Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
31-May-14 | Aug. 29, 2014 | Nov. 29, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Laredo Oil, Inc. | ' | ' |
Entity Central Index Key | '0001442492 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-May-14 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--05-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $6,080,000 |
Entity Common Stock, Shares Outstanding | ' | 53,600,013 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2014 | ' | ' |
Balance_Sheets
Balance Sheets (USD $) | 31-May-14 | 31-May-13 |
Current Assets | ' | ' |
Cash and cash equivalents | $88,271 | $107,674 |
Prepaid expenses and other current assets | 48,223 | 35,690 |
Total Current Assets | 136,494 | 143,364 |
TOTAL ASSETS | 136,494 | 143,364 |
Current Liabilities | ' | ' |
Accounts payable | 28,286 | 27,963 |
Accrued payroll liabilities | 482,515 | 222,631 |
Accrued interest | 76,805 | 50,293 |
Deferred management fee revenue | 45,833 | 40,833 |
Warrant liabilities | 636,428 | 140,365 |
Notes payable | 350,000 | 0 |
Total Current Liabilities | 1,619,867 | 482,085 |
Long term notes payable | 0 | 350,000 |
Total Liabilities | 1,619,867 | 832,085 |
Commitments and Contingencies | ' | ' |
Stockholders' Deficit | ' | ' |
Preferred stock: $0.001 par value; 10,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock: $0.0001 par value; 90,000,000 shares authorized; 53,600,013 and 53,500,013 issued and outstanding, respectively | 5,360 | 5,350 |
Additional paid in capital | 6,684,403 | 6,163,086 |
Accumulated deficit | -8,173,136 | -6,857,157 |
Total stockholders' Deficit | -1,483,373 | -688,721 |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $136,494 | $143,364 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | 31-May-14 | 31-May-13 |
Stockholders equity: | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 90,000,000 | 90,000,000 |
Common stock, issued shares | 53,600,013 | 53,500,013 |
Common stock, outstanding shares | 53,600,013 | 53,500,013 |
Statements_of_Operations
Statements of Operations (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Income Statement [Abstract] | ' | ' |
Management fee revenue | $3,471,933 | $2,204,676 |
Direct costs | 3,326,206 | 1,954,574 |
Gross profit | 145,727 | 250,102 |
General, selling and administrative expenses | 607,998 | 546,074 |
Consulting and professional services | 330,334 | 303,251 |
Total Operating Expense | 938,332 | 849,325 |
Operating loss | -792,605 | -599,223 |
Non-operating income (expense) | ' | ' |
Gain (loss) on revaluation of warrant liability | -496,062 | -67,009 |
Interest expense | -27,312 | -21,515 |
Net loss | ($1,315,979) | ($687,747) |
Net loss per share, basic and diluted | ($0.02) | ($0.01) |
Weighted average number of basic and diluted common shares outstanding | 53,609,465 | 53,413,712 |
Statement_of_Stockholders_Defi
Statement of Stockholders' Deficit (USD $) | Common Stock | Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance - Amount at May. 31, 2012 | $5,300 | $0 | $5,735,121 | ($6,169,410) | ($428,989) |
Beginning Balance - Shares at May. 31, 2012 | 53,000,013 | 0 | ' | ' | ' |
Net loss | ' | ' | ' | -687,747 | -687,747 |
Issuance of restricted stock, shares | 500,000 | ' | ' | ' | ' |
Issuance of restricted stock, amount | 50 | ' | 44,674 | ' | 44,724 |
Share based compensation | ' | ' | 383,291 | ' | 383,291 |
Ending Balance, amount at May. 31, 2013 | 5,350 | 0 | 6,163,086 | -6,857,157 | -688,721 |
Ending Balance, shares at May. 31, 2013 | 53,500,013 | 0 | ' | ' | ' |
Net loss | ' | ' | ' | -1,315,979 | -1,315,979 |
Issuance of restricted stock, shares | 150,000 | ' | ' | ' | ' |
Issuance of restricted stock, amount | 15 | ' | 50,679 | ' | 50,694 |
Cancellation of restricted stock, shares | -50,000 | ' | ' | ' | ' |
Cancellation of restricted stock, amount | -5 | ' | -2,078 | ' | -2,083 |
Share based compensation | ' | ' | 472,716 | ' | 472,716 |
Ending Balance, amount at May. 31, 2014 | $5,360 | $0 | $6,684,403 | ($8,173,136) | ($1,483,373) |
Ending Balance, shares at May. 31, 2014 | 53,600,013 | 0 | ' | ' | ' |
Statements_of_Cash_Flows
Statements of Cash Flows (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net loss | ($1,315,979) | ($687,747) |
Adjustments to Reconcile Net Loss to Net Cash Used by Operating Activities | ' | ' |
Stock issued for services | 48,611 | 44,724 |
Share based compensation | 472,716 | 383,291 |
Loss on revaluation of warrant liability | 496,062 | 67,009 |
Increase in prepaid expenses and other current assets | -12,533 | -4,928 |
Increase in accounts payable and accrued liabilities | 286,720 | 190,762 |
Increase in deferred management fee revenue | 5,000 | 0 |
NET CASH USED IN OPERATING ACTIVITIES | -19,403 | -6,889 |
CASH FLOWS FROM INVESTING ACTIVITIES | 0 | 0 |
CASH FLOW FROM FINANCING ACTIVITIES | 0 | 0 |
Net (decrease) in cash and cash equivalents | -19,403 | -6,889 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 107,674 | 114,563 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $88,271 | $107,674 |
1_ORGANIZATION_AND_DESCRIPTION
1. ORGANIZATION AND DESCRIPTION OF BUSINESS | 12 Months Ended |
31-May-14 | |
Accounting Policies [Abstract] | ' |
1. ORGANIZATION AND DESCRIPTION OF BUSINESS | ' |
The accompanying financial statements have been prepared by management of Laredo Oil, Inc. (“the Company”). In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the periods ended May 31, 2014 and for all periods presented have been made. | |
The Company was incorporated under the laws of the State of Delaware on March 31, 2008 under the name of “Laredo Mining, Inc.” with authorized common stock of 90,000,000 shares at $0.0001 par value and authorized preferred stock of 10,000,000 shares at $0.001 par value on October 21, 2009 the name was changed to “Laredo Oil, Inc.” | |
The Company is a management services company managing the acquisition and conventional operation of mature oil fields and the further recovery of stranded oil from those fields using enhanced oil recovery (“EOR”) methods for its sole customer, Stranded Oil Resources Corporation (“SORC”), an indirect, wholly owned subsidiary of Alleghany Corporation (“Alleghany”). | |
