Nevada | 45-1352286 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Large | Accelerated filer ☐ |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☒ |
Emerging growth company ☐ |
Page | ||
3 | ||
PART I. FINANCIAL INFORMATION | ||
Item 1. | 4 | |
4 | ||
5 | ||
6 | ||
7 | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II. OTHER INFORMATION | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
February 28, | May 31, | |||||||||||||||
2017 | 2016 | February 28, | May 31, | |||||||||||||
(Unaudited) | 2018 | 2017 | ||||||||||||||
ASSETS | (unaudited) | |||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 5,940 | $ | 88,244 | $ | 22,733 | $ | 78,310 | ||||||||
Prepaid expenses | 22,791 | 6,742 | 12,598 | 1,410 | ||||||||||||
Other current assets | 23,431 | - | ||||||||||||||
Total current assets | 28,731 | 94,986 | 58,762 | 79,720 | ||||||||||||
Investment | 2,050,000 | - | ||||||||||||||
Security deposit | 50,000 | 50,000 | - | 50,000 | ||||||||||||
Property, plant and equipment, net of accumulated depreciation of $1,561 and $892 | 1,113 | 1,782 | ||||||||||||||
Construction in progress | 141,739 | 106,726 | ||||||||||||||
Intangible assets, net of accumulated amortization of $720 and $396 | 1,438 | 1,762 | ||||||||||||||
Property, plant and equipment, net of accumulated depreciation of $2,453 and $1,784 | 221 | 890 | ||||||||||||||
Intangible assets, net of accumulated amortization of $1,152 and $828 | 1,006 | 1,330 | ||||||||||||||
Total assets | $ | 223,021 | $ | 255,256 | $ | 2,109,989 | $ | 131,940 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable and accrued liabilities | $ | 569,959 | $ | 431,017 | $ | 671,807 | $ | 581,765 | ||||||||
Accrued compensation, related party | 128,750 | 267,493 | 108,834 | 53,750 | ||||||||||||
Notes Payable | 410,000 | - | ||||||||||||||
Due to related party | 17,930 | 17,930 | 17,930 | 17,930 | ||||||||||||
Accrued interest | 57,518 | 41,116 | 9,602 | 20,171 | ||||||||||||
Accrued interest, related party | 199,190 | 68,148 | 193,988 | 106,022 | ||||||||||||
Notes payable, related parties | 167,000 | - | 152,174 | 699,208 | ||||||||||||
Convertible notes payable, net of discount of $419,584 and $227,475 | 147,082 | 72,525 | ||||||||||||||
Convertible notes payable, related party, net of discount of $285,470 and $95,477 | 731,156 | 22,678 | ||||||||||||||
Convertible notes payable, net of discount of $826,775 and $57,644 | 141,225 | 252,356 | ||||||||||||||
Convertible notes payable, related party, net of discount of $98,382 and $0 | 114,803 | - | ||||||||||||||
Derivative liability | 167,372 | 418,537 | 974,175 | 95,276 | ||||||||||||
Total current liabilities | 2,185,957 | 1,339,444 | 2,794,538 | 1,826,478 | ||||||||||||
Noncurrent liabilities | ||||||||||||||||
Convertible notes payable, net of discount of $9,078 and $390,021 | 15,924 | 43,312 | ||||||||||||||
Convertible notes payable, related parties, net of discount of $338,191 and $1,018,657 | 1,095,433 | 230,718 | ||||||||||||||
Notes payable, related parties | - | 72,750 | ||||||||||||||
Convertible notes payable, related parties, net of discount of $623,847 and $0 | 615,574 | 192,000 | ||||||||||||||
Total Liabilities | 3,297,314 | 1,686,224 | 3,410,112 | 2,018,478 | ||||||||||||
Commitments and contingencies | - | - | - | - | ||||||||||||
Stockholder’s equity | ||||||||||||||||
Common stock, $0.0001 par value; 250,000,000 shares authorized; 21,178,176 and 20,350,003 shares issued and outstanding at February 28, 2017 and May 31, 2016, respectively | 2,118 | 2,035 | ||||||||||||||
Common stock, $0.0001 par value; 250,000,000 shares authorized; 43,186,944 and 32,852,944 shares issued and outstanding at February 28, 2018 and May 31, 2017, respectively | 4,319 | 3,286 | ||||||||||||||
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued | - | - | - | - | ||||||||||||
Additional paid-in capital | 3,104,675 | 2,627,183 | 13,224,661 | 7,032,836 | ||||||||||||
Stock payable | 65,700 | 65,700 | ||||||||||||||
Common stock subscriptions receivable | (69,102 | ) | - | |||||||||||||
Common stock subscribed | 123,950 | 68,950 | ||||||||||||||
Accumulated deficit | (6,246,786 | ) | (4,125,886 | ) | (14,583,951 | ) | (8,991,610 | ) | ||||||||
Total stockholder’s equity (deficit) | (3,074,293 | ) | (1,430,968 | ) | (1,300,123 | ) | (1,886,538 | ) | ||||||||
Total liabilities and stockholders’ equity (deficit) | $ | 223,021 | $ | 255,256 | $ | 2,109,989 | $ | 131,940 |
For the Three | For the Three | For the Nine | For the Nine | |||||||||||||||||||||||||||||
Months Ended | Months Ended | Months Ended | Months Ended | For the Three | For the Thee | For the Nine | For the Nine | |||||||||||||||||||||||||
February 28, | February 29, | February 28, | February 29, | Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | February 28, 2018 | February 28, 2017 | February 28, 2018 | February 28, 2017 | |||||||||||||||||||||||||
Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
Cost of goods sold | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Gross margin | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Selling, general and administrative expenses | 144,204 | 406,323 | 482,071 | 917,726 | 838,047 | 144,204 | 1,136,468 | 482,071 | ||||||||||||||||||||||||
Professional fees | 99,867 | 343,818 | 603,098 | 767,420 | 376,924 | 99,867 | 695,086 | 603,098 | ||||||||||||||||||||||||
Total operating expenses | 244,071 | 750,141 | 1,085,169 | 1,685,146 | 1,214,971 | 244,071 | 1,831,554 | 1,085,169 | ||||||||||||||||||||||||
Operating loss | (244,071 | ) | (750,141 | ) | (1,085,169 | ) | (1,685,146 | ) | (1,214,971 | ) | (244,071 | ) | (1,831,554 | ) | (1,085,169 | ) | ||||||||||||||||
Other (income) expense: | ||||||||||||||||||||||||||||||||
Interest expense | 381,149 | 106,599 | 1,395,511 | 177,464 | 1,434,314 | 381,149 | 2,316,145 | 1,395,511 | ||||||||||||||||||||||||
Gain on settlement of debt | - | - | (3,480 | ) | - | |||||||||||||||||||||||||||
Loss on modification of debt | - | - | 33,334 | - | - | - | 29,145 | 33,334 | ||||||||||||||||||||||||
Loss on note exchange | - | - | 404,082 | - | ||||||||||||||||||||||||||||
Loss on extinguishment of debt | - | - | 989,032 | - | ||||||||||||||||||||||||||||
Change in fair value of derivative | (244,848 | ) | - | (393,114 | ) | - | (148,227 | ) | (244,848 | ) | 25,863 | (393,114 | ) | |||||||||||||||||||
Total other expense | 136,301 | 106,599 | 1,035,731 | 177,464 | 1,286,087 | 136,301 | 3,760,787 | 1,035,731 | ||||||||||||||||||||||||
- | ||||||||||||||||||||||||||||||||
Income (Loss) before income taxes | (380,372 | ) | (856,740 | ) | (2,120,900 | ) | (1,862,610 | ) | (2,501,058 | ) | (380,372 | ) | (5,592,341 | ) | (2,120,900 | ) | ||||||||||||||||
Income tax expense | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Net income (loss) | $ | (380,372 | ) | $ | (856,740 | ) | $ | (2,120,900 | ) | $ | (1,862,610 | ) | $ | (2,501,058 | ) | $ | (380,372 | ) | $ | (5,592,341 | ) | $ | (2,120,900 | ) | ||||||||
Net income (loss) per share - basic | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||||
Net income (loss) per share - diluted | $ | (0.02 | ) | $ | (0.04 | ) | $ | (0.10 | ) | $ | (0.09 | ) | $ | (0.06 | ) | $ | (0.02 | ) | $ | (0.16 | ) | $ | (0.10 | ) | ||||||||
Weighted average shares outstanding - basic | 20,465,360 | 20,182,640 | 20,388,033 | 20,081,901 | 39,126,944 | 20,465,360 | 35,654,299 | 20,388,033 | ||||||||||||||||||||||||
Weighted average shares outstanding - diluted | 20,465,360 | 20,182,640 | 20,388,033 | 20,081,901 | 39,126,944 | 20,465,360 | 35,654,299 | 20,388,033 |
For the Nine | For the Nine | |||||||
Months Ended | Months Ended | |||||||
February 28, | February 29, | |||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (2,120,900 | ) | $ | (1,862,610 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Imputed interest | 804 | 807 | ||||||
Change in fair value of derivative | (393,114 | ) | - | |||||
Loss on modification of debt | 33,334 | - | ||||||
Issuance of stock for services | - | 115,050 | ||||||
Stock-based compensation | - | 327,500 | ||||||
Amortization of debt discounts | 1,197,998 | 114,489 | ||||||
Depreciation and amortization expense | 993 | 957 | ||||||
Changes in assets and liabilities: | ||||||||
Prepaid expenses | (16,049 | ) | 17,638 | |||||
Accounts payable and accrued expenses | 137,699 | 198,464 | ||||||
Deferred liabilities | - | 47,888 | ||||||
Accrued compensation, related party | 112,500 | 106,250 | ||||||
Due to related parties | - | (525 | ) | |||||
Accrued interest, related party | 131,042 | 39,647 | ||||||
Accrued interest | 16,402 | 22,521 | ||||||
