Joint Venture

3 Months Ended

Aug. 31, 2011

Note 8 Joint Venture

On August 16, 2011, the Company entered into an agreement to form a Joint Venture ("JV").

The JV intends to engage in the business of exploiting proprietary software designed to recapture royalties for unauthorized computer downloads of copyrighted material on the Internet. The other party will exclusively license software to the JV and the Company will contribute $500,000 to the JV. Each company will own 50% of the JV.

Additionally, the Company granted 10-year warrants to the other party, as consideration for the formation of the JV, to purchase 5,000,000 shares of the Company's common stock at an exercise price of $0.001 per share. All warrants were fully vested on the grant date.

The warrants have a fair value of $250,000, based upon the black-scholes option-pricing model. The Company used the following weighted average assumptions:

Expected dividends		0%
Expected volatility		240%
Expected term		10 year
Risk free interest rate		2.23%

The Company has accounted for its investment in the JV using the equity method of accounting. During the three months ended August 31, 2011, the Company contributed $18,000 to fund JV related expenses. The JV's year-to-date expenses were $39,130 of which the Company's share of $19,565 has been reflected in the accompanying statement of operations as the proportionate share of losses from the JV, but is limited to the Company's total investment of $18,000 since losses are only recognized to the extent of the investment in the JV. The JV has not yet been formed; however, the Company has paid expenses as if the JV had been formed.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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CYBERMESH INTERNATIONAL CORP. 10-Q/A