From its inception through October 2009, the Company was primarily engaged in acquisition and exploration efforts for mineral properties. After a change in control in October 2009, the Company shifted its focus to locating mature oil fields with the intention of acquiring those oil fields and recovering stranded oil using enhanced oil recovery methods. The Company was unable to raise the capital required to purchase any suitable oil fields. | |
On June 14, 2011, the Company entered into agreements with Stranded Oil Resources Corporation (“SORC”) to seek recovery of stranded crude oil from mature, declining oil fields by using the Enhanced Oil Recovery (“EOR”) method known as Underground Gravity Drainage (“UGD”). Such agreements include license agreements, management services agreements, and other agreements (collectively the “Agreements”). SORC is a subsidiary of Alleghany Capital Corporation (“Alleghany Capital”) which is a subsidiary of Alleghany Corporation (“Alleghany”). | |
The Agreements stipulate that the Company and Mark See, the Company’s Chairman and Chief Executive Officer (“CEO”), will provide to SORC, management services and expertise through exclusive, perpetual license agreements and a management services agreement (the “Management Service Agreement”) with SORC. As consideration for the licenses to SORC, the Company will receive an interest in SORC’s net profits as defined in the Agreements (the “Royalty”). The Management Service Agreement (“MSA”) outlines that the Company will provide the services of key employees (“Key Persons”), including Mark See, in exchange for monthly and quarterly management service fees. The monthly management service fees provide funding for the salaries, benefit costs, and FICA taxes for the Key Persons identified in the MSA. SORC remits payment for the monthly management fees in advance and is payable on the first day of each calendar month. The quarterly management fee was raised from $122,500 per quarter to $137,500 per quarter in August 2013 and is paid on the first day of each calendar quarter, and, as such, $45,833 has been recorded as deferred management fee revenue at May 31, 2014. In addition, SORC will reimburse the Company for monthly expenses incurred by the Key Persons in connection with their rendition of services under the MSA. The Company may submit written requests to SORC for additional funding for payment of the Company’s operating costs and expenses, which SORC, in its sole and absolute discretion, will determine whether or not to fund. As of the filing date, no such additional funding requests have been made. | |
As consideration for the licenses to SORC, the Company will receive a 19.49% interest in SORC net profits as defined in the SORC License Agreement (the “SORC License Agreement”). Under the SORC License Agreement, the Company agreed that a portion of the Royalty equal to at least 2.25% of the net profits (“Incentive Royalty”) be used to fund a long term incentive plan for the benefit of its employees, as determined by the Company’s board of directors. On October 11, 2012, the Laredo Royalty Incentive Plan (the “Plan”) was approved and adopted by the Board and the Incentive Royalty was assigned by the Company to Laredo Royalty Incentive Plan, LLC, a special purpose Delaware limited liability company and wholly owned subsidiary of Laredo Oil, Inc. formed to carry out the purposes of the Plan (the “Plan Entity”). Through May 31, 2014 the subsidiary has had no activity. As a result of the assignment of the Incentive Royalty to the Plan Entity, the Royalty retained by the Company has been reduced from 19.49% to 17.24% subject to reduction to 15% under certain events stipulated in the SORC License Agreement. Additionally, in the event of a SORC initial public offering or certain other defined corporate events, the Company will receive 17.24%, subject to reduction to 15% under the SORC License Agreement, of the SORC common equity or proceeds emanating from the event in exchange for termination of the Royalty. Under certain circumstances regarding termination of exclusivity and license terminations, the Royalty could be reduced to 7.25%. If any Incentive Royalty is funded as a result of those conditions being met, the Company may record compensation expense for the fair value of the Incentive Royalty, once all pertinent factors are known and considered probable. | |
Basic and Diluted Loss per Share | |
The Company’s basic and diluted earnings per share (EPS) amounts have been computed based on the weighted-average number of shares of common stock outstanding for the period. As the Company realized a net loss for the years ended May 31, 2014 and 2013, no potentially dilutive securities were included in the calculation of diluted loss per share as their impact would have been anti-dilutive. |
2_GOING_CONCERN
2. GOING CONCERN | 12 Months Ended |
31-May-14 | |
Text Block [Abstract] | ' |
2. GOING CONCERN | ' |
These financial statements have been prepared on a going concern basis. The Company has no significant operating history as of May 31, 2014 and has a net loss of approximately $1,316,000 for the year ended May 31, 2014. The Company entered into the Agreements with SORC to fund operations and to provide working capital. However, there is no assurance that in the future such financing will be available to meet the Company’s needs. | |
Management has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond. These steps include (a) providing services and expertise under the Agreements to expand operations; and (b) controlling overhead and expenses. In that regard, the Company has worked to attract and retain key personnel with significant experience in the industry to enhance the quality and breadth of the services it provides. At the same time, in an effort to control costs, the Company has required a number of its personnel to multi-task and cover a wider range of responsibilities in an effort to restrict the growth of the Company’s headcount at a time of expanding demand for its services under the Management Services Agreement. Further, the Company works closely with SORC to obtain its approval in advance of committing to material costs and expenditures in order to keep the Company’s expenses in line with the management fee revenue. There can be no assurance that the Company can successfully accomplish these steps and it is uncertain that the Company will achieve a profitable level of operations and obtain additional financing. There can be no assurance that any additional financing will be available to the Company on satisfactory terms and conditions, if at all. | |
