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Notes Payable
 12 Months Ended
Feb. 28, 2025
Debt Disclosure [Abstract]  
Notes Payable

NOTE 12 – Notes Payable

 

On May 24, 2024, the Company sold a short-term promissory note to a private investor in the aggregate principal amount of $100,000. The note bears interest at 7.5% per annum and had a maturity date of the earlier of completion of a public financing or October 31, 2024. The investor has consented to extend the maturity date on a month-to-month basis and continues to accrue interest. As of February 28, 2025, the full principal amount of $100,000 was outstanding.

 

On June 26, 2024, the Company sold a short-term promissory note to a private investor in the aggregate principal amount of $40,000. The note bears interest at 7.5% per annum and has a maturity date of June 25, 2025, which may be extended by written consent of the investor. As of February 28, 2025, the full principal amount of $40,000 was outstanding.

 

On September 19, 2024, the Company sold a short-term promissory note and warrants to Alumni Capital for total consideration of $250,000. After deducting commissions, net proceeds to the Company were $230,000. The Alumni Note is in the principal amount of $300,000 with an original issue discount of $50,000 and guaranteed interest on the principal amount of 10% per annum which shall be due and payable on December 19, 2024. In the event of a failure to re-pay the Alumni Note on or before December 19, 2024, the interest rate will increase to the lesser of twenty-two percent (22%) per annum or the maximum amount permitted under law from the due date thereof until the same is paid. The Alumni Note is convertible into common stock of the Company only upon an event of default. In accordance with ASC 470-20-25-2, the proceeds of the short-term promissory note was allocated to the note and the warrant based on the relative fair values of the note without the warrants and of the warrant itself at time of issuance, with the portion of the proceeds allocated to the warrants accounted for as paid-in capital, and the remainder of the proceeds allocated to the note. The relative fair value of the warrants at the time of issuance that was allocated to additional paid-in capital was $116,322. The Alumni note and accrued interest was repaid on December 19, 2024.

 

 

On October 18, 2024, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $154,440. The note includes an Original Issue Discount of $22,440, and bears a one-time interest charge of 13%, which was applied on the issuance date to the principal. The note is payable in ten equal installments of $17,452 beginning on November 15, 2024, and may be prepaid at any time with no prepayment penalty. Upon the event of default by the Company, any unpaid principal and interest may be converted to common stock at the election of 1800 Diagonal Lending LLC. As of February 28, 2025, the balance on the note, net of the unamortized debt discount, was $80,114.

 

On November 1, 2024, the Company sold a short-term promissory note to a private investor in the aggregate principal amount of $250,000. The note bears guaranteed interest of 15%, or $37,500, payable in full together with the principal on the maturity date of May 1, 2025. On November 29, 2024, the Company sold an additional short-term promissory note to the same investor in the aggregate principal amount of $100,000. The note bears guaranteed interest of 15%, or $15,000, payable in full together with the principal on the maturity date of May 29, 2025. In connection with the promissory notes, the Company issued warrants to the investor to purchase up to 140,000 shares of common stock at an exercise price of $3.25 per share with a three-year term. In accordance with ASC 470-20-25-2, the proceeds of the short-term promissory notes were allocated to the notes and the warrants based on the relative fair values of the notes without the warrants and of the warrants themselves at time of issuance, with the portion of the proceeds allocated to the warrants accounted for as paid-in capital, and the remainder of the proceeds allocated to the note. The relative fair value of the warrants at the time of issuance that was allocated to additional paid-in capital was $120,239. On December 31, 2024, the Company entered into a Debt Exchange Agreement with the investor whereby the entire principal balance of $350,000 plus guaranteed interest of $52,500 was converted into 133,278 shares of the Company’s Series M Preferred Stock at a price of $3.02 per share.

 

On November 8, 2024, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $125,190. The note includes an Original Issue Discount of $18,190, and bears a one-time interest charge of 13%, which was applied on the issuance date to the principal. The note is payable in five installments, with the first payment in the amount of $70,732 due on May 15, 2025, and the remaining four equal installments of $17,683 are due on the 15th of each of the next four successive months. The note may be prepaid at any time with no prepayment penalty. Upon the event of default by the Company, any unpaid principal and interest may be converted to common stock at the election of 1800 Diagonal Lending LLC. As of February 28, 2025, the balance on the note, net of the unamortized debt discount was $113,223.

 

On December 31, 2024, the Company sold a short-term promissory note to a private investor in the aggregate principal amount of $220,000. The note bears guaranteed interest of 15%, or $33,000, payable in full on the issue date by the issuance of 10,927 shares of the Company’s Series K Preferred Stock. The note may be prepaid at any time without penalty. Additionally, the Company issued a warrant to the investor to purchase up to 220,000 shares of common stock with an exercise price of $4.00 per share and a three-year term. In accordance with ASC 470-20-25-2, the proceeds of the short-term promissory note were allocated to the note and the warrant based on the relative fair values of the note without the warrant and of the warrant itself at time of issuance, with the portion of the proceeds allocated to the warrants accounted for as paid-in capital, and the remainder of the proceeds allocated to the note. The relative fair value of the warrant at the time of issuance that was allocated to additional paid-in capital was $179,913. As of February 28, 2025, the balance on the note, net of the unamortized debt discount, was $41,504.

 

On December 31, 2024, the Company sold a short-term promissory note to a private investor for $1,000,000, with $500,000 funded on December 15, 2024 and $500,000 funded on January 15, 2025. The note bears prepaid interest of 15%, payable in 49,668 shares of the Company’s Series K Preferred Stock. In addition, the Company issued warrants to the investor to purchase up to 1,000,000 shares of the Company’s common stock at an exercise price of $4.00 per share with an expiration date of June 30, 2028. Up to 500,000 of the warrants may be exercised on a cashless basis, at the election of the investor. In accordance with ASC 470-20-25-2, the proceeds of the short-term promissory note were allocated to the note and the warrant based on the relative fair values of the note without the warrant and of the warrant itself at time of issuance, with the portion of the proceeds allocated to the warrants accounted for as paid-in capital, and the remainder of the proceeds allocated to the note. The relative fair value of the warrant at the time of issuance that was allocated to additional paid-in capital was $829,523. On February 26, 2025, the Company entered into a Debt Exchange Agreement with the investor whereby the entire principal balance of $1,000,000 was converted into 250,000 shares of the Company’s Series P Preferred Stock at a price of $4.00 per share.

 

On February 4, 2025, the Company sold a short-term promissory note to 1800 Diagonal Lending LLC in the aggregate principal amount of $152,100. The note includes an Original Issue Discount of $22,100, and bears a one-time interest charge of 13%, which was applied on the issuance date to the principal. The note is payable in five installments, with the first payment in the amount of $85,937 due on August 15, 2025, and the remaining four equal installments of $21,484 are due on the 15th of each of the next four successive months. The note may be prepaid at any time with no prepayment penalty. Upon the event of default by the Company, any unpaid principal and interest may be converted to common stock at the election of 1800 Diagonal Lending LLC. As of February 28, 2025, the balance on the note, net of the unamortized debt discount was $131,163.