Derivative Liability |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Liability [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVE LIABILITY | NOTE 8 – DERIVATIVE LIABILITY
In March 2024, pursuant to the amendment of the Kopple note payable (see Note 3), the Company granted Kopple the right to convert the amended 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 of the Company’s common stock. The Company evaluated this conversion option under ASC 815, Derivatives and Hedging and determined that it is not indexed to the Company's own stock because the number of shares issuable upon conversion has no explicit limit. Accordingly, the conversion feature has been accounted for as a derivative liability, remeasured to fair value each reporting period, with changes in fair value recognized in the statements of operations. This conversion feature was the Company's only derivative liability as of February 28, 2026.
The Company has also issued other convertible notes payable and warrants that provide for the issuance of common stock upon conversion or exercise. As discussed in Note 9, when the number of shares issuable under the Company's outstanding convertible securities and warrants exceeds the number of authorized and unissued shares available, the Company applies a sequencing policy — allocating remaining authorized shares first to warrants, then to convertible notes payable — to determine which instruments are covered. As of February 28, 2026, the Company's remaining authorized and unissued shares, after this allocation, were sufficient to cover all such other convertible notes payable and warrants, which accordingly remained classified in equity.
During the three months ended May 31, 2026, the number of shares potentially issuable under the Company's outstanding convertible notes payable and warrants, together with other outstanding commitments to issue common stock, increased to the point that the Company's remaining authorized and unissued shares were no longer sufficient to cover all of these instruments. As a result, in addition to the Kopple conversion feature, the conversion and exercise features of certain other convertible notes payable and warrants that had previously been classified in equity were reclassified as derivative liabilities as of May 31, 2026. The Company intends to seek stockholder approval to increase its authorized shares of common stock. If additional shares are authorized, the Company will reassess the classification of these instruments at that time.
The Company measures the derivative liability at fair value using a Black-Scholes option-pricing model. The fair value of the derivative liability was $31,023 and $22,844 as of May 31, 2026 and February 28, 2026, respectively. The increase reflects both the change in fair value of the Kopple conversion feature and the addition of the other convertible notes payable and warrants reclassified into liability treatment during the quarter, as described above.
The following tables summarize the derivative liability:
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