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern. |
3_SUMMARY_OF_SIGNIFICANT_ACCOU
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
USE OF ESTIMATES | |||||||||||||||||
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. | |||||||||||||||||
REVENUE RECOGNITION | |||||||||||||||||
Revenue is recognized from services when it is realized or realizable and earned. Management fee revenue is considered realized and earned when persuasive evidence of an arrangement exists, the service has been performed, the sales price is fixed and determinable, no significant unfulfilled obligation exists, and collection is reasonably assured. | |||||||||||||||||
CASH AND CASH EQUIVALENTS | |||||||||||||||||
All highly liquid investments with a maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of May 31, 2014 and 2013. At times, the Company maintains cash balances deposited at its financial institution that exceed FDIC insured limits. | |||||||||||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | |||||||||||||||||
The Company financed directors’ and officers’ insurance and is amortizing the expense over the 12 month contract life. | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | |||||||||||||||||
The Company's financial instruments as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825-10-50, Financial Instruments, include cash, trade accounts receivable, accounts payable, accrued liabilities, warrant liabilities and notes payable. All instruments, with the exception of the warrant liabilities which are measured at fair value, are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at May 31, 2014. | |||||||||||||||||
Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the fair value of notes payable approximate their carrying value. | |||||||||||||||||
FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FASB ASC 820 provides a framework for measuring fair value, establishes a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets. | |||||||||||||||||
The three level fair value hierarchies for disclosure of fair value measurements defined by FASB ASC 820 are as follows: | |||||||||||||||||
Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |||||||||||||||||
Level 2 – Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. | |||||||||||||||||
Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under level 3 generally involves a significant degree of judgment from management. | |||||||||||||||||
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. | |||||||||||||||||
The Company has warrant liabilities which are measured at fair value on a recurring basis at May 31, 2014 and 2013. The Company recorded a loss on revaluation of warrant liability of $496,062 and $67,009 for the years ended May 31, 2014 and 2013, respectively. The Company measures the fair value of the warrant liabilities using the Black Scholes method. Inputs used to determine fair value under this method include the Company’s stock price, volatility, risk free interest rate and expected remaining life as disclosed in Note 6. | |||||||||||||||||
The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of May 31, 2014 and 2013: | |||||||||||||||||
Fair Value Measurements on a Recurring Basis | |||||||||||||||||
Quoted prices in active markets | Other observable inputs | Unobservable inputs | |||||||||||||||
Current Liability | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Warrant Liabilities – May 31, 2014 | $ | - | $ | 636,428 | $ | - | $ | 636,428 | |||||||||
Warrant Liabilities – May 31, 2013 | $ | - | $ | 140,365 | $ | - | $ | 140,365 | |||||||||
There were no assets or liabilities measured at fair value on a non-recurring basis as of May 31, 2014 or 2013. | |||||||||||||||||
SHARE BASED EXPENSES | |||||||||||||||||
FASB ASC 718, Compensation - Stock Compensation prescribes accounting and reporting standards for all stock-based payment awards to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. Stock-based payment awards may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity. | |||||||||||||||||
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date. | |||||||||||||||||
INCOME TAXES | |||||||||||||||||
The Company accounts for income taxes by the asset and liability method in accordance with FASB ASC 740, Income Taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. | |||||||||||||||||
In addition, the Company utilizes the two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. | |||||||||||||||||
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | |||||||||||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, its final standard on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard clarifies that a performance target that affects vesting and that can be achieved after the requisite period service period, should be treated as a performance condition. The update is effective for financial statement periods beginning after December 15, 2015, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on its financial condition, results of operations, or cash flows of the Company. | |||||||||||||||||
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 financial statements. |
4_LOSS_PER_SHARE
4. LOSS PER SHARE | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
4. LOSS PER SHARE | ' | ||||||||
Basic and diluted earnings per share is computed by dividing net loss available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted loss per share gives effect to all dilutive potential common shares outstanding during the period. Dilutive loss per share excludes all potential common shares if their effect is anti-dilutive. As of both May 31, 2014 and 2013, warrants to purchase 7,119,501 shares of common stock and options to purchase 8,400,000 of common stock were not included in the computation of diluted net loss per share because they were anti-dilutive. | |||||||||