Net cash used in operating activities | (899,291 | ) | (871,924 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payments to acquire equipment | - | (2,674 | ) | |||||
Payment for construction in progress | (35,013 | ) | (41,803 | ) | ||||
Net cash used in investing activities | (35,013 | ) | (44,477 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from related party convertible notes payable | 150,000 | 345,000 | ||||||
Proceeds from related party notes payable | 838,000 | 392,750 | ||||||
Repayments of related party notes payable | (61,000 | ) | - | |||||
Repayments of convertible notes payable | (75,000 | ) | - | |||||
Net cash provided by financing activities | 852,000 | 737,750 | ||||||
Net increase in cash and cash equivalents | (82,304 | ) | (178,651 | ) | ||||
Cash and cash equivalents at beginning of period | 88,244 | 208,821 | ||||||
Cash and cash equivalents at end of period | $ | 5,940 | $ | 30,170 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | 49,265 | $ | - | ||||
Income taxes paid | $ | - | $ | - | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Convertible note issued for unpaid accrued salary | $ | 250,000 | $ | - | ||||
Related party notes payable reclassified as related party convertible notes payable | $ | 222,750 | $ | - | ||||
Discount on convertible notes payable due to derivatives | $ | 518,720 | $ | 945,000 | ||||
Extinguishment of debt – related party | $ | 254,114 | $ | - | ||||
Common stock issued for conversion of notes payable | $ | 222,657 | $ | - | ||||
Transfer principle from related party notes payable to related party convertible notes payable | $ | - | $ | 945,000 |
For the Nine | For the Nine | |||||||
Months Ended | Months Ended | |||||||
February 28, 2017 | February 28, 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income (loss) | $ | (5,592,341 | ) | $ | (2,120,900 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Imputed interest | 804 | 804 | ||||||
Change in fair value of derivative | 25,863 | (393,114 | ) | |||||
Share-based compensation | 55,000 | - | ||||||
Warrants issued to placement agent | 610,414 | - | ||||||
Loss on modification of debt | 29,145 | 33,334 | ||||||
(Gain) loss on note exchange | 404,082 | - | ||||||
Loss on extinguishment of debt | 989,032 | - | ||||||
Gain on settlement of debt | (3,480 | ) | - | |||||
Amortization of debt discounts | 1,391,110 | 1,197,998 | ||||||
Amortization of deferred financing costs | 22,569 | - | ||||||
Depreciation and amortization expense | 993 | 993 | ||||||
Changes in assets and liabilities: | ||||||||
Other assets | 50,000 | - | ||||||
Prepaid expenses | (11,188 | ) | (16,049 | ) | ||||
Other current assets | (46,000 | ) | - | |||||
Accounts payable and accrued expenses | 937,895 | 137,699 | ||||||
Accrued compensation | 167,584 | 112,500 | ||||||
Due to related parties | - | - | ||||||
Accrued interest, related party | 87,966 | 131,042 | ||||||
Deferred rent | (49,565 | ) | - | |||||
Accrued interest | 21,045 | 16,402 | ||||||
Net cash used in operating activities | (909,072 | ) | (899,291 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Payment for investment in Oasis LLCs | (2,050,000 | ) | - | |||||
Payment for construction in progress | - | (35,013 | ) | |||||
Net cash used in investing activities | (2,050,000 | ) | (35,013 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Proceeds from related party convertible notes payable | 601,070 | 150,000 | ||||||
Proceeds from related party notes payable | - | 838,000 | ||||||
Proceeds from convertible notes | 880,000 | - | ||||||
Proceeds from notes payable | 410,000 | - | ||||||
Principal payments on related party notes payable | - | (61,000 | ) | |||||
Repayments of convertible notes payable | - | (75,000 | ) | |||||
Proceeds from sale of equity | 1,012,425 | - | ||||||
Net cash provided by financing activities | 2,903,495 | 852,000 | ||||||
Net increase in cash and cash equivalents | (55,577 | ) | (82,304 | ) | ||||
Cash and cash equivalents at beginning of period | 78,310 | 88,244 | ||||||
Cash and cash equivalents at end of period | $ | 22,733 | $ | 5,940 | ||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
Interest paid | $ | - | $ | - | ||||
Income taxes paid | $ | - | $ | - | ||||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||
Convertible note issued for unpaid accrued salary | $ | 112,500 | $ | 250,000 | ||||
Related party notes payable reclassified as related party convertible notes payable | $ | 1,116,856 | $ | 222,750 | ||||
Beneficial conversion feature on convertible notes payable | $ | 1,681,946 | $ | - | ||||
Note payable exchanged for common stock | $ | 936,478 | $ | 518,720 | ||||
Shares issued for settlement of accounts payable | $ | 6,000 | $ | - | ||||
Extinguishment of debt | $ | $ | 254,114 | |||||
Discount on convertible notes payable due to derivative | $ | 1,321,862 | $ | - | ||||
Common stock issued for conversion of notes payable | $ | - | $ | 222,657 |
February 28, | May 31, | February 28, | May 31, | |||||||||||||
2017 | 2016 | 2018 | 2017 | |||||||||||||
Prepaid rent | $ | 16,381 | $ | - | ||||||||||||
Prepaid legal fees | 6,410 | 6,742 | $ | 1,410 | $ | 1,410 | ||||||||||
Prepaid expenses | 11,188 | - | ||||||||||||||
Total | $ | 22,791 | $ | 6,742 | $ | 12,598 | $ | 1,410 |
February 28, | May 31, | February 28, | May 31, | |||||||||||||
2017 | 2016 | 2018 | 2017 | |||||||||||||
Computer equipment | $ | 2,674 | $ | 2,674 | $ | 2,674 | $ | 2,674 | ||||||||
Property and equipment, gross | 2,674 | 2,674 | 2,674 | 2,674 | ||||||||||||
Less: accumulated depreciation | (1,561 | ) | (892 | ) | (2,453 | ) | (1,784 | ) | ||||||||
Property and equipment, net | $ | 1,113 | $ | 1,782 | $ | 221 | $ | 890 |
February 28, | May 31, | February 28, | May 31, | |||||||||||||
2017 | 2016 | 2018 | 2017 | |||||||||||||
Domain name | $ | 2,158 | $ | 2,158 | $ | 2,158 | $ | 2,158 | ||||||||
2,158 | 2,158 | 2,158 | 2,158 | |||||||||||||
Less: accumulated amortization | (720 | ) | (396 | ) | (1,152 | ) | (828 | ) | ||||||||
Intangible assets, net | $ | 1,438 | $ | 1,762 | $ | 1,006 | $ | 1,330 |
February 28, | May 31, | |||||||
2018 | 2017 | |||||||
Trade payables | $ | 575,546 | $ | 497,213 | ||||
Accrued payroll and related liabilities | 40,562 | 34,987 | ||||||
Deferred rent liability | 55,699 | 49,565 | ||||||
Total accounts payable and accrued liabilities | $ | 671,807 | $ | 581,765 |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
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 6% for loans made through November 30, 2017, and at a rate of 10% for loans made after November 30, 2016. The Binder Funding Notes have no maturity date and are due on demand. During the nine months ended February 28, 2017, Mr. Binder advanced a total of $118,000 to the Company, and the Company repaid Mr. Binder $61,000 under the Binder Funding Note; $12,750 of this amount was transferred out of the Binder Funding Notes and used to fund a new convertible note payable to Mr. Binder (See “Binder Convertible Note 3” below). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $166 and $237, respectively, on the Binder Funding Notes. | $ | 47,000 | $ | 2,750 | ||||
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 “Koretsky Funding Notes”). The Koretsky Funding Notes bear interest at a rate of 6% for loans made through November 30, 2017, and at a rate of 10% for loans made after November 30, 2016. The Koretsky Funding Notes have no maturity date and are due on demand. During the nine months ended February 28, 2017, Frank Koretsky advanced $140,000 and Newcan Investment Partners, LLC advanced $580,000to the Company under the Koretsky Funding Notes; during the nine months ended February 28, 2017, $210,000 was transferred out of the Koretsky Funding Notes and used to fund a new convertible note payable to Mr. Koretsky (see “Koretsky Convertible Note 3” below) and $460,000 was transferred out of the Koretsky Funding Notes and used to fund new convertible notes payable to Newcan (see “Newcan Convertible Notes 1 and 2” below). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $1,102 and $7,890, respectively, on the Koretsky Funding Notes. | 120,000 | 70,000 | ||||||
Total – Notes Payable, Related Parties | $ | 167,000 | $ | 72,750 | ||||
Current portion | $ | 167,000 | $ | - | ||||
