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Related Parties Transactions
9 Months Ended
Nov. 30, 2019
Related Party Transactions [Abstract]  
RELATED PARTIES TRANSACTIONS

NOTE 8 – RELATED PARTIES TRANSACTIONS

 

Breslow Note

 

On January 24, 2017 the Company entered into a Debt Refinancing Agreement with Mr. Breslow, a former Director of the Company. Pursuant to the agreement, both Mr. Breslow and the Company acknowledged that total debt owed to Mr. Breslow was $23,872,614 including $8,890,574 of accrued interest. Mr. Breslow agreed to cancel and forgive all interest due, waive all events of default and sign a new five-year convertible note in the amount of $14,982,041 providing for no interest for nine months and interest of 5% per annum thereafter payable monthly in arrears. The note also provides various default provisions. In accordance with the agreement, on February 14, 2018, the effective date of the 1-for-7 reverse stock split, $11,982,041 of the note was converted into 7,403,705 shares of common stock and the then accrued interest of $9,388,338 was forgiven. A new $3,000,000 five-year note representing the remaining balance was entered into. The note bears interest at a rate of 5% per annum payable monthly in arrears.

 

Kopple Note

 

At November 30, 2019, the balance in notes payable and accrued interest-related party, current of $6,551,591, consists primarily of the Kopple (a former Board member) note of $6,415,109 and the Gagerman note of $136,482 (see below). The Kopple note has a principle balance of $3,587,322 plus accrued interest of $2,827,787.. At November 30, 2019, the balance in convertible notes payable and accrued interest-related party consists of $2,000,000 of unsecured convertible notes payable plus accrued interest of $1,849,978 and an unsecured convertible note of $20,000 plus accrued interest of $3,173 to Mr. Kopple.

 

Gagerman Note

 

The notes payable and accrued interest-related party, currrent balance also includes $82,000 of unsecured notes payable plus accrued interest of $54,482 owed to Melvin Gagerman, the Company's former CEO and CFO, pursuant to a demand note entered into on April 5, 2014. See note 7 for disclosures with respect to cancellation of Gagerman's unpaid compensation of $1.0 million.

 

Other Related Party Transactions

 

In November 2019, two members of the board of directors, Messrs. Diaz-Verson and Lempert, agreed to cancel their outstanding debt with the Company in the amounts of $6,579 and $20,500, respectively, in exchange for 32,895 and 102,503 shares of common stock at a conversion price of $0.20 per share. On the dates of the exchange, November 26 and November 27, 2019, respectively, the closing prices of the Company's common stock was $0.21 and $0.22 per share, respectively (see Note 4). The loss on extinguishment of debt of approximately $2,700 was recorded as part of additional paid-in-capital.