Liquidity and Capital Resources
As of November 30, 2008, the company working capital deficit of $531,257 was comprised of current assets of $16,073 and current liabilities of $547,330. This represents an improvement in working capital of $138,301 compared to the deficit of $669,558 at fiscal year end May 31, 2008. The company working capital position improved primarily because we received cash proceeds of $150,000 from the private placement of 7,500,000 shares of common stock and because a creditor converted certain indebtedness into common stock.
Net cash used in operating activities was $110,640, during the six months ended November 30, 2008, compared to $35,123, during the six months ended November 30, 2007, an increase of $75,517. Net cash used in operating activities is closely correlated to cash provided by financing activities. We used the proceeds from our financing activities to fund research and operating expenses and reduce accounts payable.
During the six months ended November 30, 2008 and 2007, the company’s investment activities neither provided nor used any funds.
Net cash provided by financing activities during the six months ended November 30, 2008, was $120,000 compared to $10,600 during the six months ended November 30, 2007.
During the six months ended November 30, 2008, the company issued 7,500,000 shares of our common stock at $0.02 per share for cash proceeds of $150,000. We also received advances from related parties of $28,750.
Research and development costs were $49,239 for the three months ended November 30, 2008, compared to $nil incurred during the three months ended November 30, 2007.
General and administrative expense increased to $52,982 for the three months ended November 30, 2008, compared to $40,361 during the same period of 2007.
Interest expense was $356 for the three months ended November 30, 2008, compared to $120,815 for the three months ended November 30, 2007, a decrease of $120,459 or 99%.
Results of Operations – Six Months ended November 30, 2008 Compared to the Six Months Ended November 30, 2007
For the six months ended November 30, 2008, the company recorded a net loss of $145,250 or $(0.02) per share, compared to a loss for the corresponding period of 2007 of $235,358 or $(0.08) per share, a difference of $90,108.
Research and development costs increased to $50,819 during the six months ended November 30, 2008, compared to $28,065 incurred during the six months ended November 30, 2007.
General and administrative expenses increased to $93,085 for the six months ended November 30, 2008, compared to $79,235 during the corresponding period of 2007.
Interest expense, including the amortization of debt discount, decreased to $1,396 for the six months ended November 30, 2008 compared to $128,058 for the comparable period in the prior year, a decrease of $126,662.