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Stockholders’ Equity
 3 Months Ended
May 31, 2025
Equity [Abstract]  
Stockholders’ Equity

NOTE 11 - Stockholders’ Equity

 

Common Stock

 

The Company has 250,000,000 shares of common stock authorized for issuance pursuant to its amended and restated articles of incorporation, as amended (“Charter”). At May 31, 2025 and February 28, 2025, there were 7,691,374 and 1,656,738 shares of common stock, par value $0.001 per share, issued and outstanding, respectively. All shares of common stock have equal voting rights, are fully-paid and non-assessable, and are entitled to one vote per share.

 

 

In the first quarter of 2024, the Company issued 100,000 shares of common stock upon conversion of 100,000 shares of Series G Convertible Preferred Stock, 117,000 shares of common stock upon conversion of 117,000 shares of Series H Preferred, and 192,502 shares of common stock upon conversion of 192,502 shares of Series I Preferred.

 

In the first quarter of 2025, the Company issued 105,000 shares of common stock in connection with various investor relations consulting contracts, 45,642 shares of common stock to the holders of shares of the Company’s Series L and Series M Preferred stock as dividends, 20,000 shares of common stock to Ovation as partial consideration pursuant to the April 1, 2025 Journy.tv Asset Purchase Agreement; 5,000 shares of common stock to ITA as a finder’s fee related to the FSA acquisition; 15,000 shares of common stock pursuant to a consulting contract related to the development and launch of a dedicated beauty and wellness FAST channel; and 5,843,993 shares of common stock to the members of NTG pursuant to the Exchange Agreement, constituting Contingent Shares issuable to the members of NTG upon the achievement of all business milestones.   

 

Preferred Stock

 

Under our Charter, our board of directors has the authority, without further action by stockholders, to designate one or more series of preferred stock and to fix the voting powers, designations, preferences, limitations, restrictions and relative rights granted to or imposed upon the preferred stock, including dividend rights, conversion rights, voting rights, rights and terms of redemption, liquidation preference and sinking fund terms, any or all of which may be preferential to or greater than the rights of the common stock.

 

Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.

 

The Company is authorized to issue 10,000,000 shares of preferred stock, par value $0.001 per share. An aggregate of 3,388,874 and 3,106,616 shares of preferred stock were issued and outstanding at May 31, 2025 and February 28, 2025, respectively, as further discussed below.

 

Series E Convertible Preferred Stock

 

Under the Certificate of Designations of the Series E Preferred Stock, shares of the Company’s Series E Preferred have an initial stated value of $1,500 per share (the “Series E Stated Value”). Dividends at the initial rate of 9% per annum will accrue and, on a monthly basis, shall be payable in kind by the increase of the Series E Stated Value of the Series E Preferred by said amount. The holders of shares of the Series E Preferred have the right at any time to convert all or a portion of the Series E Preferred (including, without limitation, accrued and unpaid dividends and make-whole dividends through the third anniversary of the closing date) into shares of the Company’s common stock at an initial conversion rate determined by dividing the Conversion Amount by the conversion price ($0.13 above the consolidated closing bid price for the trading day prior to the execution of the relates stock purchase agreement). The Conversion Amount is the sum of the Stated Series E Value of the shares of Series E Preferred then being converted plus any other unpaid amounts payable with respect to the Series E Preferred being converted plus the “Make Whole Amount” (the amount of any dividends that, but for the conversion, would have accrued at the dividend rate for the period through the third anniversary of the initial issuance date). The Conversion Rate is also subject to adjustment for stock splits, dividends recapitalizations and similar events.

 

At May 31, 2025, 316 shares of Series E Preferred were outstanding, which if converted as of May 31, 2025, including the make-whole dividends, would have resulted in the issuance of 3,415 shares of common stock.

 

Series F Convertible Preferred Stock

 

On January 4, 2024, the Company filed a Certificate of Designation of Series F Convertible Preferred Stock (the “Series F Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 5,843,993 shares of the Company’s preferred stock as Series F Preferred. The Series F Preferred was designated by the Company in connection with the acquisition of NTH, and, in the event that the Company did not have sufficient shares of common stock available to fulfill its obligations pursuant to the Exchange Agreement governing the terms of the acquisition, shares of Series F Preferred would have been issued to the previous equity holders of NTH in lieu of shares of Company common stock.