For the Year Ended | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Numerator - net loss attributable to | |||||||||
common stockholders | $ | (1,315,979 | ) | $ | (687,747 | ) | |||
Denominator - weighted average | |||||||||
number of common shares outstanding | 53,609,465 | 53,413,712 | |||||||
Basic and diluted loss | |||||||||
per common share | $ | (0.02 | ) | $ | (0.01 | ) |
5_RELATED_PARTY_TRANSACTIONS
5. RELATED PARTY TRANSACTIONS | 12 Months Ended |
31-May-14 | |
Related Party Transactions [Abstract] | ' |
5. RELATED PARTY TRANSACTIONS | ' |
Transactions between related parties are considered to be related party transactions even though they may not be given accounting recognition. FASB ASC 850, Related Party Disclosures (“FASB ASC 850”) requires that transactions with related parties that would make a difference in decision making shall be disclosed so that users of the financial statements can evaluate their significance. Related party transactions typically occur within the context of the following relationships: | |
· Affiliates of the entity; | |
· Entities for which investments in their equity securities is typically accounted for under the equity method by the investing entity; | |
· Trusts for the benefit of employees; | |
· Principal owners of the entity and members of their immediate families; | |
· Management of the entity and members of their immediate families; | |
Other parties that can significantly influence the management or operating policies of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties might be prevented from fully pursuing its own separate interests. | |
SORC and Alleghany are considered related parties under FASB ASC 850. All management fee revenue reported by the Company for the years ended May 31, 2014 and 2013 is generated from charges to SORC. All outstanding notes payable at May 31, 2014 and 2013, respectively are held by Alleghany. See Note 7. |
6_STOCKHOLDERS_DEFICIT
6. STOCKHOLDERS' DEFICIT | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Equity [Abstract] | ' | ||||||||
6. STOCKHOLDERS' DEFICIT | ' | ||||||||
Share Based Compensation | |||||||||
Effective November 6, 2011, the holders of a majority of the shares of common stock approved the Plan to reserve 10,000,000 shares of common stock for issuance to eligible recipients. Shares under the plan can be issued in the form of options, restricted stock, and other forms of equity securities. The Company’s board of directors has the discretion to set the amount and vesting period of award grants. All shares available for issuance under the Plan have been granted as of May 31, 2014. | |||||||||
The Black-Scholes option pricing model is used to estimate the fair value of options granted under our stock incentive plan. | |||||||||
The following table summarizes share-based compensation: | |||||||||
Year Ended | |||||||||
31-May-14 | 31-May-13 | ||||||||
Share-based compensation: | |||||||||
General, selling and administrative expenses | $ | 435,254 | $ | 383,291 | |||||
Consulting and professional services | 86,073 | 44,724 | |||||||
521,327 | 428,015 | ||||||||
Share-based compensation by type of award: | |||||||||
Stock options | 472,716 | 383,291 | |||||||
Restricted stock | 48,611 | 44,724 | |||||||
$ | 521,327 | $ | 428,015 | ||||||
Stock Options | |||||||||
On August 8, 2013, the Company granted 1,540,000 stock options to employees with an exercise price of $0.25 per share, the fair market value on the date of grant. The options vest monthly over three years beginning September 1, 2013 and expire on August 8, 2023. The grant date fair value of this employee stock option grant amounted to approximately $380,000. The assumptions used in calculating these values were based on an expected term of 7.0 years, volatility of 187% and a 1.98% risk free interest rate at the date of grant. | |||||||||
On November 22, 2013, the Company granted 1,200,000 stock options to employees with an exercise price of $0.36 per share, the fair market value on the date of grant. The options vest monthly over three years beginning December 1, 2013 and expire on November 22, 2023. The grant date fair value of this employee stock option grant amounted to approximately $427,000. The assumptions used in calculating these values were based on an expected term of 7.0 years, volatility of 186% and a 2.1% risk free interest rate at the date of grant. On November 22, 2013, the Company reduced the number of stock options previously granted to Mr. See with an exercise price of $2.00, resulting in a forfeiture of 400,000 stock options. As a result of this forfeiture, the Company recorded a reversal of compensation cost of approximately $40,000. | |||||||||
On April 11, 2014, the Company granted 250,000 stock options to a consultant with an exercise price of $0.27 per share, the fair market value on the date of grant. The options vest monthly over three years beginning May 1, 2014 and expire on April 11, 2024. The grant date fair value of this employee stock option grant amounted to approximately $67,000. The assumptions used in calculating these values were based on an expected term of 7.0 years, volatility of 183% and a 2.1% risk free interest rate at the date of grant. On April 11, 2014, the Company reduced the number of stock options previously granted to Mr. See with an exercise price of $2.00, resulting in a forfeiture of 200,000 stock options. As a result of this forfeiture, the Company recorded a reversal of compensation cost of approximately $25,000. | |||||||||
For the years ended May 31, 2014 and 2013, respectively, $472,716 (for 2,178,611 vested shares) and $383,291 (for 2,003,333 vested shares) was recognized as expense related to the stock options. As of May 31, 2014, $952,913 in expense was not recognized for 3,617,778 unvested shares with a weighted average vesting period of 0.8 years. As of May 31, 2013, $664,827 of expense was not recognized for 3,383,889 unvested shares with a weighted average vesting period of 1.7 years. | |||||||||
The following table summarizes information about options granted during the years ended May 31, 2014 and 2013: | |||||||||
Number of | Weighted | ||||||||
Shares | Average | ||||||||
Exercise Price ($) | |||||||||
