RELATED PARTY TRANSACTIONS

6 Months Ended

Nov. 30, 2022

Related Party Policy

Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all material related party transactions.

Related Party Note Payable

During the period ended November 30, 2021, a related party note payable was held by the CEO of the Company. During this period, the outstanding debt principal of $0.5 million and accrued interest of $1.6 million were converted to 5.1 million shares of Common Stock with a fair value of $0.75 per share which resulted in a loss on extinguishment of $1.3 million. Upon the consummation of an exchange agreement, the note payable was surrendered and cancelled, and all rights including rights to accrued interest due were extinguished.

Related Party Revenue

The Company has material transactions with two related parties Company A is a customer and is also the parent company of the minority member of the 1.21 Gigawatts joint venture.. Company B is a customer and is also the controlling member of the Highland Digital joint venture. Company B became a related party during September 2022. The following tables illustrate related party revenue for the three and six months ended November 30, 2022 and November 30, 2021.


	Revenue for the Three Months ended
(in thousands)	November 30, 2022		November 30, 2021
Customer A	$	4,016	$	—
Customer B	$	5,043	$	—


	Revenue for the Six Months ended
(in thousands)	November 30, 2022		November 30, 2021
Customer A	$	6,469	$	—
Customer B	$	8,622	$	—

The following tables illustrate related party deferred revenue and deposits balances as of November 30, 2022 and May 31, 2022.


	Customer A Balances as of
(in thousands)	November 30, 2022		May 31, 2022
Deferred revenue	$	700	$	1,721
Customer Deposits	$	1,584	$	1,719


	Customer B Balances as of
(in thousands)	November 30, 2022		May 31, 2022
Deferred revenue	$	2,279	$	888
Customer Deposits	$	7,024	$	6,508