 

 

The terms and conditions set forth in the Series F Certificate of Designation are summarized below:

 

Ranking. The Series F Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series F Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series F Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series F Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series F Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series F Preferred or alter or amend the Series F Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series F Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series F Preferred, each outstanding share of Series F Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series F Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary (each, a “Liquidation”), holders of Series F Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

At May 31, 2025, no shares of the Series F Preferred were outstanding.

 

Series G Convertible Preferred Stock

 

On January 26, 2024, the Company filed a Certificate of Designation of Series G Convertible Preferred Stock (the “Series G Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 100,000 shares of the Company’s preferred stock as Series G Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series G Certificate of Designation are summarized below:

 

Ranking. The Series G Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series G Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series G Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series G Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series G Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series G Preferred or alter or amend the Series G Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series G Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series G Preferred, each outstanding share of Series G Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series G Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series G Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series G Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

 

Redemption Right. The Company shall have the right to redeem up to 50% of the Series G Preferred for an aggregate price of $1.00 in accordance with the terms of the Perpetual License Agreement.

 

The Company did not exercise its option to repurchase 50% of the Series G Preferred, and all such shares were converted into shares of Company common stock on March 15, 2024. At May 31, 2025, no shares of Series G Preferred were outstanding.

 

Series H Convertible Preferred Stock

 

On January 26, 2024, the Company filed a Certificate of Designation of Series H Convertible Preferred Stock (the “Series H Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 150,000 shares of the Company’s preferred stock as Series H Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series H Certificate of Designation are summarized below:

 

Ranking. The Series H Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series H Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Company’s Charter or as otherwise required by the Nevada Revised Statutes, holders of Series H Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series H Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series H Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series H Preferred or alter or amend the Series H Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series H Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding Series H Preferred, each outstanding share of Series H Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series H Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series H Preferred will be entitled to participate, on an as-converted-to-common stock basis calculate based on the Series H Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

At May 31, 2025, 33,000 shares of Series H Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 33,000 shares of common stock.

 

Series I Convertible Preferred Stock

 

On February 22, 2024, the Company filed a Certificate of Designation of Series I Convertible Preferred Stock (the “Initial Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 331,124 shares of the Company’s preferred stock as Series I Preferred, par value $0.001 per share. On February 25, 2025, the Company filed an amendment to the Initial Series I Certificate of Designation (the “Amendment to Series I Certificate of Designation” and together with the Initial Series I Certificate of Designation, the “Series I Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of Series I Preferred to 692,945 shares.

 

The terms and conditions set forth in the Series I Certificate of Designation are summarized below:

 

Ranking. The Series I Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series I Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series I Preferred are entitled to vote with the holders of outstanding shares of Company common stock, voting together as a single class, with respect to all matters presented to the Company’s stockholders for their action or consideration. In any such vote, each holder is entitled to a number of votes equal to the number of shares of common stock into which the Series I Preferred held by such holder is convertible. The Company may not, without the consent of holders of a majority of the outstanding shares of Series I Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series I Preferred or alter or amend the Series I Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series I Preferred, or (c) enter into any agreement with respect to the foregoing.

 

 

Conversion. On such date that the Company amends its Charter to increase the number of shares of common stock authorized for issuance thereunder, to at least the extent required to convert all of the outstanding shares of Series I Preferred, each outstanding share of Series I Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series I Conversion Ratio”).

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series I Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series I Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On August 15, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 4,967 shares of Series I Preferred, at $3.02 per share, resulting in gross proceeds to the Company of $15,000.

 

On August 31, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 24,834 shares of Series I Preferred at $3.02 per share, resulting in gross proceeds to the Company of $75,000.

 

On October 1, 2024, the Company entered into a securities purchase agreement with an investor for the sale of 66,225 shares of Series I Preferred at $3.02 per share, resulting in gross proceeds to the Company of $200,000.