Balance, May 31, 2012 | - | $ | - | ||||||
Options granted and assumed | 6,010,000 | 1.1 | |||||||
Options expired | - | - | |||||||
Options cancelled, forfeited | - | - | |||||||
Options exercised | - | - | |||||||
Balance, May 31, 2013 | 6,010,000 | $ | 1.1 | ||||||
Options granted and assumed | 2,990,000 | 0.3 | |||||||
Options expired | - | - | |||||||
Options cancelled, forfeited | (600,000 | ) | $ | 2 | |||||
Options exercised | - | - | |||||||
Balance, May 31, 2014 | 8,400,000 | $ | 0.75 | ||||||
All stock options are exercisable upon vesting. | |||||||||
As of May 31, 2014 and 2013, 8,400,000 and 6,010,000 options have been granted at a weighted average exercise price of $0.75 and $1.10, respectively. | |||||||||
Restricted Stock | |||||||||
On August 8, 2013, the three independent board members were each granted 50,000 restricted shares which vest in equal annual installments over three years. In the fourth quarter of 2014, one of the independent board members resigned from their board position resulting in a forfeiture of 50,000 restricted shares. | |||||||||
The fair value of the restricted stock granted is the market value as of the respective grant date since the restricted stock is granted at no cost to the directors. The grant date fair value of restricted stock granted during the first quarter of fiscal year 2014 was $37,500, using $0.25 per share. | |||||||||
In August 2012, Laredo Oil granted 500,000 shares of restricted stock to an independent board member at a grant date fair value of $65,000, using $0.13 per share. The shares vest over three years. | |||||||||
The Company has granted 1.6 million and 1.5 million shares of restricted stock as of May 31, 2014 and 2013, respectively. As of May 31, 2014, a total of 1,166,667 shares vested. The Company recognized $48,611 and $44,722 in expense for the years ended May 31, 2014 and 2013, respectively. The unvested portion of the shares amounts to $43,333 and is expected to be recognized as expense over the next three fiscal years. | |||||||||
Warrants | |||||||||
No warrants have been granted, cancelled or exercised during the years ended May 31, 2014 and 2013 as follows: | |||||||||
Number of | Weighted | ||||||||
Shares | Average | ||||||||
Exercise Price | |||||||||
Balance, May 31, 2012 | 7,119,501 | $ | 0.59 | ||||||
Warrants granted and assumed | — | — | |||||||
Warrants expired | — | — | |||||||
Warrants cancelled, forfeited | — | — | |||||||
Warrants exercised | — | — | |||||||
Balance, May 31, 2013 | 7,119,501 | $ | 0.59 | ||||||
Warrants granted and assumed | — | — | |||||||
Warrants expired | — | — | |||||||
Warrants cancelled, forfeited | — | — | |||||||
Warrants exercised | — | — | |||||||
Balance, May 31, 2014 | 7,119,501 | $ | 0.59 | ||||||
All warrants are exercisable as of May 31, 2014. | |||||||||
During fiscal year 2011, the Company issued warrants to purchase 975,000 shares of common stock in connection with a stock purchase agreement. These warrants are exercisable for five years from the date of the Company’s Private Placement. The exercise price of each warrant is equal to the lesser of the stock price in a future financing arrangement or $0.25. Accordingly, these warrants contain anti-dilution provisions that adjust the exercise price of the warrants in the event additional shares of common stock or securities convertible into common stock are issued by the Company at a price less than the then applicable exercise price of the warrants. Pursuant to FASB ASC 815-40, Derivatives and Hedging, these warrants are treated as a liability measured at fair value at inception, with the calculated increase or decrease in fair value each quarter being recognized in the Statement of Operations. The fair value of the warrants was determined during fiscal years ending May 31, 2014 and 2013 using the Black-Scholes option pricing model based on the following weighted average assumptions: | |||||||||
2014 | 2013 | ||||||||
Risk-free interest rates | 0.29 | % | 1.21 | % | |||||
Contractual life | 1.6 years | 1.3 years | |||||||
Expected volatility | 188.5 | % | 184.9 | % | |||||
Dividend yield | 0 | % | 0 | % |
7_NOTES_PAYABLE
7. NOTES PAYABLE | 12 Months Ended |
31-May-14 | |
Debt Disclosure [Abstract] | ' |
7. NOTES PAYABLE | ' |
During the fiscal year ended May 31, 2011, the Company entered into two Loan Agreements with Alleghany for a combined available borrowing limit of $350,000. The notes accrue interest on the outstanding principal of $350,000 at the rate of 6% per annum. . As of May 31, 2014, accrued interest totaling $76,805 is recorded in current liabilities. The interest is payable in either cash or in kind. The notes have been amended and restated and now have a maturity date of December 31, 2014 and are classified as notes payable as of May 31, 2014. The loan agreements require any stock issuances for cash be utilized to pay down the outstanding loan balance unless written consent is obtained from Alleghany. |
8_PROVISION_FOR_INCOME_TAXES
8. PROVISION FOR INCOME TAXES | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
8. PROVISION FOR INCOME TAXES | ' | ||||||||
We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. Per the authoritative literature when it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carryforwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carryforward period. | |||||||||
The Company has not taken any tax positions that, if challenged, would have a material effect on the financial statements for the twelve-months ended May 31, 2014 and 2013. The Company’s tax returns for the fiscal years ended May 31 of 2008 to 2013 remain subject to examination by the tax authorities. | |||||||||
The components of the Company's deferred tax asset as of May 31, 2014 and 2013 are as follows: | |||||||||
2014 | 2013 | ||||||||
Net operating loss | $ | 472,429 | $ | 451,781 | |||||
Other | 327,524 | 158,378 | |||||||
Valuation allowance | (799,953 | ) | (610,159 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
A reconciliation of income taxes computed at the statutory rate to the income tax amount recorded is as follows: | |||||||||
2014 | 2013 | ||||||||
Tax at statutory rate (34%) | $ | 447,433 | $ | 233,834 | |||||
