v3.26.3
Convertible Note Payable-Related Party
 3 Months Ended
May 31, 2026
Convertible Note Payable-Related Party [Abstract]  
CONVERTIBLE NOTE PAYABLE-RELATED PARTY

NOTE 3 – CONVERTIBLE NOTE PAYABLE-RELATED PARTY

 

Convertible note payable – related party consisted of the following:

 

    May 31,
2026		     February 28,
2026		  
(a) Convertible note payable to former director – past due   $ 3,000     $ 3,000  
(b) Convertible note payable to director – past due     20       20  
(c) Convertible note payable – Kopple     9,259       9,259  
Total   $ 12,279     $ 12,279  

 

(a) Convertible note payable-former Director  
   
  On January 24, 2017, the Company entered into a debt refinancing agreement with a former director and current shareholder. Under the agreement, the Company issued a $3,000 convertible note. The convertible note is unsecured, bears interest at 5% per annum, and was due January 24, 2022. The convertible note is convertible into shares of common stock at a conversion price of $1.40 per share, as adjusted.  As of May 31, 2026 and February 28, 2026, the outstanding balance of the convertible note amounted to $3,000 and is past due.  

  

(b) Convertible note payable-Director  
   
  On October 4, 2023, the Company issued a convertible note payable of $20 in exchange for cash to a member of the Company’s Board of Directors. The convertible note is unsecured, bears interest at a rate of 10% per annum, and matured in March 2024. The convertible note payable is convertible to common stock at a conversion price of $0.20 per share. As of May 31, 2026 and February 28, 2026, the outstanding balance of the convertible note amounted to $20 and is past due.
   
(c) Convertible note payable-Kopple
   
  The convertible note payable to Robert Kopple and associated entities (collectively “Kopple”), as amended in March 2024, is secured by tangible and intangible assets of the Company, bears interest at a rate of 10% per annum (15% on default), and matures in June 2029. During fiscal 2025, the Company accounted for the amended terms of the Kopple note payable as a debt extinguishment. As of May 31, 2026 and February 28, 2026, the outstanding balance of the convertible note payable was $9,259. Robert Kopple is the former Vice-Chairman of the Company’s Board of Directors and is a current shareholder in the Company.

 

 

The convertible note (i) requires $2,000 due December 2024 (extended to December 2025); (ii) added a fee of $15 monthly until the Company makes a principal payment of $2,000; (iii) effective August 30, 2024, the Company granted Kopple a 36 month right (but not an obligation) to convert the note payable into equity of the Company at a conversion price equal to the lower of $1 per share or 50% of the 10 day volume weighted average price per share of the Company’s common stock; (iv) during Fiscal 2025, requires the Company to pay 20% of all collected revenues within 10 days of the end of each fiscal quarter; (v) requires the Company to pay Kopple 20% of any amount raised in new capital in the form of equity, debt or convertible debt above $3,500; (vi) reduces the exercise price of the warrants granted to Kopple in March 2022 from $0.85 per share to $0.50 per share; and (vii) extends the warrant expiration date of the warrants granted to Kopple from March 8, 2029, to March 31, 2031.

 

During the year ended February 28, 2026, the $2,000 installment payment originally due in December 2024 was extended through December 31, 2025. In exchange for the extension, the Company incurred fees totaling $325, recorded as interest expense. The Company is currently negotiating with the noteholder for another installment payment extension to September 30, 2026.

 

At February 28, 2025, Kopple alleged that the Company failed to comply with certain non-monetary terms, including failing to hold a shareholders’ meeting by August 1, 2024, or otherwise secure additional shares needed to allow the exercise of Kopple’s conversion rights, and failure to pay 20% of all collected revenues within 10 days of the end of each fiscal quarter in Fiscal 2025. In addressing the alleged violation of the terms, the Company has provided for interest using a default rate of 15% per annum and reported the entire convertible note payable as current.

 

The Company disputes Kopple’s alleged failures to perform the non-monetary terms and is currently in discussion with Kopple to resolve this matter.

 

The Company is also subject to certain affirmative and negative covenants, such as periodic submission of financial statements to Kopple and restrictions on future financing and investment activities, as defined in the agreement, including a covenant not to create any indebtedness that is senior in right of payment to the Kopple debt. Management believes such covenants are normal for this type of transaction and that meeting them will not affect the Company’s operations.

 

As of May 31, 2026, the total outstanding convertible notes payable-related party of $12,279 and accrued interest of $4,310 are potentially convertible into 217,021,460 shares of common stock at a conversion price at an average price of $0.076 per share.