0001511164-16-000633.txt : 20160128 0001511164-16-000633.hdr.sgml : 20160128 20160128082637 ACCESSION NUMBER: 0001511164-16-000633 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 89 CONFORMED PERIOD OF REPORT: 20151130 FILED AS OF DATE: 20160128 DATE AS OF CHANGE: 20160128 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Mantra Venture Group Ltd. CENTRAL INDEX KEY: 0001413891 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 260592672 FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-53461 FILM NUMBER: 161366696 BUSINESS ADDRESS: STREET 1: #562 ? 800 15355 24TH AVENUE CITY: SURREY STATE: A1 ZIP: V4A 2H9 BUSINESS PHONE: (604) 560-1503 MAIL ADDRESS: STREET 1: #562 ? 800 15355 24TH AVENUE CITY: SURREY STATE: A1 ZIP: V4A 2H9 10-Q/A 1 mantraform10qq2nov3015w02932.htm FORM 10-Q/A Mantra - Form 10-Q (Q1 Aug. 31/14) (W0254456).DOCX

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q/A

Amendment No. 1

(Mark One)

[X]

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

For the quarterly period ended

November 30, 2015

 

or

[  ]

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

 

to

 

Commission File Number

000-53461

MANTRA VENTURE GROUP LTD.

(Exact name of registrant as specified in its charter)

Nevada

 

26-0592672

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

#562 - 800 15355 24th Avenue, Surrey, British Columbia, Canada

V4A 2H9

(Address of principal executive offices)

(Zip Code)

(604) 560-1503

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

[X]

YES

[  ]

NO

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

 

[X]

YES

[  ]

NO

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

Large accelerated filer

[  ]

Accelerated filer

[  ]

Non-accelerated filer

[  ]

(Do not check if a smaller reporting company)

Smaller reporting company

[X]

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[  ]

YES

[X]

NO



1



APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

 

[  ]

YES

[  ]

NO

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

80,138,619 common shares issued and outstanding as of January 20, 2016





2


Explanatory Note

Our company is filing this Form 10-Q/A for the quarter ended November 30, 2015 to include the certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, now filed and furnished, respectively, as exhibits to the Form 10-Q/A, which were erroneously omitted from the original filing.







3


Table of Contents

PART I - FINANCIAL INFORMATION

5

 

 

     Item 1. Financial Statements

5

 

 

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

7

 

 

     Item 3. Quantitative and Qualitative Disclosures About Market Risk

17

 

 

     Item 4. Controls and Procedures

18

 

 

PART II - OTHER INFORMAITON

19

 

 

     Item 1. Legal Proceedings

19

 

 

     Item 1A. Risk Factors

19

 

 

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

19

 

 

     Item 3. Defaults Upon Senior Securities

19

 

 

     Item 4. Mine Safety Disclosures

19

 

 

     Item 5. Other Information

20

 

 

     Item 6. Exhibits

20

 

 

SIGNATURES

22





4



PART I – FINANCIAL INFORMATION

Item 1.

Financial Statements

The unaudited interim consolidated financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars, unless otherwise noted.




5



MANTRA VENTURE GROUP LTD.

 

Consolidated balance sheets as of November 30, 2015, and May 31, 2015 (unaudited)

 

F-1

 

 

 

Consolidated statements of operations for the three and six month period ended November 30, 2015 and 2014 (unaudited)

 

F-2

 

 

 

Consolidated statements of cash flows for the three and six month period ended November 30, 2015 and 2014 (unaudited)

 

F-3

 

 

 

Notes to consolidated financial statements

 

F-4 – F-21
















6


MANTRA VENTURE GROUP LTD. 

Consolidated balance sheets 

(Expressed in U.S. dollars)

 

November 30,

May 31,

 

2015

2015

 

$

$

 

(Unaudited)

 

ASSETS

 

 

Current assets

 

 

     Cash

7,446 

     Accounts receivable

7,941 

25,527 

     Deferred finance costs

4,583 

7,085 

     Prepaid expenses and deposits

36,693 

126,146 

 

 

 

     Total current assets

49,217 

166,204 

     Deposit

8,000 

8,000 

     Restricted cash

14,550 

20,734 

     Property and equipment, net

83,036 

90,205 

     Intangible assets, net

64,984 

54,577 

Total assets

219,787 

339,720 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

Current liabilities

 

 

     Checks issued in excess of funds on deposit

5,636 

     Accounts payable and accrued liabilities

737,621 

613,875 

     Due to related parties

91,519 

112,193 

     Loans payable

183,670 

190,106 

     Obligations under capital lease

10,929 

17,325 

     Convertible debentures (net of discount of $231,655 and $189,520, respectively)

447,064 

237,333 

     Derivative liability

519,082 

353,668 

Total current liabilities

1,995,521 

1,524,500 

Obligations under capital lease

2,870 

Total liabilities

1,998,391 

1,524,500 

 

 

 

Stockholders' deficit

 

 

  Mantra Venture Group Ltd. stockholders’ deficit

 

 

     Preferred stock

 

 

     Authorized: 20,000,000 shares, par value $0.00001

 

 

     Issued and outstanding: Nil shares

     Common stock

 

 

     Authorized: 100,000,000 shares, par value $0.00001

 

 

     Issued and outstanding: 78,138,619 (May 31, 2015 – 71,516,581) shares

783 

715 

     Additional paid-in capital

10,934,305 

10,462,265 

     Common stock subscribed

74,742 

74,742 

     Accumulated deficit

(12,566,702)

(11,529,916)

Total Mantra Venture Group Ltd. stockholders’ deficit

(1,556,872)

(992,194)

Non-controlling interest

(221,732)

(192,586)

Total stockholders’ equity deficit

(1,778,604)

(1,184,780)

Total liabilities and stockholders’ deficit

219,787 

339,720 


(The accompanying notes are an integral part of these unaudited consolidated financial statements)



F-1


MANTRA VENTURE GROUP LTD. 

Consolidated statements of operations 

(Expressed in U.S. dollars)

(unaudited)

 

Three Months Ended

November 30,

Six Months Ended

November 30,

2015

$

2014

$

2015

$

2014

$

 

 

 

 

 

Revenue

 37,130

 22,566

 50,768

 77,796

 

 

 

 

 

Cost of goods sold

 –

 –

 

 

 

 

 

Gross profit

 37,130

 22,566

50,768

77,796

 

 

 

 

 

Operating expenses

 

 

 

 

 

 

 

 

 

Business development

 –

 5,708

 1,022

 15,933

Consulting and advisory

 54,471

 123,190

 146,593

 259,584

Depreciation and amortization

 7,794

 10,066

 11,225

 20,050

Foreign exchange gain

 268

 (24,442)

 (459)

 (46,988)

General and administrative

 10,316

 22,632

 36,507

 83,999

License fees

 37,445

 45,941

 37,445

 45,941

Management fees

 51,170

 56,541

 118,438

 115,999

Professional fees

 74,499

 72,709

 100,074

 69,766

Public listing costs

 1,667

 18,012

 11,519

 31,067

Rent

 10,079

 15,561

 31,027

 33,545

Research and development

 40,580

 224,974

 92,902

 567,409

Supplies

 3,076

 17,077

 3,076

 17,077

Travel and promotion

 5,942

 65,496

 33,074

 133,717

Wages and benefits

 –

 7,091

 2,430

 20,008

 

 

 

 

 

Total operating expenses

 297,307

 660,556

 624,873

 1,367,107

 

 

 

 

 

Loss before other expense

 (260,177)

 (637,990)

 (574,105)

 (1,289,311)

 

 

 

 

 

Other income (expense)

 

 

 

 

 

 

 

 

 

(Loss) Gain on settlement of debt

 –

 1,759

 (24,000)

 1,759

Accretion of discounts on convertible debentures

 (136,797)

 (13,379)

 (318,707)

 (21,828)

Loss on change in fair value of derivatives

 (298,121)

 –

 (91,425)

 –

Interest expense

 (34,147)

 (8,685)

 (57,695)

 (17,970)

 

 

 

 

 

Total other income expense

 (469,065)

 (20,305)

 (491,827)

 (38,039)

 

 

 

 

 

Net loss for the period

 (729,242)

 (658,295)

 (1,065,932)

 (1,327,350)

 

 

 

 

 

Less: net loss attributable to the non-controlling interest

 13,179

 24,389

 29,146

 41,085

 

 

 

 

 

Net loss attributable to Mantra Venture Group Ltd.

 (716,063)

 (633,906)

 (1,036,786)

 (1,286,265)

 

 

 

 

 

Net loss per share attributable to Mantra Venture Group Ltd. common shareholders, basic and diluted

 (0.01)

 (0.01)

(0.01)

(0.02)

 

 

 

 

 

Weighted average number of shares outstanding used in the calculation of net loss attributable to Mantra Venture Group Ltd. per common share

 73,417,388

 70,757,637

73,139,100

70,555,245

 (The accompanying notes are an integral part of these unaudited consolidated financial statements)




F-2


MANTRA VENTURE GROUP LTD. 

Consolidated statements of cash flows 

(Expressed in U.S. dollars) 

(unaudited)


 

Six Months

 Ended

November 30,

2015

$

Six Months

Ended

November 30,

2014

$

Operating activities

 

 

 

 

 

Net loss

 (1,065,932)

 (1,327,350)

 

 

 

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

 

 

(Gain) in fair value of derivative liability

 (268,442)

 –

Amortization of finance costs

 15,502

 –

Accretion of discounts on convertible debentures

 318,707

 21,828

Depreciation and amortization

 11,225

 20,050

Foreign exchange loss (gain)

 (7,841)

 (3,982)

Initial derivative expenses

 359,867

 –

Shares issued for services

 30,001

 –

Stock-based compensation on options and warrants

 19,118

 290,450

Loss (gain) on settlement of debt

 24,000

 (1,759)

 

 

 

Changes in operating assets and liabilities:

 

 

Amounts receivable

 17,586

 147,364

Prepaid expenses and deposits

 89,453

 98,370

Accounts payable and accrued liabilities

 153,500

 (99,650)

Due to related parties

 (20,674)

 (85,987)

 

 

 

Net cash used in operating activities

 (323,930)

 (940,666)

 

 

 

Investing activities

 

 

 

 

 

Purchase of property and equipment

 (682)

 (20,549)

Investment in intangible assets

 (12,161)

 (25,454)

 

 

 

Net cash used in investing activities

 (12,843)

 (46,003)

 

 

 

Financing activities

 

 

 

 

 

Repayment of capital lease obligations

 (3,309)

 (5,719)

Repayment of loan payable

 (50,000)

 (45,956)

Proceeds from notes payable

 50,000

 –

Proceeds from issuance of convertible debentures

 312,000

 –

Checks issued in excess of funds on deposit

 5,636

 –

Proceeds from issuance of common stock and subscriptions received

 15,000

 173,787

 

 

 

Net cash provided by financing activities

 329,327

 122,112

 

 

 

Change in cash

 (7,446)

 (864,557)

 

 

 

Cash, beginning of period

 7,446

 931,886

 

 

 

Cash, end of period

 –

 67,329

 

 

 

Non-cash investing and financing activities:

 

 

Common stock issued to relieve common stock subscribed

 –

 112,625

Common stock issued to settle accounts payable and debt

 24,000

 9,019

Common stock issued for conversion of notes payable

 359,988

 –

Common stock issued for pre-paid asset

 –

 –

Original issue discounts

 26,087

 –

Debt issuance cost

 13,000

 –

Original debt discount against derivative liability

 334,755

 –

 

 

 

Supplemental disclosures:

 

 

Interest paid

 9,333

 6,023

Income taxes paid

 –

 –

(The accompanying notes are an integral part of these unaudited consolidated financial statements)




F-3


MANTRA VENTURE GROUP LTD. 

Notes to the consolidated financial statements 

November 30, 2015

(Expressed in U.S. dollars) 

(unaudited)


1.

Basis of Presentation


Mantra Venture Group Ltd. (the “Company”) was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, the Company continued its corporate jurisdiction out of the State of Nevada and into the province of British Columbia, Canada. The Company is in the business of developing and providing energy alternatives. The Company also provides marketing and graphic design services to help companies optimize their environmental awareness presence through the eyes of government, industry and the general public.


The accompanying unaudited consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.


The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.


These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has yet to acquire commercially exploitable energy related technology, and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. As at November 30, 2015, the Company has an accumulated loss of $12,566,702, a working capital deficit of $1,946,304 and no cash. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.


Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months.





F-4



2.

Significant Accounting Policies


(a)

Basis of Presentation/Principles of Consolidation


These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.


(b)

Use of Estimates


The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


(c)

Cash and Cash Equivalents


The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.


(d)

Accounts Receivable


The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables the Company considers at risk. The Company had no allowance for doubtful accounts as of November 30, 2015 and 2014.





F-5



(e)

Property and Equipment


Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:


Automotive

3 years straight-line basis

Computer equipment

3 years straight-line basis

Leasehold improvements

5 years straight-line basis

Office equipment and furniture

5 years straight-line basis

Research equipment

5

years straight-line basis


(f)

Intangible Assets


Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.


(g)

Long-lived Assets


In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.


(h)

Foreign Currency Translation


Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.


The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.





F-6



(i)

Income Taxes


The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.


As of November 30, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.


The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2015. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above.


The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the six month period ended November 30, 2015 and 2014, there were no charges for interest or penalties.


(j)

Technology Development Revenue Recognition


The Company performs research and development services. The Company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.


(k)

Research and Development Costs


Research and development costs are expensed as incurred.


(l)

Stock-based Compensation


The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.




F-7



The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.


(m)

Loss Per Share


The Company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, the Company had 34,949,950 (May 31, 2015 – 8,838,205) dilutive potential shares outstanding.


(n)

Comprehensive Loss


ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2015 and 2014, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.


(o)

Recent Accounting Pronouncements


The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


(p)

Fair Value Measurements


The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:


Level 1 – quoted prices for identical instruments in active markets.


Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and.


Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.




F-8



Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the six months ended November 30, 2015 and 2014. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.


Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 10 for additional information.


(q)

Derivative Liabilities


The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2015 and May 31, 2015, the Company had a $519,082 and $353,668 derivative liability, respectively.


3.

Restricted Cash


Restricted cash represents cash pledged as security for the Company’s credit cards.


4.

Property and Equipment


 

Cost

$

Accumulated depreciation

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Furniture and equipment

2,496

707

1,788

2,039

Computer

5,341

5,118

224

829

Research equipment

140,631

77,588

63,043

69,739

Vehicles under capital lease

71,283

53,302

17,981

17,598

 

 

 

 

 

 

219,751

136,715

83,036

90,205





F-9



5.

Intangible Assets


 

Cost

$

Accumulated amortization

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Patents

70,789

5,805

64,984

54,577


Estimated Future Amortization Expense:


 

 

 

 

$

 

For year ending May 31, 2016

2,604

 

For year ending May 31, 2017

5,208

 

For year ending May 31, 2018

5,208

 

For year ending May 31, 2019

5,208

 

For year ending May 31, 2020

5,208

 


6.

Related Party Transactions


a)

During the six months ended November 30, 2015, the Company incurred management fees of $65,485 (2014 - $86,816) to the President of the Company.


b)

During the six months ended November 30, 2015, the Company incurred management fees of $23,820 (2014 - $29,183) to the spouse of the President of the Company.



c)

During the six months ended November 30, 2015, the Company incurred research and development fees of $28,920 (2014 - $39,503) to a director of the Company.


d)

The Company recorded $29,133 of management fees for the vesting of options previously granted to officers and directors.



e)

As at November 30, 2015, the Company owes a total of $74,007 (May 31, 2015 - $93,418) to the President of the Company and his spouse, and a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.


f)

As at November 30, 2015, the Company owes $17,512 (May 31, 2015 - $18,775) to an officer and a director of the Company, which is non-interest bearing, unsecured, and due on demand.





F-10



7.

Loans Payable


(a)

As at November 30, 2015, the amount of $47,321 (Cdn$63,300) (May 31, 2015 - $50,738 (Cdn$63,300)) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.


(b)

As at November 30, 2015, the amount of $17,500 (May 31, 2015 - $17,500) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.



(c)

As at November 30, 2015, the amount of $15,000 (May 31, 2015 - $15,000) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.


(d)

As at November 30, 2015, the amount of $14,150 (Cdn$18,895) (May 31, 2015 -$15,171 (Cdn$18,895)) is owed to a non-related party, which is non-interest bearing, unsecured, and due on demand.



(e)

As at November 30, 2015, the amounts of $7,500 and $27,709 (Cdn$37,000) (May 31, 2015 - $7,500 and $29,707, (Cdn$37,000)) are owed to a non-related party which are non-interest bearing, unsecured, and due on demand.


(f)

As at November 30, 2015, the amount of $4,490 (May 31, 2015- $4,490) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.



(g)

In March 2012, the Company received $50,000 for the subscription of 10,000,000 shares of the Company’s common stock. During the year ended May 31, 2013, the Company and the subscriber agreed that the shares would not be issued and that the subscription would be returned. The subscription has been reclassified as a non-interest bearing demand loan until the funds are refunded to the subscriber.


(h)

On August 4, 2015, the Company borrowed $50,000 pursuant to a promissory note. The note was due on September 4, 2015. The note bears interest at 120% per annum prior September 4, 2015, and at 180% per annum after September 4, 2015.  The holder of the note was also granted the rights to buy 100,000 shares of the Company’s common stock at a price of $0.15 per share until August 4, 2017.   During the six months ended November 30, 2015, the Company repaid the $50,000 note and $1,200 of accrued interest remains owing.


The rights issued with the note qualified for derivative accounting and under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the warrants of $9,755 resulted in a discount to the note payable of $9,755. During the six months ended November 30, 2015, the Company recorded accretion of $9,755.





F-11



8.

Obligations Under Capital Lease


On July 31, 2012 and December 21, 2012, the Company entered into two agreements to lease two vehicles for three years each. In August 2015, the July 31, 2012 lease was renewed for an additional two years. The vehicle leases are classified as a capital leases. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of November 30, 2015:


Year ending May 31:

 

$

2016

 

9,382

2017

 

4,507

2018

 

751

 

 

 

Net minimum lease payments

 

14,640

Less: amount representing interest payments

 

(841)

 

 

 

Present value of net minimum lease payments

 

13,799

Less: current portion

 

(10,929)

 

 

 

Long-term portion

 

2,870


At the end of the leases, the Company has the option to purchase the two vehicles for $1 and $9,000, respectively.


9.

Convertible Debentures


(a)

In October 2008, the Company issued three convertible debentures for total proceeds of $250,000 which bear interest at 10% per annum, are unsecured, and due one year from date of issuance. The unpaid amount of principal and accrued interest can be converted at any time at the holder’s option into 625,000 shares of the Company’s common stock at a price of $0.40 per share. The Company also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock for a period of two years from the date of issuance at an exercise price of $0.50 per share.


In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company determined that the convertible debentures contained no embedded beneficial conversion feature as the convertible debentures were issued with a conversion price higher than the fair market value of the Company’s common shares at the time of issuance.


In accordance with ASC 470-20, the Company allocated the proceeds of issuance between the convertible debt and the detachable share purchase warrants based on their relative fair values. Accordingly, the Company recognized the fair value of the share purchase warrants of $45,930 as additional paid-in capital and an equivalent discount against the convertible debentures. The Company had recorded accretion expense of $45,930, increasing the carrying value of the convertible debentures to $250,000.


On January 19, 2012, the Company entered into a settlement agreement with one of the debenture holders to settle a $50,000 convertible debenture and $122,535 in accounts payable and accrued interest with the debt holder. Pursuant to the agreement, the debt holder agreed to reduce the debt to Cdn$100,000 on the condition that the Company pays the amount of Cdn$2,500 per month for 40 months, beginning March 1, 2012 and continuing on the first day of each month thereafter.





F-12



On July 18, 2012, the Company entered into a settlement agreement with the $150,000 debenture holder. Pursuant to the settlement agreement, the lender agreed to extend the due date until April 11, 2013 and the Company agreed to pay $43,890 of accrued interest within five days of the agreement (paid), pay the accruing interest on a monthly basis (paid), and pay a $10,000 premium in addition to the $150,000 principal outstanding on April 11, 2013. On April 29, 2013, the Company entered into an amended settlement agreement whereby the lender agreed to extend the due date to September 15, 2013 and the Company agreed to pay $6,836 of interest for the period from April 1 to September 15, 2013 upon execution of the agreement (paid) and granted the lender 100,000 stock options exercisable at $0.12 per share for a period of two years.


On November 15, 2013, the Company entered into a second settlement agreement amendment. Pursuant to the second amendment, on November 15, 2013, the Company agreed to pay interest of $4,438 (paid) and commencing February 1, 2014, the Company would make monthly payments of $10,000 on the outstanding principal and interest.


The Company evaluated the modifications and determined that the creditor did not grant a concession. In addition, as the present value of the amended future cash flows had a difference of less than 10% of the cash flows of the original debt, it was determined that the original and new debt instruments are not substantially different. As a result, the modification was not treated as an extinguishment of the debt and no gain or loss was recognized. The Company recorded the fair value of $12,901 for the stock options as additional paid-in capital and a discount. During the year ended May 31, 2014, the Company repaid $40,000 of the debenture.  As at May 31, 2014 the Company had accreted $12,901 of the discount bring the carrying value of the convertible debenture to $114,661.  During the year ended May 31, 2015, the Company repaid $54,808 decreasing the carrying value to $59,853.  At November 30, 2015, the other remaining debenture of $50,000 remained outstanding and past due.


(b)

On August 19, 2013, the Company issued a convertible debenture for total proceeds of $10,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $10,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $10,000. As at November 30, 2015, the carrying value of the convertible promissory note was $10,000 and the note remained outstanding and in default.  


(c)

On September 11, 2013, the Company issued a convertible debenture for total proceeds of $58,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $58,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $58,000. As at November 30, 2015, the carrying value of the convertible promissory note was $58,000 and the note remained outstanding and in default.  





F-13



(d)

On October 18, 2013, the Company issued a convertible debenture for total proceeds of $94,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $94,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $94,000. As at November 30, 2015, the carrying value of the convertible promissory note was $94,000 and the note remained outstanding and in default.  



(e)

On December 27, 2013, the Company issued three convertible debentures for total proceeds of $15,000, which bear interest at 10% per annum, are unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion features of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $14,164.


(f)

On February 4, 2014, the Company issued a convertible debenture for total proceeds of $15,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $11,787.


(g)

On February 17, 2015, the Company issued a convertible note in the principal amount of $125,000. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.  After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.


The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $160,244 resulted in a discount to the note payable of $125,000 and the recognition of a loss on derivatives of $35,244. During the six months ended November 30, 2015, the Company issued 6,078,288 shares of common stock upon the conversion of $99,222 of principal.  During the six months ended November 30, 2015, the Company recorded accretion of $93,216 increasing the carrying value of the note to $25,778.At November 30, 2015, the note remained outstanding and past due.