 

On February 24, 2025, the Company entered into a securities purchase agreement (the “Series I Purchase Agreement”) with certain accredited investors, pursuant to which the Company issued and sold an aggregate of 331,125 restricted shares of Series I Preferred to the purchasers at a purchase price of $3.02 per share (the “Series I Offering”), resulting in aggregate gross proceeds to the Company of $1,000,000. In addition, the Company issued 10,000 shares of Series I Preferred at $3.02 per share to an outside contractor as payment for outstanding invoices.

 

On February 24 2025, the Company entered into a debt conversion agreement with Greg Miller, an independent contractor of the Company, whereby Mr. Miller and the Company agreed to convert $100,000 in deferred consulting fees owed to Mr. Miller into 33,113 shares of Series I Preferred, at a conversion price of $3.02 per share, and a warrant to purchase 33,113 shares of common stock (the “Miller Warrant”). The Miller Warrant has an exercise price of $4.00 per share, becomes exercisable six months from the issuance date (subject to stockholder approval of removal of the Exchange Cap), and shall expire three years from the initial exercise date (August 24, 2028). Additionally, if stockholder approval is not received by May 1, 2025, then the Miller Warrant shares will increase to 50,000, and the exercise price will decrease to $3.02. As such approval was not obtained by May 1, 2025, the exercise price of the Miller Warrant was reset to $3.02 and the number of shares of common stock issuable upon exercise of the Miller Warrant increased to 50,000 shares as of such date.

 

On February 25, 2025, the Company issued 10,000 shares of Series I Preferred at $3.02 per share to the Company’s IT contractor as payment for outstanding invoices.

 

The Series I Preferred shall not be convertible and the Miller Warrant shall not be exercisable into shares of common stock until such date that the Company obtains stockholder approval to remove the Exchange Cap (as described below).

 

At May 31, 2025, 500,442 shares of Series I Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 500,442 shares of common stock.

 

Series J Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series J Nonvoting Convertible Preferred Stock (the “Series J Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 297,788 shares of the Company’s preferred stock as Series J Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series J Certificate of Designation are summarized below:

 

Ranking. The Series J Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series J Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series J Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series J Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series J Preferred or alter or amend the Series J Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series J Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series J Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series J Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series J Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series J Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series J Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company issued and sold an aggregate of 231,788 restricted shares of Series J Preferred, at a purchase price of $3.02 per share, resulting in gross proceeds to the Company of $700,000. In addition, the Company issued a total of 66,000 shares of Series J Preferred to four consultants for investor relations services.

 

The Series J Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At May 31, 2025, 297,788 shares of Series J Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 297,788 shares of common stock.

 

Series K Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series K Nonvoting Convertible Preferred Stock (the “Series K Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 60,595 shares of the Company’s preferred stock as Series K Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series K Certificate of Designation are summarized below:

 

Ranking. The Series K Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series K Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series K Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series K Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series K Preferred or alter or amend the Series K Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series K Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series K Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series K Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series K Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series K Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series K Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

 

On December 31, 2024, the Company issued an aggregate of 60,595 shares of Series K Preferred to a series of investors at a price of $3.02 per share as prepaid guaranteed interest in connection with the sale of an aggregate of $1,220,000 in promissory notes.

 

The Series K Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At May 31, 2025, 60,595 shares of the Series K Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 60,595 shares of common stock.

 

Series L Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series L Nonvoting Convertible Preferred Stock (the “Initial Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 579,469 shares of the Company’s preferred stock as Series L Preferred, par value $0.001 per share. On February 25, 2025, the Company filed an amendment to the Initial Series L Certificate of Designation (the “Series L Preferred Amendment,” and together with the Initial Series L Certificate of Designation, the “Series L Certificate of Designation”) with the Secretary of State of the State of Nevada, to increase the number of shares of the Company’s preferred stock designated as Series L Preferred to 1,076,158 shares.

 

The terms and conditions set forth in the Series L Certificate of Designation are summarized below:

 

Ranking. The Series L Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series L Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance, and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however, that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due” until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall increase to 14%.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series L Preferred are not entitled to voting rights However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series L Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series L Preferred or alter or amend the Series L Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series L Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series L Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series L Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series L Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series L Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series L Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman of the board, Donald P. Monaco (the “Related Parties”), whereby the Related Parties and the Company agreed to convert $1.75 million in existing unsecured promissory notes owed to the Related Parties for monies advanced to the Company into an aggregate of 579,469 restricted shares of Series L Preferred, at a purchase price of $3.02 per share.