Effect of non-deductible permanent differences | (257,639 | ) | (71,729 | ) | |||||
Other | 0 | (70,052 | ) | ||||||
(Increase) decrease in valuation allowance | (189,794 | ) | (92,053 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
The net federal operating loss carry forward will expire between 2028 and 2034. This carry forward may be limited upon the consummation of a business combination under IRC Section 381. |
9_OFFICE_LEASES
9. OFFICE LEASES | 12 Months Ended | ||||
31-May-14 | |||||
Leases [Abstract] | ' | ||||
9. OFFICE LEASES | ' | ||||
The Company has leases for office space in Colorado and Montana expiring on various dates through September 2015. Future minimum lease payments to be paid under these lease agreements for the years ending May 31 are as follows: | |||||
2015 | $ | 62,987 | |||
2016 | 9,454 | ||||
$ | 72,441 | ||||
Rent expense amounted to $56,801 and $39,462 for the years ending May 31, 2014 and 2013, respectively. |
3_SUMMARY_OF_SIGNIFICANT_ACCOU1
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
USE OF ESTIMATES | ' | ||||||||||||||||
Management uses estimates and assumptions in preparing these financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could differ from those estimates. | |||||||||||||||||
REVENUE RECOGNITION | ' | ||||||||||||||||
Revenue is recognized from services when it is realized or realizable and earned. Management fee revenue is considered realized and earned when persuasive evidence of an arrangement exists, the service has been performed, the sales price is fixed and determinable, no significant unfulfilled obligation exists, and collection is reasonably assured. | |||||||||||||||||
CASH AND CASH EQUIVALENTS | ' | ||||||||||||||||
All highly liquid investments with a maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of May 31, 2014 and 2013. At times, the Company maintains cash balances deposited at its financial institution that exceed FDIC insured limits. | |||||||||||||||||
PREPAID EXPENSES AND OTHER CURRENT ASSETS | ' | ||||||||||||||||
The Company financed directors’ and officers’ insurance and is amortizing the expense over the 12 month contract life. | |||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||
The Company's financial instruments as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 825-10-50, Financial Instruments, include cash, trade accounts receivable, accounts payable, accrued liabilities, warrant liabilities and notes payable. All instruments, with the exception of the warrant liabilities which are measured at fair value, are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at May 31, 2014. | |||||||||||||||||
Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the fair value of notes payable approximate their carrying value. | |||||||||||||||||
FASB ASC 820, Fair Value Measurements (“FASB ASC 820”), defines fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. FASB ASC 820 provides a framework for measuring fair value, establishes a three level hierarchy for fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date and requires consideration of the counterparty’s creditworthiness when valuing certain assets. | |||||||||||||||||
The three level fair value hierarchies for disclosure of fair value measurements defined by FASB ASC 820 are as follows: | |||||||||||||||||
Level 1 – Unadjusted, quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. | |||||||||||||||||
Level 2 – Inputs, other than quoted prices in active markets, that are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. | |||||||||||||||||
Level 3 – Prices or valuations that require unobservable inputs that are both significant to the fair value measurement and unobservable. Valuation under level 3 generally involves a significant degree of judgment from management. | |||||||||||||||||
A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. | |||||||||||||||||
The Company has warrant liabilities which are measured at fair value on a recurring basis at May 31, 2014 and 2013. The Company recorded a loss on revaluation of warrant liability of $496,062 and $67,009 for the years ended May 31, 2014 and 2013, respectively. The Company measures the fair value of the warrant liabilities using the Black Scholes method. Inputs used to determine fair value under this method include the Company’s stock price, volatility, risk free interest rate and expected remaining life as disclosed in Note 6. | |||||||||||||||||
The following table presents the fair value hierarchy for those assets measured at fair value on a recurring basis as of May 31, 2014 and 2013: | |||||||||||||||||
Fair Value Measurements on a Recurring Basis | |||||||||||||||||
Quoted prices in active markets | Other observable inputs | Unobservable inputs | |||||||||||||||
Current Liability | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Warrant Liabilities – May 31, 2014 | $ | - | $ | 636,428 | $ | - | $ | 636,428 | |||||||||
Warrant Liabilities – May 31, 2013 | $ | - | $ | 140,365 | $ | - | $ | 140,365 | |||||||||
There were no assets or liabilities measured at fair value on a non-recurring basis as of May 31, 2014 or 2013. | |||||||||||||||||
SHARE BASED EXPENSES | ' | ||||||||||||||||
FASB ASC 718, Compensation - Stock Compensation prescribes accounting and reporting standards for all stock-based payment awards to employees, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. Stock-based payment awards may be classified as either equity or liabilities. The Company should determine if a present obligation to settle the share-based payment transaction in cash or other assets exists. A present obligation to settle in cash or other assets exists if: (a) the option to settle by issuing equity instruments lacks commercial substance or (b) the present obligation is implied because of an entity's past practices or stated policies. If a present obligation exists, the transaction should be recognized as a liability; otherwise, the transaction should be recognized as equity. | |||||||||||||||||
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of FASB ASC 505-50, Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees shall be based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction should be determined at the earlier of performance commitment date or performance completion date. | |||||||||||||||||