F-14



(h)

On June 1, 2015, the Company issued a convertible note in the principal amount of $100,000 due on demand on or after December 1, 2015. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.  After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed. In no event shall the conversion price be lower than $0.00001.


The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $310,266 resulted in a discount to the note payable of $100,000 and the recognition of a loss on derivatives of $210,266.  During the six months ended November 30, 2015, the Company recorded accretion of $100,000, increasing the carrying value of the note to $100,000.


(i)

On September 8, 2015, the Company issued a convertible note in the principal amount of $326,087. During the six months ended November 30, 2015, the Company received the initial tranches of $225,000 net of a $26,087 original issue discount. The note bears interest at 12% per annum and is convertible into common shares of the Company at a 65% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 65% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.


The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $376,713 resulted in a discount to the note payable of $225,000 and the recognition of a loss on derivatives of $151,713.  During the six months ended November 30, 2015, the Company recorded accretion of $23,482, increasing the carrying value of the note to $23,482.


10.

Derivative Liabilities


The embedded conversion option of the convertible debenture described in Note 9(g) contains a conversion feature that qualifies for embedded derivative classification.  The fair value of the liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.


Upon the issuance of the convertible note payable described in Note 9(g), the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options.  The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the convertible note described in Notes 9(h) and 9(i), and the rights described in Note 7(h) would qualify for treatment as derivative liabilities.  The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.





F-15



The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:


 

 

November 30, 2015

 

May 31, 2015

 

 


 


Balance at the beginning of period

 $

 353,668

$

 

 

 

 

 

Addition of new derivative liabilities (embedded conversion options)

 

 694,623

 

160,244

Conversion of derivative liability

 

 (260,767)

 

 

Change in fair value of embedded conversion option

 

 (268,442)

 

193,424

 

 


 

 

Balance at the end of the period

 $

519,082

$

353,668


The following table summarizes the change in fair value of derivatives:


 

 

November 30, 2015

 

November 30, 2014

 




 

Fair value of derivative liabilities in excess of note proceeds received

$

(359,867)

$

 –

Change in fair value of derivative liabilities during period


268,442


 –

 




 

Change in fair value of derivatives

$

(91,425)

$

 –


The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Markets), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:


 

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

 

 

 

 

 

 

 

 

 

 

At issuance

134-184%

0.07-0.74%

0%

0.50-2.00

At November 30, 2015

171-182%

0.25-0.51%

0%

0.78-1.00

 

 

 

 

 


11.

Common Stock


(a)

As at November 30, and May 31, 2015, the Company had received proceeds of $2,080 at $0.08 per unit for subscriptions for 26,000 units.  Each unit consisted of one share of common stock and one-half of one share purchase warrant.  Each whole share purchase warrant is exercisable at $0.20 per common share for a period of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over-the-Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.


(b)

As at November 30, and May 31, 2015 the Company’s subsidiary, Mantra Energy Alternatives Ltd., had received subscriptions for 67,000 shares of common stock at Cdn$1.00 per share for proceeds of $66,277 (Cdn$67,000), which is included in common stock subscribed, net of the non-controlling interest portion of $7,231.




F-16



(c)

As at November 30, and May 31, 2015, the Company’s subsidiary, Climate ESCO Ltd., had received subscriptions for 210,000 shares of common stock at $0.10 per share for proceeds of $21,000, which is included in common stock subscribed, net of the non-controlling interest portion of $7,384.


Stock transactions during the six months ended November 30, 2015:


(a)

On July 1, 2015, the Company issued 150,000 common shares with a fair value of $30,000 pursuant to a consulting agreement.


(b)

On July 20, 2015, the Company issued 93,750 common shares at $0.16 per share for proceeds of $15,000.


(c)

On July 22, 2015, the Company issued 300,000 shares to settle $24,000 owed to a creditor.  The shares had a fair value of $48,000 and the Company recorded a loss on settlement of debt of $24,000.


(d)

On August 24, 2015, the Company issued 322,872 shares of common stock upon the conversion of $15,000 of principal of the convertible note described in Note 9(g).


(e)

On September 21, 2015, the Company issued 676,132 shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).


(f)

On October 22, 2015, the Company issued 1,581,778 shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).


(g)

On November 9, 2015, the Company issued 3,497,506 shares of common stock upon the conversion of $44,222 of principal of the convertible note described in Note 9(g).


12.

Share Purchase Warrants


The following table summarizes the continuity of share purchase warrants:


 

Number of

warrants

Weighted average exercise price

$

 



Balance, May 31, 2015

5,258,333

0.44

 

 

 

Issued

100,000

0.15

 

 

 

Balance, November 30, 2015

5,358,333

0.44





F-17



As at November 30, 2015, the following share purchase warrants were outstanding:


Number of warrants

Exercise

price

$

Expiry date

 

 

 

150,000

0.60

November 18, 2016

500,000

0.60

February 27, 2017

333,333

0.80

June 4, 2017

200,000

0.80

July 11, 2017

100,000

0.15

August 4, 2017

4,075,000

0.37

April 10, 2019

 

 

 

5,358,333

 

 


13.

Stock Options


During the six months ended November 30, 2015, the Company recorded $19,118 related to the vesting of previously granted stock options.


The following table summarizes the continuity of the Company’s stock options:


 

Number
of options

Weighted
average
exercise price
$

Weighted average remaining contractual life (years)

Aggregate

intrinsic

value

$

 

 

 

 

 

Outstanding, May 31, 2015

1,675,000

0.20

 

 

 

 

 

 

 

Expired

(300,000)

0.20

 

 

 

 

 

 

 

Outstanding, November 30, 2015

1,375,000

0.20

0.90

Exercisable, November 30, 2015

1,125,000

0.24

0.89


A summary of the changes of the Company’s non-vested stock options is presented below:


Non-vested stock options

Number of Options

Weighted Average

Grant Date

Fair Value

 

 

$

Non-vested at May 31, 2015

550,000

0.23

Vested

(300,000)

0.19

 

 

 

Non-vested at November 30, 2015

250,000

0.17

As at November 30, 2015, there was $4,030 of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a weighted average period of 0.28 years.  





F-18



Additional information regarding stock options as of November 30, 2015 is as follows:


Number of

options

Exercise

price

$

Expiry date

 

 

 

175,000

0.20

April 28, 2016

200,000

0.30

July 17, 2016

200,000

0.10

August 1, 2016

200,000

0.20

November 1, 2016

200,000

0.20

December 9, 2016

400,000

0.20

March 16, 2017

 

 

 

1,375,000

 

 

The fair values for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:


 

November 30, 2015

 

November 30, 2014

 

 

 

 

Risk-free Interest rate

 

0.48%

Expected life (in years)

 

1.97

Expected volatility

 

111%


During the six month period ended November 30, 2015, the Company recorded stock-based compensation of $Nil (2014 - $248,690) for stock options granted.


The weighted average fair value of the stock options granted for the six month period ended November 30, 2015 - $0.42 per option.


14.

Commitments and Contingencies


(a)

On September 2, 2009, the Company entered into an agreement with a company to acquire a worldwide, exclusive license for the Mixed Reactant Flow-By Fuel Cell technology. The term of the agreement is for twenty years or the expiry of the last patent licensed under the agreement, whichever is later. The Company agreed to pay the licensor the following license fees:


·

an initial license fee of Cdn$10,000 payable in two installments: Cdn$5,000 upon execution of the agreement (paid) and Cdn$5,000 within thirty days of September 2, 2009 (paid);

·

a further license fee of Cdn$15,000 (paid) to be paid within ninety days of September 2, 2009; and

·

an annual license fee, payable annually on the anniversary of the date of the agreement as follows:


September 1, 2010

Cdn$10,000 (paid)

September 1, 2011

Cdn$20,000 (accrued)

September 1, 2012

Cdn$30,000(accrued)

September 1, 2013

Cdn$40,000 (accrued)

September 1, 2014

and each successive anniversary

Cdn$50,000 (accrued)



F-19


The Company is to pay the licensor a royalty calculated as 2% of the gross revenue and 15% of any and all consideration directly or indirectly received by the Company from the grant of any sublicense rights. The Company will pay interest at a rate of 1% per month on any amounts past due. In addition, the Company is responsible for the timely payment of all future costs relating to patent expenses and any new or useful art, process, machine, manufacture or composition of matter arising out of any licensor improvements or joint improvements licensed under this agreement and identified by the licensor as potentially patentable. The Company must also invest a minimum of Cdn$250,000 in research and development directly associated with the technology.


(b)

On May 23, 2012, a former employee of the Company delivered a Notice of Application seeking judgment against the Company for approximately $55,000. The hearing of that Application took place on July 31, 2012, at which time the former employee obtained judgment in the approximate amount of $55,000. The Company did not defend the amount of the judgment and the amount is included in accounts payable, but claims a complete set-off on the basis that the former employee retains 1,000,000 shares of common stock of the Company as security for payment of the outstanding consulting fees owed to him. On August 31, 2012, the Company commenced a separate action against the former employee seeking a return of the 1,000,000 shares of common stock and a stay of execution of the judgment. That application is pending and has not yet been heard or determined by the court. The payment of the judgment claim of approximately $55,000 is dependent upon whether the former employee will first return the 1,000,000 shares of common stock noted above. The probable outcome of the Company’s claim for the return of the shares cannot yet be determined.


(c)

On May 7, 2014, the Company entered into a two year office space lease commencing July 1, 2014.  Pursuant to the lease, the Company is required to pay Cdn$2,683 plus taxes per month.  In addition, on June 1, 2014, the Company entered into a two year office space lease commencing June 1, 2014.  Pursuant to the lease, the Company is required to pay Cdn$1,240 plus taxes per month. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the minimum lease payments as of November 30, 2015:


Fiscal year ending May 31:

 

$

2016

 

17,627

2017

 

2,032

 

 

19,637


(d)

On November 1, 2014, the Company’s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $80,000 per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements.  


(e)

On November 1, 2014, the Company’s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $86,000 per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements.  





F-20



(f)

On November 15, 2013, the Company entered into a second settlement agreement with the $150,000 debenture holder described in Note 9(a). Pursuant to the second amendment, on November 15, 2013, the Company agreed to make monthly payments of $10,000 on the outstanding principal and interest.  Payments were made until December 2014, but have not been made after.  The plaintiff is seeking relief of amounts owed along with 10% interest per annum, from the date of judgments.  All amounts are recorded in these financial statements.



(g)

On June 15, 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for six months in consideration for $65,000 per year.


(h)

On July 1 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for a period of six months in consideration for 150,000 common shares and $3,000 per month for the first three months and $5,000 per month for the remaining three months.  On July 1, 2015, the Company issued 150,000 shares to the consultant.


(i)

On September 3, 2015, a former prospective employee of the Company delivered a Notice of Claim seeking judgment against the Company for approximately $11,400.  The Company believes the claim is without merit and intends to defend itself.


16.

Subsequent Events

(a)

On December 4, 2015, the holder of the convertible debentures described in Notes 9(g) and (h) entered into an agreement to sell and assign the remaining outstanding principal to a third party.  The Company approved and is bound by the assignment and sale agreement.


(b)

On December 22, 2015, the Company issued 1,000,000 shares of common stock upon the conversion of $10,000 of principal of the convertible note described in Note 9(g).



(c)

On January 1, 2016, the Company issued 1,000,000 shares of common stock upon the conversion of $10,000 of principal of the convertible note described in Note 9(g).




F-21



Item 2.

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


FORWARD LOOKING STATEMENTS


This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plan”", “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.


Our unaudited consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States generally accepted accounting principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.


In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to "US$" refer to United States dollars and all references to "common stock" refer to the common shares in our capital stock.


As used in this quarterly report, the terms “we”, “us”, “our” and “our company” mean Mantra Venture Group Ltd. and our wholly owned subsidiaries Carbon Commodity Corporation, Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc., as well as our majority owned subsidiary Climate ESCO Ltd. and Mantra Energy Alternatives Ltd., unless otherwise indicated.


Business Overview


We were incorporated in Nevada on January 22, 2007. On December 8, 2008 we continued our corporate jurisdiction out of the state of Nevada and into the Province of British Columbia, Canada. Our principal offices are located at #562 - 800 15355 24th Avenue, Street, Surrey, British Columbia, Canada, V4A 2H9. Our telephone number is (604) 560-1503. Our fiscal year end is May 31.


We are building a portfolio of companies and technologies that mitigate negative environmental and health consequences that arise from the production of energy and the consumption of resources.


Our mission is to develop and commercialize alternative energy technologies and services to enable the sustainable consumption, production and management of resources on residential, commercial and industrial scales. To carry out our business strategy we intend to acquire or license from third parties technologies that require further development before they can be brought to market. We also intend to develop such technologies ourselves, and we anticipate that to complete commercialization of some technologies we will enter into joint ventures, partnerships, or other strategic relationships with third parties who have expertise that we may require. We also plan to enter into formal relationships with consultants, contractors, retailers and manufacturers who specialize in the areas of environmental sustainability in order to carry out our online retail strategy.




7



We have acquired and own a process for the electro-reduction of carbon dioxide (“ERC”) and have the exclusive world license for a mixed-reactant fuel cell (“MRFC”). We are developing these technologies toward commercial applications.


In the past we have contracted out our development work to various laboratories. As of July 1, 2014, we have been carrying out research and development on these technologies in our own internal laboratory with our own staff in Vancouver, BC. These activities include: experimentation to improve the process performance; process and economic modeling to optimize the costs of a commercial system; design and simulation of pilot systems for technology demonstration and validation; business development activities such as the establishment of strategic and technology development partners; and the design and fabrication of laboratory prototypes, among others.


We currently carry on our business through our subsidiary, Mantra Energy Alternatives Ltd. (“MEA”), through which we identify, acquire, develop and market technologies related to alternative energy production and reduction of greenhouse gas emissions and resource consumption. We also have a number of inactive subsidiaries, which we plan to engage in various businesses in the future.


Since our inception, we have incurred operational losses and we have completed several rounds of financing to fund our operations.


On May 25, 2015, we released a demonstration video of our MRFC technology. This video showcased the fuel cell powering an electric scooter, and was designed to demonstrate the capabilities of the technology to strategic partners and investors.


Collaboration with Alstom (Switzerland) Ltd.


On June 24, 2013, we entered into an agreement with Alstom (Switzerland) Ltd. concerning the joint research and development projects relating to (1) a pilot plant for the conversion of carbon dioxide to formate at a Lafarge cement plant (the “Lafarge pilot project”); and (2) the development of processes for the conversion of carbon dioxide to other valuable chemicals.


Pursuant to the agreement with Alstom, MEA and Alstom will co-operate in one or more research and development projects related to MEA’s ERC technology. Prospective projects will be associated with the development of technologies and processes for the conversion of COto chemical products and the investigation of the feasibility of scale-up and commercialization of these processes. Prior to undertaking any research and development project under the agreement, MEA and Alstom will mutually agree to special terms and conditions governing the purpose, aims and objectives of any such project, including technical descriptions, the designation of work phases and project managers, and the allocation of responsibilities and costs between the parties. The commencement of any work phase for any project will be at the sole discretion of Alstom.


Intellectual Property Management


MEA and Alstom also will establish an intellectual property committee to oversee and manage all intellectual property issues and activities resulting from the agreement, including the protection of any new intellectual property. Each party will have exclusive right and discretion to prosecute all patents and patent applications resulting from its work on any project. The parties will jointly prosecute any intellectual property in jointly-owned results. Alstom will have the additional option under the agreement to acquire an exclusive license to intellectual property created by MEA under the agreement, and to a license to MEA’s ERC technology as may be reasonably required to exploit intellectual property assumed by Alstom. The agreement does not affect ownership of any underlying intellectual property of either party.





8



Lafarge Pilot Project and Carbon Dioxide to Alternative Products


The agreement with Alstom will remain valid for five years or the completion of the last active project, whichever last occurs, and may be extended at any time by the written agreement of both parties. The first joint research and development project under the agreement is the Lafarge pilot project, which plans for the design, construction, and installation of a pilot plant for the conversion of 100 kg/day carbon dioxide to formate, followed by a commercialization scale-up study. Alstom’s contribution to the Lafarge pilot plant project will be approximately CDN$250,000 for in-kind services.


A second integrated research and development project will study carbon dioxide conversion to alternative chemical products by electrochemical reduction, with a focus on catalyst materials and lifetime. This project has, for the past two years, been our only source of revenue. From Phases 1 to3 (lasting from September 2013 to September 2015), we received approximately CDN$611,125. The Phase 3 review occurred in September 2015 and tentatively approved for advancement into Phase 4. The timeline and structure of Phase 4 will depend upon the results, expected in October 2015, of a large-scale funding application submitted to the European Union in June 2015. If successful, this funding will cover Phases 4 and 5 of the current project. The original budget for Phase 4 was CDN$35,375, while Phase 5 was to-be-determined based on the results of the previous phases. Mantra and Alstom continue to pursue additional funding opportunities.


Electro Reduction of Carbon Dioxide (“ERC”)


We previously acquired 100% ownership in and to a certain chemical process for the electro-reduction of carbon dioxide. The reactor at the core of the chemical process, referred to as the electrochemical reduction of carbon dioxide (CO2), or “ERC”, has been proven functional through small-scale prototype trials and limited scale-up trials. ERC offers a possible solution to reduce the impact of COemissions on Earth’s environment by converting COinto chemicals with a broad range of commercial applications, including a fuel for a next generation of fuel cells. Powered by electricity, the ERC process combines captured carbon dioxide with water to produce materials, such as formic acid, formate salts, oxalic acid and methanol, that are conventionally obtained from the thermo-chemical processing of fossil fuels. However, while thermo-chemical reactions must be driven at relatively high temperatures that are normally obtained by burning fossil fuels, ERC operates at near ambient conditions and is driven by electric energy that can be taken from an electric power grid supplied by hydro, wind, solar or nuclear energy.


ERC has been shown to produce a range of compounds, including formic acid, formate salts, oxalic acid, and methanol. The efficiency for generation of each compound depends on the experimental conditions, most importantly the material of the cathode, which catalyzes the electrochemical reactions.


Until appropriate cathodes are found some products of CO2 reduction (methanol, for instance) are obtained at efficiencies too low for practical use. Other products can be generated on known cathodes with high current yields that could support valuable practical processes. For example, formic acid and its salts have been obtained on tin cathodes with current efficiencies above 80%, at industrially relevant conditions.


ERC Development to Date


In October of 2008, we completed our first ERC prototype reactor capable of processing 1 kilogram of COper day. We anticipate that commercialization of ERC will require us to develop reactors capable of processing not less than 100 tons of COper day; however, there is no guarantee that we will successfully produce reactors of that size. Production of commercially viable ERC reactors will depend on continued research and development, successful testing of small-scale ERC reactors, and securing of additional financing. This testing is underway in our research facilities, and is complemented by the parallel engineering of a scaled-up demonstration plant by BC Research Inc.





9



Established and Emerging Market for ERC and its Chemical Products


The technology behind ERC can be applied to any scale commercial venture which outputs COinto the atmosphere, though it is expected to be most effective when applied to large scale stationary sources. We anticipate that, once fully commercialized, we will be able to offer ERC as a CO2management system to various industry including steel, cement, fermentation processes, power generation and pulp and paper.


As described, the ERC process can be used to produce a variety of different chemical products from CO2. The first products that Mantra are targeting are formic acid and its salts. These products have existing markets as commodity chemicals and sell for between $1,000 and $1,500 per tonne, with global consumption being in excess of 600,000 tonnes per year. Formic acid and its salts are used in a variety of industrial applications, including silage preservation, leather tanning, textiles production, oil well drilling, and de-icing, and show enormous potential for market expansion through their use in chemical energy storage.


However, if the ERC process reaches market acceptance as a way to deal with COemissions from industry facilities, it will likely lead to supply of formic acid in excess of current market demand. We have identified several potential future applications for formic acid, which may lead to an expansion in current market demand. The application we have identified and are currently focusing on is energy storage.


Mixed-Reactant Fuel Cell (MRFC)


We retain the exclusive worldwide license for the MRFC technology. The MRFC is a novel fuel cell architecture that utilizes a mixture of the fuel and oxidant, and as a result, does not need a membrane. Conventional fuel cells (typically powered by hydrogen or methanol) must keep the fuel and oxidant separate, leading to several complications: a costly, failure-prone ion-selective membrane must be used to separate but ionically connect the cathode and anode chambers; complex reactant distribution and manifolding; and heavy, thick bipolar plates for separating cells. By contract, the MRFC has no membrane, has a simple reactant distribution mechanism, and contains no bipolar plates; as a result, the system is projected to be cheaper, lighter, and more robust than conventional fuel cells.


The MRFC thus offers the potential to provide distributed or grid-connected clean, affordable heat and power. Being very versatile due to its simplicity, the MRFC can address several markets, including emergency backup power, stationary combined heat and power, industrial vehicles such as forklifts, and transportation. The first target market for this technology is distributed emergency backup power for telecommunications.


The MRFC was invented and developed at the University of British Columbia by Professor Emeritus Colin Oloman and his team. In July 2014, we brought the technology into our internal lab for development, which culminated in May 2015 in a video we released showcasing an electric scooter powered exclusively by our MRFC technology. This video was intended to promote the technology to strategic partners and investors. Much of our research budget and activity over the period of January to May 2015 was dedicated to the design and construction of this scooter and the subsequent production of the demonstration video. We are currently exploring possibilities for joint development of the fuel cell with strategic partners.





10



Energy Storage


Formate salts and formic acid, which can be produced from COvia ERC, are excellent energy carriers and effective fuels for the MRFC. Thus, the integration of ERC and MRFC represents an energy storage solution whereby intermittent renewable electricity can be stored as formate/formic acid when it is available, and liberated when it is needed. The availability of energy storage is widely recognized as the next most critical factor for increased renewables penetration.


[mantraform10qq2nov3015w02001.jpg]




11



Results of Operations for the Three and Six Month Periods Ended November 30, 2015 and November 30, 2014


Revenues


Our operating results for the three and six month periods ended November 30, 2015 and November 30, 2014 are summarized as follows:


 

 

Three Months Ended

 

Six Months Ended

 

 

November 30,

 

November 30,

 

 

2015

 

2014

 

 

2015

 

2014

Revenue

$

37,130

$

22,566

 

$

50,768

$

77,796

Operating expenses

$

297,307

$

660,556

 

$

624,873

$

1,367,107

Other expenses

$

(469,065)

$

(20,305)

 

$

(491,287)

$

(38,039)

Net loss

$

(729,242)

$

(20,305)

 

$

(1,065,932)

$

(1,327,350)


Our net loss for the three months ended November 30, 2015 was $729,242. Our net loss for six months ended November 30, 2015 was $1,065,932.


Revenue generated during the three months ended November 30, 2015 was $37,130 compared to revenue of $22,566 during the same period in 2014.  Revenue generated during the six months ended November 30, 2015 was $50,768 compared to revenue of $77,796 during the same period in 2014.  