 

 

On February 24, 2025, the Company entered into debt conversion agreements with its chief executive officer, William Kerby, and chairman of the board, Donald P. Monaco, whereby the Related Parties and the Company agreed to convert $500,000 in deferred salary (Mr. Kerby) and $1.0 million in existing unsecured promissory notes owed for monies advanced to the Company (Mr. Monaco), respectively, into an aggregate of 496,687 restricted shares of Series L Preferred at a conversion price of $3.02 per share.

 

The Series L Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap, subject to beneficial ownership limitations.

 

At May 31, 2025, 1,076,156 shares of the Series L Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 1,076,156 shares of common stock.

 

Series M Nonvoting Convertible Preferred Stock

 

On January 3, 2025, the Company filed a Certificate of Designation of Series M Nonvoting Convertible Preferred Stock (the “Series M Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 165,562 shares of the Company’s preferred stock as Series M Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series M Certificate of Designation are summarized below:

 

Ranking. The Series M Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series M Preferred will be entitled to dividends, if, as and when declared by the Board out of funds at the time legally available therefor, dividends in the amount of 12% per annum per share of Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Preferred Stock), and no more. Dividends on the Preferred Stock shall be fully cumulative, shall accrue without interest and without compounding from the date of first issuance, and shall, if declared by the Board, be payable quarterly in arrears on March 1, June 1, September 1 and December of each year. All dividends on the Preferred Stock shall be payable (i) in shares of Common Stock of the Company at the Nasdaq Closing Price; provided, however, that such prices shall not be less than $3.02 per share, or (ii) cash, at the election of a majority of the independent directors. Any dividend which shall not be paid on required dividend date on which it shall become due shall be deemed to be “past due” until such dividend shall be paid or until the share of Preferred Stock with respect to which such dividend became due shall no longer be outstanding, whichever is the earlier to occur. In the event that any dividend becomes “past due” the per annum rate shall increase to 14%.

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series M Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series M Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series M Preferred or alter or amend the Series M Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series M Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series M Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series M Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series M Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series M Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series M Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On December 31, 2024, the Company entered into a securities purchase agreement with certain accredited investors, pursuant to which the Company may issue and sell up to $500,000 of restricted shares of Series M Preferred, at a purchase price of $3.02 per share.

 

 

In addition, as part of the Series M Preferred offering, on December 31, 2024, the Company entered into a debt conversion agreement with an existing lender whereby the lender and the Company agreed to convert $350,000 in existing unsecured promissory notes plus accrued interest owed to the lender for monies advanced to the Company into shares of Series M Preferred.

 

The Series M Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

On December 31, 2024, in connection with the foregoing, the Company issued 133,278 shares of Series M Preferred to an investor pursuant to a debt conversion agreement.

 

At May 31, 2025, all 133,278 shares of the Series M Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 133,278 shares of common stock.

 

Series N Nonvoting Convertible Preferred Stock

 

On January 30, 2025, the Company filed a Certificate of Designation of Series N Convertible Preferred Stock (the “Series N Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 500,000 shares of the Company’s preferred stock as Series N Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series N Certificate of Designation are summarized below:

 

Ranking. The Series N Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series N Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Series N Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series N Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series N Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series N Preferred or alter or amend the Series N Certificate of Designation, (ii) amend its Charter, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series N Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series N Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series N Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series N Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series N Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series N Conversion Ratio (as defined in the Series N Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On January 28, 2025, the Company entered into a securities purchase agreement with an accredited investor, pursuant to which the Company issued and sold the purchaser (i) 17,000 restricted shares of Series N Preferred and (ii) warrants to purchase 17,000 shares of Company common stock, at a combined purchase price of $5.00 per share and warrant, resulting in gross proceeds to the Company of $85,000.

 

On February 24, 2025, the Company and Blue Fysh entered into a Share Exchange Agreement whereby Blue Fysh agreed to issue 82 restricted shares of its common stock to the Company, representing a 10% interest in Blue Fysh, in exchange for 483,000 restricted shares of Series N Preferred at an issuance price of $5.00 per share (the “BF Share Exchange”). The BF Share Exchange closed on February 28, 2025.

