 24,658
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