Expenses


Our operating expenses for the three and six month periods ended November 30, 2015 and November 30, 2014 are summarized as follows:


 

 

Three Months Ended

 

Six Months Ended

 

 

November 30,

 

November 30,

 

 

2015

 

2014

 

 

2015

 

2014

Business development

$

Nil

$

5,708

 

$

1,022

$

15,933

Consulting and advisory

$

54,471

$

123,190

 

$

146,593

$

259,584

Depreciation and amortization

$

7,794

$

10,066

 

$

11,225

$

20,050

Foreign exchange gain

$

268

$

(24,442)

 

$

(459)

$

(46,988)

General and administrative

$

10,316

$

22,632

 

$

36,507

$

83,999

License fees

$

37,445

$

45,941

 

$

37,445

$

45,941

Management fees

$

51,170

$

56,541

 

$

118,438

$

115,999

Professional fees

$

74,499

$

72,709

 

$

100,074

$

69,766

Public listing costs

$

1,667

$

18,012

 

$

11,519

$

31,067

Rent

$

10,079

$

15,561

 

$

31,027

$

33,545

Research and Development

$

40,580

$

224,974

 

$

92,902

$

567,409

Supplies

$

3,076

$

17,077

 

$

3,076

$

17,077

Travel and promotion

$

5,942

$

65,496

 

$

33,074

$

133,717

Wages and benefits

$

Nil

$

7,091

 

$

2,430

$

20,008





12



During the three months ended November 30, 2015 our operating expenses were $297,307 compared to operating expenses of $660,556 for the three month period ended November 30, 2015.  The decrease of operating expenses of $363,249 during this period primarily consisted of a decrease in consulting and advisory fees, research and development and travel and promotion.  Consulting and advisory fees decreased during the period ended November 30, 2015, as a result of scaling back the number of consultants under contract.  Travel and promotional expenses decreased during the period ended November 30, 2015, as a result of reduced travel to seek new proposals.  Research and development decreased during the period ended November 30, 2015, as the Company has moved past the research phase of our current projects.


During the six months ended November 30, 2015 our operating expenses were $624,873 compared to operating expenses of $1,367,107 for the six month period ended November 30, 2015.  The decrease of operating expenses of $742,234 during this period primarily consisted of a decrease in consulting and advisory fees, general and administrative expenses, research and development and travel and promotion. Consulting and advisory fees decreased during the period ended November 30, 2015, as a result of scaling back the number of consultants under contract.  General and administrative expenses were reduced due to a reduced budget during the period ended November 30, 2015. Travel and promotional expenses decreased during the period ended November 30, 2015, as a result of reduced travel to seek new proposals.  Research and development decreased during the period ended November 30, 2015, as the Company has moved past the research phase of our current projects.


The weighted average number of shares outstanding were 73,139,100 and 70,555,245for the six months ended November 30, 2015 and November 30, 2014, respectively.


The weighted average number of shares outstanding were 73,417,388 and 70,757,637 for the three months ended November 30, 2015 and November 30, 2014.


Liquidity and Capital Resources

Working Capital

 

 

At

 

 

At

 

 

 

November 30

 

 

May 31,

 

 

 

2015

 

 

2015

 

Current Assets

$

49,217

 

$

166,204

 

Current Liabilities

$

1,995,521

 

$

1,524,500

 

Working Capital

$

(1,946,304)

 

$

(1,358,296)

 


Cash Flows


 

 

Six Months

Ended

November 30,

2015

 

 

Six Months

Ended

November 30

2014

Net Cash Used In Operating Activities

$

(323,930)

 

$

(940,666)

Net Cash Used In Investing Activities

$

(12,843)

 

$

(46,003)

Net Cash Provided by Financing Activities

$

329,327

 

$

122,112

Change In Cash

$

(7,446)

 

$

(864,557)





13



As of November 30, 2015, we had $Nil cash in our bank accounts and a working capital deficit of $1,946,304. As of November 30, 2015 we had total current assets of $49,217 and total current liabilities of $1,995,521.


Cash Flows from Operating Activities


We have not generated positive cash flows from operating activities. For the six months ended November 30, 2015, net cash flows used in operating activities was $323,930 compared to $940,666 for the six months ended November 30, 2014. The decrease in net cash used in operating activities was primarily a result of a decrease in cash used to fund operating losses during the six months ended November 30, 2015 compared to the six months ended November 30, 2014.


Cash Flows from Investing Activities


For the six months ended November 30, 2015 cash flows used in investing activities were $12,843 compared to $46,003 for the six months ended November 30, 2014. The decrease in cash used in investing activities was a result of a decrease in cash used to purchase property plant and equipment and invest in intangible assets during the six months ended November 30, 2015 compared to the six months ended November 30, 2014.


Cash Flows from Financing Activities


For the six months ended November 30, 2015 cash flows from financing activities were $329,327 compared to $122,112 for the six months ended November 30, 2014. The increase in cash provided by financing activities increased as a result of the receipt of $50,000 of proceeds from the issuance of notes payable and $312,000 of proceeds from the issuance of convertible debentures during the six months ended November 30, 2015.  The Company received no proceeds from notes payable or convertible debentures during six nine months ended November 30, 2014.


We have suffered recurring losses from operations.  The continuation of our company is dependent upon our company attaining and maintaining profitable operations and raising additional capital as needed.  In this regarding we have historically raised additional capital through equity offerings and loan transactions.


We expect that our total expenses will increase over the next year as we increase our business operations. We have not been able to reach the break-even point since our inception and have had to rely on outside capital resources. We do not anticipate making significant revenues for the next year. Over the next 12 months, we plan to primarily concentrate on commercializing our ERC technology and associated projects.


Description

Estimated
expenses
($)

Research and Development

500,000

Consulting Fees

250,000

Commercialization of ERC

3,000,000

Shareholder communication and awareness

200,000

Professional Fees

300,000

Wages and Benefits

200,000

Management Fees

150,000

Total

 




14


In order to fully carry out our business plan, we need additional financing of approximately $4,600,000 for the next 12 months. In order to improve our liquidity, we intend to pursue additional equity financing from private placement sales of our equity securities or shareholders’ loans. We do not presently have sufficient financing to undertake our planned business activities. Issuances of additional shares will result in dilution to our existing shareholders.


We currently do not have any arrangements in place for the completion of any further private placement financings and there is no assurance that we will be successful in completing any further private placement financings. If we are unable to achieve the necessary additional financing, then we plan to reduce the amounts that we spend on our business activities and administrative expenses in order to be within the amount of capital resources that are available to us.


Off-Balance Sheet Arrangements


We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.


Inflation


The effect of inflation on our revenue and operating results has not been significant.


Critical Accounting Policies


Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.


Basis of Presentation


Our consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. Our consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.





15



Use of Estimates


The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Our company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. Our company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by our company may differ materially and adversely from our company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


Accounts Receivable


Our company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables our company considers at risk. Our company had no allowance for doubtful accounts as of November 30, 2015 and 2014.


Intangible Assets


Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. Our company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. Our company has no intangibles with indefinite lives.


Long-lived Assets


In accordance with ASC 360, “Property, Plant and Equipment”, our company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.





16



Technology Development Revenue


Our company performs research and development services. Our company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.


Stock-based Compensation


Our company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.


Our company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by our company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to our company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.


Loss Per Share


Our company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, our company had 34,949,950 (May 31, 2015 – 8,838,205) dilutive potential shares outstanding.


Recent Accounting Pronouncements


Our company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


Item 3.

Quantitative and Qualitative Disclosures About Market Risk


As a “smaller reporting company”, we are not required to provide the information required by this Item.





17



Item 4.

Controls and Procedures


a) Evaluation of disclosure controls and procedures.


Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.


Based on our evaluation, our chief executive officer and chief financial officer concluded that, as a result of the material weaknesses described below, as of November 30, 2015, our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. The material weaknesses, which relate to internal control over financial reporting, that were identified are:


a)

Due to our small size, we do not have a proper segregation of duties in certain areas of our financial reporting process. The areas where we have a lack of segregation of duties include cash receipts and disbursements, approval of purchases and approval of accounts payable invoices for payment. This control deficiency, which is pervasive in nature, results in a reasonable possibility that material misstatements of the consolidated financial statements will not be prevented or detected on a timely basis;


b)

We do not have a functioning audit committee. As a result, there is ineffective independent oversight in the establishment and monitoring of required internal controls and procedures; and


c)

We do not have any formally adopted internal controls surrounding its cash and financial reporting procedures.


We are committed to improving our financial organization. In addition, we will look to increase our personnel resources and technical accounting expertise within the accounting function to resolve non-routine or complex accounting matters. In addition, when funds are available, we will take the following action to enhance our internal controls: Hiring additional knowledgeable personnel with technical accounting expertise to further support our current accounting personnel, which management estimates will cost approximately $100,000 per annum. As our operations are relatively small and we continue to have net cash losses each quarter, we do not anticipate being able to hire additional internal personnel until such time as our operations are profitable on a cash basis or until our operations are large enough to justify the hiring of additional accounting personnel. We currently engage an outside accounting firm to assist us in the preparation of our consolidated financial statements and anticipate doing so until we have a sufficient number of internal accounting personnel to achieve compliance. As necessary, we will engage consultants in the future in order to ensure proper accounting for our consolidated financial statements.


Due to the fact that our internal accounting staff consists solely of a chief executive officer, who functions as our principal accounting officer, additional personnel will also ensure the proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support us if personnel turn over issues within the department occur. We believe this will greatly decrease any control and procedure issues we may encounter in the future.




18



(b) Changes in internal control over financial reporting.


There were no changes in our internal control over financial reporting that occurred during the quarter ended November 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II – OTHER INFORMATION


Item 1.

Legal Proceedings


On September 3, 2015, a former prospective employee of our company delivered a Notice of Claim seeking judgment against our company for approximately $11,400.  We believe that the claim is without merit and we intend to defend the claim.


Item 1A.

Risk Factors


As a “smaller reporting company”, we are not required to provide the information required by this Item.


Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds


On September 21, 2015, we issued 676,132 shares of our common stock upon the conversion of $20,000 of principal of a convertible note.


On October 22, 2015, we issued 1,581,778 shares of our common stock upon the conversion of $20,000 of principal of a convertible note.


On November 9, 2015, we issued 3,497,506 shares of our common stock upon the conversion of $44,222 of principal of a convertible note.


All of the above offerings and sales were deemed to be exempt under either rule 506 of Regulation D and Section 4(a)(2) or Rule 902 of Regulation S of the Securities Act of 1933, as amended. No advertising or general solicitation was employed in offering the securities. The offerings and sales were made to a limited number of persons, all of whom were accredited investors, business associates of our company or executive officers of our ocmpany, and transfer was restricted by our company in accordance with the requirements of the Securities Act of 1933. In addition to representations by the above-referenced persons, we have made independent determinations that all of the above-referenced persons were accredited or sophisticated investors, and that they were capable of analyzing the merits and risks of their investment, and that they understood the speculative nature of their investment. Except as expressly set forth above, the individuals and entities to whom we issued securities as indicated in this section are unaffiliated with us.


Item 3.

Defaults Upon Senior Securities


None.


Item 4.

Mine Safety Disclosures


Not applicable.





19



Item 5.

Other Information


On November 3, 2015, our Board of Directors approved the an amendment to our Notice of Articles to increase the authorized number of our shares of common stock from 100,000,000 shares of common stock, par value $0.00001 to 275,000,000 shares of common stock, par value of $0.00001 per share .


On November 4, 2015, subsequent to the approval by our Board of Directors of the, the holder of the majority of the outstanding shares of our corporation entitled to vote gave us written consent for the amendment to our Notice of Articles.


As at the date of this Quarterly Report, we have not yet filed the amendment to our Notice of Articles with the British Columbia Registrar of Companies.


None.


Item 6.

Exhibits


Exhibit Number

Exhibit Description

(2)

Plan of acquisition, reorganization, arrangement, liquidation or succession

2.1

Plan of Conversion of Mantra Venture Group Ltd. from a Nevada Corporation into a British Columbia Corporation dated October 29, 2008. (incorporated by reference to our Current Report on Form 8-K filed with the SEC on November 4, 2008)

(3)

Articles of Incorporation, Bylaws

3.1

Articles of Conversion of Mantra Venture Group Ltd. dated October 28, 2008 (incorporated by reference to our Current Report on Form 8-K filed with the SEC on November 4, 2008)

3.2

British Columbia Table 1 Articles adopted on December 4, 2008 (incorporated by reference to our Current Report on Form 8-K filed with the SEC on December 12, 2008)

3.3

British Columbia Notice of Articles (incorporated by reference to our Current Report on Form 8-K filed with the SEC on December 12, 2008)

(10)

Material Contracts

10.1

Revolving Line of Credit Agreement with Larry Kristof dated October 15, 2008 (incorporated by reference to our Quarterly Report on Form 10-Q filed on January 14, 2009)

10.2

2009 Stock Compensation Plan and 2009 Stock Option Plan (incorporated by reference to our Registration Statement on Form S-8 filed on November 24, 2009)

10.3

Subscription Agreement with Mantra Energy Alternatives Ltd. dated February 29, 2012 (incorporated by reference to our Current Report on Form 8-K filed on March 9, 2012)

10.4

Service Contract with PowerTech Labs Inc. dated June 19, 2012 (incorporated by reference to our Current Report on Form 8-K filed on June 25, 2012)

10.8

Employment Agreement with and Larry Kristof dated January 8, 2013 (incorporated by reference to our Current Report on Form 8-K filed on January 14, 2013)

10.9

Employment Agreement between our subsidiary, Mantra Energy Alternatives Ltd., and Larry Kristof dated January 8, 2013 (incorporated by reference to our Current Report on Form 8-K filed on January 14, 2013)



20



10.13

Director Agreement with Patrick Dodd dated May 7, 2013 (incorporated by reference to our Current Report on Form 8-K filed on May 10, 2013)

10.14

Consulting Agreement with BC0798465 BC Ltd. dated July 1, 2013 (incorporated by reference to our Current Report on Form 8-K filed on September 12, 2013)

10.16

Employment Agreement between our subsidiary, Mantra Energy Alternatives Ltd., and Sona Kazemi dated October 17, 2013 (incorporated by reference to our Current Report on Form 8-K filed on October 28, 2013)

10.17

Framework Agreement between our subsidiary, Mantra Energy Alternatives Ltd., and Alstom (Switzerland) Ltd. (incorporated by reference to our Current Report on Form 8-K filed on November 19, 2013)

(14)

Code of Ethics

14.1

Code of Ethics and Business Conduct (incorporated by reference to our Registration Statement on Form S- 1 filed on February 26, 2008)

(21)

List of Subsidiaries

21.1

Carbon Commodity Corporation (wholly owned)

 

Mantra China Inc. (wholly owned)

 

Mantra China Limited (wholly owned)

 

Mantra Media Corp. (wholly owned)

 

Mantra NextGen Power Inc. (wholly owned)

 

Mantra Wind Inc. (wholly owned)

 

Climate ESCO Ltd. (majority owned)

 

Mantra Energy Alternatives Ltd. (majority owned)

(31)

(i) Rule 13a-14(a)/ 15d-14(a) Certifications (ii) Rule 13a-14(d)/ 15d-14(d) Certifications

31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

(32)

Section 1350 Certifications

32.1*

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of the Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer

(99)

Additional Exhibits

99.1

Audit Committee Charter adopted April 20, 2010 (incorporated by reference to our Annual Report on Form 10-K filed with the SEC on September 14, 2010)

(101)*

Interactive Data Files

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document.

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document.


*

Filed herewith.




21



SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Mantra Venture Group Ltd.

 

(Registrant)

Date: January 28, 2016

/s/ Larry Kristof

 

Larry Kristof

 

President, Chief Executive Officer, Chief Financial

 

Officer, Secretary, Treasurer and Director

 

(Principal Executive Officer, Principal Financial Officer

 

and Principal Accounting Officer)




22


EX-31.1 2 exhibit311.htm EXHIBIT 31.1 Mantra - Section 302 Cert (CEO/CFO) Q3 Feb. 28/14 (W0230146).DOC

EXHIBIT 31.1

CERTIFICATION PURSUANT TO
18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Larry Kristof, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Mantra Venture Group Ltd.;

2.

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

3.

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

4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

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

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

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

5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)

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

(b)

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


Date:  January 28, 2016


/s/ Larry Kristof

Larry Kristof

President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)





EX-32.1 3 exhibit321.htm EXHIBIT 32.1 Mantra - Section 906 Cert (CEO/CFO) Q3 Feb. 28/14 (W0230147).DOC

EXHIBIT 32.1


CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002


I, Larry Kristof, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:


(1)

the Quarterly Report on Form 10-Q of Mantra Venture Group Ltd. for the period ended November 30, 2015 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and


(2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Mantra Venture Group Ltd.


Dated: January 28, 2016

 

 

 

 

 

 

 

 

 

 

/s/ Larry Kristof

 

 

 

Larry Kristof

 

 

President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director

(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

 

 

Mantra Venture Group Ltd.

 

 

 



A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Mantra Venture Group Ltd. and will be retained by Mantra Venture Group Ltd. and furnished to the Securities and Exchange Commission or its staff upon request.




 