INCOME TAXES | ' | ||||||||||||||||
The Company accounts for income taxes by the asset and liability method in accordance with FASB ASC 740, Income Taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current year. Deferred income tax assets and liabilities are recognized in the current year for temporary differences between the tax and accounting bases of assets and liabilities as well as for the benefit of losses available to be carried forward to future years for tax purposes that are likely to be realized. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized. | |||||||||||||||||
In addition, the Company utilizes the two-step approach to recognizing and measuring uncertain tax positions taken or expected to be taken in a tax return. The first step is to determine if the weight of available evidence indicates that it is more likely than not that the tax position will be sustained in an audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. The Company recognizes interest and penalties accrued on unrecognized tax benefits within general and administrative expense. To the extent that accrued interest and penalties do not ultimately become payable, amounts accrued will be reduced and reflected as a reduction in general and administrative expenses in the period that such determination is made. | |||||||||||||||||
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | ' | ||||||||||||||||
In June 2014, the FASB issued ASU 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period, its final standard on accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The standard clarifies that a performance target that affects vesting and that can be achieved after the requisite period service period, should be treated as a performance condition. The update is effective for financial statement periods beginning after December 15, 2015, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on its financial condition, results of operations, or cash flows of the Company. | |||||||||||||||||
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 financial statements. |
3_SUMMARY_OF_SIGNIFICANT_ACCOU2
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
31-May-14 | |||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||
Fair Value Measurements on a Recurring Basis | ' | ||||||||||||||||
Quoted prices in active markets | Other observable inputs | Unobservable inputs | |||||||||||||||
Current Liability | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Warrant Liabilities – May 31, 2014 | $ | - | $ | 636,428 | $ | - | $ | 636,428 | |||||||||
Warrant Liabilities – May 31, 2013 | $ | - | $ | 140,365 | $ | - | $ | 140,365 |
4_LOSS_PER_SHARE_Tables
4. LOSS PER SHARE (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Earnings Per Share [Abstract] | ' | ||||||||
Schedule of Earnings Per Share, Basic and Diluted | ' | ||||||||
For the Year Ended | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Numerator - net loss attributable to | |||||||||
common stockholders | $ | (1,315,979 | ) | $ | (687,747 | ) | |||
Denominator - weighted average | |||||||||
number of common shares outstanding | 53,609,465 | 53,413,712 | |||||||
Basic and diluted loss | |||||||||
per common share | $ | (0.02 | ) | $ | (0.01 | ) |
6_STOCKHOLDERS_DEFICIT_Tables
6. STOCKHOLDERS' DEFICIT (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Stockholders Deficit Tables | ' | ||||||||
Share-based compensation | ' | ||||||||
Year Ended | |||||||||
31-May-14 | 31-May-13 | ||||||||
Share-based compensation: | |||||||||
General, selling and administrative expenses | $ | 435,254 | $ | 383,291 | |||||
Consulting and professional services | 86,073 | 44,724 | |||||||
521,327 | 428,015 | ||||||||
Share-based compensation by type of award: | |||||||||
Stock options | 472,716 | 383,291 | |||||||
Restricted stock | 48,611 | 44,724 | |||||||
$ | 521,327 | $ | 428,015 | ||||||
Summary of options | ' | ||||||||
Number of | Weighted | ||||||||
Shares | Average | ||||||||
Exercise Price ($) | |||||||||
Balance, May 31, 2012 | - | $ | - | ||||||
Options granted and assumed | 6,010,000 | 1.1 | |||||||
Options expired | - | - | |||||||
Options cancelled, forfeited | - | - | |||||||
Options exercised | - | - | |||||||
Balance, May 31, 2013 | 6,010,000 | $ | 1.1 | ||||||
Options granted and assumed | 2,990,000 | 0.3 | |||||||
Options expired | - | - | |||||||
Options cancelled, forfeited | (600,000 | ) | $ | 2 | |||||
Options exercised | - | - | |||||||
Balance, May 31, 2014 | 8,400,000 | $ | 0.75 | ||||||
Summary of warrants | ' | ||||||||
Number of | Weighted | ||||||||
Shares | Average | ||||||||
Exercise Price | |||||||||
Balance, May 31, 2012 | 7,119,501 | $ | 0.59 | ||||||
Warrants granted and assumed | — | — | |||||||
Warrants expired | — | — | |||||||
Warrants cancelled, forfeited | — | — | |||||||
Warrants exercised | — | — | |||||||
Balance, May 31, 2013 | 7,119,501 | $ | 0.59 | ||||||
Warrants granted and assumed | — | — | |||||||
Warrants expired | — | — | |||||||
Warrants cancelled, forfeited | — | — | |||||||
Warrants exercised | — | — | |||||||
Balance, May 31, 2014 | 7,119,501 | $ | 0.59 | ||||||
Stock options valuation assumptions | ' | ||||||||
2014 | 2013 | ||||||||
Risk-free interest rates | 0.29 | % | 1.21 | % | |||||
Contractual life | 1.6 years | 1.3 years | |||||||
Expected volatility | 188.5 | % | 184.9 | % | |||||
Dividend yield | 0 | % | 0 | % |
8_PROVISION_FOR_INCOME_TAXES_T
8. PROVISION FOR INCOME TAXES (Tables) | 12 Months Ended | ||||||||
31-May-14 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Components of deferred tax asset | ' | ||||||||
2014 | 2013 | ||||||||
Net operating loss | $ | 472,429 | $ | 451,781 | |||||
Other | 327,524 | 158,378 | |||||||
Valuation allowance | (799,953 | ) | (610,159 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
Schedule of Effective Income Tax Rate Reconciliation | ' | ||||||||
2014 | 2013 | ||||||||
Tax at statutory rate (34%) | $ | 447,433 | $ | 233,834 | |||||
Effect of non-deductible permanent differences | (257,639 | ) | (71,729 | ) | |||||
Other | 0 | (70,052 | ) | ||||||
