Note 10. Stock Options

12 Months Ended

May. 31, 2015

Notes

Note 10. Stock Options

Note 10. STOCK OPTIONS

In January 2005, the Board of Directors approved a stock option plan under which options to purchase 2,000,000 shares of common stock could be issued to key employees and key consultants as determined by the Board of Directors.  During 2005, 1,800,000 options were issued to five directors and a consultant of the Company, all of which were immediately vested. Each option allows the recipient to purchase shares at an exercise price of $.10 per share. An additional 300,000 options were granted to the then Company President during the year ended May 31, 2006 at an exercise price of $.17 per share, all of which have vested. The value of all of these options was expensed in prior years. On January 10, 2007, one of the option recipients resigned and, under the terms of the plan, his 300,000 options were terminated July 10, 2007. During the year ended May 31, 2009, two of the directors resigned and 600,000 options were cancelled on May 29, 2011, in accordance with the terms of the grants.

During the year ended May 31, 2010, the Company modified the exercise price and extended the exercise period for the 1,500,000 options that remained outstanding at that time. In addition, 200,000 options were issued to new directors on September 29, 2009. These additional options have fully vested. The value of the modification and of the additional options has been expensed in the year the modification and grant occurred.

During fiscal year 2013, the Company shareholders adopted the 2012 option plan, approved in accordance with Delaware Corporation General Law, by which the Board can issue 5,000,000 options to purchase common stock.  Under the plan, 1,500,000 options were granted during the year ended May 31, 2013.

During the year ended May 31, 2015, options to purchase 1,500,000 shares of common stock were granted, which were valued at $90,000.  These options are fully vested.

The fair value of options granted under these plans was estimated on the date of grant using a Black-Scholes valuation model.

The assumptions used in developing the fair value of current year options were as follows:

Stock volatility	2.003%
Expected life	5 Years
Dividends	None
Risk free rate	0.79%

The following is a summary of options activity during the years ended May 31, 2015 and 2014:

		Weighted
	Number	Average
	of	Exercise
	Options	Price
Options outstanding and exercisable at May 31, 2013	2,900,000	$.21
Options granted during fiscal 2014	-	-
Options exercised or cancelled during fiscal 2014	-	-
Options outstanding and exercisable at May 31, 2014	2,900,000	.21
Options granted during fiscal 2015	1,500,000	.07
Options exercised or cancelled during fiscal 2015	-	-
Options outstanding and exercisable at May 31, 2015	4,400,000	$.16