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(the &#147;Company&#148;) was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, the Company continued its corporate jurisdiction out of the State of Nevada and into the province of British Columbia, Canada. The Company is in the business of developing and providing energy alternatives. The Company also provides marketing and graphic design services to help companies optimize their environmental awareness presence through the eyes of government, industry and the general public. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>The accompanying unaudited consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company&#146;s Annual Report on Form 10-K for the fiscal year ended May 31, 2015. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company&#146;s financial position and the results of its operations and its cash flows for the periods shown.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has yet to acquire commercially exploitable energy related technology, and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. As at November 30, 2015, the Company has an accumulated loss of $12,566,702, a working capital deficit of $1,946,304 and no cash. These factors raise substantial doubt regarding the Company&#146;s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-indent:-.5in'><b>2.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Significant Accounting Policies</b></p> <p style='margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin-left:.5in;text-align:justify;text-indent:0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp; Basis of Presentation/Principles of Consolidation</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp; Use of Estimates</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company&#146;s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp; Cash and Cash Equivalents</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp; Accounts Receivable</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables the Company considers at risk. The Company had no allowance for doubtful accounts as of November 30, 2015 and 2014.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp; Property and Equipment</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="486" style='margin-left:63.0pt;border-collapse:collapse'> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;text-align:justify'>Automotive</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;text-align:justify'>3 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Computer equipment</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>3 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Leasehold improvements</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Office equipment and furniture</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Research equipment</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> </table> <p>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible Assets</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp; Long-lived Assets</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>In accordance with ASC 360, &#147;<i>Property, Plant and Equipment</i>&#148;, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp; Foreign Currency Translation</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company&#146;s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income Taxes</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, &#147;<i>Accounting for Income Taxes</i>&#148;. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>As of November 30, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2015. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company&#146;s, or its subsidiaries&#146;, income tax returns for the open taxation years noted above.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the six month period ended November 30, 2015 and 2014, there were no charges for interest or penalties.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Technology Development Revenue Recognition</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company performs research and development services. The Company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(k)&nbsp;&nbsp;&nbsp;&nbsp; Research and Development Costs</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Research and development costs are expensed as incurred.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-left:.5in;text-align:justify;text-indent:0in'>(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based Compensation</p> <p style='margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company records stock-based compensation in accordance with ASC 718, &#147;<i>Compensation &#150; Stock Compensation</i>&#148;, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company&#146;s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company&#146;s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(m)&nbsp;&nbsp; Loss Per Share</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company computes loss per share in accordance with ASC 260, &quot;<i>Earnings per Share</i>&quot; which requires presentation of both basic and diluted earnings per share (&#147;EPS&#148;) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, the Company had 34,949,950 (May 31, 2015 &#150;8,838,205) dilutive potential shares outstanding.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(n)&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive Loss</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>ASC 220, &#147;<i>Comprehensive Income</i>,&#148; establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2015 and 2014, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.</p> <p>&nbsp;</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(o)&nbsp;&nbsp;&nbsp;&nbsp; Recent Accounting Pronouncements</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.</p> <p>&nbsp;</p> <p style='margin-left:.5in;text-align:justify;text-indent:0in'>(p)&nbsp;&nbsp;&nbsp;&nbsp; Fair Value Measurements</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 1 &#150; quoted prices for identical instruments in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 2 &#150; quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 3 &#150; fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on &#147;Level 3&#148; inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of &#147;Level 3&#148; during the six months ended November 30, 2015 and 2014. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 10 for additional information.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin-left:.5in;text-align:justify;text-indent:0in'>(q)&nbsp;&nbsp;&nbsp;&nbsp; Derivative Liabilities</p> <p style='margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company accounts for derivative instruments in accordance with ASC Topic 815, &#147;<i>Derivatives and Hedging</i>&#148; and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company&#146;s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2015 and May 31, 2015, the Company had a $519,082 and $353,668 derivative liability, respectively.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-indent:-.5in'><b>3.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Restricted Cash</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>Restricted cash represents cash pledged as security for the Company&#146;s credit cards.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-indent:-.5in'><b>4.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Property and Equipment</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="576" style='margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Cost</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Accumulated depreciation</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:26.4pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:9.0pt'> <td width="204" valign="bottom" style='width:153.0pt;padding:0;height:9.0pt'> <p style='margin:0in;margin-bottom:.0001pt'>Furniture and equipment</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>2,496</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>707</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>1,788</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>2,039</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Computer</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>5,341</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>5,118</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>224</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>829</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Research equipment</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>140,631</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>77,588</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>63,043</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>69,739</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Vehicles under capital lease</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>71,283</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>53,302</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>17,981</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>17,598</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>219,751</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>136,715</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>83,036</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>90,205</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:22.5pt;text-indent:-.25in'><b>5.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Intangible Assets</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:22.3pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="576" style='margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Cost</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Accumulated amortization</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:26.4pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Patents</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>70,789</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>5,805</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>64,984</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>54,577</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'>Estimated Future Amortization Expense:</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.25in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="444" style='margin-left:41.4pt;border-collapse:collapse'> <tr style='height:5.75pt'> <td width="198" valign="bottom" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.3in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>$</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2016</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>2,604</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2017</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2018</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2019</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2020</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>6.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>&#160;&#160;&#160;&#160;&#160;&#160;&#160; Related Party Transactions</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">During the six months ended November 30, 2015, the Company incurred management fees of $</font><font lang="EN-CA">65,485 </font><font lang="EN-CA">(2014 - $</font><font lang="EN-CA">86,816</font><font lang="EN-CA">) to the President of the Company.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">During the six months ended November 30, 2015, the Company incurred management fees of $</font><font lang="EN-CA">23,820 </font><font lang="EN-CA">(2014 - $</font><font lang="EN-CA">29,183</font><font lang="EN-CA">) to the spouse of the President of the Company.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">During the six months ended November 30, 2015, the Company incurred research and development fees of </font><font lang="EN-CA">$28,920 </font><font lang="EN-CA">(2014 - $</font><font lang="EN-CA">39,503</font><font lang="EN-CA">) to a director of the Company.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">The Company recorded $</font><font lang="EN-CA">29,133 </font><font lang="EN-CA">of management fees for the vesting of options previously granted to officers and directors.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">As at November 30, 2015, the Company owes a total of $</font><font lang="EN-CA">74,007 </font><font lang="EN-CA">(May 31, 2015 - $</font><font lang="EN-CA">93,418</font><font lang="EN-CA">) to the President of the Company and his spouse, and a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">As at November 30, 2015, the Company owes $</font><font lang="EN-CA">17,512 </font><font lang="EN-CA">(May 31, 2015 - $</font><font lang="EN-CA">18,775</font><font lang="EN-CA">) to an officer and a director of the Company, which is non-interest bearing, unsecured, and due on demand.</font></p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;margin-left:22.5pt;text-indent:-.25in'><b>7.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Loans Payable</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amount of $47,321 (Cdn$63,300) (May 31, 2015 - $50,738 (Cdn$63,300)) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amount of $17,500 (May 31, 2015 - $17,500) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amount of $15,000 (May 31, 2015 - $15,000) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amount of $14,150 (Cdn$18,895) (May 31, 2015 -$15,171 (Cdn$18,895)) is owed to a non-related party, which is non-interest bearing, unsecured, and due on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amounts of $35,209 (Cdn$37,000) (May 31, 2015 - $37,207 (Cdn$37,000)) are owed to a non-related party which are non-interest bearing, unsecured, and due on demand.</p> <p style='margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin-left:1.0in;text-align:justify;text-indent:-.5in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As at November 30, 2015, the amount of $4,490 (May 31, 2015- $4,490) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">In March 2012, the Company received $</font><font lang="EN-CA">50,000 </font><font lang="EN-CA">for the subscription of </font><font lang="EN-CA">10,000,000</font><font lang="EN-CA"> shares of the Company&#146;s common stock. During the year ended May 31, 2013, the Company and the subscriber agreed that the shares would not be issued and that the subscription would be returned. The subscription has been reclassified as a non-interest bearing demand loan until the funds are refunded to the subscriber.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On August 4, 2015, the Company borrowed $</font><font lang="EN-CA">50,000 </font><font lang="EN-CA">pursuant to a promissory note. The note was due on September 4, 2015. The note bears interest at </font><font lang="EN-CA">120</font><font lang="EN-CA">% per annum prior September 4, 2015, and at </font><font lang="EN-CA">180</font><font lang="EN-CA">% per annum after September 4, 2015.&#160; The holder of the note was also granted the rights to buy 100,000 shares of the Company&#146;s common stock at a price of $0.15 per share until August 4, 2017.&#160;&#160; During the six months ended November 30, 2015, the Company repaid the $</font><font lang="EN-CA">50,000</font><font lang="EN-CA"> note and $</font><font lang="EN-CA">1,200 </font><font lang="EN-CA">of accrued interest remains owing.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-left:1.0in'><font lang="EN-CA">The rights issued with the note qualified for derivative accounting and under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;.&#160; The initial fair value of the warrants of $</font><font lang="EN-CA">9,755 </font><font lang="EN-CA">resulted in a discount to the note payable of $9,755. During the six months ended November 30, 2015, the Company recorded accretion of $</font><font lang="EN-CA">9,755</font><font lang="EN-CA">.</font></p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:0in;text-align:justify;text-indent:0in'><b>8.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Obligations Under Capital Lease</b></p> <p style='margin-left:.25in;text-align:justify'>&nbsp;</p> <p style='margin-left:.5in;text-align:justify'>On July 31, 2012 and December 21, 2012, the Company entered into two agreements to lease two vehicles for three years each. In August 2015, the July 31, 2012 lease was renewed for an additional two years. The vehicle leases are classified as a capital leases. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of November 30, 2015:</p> <p style='margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Year ending May 31:</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-4.2pt;text-align:center'>$</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2016</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>9,382</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2017</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>4,507</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2018</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>751</p> </td> </tr> <tr style='height:5.65pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net minimum lease payments</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>14,640</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: amount representing interest payments</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>(841)</p> </td> </tr> <tr style='height:5.75pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Present value of net minimum lease payments</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>13,799</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: current portion</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>(10,929)</p> </td> </tr> <tr style='height:5.75pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Long-term portion</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>2,870</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>At the end of the leases, the Company has the option to purchase the two vehicles for $1 and $9,000, respectively. </p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>9.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </b><b>Convertible Debentures</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in'>&nbsp;</p> <p style='margin-left:1.0in;text-align:justify;text-indent:-.5in'>(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; In October 2008, the Company issued three convertible debentures for total proceeds of $250,000 which bear interest at 10% per annum, are unsecured, and due one year from date of issuance. The unpaid amount of principal and accrued interest can be converted at any time at the holder&#146;s option into 625,000 shares of the Company&#146;s common stock at a price of $0.40 per share. The Company also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of the Company&#146;s common stock for a period of two years from the date of issuance at an exercise price of $0.50 per share.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>In accordance with ASC 470-20, &#147;<i>Debt with Conversion and Other Options</i>&#148;, the Company determined that the convertible debentures contained no embedded beneficial conversion feature as the convertible debentures were issued with a conversion price higher than the fair market value of the Company&#146;s common shares at the time of issuance.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>In accordance with ASC 470-20, the Company allocated the proceeds of issuance between the convertible debt and the detachable share purchase warrants based on their relative fair values. Accordingly, the Company recognized the fair value of the share purchase warrants of $45,930 as additional paid-in capital and an equivalent discount against the convertible debentures. The Company had recorded accretion expense of $45,930, increasing the carrying value of the convertible debentures to $250,000.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>On January 19, 2012, the Company entered into a settlement agreement with one of the debenture holders to settle a $50,000 convertible debenture and $122,535 in accounts payable and accrued interest with the debt holder. Pursuant to the agreement, the debt holder agreed to reduce the debt to Cdn$100,000 on the condition that the Company pays the amount of Cdn$2,500 per month for 40 months, beginning March 1, 2012 and continuing on the first day of each month thereafter.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>On July 18, 2012, the Company entered into a settlement agreement with the $150,000 debenture holder. Pursuant to the settlement agreement, the lender agreed to extend the due date until April 11, 2013 and the Company agreed to pay $43,890 of accrued interest within five days of the agreement (paid), pay the accruing interest on a monthly basis (paid), and pay a $10,000 premium in addition to the $150,000 principal outstanding on April 11, 2013. On April 29, 2013, the Company entered into an amended settlement agreement whereby the lender agreed to extend the due date to September 15, 2013 and the Company agreed to pay $6,836 of interest for the period from April 1 to September 15, 2013 upon execution of the agreement (paid) and granted the lender 100,000 stock options exercisable at $0.12 per share for a period of two years.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>On November 15, 2013, the Company entered into a second settlement agreement amendment. Pursuant to the second amendment, on November 15, 2013, the Company agreed to pay interest of $4,438 (paid) and commencing February 1, 2014, the Company would make monthly payments of $10,000 on the outstanding principal and interest.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>The Company evaluated the modifications and determined that the creditor did not grant a concession. In addition, as the present value of the amended future cash flows had a difference of less than 10% of the cash flows of the original debt, it was determined that the original and new debt instruments are not substantially different. As a result, the modification was not treated as an extinguishment of the debt and no gain or loss was recognized. The Company recorded the fair value of $12,901 for the stock options as additional paid-in capital and a discount. During the year ended May 31, 2014, the Company repaid $40,000 of the debenture.&#160; As at May 31, 2014 the Company had accreted $12,901 of the discount bring the carrying value of the convertible debenture to $114,661.&#160; During the year ended May 31, 2015, the Company repaid $54,808 decreasing the carrying value to $59,853.&#160; At November 30, 2015, the other remaining debenture of $50,000 remained outstanding and past due.</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On August 19, 2013, the Company issued a convertible debenture for total proceeds of $10,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder&#146;s option into shares of the Company&#146;s common stock at $0.04 per share at any time after the first anniversary of the notes.&#160; The Company recognized the intrinsic value of the embedded beneficial conversion feature of $10,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $10,000. As at November 30, 2015, the carrying value of the convertible promissory note was $10,000 and the note remained outstanding and in default.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On September 11, 2013, the Company issued a convertible debenture for total proceeds of $58,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder&#146;s option into shares of the Company&#146;s common stock at $0.04 per share at any time after the first anniversary of the notes.&#160; The Company recognized the intrinsic value of the embedded beneficial conversion feature of $58,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $58,000. As at November 30, 2015, the carrying value of the convertible promissory note was $58,000 and the note remained outstanding and in default.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On October 18, 2013, the Company issued a convertible debenture for total proceeds of $94,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder&#146;s option into shares of the Company&#146;s common stock at $0.04 per share at any time after the first anniversary of the notes.&#160; The Company recognized the intrinsic value of the embedded beneficial conversion feature of $94,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $94,000. As at November 30, 2015, the carrying value of the convertible promissory note was $94,000 and the note remained outstanding and in default.&#160; </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On December 27, 2013, the Company issued three convertible debentures for total proceeds of $15,000, which bear interest at 10% per annum, are unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder&#146;s option into shares of the Company&#146;s common stock at $0.04 per share at any time after the first anniversary of the notes.&#160; The Company recognized the intrinsic value of the embedded beneficial conversion features of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $14,164. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On February 4, 2014, the Company issued a convertible debenture for total proceeds of $15,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder&#146;s option into shares of the Company&#146;s common stock at $0.04 per share at any time after the first anniversary of the notes. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $11,787. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On February 17, 2015, the Company issued a convertible note in the principal amount of $125,000. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.&#160; After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;.&#160; The initial fair value of the conversion feature of $160,244 resulted in a discount to the note payable of $125,000 and the recognition of a loss on derivatives of $35,244. During the six months ended November 30, 2015, the Company issued 6,078,288 shares of common stock upon the conversion of $99,222 of principal.&#160; During the six months ended November 30, 2015, the Company recorded accretion of $93,216 increasing the carrying value of the note to $25,778. At November 30, 2015, the note remained outstanding and past due.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On June 1, 2015, the Company issued a convertible note in the principal amount of $100,000 due on demand on or after December 1, 2015. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.&#160; After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed. In no event shall the conversion price be lower than $0.00001.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;.&#160; The initial fair value of the conversion feature of $310,266 resulted in a discount to the note payable of $100,000 and the recognition of a loss on derivatives of $210,266.&#160; During the six months ended November 30, 2015, the Company recorded accretion of $100,000, increasing the carrying value of the note to $100,000.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; On September 8, 2015, the Company issued a convertible note in the principal amount of $326,087. During the six months ended November 30, 2015, the Company received the initial tranches of $225,000 net of a $26,087 original issue discount. The note bears interest at 12% per annum and is convertible into common shares of the Company at a 65% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 65% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 &#147;<i>Derivatives and Hedging</i>&#148;.&#160; The initial fair value of the conversion feature of $376,713 resulted in a discount to the note payable of $225,000 and the recognition of a loss on derivatives of $151,713.&#160; During the six months ended November 30, 2015, the Company recorded accretion of $23,482, increasing the carrying value of the note to $23,482.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>10.&nbsp;&nbsp;&nbsp; </b><b>Derivative Liabilities</b></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>The embedded conversion option of the convertible debenture described in Note 9(g) contains a conversion feature that qualifies for embedded derivative classification.&#160; The fair value of the liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments. </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>Upon the issuance of the convertible note payable described in Note 9(g), the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options.&#160; The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company&#146;s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the convertible note described in Notes 9(h) and 9(i), and the rights described in Note 7(h) would qualify for treatment as derivative liabilities.&#160; The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;text-align:justify'>The table below sets forth a summary of changes in the fair value of the Company&#146;s Level 3 financial liabilities:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="606" style='margin-left:.25in;border-collapse:collapse'> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31, 2015</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:justify'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at the beginning of period</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>353,668</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:18.9pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt'>Addition of new derivative liabilities (embedded conversion options)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>694,623</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>160,244</p> </td> </tr> <tr style='height:22.5pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:22.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Conversion of derivative liability</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>(260,767)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>-</p> </td> </tr> <tr style='height:22.5pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:22.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Change in fair value of embedded conversion option</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>(268,442)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>193,424</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at the end of the period </p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>519,082</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>353,668</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt'>The following table summarizes the change in fair value of derivatives:</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="607" style='margin-left:.25in;border-collapse:collapse'> <tr align="left"> <td width="378" valign="bottom" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2014</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:9.95pt'> <td width="378" valign="top" style='width:283.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Fair value of derivative liabilities in excess of note proceeds received</p> </td> <td width="18" valign="top" style='width:13.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>(359,867)</p> </td> <td width="18" valign="bottom" style='width:13.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:9.95pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:10.1pt'> <td width="378" valign="top" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:4.5pt;text-align:justify;text-indent:-4.5pt'>Change in fair value of derivative liabilities during period </p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>268,442</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="top" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Change in fair value of derivatives</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>(91,425)</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions. The model incorporates the price of a share of the Company&#146;s common stock (as quoted on the Over the Counter Markets), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:</p> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="594" style='width:445.5pt;margin-left:23.4pt;border-collapse:collapse'> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Volatility</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Risk-free Interest Rate</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Dividend Yield</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Life (in years)</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:4.3pt'> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>At issuance</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>134-184%</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.07-0.74%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.50-2.00</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>At November 30, 2015</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>171-182%</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.25-0.51%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.78-1.00</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:22.5pt;text-indent:-.25in'><b>11.&nbsp;&nbsp;&nbsp; </b><b>Common Stock</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:35.85pt;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">As at November 30, and May 31, 2015, the Company had received proceeds of $</font><font lang="EN-CA">2,080 </font><font lang="EN-CA">at $0.08 per unit for subscriptions for </font><font lang="EN-CA">26,000</font><font lang="EN-CA"> units.&#160; Each unit consisted of one share of common stock and one-half of one share purchase warrant.&#160; Each whole share purchase warrant is exercisable at $</font><font lang="EN-CA">0.20 </font><font lang="EN-CA">per common share for a period of two years or five business days after the Company&#146;s common stock trades at least one time per day on the FINRA Over-the-Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">As at November 30, and May 31, 2015 the Company&#146;s subsidiary, Mantra Energy Alternatives Ltd., had received subscriptions for </font><font lang="EN-CA">67,000</font><font lang="EN-CA"> shares of common stock at Cdn$1.00 per share for proceeds of $</font><font lang="EN-CA">66,277 </font><font lang="EN-CA">(Cdn$67,000), which is included in common stock subscribed, net of the non-controlling interest portion of $</font><font lang="EN-CA">7,231</font><font lang="EN-CA">.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:0in;margin-bottom:6.0pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">As at November 30, and May 31, 2015, the Company&#146;s subsidiary, Climate ESCO Ltd., had received subscriptions for </font><font lang="EN-CA">210,000</font><font lang="EN-CA"> shares of common stock at $0.10 per share for proceeds of $</font><font lang="EN-CA">21,000</font><font lang="EN-CA">, which is included in common stock subscribed, net of the non-controlling interest portion of $</font><font lang="EN-CA">7,384</font><font lang="EN-CA">.</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-indent:.5in'>Stock transactions during the six months ended November 30, 2015:</p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in'><font lang="EN-CA">(a)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On July 1, 2015, the Company issued </font><font lang="EN-CA">150,000</font><font lang="EN-CA"> common shares with a fair value of $30,000 pursuant to a consulting agreement.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:1.0in;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(b)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On July 20, 2015, the Company issued </font><font lang="EN-CA">93,750</font><font lang="EN-CA"> common shares at $0.16 per share for proceeds of $15,000.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:1.0in;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(c)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On July 22, 2015, the Company issued </font><font lang="EN-CA">300,000</font><font lang="EN-CA"> shares to settle $24,000 owed to a creditor.&#160; The shares had a fair value of $48,000 and the Company recorded a loss on settlement of debt of $24,000.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(d)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On August 24, 2015, the Company issued </font><font lang="EN-CA">322,872</font><font lang="EN-CA"> shares of common stock upon the conversion of $15,000 of principal of the convertible note described in Note 9(g).</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(e)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On September 21, 2015, the Company issued </font><font lang="EN-CA">676,132</font> <font lang="EN-CA">shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On October 22, 2015, the Company issued </font><font lang="EN-CA">1,581,778</font><font lang="EN-CA"> shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:8.0pt;margin-right:0in;margin-bottom:0in;margin-left:1.0in;margin-bottom:.0001pt;text-align:justify;text-indent:-.25in;text-autospace:none'><font lang="EN-CA">(g)&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On November 9, 2015, the Company issued </font><font lang="EN-CA">3,497,506</font><font lang="EN-CA"> shares of common stock upon the conversion of $44,222 of principal of the convertible note described in Note 9(g).</font></p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>12.&nbsp;&nbsp;&nbsp; </b><b>Share Purchase Warrants</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify;text-indent:.25in'><font lang="EN-CA">The following table summarizes the continuity of share purchase warrants:</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="636" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>warrants</p> </td> <td width="120" valign="bottom" style='width:1.25in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average exercise price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:14.45pt'> <td width="414" valign="top" style='width:310.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, May 31, 2015</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,258,333</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.44</p> </td> </tr> <tr style='height:5.75pt'> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>Issued</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>100,000</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.15</p> </td> </tr> <tr style='height:5.75pt'> <td width="414" valign="top" style='width:310.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, November 30, 2015</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,358,333</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.44</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-autospace:none'><font lang="EN-CA">&#160;&#160;&#160;&#160;&#160;&#160;&#160; As at November 30, 2015, the following share purchase warrants were outstanding:</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="306" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="90" valign="bottom" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Number of warrants </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>$</p> </td> <td width="144" valign="bottom" style='width:1.5in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expiry date</p> </td> </tr> <tr style='height:5.75pt'> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>150,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.60</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>November 18, 2016</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>500,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.60</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>February 27, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>333,333</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.80</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>June 4, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.80</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>July 11, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>100,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.15</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>August 4, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>4,075,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.37</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>April 10, 2019</p> </td> </tr> <tr style='height:5.75pt'> <td width="90" valign="top" style='width:67.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,358,333</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> </table> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>13.&nbsp;&nbsp;&nbsp; </b><b>Stock Options</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'><font lang="EN-CA">During the six months ended November 30, 2015, the Company recorded $</font><font lang="EN-CA">19,118 </font><font lang="EN-CA">related to the vesting of previously granted stock options.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'><font lang="EN-CA">The following table summarizes the continuity of the Company&#146;s stock options:</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="600" style='width:6.25in;margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of options</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average exercise price $</p> </td> <td width="114" valign="top" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average remaining contractual life (years)</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Aggregate</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>intrinsic</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="top" style='width:2.75in;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="top" style='width:85.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, May 31, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,675,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="bottom" style='width:2.75in;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>Expired</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:2.9pt;text-align:right'>(300,000)</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="bottom" style='width:2.75in;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, November 30, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,375,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>0.90</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&#150;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercisable, November 30, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,125,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.24</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>0.89</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&#150;</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.5in'><font lang="EN-CA">A summary of the changes of the Company&#146;s non-vested stock options is presented below:</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.25in'>&nbsp;</p> <table border="1" cellspacing="0" cellpadding="0" width="564" style='width:423.0pt;margin-left:41.4pt;border-collapse:collapse;border:none'> <tr align="left"> <td width="339" valign="bottom" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-.9pt'><font lang="EN-CA">Non-vested stock options</font></p> </td> <td width="100" valign="bottom" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Number of Options</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:11.95pt;text-align:right;text-indent:-6.05pt'><font lang="EN-CA">Weighted Average</font></p> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Grant Date</font></p> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Fair Value</font></p> </td> </tr> <tr style='height:5.65pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:15.85pt'>&nbsp;</p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">$</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-19.7pt'><font lang="EN-CA">Non-vested at May 31, 2015</font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">550,000</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.23</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font lang="EN-CA">Vested </font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">(300,000)</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.19</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="339" valign="top" style='width:254.3pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-19.7pt'><font lang="EN-CA">Non-vested at November 30, 2015</font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">250,000</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.17</font></p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-autospace:none'><font lang="EN-CA">As at November 30, 2015, there was $</font><font lang="EN-CA">4,030 </font><font lang="EN-CA">of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a weighted average period of 0.28 years.&#160; </font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-indent:.25in;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-autospace:none'><font lang="EN-CA">Additional information regarding stock options as of November 30, 2015 is as follows:</font></p> <p style='margin:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="330" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="84" valign="bottom" style='width:63.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>options</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>$</p> </td> <td width="168" valign="bottom" style='width:1.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.05pt'>Expiry date</p> </td> </tr> <tr style='height:5.65pt'> <td width="84" valign="top" style='width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>175,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>April 28, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.30</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>July 17, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.10</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>August 1, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>November 1, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>December 9, 2016 </p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>400,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>March 16, 2017</p> </td> </tr> <tr style='height:5.65pt'> <td width="84" valign="top" style='width:63.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:22.95pt;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,375,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:22.95pt;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify;text-autospace:none'><font lang="EN-CA">The fair values for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="394" style='width:4.1in;margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="95" valign="bottom" style='width:71.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="19" valign="bottom" style='width:13.95pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2014</p> </td> </tr> <tr style='height:5.75pt'> <td width="186" valign="top" style='width:139.5pt;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="95" valign="top" style='width:71.55pt;border:none;padding:0;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="19" valign="top" style='width:13.95pt;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="top" style='width:70.2pt;border:none;padding:0;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Risk-free Interest rate</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.48%</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Expected life (in years)</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.97</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Expected volatility</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>111%</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>During the six month period ended November 30, 2015, the Company recorded stock-based compensation of $0 (2014 - $248,690) for stock options granted.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>The weighted average fair value of the stock options granted for the six month period ended November 30, 2015 - $0.42 per option.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-.25in'><b>14.