(Increase) decrease in valuation allowance | (189,794 | ) | (92,053 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
9_OFFICE_LEASES_Tables
9. OFFICE LEASES (Tables) | 12 Months Ended | ||||
31-May-14 | |||||
Leases [Abstract] | ' | ||||
Future minimum lease payments | ' | ||||
2015 | $ | 62,987 | |||
2016 | 9,454 | ||||
$ | 72,441 |
1_ORGANIZATION_AND_DESCRIPTION1
1. ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) (USD $) | 31-May-14 | 31-May-13 |
Organization And Description Of Business Details Narrative | ' | ' |
Deferred management fee revenue | $45,833 | $40,833 |
2_GOING_CONCERN_Details_Narrat
2. GOING CONCERN (Details Narrative) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Going Concern Details Narrative | ' | ' |
Net loss | ($1,315,979) | ($687,747) |
3_SUMMARY_OF_SIGNIFICANT_ACCOU3
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 31-May-14 | 31-May-13 |
Warrant Liabilities | $636,428 | $140,365 |
Level 1 | ' | ' |
Warrant Liabilities | 0 | 0 |
Level 2 | ' | ' |
Warrant Liabilities | 636,428 | 140,365 |
Level 3 | ' | ' |
Warrant Liabilities | $0 | $0 |
3_SUMMARY_OF_SIGNIFICANT_ACCOU4
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' |
Loss (gain) on revaluation of warrant liability | $496,062 | $67,009 |
4_LOSS_PER_SHARE_Details
4. LOSS PER SHARE (Details) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Earnings Per Share [Abstract] | ' | ' |
Numerator - net loss attributable to common stockholders | ($1,315,979) | ($687,747) |
Denominator - weighted average number of common shares outstanding | 53,609,465 | 53,413,712 |
Basic and diluted loss per common share | ($0.02) | ($0.01) |
4_LOSS_PER_SHARE_Details_Narra
4. LOSS PER SHARE (Details Narrative) | 12 Months Ended |
31-May-14 | |
Warrants | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 7,119,501 |
Stock options | ' |
Antidilutive Securities Excluded from Computation of Earnings Per Share | 8,400,000 |
6_STOCKHOLDERS_DEFICIT_Details
6. STOCKHOLDERS' DEFICIT (Details) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Share-based compensation | $521,327 | $428,015 |
General, selling and administrative expenses | ' | ' |
Share-based compensation | 435,254 | 383,291 |
Consulting and professional services | ' | ' |
Share-based compensation | 86,073 | 44,724 |
Stock options | ' | ' |
Share-based compensation | 472,716 | 383,291 |
Restricted stock | ' | ' |
Share-based compensation | $48,611 | $44,724 |
6_STOCKHOLDERS_DEFICIT_Details1
6. STOCKHOLDERS' DEFICIT (Details 1) (Stock options, USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Stock options | ' | ' |
Number of Shares | ' | ' |
Options/Warrants Outstanding, Beginning | 6,010,000 | 0 |
Options/Warrants granted and assumed | 2,990,000 | 6,010,000 |
Options/Warrants expired | 0 | 0 |
Options/Warrants cancelled, forfeited | -600,000 | 0 |
Options/Warrants exercised | 0 | 0 |
Options/Warrants Outstanding, Ending | 8,400,000 | 6,010,000 |
Weighted Average Exercise Price | ' | ' |
Weighted Average Exercise Price, Beginning | $1.10 | $0 |
Options/Warrants granted and assumed, Weighted Average Exercise Price | $0.30 | $1.10 |
Options/Warrants expired, Weighted Average Exercise Price | $0 | $0 |
Options/Warrants cancelled, forfeited, Weighted Average Exercise Price | $2 | $0 |
Options/Warrants exercised, Weighted Average Exercise Price | $0 | $0 |
Weighted Average Exercise Price, Ending | $0.75 | $1.10 |
6_STOCKHOLDERS_DEFICIT_Details2
6. STOCKHOLDERS' DEFICIT (Details 2) (Warrants, USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Warrants | ' | ' |
Number of Shares | ' | ' |
Options/Warrants Outstanding, Beginning | 7,119,501 | 7,119,501 |
Options/Warrants granted and assumed | 0 | 0 |
Options/Warrants expired | 0 | 0 |
Options/Warrants cancelled, forfeited | 0 | 0 |
Options/Warrants exercised | 0 | 0 |
Options/Warrants Outstanding, Ending | 7,119,501 | 7,119,501 |
Weighted Average Exercise Price | ' | ' |
Weighted Average Exercise Price, Beginning | $0.59 | $0.59 |
Options/Warrants granted and assumed, Weighted Average Exercise Price | $0 | $0 |
Options/Warrants expired, Weighted Average Exercise Price | $0 | $0 |
Options/Warrants cancelled, forfeited, Weighted Average Exercise Price | $0 | $0 |
Options/Warrants exercised, Weighted Average Exercise Price | $0 | $0 |
Weighted Average Exercise Price, Ending | $0.59 | $0.59 |
6_STOCKHOLDERS_DEFICIT_Details3
6. STOCKHOLDERS' DEFICIT (Details 3) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Stockholders Deficit Tables | ' | ' |
Risk-free interest rate | 0.29% | 1.21% |
Contractual life | '1 year 7 months 6 days | '1 year 3 months 18 days |
Expected volatility | 188.50% | 184.90% |
Dividend yield | 0.00% | 0.00% |
7_NOTES_PAYABLE_Details_Narrat
7. NOTES PAYABLE (Details Narrative) (USD $) | 31-May-14 | 31-May-13 |
Notes Payable Details Narrative | ' | ' |
Notes payable | $350,000 | $0 |
Accrued interest | $76,805 | $50,293 |
8_PROVISION_FOR_INCOME_TAXES_D
8. PROVISION FOR INCOME TAXES (Details) (USD $) | 31-May-14 | 31-May-13 |
Income Tax Disclosure [Abstract] | ' | ' |
Net operating loss | $472,429 | $451,781 |
Other | 327,524 | 158,378 |
Valuation allowance | -799,953 | -610,159 |
Net deferred tax asset | $0 | $0 |
8_PROVISION_FOR_INCOME_TAXES_D1
8. PROVISION FOR INCOME TAXES (Details 1) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Income Tax Disclosure [Abstract] | ' | ' |
Tax at statutory rate (34%) | $447,433 | $233,834 |
Effect of non-deductible permanent differences | -257,639 | -71,729 |
Other | 0 | -70,052 |
(Increase) decrease in valuation allowance | -189,794 | -92,053 |
Net deferred tax asset | $0 | $0 |
8_PROVISION_FOR_INCOME_TAXES_D2
8. PROVISION FOR INCOME TAXES (Details Narrative) | 12 Months Ended |
31-May-14 | |
Provision For Income Taxes Details Narrative | ' |
Operating loss carry forward, expiration | 'The net federal operating loss carry forward will expire between 2028 and 2034. |
9_OFFICE_LEASES_Details
9. OFFICE LEASES (Details) (USD $) | 31-May-14 |
Leases [Abstract] | ' |
2015 | $62,987 |
2016 | 9,454 |
Operating Leases, Future Minimum Payments Due | $72,441 |
9_OFFICE_LEASES_Details_Narrat
9. OFFICE LEASES (Details Narrative) (USD $) | 12 Months Ended | |
31-May-14 | 31-May-13 | |
Office Leases Details Narrative | ' | ' |
Rent expense | $56,801 | $39,462 |