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Series B Preferred Stock | 12 Months Ended
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Feb. 28, 2025
Series B Preferred Stock |
Series B Preferred Stock | 12. Series B Preferred Stock On December 23, 2024 (the “Issuance Date”), the Company issued and sold 1,044,430 shares of Series B Convertible Preferred Stock (“Series B CPS”) at $10.00 per share to Reed Circular Economy (the “Holder”), an affiliate of Reed Societe Generale Group, for cash proceeds of $10,395 (€10,000). The main features of the Series B CPS are as follows:
| · | Automatic conversion of the stated value ($10,395 on the Issuance Date) on the fifth anniversary of the Issuance Date into shares of the Company’s common stock at a conversion price of $4.75 per share;
| · | Accrues a cumulative fixed annual PIK dividend at a rate of 13% of the stated value, which is added to the stated value of the Series B CPS on September 30 of each year;
| · | Redeemable in cash at any time, starting after the third anniversary of the Issuance Date by the Company (issuer call option);
| · | Redeemable in cash on the fifth anniversary of the Issuance Date at the option of the Holder (put feature); and
| · | Voting rights equal to the number of whole shares of the Company’s common stock (rounded to the nearest whole share) into which the stated value of Series B CPS would be convertible on a given date.
The Series B CPS is classified as a liability in accordance with ASC 480, Distinguishing Liabilities from Equity. Although the Series B CPS is mandatorily convertible into a fixed number of common shares after five years, it contains provisions that create obligations for the Company that meet the definition of a liability under US GAAP. Because the holder has the right to demand redemption for cash at maturity, and the issuer can redeem the instrument prior to conversion, the instrument is not solely within the Company’s control to avoid settlement in a form that would require asset transfer. Accordingly, liability classification is required under ASC 480-10-25-4. The Series B CPS is initially recognized at fair value, net of issuance costs, and is subsequently measured at amortized cost using the effective interest method. The PIK dividends are accrued over the term of the instrument and increase the carrying amount of the liability. Although the instrument includes voting rights on an as-converted basis, such rights do not affect the classification assessment under US GAAP. The Company has evaluated the instrument for any embedded features requiring bifurcation under ASC 815, such as derivative elements, and has concluded that separate accounting is not required. Changes in the carrying value of the instrument, including accrued PIK dividends, are recorded in “Interest and other financial expenses” in our Consolidated Statements of Operations and Comprehensive Loss. The balance of Series B CPS as at February 28, 2025 and February 29, 2024 was as follows:
|  | February 28, 2025 |  |  | February 29, 2024 |
Stated value at issuance |  | $ | 10,395 |  |  | $ | - |
Accrued PIK dividends |  |  | 252 |  |  |  | - |
Series B Convertible Preferred Stock |  | $ | 10,647 |  |  | $ | - |

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- Definition The entire disclosure for terms, amounts, nature of changes, rights and privileges, dividends, and other matters related to preferred stock. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 505 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/505/tableOfContent + Details
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