&nbsp;&nbsp;&nbsp; </b><b>Commitments and Contingencies</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:58.5pt;text-align:justify;text-indent:-22.5pt;text-autospace:none'><font lang="EN-CA">(a)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On September 2, 2009, the Company entered into an agreement with a company to acquire a worldwide, exclusive license for the Mixed Reactant Flow-By Fuel Cell technology. The term of the agreement is for twenty years or the expiry of the last patent licensed under the agreement, whichever is later. The Company agreed to pay the licensor the following license fees:</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-align:justify;text-indent:-.5in'><font style='font-family:Symbol'>&#183;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>an initial license fee of Cdn$10,000 payable in two installments: Cdn$5,000 upon execution of the agreement (paid) and Cdn$5,000 within thirty days of September 2, 2009 (paid);</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-align:justify;text-indent:-.5in'><font style='font-family:Symbol'>&#183;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>a further license fee of Cdn$15,000 (paid) to be paid within ninety days of September 2, 2009; and</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.5in;text-align:justify;text-indent:-.5in'><font style='font-family:Symbol'>&#183;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font>an annual license fee, payable annually on the anniversary of the date of the agreement as follows:</p> <p style='margin-left:.5in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:126.9pt;border-collapse:collapse'> <tr align="left"> <td width="216" valign="top" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.95in'>September 1, 2010</p> </td> <td width="288" valign="top" style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:10.0pt'>Cdn$10,000 (paid)</p> </td> </tr> <tr align="left"> <td width="216" valign="top" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.95in'>September 1, 2011</p> </td> <td width="288" valign="top" style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:10.0pt'>Cdn$20,000 (accrued)</p> </td> </tr> <tr align="left"> <td width="216" valign="top" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.95in'>September 1, 2012</p> </td> <td width="288" valign="top" style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:10.0pt'>Cdn$30,000(accrued)</p> </td> </tr> <tr align="left"> <td width="216" valign="top" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.95in'>September 1, 2013</p> </td> <td width="288" valign="top" style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:10.0pt'>Cdn$40,000 (accrued)</p> </td> </tr> <tr align="left"> <td width="216" valign="top" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.95in'>September 1, 2014 </p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.95in'>and each successive anniversary</p> </td> <td width="288" valign="top" style='width:3.0in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:10.0pt'>Cdn$50,000 (accrued)</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify'>The Company is to pay the licensor a royalty calculated as 2% of the gross revenue and 15% of any and all consideration directly or indirectly received by the Company from the grant of any sublicense rights. The Company will pay interest at a rate of 1% per month on any amounts past due. In addition, the Company is responsible for the timely payment of all future costs relating to patent expenses and any new or useful art, process, machine, manufacture or composition of matter arising out of any licensor improvements or joint improvements licensed under this agreement and identified by the licensor as potentially patentable. The Company must also invest a minimum of Cdn$250,000 in research and development directly associated with the technology.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-indent:-.5in'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(b)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On May 23, 2012, a former employee of the Company delivered a Notice of Application seeking judgment against the Company for approximately $</font><font lang="EN-CA">55,000</font><font lang="EN-CA">. The hearing of that Application took place on July 31, 2012, at which time the former employee obtained judgment in the approximate amount of $</font><font lang="EN-CA">55,000</font><font lang="EN-CA">. The Company did not defend the amount of the judgment and the amount is included in accounts payable, but claims a complete set-off on the basis that the former employee retains 1,000,000 shares of common stock of the Company as security for payment of the outstanding consulting fees owed to him. On August 31, 2012, the Company commenced a separate action against the former employee seeking a return of the 1,000,000 shares of common stock and a stay of execution of the judgment. That application is pending and has not yet been heard or determined by the court. The payment of the judgment claim of approximately $55,000 is dependent upon whether the former employee will first return the 1,000,000 shares of common stock noted above. The probable outcome of the Company&#146;s claim for the return of the shares cannot yet be determined.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(c)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On May 7, 2014, the Company entered into a two year office space lease commencing July 1, 2014.&#160; Pursuant to the lease, the Company is required to pay Cdn$</font><font lang="EN-CA">2,683 </font><font lang="EN-CA">plus taxes per month.&#160; In addition, on June 1, 2014, the Company entered into a two year office space lease commencing June 1, 2014.&#160; Pursuant to the lease, the Company is required to pay Cdn$1,240 plus taxes per month. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the minimum lease payments as of November 30, 2015:</font></p> <p style='margin-left:.5in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:77.4pt;border-collapse:collapse'> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Fiscal year ending May 31:</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-4.2pt;text-align:center'>$</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2016</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>17,627</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2017</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>2,032</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>19,637</p> </td> </tr> </table> <p style='margin:0in;margin-bottom:.0001pt;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(d)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On November 1, 2014, the Company&#146;s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $</font><font lang="EN-CA">80,000 </font><font lang="EN-CA">per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements.&#160; </font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(e)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On November 1, 2014, the Company&#146;s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $</font><font lang="EN-CA">86,000 </font><font lang="EN-CA">per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements.&#160; </font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On November 15, 2013, the Company entered into a second settlement agreement with the $</font><font lang="EN-CA">150,000 </font><font lang="EN-CA">debenture holder described in Note 9(a). Pursuant to the second amendment, on November 15, 2013, the Company agreed to make monthly payments of $10,000 on the outstanding principal and interest.&#160; Payments were made until December 2014, but have not been made after.&#160; The plaintiff is seeking relief of amounts owed along with 10% interest per annum, from the date of judgments.&#160; All amounts are recorded in these financial statements.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(g)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On June 15, 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for six months in consideration for $</font><font lang="EN-CA">65,000 </font><font lang="EN-CA">per year.</font></p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-autospace:none'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(h)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On July 1 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for a period of six months in consideration for 150,000 common shares and $</font><font lang="EN-CA">3,000 </font><font lang="EN-CA">per month for the first three months and $</font><font lang="EN-CA">5,000 </font><font lang="EN-CA">per month for the remaining three months.&#160; On July 1, 2015, the Company issued </font><font lang="EN-CA">150,000</font><font lang="EN-CA"> shares to the consultant.</font></p> <p style='margin-top:0in;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:1.0in;text-align:justify;text-indent:-.5in;text-autospace:none'><font lang="EN-CA">(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </font><font lang="EN-CA">On September 3, 2015, a former prospective employee of the Company delivered a Notice of Claim seeking judgment against the Company for approximately $</font><font lang="EN-CA">11,400</font><font lang="EN-CA">. &#160;The Company believes the claim is without merit and intends to defend itself.</font></p> <!--egx--> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-autospace:none'><b>Subsequent Events</b></p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.25in;margin-bottom:.0001pt;text-align:justify'>On December 4, 2015, the holder of the convertible debentures described in Notes 9(g) and (h) entered into an agreement to sell and assign the remaining outstanding principal to a third party.&#160; The Company approved and is bound by the assignment and sale agreement.</p> <!--egx--><p style='margin-left:.5in;text-align:justify;text-indent:0in'>(a)&nbsp;&nbsp;&nbsp;&nbsp; Basis of Presentation/Principles of Consolidation</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(b)&nbsp;&nbsp;&nbsp;&nbsp; Use of Estimates</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company&#146;s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(c)&nbsp;&nbsp;&nbsp;&nbsp; Cash and Cash Equivalents</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(d)&nbsp;&nbsp;&nbsp;&nbsp; Accounts Receivable</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables the Company considers at risk. The Company had no allowance for doubtful accounts as of November 30, 2015 and 2014.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(e)&nbsp;&nbsp;&nbsp;&nbsp; Property and Equipment</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="486" style='margin-left:63.0pt;border-collapse:collapse'> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;text-align:justify'>Automotive</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;text-align:justify'>3 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Computer equipment</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>3 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Leasehold improvements</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Office equipment and furniture</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> <tr align="left"> <td width="240" valign="bottom" style='width:2.5in;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Research equipment</p> </td> <td width="246" valign="bottom" style='width:184.5pt;background:white;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>5 years straight-line basis</p> </td> </tr> </table> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(f)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Intangible Assets</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(g)&nbsp;&nbsp;&nbsp;&nbsp; Long-lived Assets</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>In accordance with ASC 360, &#147;<i>Property, Plant and Equipment</i>&#148;, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(h)&nbsp;&nbsp;&nbsp;&nbsp; Foreign Currency Translation</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company&#146;s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Income Taxes</p> <p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, &#147;<i>Accounting for Income Taxes</i>&#148;. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>As of November 30, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2015. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company&#146;s, or its subsidiaries&#146;, income tax returns for the open taxation years noted above.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the six month period ended November 30, 2015 and 2014, there were no charges for interest or penalties.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(j)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Technology Development Revenue Recognition</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company performs research and development services. The Company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(k)&nbsp;&nbsp;&nbsp;&nbsp; Research and Development Costs</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>Research and development costs are expensed as incurred.</p> <!--egx--><p style='margin-left:.5in;text-align:justify;text-indent:0in'>(l)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Stock-based Compensation</p> <p style='margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company records stock-based compensation in accordance with ASC 718, &#147;<i>Compensation &#150; Stock Compensation</i>&#148;, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company&#146;s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company&#146;s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(m)&nbsp;&nbsp; Loss Per Share</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>The Company computes loss per share in accordance with ASC 260, &quot;<i>Earnings per Share</i>&quot; which requires presentation of both basic and diluted earnings per share (&#147;EPS&#148;) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, the Company had 34,949,950 (May 31, 2015 &#150;8,838,205) dilutive potential shares outstanding.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(n)&nbsp;&nbsp;&nbsp;&nbsp; Comprehensive Loss</p> <p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.75in;margin-bottom:.0001pt;text-align:justify'>ASC 220, &#147;<i>Comprehensive Income</i>,&#148; establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2015 and 2014, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.</p> <!--egx--><p style='margin-top:6.0pt;margin-right:0in;margin-bottom:0in;margin-left:.5in;margin-bottom:.0001pt;text-align:justify;text-indent:0in'>(o)&nbsp;&nbsp;&nbsp;&nbsp; Recent Accounting Pronouncements</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.</p> <!--egx--><p style='margin-left:.5in;text-align:justify;text-indent:0in'>(p)&nbsp;&nbsp;&nbsp;&nbsp; Fair Value Measurements</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 1 &#150; quoted prices for identical instruments in active markets.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 2 &#150; quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Level 3 &#150; fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on &#147;Level 3&#148; inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of &#147;Level 3&#148; during the six months ended November 30, 2015 and 2014. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 10 for additional information.</p> <!--egx--><p style='margin-left:.5in;text-align:justify;text-indent:0in'>(q)&nbsp;&nbsp;&nbsp;&nbsp; Derivative Liabilities</p> <p style='margin-left:.5in;text-align:justify'>&nbsp;</p> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.75in;text-align:justify'>The Company accounts for derivative instruments in accordance with ASC Topic 815, &#147;<i>Derivatives and Hedging</i>&#148; and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company&#146;s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2015 and May 31, 2015, the Company had a $519,082 and $353,668 derivative liability, respectively.</p> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="576" style='margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Cost</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Accumulated depreciation</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, </p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:26.4pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:9.0pt'> <td width="204" valign="bottom" style='width:153.0pt;padding:0;height:9.0pt'> <p style='margin:0in;margin-bottom:.0001pt'>Furniture and equipment</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>2,496</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>707</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>1,788</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0;height:9.0pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>2,039</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Computer</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>5,341</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>5,118</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>224</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>829</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Research equipment</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>140,631</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>77,588</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>63,043</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>69,739</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Vehicles under capital lease</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>71,283</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>53,302</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>17,981</p> </td> <td width="93" valign="bottom" style='width:69.75pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>17,598</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>219,751</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>136,715</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>83,036</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>90,205</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:22.3pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="576" style='margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Cost</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Accumulated amortization</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31,</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>2015</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Net carrying value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.65pt'> <td width="204" valign="bottom" style='width:153.0pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:26.4pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="204" valign="bottom" style='width:153.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Patents</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:12.2pt;text-align:right'>70,789</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.8pt;text-align:right'>5,805</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>64,984</p> </td> <td width="93" valign="bottom" style='width:69.75pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.65pt;text-align:right'>54,577</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.25in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="444" style='margin-left:41.4pt;border-collapse:collapse'> <tr style='height:5.75pt'> <td width="198" valign="bottom" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.3in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>$</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2016</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>2,604</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2017</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2018</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2019</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="198" valign="top" style='width:148.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:.1in'>For year ending May 31, 2020</p> </td> <td width="216" valign="bottom" style='width:2.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>5,208</p> </td> <td width="30" valign="bottom" style='width:22.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> </table> <!--egx--><p style='margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Year ending May 31:</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-4.2pt;text-align:center'>$</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2016</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>9,382</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2017</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>4,507</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2018</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>751</p> </td> </tr> <tr style='height:5.65pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Net minimum lease payments</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>14,640</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: amount representing interest payments</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>(841)</p> </td> </tr> <tr style='height:5.75pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Present value of net minimum lease payments</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>13,799</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Less: current portion</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>(10,929)</p> </td> </tr> <tr style='height:5.75pt'> <td width="474" valign="top" style='width:355.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="474" valign="top" style='width:355.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Long-term portion</p> </td> <td width="36" valign="top" style='width:27.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>2,870</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-top:6.0pt;margin-right:0in;margin-bottom:6.0pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="606" style='margin-left:.25in;border-collapse:collapse'> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>May 31, 2015</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:justify'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at the beginning of period</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>353,668</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:18.9pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:18.9pt'> <p style='margin:0in;margin-bottom:.0001pt'>Addition of new derivative liabilities (embedded conversion options)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>694,623</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:18.9pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>160,244</p> </td> </tr> <tr style='height:22.5pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:22.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Conversion of derivative liability</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>(260,767)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>-</p> </td> </tr> <tr style='height:22.5pt'> <td width="378" valign="bottom" style='width:283.5pt;padding:0;height:22.5pt'> <p style='margin:0in;margin-bottom:.0001pt'>Change in fair value of embedded conversion option</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>(268,442)</p> </td> <td width="18" valign="bottom" style='width:13.5pt;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:22.5pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>193,424</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-top:solid windowtext 1.0pt;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="bottom" style='width:283.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Balance at the end of the period </p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>519,082</p> </td> <td width="18" valign="bottom" style='width:13.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>353,668</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="607" style='margin-left:.25in;border-collapse:collapse'> <tr align="left"> <td width="378" valign="bottom" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2014</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.7pt;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:9.95pt'> <td width="378" valign="top" style='width:283.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Fair value of derivative liabilities in excess of note proceeds received</p> </td> <td width="18" valign="top" style='width:13.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="top" style='width:1.0in;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>(359,867)</p> </td> <td width="18" valign="bottom" style='width:13.7pt;padding:0;height:9.95pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;padding:0;height:9.95pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:10.1pt'> <td width="378" valign="top" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:4.5pt;text-align:justify;text-indent:-4.5pt'>Change in fair value of derivative liabilities during period </p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>268,442</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.0pt;padding:0;height:10.1pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> <tr style='height:5.65pt'> <td width="378" valign="top" style='width:283.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;padding:0;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>&nbsp;</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;padding:0;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:18.2pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="378" valign="top" style='width:283.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>Change in fair value of derivatives</p> </td> <td width="18" valign="top" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="top" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>(91,425)</p> </td> <td width="18" valign="bottom" style='width:13.7pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify'>$</p> </td> <td width="96" valign="bottom" style='width:1.0in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:13.5pt;text-align:right'>&#150;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="594" style='width:445.5pt;margin-left:23.4pt;border-collapse:collapse'> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Volatility</p> </td> <td width="108" valign="bottom" style='width:81.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Risk-free Interest Rate</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Dividend Yield</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Expected Life (in years)</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr style='height:4.3pt'> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt;height:4.3pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>At issuance</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>134-184%</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.07-0.74%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.50-2.00</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>At November 30, 2015</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>171-182%</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.25-0.51%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0%</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>0.78-1.00</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="108" valign="bottom" style='width:81.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="636" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="bottom" style='width:76.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>warrants</p> </td> <td width="120" valign="bottom" style='width:1.25in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average exercise price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:14.45pt'> <td width="414" valign="top" style='width:310.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;padding:0in 5.4pt 0in 5.4pt;height:14.45pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, May 31, 2015</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,258,333</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.44</p> </td> </tr> <tr style='height:5.75pt'> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>Issued</p> </td> <td width="102" valign="top" style='width:76.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>100,000</p> </td> <td width="120" valign="top" style='width:1.25in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.15</p> </td> </tr> <tr style='height:5.75pt'> <td width="414" valign="top" style='width:310.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="414" valign="top" style='width:310.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Balance, November 30, 2015</p> </td> <td width="102" valign="top" style='width:76.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,358,333</p> </td> <td width="120" valign="top" style='width:1.25in;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>0.44</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="306" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="90" valign="bottom" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Number of warrants </p> </td> <td width="72" valign="bottom" style='width:.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>$</p> </td> <td width="144" valign="bottom" style='width:1.5in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Expiry date</p> </td> </tr> <tr style='height:5.75pt'> <td width="90" valign="bottom" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>150,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.60</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>November 18, 2016</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>500,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.60</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>February 27, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>333,333</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.80</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>June 4, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.80</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>July 11, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>100,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.15</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>August 4, 2017</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>4,075,000</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.37</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>April 10, 2019</p> </td> </tr> <tr style='height:5.75pt'> <td width="90" valign="top" style='width:67.5pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="90" valign="top" style='width:67.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>5,358,333</p> </td> <td width="72" valign="bottom" style='width:.75in;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="144" valign="bottom" style='width:1.5in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.5in;text-align:justify'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="600" style='width:6.25in;margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Number of options</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average exercise price $</p> </td> <td width="114" valign="top" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Weighted average remaining contractual life (years)</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>Aggregate</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>intrinsic</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>value</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>$</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="top" style='width:2.75in;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="66" valign="top" style='width:49.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="top" style='width:85.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> <td width="78" valign="top" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:1.45pt;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, May 31, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,675,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="bottom" style='width:2.75in;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>Expired</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:2.9pt;text-align:right'>(300,000)</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr style='height:5.75pt'> <td width="264" valign="bottom" style='width:2.75in;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.1in'>&nbsp;</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>&nbsp;</p> </td> <td width="114" valign="bottom" style='width:85.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Outstanding, November 30, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,375,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.20</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>0.90</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&#150;</p> </td> </tr> <tr align="left"> <td width="264" valign="bottom" style='width:2.75in;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Exercisable, November 30, 2015</p> </td> <td width="66" valign="bottom" style='width:49.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,125,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:9.0pt;text-align:right'>0.24</p> </td> <td width="114" valign="bottom" style='width:85.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.2in;text-align:right'>0.89</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&#150;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:.25in'>&nbsp;</p> <table border="1" cellspacing="0" cellpadding="0" width="564" style='width:423.0pt;margin-left:41.4pt;border-collapse:collapse;border:none'> <tr align="left"> <td width="339" valign="bottom" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-.9pt'><font lang="EN-CA">Non-vested stock options</font></p> </td> <td width="100" valign="bottom" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Number of Options</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:11.95pt;text-align:right;text-indent:-6.05pt'><font lang="EN-CA">Weighted Average</font></p> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Grant Date</font></p> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">Fair Value</font></p> </td> </tr> <tr style='height:5.65pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:15.85pt'>&nbsp;</p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">$</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-19.7pt'><font lang="EN-CA">Non-vested at May 31, 2015</font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">550,000</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.23</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'><font lang="EN-CA">Vested </font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">(300,000)</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.19</font></p> </td> </tr> <tr style='height:5.75pt'> <td width="339" valign="top" style='width:254.3pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.75pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="339" valign="top" style='width:254.3pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-indent:-19.7pt'><font lang="EN-CA">Non-vested at November 30, 2015</font></p> </td> <td width="100" valign="top" style='width:74.85pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:-3.95pt;margin-bottom:0in;margin-left:-5.65pt;margin-bottom:.0001pt'><font lang="EN-CA">250,000</font></p> </td> <td width="125" valign="bottom" style='width:93.85pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:right'><font lang="EN-CA">0.17</font></p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;text-indent:.25in;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="330" style='margin-left:41.4pt;border-collapse:collapse'> <tr align="left"> <td width="84" valign="bottom" style='width:63.0pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Number of</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>options</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>Exercise</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>price</p> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>$</p> </td> <td width="168" valign="bottom" style='width:1.75in;border:none;border-bottom:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.05pt'>Expiry date</p> </td> </tr> <tr style='height:5.65pt'> <td width="84" valign="top" style='width:63.0pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;border:none;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>175,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>April 28, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.30</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>July 17, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.10</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>August 1, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>November 1, 2016</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>200,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>December 9, 2016 </p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>400,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>0.20</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-indent:-4.3pt'>March 16, 2017</p> </td> </tr> <tr style='height:5.65pt'> <td width="84" valign="top" style='width:63.0pt;border:none;border-top:solid windowtext 1.0pt;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>&nbsp;</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt;height:5.65pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:22.95pt;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="84" valign="top" style='width:63.0pt;border:none;border-bottom:solid windowtext 1.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:.1in;text-align:right'>1,375,000</p> </td> <td width="78" valign="bottom" style='width:58.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-top:0in;margin-right:.2in;margin-bottom:0in;margin-left:4.3pt;margin-bottom:.0001pt;text-align:right;text-indent:-4.3pt'>&nbsp;</p> </td> <td width="168" valign="bottom" style='width:1.75in;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;margin-right:22.95pt;text-indent:-4.05pt'>&nbsp;</p> </td> </tr> </table> <!--egx--><p style='margin:0in;margin-bottom:.0001pt;margin-left:.25in;text-align:justify;text-autospace:none'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" width="394" style='width:4.1in;margin-left:.5in;border-collapse:collapse'> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="95" valign="bottom" style='width:71.55pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2015</p> </td> <td width="19" valign="bottom" style='width:13.95pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;border:none;border-bottom:solid windowtext 1.0pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>November 30, 2014</p> </td> </tr> <tr style='height:5.75pt'> <td width="186" valign="top" style='width:139.5pt;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="95" valign="top" style='width:71.55pt;border:none;padding:0;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> <td width="19" valign="top" style='width:13.95pt;border:none;padding:0;height:5.75pt'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="top" style='width:70.2pt;border:none;padding:0;height:5.75pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&nbsp;</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Risk-free Interest rate</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>0.48%</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Expected life (in years)</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>1.97</p> </td> </tr> <tr align="left"> <td width="186" valign="top" style='width:139.5pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>Expected volatility</p> </td> <td width="95" valign="bottom" style='width:71.55pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>&#150;</p> </td> <td width="19" valign="top" style='width:13.95pt;padding:0'> <p style='margin:0in;margin-bottom:.0001pt'>&nbsp;</p> </td> <td width="94" valign="bottom" style='width:70.2pt;padding:0'> <p align="center" style='margin:0in;margin-bottom:.0001pt;text-align:center'>111%</p> </td> </tr> </table> <!--egx--><p style='margin-left:.5in'>&nbsp;</p> <table border="0" cellspacing="0" cellpadding="0" style='margin-left:77.4pt;border-collapse:collapse'> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt'>Fiscal year ending May 31:</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="center" style='margin:0in;margin-bottom:.0001pt;margin-right:-4.2pt;text-align:center'>$</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2016</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>17,627</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>2017</p> </td> <td width="36" valign="top" style='width:27.0pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>2,032</p> </td> </tr> <tr align="left"> <td width="450" valign="top" style='width:337.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p style='margin:0in;margin-bottom:.0001pt;text-align:justify;text-indent:17.1pt'>&nbsp;</p> </td> <td width="36" valign="top" style='width:27.0pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;text-align:right'>&nbsp;</p> </td> <td width="90" valign="top" style='width:67.5pt;border-top:solid windowtext 1.0pt;border-left:none;border-bottom:solid windowtext 1.5pt;border-right:none;padding:0in 5.4pt 0in 5.4pt'> <p align="right" style='margin:0in;margin-bottom:.0001pt;margin-right:8.75pt;text-align:right'>19,637</p> </td> </tr> 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Document and Entity Information
6 Months Ended
Nov. 30, 2015
shares
Document and Entity Information:  
Entity Registrant Name Mantra Venture Group Ltd.
Document Type 10-Q
Document Period End Date Nov. 30, 2015
Trading Symbol mvtg
Amendment Flag false
Entity Central Index Key 0001413891
Current Fiscal Year End Date --05-31
Entity Common Stock, Shares Outstanding 78,138,619
Entity Filer Category Smaller Reporting Company
Entity Current Reporting Status Yes
Entity Voluntary Filers No
Entity Well-known Seasoned Issuer No
Document Fiscal Year Focus 2016
Document Fiscal Period Focus Q2
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MANTRA VENTURE GROUP LTD. - Consolidated Balance Sheets - USD ($)
Nov. 30, 2015
May. 31, 2015
Current Assets:    
Cash   $ 7,446
Accounts receivable $ 7,941 25,527
Deferred finance costs 4,583 7,085
Prepaid expenses and deposits 36,693 126,146
Total Current Assets 49,217 166,204
Deposit 8,000 8,000
Restricted cash 14,550 20,734
Property and equipment, net 83,036 90,205
Intangible assets, net 64,984 54,577
Total Assets 219,787 339,720
Current liabilities:    
Checks issued in excess of funds on deposit 5,636  
Accounts payable and accrued liabilities 737,621 613,875
Due to related parties 91,519 112,193
Loans payable 183,670 190,106
Obligations under capital lease, current 10,929 17,325
Convertible debentures, net [1] 447,064 237,333
Derivative liability 519,082 353,668
Total Current Liabilities 1,995,521 1,524,500
Obligations under capital lease 2,870  
Total Liabilities $ 1,998,391 $ 1,524,500
Stockholders' Deficit:    
Preferred stock [2]
Common stock [3] $ 783 $ 715
Additional paid-in capital 10,934,305 10,462,265
Common stock subscribed 74,742 74,742
Accumulated deficit (12,566,702) (11,529,916)
Total Stockholders' deficit (1,556,872) (992,194)
Non-contolling interest (221,732) (192,586)
Total Stockholders' equity deficit (1,778,604) (1,184,780)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 219,787 $ 339,720
[1] net of discount of $231,655 and $189,520, respectively.
[2] 20,000,000 shares authorized, par value $0.00001 0 shares issued and outstanding.
[3] 100,000,000 shares authorized, par value $0.0001; 78,138,619 and 71,516,581 shares issued and outstanding as of November 30, 2015 and May 31, 2015
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Statement of Financial Position - Parenthetical - $ / shares
Nov. 30, 2015
May. 31, 2015
Statement of Financial Position    
Common Stock, Par Value $ 0.00001 $ 0.00001
Preferred Stock, Par Value $ 0.00001 $ 0.00001
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MANTRA VENTURE GROUP LTD. - Consolidated Statements of Operations
3 Months Ended 6 Months Ended
Nov. 30, 2015
USD ($)
$ / shares
Nov. 30, 2014
USD ($)
$ / shares
Nov. 30, 2015
USD ($)
$ / shares
Nov. 30, 2014
USD ($)
$ / shares
Income Statement        
Revenues $ 37,130 $ 22,566 $ 50,768 $ 77,796
Cost of goods sold
Gross profit $ 37,130 $ 22,566 $ 50,768 $ 77,796
Operating Expenses:        
Business development   5,708 1,022 15,933
Consulting and advisory 54,471 123,190 146,593 259,584
Depreciation and amortization 7,794 10,066 11,225 20,050
Foreign exchange gain 268 (24,442) (459) (46,988)
General and administrative 10,316 22,632 36,507 83,999
License fees 37,445 45,941 37,445 45,941
Management fees 51,170 56,541 118,438 115,999
Professional fees 74,499 72,709 100,074 69,766
Public listing costs 1,667 18,012 11,519 31,067
Rent 10,079 15,561 31,027 33,545
Research and development 40,580 224,974 92,902 567,409
Supplies 3,076 17,077 3,076 17,077
Travel and promotion 5,942 65,496 33,074 133,717
Wages and benefits   7,091 2,430 20,008
Total operating expenses 297,307 660,556 624,873 1,367,107
Loss before other expense (260,177) (637,990) (574,105) (1,289,311)
Other income (expense)        
(Loss) Gain on settlement of debt   1,759 (24,000) 1,759
Accretion of discounts on convertible debentures (136,797) (13,379) (318,707) (21,828)
Loss on change in fair value of derivatives (298,121)   (91,425)  
Interest expense (34,147) (8,685) (57,695) (17,970)
Total other income expense (469,065) (20,305) (491,827) (38,039)
Net loss (729,242) (658,295) (1,065,932) (1,327,350)
Less: net loss attributable to the non-controlling interest 13,179 24,389 29,146 41,085
Net loss attributable [1] $ (716,063) $ (633,906) $ (1,036,786) $ (1,286,265)
Net loss per share attributable to common shareholders, basic and diluted | $ / shares $ (0.01) $ (0.01) $ (0.01) $ (0.02)
[1] attributable to Mantra Venture Group Ltd.
XML 15 R5.htm IDEA: XBRL DOCUMENT v3.3.1.900
MANTRA VENTURE GROUP LTD. - Consolidated Statements of Cash Flows - USD ($)
3 Months Ended 6 Months Ended 12 Months Ended
Nov. 30, 2015
Nov. 30, 2014
Nov. 30, 2015
Nov. 30, 2014
May. 31, 2015
May. 31, 2014
Cash flows from operating activities:            
Net loss $ (729,242) $ (658,295) $ (1,065,932) $ (1,327,350)    
Adjustments to reconcile net loss to net cash used in operating activities:            
(Gain) in fair value of derivative liability     (268,442)      
Amortization of finance costs 15,502   15,502      
Accretion of discounts on convertible debentures     318,707 21,828    
Depreciation and amortization $ 7,794 10,066 11,225 20,050    
Foreign exchange loss (gain)     (7,841) (3,982)    
Initial derivative expenses     359,867      
Shares issued for services     30,001      
Stock-based compensation on options and warrants     19,118 290,450    
Loss (gain) on settlement of debt     24,000 (1,759)    
Changes in nonoperating assets and liabilities:            
Amounts receivable, increase decrease     17,586 147,364    
Prepaid expenses and deposits, increase decrease     89,453 98,370    
Accounts payable and accrued liabilities, increase decrease     153,500 (99,650)    
Due to related parties, increase decrease     (20,674) (85,987)    
Net Cash Used In Operating Activities     (323,930) (940,666)    
Cash flows from investing activities:            
Purchase of property and equipment     (682) (20,549)    
Investment in intangible assets     (12,161) (25,454)    
Net Cash Used In Investing Activities     (12,843) (46,003)    
Cash flows from financing activities:            
Repayment of capital lease obligations     (3,309) (5,719)    
Repayment of loan payable     (50,000) (45,956)    
Proceeds from notes payable     50,000      
Proceeds from issuance of convertible debentures     312,000   $ 54,808 $ 40,000
Checks issued in excess of funds on deposit     5,636      
Proceeds from issuance of common stock and subscriptions received     15,000 173,787    
Net Cash Provided By Financing Activities     329,327 122,112    
Change in cash     (7,446) (864,557)    
Cash, beginning of period     7,446 931,886 931,886  
Cash, end of period   $ 67,329   67,329 $ 7,446 $ 931,886
Non-cash investing and financing activities:            
Common stock issued to relieve common stock subscribed       112,625    
Common stock issued to settle accounts payable and debt     24,000 $ 9,019    
Common stock issued for conversion of notes payable     $ 359,988      
Common stock issued for pre-paid asset        
Original issue discounts     $ 26,087      
Debt issuance cost     13,000      
Original debt discount against derivative liability     334,755      
Supplemental disclosures:            
Interest paid     $ 9,333 $ 6,023    
Income taxes paid        
XML 16 R6.htm IDEA: XBRL DOCUMENT v3.3.1.900
1. Basis of Presentation
6 Months Ended
Nov. 30, 2015
Notes  
1. Basis of Presentation

