Convertible Note Payable-Related Party

6 Months Ended

Aug. 31, 2025

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:

	August 31, 2025		February 28, 2025
(amounts in thousands)
(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 of the Company. As part of the agreement, the Company issued a $3,000 convertible note. The convertible note is unsecured, bears interest at 5% per annum, and was due February 2, 2023. The convertible note is convertible into shares of common stock at a conversion price of $1.40 per share, as adjusted.  As of August 31, 2025 and February 28, 2025, 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 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 August 31, 2025 and February 28, 2025, 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. As of August 31, 2025 and February 28, 2025, 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, originally due December 2024, to be paid by 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 any 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) 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.   March 2024 amendment to the Kopple note payable   During 2025, the installment payment of $2,000, due in December 2024, has been extended four times until December 31, 2025, in exchange for total consideration of $325,000, which was recorded as interest expense.   Accounting for March 2024 amendment to the Kopple note payable as debt extinguishment   The Company accounted for the amended terms of the Kopple note payable as a debt extinguishment. The Company recorded a loss on debt extinguishment of $19,324 as a result of this amendment, which is the difference between (i) the fair value of the amended convertible note payable of $9,259, combined with the fair value of the conversion option upon issuance of $22,194, and the change in the fair value of the amended warrants of $33, and (ii) the net carrying amount of the former note payable of $12,162.   Other   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 Kopple’s conversion rights, and failure to pay 20% of all collected revenues within 10 days of the end of each fiscal quarter. In addressing the alleged violation of terms, the Company has provided for interest at the rate of 15% per annum and reported the entire convertible note payable as current.

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 investing activities, as defined in the agreement, including the covenant to not 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 management believes meeting these covenants will not affect the operations of the Company.

At August 31, 2025, the total outstanding convertible notes payable-related party of $12,279 and accrued interest of $3,352 are convertible into 101,420,837 shares of common stock at conversion rates ranging from $0.20 to $1.40 per share.