 

The Series N Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap.

 

At May 31, 2025, 500,000 shares of the Series N Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 500,000 shares of common stock.

 

 

Series O Nonvoting Convertible Preferred Stock

 

On February 6, 2025, the Company filed a Certificate of Designation of Series O Nonvoting Convertible Preferred Stock (the “Series O Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 451,614 shares of the Company’s preferred stock as Series O Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series O Certificate of Designation are summarized below:

 

Ranking. The Series O Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series O Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

Voting. Except as provided by the Series O Certificate of Designation, or as otherwise required by the Nevada Revised Statutes, holders of Series O Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series O Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series O Preferred or alter or amend the Series O Certificate of Designation, (ii) amend its Charter, amended and restated bylaws or other charter documents in any manner that adversely effects any rights of the holders of the Series O Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq, each outstanding share of Series O Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series O Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series O Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series O Conversion Ratio (as defined in the Series O Certificate of Designation), with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On February 6, 2025, in connection with the Company’s acquisition of the initial 49% of interests in FSA, the Company issued 161,291 shares of Series O Preferred to FSA.

 

On April 9, 2025, in connection with the Company’s acquisition of the remaining 51% of interests in FSA, the Company issued 161,291 shares of Series O Preferred to the FSA Unitholders.

 

On April 28, 2025, in connection with achievement of all business milestones, the Company issued 120,967 shares of Series O Preferred stock to FSA.

 

The shares of Series O Preferred issued cannot be converted into shares of Company common stock unless and until the Company’s stockholders approve the conversion of Series O Preferred into shares of common stock in accordance with the listing rules of Nasdaq. Upon receipt of such approval, the shares of Series O Preferred outstanding as of such date shall automatically convert into shares of Company common stock, subject to applicable beneficial ownership limitations.

 

At May 31, 2025, 443,549 shares of Series O Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 443,549 shares of common stock

 

Series P Nonvoting Convertible Preferred Stock

 

On February 25, 2025, the Company filed a Certificate of Designation of Series P Nonvoting Convertible Preferred Stock (the “Series P Certificate of Designation”) with the Secretary of State of the State of Nevada, designating 343,750 shares of the Company’s preferred stock as Series P Preferred, par value $0.001 per share.

 

The terms and conditions set forth in the Series P Certificate of Designation are summarized below:

 

Ranking. The Series P Preferred rank pari passu to the Company’s common stock.

 

Dividends. Holders of Series P Preferred will be entitled to dividends, on an as-converted basis, equal to dividends actually paid, if any, on shares of Company common stock.

 

 

Voting. Except as provided by the Charter, or as otherwise required by the Nevada Revised Statutes, holders of Series P Preferred are not entitled to voting rights. However, the Company may not, without the consent of holders of a majority of the outstanding shares of Series P Preferred, (i) alter or change adversely the powers, preferences or rights given to the Series P Preferred or alter or amend the Series P Certificate of Designation, (ii) amend its Charter or other charter documents in any manner that adversely effects any rights of the holders of the Series P Preferred, or (c) enter into any agreement with respect to the foregoing.

 

Conversion. On the third business day after the date that the Company’s stockholders approve the conversion of Series P Preferred into shares of Common Stock in accordance with the listing rules of Nasdaq, each outstanding share of Series P Preferred shall automatically be converted into one share of Company common stock (subject to adjustment under certain limited circumstances) (the “Series P Conversion Ratio”), subject to beneficial ownership limitations.

 

Liquidation. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, holders of Series P Preferred will be entitled to participate, on an as-converted-to-common stock basis calculated based on the Series P Conversion Ratio, with holders of Company common stock in any distribution of assets of the Company to holders of the Company’s common stock.

 

On February 26, 2025, the Company entered into an Equity Investment Agreement with AOS Holdings LLC (“AOS”), pursuant to which the Company issued and sold to AOS (i) 93,750 restricted shares of Series P Preferred, (ii) a warrant exercisable in cash to purchase up to 375,000 shares of common stock (the “Cash Warrant”), and (iii) a warrant exercisable in either cash or via cashless exercise (the “Cashless Warrant”) to purchase up to 375,000 shares of common stock, for a combined purchase price of $4.00 per share, resulting in gross proceeds to the Company of $375,000.