1.       Basis of Presentation

 

Mantra Venture Group Ltd. (the “Company”) was incorporated in the State of Nevada on January 22, 2007 to acquire and commercially exploit various new energy related technologies through licenses and purchases. On December 8, 2008, the Company continued its corporate jurisdiction out of the State of Nevada and into the province of British Columbia, Canada. The Company is in the business of developing and providing energy alternatives. The Company also provides marketing and graphic design services to help companies optimize their environmental awareness presence through the eyes of government, industry and the general public.

 

The accompanying unaudited consolidated interim financial statements of the Company should be read in conjunction with the consolidated financial statements and accompanying notes filed with the U.S. Securities and Exchange Commission in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2015. In the opinion of management, the accompanying financial statements reflect all adjustments of a recurring nature considered necessary to present fairly the Company’s financial position and the results of its operations and its cash flows for the periods shown.

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported. Actual results could differ materially from those estimates. The results of operations and cash flows for the periods shown are not necessarily indicative of the results to be expected for the full year.

 

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has yet to acquire commercially exploitable energy related technology, and is unlikely to generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of management to raise additional equity capital through private and public offerings of its common stock, and the attainment of profitable operations. As at November 30, 2015, the Company has an accumulated loss of $12,566,702, a working capital deficit of $1,946,304 and no cash. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Management requires additional funds over the next twelve months to fully implement its business plan. Management is currently seeking additional financing through the sale of equity and from borrowings from private lenders to cover its operating expenditures. There can be no certainty that these sources will provide the additional funds required for the next twelve months.

XML 17 R7.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies
6 Months Ended
Nov. 30, 2015
Notes  
2. Significant Accounting Policies

2.       Significant Accounting Policies

 

(a)     Basis of Presentation/Principles of Consolidation

 

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.

 

(b)     Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

 

(c)     Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

 

(d)     Accounts Receivable

The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables the Company considers at risk. The Company had no allowance for doubtful accounts as of November 30, 2015 and 2014.

 

(e)     Property and Equipment

Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:

 

Automotive

3 years straight-line basis

Computer equipment

3 years straight-line basis

Leasehold improvements

5 years straight-line basis

Office equipment and furniture

5 years straight-line basis

Research equipment

5 years straight-line basis

 

(f)      Intangible Assets

Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.

 

(g)     Long-lived Assets

In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

 

(h)     Foreign Currency Translation

 

Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.

 

The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.

 

(i)       Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

As of November 30, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2015. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above.

 

The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the six month period ended November 30, 2015 and 2014, there were no charges for interest or penalties.

 

(j)      Technology Development Revenue Recognition

The Company performs research and development services. The Company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.

 

(k)     Research and Development Costs

Research and development costs are expensed as incurred.

 

(l)       Stock-based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.

 

(m)   Loss Per Share

The Company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, the Company had 34,949,950 (May 31, 2015 –8,838,205) dilutive potential shares outstanding.

 

(n)     Comprehensive Loss

ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2015 and 2014, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.

 

(o)     Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

(p)     Fair Value Measurements

 

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

 

Level 1 – quoted prices for identical instruments in active markets.

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and.

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the six months ended November 30, 2015 and 2014. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

 

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 10 for additional information.

 

(q)     Derivative Liabilities

 

The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2015 and May 31, 2015, the Company had a $519,082 and $353,668 derivative liability, respectively.

XML 18 R8.htm IDEA: XBRL DOCUMENT v3.3.1.900
3. Restricted Cash
6 Months Ended
Nov. 30, 2015
Notes  
3. Restricted Cash

3.                   Restricted Cash

 

Restricted cash represents cash pledged as security for the Company’s credit cards.

XML 19 R9.htm IDEA: XBRL DOCUMENT v3.3.1.900
4. Property and Equipment
6 Months Ended
Nov. 30, 2015
Notes  
4. Property and Equipment

4.                   Property and Equipment

 

 

Cost

$

Accumulated depreciation

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Furniture and equipment

2,496

707

1,788

2,039

Computer

5,341

5,118

224

829

Research equipment

140,631

77,588

63,043

69,739

Vehicles under capital lease

71,283

53,302

17,981

17,598

 

 

 

 

 

 

219,751

136,715

83,036

90,205

 

XML 20 R10.htm IDEA: XBRL DOCUMENT v3.3.1.900
5. Intangible Assets
6 Months Ended
Nov. 30, 2015
Notes  
5. Intangible Assets

5.       Intangible Assets

 

 

Cost

$

Accumulated amortization

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Patents

70,789

5,805

64,984

54,577

 

Estimated Future Amortization Expense:

 

 

 

 

 

$

 

For year ending May 31, 2016

2,604

 

For year ending May 31, 2017

5,208

 

For year ending May 31, 2018

5,208

 

For year ending May 31, 2019

5,208

 

For year ending May 31, 2020

5,208

 

XML 21 R11.htm IDEA: XBRL DOCUMENT v3.3.1.900
6. Related Party Transactions
6 Months Ended
Nov. 30, 2015
Notes  
6. Related Party Transactions

6.               Related Party Transactions

 

a)       During the six months ended November 30, 2015, the Company incurred management fees of $65,485 (2014 - $86,816) to the President of the Company.

b)       During the six months ended November 30, 2015, the Company incurred management fees of $23,820 (2014 - $29,183) to the spouse of the President of the Company.

c)       During the six months ended November 30, 2015, the Company incurred research and development fees of $28,920 (2014 - $39,503) to a director of the Company.

d)       The Company recorded $29,133 of management fees for the vesting of options previously granted to officers and directors.

e)       As at November 30, 2015, the Company owes a total of $74,007 (May 31, 2015 - $93,418) to the President of the Company and his spouse, and a company controlled by the President of the Company which is non-interest bearing, unsecured, and due on demand.

f)        As at November 30, 2015, the Company owes $17,512 (May 31, 2015 - $18,775) to an officer and a director of the Company, which is non-interest bearing, unsecured, and due on demand.

XML 22 R12.htm IDEA: XBRL DOCUMENT v3.3.1.900
7. Loans Payable
6 Months Ended
Nov. 30, 2015
Notes  
7. Loans Payable

7.       Loans Payable

 

(a)                 As at November 30, 2015, the amount of $47,321 (Cdn$63,300) (May 31, 2015 - $50,738 (Cdn$63,300)) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.

 

(b)                 As at November 30, 2015, the amount of $17,500 (May 31, 2015 - $17,500) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.

 

(c)                 As at November 30, 2015, the amount of $15,000 (May 31, 2015 - $15,000) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.

 

(d)                 As at November 30, 2015, the amount of $14,150 (Cdn$18,895) (May 31, 2015 -$15,171 (Cdn$18,895)) is owed to a non-related party, which is non-interest bearing, unsecured, and due on demand.

 

(e)                 As at November 30, 2015, the amounts of $35,209 (Cdn$37,000) (May 31, 2015 - $37,207 (Cdn$37,000)) are owed to a non-related party which are non-interest bearing, unsecured, and due on demand.

 

(f)                  As at November 30, 2015, the amount of $4,490 (May 31, 2015- $4,490) is owed to a non-related party which is non-interest bearing, unsecured, and due on demand.

 

(g)                 In March 2012, the Company received $50,000 for the subscription of 10,000,000 shares of the Company’s common stock. During the year ended May 31, 2013, the Company and the subscriber agreed that the shares would not be issued and that the subscription would be returned. The subscription has been reclassified as a non-interest bearing demand loan until the funds are refunded to the subscriber.

 

(h)                 On August 4, 2015, the Company borrowed $50,000 pursuant to a promissory note. The note was due on September 4, 2015. The note bears interest at 120% per annum prior September 4, 2015, and at 180% per annum after September 4, 2015.  The holder of the note was also granted the rights to buy 100,000 shares of the Company’s common stock at a price of $0.15 per share until August 4, 2017.   During the six months ended November 30, 2015, the Company repaid the $50,000 note and $1,200 of accrued interest remains owing.

 

The rights issued with the note qualified for derivative accounting and under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the warrants of $9,755 resulted in a discount to the note payable of $9,755. During the six months ended November 30, 2015, the Company recorded accretion of $9,755.

XML 23 R13.htm IDEA: XBRL DOCUMENT v3.3.1.900
8. Obligations Under Capital Lease
6 Months Ended
Nov. 30, 2015
Notes  
8. Obligations Under Capital Lease

8.                   Obligations Under Capital Lease

 

On July 31, 2012 and December 21, 2012, the Company entered into two agreements to lease two vehicles for three years each. In August 2015, the July 31, 2012 lease was renewed for an additional two years. The vehicle leases are classified as a capital leases. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the net minimum lease payments as of November 30, 2015:

 

Year ending May 31:

 

$

2016

 

9,382

2017

 

4,507

2018

 

751

 

 

 

Net minimum lease payments

 

14,640

Less: amount representing interest payments

 

(841)

 

 

 

Present value of net minimum lease payments

 

13,799

Less: current portion

 

(10,929)

 

 

 

Long-term portion

 

2,870

 

At the end of the leases, the Company has the option to purchase the two vehicles for $1 and $9,000, respectively.

XML 24 R14.htm IDEA: XBRL DOCUMENT v3.3.1.900
9. Convertible Debentures
6 Months Ended
Nov. 30, 2015
Notes  
9. Convertible Debentures

9.       Convertible Debentures

 

(a)                 In October 2008, the Company issued three convertible debentures for total proceeds of $250,000 which bear interest at 10% per annum, are unsecured, and due one year from date of issuance. The unpaid amount of principal and accrued interest can be converted at any time at the holder’s option into 625,000 shares of the Company’s common stock at a price of $0.40 per share. The Company also issued 250,000 detachable, non-transferable share purchase warrants. Each share purchase warrant entitles the holder to purchase one additional share of the Company’s common stock for a period of two years from the date of issuance at an exercise price of $0.50 per share.

 

In accordance with ASC 470-20, “Debt with Conversion and Other Options”, the Company determined that the convertible debentures contained no embedded beneficial conversion feature as the convertible debentures were issued with a conversion price higher than the fair market value of the Company’s common shares at the time of issuance.

 

In accordance with ASC 470-20, the Company allocated the proceeds of issuance between the convertible debt and the detachable share purchase warrants based on their relative fair values. Accordingly, the Company recognized the fair value of the share purchase warrants of $45,930 as additional paid-in capital and an equivalent discount against the convertible debentures. The Company had recorded accretion expense of $45,930, increasing the carrying value of the convertible debentures to $250,000.

 

On January 19, 2012, the Company entered into a settlement agreement with one of the debenture holders to settle a $50,000 convertible debenture and $122,535 in accounts payable and accrued interest with the debt holder. Pursuant to the agreement, the debt holder agreed to reduce the debt to Cdn$100,000 on the condition that the Company pays the amount of Cdn$2,500 per month for 40 months, beginning March 1, 2012 and continuing on the first day of each month thereafter.

 

On July 18, 2012, the Company entered into a settlement agreement with the $150,000 debenture holder. Pursuant to the settlement agreement, the lender agreed to extend the due date until April 11, 2013 and the Company agreed to pay $43,890 of accrued interest within five days of the agreement (paid), pay the accruing interest on a monthly basis (paid), and pay a $10,000 premium in addition to the $150,000 principal outstanding on April 11, 2013. On April 29, 2013, the Company entered into an amended settlement agreement whereby the lender agreed to extend the due date to September 15, 2013 and the Company agreed to pay $6,836 of interest for the period from April 1 to September 15, 2013 upon execution of the agreement (paid) and granted the lender 100,000 stock options exercisable at $0.12 per share for a period of two years.

 

On November 15, 2013, the Company entered into a second settlement agreement amendment. Pursuant to the second amendment, on November 15, 2013, the Company agreed to pay interest of $4,438 (paid) and commencing February 1, 2014, the Company would make monthly payments of $10,000 on the outstanding principal and interest.

 

The Company evaluated the modifications and determined that the creditor did not grant a concession. In addition, as the present value of the amended future cash flows had a difference of less than 10% of the cash flows of the original debt, it was determined that the original and new debt instruments are not substantially different. As a result, the modification was not treated as an extinguishment of the debt and no gain or loss was recognized. The Company recorded the fair value of $12,901 for the stock options as additional paid-in capital and a discount. During the year ended May 31, 2014, the Company repaid $40,000 of the debenture.  As at May 31, 2014 the Company had accreted $12,901 of the discount bring the carrying value of the convertible debenture to $114,661.  During the year ended May 31, 2015, the Company repaid $54,808 decreasing the carrying value to $59,853.  At November 30, 2015, the other remaining debenture of $50,000 remained outstanding and past due.

 

(b)                 On August 19, 2013, the Company issued a convertible debenture for total proceeds of $10,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $10,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $10,000. As at November 30, 2015, the carrying value of the convertible promissory note was $10,000 and the note remained outstanding and in default. 

 

(c)                 On September 11, 2013, the Company issued a convertible debenture for total proceeds of $58,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $58,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $58,000. As at November 30, 2015, the carrying value of the convertible promissory note was $58,000 and the note remained outstanding and in default. 

 

(d)                 On October 18, 2013, the Company issued a convertible debenture for total proceeds of $94,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion feature of $94,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $94,000. As at November 30, 2015, the carrying value of the convertible promissory note was $94,000 and the note remained outstanding and in default. 

 

(e)                 On December 27, 2013, the Company issued three convertible debentures for total proceeds of $15,000, which bear interest at 10% per annum, are unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes.  The Company recognized the intrinsic value of the embedded beneficial conversion features of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $14,164.

 

(f)                  On February 4, 2014, the Company issued a convertible debenture for total proceeds of $15,000, which bears interest at 10% per annum, is unsecured, and due two years from date of issuance. The unpaid amount of principal and accrued interest can be converted at the holder’s option into shares of the Company’s common stock at $0.04 per share at any time after the first anniversary of the notes. The Company recognized the intrinsic value of the embedded beneficial conversion feature of $15,000 as additional paid-in capital and reduced the carrying value of the convertible debenture to $nil. The carrying value will be accreted over the term of the convertible debenture up to its face value of $15,000. As at November 30, 2015, the carrying value of the convertible promissory note was $11,787.

 

(g)                 On February 17, 2015, the Company issued a convertible note in the principal amount of $125,000. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.  After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.

 

The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $160,244 resulted in a discount to the note payable of $125,000 and the recognition of a loss on derivatives of $35,244. During the six months ended November 30, 2015, the Company issued 6,078,288 shares of common stock upon the conversion of $99,222 of principal.  During the six months ended November 30, 2015, the Company recorded accretion of $93,216 increasing the carrying value of the note to $25,778. At November 30, 2015, the note remained outstanding and past due.

 

(h)                 On June 1, 2015, the Company issued a convertible note in the principal amount of $100,000 due on demand on or after December 1, 2015. The note has a cash redemption premium of 130% of the principal amount in the first 90 days following the execution date, of 135% for days 90-120 following the execution date, and 140% after the 120th day.  After 140 days cash redemption is only available upon approval by the holder. The note bears interest at 12% per annum and is convertible into common shares of the Company at the lower of a 42% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 42% discount to the lowest trading price during the previous 20 trading days before the date the note was executed. In no event shall the conversion price be lower than $0.00001.

