Annual report pursuant to Section 13 and 15(d)

Subsequent Events

Subsequent Events
12 Months Ended
May 31, 2017
Subsequent Events

Note 15 – Subsequent Events

On June 1, 2017, the Company issued to directors, in connection with their annual compensation, options covering 450,000 shares of common stock. The options have an exercise price of $0.57, a ten-year term and vest quarterly over one year. These awards reflect an increase in the annual non-employee director stock option awards from 50,000 to 75,000 shares per year effective for fiscal year 2018. Additionally, in conjunction with annual incentive compensation, the Company issued options covering 800,000 shares of common stock to management and employees. The options have an exercise price of $0.57, a ten-year term and vest annually over three years.

On June 1, 2017, the Company issued to a director and non-executive Chief Science Officer, an option covering 600,000 shares of common stock. The options have an exercise price of $0.57, a ten- year term and vest one-third at month six, eighteen and thirty following the grant date.

On June 14, 2017, the Company’s Board of Directors approved a modification in the warrant terms issued in connection with the 2017 Short-Term Convertible Notes, as fully described in Note 4 above. The warrant coverage was increased from 25% to 50% and the exercise price of the warrant was reduced to $1.00 per share from $1.35 per share. On June 19, 2017, in connection with new terms, the Company issued an incremental 383,333 warrant shares to previous investors.

Between June 19, 2017 and July 10, 2017, the Company sold approximately $3.9 million in aggregate principal amount of 2017 Notes. These notes are fully described in Note 4 above and reflect the modified warrant terms approved on June 14, 2017, as fully outlined above. The 2017 Notes are convertible into an underlying 5,184,661 shares of Common Stock. In connection with the sale, the Company issued warrants covering 2,592,326 shares of Common Stock at an exercise price of $1.00 per share. The Warrants are currently exercisable in full and will expire five years from issuance. In connection with the sale of notes, the Company paid placement agent fees of $262,000, which includes a nonaccountable expense fee of $20,000, and became liable for a placement agent warrant covering 286,767 shares of Common Stock with an exercise price of $0.825 per share. The warrant will be fully exercisable upon issuance with a five-year term.

On June 21, 2017, the Company issued a warrant covering 200,000 shares of Common Stock to a third-party consultant, as consideration for services. The warrant is exercisable at $0.64 per share and has a five-year term. The warrant vests 25% on the date of issuance, 25% on December 31, 2017 and 50% upon the completion of certain strategic milestones.

On June 30, 2017, the Company issued an aggregate of 3,295,000 shares of Common Stock, upon the exercise by investors of certain outstanding warrants at $0.50 per share, for aggregate gross proceeds of approximately $1.6 million. The warrants previously had an exercise price of $1.00 and were scheduled to expire on May 31, 2017. As an inducement to exercise the warrants prior to their expiration, and in exchange for the release by such investors of certain claims, the Company entered into agreements with such investors to reduce the exercise price to $0.50 per share and to extend the expiration date to June 30, 2017.