 

On February 26, 2025, the Company entered into a Debt Exchange Agreement with AOS, whereby AOS and the Company agreed to convert $1,000,000 owed to AOS under an existing unsecured promissory note owed for monies advanced to the Company into 250,000 shares of Series P Preferred at a conversion price of $4.00 per share.

 

The Series P Preferred shall be convertible into shares of the Company’s common stock on such date that the Company obtains stockholder approval to remove the Exchange Cap, subject to beneficial ownership limitations.

 

At May 31, 2025, 343,750 shares of the Series P Preferred were outstanding, which if converted as of May 31, 2025, would have resulted in the issuance of 343,750 shares of common stock.

 

Stock Options

 

On December 28, 2023, at the Annual Meeting of Stockholders of the Company, the Company’s stockholders approved the adoption of the NextTrip 2023 Equity Incentive Plan (the “2023 Plan”). 7,000,000 shares of common stock have been reserved for issuance under the 2023 Plan., and as of May 31, 2025, 6,443,750 shares are available for future issuance.

 

The Company’s 2013 Equity Incentive Plan expired on March 15, 2023. As such, there were no shares of common stock reserved for future issuance thereunder as of May 31, 2025.

 

On March 26, 2025, under the terms of the 2013 Equity Incentive Plan, all outstanding options terminated upon the change in control effected by the issuance of Contingent Shares pursuant to the Exchange Agreement entered into in connection with the NextTrip Acquisition.

 

During the three months ended May 31, 2025, the Company granted and issued stock options to purchase an aggregate of 556,250 shares of common stock under the 2023 Plan. There were no issuances of options during the three months ended May 31, 2024.

 

The Company generally grants stock options to employees, consultants, and directors at exercise prices equal to the fair market value of the Company’s common stock on the grant date, but not less than 100% of the fair market value. Stock options are typically granted throughout the year and generally vest over a period from one to three years of service and expire five years from the grant date, unless otherwise specified. The Company recognizes compensation expense for the fair value of the stock options over the vesting period for each stock option award.

 

Total stock-based compensation expense included in the statements of operations for the three months ended May 31, 2025 and 2024 was $138,325 and $16,394, respectively, all of which is related to stock options. 

 

The fair value of stock-based awards was estimated using the Black-Scholes model with the following weighted average assumptions for the three months ended May 31, 2025. There were no grants issued during the three months ended May 31, 2024:

 

    2025  
Dividend yield     0.0 %
Risk-free interest rate     3.825%-4.06 %
Expected volatility     122.5%-139.7 %
Expected life (in years)     3.32  

  

 

Option activity for the three months ended May 31, 2025 and the year ended February 28, 2025 was as follows:

 

    Options    

Weighted

Average

Exercise

Price ($)

    

Weighted

Average

Remaining

Contractual

Life (Yrs.)

    

Aggregate

Intrinsic

Value ($)

  
                         
Options outstanding at February 29, 2024     85,300       60.50       2.52       -  
                                 
Exercised     -       -       -       -  
Forfeited or cancelled     (8,958 )     125.65       -       -  
Options outstanding at February 28, 2025     76,342       52.69       1.60       -  
Granted     556,250       5.15       3.32       -  
Exercised     -       -       -       -  
Forfeited or cancelled     (76,342 )      52.69       -       -  
Options outstanding May 31, 2025     556,250       5.15       3.32       -  
Options expected to vest in the future as of May 31, 2025     -       -       3.32       -  
Options exercisable at May 31, 2025     556,250       5.15       3.32       -  
Options vested, exercisable, and options expected to vest at May 31, 2025     556,250       5.15       3.32       -  

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At May 31, 2025, no options had an exercise price below the $2.05 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At May 31, 2025, there was no unrecognized stock-based compensation expense related to unvested stock options.