Long term portion | $ | - | $ | 72,750 |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated January 12, 2016 and due January 1, 2019 (the “Binder Convertible Note 1”). The Binder Convertible Note 1 was funded with $50,000 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 6% per annum. No payments are required until January 1, 2017, at which time all accrued interest becomes due and payable. Commencing on April 1, 2017, the first of eight principal payments in the amount of $6,250 will become due; subsequent principal payments will become due on the first day of each July, October, January, and April until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $0.75 converted, with each Unit consisting of one (1) share of common stock and a three-year warrant to purchase (1) share of common stock at a price of $1.00 per share (post Reverse-Split). The Company recognized a discount of $50,000 on the value of the beneficial conversion feature at the time of issuance of this note. During the nine months ended February 28, 2017, $18,561 of this discount was charged to operations. During the three and nine months ended February 28, 2017 the Company accrued interest in the amount of $740 and $2,244, respectively, on this note. | 50,000 | 50,000 | ||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated April 8, 2016 and due April 1, 2019 (the “Binder Convertible Note 2”). The Binder Convertible Note 2 was funded with $42,500 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 6% per annum through February 29, 2016 and 10% per annum thereafter. No payments are required until April 1, 2017, at which time all accrued interest becomes due and payable. Commencing on July 1, 2017, the first of eight principal payments in the amount of $5,313 will become due; subsequent principal payments will become due on the first day of each October, January, April, and July until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). The Company recognized a discount of $37,840 on the value of the beneficial conversion feature at the time of issuance of this note. During the nine months ended February 28, 2017, $14,048 of this discount was charged to operations. During the three and nine months ended February 28, 2016, the Company accrued interest in the amount of $1,048 and $3,179, respectively, on this note. | 42,500 | 42,500 | ||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated July 20, 2016 and due July 1, 2019 (the “Binder Convertible Note 3”). The Binder Convertible Note 3 was funded with the conversion of $250,000 of unpaid accrued salary due to Mr. Binder and $12,750 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No payments are required until July 1, 2017, at which time all accrued interest becomes due and payable. Commencing on October 1, 2017, the first of eight principal payments in the amount of $32,844 will become due; subsequent principal 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 “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $6,479 and $16,120, respectively, on this note. | 262,750 | - | ||||||
Unsecured convertible note issued to Frank Koretsky, a director of the Company, dated January 12, 2016 and due January 1, 2019 (the “Koretsky Convertible Note 1”). The Koretsky Convertible Note 1 was funded with $895,000 of advances Mr. Koretsky made to the Company under the Koretsky Funding Notes. This note bears interest at the rate of 6% per annum. No payments are required until January 1, 2017, at which time all accrued interest becomes due and payable. Commencing on April 1, 2017, the first of eight principal payments in the amount of $111,875 will become due; subsequent principal payments will become due on the first day of each July, October, January, and April until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $0.75 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.00 per share (post Reverse-Split). The Company recognized a discount of $895,000 on the value of the beneficial conversion feature at the time of issuance of this note. During the three and nine months ended February 28, 2017, $110,745 and $332,234, respectively, of this discount was charged to operations. During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $13,241 and $40,164, respectively, on this note. | 895,000 | 895,000 |
February 28, | May 31, | |||||||
2018 | 2017 | |||||||
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 6% for loans made through November 30, 2016, and at a rate of 10% for loans made after November 30, 2016. The Binder Funding Notes have no maturity date and are due on demand. During the twelve months ended May 31, 2016, Mr. Binder advanced a total of $95,250 to the Company under the Binder Funding Notes; during the year ended May 31, 2016, $92,500 of this amount was transferred out of the Binder Funding Notes and used to fund two new convertible notes payable to Mr. Binder (See Binder Convertible Notes 1 and 2 below). During the twelve months ended May 31, 2016, the Company accrued interest in the amount of $1,308 on the Binder Funding Notes. In July 2016, the remaining principal balance of $2,750 in the Binder Funding Notes was transferred to a new Convertible Note payable to Mr. Binder (the “Binder Convertible Note 3”). During the twelve months ended May 31, 2017, Mr. Binder advanced a total of $145,850 to the Company under the Binder Funding Notes. Also during the year ended May 31, 2017, Mr. Binder loaned the Company an additional $49,700; which was credited to the Binder Funding Notes. Also during the year ended May 31, 2017, principal in the amount of $59,750 and accrued interest in the amount of $813 was transferred out of the Binder Funding Notes and used to fund two new convertible notes payable to Mr. Binder (See Binder Convertible Notes 3 and 4 below). Also during the year ended May 31, 2017, the Company made principal payments in the aggregate amount of $61,000 under the Binder Funding Notes. During the year ended May 31, 2017, the Company accrued interest in the amount of $1,910 on the Binder Funding Notes. Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, 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. During the three months ended August 31, 2017, Mr. Binder advanced a total of $47,767 to the Company under the Binder Funding Notes. During the three months ended August 31, 2017, interest in the amount of $2,466 was accrued on the Binder Funding Notes. Also during the three months ended August 31, 2017, principal in the amount of $77,550 and accrued interest in the amount of $3,630 were transferred from the Binder Funding Notes to a new convertible note payable to Mr. Binder (the “Binder Convertible Note 5”), and principal in the amount of $47,767 was transferred from the Binder Funding Notes to a new Convertible Note payable to Mr. Binder (the “Binder Convertible Note 6”). During the three months ended November 30, 2017, Mr. Binder advanced a total of $112,862 to the Company under the Binder Funding Notes. A discount in the amount of $70,790 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense. During these three months ended November 30, 2017, interest in the amount of $642 was accrued on the Binder Funding Notes. Also during the three months ended November 30, 2017, principal in the amount of $27,021 and accrued interest in the amount of $122 was transferred from the Binder Funding Notes to a new convertible note payable to Mr. Binder (the “Binder Convertible Note 7”). 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 three months ended February 28, 2018, Mr. Binder advanced a total of $194,191 to the Company under the Binder Funding Notes. During the three months ended February 28, 2018, interest in the amount of $2,433 was accrued on the Finder Funding Notes. A discount in the amount of $194,191 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense. Also, during the three months ended February 28, 2018, principal in the amount of $127,860 and accrued interest in the amount of $1,437 was transferred from the Binder Funding Notes to a new convertible note payable to Mr. Binder (the “Binder Convertible Note 8”). | $ | 152,174 | $ | 77,550 |
February 28, 2018 | May 31, 2017 | |||||||
Note payable to Frank Koretsky, a director of the Company, for advances to fund operations (the “Koretsky Funding Notes”). The Koretsky Funding Notes bear interest at a rate of 6% for loans made through November 30, 2016, and at a rate of 10% for loans made after November 30, 2016. The Koretsky Funding Notes have no maturity date and are due on demand. During the twelve months ended May 31, 2017, Mr. Koretsky advanced $550,000 to the Company under the Koretsky Funding Notes. Also during the twelve months ended May 31, 2017, $210,000 of principal and $1,346 of accrued interest was transferred out of the Koretsky Funding Notes and used to fund a new convertible notes payable to Mr. Koretsky. Also during the twelve months ended May 31, 2017, principal and accrued interest in the amounts of $410,000 and $4,046, respectively, were transferred out of the Koretsky Funding Notes and contributed to the Newcan Funding Notes (see Newcan Funding Notes, below). | - | - | ||||||
