General form of registration statement for all companies including face-amount certificate companies

FAIR VALUE OF FINANCIAL INSTRUMENTS

v3.5.0.2
FAIR VALUE OF FINANCIAL INSTRUMENTS
3 Months Ended 12 Months Ended
Aug. 31, 2016
May 31, 2016
Fair Value Disclosures [Abstract]    
Fair Value Disclosures [Text Block]
Note 13 – Fair Value of Financial Instruments

In March 2016, the Company entered into convertible note agreements containing beneficial conversion features with Old Main.  One of the features is a ratchet reset provision which, in general, reduces the conversion price should the Company issue equity with an effective price per share that is lower than the stated conversion price in the note agreement (see note 11). The Company accounts for the fair value of the conversion feature in accordance with ASC 815- Accounting for Derivatives and Hedging and Emerging Issues Task Force (“EITF”) 07-05- Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity’s Own Stock (“EITF 07-05”). The Company carries the embedded derivative on its balance sheet at fair value and accounts for any unrealized change in fair value as a component of its results of operations.

The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis at August 31, 2016 and May 31, 2016.

 
August 31, 2016
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Liabilities
               
Derivative liabilities
 
$
-
   
$
-
   
$
294,616
   
$
294,616
 

 
May 31, 2016
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Liabilities
               
Derivative liabilities
 
$
-
   
$
-
   
$
418,537
   
$
418,537
 

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

 
Derivative
 
 
Liability
 
Liabilities Measured at Fair Value
   
     
Balance as of May 31, 2016
 
$
418,537
 
         
Issuances
   
-
 
         
Revaluation gain
   
123,921
 
         
Balance as of August 31, 2016
 
$
294,616
 

NOTE 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS

The following summarizes the Company’s derivative financial liabilities that are recorded at fair value on a recurring basis at May 31, 2016 and 2015.

 
May 31, 2016
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Liabilities
               
Derivative liabilities
 
$
-
   
$
-
   
$
418,537
   
$
418,537
 

 
May 31, 2015
 
 
Level 1
 
Level 2
 
Level 3
 
Total
 
Liabilities
               
Derivative liabilities
 
$
-
   
$
-
   
$
-
   
$
-
 

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

 
Derivative
 
 
Liability
 
Liabilities Measured at Fair Value
   
     
Balance as of May 31, 2015
 
$
-
 
         
Issuances
   
480,294
 
         
Revaluation gain
   
61,757
 
         
Balance as of May 31, 2016
 
$
$ 418,537