 

Stock Appreciation Rights

 

The purposes of the 2020 Stock Appreciation Rights Plan (the “2020 SAR Plan”) are to: (i) enable the Company to attract and retain the types of employees, consultants, and directors (collectively, “Service Providers”) who will contribute to the Company’s long-range success; (ii) provide incentives that align the interests of Service Providers with those of the stockholders of the Company; and (iii) promote the success of the Company’s business. The 2020 SAR Plan provides for incentive awards that are only in the form of stock appreciation rights payable in cash (“SARs”). No shares of common stock are reserved or will be issued pursuant to the 2020 SAR Plan.

 

SARs may be granted to any Service Provider. A SAR is the right to receive an amount equal to the Spread with respect to a share of the Company’s common stock (a “Share”) upon the exercise of the SAR. The “Spread” is the difference between the exercise price per share specified in a SAR agreement on the date of grant and the fair market value per share on the date of exercise of the SAR. The exercise price per share will not be less than 100% of the fair market value of a Share on the date of grant of the SAR. The administrator of the 2020 SAR Plan will have the authority to, among other things, prescribe the terms and conditions of each SAR, including, without limitation, the exercise price and vesting provisions, and to specify the provisions of the SAR Agreement relating to such grant.

 

On March 26, 2025, under the terms of the 2020 SAR Plan, all outstanding unvested SARs became immediately vested and exercisable upon the change in control effected by the issuance of Contingent Shares pursuant to the Exchange Agreement entered into in connection with the NextTrip Acquisition.

 

The Company did not grant any SARs during the three months ended May 31, 2025 or May 31, 2024.

 

The Company recognizes compensation expense and a corresponding liability for the fair value of the SARs over the vesting period for each SAR award. The SARs are revalued at each reporting date in accordance with ASC 718 “Compensation-Stock Compensation,” and any changes in fair value are reflected in the Statement of Operations as of the applicable reporting date.

 

 

SARs activity for the three months ended May 31, 2025 and the year ended February 28, 2025 was as follows:

 

    SARs    

Weighted

Average

Exercise

Price ($)

    

Weighted

Average

Remaining

Contractual Life (Yrs.)

    

Aggregate

Intrinsic

Value ($)

  
                         
SARs outstanding at February 29, 2024     40,390       44.77       2.99       -  
Exercised     -       -       -       -  
Forfeited or cancelled     (167 )     37.4       -       -  
SARs outstanding at February 28, 2025     40,223       44.80       1.99       -  
Granted     -       -       -       -  
Exercised     -       -       -       -  
Forfeited or cancelled     -       -       -       -  
SARs outstanding May 31, 2025     40,223       44.80       1.73       -  
SARs expected to vest in the future as of May 31, 2025     -       -       -       -  
SARs exercisable at May 31, 2025     40,223       44.80       1.73       -  
SARs vested, exercisable, and SARs expected to vest at May 31, 2025    

 

40,223

      

 

44.80

       1.73       -  

 

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the market price of our common stock for those awards that have an exercise price below the market price of our common stock. At May 31, 2025, no SARs had an exercise price below the $2.05 closing price of our common stock as reported on The Nasdaq Capital Market.

 

At May 31, 2025, there was no unrecognized stock-based compensation expense related to unvested SARs.

 

Warrants

 

The fair value of warrants issued during the three months ended May 31, 2025 was estimated using the Black-Scholes model with the following assumptions. There were no warrants issued for the three months ended May 31, 2024:

 

Assumptions:

 

    2025  
Dividend yield     0.0 %
Risk-free interest rate     3.1%-4.1 %
Expected volatility     156.4%-160.5 %
Expected life (in years)     3.0-3.5  

 

Warrant activity for the three months ended May 31, 2025 and the year ended February 28, 2025 was as follows:

 

    Warrants    

Weighted

Average

Exercise

Price ($)

    

Weighted

Average

Remaining

Contractual

Life (Yrs.)

  
Warrants outstanding at February 29, 2024     486,165       9.94       1.96  
Granted     2,637,887       4.80       4.24  
Exercised     (104,965 )     3.02       -  
Forfeited or cancelled     (3,202 )     -       -  
Warrants outstanding at February 28, 2025     3,015,885       5.36       3.84  
Granted     96,887       4.24       4.56  
Exercised     -       -       -  
Forfeited or cancelled     -       -       -  
Warrants outstanding at May 31, 2025     3,112,772       5.31       3.62