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%. The Newcan Funding Notes have no maturity date and are due on demand. During the twelve months ended May 31, 2017, principal and interest in the amount of $410,000 and $4,046, respectively, were transferred from the Koretsky Funding Notes into the Newcan Funding Notes. Also during the year ended May 31, 2017, Newcan advanced $791,658 to the Company under the Newcan Funding Notes. Also during the year ended May 31, 2017, principal in the amount of $460,000 and accrued interest in the amount of $7,747, respectively, were transferred from the Newcan Finding Notes and used to fund the Newcan Convertible Notes 2 and 3 (see below); also during the year ended May 31, 2017, principal and accrued interest in the amounts of $120,000 and $2,121, respectively, were transferred out of the Newcan Funding Notes in order to fund the Newcan Convertible Note 3; see below. During the twelve months ended May 31, 2017, the Company accrued interest in the amount of $13,434 on this note. 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. During the three months ended August 31, 2017, Newcan advanced $70,000 to the Company under the Newcan Funding Notes. Also during the three months ended August 31, 2017, interest in the amount of $14,964 was accrued on the Newcan Funding Notes. Also during the three months ended August 31, 2017, principal in the amount of $621,658 and accrued interest in the amount of $23,856 were transferred to a new Convertible Note payable to Newcan (the “Newcan Convertible Note 4”), and principal in the amount of $70,000 was transferred to a new Convertible Note payable to Newcan (the “Newcan Convertible Note 5”). During the three months ended November 30, 2017, Newcan advanced $45,000 to the Company under the Newcan Funding Notes. Also during the three months ended November 30, 2017, interest in the amount of $247 was accrued on the Newcan Funding Notes. A discount in the amount of $58,600 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense. Also, during the three months ended November 30, 2017, principal in the amount of $30,000 and accrued interest in the amount of $148 were transferred to a new Convertible Notes payable to Newcan (the “Newcan Convertible Note 6”). 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 three months ended February 28, 2018, Newcan advanced $100,000 to the Company under the Newcan Funding Notes. Also during the three months ended February 28, 2018, interest in the amount of $915 was accrued on the Newcan Funding Notes. A discount in the amount of $70,400 related to the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense. Also, during the three months ended February 28, 2018, principal in the amount of $115,000 and accrued interest in the amount of $1,014 were transferred to a new Convertible Notes payable to Newcan (the “Newcan Convertible Note 6”). | - | 621,658 | ||||||
Total – Demand Convertible Notes Payable, Related Parties | $ | 152,174 | $ | 699,208 | ||||
Current portion | $ | 152,174 | $ | 699,208 | ||||
Long term portion | $ | - | $ | - |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
Unsecured convertible note issued to Frank Koretsky, a director of the Company, dated April 11, 2016 and due April 1, 2019 (the “Koretsky Convertible Note 2”). The Koretsky Convertible Note 2 was funded with $380,000 of advances Mr. Koretsky made to the Company under the Koretsky Funding Notes. This note bears interest at the rate of 6% per annum through February 29, 2016 and 10% per annum thereafter. No payments are required until April 1, 2017, at which time all accrued interest becomes due and payable. Commencing on July 1, 2017, the first of eight principal payments in the amount of $47,500 will become due; subsequent principal payments will become due on the first day of each October, January, April, and July until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). The Company recognized a discount of $338,336 on the value of the beneficial conversion feature at the time of issuance of this note. During the three and nine months ended February 28, 2017, $41,867 and $125,602, respectively, of this discount was charged to operations. During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $9,370 and $28,422, respectively, on this note. | 380,000 | 380,000 | ||||||
Unsecured convertible note issued to Frank Koretsky, a director of the Company, dated July 20, 2016 and due July 1, 2019 (the “Koretsky Convertible Note 3”). The Koretsky Convertible Note 3 was funded with $210,000 of advances Mr. Koretsky made to the Company under the Koretsky Funding Notes. This note bears interest at the rate of 10% per annum. No payments are required until July 1, 2017, at which time all accrued interest becomes due and payable. Commencing on October 1, 2017, the first of eight principal payments in the amount of $32,844 will become due; subsequent principal 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 “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $5,178 and $13,728, respectively, on this note. | 210,000 | - | ||||||
Unsecured convertible note issued to CLS CO 2016, LLC an entity affiliated with Frank Koretsky, a director of the Company, dated August 3, 2016 and due August 1, 2018 (the “CLS CO 2016 Note”). This note has a face amount of $150,000 and bears interest at the rate of 15% per annum. All interest accruing on this Note through the first anniversary of this Note shall be added to principal. Commencing on November 1, 2017, the Company shall pay the outstanding principal balance in four (4) equal quarterly installments, together with accrued interest, in arrears, until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $5,548 and $12,884, respectively, on this note. | 150,000 | - |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
Unsecured convertible note issued to Newcan dated January 10, 2017 and due January 2, 2020 (the “Newcan Note 1”). The Newcan Note 1 was funded with $410,000 of advances Newcan made to the Company under the Koretsky Funding Notes. This note bears interest at the rate of 10% per annum. No payments are required until January 2, 2018, at which time all accrued interest becomes due and payable. Commencing on April 1, 2018, the first of eight principal payments in the amount of $51,250 will become due; subsequent principal payments will become due on the first day of each, July, October, January, and April until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $5,504 on this note. | 410,000 | - | ||||||
Unsecured convertible note issued to Newcan Investment Partners LLC an entity affiliated with Frank Koretsky, a director of the Company, dated January 10, 2017 and due January 2, 2020 (the “Newcan Note 2”). The Newcan Note 2 was funded with $50,000 of advances Newcan made to the Company under the Koretsky Funding Notes. This note bears interest at the rate of 10% per annum. No payments are required until January 2, 2018, at which time all accrued interest becomes due and payable. Commencing on April 1, 2018, the first of eight principal payments in the amount of $6,250 will become due; subsequent principal payments will become due on the first day of each July, October, January, and April until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $1.07 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $1.07 per share (post Reverse-Split). During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $671 on this note. | 50,000 | - | ||||||
Total – Convertible Notes Payable, Related Parties | $ | 2,450,250 | 1,367,500 | |||||
Less: Discount | (623,661 | ) | (1,114,104 | ) | ||||
Convertible Notes Payable, Related Parties, Net of Discounts | $ | 1,826,589 | 253,396 | |||||
Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion | $ | 731,156 | $ | 22,678 | ||||
Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion | 1,095,433 | 230,718 |
February 28, | May 31, | |||||||
