Annual report pursuant to Section 13 and 15(d)

Consolidated Statement of Cash Flows

Consolidated Statement of Cash Flows
12 Months Ended
May 31, 2016
USD ($)
May 31, 2015
USD ($)
Cash flows from operating activities:    
Net loss $ (25,703,612) $ (25,088,070)
Adjustments to reconcile net loss to net cash used by operating activities:    
Amortization and depreciation 361,610 360,582
Amortization of debt issuance costs 604,625 103,598
Amortization of discounts on convertible notes 1,791,967 2,145,010
Amortization of discounts on related party notes 94,344 523,614
Loss on the sale of fixed asset   583
Gain on extinguishment of accounts payable 72,898  
Loss on extinguishment of convertible notes (584,177)  
Change in fair value of derivative liability (646,505) 838,643
Inducement interest expense 1,954,108 1,526,254
Stock-based compensation 2,353,194 631,302
Changes in current assets and liabilities:    
(Increase) in prepaid expenses (864,817) (498,928)
(Decrease) increase in accounts payable, accrued salaries and severance, accrued interest and accrued liabilities (5,412,640) 7,440,554
Net cash used in operating activities (24,810,651) (12,016,858)
Cash flows from investing activities:    
Furniture and equipment purchases (11,949) (18,585)
Net cash used in investing activities (11,949) (18,585)
Cash flows from financing activities:    
Payments of offering costs (3,915,127) (423,104)
Proceeds from sale of common stock 37,569,964  
Proceeds from issuance of convertible notes payable   7,481,050
Payment of principal and interest on convertible notes payable (789,140)  
Proceeds from exercise of warrants 548,619 1,141,435
Net cash provided by financing activities 33,414,316 8,199,381
Net change in cash 8,591,716 (3,836,062)
Cash, beginning of period 1,050,060 4,886,122
Cash, end of period 9,641,776 1,050,060
Cash paid during the period for:    
Income taxes   3,142
Interest 26,890 203,864
Non-cash investing and financing transactions:    
Common stock issued upon conversion of convertible debt and extinguishment of derivative liability 7,947,842 4,221,250
Common stock issued or to be issued for accrued interest payable 143,479 138,373
Preferred and common stock subject to rescission liability   378,000
Amortization of deferred offering costs related to rescission liability   68,292
Accounts payable extinguished through settlements $ 72,898  
Original issue discount related to valuation of compound embedded derivative of convertible note payable issued with anti-dilution feature   1,170,264
Original issue discount related to valuation of relative fair value of warrants issued with convertible notes payable   $ 2,220,143
Warrants issued for debt discount on convertible notes payable | shares   285,118