 

The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $310,266 resulted in a discount to the note payable of $100,000 and the recognition of a loss on derivatives of $210,266.  During the six months ended November 30, 2015, the Company recorded accretion of $100,000, increasing the carrying value of the note to $100,000.

 

(i)                   On September 8, 2015, the Company issued a convertible note in the principal amount of $326,087. During the six months ended November 30, 2015, the Company received the initial tranches of $225,000 net of a $26,087 original issue discount. The note bears interest at 12% per annum and is convertible into common shares of the Company at a 65% discount to the lowest trading price during the previous 20 trading days to the date of conversion; or a 65% discount to the lowest trading price during the previous 20 trading days before the date the note was executed.

 

The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 “Derivatives and Hedging”.  The initial fair value of the conversion feature of $376,713 resulted in a discount to the note payable of $225,000 and the recognition of a loss on derivatives of $151,713.  During the six months ended November 30, 2015, the Company recorded accretion of $23,482, increasing the carrying value of the note to $23,482.

XML 25 R15.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities
6 Months Ended
Nov. 30, 2015
Notes  
10. Derivative Liabilities

10.    Derivative Liabilities

 

The embedded conversion option of the convertible debenture described in Note 9(g) contains a conversion feature that qualifies for embedded derivative classification.  The fair value of the liability will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative financial instruments.

 

Upon the issuance of the convertible note payable described in Note 9(g), the Company concluded that it only has sufficient shares to satisfy the conversion of some but not all of the outstanding convertible notes, warrants and options.  The Company elected to reclassify contracts from equity with the earliest inception date first. As a result, none of the Company’s previously outstanding convertible instruments qualified for derivative reclassification, however, any convertible securities issued after the election, including the convertible note described in Notes 9(h) and 9(i), and the rights described in Note 7(h) would qualify for treatment as derivative liabilities.  The Company reassesses the classification of the instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification.

The table below sets forth a summary of changes in the fair value of the Company’s Level 3 financial liabilities:

 

 

 

November 30, 2015

 

May 31, 2015

 

 

 

 

 

Balance at the beginning of period

$

353,668

$

 

 

 

 

 

Addition of new derivative liabilities (embedded conversion options)

 

694,623

 

160,244

Conversion of derivative liability

 

(260,767)

 

-

Change in fair value of embedded conversion option

 

(268,442)

 

193,424

 

 

 

 

 

Balance at the end of the period

$

519,082

$

353,668

 

The following table summarizes the change in fair value of derivatives:

 

 

 

November 30, 2015

 

November 30, 2014

 

 

 

 

 

Fair value of derivative liabilities in excess of note proceeds received

$

(359,867)

$

Change in fair value of derivative liabilities during period

 

268,442

 

 

 

 

 

 

Change in fair value of derivatives

$

(91,425)

$

 

The Company uses Level 3 inputs for its valuation methodology for the embedded conversion option liabilities as their fair values were determined by using the Black-Scholes option pricing model based on various assumptions. The model incorporates the price of a share of the Company’s common stock (as quoted on the Over the Counter Markets), volatility, risk free rate, dividend rate and estimated life. Significant changes in any of these inputs in isolation would result in a significant change in the fair value measurement. As required, these are classified based on the lowest level of input that is significant to the fair value measurement. The following table shows the assumptions used in the calculations:

 

 

 

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

 

 

 

 

 

 

 

 

 

 

At issuance

134-184%

0.07-0.74%

0%

0.50-2.00

At November 30, 2015

171-182%

0.25-0.51%

0%

0.78-1.00

 

 

 

 

 

 

XML 26 R16.htm IDEA: XBRL DOCUMENT v3.3.1.900
11. Common Stock
6 Months Ended
Nov. 30, 2015
Notes  
11. Common Stock

11.    Common Stock

 

(a)                 As at November 30, and May 31, 2015, the Company had received proceeds of $2,080 at $0.08 per unit for subscriptions for 26,000 units.  Each unit consisted of one share of common stock and one-half of one share purchase warrant.  Each whole share purchase warrant is exercisable at $0.20 per common share for a period of two years or five business days after the Company’s common stock trades at least one time per day on the FINRA Over-the-Counter Bulletin Board at a price at or above $0.40 per share for seven consecutive trading days.

(b)                 As at November 30, and May 31, 2015 the Company’s subsidiary, Mantra Energy Alternatives Ltd., had received subscriptions for 67,000 shares of common stock at Cdn$1.00 per share for proceeds of $66,277 (Cdn$67,000), which is included in common stock subscribed, net of the non-controlling interest portion of $7,231.

(c)                 As at November 30, and May 31, 2015, the Company’s subsidiary, Climate ESCO Ltd., had received subscriptions for 210,000 shares of common stock at $0.10 per share for proceeds of $21,000, which is included in common stock subscribed, net of the non-controlling interest portion of $7,384.

Stock transactions during the six months ended November 30, 2015:

(a)     On July 1, 2015, the Company issued 150,000 common shares with a fair value of $30,000 pursuant to a consulting agreement.

(b)     On July 20, 2015, the Company issued 93,750 common shares at $0.16 per share for proceeds of $15,000.

(c)     On July 22, 2015, the Company issued 300,000 shares to settle $24,000 owed to a creditor.  The shares had a fair value of $48,000 and the Company recorded a loss on settlement of debt of $24,000.

(d)     On August 24, 2015, the Company issued 322,872 shares of common stock upon the conversion of $15,000 of principal of the convertible note described in Note 9(g).

(e)     On September 21, 2015, the Company issued 676,132 shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).

(f)      On October 22, 2015, the Company issued 1,581,778 shares of common stock upon the conversion of $20,000 of principal of the convertible note described in Note 9(g).

(g)     On November 9, 2015, the Company issued 3,497,506 shares of common stock upon the conversion of $44,222 of principal of the convertible note described in Note 9(g).

XML 27 R17.htm IDEA: XBRL DOCUMENT v3.3.1.900
12. Share Purchase Warrants
6 Months Ended
Nov. 30, 2015
Notes  
12. Share Purchase Warrants

12.    Share Purchase Warrants

 

The following table summarizes the continuity of share purchase warrants:

 

 

Number of

warrants

Weighted average exercise price

$

 

 

 

Balance, May 31, 2015

5,258,333

0.44

 

 

 

Issued

100,000

0.15

 

 

 

Balance, November 30, 2015

5,358,333

0.44

 

        As at November 30, 2015, the following share purchase warrants were outstanding:

 

Number of warrants

Exercise

price

$

Expiry date

 

 

 

150,000

0.60

November 18, 2016

500,000

0.60

February 27, 2017

333,333

0.80

June 4, 2017

200,000

0.80

July 11, 2017

100,000

0.15

August 4, 2017

4,075,000

0.37

April 10, 2019

 

 

 

5,358,333

 

 

XML 28 R18.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options
6 Months Ended
Nov. 30, 2015
Notes  
13. Stock Options

13.    Stock Options

 

During the six months ended November 30, 2015, the Company recorded $19,118 related to the vesting of previously granted stock options.

 

The following table summarizes the continuity of the Company’s stock options:

 

 

Number of options

Weighted average exercise price $

Weighted average remaining contractual life (years)

Aggregate

intrinsic

value

$

 

 

 

 

 

Outstanding, May 31, 2015

1,675,000

0.20

 

 

 

 

 

 

 

Expired

(300,000)

0.20

 

 

 

 

 

 

 

Outstanding, November 30, 2015

1,375,000

0.20

0.90

Exercisable, November 30, 2015

1,125,000

0.24

0.89

 

A summary of the changes of the Company’s non-vested stock options is presented below:

 

Non-vested stock options

Number of Options

Weighted Average

Grant Date

Fair Value

 

 

$

Non-vested at May 31, 2015

550,000

0.23

Vested

(300,000)

0.19

 

 

 

Non-vested at November 30, 2015

250,000

0.17

 

As at November 30, 2015, there was $4,030 of unrecognized compensation cost related to non-vested stock option agreements. This cost is expected to be recognized over a weighted average period of 0.28 years. 

 

Additional information regarding stock options as of November 30, 2015 is as follows:

 

Number of

options

Exercise

price

$

Expiry date

 

 

 

175,000

0.20

April 28, 2016

200,000

0.30

July 17, 2016

200,000

0.10

August 1, 2016

200,000

0.20

November 1, 2016

200,000

0.20

December 9, 2016

400,000

0.20

March 16, 2017

 

 

 

1,375,000

 

 

 

The fair values for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:

 

 

November 30, 2015

 

November 30, 2014

 

 

 

 

Risk-free Interest rate

 

0.48%

Expected life (in years)

 

1.97

Expected volatility

 

111%

 

During the six month period ended November 30, 2015, the Company recorded stock-based compensation of $0 (2014 - $248,690) for stock options granted.

 

The weighted average fair value of the stock options granted for the six month period ended November 30, 2015 - $0.42 per option.

XML 29 R19.htm IDEA: XBRL DOCUMENT v3.3.1.900
14. Commitments and Contingencies
6 Months Ended
Nov. 30, 2015
Notes  
14. Commitments and Contingencies

14.    Commitments and Contingencies

 

(a)        On September 2, 2009, the Company entered into an agreement with a company to acquire a worldwide, exclusive license for the Mixed Reactant Flow-By Fuel Cell technology. The term of the agreement is for twenty years or the expiry of the last patent licensed under the agreement, whichever is later. The Company agreed to pay the licensor the following license fees:

 

·                     an initial license fee of Cdn$10,000 payable in two installments: Cdn$5,000 upon execution of the agreement (paid) and Cdn$5,000 within thirty days of September 2, 2009 (paid);

 

·                     a further license fee of Cdn$15,000 (paid) to be paid within ninety days of September 2, 2009; and

 

·                     an annual license fee, payable annually on the anniversary of the date of the agreement as follows:

 

September 1, 2010

Cdn$10,000 (paid)

September 1, 2011

Cdn$20,000 (accrued)

September 1, 2012

Cdn$30,000(accrued)

September 1, 2013

Cdn$40,000 (accrued)

September 1, 2014

and each successive anniversary

Cdn$50,000 (accrued)

 

The Company is to pay the licensor a royalty calculated as 2% of the gross revenue and 15% of any and all consideration directly or indirectly received by the Company from the grant of any sublicense rights. The Company will pay interest at a rate of 1% per month on any amounts past due. In addition, the Company is responsible for the timely payment of all future costs relating to patent expenses and any new or useful art, process, machine, manufacture or composition of matter arising out of any licensor improvements or joint improvements licensed under this agreement and identified by the licensor as potentially patentable. The Company must also invest a minimum of Cdn$250,000 in research and development directly associated with the technology.

 

(b)                 On May 23, 2012, a former employee of the Company delivered a Notice of Application seeking judgment against the Company for approximately $55,000. The hearing of that Application took place on July 31, 2012, at which time the former employee obtained judgment in the approximate amount of $55,000. The Company did not defend the amount of the judgment and the amount is included in accounts payable, but claims a complete set-off on the basis that the former employee retains 1,000,000 shares of common stock of the Company as security for payment of the outstanding consulting fees owed to him. On August 31, 2012, the Company commenced a separate action against the former employee seeking a return of the 1,000,000 shares of common stock and a stay of execution of the judgment. That application is pending and has not yet been heard or determined by the court. The payment of the judgment claim of approximately $55,000 is dependent upon whether the former employee will first return the 1,000,000 shares of common stock noted above. The probable outcome of the Company’s claim for the return of the shares cannot yet be determined.

 

(c)                 On May 7, 2014, the Company entered into a two year office space lease commencing July 1, 2014.  Pursuant to the lease, the Company is required to pay Cdn$2,683 plus taxes per month.  In addition, on June 1, 2014, the Company entered into a two year office space lease commencing June 1, 2014.  Pursuant to the lease, the Company is required to pay Cdn$1,240 plus taxes per month. The following is a schedule by years of future minimum lease payments under capital leases together with the present value of the minimum lease payments as of November 30, 2015:

 

Fiscal year ending May 31:

 

$

2016

 

17,627

2017

 

2,032

 

 

19,637

 

(d)                 On November 1, 2014, the Company’s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $80,000 per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements. 

 

(e)                 On November 1, 2014, the Company’s subsidiary entered into an employment agreement. Pursuant to the agreement, the employee will perform services for a term of one year for base remuneration of $86,000 per annum. In addition, the Company granted to the employee 100,000 stock options exercisable at a price of $0.20 per share. These options are non-transferrable, vest immediately, and expire upon the earlier of 24 months, or upon termination of the employment agreements. 

 

(f)                  On November 15, 2013, the Company entered into a second settlement agreement with the $150,000 debenture holder described in Note 9(a). Pursuant to the second amendment, on November 15, 2013, the Company agreed to make monthly payments of $10,000 on the outstanding principal and interest.  Payments were made until December 2014, but have not been made after.  The plaintiff is seeking relief of amounts owed along with 10% interest per annum, from the date of judgments.  All amounts are recorded in these financial statements.

 

(g)                 On June 15, 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for six months in consideration for $65,000 per year.

 

(h)                 On July 1 2015, the Company entered into a consulting agreement pursuant to which the consultant will provide consulting services for a period of six months in consideration for 150,000 common shares and $3,000 per month for the first three months and $5,000 per month for the remaining three months.  On July 1, 2015, the Company issued 150,000 shares to the consultant.

 

(i)                   On September 3, 2015, a former prospective employee of the Company delivered a Notice of Claim seeking judgment against the Company for approximately $11,400.  The Company believes the claim is without merit and intends to defend itself.

XML 30 R20.htm IDEA: XBRL DOCUMENT v3.3.1.900
15. Subsequent Events
6 Months Ended
Nov. 30, 2015
Notes  
15. Subsequent Events

Subsequent Events

On December 4, 2015, the holder of the convertible debentures described in Notes 9(g) and (h) entered into an agreement to sell and assign the remaining outstanding principal to a third party.  The Company approved and is bound by the assignment and sale agreement.

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Basis of Presentation/principles of Consolidation (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Basis of Presentation/principles of Consolidation

(a)     Basis of Presentation/Principles of Consolidation

 

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. These consolidated financial statements include the accounts of the Company and its subsidiaries, Carbon Commodity Corporation, Climate ESCO Ltd., Mantra Energy Alternatives Ltd., Mantra China Inc., Mantra China Limited, Mantra Media Corp., Mantra NextGen Power Inc., and Mantra Wind Inc. All the subsidiaries are wholly-owned with the exception of Climate ESCO Ltd., which is 64.55% owned and Mantra Energy Alternatives Ltd., which is 88.21% owned. All inter- company balances and transactions have been eliminated.

XML 32 R22.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Use of Estimates (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Use of Estimates

(b)     Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to allowance for doubtful accounts, the estimated useful lives and recoverability of long-lived assets, valuation of inventory, equity component of convertible debt, stock-based compensation, and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

XML 33 R23.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Cash and Cash Equivalents (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Cash and Cash Equivalents

(c)     Cash and Cash Equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

XML 34 R24.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Accounts Receivable (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Accounts Receivable

(d)     Accounts Receivable

The Company recognizes allowances for doubtful accounts to ensure accounts receivable are not overstated due to the inability or unwillingness of its customers to make required payments. The allowance is based on historical bad debt expense, the age of receivable and the specific identification of receivables the Company considers at risk. The Company had no allowance for doubtful accounts as of November 30, 2015 and 2014.

XML 35 R25.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Property and Equipment (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Property and Equipment

(e)     Property and Equipment

Property and equipment are stated at cost. The Company depreciates the cost of property and equipment over their estimated useful lives at the following annual rates:

 

Automotive

3 years straight-line basis

Computer equipment

3 years straight-line basis

Leasehold improvements

5 years straight-line basis

Office equipment and furniture

5 years straight-line basis

Research equipment

5 years straight-line basis

XML 36 R26.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Intangible Assets (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Intangible Assets

(f)      Intangible Assets

Intangible assets consist of patents and are stated at cost and have a definite life. Intangible assets are amortized over their estimated useful lives. The Company periodically evaluates the reasonableness of the useful lives of these assets. Once these assets are fully amortized, they are removed from the accounts. These assets are reviewed for impairment or obsolescence when events or changes in circumstances indicate that the carrying amount may not be recoverable. If impaired, intangible assets are written down to fair value based on discounted cash flows or other valuation techniques. The Company has no intangibles with indefinite lives.

XML 37 R27.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Long-lived Assets (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Long-lived Assets

(g)     Long-lived Assets

In accordance with ASC 360, “Property, Plant and Equipment”, the Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; and current expectation that the asset will more likely than not be sold or disposed significantly before the end of its estimated useful life. Recoverability is assessed based on the carrying amount of the asset and its fair value, which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value.

XML 38 R28.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Foreign Currency Translation (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Foreign Currency Translation

(h)     Foreign Currency Translation

 

Transactions in foreign currencies are translated into the currency of measurement at the exchange rates in effect on the transaction date. Monetary balance sheet items expressed in foreign currencies are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. The resulting exchange gains and losses are recognized in income.

 

The Company’s integrated foreign subsidiaries are financially or operationally dependent on the Company. The Company uses the temporal method to translate the accounts of its integrated operations into U.S. dollars. Monetary assets and liabilities are translated at the exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are translated at historical rates. Revenues and expenses are translated at average rates for the period, except for amortization, which is translated on the same basis as the related asset. The resulting exchange gains or losses are recognized in income.

XML 39 R29.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Income Taxes (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Income Taxes

(i)       Income Taxes

 

The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Accounting for Income Taxes”. The asset and liability method provides that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

 

As of November 30, 2015 and 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions.

 

The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three years from the date of the original notice of assessment in respect of any particular taxation year. For Canadian and U.S. income tax returns, the open taxation years range from 2010 to 2015. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state. Tax authorities of Canada and U.S. have not audited any of the Company’s, or its subsidiaries’, income tax returns for the open taxation years noted above.

 

The Company recognizes interest and penalties related to uncertain tax positions in tax expense. During the six month period ended November 30, 2015 and 2014, there were no charges for interest or penalties.

XML 40 R30.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Technology Development Revenue Recognition (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Technology Development Revenue Recognition

(j)      Technology Development Revenue Recognition

The Company performs research and development services. The Company recognizes revenue under research contracts when a contract has been executed, the contract price is fixed and determinable, delivery of services or products has occurred, and collectability of the contract price is considered reasonably assured and can be reasonably estimated. Revenue is based on direct labor hours expended at contract billing rates plus other billable direct costs.

XML 41 R31.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Research and Development Costs (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Research and Development Costs

(k)     Research and Development Costs

Research and development costs are expensed as incurred.

XML 42 R32.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Stock-based Compensation (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Stock-based Compensation

(l)       Stock-based Compensation

 

The Company records stock-based compensation in accordance with ASC 718, “Compensation – Stock Compensation”, using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable.

 

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock-based awards. This model is affected by the Company’s stock price as well as assumptions regarding a number of subjective variables. These subjective variables include, but are not limited to the Company’s expected stock price volatility over the term of the awards, and actual and projected employee stock option exercise behaviors. The value of the portion of the award that is ultimately expected to vest is recognized as an expense in the consolidated statement of operations over the requisite service period.

XML 43 R33.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Loss Per Share (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Loss Per Share

(m)   Loss Per Share

The Company computes loss per share in accordance with ASC 260, "Earnings per Share" which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at November 30, 2015, the Company had 34,949,950 (May 31, 2015 –8,838,205) dilutive potential shares outstanding.

XML 44 R34.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Comprehensive Loss (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Comprehensive Loss

(n)     Comprehensive Loss

ASC 220, “Comprehensive Income,” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2015 and 2014, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.

XML 45 R35.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Recent Accounting Pronouncements (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Recent Accounting Pronouncements

(o)     Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

XML 46 R36.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Fair Value Measurements (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Fair Value Measurements

(p)     Fair Value Measurements

 

The Company measures and discloses the estimated fair value of financial assets and liabilities using the fair value hierarchy prescribed by US generally accepted accounting principles. The fair value hierarchy has three levels, which are based on reliable available inputs of observable data. The hierarchy requires the use of observable market data when available. The three-level hierarchy is defined as follows:

 

Level 1 – quoted prices for identical instruments in active markets.

Level 2 – quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model derived valuations in which significant inputs and significant value drivers are observable in active markets; and.

Level 3 – fair value measurements derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

 

Financial instruments consist principally of cash and cash equivalents, accounts receivable, restricted cash, accounts payable, loans payable and convertible debentures. Derivative liabilities are determined based on “Level 3” inputs, which are significant and unobservable and have the lowest priority. There were no transfers into or out of “Level 3” during the six months ended November 30, 2015 and 2014. The recorded values of all other financial instruments approximate their current fair values because of their nature and respective relatively short maturity dates or durations.

 

Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statement. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates. See Note 10 for additional information.

XML 47 R37.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Derivative Liabilities (Policies)
6 Months Ended
Nov. 30, 2015
Policies  
Derivative Liabilities

(q)     Derivative Liabilities

 

The Company accounts for derivative instruments in accordance with ASC Topic 815, “Derivatives and Hedging” and all derivative instruments are reflected as either assets or liabilities at fair value in the balance sheet. The Company uses estimates of fair value to value its derivative instruments. Fair value is defined as the price to sell an asset or transfer a liability in an orderly transaction between willing and able market participants. In general, the Company’s policy in estimating fair values is to first look at observable market prices for identical assets and liabilities in active markets, where available. When these are not available, other inputs are used to model fair value such as prices of similar instruments, yield curves, volatilities, prepayment speeds, default rates and credit spreads, relying first on observable data from active markets. Depending on the availability of observable inputs and prices, different valuation models could produce materially different fair value estimates. The values presented may not represent future fair values and may not be realizable. The Company categorizes its fair value estimates in accordance with ASC 820 based on the hierarchical framework associated with the three levels of price transparency utilized in measuring financial instruments at fair value as discussed above. As at November 30, 2015 and May 31, 2015, the Company had a $519,082 and $353,668 derivative liability, respectively.

XML 48 R38.htm IDEA: XBRL DOCUMENT v3.3.1.900
4. Property and Equipment: Property, Plant and Equipment (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Property, Plant and Equipment

 

 

Cost

$

Accumulated depreciation

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Furniture and equipment

2,496

707

1,788

2,039

Computer

5,341

5,118

224

829

Research equipment

140,631

77,588

63,043

69,739

Vehicles under capital lease

71,283

53,302

17,981

17,598

 

 

 

 

 

 

219,751

136,715

83,036

90,205

XML 49 R39.htm IDEA: XBRL DOCUMENT v3.3.1.900
5. Intangible Assets: Schedule of Finite-Lived Intangible Assets (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Finite-Lived Intangible Assets

 

 

Cost

$

Accumulated amortization

$

November 30,

2015

Net carrying value

$

May 31,

2015

Net carrying value

$

 

 

 

 

 

Patents

70,789

5,805

64,984

54,577

XML 50 R40.htm IDEA: XBRL DOCUMENT v3.3.1.900
5. Intangible Assets: Finite-lived Intangible Assets Amortization Expense (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Finite-lived Intangible Assets Amortization Expense

 

 

 

 

 

$

 

For year ending May 31, 2016

2,604

 

For year ending May 31, 2017

5,208

 

For year ending May 31, 2018

5,208

 

For year ending May 31, 2019

5,208

 

For year ending May 31, 2020

5,208

 

XML 51 R41.htm IDEA: XBRL DOCUMENT v3.3.1.900
8. Obligations Under Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Future Minimum Lease Payments for Capital Leases

 

Year ending May 31:

 

$

2016

 

9,382

2017

 

4,507

2018

 

751

 

 

 

Net minimum lease payments

 

14,640

Less: amount representing interest payments

 

(841)

 

 

 

Present value of net minimum lease payments

 

13,799

Less: current portion

 

(10,929)

 

 

 

Long-term portion

 

2,870

XML 52 R42.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Changes in the fair value of the Company's Level 3 Financial Liabilities (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Changes in the fair value of the Company's Level 3 Financial Liabilities

 

 

 

November 30, 2015

 

May 31, 2015

 

 

 

 

 

Balance at the beginning of period

$

353,668

$

 

 

 

 

 

Addition of new derivative liabilities (embedded conversion options)

 

694,623

 

160,244

Conversion of derivative liability

 

(260,767)

 

-

Change in fair value of embedded conversion option

 

(268,442)

 

193,424

 

 

 

 

 

Balance at the end of the period

$

519,082

$

353,668

XML 53 R43.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Change in Fair Value of Derivatives Table Text Block (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Change in Fair Value of Derivatives Table Text Block

 

 

 

November 30, 2015

 

November 30, 2014

 

 

 

 

 

Fair value of derivative liabilities in excess of note proceeds received

$

(359,867)

$

Change in fair value of derivative liabilities during period

 

268,442

 

 

 

 

 

 

Change in fair value of derivatives

$

(91,425)

$

XML 54 R44.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Fair Value Assumptions Used in Fair Value Calculation (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Fair Value Assumptions Used in Fair Value Calculation

 

 

Expected Volatility

Risk-free Interest Rate

Expected Dividend Yield

Expected Life (in years)

 

 

 

 

 

 

 

 

 

 

At issuance

134-184%

0.07-0.74%

0%

0.50-2.00

At November 30, 2015

171-182%

0.25-0.51%

0%

0.78-1.00

 

 

 

 

 

XML 55 R45.htm IDEA: XBRL DOCUMENT v3.3.1.900
12. Share Purchase Warrants: Schedule of Stockholders' Equity Note, Warrants or Rights, Activity Table Text Block (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Stockholders' Equity Note, Warrants or Rights, Activity Table Text Block

 

 

Number of

warrants

Weighted average exercise price

$

 

 

 

Balance, May 31, 2015

5,258,333

0.44

 

 

 

Issued

100,000

0.15

 

 

 

Balance, November 30, 2015

5,358,333

0.44

XML 56 R46.htm IDEA: XBRL DOCUMENT v3.3.1.900
12. Share Purchase Warrants: Schedule of Stockholders' Equity Note, Warrants or Rights (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Stockholders' Equity Note, Warrants or Rights

 

Number of warrants

Exercise

price

$

Expiry date

 

 

 

150,000

0.60

November 18, 2016

500,000

0.60

February 27, 2017

333,333

0.80

June 4, 2017

200,000

0.80

July 11, 2017

100,000

0.15

August 4, 2017

4,075,000

0.37

April 10, 2019

 

 

 

5,358,333

 

 

XML 57 R47.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Share-based Compensation, Stock Options, Activity (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Share-based Compensation, Stock Options, Activity

 

 

Number of options

Weighted average exercise price $

Weighted average remaining contractual life (years)

Aggregate

intrinsic

value

$

 

 

 

 

 

Outstanding, May 31, 2015

1,675,000

0.20

 

 

 

 

 

 

 

Expired

(300,000)

0.20

 

 

 

 

 

 

 

Outstanding, November 30, 2015

1,375,000

0.20

0.90

Exercisable, November 30, 2015

1,125,000

0.24

0.89

XML 58 R48.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Nonvested Share Activity (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Nonvested Share Activity

 

Non-vested stock options

Number of Options

Weighted Average

Grant Date

Fair Value

 

 

$

Non-vested at May 31, 2015

550,000

0.23

Vested

(300,000)

0.19

 

 

 

Non-vested at November 30, 2015

250,000

0.17

XML 59 R49.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award

 

Number of

options

Exercise

price

$

Expiry date

 

 

 

175,000

0.20

April 28, 2016

200,000

0.30

July 17, 2016

200,000

0.10

August 1, 2016

200,000

0.20

November 1, 2016

200,000

0.20

December 9, 2016

400,000

0.20

March 16, 2017

 

 

 

1,375,000

 

 

XML 60 R50.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions

 

 

November 30, 2015

 

November 30, 2014

 

 

 

 

Risk-free Interest rate

 

0.48%

Expected life (in years)

 

1.97

Expected volatility

 

111%

XML 61 R51.htm IDEA: XBRL DOCUMENT v3.3.1.900
14. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Tables)
6 Months Ended
Nov. 30, 2015
Tables/Schedules  
Schedule of Future Minimum Rental Payments for Operating Leases

 

Fiscal year ending May 31:

 

$

2016

 

17,627

2017

 

2,032

 

 

19,637

XML 62 R52.htm IDEA: XBRL DOCUMENT v3.3.1.900
1. Basis of Presentation (Details) - USD ($)
Nov. 30, 2015
May. 31, 2015
Details    
Accumulated deficit $ 12,566,702 $ 11,529,916
Working Capital Deficit $ 1,946,304  
XML 63 R53.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Loss Per Share (Details) - shares
Nov. 30, 2015
May. 31, 2015
Details    
Own-share Lending Arrangement, Counterparty Default, Earnings Per Share, Shares 34,949,950 8,838,205
XML 64 R54.htm IDEA: XBRL DOCUMENT v3.3.1.900
2. Significant Accounting Policies: Derivative Liabilities (Details) - USD ($)
Nov. 30, 2015
May. 31, 2015
Details    
Derivative Assets (Liabilities), at Fair Value, Net $ 519,082 $ 353,668
XML 65 R55.htm IDEA: XBRL DOCUMENT v3.3.1.900
4. Property and Equipment: Property, Plant and Equipment (Details)
Nov. 30, 2015
USD ($)
Cost  
Furniture and Fixtures, Gross $ 2,496
Machinery and Equipment, Gross 5,341
Property, Plant and Equipment, Other, Gross 140,631
Property, Plant and Equipment, Other, Net 71,283
Accumulated Depreciation  
Furniture and Fixtures, Gross 707
Machinery and Equipment, Gross 5,118
Property, Plant and Equipment, Other, Gross 77,588
Property, Plant and Equipment, Other, Net 53,302
Net Carrying Value- November 30, 2015  
Furniture and Fixtures, Gross 1,788
Machinery and Equipment, Gross 224
Property, Plant and Equipment, Other, Gross 63,043
Property, Plant and Equipment, Other, Net 17,981
Net Carrying Value- May 31, 2015  
Furniture and Fixtures, Gross 2,039
Machinery and Equipment, Gross 829
Property, Plant and Equipment, Other, Gross 69,739
Property, Plant and Equipment, Other, Net $ 17,598
XML 66 R56.htm IDEA: XBRL DOCUMENT v3.3.1.900
5. Intangible Assets: Schedule of Finite-Lived Intangible Assets (Details)
May. 31, 2015
USD ($)
Cost  
Finite-Lived Patents, Gross $ 70,789
Accumulated Amortization  
Finite-Lived Patents, Gross 5,805
Net Carrying Value- November 30, 2015  
Finite-Lived Patents, Gross 64,984
Net Carrying Value- May 31, 2015  
Finite-Lived Patents, Gross $ 54,577
XML 67 R57.htm IDEA: XBRL DOCUMENT v3.3.1.900
5. Intangible Assets: Finite-lived Intangible Assets Amortization Expense (Details) - USD ($)
12 Months Ended
May. 31, 2020
May. 31, 2019
May. 31, 2018
May. 31, 2017
May. 31, 2016
Details          
Future Amortization Expense $ 5,208 $ 5,208 $ 5,208 $ 5,208 $ 2,604
XML 68 R58.htm IDEA: XBRL DOCUMENT v3.3.1.900
6. Related Party Transactions (Details) - USD ($)
3 Months Ended 6 Months Ended
Nov. 30, 2015
Nov. 30, 2014
Nov. 30, 2015
Nov. 30, 2014
May. 31, 2015
Research and development $ 40,580 $ 224,974 $ 92,902 $ 567,409  
President          
Management Fee Expense     65,485 86,816  
Due to Related Parties, Current 74,007   74,007   $ 93,418
Spouse of the President          
Management Fee Expense     23,820 29,183  
Director          
Research and development     28,920 $ 39,503  
Officers and Directors          
Management Fee Expense     29,133    
Due to Related Parties, Current $ 17,512   $ 17,512   $ 18,775
XML 69 R59.htm IDEA: XBRL DOCUMENT v3.3.1.900
7. Loans Payable (Details) - USD ($)
6 Months Ended
Nov. 30, 2015
Sep. 04, 2015
Aug. 04, 2015
May. 31, 2015
Mar. 31, 2012
Common stock subscribed $ 74,742     $ 74,742 $ 50,000
Temporary Equity, Share Subscriptions         10,000,000
Notes Payable, Current     $ 50,000    
Accounts Payable, Interest-bearing, Interest Rate   180.00% 120.00%    
Repaid Notes 50,000        
Increase (Decrease) in Accrued Interest Receivable, Net 1,200        
Fair Value Adjustment of Warrants 9,755        
Accretion of Discount 9,755        
Non-related party 1          
Notes and Loans Payable, Current 47,321     50,738  
Non-related party 2          
Notes and Loans Payable, Current 17,500     17,500  
Non-related party 3          
Notes and Loans Payable, Current 15,000     15,000  
Non-related party 4          
Notes and Loans Payable, Current 14,150     15,171  
Non-related party 5          
Notes and Loans Payable, Current 35,209     37,207  
Non-related party 6          
Notes and Loans Payable, Current $ 4,490     $ 4,490  
XML 70 R60.htm IDEA: XBRL DOCUMENT v3.3.1.900
8. Obligations Under Capital Lease: Schedule of Future Minimum Lease Payments for Capital Leases (Details)
Nov. 30, 2015
USD ($)
Year Ending May 31, 2016  
Capital Leases, Future Minimum Payments Due, Next Twelve Months $ 9,382
Year Ending May 31, 2017  
Capital Leases, Future Minimum Payments Due, Next Twelve Months 4,507
Year Ending May 31, 2018  
Capital Leases, Future Minimum Payments Due, Next Twelve Months 751
Net Minimum Lease Payments  
Capital Leases, Future Minimum Payments Due, Next Twelve Months 14,640
Amount Representing interest payments  
Capital Leases, Future Minimum Payments Due, Next Twelve Months (841)
Present Value of net minimum lease payments  
Capital Leases, Future Minimum Payments Due, Next Twelve Months 13,799
Current Portion  
Capital Leases, Future Minimum Payments Due, Next Twelve Months (10,929)
Long-term portion  
Capital Leases, Future Minimum Payments Due, Next Twelve Months $ 2,870
XML 71 R61.htm IDEA: XBRL DOCUMENT v3.3.1.900
9. Convertible Debentures (Details) - USD ($)
6 Months Ended 12 Months Ended
Feb. 04, 2014
Dec. 27, 2013
Oct. 18, 2013
Sep. 11, 2013
Aug. 19, 2013
Oct. 31, 2008
Nov. 30, 2015
May. 31, 2015
May. 31, 2014
Sep. 08, 2015
Jun. 02, 2015
Feb. 17, 2015
Apr. 14, 2014
Feb. 01, 2014
Nov. 15, 2013
Jul. 18, 2012
Jan. 19, 2012
Details                                  
Proceeds from Convertible Debt $ 15,000 $ 15,000 $ 94,000 $ 58,000 $ 10,000 $ 250,000                      
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate   10.00% 10.00% 10.00% 10.00% 10.00%             10.00%        
Sale of Stock, Price Per Share $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.04 $ 0.50                      
Convertible Debt, Fair Value Disclosures   $ 15,000 $ 94,000 $ 58,000 $ 10,000 $ 250,000         $ 100,000 $ 25,778          
Convertible Debt $ 11,787 14,164 94,000 58,000 10,000     $ 59,853 $ 114,661             $ 150,000 $ 50,000
Accounts Payable and Other Accrued Liabilities                                 $ 122,535
Accrued Liabilities, Current                               $ 43,890  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number             1,125,000                 100,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Exercise Price                               $ 0.12  
Debt Instrument, Annual Principal Payment                             $ 10,000    
Additional Paid in Capital, Common Stock   15,000 94,000 58,000 10,000                 $ 12,901      
Proceeds from issuance of convertible debentures $ 15,000 $ 15,000 $ 94,000 $ 58,000 $ 10,000 $ 250,000 $ 312,000 $ 54,808 40,000                
Accretion of Discounts on Convertible Debt                 $ 12,901                
Convertible Debt Outstanding             $ 50,000                    
Convertible Notes Payable                   $ 326,087 100,000 125,000          
Initial Fair Value of Conversion Feature                   376,713 310,266 160,244          
Discount on Note Payable                   225,000 100,000 125,000          
Loss on Derivatives                   $ 151,713 $ 210,266 $ 35,244          
Debt Instrument Convertible Interest Rate             12.00%                    
XML 72 R62.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Changes in the fair value of the Company's Level 3 Financial Liabilities (Details) - USD ($)
6 Months Ended
Nov. 30, 2015
May. 31, 2015
Jun. 02, 2015
Details      
Derivative liability $ 519,082 $ 353,668 $ 353,668
Addition of New Derivative Liabilities 694,623 160,244  
Conversion of Derivative Liability (260,767)    
Change in Fair Value of Embedded Conversion Option $ (268,442) $ 193,424  
XML 73 R63.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Change in Fair Value of Derivatives Table Text Block (Details)
Nov. 30, 2015
USD ($)
Details  
Fair Value of Derivative Liabilities in excess of note $ (359,867)
Change in Fair Value of Derivative Liabilities 268,442
Change in Fair Value of Derivatives $ (91,425)
XML 74 R64.htm IDEA: XBRL DOCUMENT v3.3.1.900
10. Derivative Liabilities: Fair Value Assumptions Used in Fair Value Calculation (Details)
6 Months Ended
Nov. 30, 2015
May. 31, 2015
Nov. 30, 2014
Fair Value Assumptions, Risk Free Interest Rate     0.48%
Fair Value Assumptions, Expected Dividend Rate 0.00% 0.00%  
Expected Life     1.97
Minimum      
Fair Value Assumptions, Expected Volatility Rate 171.00% 134.00%  
Fair Value Assumptions, Risk Free Interest Rate 0.25% 0.07%  
Expected Life 0.78 0.50  
Maximum      
Fair Value Assumptions, Expected Volatility Rate 182.00% 184.00%  
Fair Value Assumptions, Risk Free Interest Rate 0.51% 0.74%  
Expected Life 1.00 2.00  
XML 75 R65.htm IDEA: XBRL DOCUMENT v3.3.1.900
11. Common Stock (Details) - USD ($)
Nov. 30, 2015
Nov. 09, 2015
Oct. 22, 2015
Sep. 21, 2015
Aug. 24, 2015
Jul. 22, 2015
Jul. 20, 2015
Jul. 01, 2015
May. 31, 2015
Mar. 31, 2012
Share Subscription Proceeds $ 2,080                  
Common Stock Share Subscriptions 26,000                  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.20                  
Common stock subscribed $ 74,742               $ 74,742 $ 50,000
Common Stock, Shares Issued   3,497,506 1,581,778 676,132 322,872 300,000 93,750 150,000    
Mantra Energy Alternatives Ltd.                    
Share Subscription Proceeds $ 66,277                  
Common Stock Share Subscriptions 67,000                  
Common stock subscribed $ 7,231                  
Climate ESCO Ltd.                    
Share Subscription Proceeds $ 21,000                  
Common Stock Share Subscriptions 210,000                  
Common stock subscribed $ 7,384                  
XML 76 R66.htm IDEA: XBRL DOCUMENT v3.3.1.900
12. Share Purchase Warrants: Schedule of Stockholders' Equity Note, Warrants or Rights, Activity Table Text Block (Details) - $ / shares
6 Months Ended
Nov. 30, 2015
May. 31, 2015
Details    
Class of Warrant or Right, Outstanding 5,358,333 5,258,333
Class of Warrant or Right Weighted Average Exercise Price $ 0.44 $ 0.44
Debt Conversion, Converted Instrument, Warrants or Options Issued 100,000  
Share Purchase Warrants Issued Weighted Average Exercise Price $ 0.15  
XML 77 R67.htm IDEA: XBRL DOCUMENT v3.3.1.900
12. Share Purchase Warrants: Schedule of Stockholders' Equity Note, Warrants or Rights (Details) - $ / shares
Nov. 30, 2015
May. 31, 2015
Class of Warrant or Right, Outstanding 5,358,333 5,258,333
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.20  
Expiry Date: November 18, 2016    
Class of Warrant or Right, Outstanding 150,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.60  
Expiry Date: February 27, 2017    
Class of Warrant or Right, Outstanding 500,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.60  
Expiry Date: June 4, 2017    
Class of Warrant or Right, Outstanding 333,333  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.80  
Expiry Date: July 11, 2017    
Class of Warrant or Right, Outstanding 200,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.80  
Expiry Date: August 4, 2017    
Class of Warrant or Right, Outstanding 100,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.15  
Expiry Date: April 10, 2019    
Class of Warrant or Right, Outstanding 4,075,000  
Class of Warrant or Right, Exercise Price of Warrants or Rights $ 0.37  
XML 78 R68.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options (Details) - USD ($)
6 Months Ended
Nov. 30, 2015
Nov. 30, 2014
Details    
Stock Options Vested $ 19,118  
Unrecognized Compensation 4,030  
Stock Based Compensation $ 0 $ 248,690
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price $ 0.42  
XML 79 R69.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Share-based Compensation, Stock Options, Activity (Details) - $ / shares
6 Months Ended
Nov. 30, 2015
May. 31, 2015
Jul. 18, 2012
Details      
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 1,375,000 1,675,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20 $ 0.20  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Expirations in Period (300,000)    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price $ 0.20    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Weighted Average Remaining Contractual Term 10 months 24 days    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercisable, Number 1,125,000   100,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Exercise Price $ 0.24    
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Exercisable Options, Weighted Average Remaining Contractual Term 10 months 20 days    
XML 80 R70.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Nonvested Share Activity (Details) - $ / shares
Nov. 30, 2015
May. 31, 2015
Details    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares 250,000 550,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value $ 0.17 $ 0.23
Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Outstanding, Number   (300,000)
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value   $ 0.19
XML 81 R71.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Disclosure of Share-based Compensation Arrangements by Share-based Payment Award (Details) - $ / shares
Nov. 30, 2015
May. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 1,375,000 1,675,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20 $ 0.20
Expiry Date: April 28, 2016    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 175,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20  
Expiry Date: July 17, 2016    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 200,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.30  
Expiry Date: August 1, 2016    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 200,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.10  
Expiry Date: November 1, 2016    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 200,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20  
Expiry Date: December 9, 2016    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 200,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20  
Expiry Date: March 16, 2017    
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number 400,000  
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price $ 0.20  
XML 82 R72.htm IDEA: XBRL DOCUMENT v3.3.1.900
13. Stock Options: Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions (Details)
6 Months Ended
Nov. 30, 2014
Details  
Fair Value Assumptions, Risk Free Interest Rate 0.48%
Expected Life 1.97
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate 111.00%
XML 83 R73.htm IDEA: XBRL DOCUMENT v3.3.1.900
14. Commitments and Contingencies (Details)
3 Months Ended 4 Months Ended 6 Months Ended 12 Months Ended 14 Months Ended 24 Months Ended 25 Months Ended 60 Months Ended
Jan. 31, 2016
USD ($)
Nov. 30, 2015
USD ($)
Nov. 30, 2014
USD ($)
Oct. 31, 2015
USD ($)
Dec. 15, 2015
USD ($)
Nov. 30, 2015
USD ($)
Nov. 30, 2014
USD ($)
May. 31, 2017
USD ($)
May. 31, 2016
USD ($)
Dec. 31, 2014
USD ($)
Jun. 30, 2016
CAD
Nov. 30, 2016
USD ($)
Sep. 02, 2014
CAD
Nov. 09, 2015
shares
Oct. 22, 2015
shares
Sep. 21, 2015
shares
Sep. 03, 2015
USD ($)
Aug. 24, 2015
shares
Jul. 22, 2015
shares
Jul. 20, 2015
shares
Jul. 01, 2015
shares
Sep. 03, 2014
CAD
Sep. 01, 2013
CAD
Sep. 01, 2012
CAD
Jul. 31, 2012
USD ($)
May. 23, 2012
USD ($)
Sep. 01, 2011
CAD
Sep. 01, 2010
CAD
Sep. 02, 2009
CAD
Initial License Fee | CAD                                                         CAD 10,000
Further License Fee | CAD                                           CAD 50,000 CAD 40,000 CAD 30,000     CAD 20,000 CAD 10,000 CAD 15,000
Research and Development in Process | CAD                         CAD 250,000                                
Notice of Application                                                 $ 55,000 $ 55,000      
Rent   $ 10,079 $ 15,561     $ 31,027 $ 33,545 $ 2,032 $ 17,627   CAD 2,683                                    
Consulting Agreement $ 5,000                                                        
Common Stock, Shares Issued | shares                           3,497,506 1,581,778 676,132   322,872 300,000 93,750 150,000                
Notice of Claim                                 $ 11,400                        
Employment Agreement 1                                                          
Employment Agreement                       $ 80,000                                  
Employment Agreement 2                                                          
Employment Agreement                       $ 86,000                                  
Settlement Agreement                                                          
Settlement Agreement                   $ 150,000                                      
Consulting Agreement 1                                                          
Consulting Agreement         $ 65,000                                                
Consulting Agreement 2                                                          
Consulting Agreement       $ 3,000                                                  
Common Stock, Shares Issued | shares                                         150,000                
XML 84 R74.htm IDEA: XBRL DOCUMENT v3.3.1.900
14. Commitments and Contingencies: Schedule of Future Minimum Rental Payments for Operating Leases (Details) - USD ($)
12 Months Ended
May. 31, 2017
May. 31, 2016
Details    
Capital Lease Obligations Incurred $ 2,032 $ 17,627
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