2018 | 2017 | |||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated March 31, 2017 (the “Binder Convertible Note 4”). The Binder Convertible Note 4 was funded with the conversion of $112,500 of unpaid accrued salary due to Mr. Binder and $47,000 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No interest payments are required until April 1, 2018, at which time all accrued interest becomes due and payable. Commencing on July 1, 2018, the first of eight principal payments in the amount of $19,938 will become due; subsequent principal payments will become due on the first day of each October, January, April, and July until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $0.25 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $0.25 per share. Pursuant to the Omnibus Loan Agreement, on May 31, 2017, the requirement to issue warrants upon conversion was deleted, and principal in the amount of $87,500 was converted into a total of 350,000 shares of common stock. The remaining principal balance of $72,000 will be due in eight quarterly payments in the amount of $9,000 commencing July 1, 2018; subsequent principal payments will become due on the first day of each October, January, April, and July until paid in full. During the twelve months ended May 31, 2017, the Company accrued interest in the amount of $2,666 on the Binder Convertible Note 4. 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 was recorded in the amount of $29,376 related to the revaluation of the beneficial conversion feature of the Binder Convertible Note 4; $2,628 of this discount was amortized to interest expense during the three months ended February 28, 2018.. During the three and nine months ended February 28, 2018, interest in the amount of $1,775 and $5,385 was accrued on Binder Convertible Note 4, respectively. | $ | 72,000 | $ | 72,000 | ||||
Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated March 31, 2017 (the “Newcan Convertible Note 3”). The Newcan Convertible Note 3 was funded with the conversion of $120,000 of advances 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 April 1, 2018, at which time all accrued interest becomes due and payable. Commencing on July 1, 2018, the first of eight principal payments in the amount of $15,000 will become due; subsequent principal payments will become due on the first day of each October, January, April, and July until paid in full. This note and accrued interest under the note may be converted, in whole or in part, into one “Unit” for each $0.25 converted, with each Unit consisting of one (1) share of common stock and a five-year warrant to purchase (1) share of common stock at a price of $0.25 per share. During the twelve months ended May 31, 2017, the Company accrued interest in the amount of $2,005 on the Koretsky Convertible Note 4. Pursuant to the Omnibus Loan Agreement, on May 31, 2017, the requirement to issue warrants upon conversion was deleted. 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 was recorded in the amount of $48,960 related to the revaluation of the beneficial conversion feature of the Newcan Convertible Note 1; $4,379 of this discount was amortized during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $2,959 and $8,975 was accrued on Newcan Convertible Note 3, respectively. | 120,000 | 120,000 |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
Convertible promissory note issued to an unaffiliated third party due April 29, 2018 (the “April 2015 Note”). During the twelve months ended May 31, 2015, the lender loaned the Company the amount of $200,000 pursuant to this note. The April 2015 Note bears interest at a rate of 15% per annum. On the first anniversary of this note, the all then accrued interest became due. Thereafter, the Company is required to make eight equal payments of principal together with accrued interest, quarterly in arrears, commencing on July 1, 2016 until paid in full. The note and any accrued unpaid interest is convertible into common stock of the Company. For each dollar converted, the note holder shall receive two shares of common stock and one three-year warrant to purchase 1.33 shares (post Reverse-Split) of common stock at $0.75 per share (post Reverse-Split). The Company recognized a discount of $200,000 on the April 2015 Note related to the value of the beneficial conversion feature at the time of issuance. During the nine months ended February 28, 2017, $82,390 of this discount was charged to operations. During the three months ended February 27, 2017, the Company repaid principal in the amount of $25,000 and interest in the amount of $6,690 on this note; during the nine months ended February 28, 2017, the Company repaid principal in the amount of $75,000 and interest in the amount of $49,265 on this note. During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $4,952 and $18,740, respectively, on this note. | 125,000 | 200,000 | ||||||
Convertible Promissory Notes payable to Old Main Capital, LLC (“Old Main”) dated March 18, 2016, April 22, 2016 and May 27, 2016 as amended on October 6, 2016 and November 28, 2016, for the purchase of up to $333,333 in 10% Original Issue Discount Convertible Promissory Notes (the “10% Notes”). These notes originally bore interest at the rate of 10% per annum, which increased to 15% effective August 1, 2016. Initially, Old Main could, at its option, convert all or a portion of the notes and accrued but unpaid interest into shares of common stock at a conversion price of $0.80 per share (post Reverse-Split) (the “Fixed Conversion Price”). The Fixed Conversion Price is subject to adjustment if, at any time while this note is outstanding, the Company should issue any equity security with an effective price per share that is lower than the Fixed Conversion Price (the “Base Conversion Price”), other than certain exempt issuances. In such an instance, the Fixed Conversion Price will be lowered to match the Base Conversion Price. Originally, at the earlier of October 18, 2016 or two trading days after the registration statement related to the Company’s equity line was declared effective, the Company must begin to redeem 1/24th of the face amount of the notes and any accrued but unpaid interest on a bi-weekly basis. Such amortization payments could be made, at the Company’s option, in cash or, subject to certain conditions, in common stock pursuant to a conversion rate equal to the lower of (a) $0.80 or (b) 75% of the lowest daily volume weighted average price of the common stock in the twenty consecutive trading days immediately prior to the conversion date. The Company recognized a discount of $330,188 on the 10% Notes related to the value of the original issue discount and embedded derivative at time of issuance. On October 6, 2016, the 10% Notes were amended to increase the interest rate to 15% (effective August 1, 2016) and subsequently amended November 28, 2016 to convert the 10% Notes from installment notes to “balloon” notes, with all principal and accrued interest due on September 18, 2017. In exchange for amending the terms of the 10% Notes, the Company increased the outstanding principal balance by 10% to $366,666. In addition the Fixed Conversion Price 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. This November 28, 2016 amendment required an extinguishment analysis of the 10% Notes resulting in the gain on extinguishment of debt in the amount of $172,618 during the nine months ended February 28, 2017. The gain on extinguishment of debt was included in additional paid in capital during the nine months ended February 28, 2017. The 10% Notes were revalued as of the November 28, 2016 amendment and the Company recognized a discount of $366,666 on the value of the embedded derivative. During the three months ended February 28, 2017 Old Main converted an aggregate of $100,000 of principal, in six transactions, into 828,173 shares of common stock. . At February 28, 2017 and May 31, 2016, the amount of discount remaining on these notes was $264,276 and $326,132, respectively. During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $12,649 and $34,959, respectively, on these notes. | 266,666 | 333,332 |
February 28, 2018 | May 31, 2017 | |||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated August 23, 2017 in the original principal amount of $115,050 (the “Binder Convertible Note 5”). The Binder Convertible Note 5 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder and $77,550 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No interest payments are required until October 1, 2018, at which time all accrued interest becomes due and payable. Commencing on January 2, 2019, the first of eight principal payments in the amount of $14,381 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 $0.25 converted. The Company recognized a discount of $46,020 on the Binder Convertible Note 5 related to the value of the beneficial conversion feature at the time of issuance; $3,824 and $4,160 of this discount was amortized during the three and six months ended November 30, 2017, respectively. During the three and six months ended November 30, 2017, interest in the amount of $2,868 and $3,121 was accrued on Binder Convertible Note 5, respectively, and $3,630 of accrued interest was transferred from the Binder Funding Notes. 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 the discount balance in the amount of $41,859 was charged to interest expense. A new discount was recorded in the amount of $46,940 related to the value of the repriced conversion feature of Binder Convertible Note 5; $4,199 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $2,837 and $5,957 was accrued on Binder Convertible Note 5, respectively. | 115,050 | - | ||||||
