Annual report pursuant to Section 13 and 15(d)

Consolidated Statements of Cash Flows

Consolidated Statements of Cash Flows (USD $)
12 Months Ended
May 31, 2014
May 31, 2013
Cash flows from operating activities    
Net loss $ (12,431,413) $ (9,568,301)
Adjustments to reconcile net loss to net cash used by operating activities:    
Amortization and depreciation 352,429 222,684
Amortization of debt issuance costs 120,000  
Amortization of discount on convertible debt 3,807,320 1,703,616
Interest expense associated with conversion inducement 193,160  
Gain on settlement of accounts payable (183,944) (372,759)
Stock-based compensation 928,413 3,590,011
Changes in current assets and liabilities:    
(Increase) in prepaid expenses (348,972) (73,867)
Decrease in other assets   5,744
Increase in accounts payable, accrued salaries, accrued interest and accrued liabilities 176,064 1,099,939
Net cash used in operating activities (7,386,943) (3,392,933)
Cash flows from investing activities:    
Asset acquisition of intangibles   (3,500,000)
Furniture and equipment purchases (19,220) (3,135)
Net cash used in investing activities (19,220) (3,503,135)
Cash flows from financing activities:    
Payments on indebtedness to related parties (500,000) (74,492)
Proceeds from issuance of convertible notes payable 1,200,000 6,588,250
Proceeds from notes payable related party   500,000
Payments on convertible notes payable (500,000)  
Proceeds from sale of common stock 13,642,667  
Payments of debt issuance costs (120,000)  
Payments of offering costs, common stock (2,084,063)  
Proceeds from exercise of warrants and options 50,000 201,000
Net cash provided by financing activities 11,688,604 7,214,758
Net change in cash 4,282,441 318,690
Cash, beginning of period 603,681 284,991
Cash, end of period 4,886,122 603,681
Cash paid during the period for:    
Income taxes      
Interest 311,991 224,724
Non-cash investing and financing transactions:    
Common stock issued for convertible debt 2,459,000 567,000
Common stock issued or to be issued for accrued interest payable 58,518 4,205
Original issue discount and intrinsic value of beneficial conversion feature related to debt issued with warrants 1,200,000 6,243,502
Common stock issued on payment of accounts payable   80,000
Preferred and common stock subject to rescission 158,500 3,212,500
Amortization of deferred offering costs related to rescission liability 28,638 580,398
Common stock issued for Series B convertible preferred stock   19,000
Series B convertible preferred stock dividends   2,190
Accounts payable extinguished through settlements $ 183,944