Note 1 - General:
The accompanying condensed financial statements include all
adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods. All
such adjustments are of a normal recurring nature. The statements have been prepared in accordance with the requirements for Form 10-Q
and, therefore, do not include all disclosures or financial details required by generally accepted accounting principles. These
condensed financial statements should be read in conjunction with the financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the year ended May 31, 2012. The results of operations for the interim periods
are not necessarily indicative of results to be expected for a full year's operations.
The accompanying financial statements have been prepared on
a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of
business. The financial statements do not include any adjustments relating to the recoverability of assets and the satisfaction
of liabilities that might be necessary should the Company be unable to continue as a going concern. As shown in the financial statements,
the Company incurred a loss from operations for the six months ended November 30, 2012, has a stockholders deficiency
and a working capital deficiency. These conditions raise substantial doubt about the Companys ability to continue as a going
The Companys plan and ability to continue as a going
concern is primarily dependent upon its ability to maintain consistent production volumes to fulfill existing sales orders. Production
lead time has increased at the Companys primary raw material supplier and alternative sources of supply are being evaluated
so that manufacturing and production disruptions can be minimized. There can be no assurance that the Company will be able to establish
an alternative source of supply and maintain consistent production volumes to meet demand. The financial statements do not include
any potential contingent liabilities associated with the establishment of an alternative source of supply given the uncertainties
associated with the regulatory, logistic and financial issues involved but it is likely that mill construction, testing and regulatory
certification will necessitate at least six months before production commences.
At November 30, 2012, inventory of $211,898 consisted of
$58,570 of finished goods and $153,328 of raw materials.
Pursuant to a stock purchase agreement dated August 10, 2012, the Company
agreed to sell and issue 8,645,533 shares of common stock for an aggregate purchase price of $200,000 to its Chairman of the Board.
The sale was completed on September 24, 2012.