Unsecured convertible note issued to Jeffrey Binder, an officer and director of the Company, dated August 23, 2017 in the original principal amount of $72,767 (the “Binder Convertible Note 6”). The Binder Convertible Note 6 was funded with the conversion of $25,000 of unpaid accrued salary due to Mr. Binder and $47,767 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No interest payments are required until October 1, 2018, at which time all accrued interest becomes due and payable. Commencing on January 2, 2019, the first of eight principal payments in the amount of $9,096 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 $0.25 converted. The Company recognized a discount of $29,107 on the Binder Convertible Note 6 related to the value of the beneficial conversion feature at the time of issuance; $2,419 and $2,632 of this discount was amortized during the three and six months ended November 30 2017, respectively. During the three and six months ended November 30, 2017, interest in the amount of $1,814 and $1,974 was accrued on Binder Note 6, respectively. 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 the discount balance in the amount of $26,475 was charged to interest expense. A new discount was recorded in the amount of $29,689 related to the value of the repriced conversion feature of Binder Convertible Note 6; $2,656 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $1,794 and $3,768 was accrued on Binder Convertible Note 6, respectively. | 72,767 | - |
February 28, | May 31, | |||||||
2017 | 2016 | |||||||
Convertible promissory note payable to Old Main dated March 18, 2016 and amended on October 6, 2016 and November 28, 2016, and bearing interest at a rate of 8% (the “8% Note”). The 8% Note was issued for Old Main’s commitment to enter into an equity line transaction with the Company and prepare all of the related transaction documents. Originally, Old Main could, at its option, convert all or a portion of the note and accrued but unpaid interest into shares of common stock at a conversion price of $1.07 per share (post Reverse-Split) (the “8% Fixed Conversion Price”). The 8% Fixed Conversion Price is subject to adjustment if, at any time while this note is outstanding, the Company should issue any equity security with an effective price per share that is lower than the 8% Fixed Conversion Price (the “8% Base Conversion Price”), other than certain exempt issuances. In such an instance, the 8% Fixed Conversion Price will be lowered to match the 8% Base Conversion Price. Originally, at the earlier of February 3, 2017 or the effectiveness of the registration statement related to the Company’s equity line, the Company must begin to redeem 1/6th of the face amount of the note and any accrued but unpaid interest on a monthly basis. Such amortization payment could be made, at its option, in cash or, subject to certain conditions, in common stock pursuant to a conversion rate equal to the lower of (a) $1.07 (post Reverse-Split) or (b) 75% of the lowest daily volume weighted average price of the common stock in the twenty consecutive trading days ending on the trading day that is immediately prior to the applicable conversion date. The Company recognized a discount of $172,108 on the value of the embedded derivative at the time of issuance. On November 28, 2016, the 8% Note was amended converting the note from an installment note to a “balloon” note, with all principal and accrued interest due on March 18, 2017. In addition the Fixed Conversion Price 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. The November 28, 2016 amendment required an extinguishment analysis of the 8% Note resulting in gain on extinguishment of debt in the amount of $81,496 for the nine months ended February 28, 2017. The gain on extinguishment of debt was included in additional paid-in capital at February 28, 2017. The 8% Note was revalued as of the November 28, 2016 amendment and the Company recognized a discount of $169,476 on the value of the embedded derivative. At February 28, 2017 and May 31, 2016, the amount of discount remaining on these notes was $118,998 and $163,586, respectively. During the three and nine months ended February 28, 2017, the Company accrued interest in the amount of $3,945 and $11,967, respectively, on this note. | 200,000 | 200,000 | ||||||
Total - Convertible Notes Payable | $ | 591,666 | $ | 733,332 | ||||
Less: Discount | (428,660 | ) | (587,910 | ) | ||||
Convertible Notes Payable, Net of Discounts | $ | 163,006 | $ | 145,422 | ||||
Total - Convertible Notes Payable, Net of Discounts, Current Portion | $ | 147,082 | $ | 72,525 | ||||
Total - Convertible Notes Payable, Net of Discounts, Long-term Portion | $ | 15,924 | $ | 43,312 | ||||
Discounts on notes payable amortized to interest expense: | $ | 1,197,998 | $ | 286,317 |
February 28, 2018 | May 31, 2017 | |||||||
Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated August 23, 2017 in the original principal amount of $621,658 (the “Newcan Convertible Note 4”). The Newcan Convertible Note 4 was funded with the conversion of $621,658 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, 2018, at which time all accrued interest becomes due and payable. Commencing on January 2, 2019, the first of eight principal payments in the amount of $69,074 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 $0.25 converted. The Company recognized a discount of $248,663 on the Newcan Convertible Note 4 related to the value of the beneficial conversion feature at the time of issuance. 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 the discount balance in the amount of $226,181 was charged to interest expense. A new discount was recorded in the amount of $253,636 related to the value of the repriced conversion feature of Newcan Convertible Note 4; $22,687 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $15,239 and $32,190 was accrued on Newcan Convertible Note 4, respectively. | 621,658 | - | ||||||
Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated August 23, 2017 in the original principal amount of $70,000 (the “Newcan Convertible Note 5”). The Newcan Convertible Note 5 was funded with the conversion of $70,000 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, 2018, at which time all accrued interest becomes due and payable. Commencing on January 2, 2019, the first of eight principal payments in the amount of $8,750 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 $0.25 converted. The Company recognized a discount of $28,000 on the Newcan Convertible Note 5 related to the value of the beneficial conversion feature at the time of issuance. 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 the discount balance in the amount of $25,468 was charged to interest expense. A new discount was recorded in the amount of $28,560 related to the value of the repriced conversion feature of Newcan Convertible Note 5; $2,555 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $1,726 and $3,625 was accrued on Newcan Convertible Note 5, respectively. | 70,000 | - |
February 28, 2018 | May 31, 2017 | |||||||
Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated October 9, 2017 in the original amount of $30,000 (the “Newcan Convertible Note 6”). The Newcan Convertible Note 6 was funded with the conversion of $30,000 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 January 2, 2019, at which time all accrued interest becomes due and payable. Commencing on April 1, 2019, the first of eight principal payments in the amount of $3,750 will become due; subsequent principal payments will become due on the first day of each July, October, January and April 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 $0.25 converted. The Company recognized a discount of $15,808 on the Newcan Convertible Note 6 related to the value of the beneficial conversion feature at the time of issuance. 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 the discount balance in the amount of $11,430 was charged to interest expense. A new discount was recorded in the amount of $12,240 related to the value of the repriced conversion feature of Newcan Convertible Note 6; $1,095 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $740 and $1,167 was accrued on Newcan Convertible Note 6, respectively. | 30,000 | - | ||||||
Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated October 9, 2017 in the original principal amount of $39,521 (the “Binder Convertible Note 7”). The Binder Convertible Note 7 was funded with the conversion of $12,500 of unpaid accrued salary due to Mr. Binder and $27,021 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No interest payments are required until January 2, 2019, at which time all accrued interest becomes due and payable. Commencing April 1, 2019, the first of eight principal payments in the amount of $4,940 will become due, subsequent payments will become due on the first day of each July, October, January and April 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 $0.25 converted. The Company recognized a discount of $12,000 on the Binder Convertible Note 7 related to the value of the beneficial conversion feature at the time of issuance. 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 the discount balance in the amount of $15,058 was charged to interest expense. A new discount was recorded in the amount of $16,125 related to the value of the repriced conversion feature of Binder Convertible Note 7; $1,442 of this discount was amortized to interest expense during the three months ended February 28, 2018. During the three and nine months ended February 28, 2018, interest in the amount of $974 and $1,538 was accrued on Binder Convertible Note 7, respectively. | 39,521 | - |
February 28, 2018 | May 31, 2017 | |||||||
Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, January 5, 2018 in the original amount of $115,000 (the “Newcan Convertible Note 7”). The Newcan Convertible Note 7 was funded with the conversion of $115,000 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 April 1, 2019, at which time all of the accrued interest becomes due and payable. Commencing on July 1, 2019, the first of eight principal payments in the amount of $14,375 will become due; subsequent principal payments will become due on the first day of each October, January, April and July 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 $115,000 on the Newcan Convertible Note 7 related to the value of the beneficial conversion feature at the time of issuance. During the three months ended February 28, 2018, the Company amortized $5,254 of this discount to interest expense. During the three and nine months ended February 28, 2018, interest in the amount of $1,701 was accrued on the Newcan Convertible Note 7. | 115,000 | - | ||||||
Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated January 5, 2018 in the original principal amount of $165,360 (the “Binder Convertible Note 8”). The Binder Convertible Note 8 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder and $127,860 of advances Mr. Binder made to the Company under the Binder Funding Notes. This note bears interest at the rate of 10% per annum. No interest payments are required until April 1, 2019, at which time all accrued interest becomes due and payable. Commencing July 1, 2019, the first of eight principal payments in the amount of $20,670 will become due; subsequent payments will become due on the first day of each October, January, April and July 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 $165,360 on the Binder Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance. During the three months ended February 28, 2018, the Company amortized $7,555 of this discount to interest expense. During the three and nine months ended February 28, 2018, interest in the amount of $2,446 and $2,446 was accrued on Binder Convertible Note 8, respectively. | 165,360 | - | ||||||
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 three months ended February 28, 2018, $458 of this discount was charged to operations. During the three months ended February 28, 2018, the Company accrued interest in the amount of $55 on this note. | 31,250 | - | ||||||
Total – Convertible Notes Payable, Related Parties | $ | 1,452,606 | $ | 192,000 | ||||
Less: Discount | (722,229 | ) | - | |||||
Convertible Notes Payable, Related Parties, Net of Discounts | $ | 730,377 | $ | 192,000 | ||||
Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion | $ | 114,803 | $ | - | ||||
Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion | 615,574 | 192,000 |
February 28, 2018 | May 31, 2017 | |||||||
Convertible promissory note issued to an unaffiliated third party due April 29, 2018 (the “April 2015 Note”). During the twelve months ended May 31, 2015, the lender loaned the Company the amount of $200,000 pursuant to this note. The April 2015 Note bears interest at a rate of 15% per annum. On the first anniversary of this note, the all then accrued interest became due. Thereafter, the Company is required to make eight equal payments of principal together with accrued interest, quarterly in arrears, commencing on July 1, 2016 until paid in full. The note and any accrued unpaid interest is convertible into common stock of the Company. For each dollar converted, the note holder shall receive two shares of common stock and one three-year warrant to purchase 1.33 shares of common stock at $0.75 per share. The Company recognized a discount of $200,000 on the April 2015 Note related to the value of the beneficial conversion feature at the time of issuance. During the twelve months ended May 31, 2016, $66,667 of this discount was charged to operations. During the twelve months ended May 31, 2016, the Company accrued interest in the amount of $30,082 on this note. During the year ended May 31, 2017, the Company repaid principal in the amount of $100,000 and interest in the amount of $53,837 on this note. Also during the year ended May 31, 2017, the Company charged $100,545 of the discount to operations, and accrued interest in the amount of $22,440 on the April 2015 Note. On September 20, 2017, the Company entered into an Exchange Agreement, whereby it agreed to exchange the April 2015 Note for 1,500,000 shares of its common stock. The holder of the April 2015 Note had previously sold it for $105,219, which represented the balance due by the Company, to StarForce Media, Inc., an entity that is not affiliated with the Company. The Company recognized a loss on this exchange in the amount of $404,082, which was charged to operations during the three months ended November 30, 2017. The Company also expensed the remaining discount in the amount of $18,155 to interest expense during the three months ended November 30, 2017. During the three and nine months ended February 28, 2018 the Company accrued interest in the amount of $ 0 and $4,603, respectively, on the April 2015 Note. | $ | - | $ | 100,000 |
February 28, 2018 | May 31, 2017 | |||||||
Convertible promissory note payable to Old Main Capital, LLC (“Old Main”) dated March 18, 2016 and bearing interest at a rate of 8% (the “8% Note”). The 8% Note was issued for Old Main’s commitment to enter into an equity line transaction with the Company and prepare all of the related transaction documents. Old Main may, at its option, convert all or a portion of the note and accrued but unpaid interest into shares of common stock at a conversion price of $1.07 per share (post Reverse-Split) (the “8% Fixed Conversion Price”). The 8% Fixed Conversion Price is subject to adjustment if, at any time while this note is outstanding, the Company should issue any equity security with an effective price per share that is lower than the 8% Fixed Conversion Price (the “8% Base Conversion Price”), other than certain exempt issuances. In such an instance, the 8% Fixed Conversion Price will be lowered to match the 8% Base Conversion Price. The shares underlying the 8% Note are subject to a registration rights agreement. At the earlier of September 18, 2016 or two trading days after this registration statement becomes effective, the Company must begin to redeem 1/6th of the face amount of the note and any accrued but unpaid interest on a monthly basis. Such amortization payment may be made, at its option, in cash or, subject to certain conditions, in common stock pursuant to a conversion rate equal to the lower of (a) $1.07 (post Reverse-Split) or (b) 75% of the lowest daily volume weighted average price of the common stock in the twenty consecutive trading days ending on the trading day that is immediately prior to the applicable conversion date. The Company recognized a discount of $172,108 on the value of the embedded derivative. On November 28, 2016, the 8% Note was amended converting the note from an installment note to a “balloon” note, with all principal and accrued interest due on March 18, 2017. In addition, the Fixed Conversion Price 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. The November 28, 2016 amendment required an extinguishment analysis of the 8% Note resulting in gain on extinguishment of debt in the amount of $81,496 for the nine months ended February 28, 2017. The gain on extinguishment of debt was included in additional paid-in capital at February 28, 2017. The 8% Note was revalued as of the November 28, 2016 amendment and the Company recognized a discount of $169,476 on the value of the embedded derivative. At February 28, 2017 and May 31, 2016, the amount of discount remaining on these notes was $118,998 and $163,586, respectively. On March 27, 2017, the Company entered into a further amendment to the 8% Note, whereby the Company agreed to increase the outstanding amount due under the 8% Note as of March 18, 2017 by 5%, or $10,000. In exchange for doing so, Old Main agreed to extend the maturity of the 8% Note until July 1, 2017 and to suspend conversions under the 8% Note until July 1, 2017. Also during the year ended May 31, 2017, the Company accrued interest in the amount of $17,207 on the 8% Note. On July 6, 2017, the 8% Note was further amended, whereby the maturity date was extended to July 15, 2017 and the outstanding balance was increased by $15,750. On August 23, 2017, the 8% Note was amended again to extend the maturity date to September 15, 2017. On September 23, 2017, but effective on September 15, 2017, the 8% note was further orally amended, and the outstanding balance was increased by $96,862. The Company recognized the modification of this note as an extinguishment of debt and recognized a gain on the extinguishment of $144,851. The Company also recognized a discount on the modified note of $300,435, which was fully charged to operations during the three months ended November 30, 2017. On September 25, 2017, but effective September 15, 2017, the Company entered into an Exchange Agreement, whereby it agreed to exchange the 8% Note for 4,500,000 shares of its common stock. Old Main, the original holder of the 8% Note, had previously sold it for $382,496. The balance due by the Company under the 8% Note at the time it was sold was $322,612. The Company recognized a loss on this exchange in the amount of $1,113,883, which was charged to operations during the nine months ended February 28, 2018. During the three and nine months ended February 28, 2018, the Company accrued interest in the amount of $0 and $5,587, respectively, on the 8% Note, and $30,411 of the discount was amortized to interest expense during the nine months ended February 28, 2018. | - | 210,000 |
February 28, 2018 | May 31, 2017 | |||||||
Senior Convertible promissory note payable to FirstFire Global Opportunities Fund, LLC (the “FirstFire Note”) dated November 15, 2017 and bearing interest at a rate of 5% per annum. The lender loaned the Company $330,000 and the FirstFire Note has an original issue discount of $33,000. The FirstFire Note is due seven months from the date of issue. FirstFire may, at its option, convert all or a portion of the FirstFire Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share (the “FirstFire Fixed Conversion Price”) for the first 180 calendar days after the issue date. After the 180th day, the conversion price shall equal the lower of (i) the FirstFire Fixed Conversion Price, or (ii) 75% multiplied by the lowest traded price of the common stock during twenty (20) consecutive trading day period immediately preceding the trading day that the Company received a notice of conversion. During the three months ended February 28, 2018, a dilutive issuance occurred. As a result, the FirstFire Fixed Conversion Price was reduced to $0.3125 per share. The Company recognized a discount of $363,000 on the FirstFire Note related to the beneficial conversion feature at the time of issuance. During the three and nine months ended February 28, 2018, $86,362 and $116,445, respectively, of this discount was charged to operations. During the three and nine months ended February 28, 2018, the Company accrued interest in the amount of $4,475 and $5,221 on this note, respectively. | 363,000 | - | ||||||
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 three months ended February 28, 2018, $23,168 of this discount was charged to operations. During the three months ended February 28, 2018, the Company accrued interest in the amount of $2,773 on this note. | 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 three months ended February 28, 2018, $1,612 of this discount was charged to operations. During the three months ended February 28, 2018, the Company accrued interest in the amount of $193 on this note. | 55,000 | - | ||||||
Total - Convertible Notes Payable | $ | 968,000 | $ | 310,000 | ||||
Less: Discount | (826,775 | ) | (57,644 | ) | ||||
Convertible Notes Payable, Net of Discounts | $ | 141,225 | $ | 252,356 | ||||
Total - Convertible Notes Payable, Net of Discounts, Current Portion | $ | 141,225 | $ | 252,356 | ||||
Total - Convertible Notes Payable, Net of Discounts, Long-term Portion | $ | - | $ | - |
Discounts on notes payable amortized to interest expense – 3 months ended February 28, 2018: | 818,254 | 308,606 |
Discounts on notes payable amortized to interest expense – 9 months ended February 28, 2018: | 1,391,110 | 1,197,998 |
Weighted | Weighted | Weighted | ||||||||||||||||||||
average | average | average | ||||||||||||||||||||
Range of | Number of | remaining | exercise | exercise | ||||||||||||||||||
exercise | warrants | contractual | price of | Number of | price of | |||||||||||||||||
Prices | Outstanding | life (years) | outstanding Warrants | warrants Exercisable | exercisable Warrants | |||||||||||||||||
$ | 0.75 | 1,480,000 | 2.99 | $ | 0.75 | 1,480,000 | $ | 0.75 | ||||||||||||||
1,480,000 | 2.99 | $ | 0.75 | 1,480,000 | $ | 0.75 |
Number of Shares | Weighted Average Exercise Price | |||||||
Warrants outstanding at May 31, 2017 | - | $ | - | |||||
Granted | 1,480,000 | $ | 0.75 | |||||
Exercised | - | $ | - | |||||
Cancelled / Expired | - | $ | - | |||||
Warrants outstanding at February 28, 2018 | 1,480,000 | $ | 0.75 |
February 28, 2018 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | 974,175 | $ | 974,175 |
February 28, 2017 | May 31, 2017 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | 167,372 | $ | 167,372 | $ | - | $ | - | $ | 95,276 | $ | 95,276 |
May 31, 2016 | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Liabilities | ||||||||||||||||
Derivative liabilities | $ | - | $ | - | $ | 418,537 | $ | 418,537 |
Derivative | ||||
Liability | ||||
Liabilities Measured at Fair Value | ||||
Balance as of May 31, 2016 | $ | 418,537 | ||
Issuances | 518,720 | |||
Conversions/Redemptions | (122,657 | ) | ||
Extinguishment of debt – related party | (254,114 | ) | ||
Revaluation gain | (393,114 | ) | ||
Balance as of February 28, 2017 | $ | 167,372 |
Derivative | ||||
Liability | ||||
Liabilities Measured at Fair Value | ||||
Balance as of May 31, 2017 | $ | 95,276 | ||
Issuances | 3,091,039 | |||
Conversions/Redemptions | (2,238,003 | ) | ||
Revaluation loss | 25,863 | |||
Balance as of February 28, 2018 | $ | 974,175 |
February 28, 2017 | May 31, 2016 | February 28, 2018 | May 31, 2017 | |||||||||||||
Current Assets | $ | 28,731 | $ | 94,986 | $ | 58,762 | $ | 79,720 | ||||||||
Current Liabilities | $ | 2,185,957 | $ | 1,339,444 | $ | 2,794,538 | $ | 1,826,478 | ||||||||
Working Capital (Deficit) | $ | (2,157,226 | ) | $ | (1,244,458 | ) | $ | (2,735,776 | ) | $ | (1,746,758 | ) |
· | Estimates and assumptions used in the valuation of derivative |
· | We do not have an independent board of directors or audit committee or adequate segregation of duties; 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. |
31.1 | |
31.2 | |
32.1 | |
32.2 | |
101.INS | XBRL Instance Document |
101.SCH | XBRL Taxonomy Extension Schema |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase |
101.DEF | XBRL Taxonomy Extension Definition Linkbase |
101.LAB | XBRL Taxonomy Extension Label Linkbase |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
CLS HOLDINGS USA, INC. | |||
Date: April 16, 2018 | By: | /s/ Jeffrey I. Binder | |
Jeffrey I. Binder | |||
Chairman (Principal Executive | |||
Date: April 16, 2018 | By: | /s/ David Lamadrid | |
David Lamadrid | |||
President and Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |