Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Tables)

v3.19.2
NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE (Tables)
12 Months Ended
May 31, 2019
Debt Disclosure [Abstract]  
Schedule of Debt [Table Text Block]
   

May 31,

   

May 31,

 
   

2019

   

2018

 
                 

On February 7, 2018, the Company issued a note payable to Todd Blatt in the amount of $210,000 the “Blatt Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the year ended May 31, 2019, the Company accrued interest in the amount of $1,726 on the Blatt Note. On July 20, 2018, the Company made principal and interest payments in the amount of $210,000 and $5,627, respectively, on the Blatt Note.

  $ -     $ 210,000  
                 

On February 7, 2018, the Company issued a note payable to AJG Group in the amount of $200,000 the “AJG Note”).  This note accrues interest at a rate of 6% per annum and is due on February 7, 2019. During the year ended May 31, 2018, the Company made a principal payment in the amount of $100,000 and accrued interest in the amount of $2,696 on the AJG note. During the year ended May 31, 2019, the Company accrued interest in the amount of $641 on the AJG Note. On July 9, 2018, the Company made principal and interest payments in the amount of $100,000 and $3,337, respectively, on the AJG Note.

    -       100,000  
                 

The Company issued a secured note payable to Serenity Wellness Enterprises, LLC, as nominee (“Oasis Note”). dated June 27, 2018 in the principal amount of $4,000,000 and bearing interest at a rate of 6% per annum pursuant to the Membership Interest Purchase Agreement with Alternative Solutions.  The note is due on December 4, 2019, but may be prepaid at any time without penalty.   The Oasis Note is secured by all of the membership interests in Alternative Solutions and the Oasis LLCs and by the assets of the Oasis LLCs. 

 

The Company recognized an original issue discount of $189,180 on the Oasis Note.  During the year ended May 31, 2019, $121,796 of this discount was charged to operations.  During the year ended May 31, 2019, the Company accrued interest in the amount of $225,333 on the Oasis Note.

    4,000,000       -  
                 

Total – Notes Payable

  $ 4,000,000     $ 310,000  

Less: Discount

    (67,384

)

    -  

Notes Payable, Net of Discounts

  $ 3,932,616     $ 310,000  

Current portion

  $ 3,932,616     $ 310,000  

Long term portion

  $ -     $ -  
Short-term Debt [Text Block]
The following tables summarize the Company’s loan balances at May 31, 2019 and 2018:

   

May 31,

   

May 31,

 
   

2019

   

2018

 
                 

Notes payable to Jeffrey Binder, an officer and director of the Company, for advances to fund operations (the “Binder Funding Notes”). The Binder Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Amendment, a conversion feature was added to the Binder Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $35,023 related to the revaluation of the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the year ended May 31, 2018, Mr. Binder advanced a total of $440,579 to the Company under the Binder Funding Notes. During the year ended May 31, 2018, principal in the amount of $280,198 and accrued interest in the amount of $5,188 was transferred out of the Binder Funding Notes and used to fund four new convertible notes payable to Mr. Binder, which were converted or repaid as of May 31, 2018.  Also during the year ended May 31, 2018, the Company made principal payments in the aggregate of $237,794 under the Binder Funding Notes.  During the year ended May 31, 2018, the Company accrued interest in the amount of $7,364 on the Binder Funding Notes. During the year ended May 31, 2018, discounts in the amount of $385,637 related to the beneficial conversion feature of the Binder Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the year ended May 31, 2019, the Company paid principal and accrued interest in the amounts of $137 and $3,338, respectively, on the Binder Funding Notes.

  $ -     $ 137  
   

May 31,

2019

   

May 31,

2018

 
                 

Notes payable to Newcan Investment Partners, LLC (“Newcan”), an entity owned by Frank Koretsky, a director of the Company, for advances to fund operations (the “Newcan Funding Notes”). The Newcan Funding Notes bear interest at a rate of 10% per annum, have no maturity date and are due on demand.  Effective May 31, 2017, pursuant to the Omnibus Loan Agreement, a conversion feature was added to the Newcan Funding Notes whereby principal and accrued interest is convertible into common stock of the Company at a rate of $0.25 per share.

 

Effective December 1, 2017, pursuant to the Second Omnibus Loan Amendment, the conversion price was increased from $0.25 per share to $0.3125 per share and a discount in the amount of $6,120 related to the revaluation of the beneficial conversion feature of the Newcan Funding Notes was charged to additional paid-in capital and amortized to interest expense.

 

During the year ended May 31, 2018, Newcan advanced a total of $290,000 to the Company under the Newcan Funding Notes. During the year ended May 31, 2018, principal in the amount of $836,658 and accrued interest in the amount of $25,018 was transferred out of the Newcan Funding Notes and used to fund four new convertible notes payable to Newcan, which were converted or repaid as of May 31, 2018.  During the year ended May 31, 2018, the Company accrued interest in the amount of $16,681 on the Newcan Funding Notes. During the year ended May 31, 2018, discounts in the amount of $210,120 related to the beneficial conversion feature of the Newcan Funding Notes were charged to additional paid-in capital and amortized to interest expense.

 

During the year ended May 31, 2019, principal in the amount of $75,000 and accrued interest in the amount of $1,931 was transferred out of the Newcan Funding Notes and used to create a new convertible note payable to Newcan (“Newcan Convertible Note 8”). During the year ended May 31, 2019, the Company accrued interest in the amount of $1,377 on the Newcan Funding Notes.

    -       75,000  
                 

Total – Demand Convertible Notes Payable, Related Parties

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable, Related Parties - Current portion

  $ -     $ 75,137  

Total – Demand Convertible Notes Payable, Related Parties - Long term portion

  $ -     $ -  
Convertible Debt [Table Text Block]
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to David Lamadrid (the “Lamadrid Note”) dated February 20, 2018 in the principal amount of $31,250 and bearing interest at a rate of 8% per annum.  The Lamadrid Note is due eighteen months from the date of issue.  Mr. Lamadrid may, at his option, convert all or a portion of the Lamadrid Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Lamadrid Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Lamadrid Note will be reset to such lower price. The Company recognized a discount of $31,250 on the Lamadrid Note related to the beneficial conversion feature at the time of issuance.  During the year ended May 31, 2018, $942 of this discount was charged to operations.  During the year ended May 31, 2018, the Company accrued interest in the amount of $685 on this note.

 

During the year ended May 31, 2019, interest in the amount of $562 was accrued on the Lamadrid note. During the year ended May 31, 2019, the Lamadrid Note, in the amount of $32,497, of which $31,250 was principal and $1,247 was accrued interest, was converted into 103,989 shares of common stock. During the year ended May 31, 2019, the remaining discount in the amount of $30,308 was charged to operations.

  $ -     $ 31,250  
                 

Unsecured convertible note issued to Jeffery Binder, an officer and director of the Company, dated April 6, 2018 in the original principal amount of $37,500 (the “Binder Convertible Note 9”).  The Binder Convertible Note 9 was funded with the conversion of $37,500 of unpaid accrued salary due to Mr. Binder.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing October 1, 2019, the first of eight principal payments in the amount of $4,688 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.3125 converted.  The Company recognized a discount of $37,500 on the Binder Convertible Note 9 related to the value of the beneficial conversion feature at the time of issuance. During the year ended May 31, 2018, the Company amortized $1,890 of this discount to interest expense.

 

During the year ended May 31, 2019, interest in the amount of $699 was accrued on the Binder Convertible Note 9. During the year ended May 31, 2019, the Company made principal and interest payments in the amount of $37,500 and $1,264, respectively, on the Binder Convertible Note 9. During the year ended May 31, 2019 the remaining discount in the amount of $35,610 was charged to operations.

    -       37,500  
   

May 31,

2019

   

May 31,

2018

 
                 

Unsecured convertible note issued to Newcan, an entity owned by Frank Koretsky, a director of the Company, dated, August 6, 2018 in the original amount of $75,000 (the “Newcan Convertible Note 8”).  The Newcan Convertible Note 8 was funded with the conversion of $75,000 of advances Newcan made to the Company under the Newcan Funding Notes.  This note bears interest at the rate of 10% per annum.  No interest payments are required until October 1, 2019, at which time all of the accrued interest becomes due and payable.  Commencing on January 1, 2020, the first of eight principal payments in the amount of $9,375 will become due; subsequent principal payments will become due on the first day of each April, July, October, and January until paid in full.  This note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $58,594 on the Newcan Convertible Note 8 related to the value of the beneficial conversion feature at the time of issuance.

 

During the year ended May 31, 2019, the Company accrued interest expense in the amount of $1,603 on the Newcan Convertible Note 8. During the year ended May 31, 2019, the note holder converted $78,534, of which $75,000 was principal and $3,534 was accrued interest into 196,336 shares of common stock. Also during the year ended May 31, 2019, the remaining discount in the amount of $57,322 was charged to operations.

    -       -  
                 

Total – Convertible Notes Payable, Related Parties

  $ -     $ 68,750  

Less: Discount

    -       (65,918

)

Convertible Notes Payable, Related Parties, Net of Discounts

  $ -     $ 2,832  
                 

Convertible Notes Payable, Related Parties, Net of Discounts, Current Portion

  $ -     $ 2,832  

Convertible Notes Payable, Related Parties, Net of Discounts, Long-term Portion

    -       -  
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to Darling Capital, LLC (the “Darling Note”) dated February 5, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000 and the Darling Note has an original issue discount of $50,000.  The Darling Note is due eighteen months from the date of issue.  Darling may, at its option, convert all or a portion of the Darling Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Darling Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Darling Note will be reset to such lower price. The Company recognized a discount of $550,000 on the Darling Note related to the beneficial conversion feature at the time of issuance.  During the year ended May 31, 2018, $40,427 of this discount was charged to operations.  During the year ended May 31, 2018, the Company accrued interest in the amount of $13,863 on this note.

 

During the year ended May 31, 2019, the Company accrued interest in the amount of $1,447 on this note. During the year ended May 31, 2019, the holder of the Darling Note converted $565,000, of which $550,000 was principal and $15,000 was accrued interest, into 1,808,000 shares of common stock. Also, during the year ended May 31, 2019, the remaining discount in the amount of $509,573 was charged to operations.

  $ -     $ 550,000  
                 

Convertible promissory note payable to Efrat Investments, LLC (the “Efrat Note”) dated February 12, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $50,000 and the Efrat Note has an original issue discount of $5,000.  The Efrat Note is due eighteen months from the date of issue.  Efrat may, at its option, convert all or a portion of the Efrat Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.3125 per share. The Efrat Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.3125 per share of common stock, the conversion price of the Efrat Note will be reset to such lower price. The Company recognized a discount of $55,000 on the Efrat Note related to the beneficial conversion feature at the time of issuance.  During the year ended May 31, 2018, $2,974 of this discount was charged to operations.  During the year ended May 31, 2018, the Company accrued interest in the amount of $1,302 on this note.

 

During the year ended May 31, 2019, the Company accrued interest in the amount of $898 on this note. During the year ended May 31, 2019, the holder of the Efrat Note converted $57,200, of which $55,000 was principal and $2,200 was accrued interest into 183,040 shares of common stock. Also during the year ended May 31, 2019, the remaining discount in the amount of $52,026 was charged to operations.

    -       55,000  
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note”) dated May 14, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $750,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note will be reset to such lower price. The Company recognized a discount of $750,000 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of $93,750 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the year ended May 31, 2018, $23,224 of this discount was charged to operations.  During the year ended May 31, 2018, the Company accrued interest in the amount of $2,795 on this note.

 

During the year ended May 31, 2019, a reset event occurred. As a result, the conversion price of the YA II PN Note was reduced to $0.34 per share of common stock. This was considered a material modification of the note; the remaining balance of the discount to the note in the amount of $699,628 was charged to interest expense, a new discount in the amount of $750,000 was charged to additional paid-in capital, and $620,052 of the new discount was amortized to interest expense.  During the year ended May 31, 2019, the Company accrued interest expense in the amount of $36,274 on the YA II PN Note. During the year ended May 31, 2019, the holder of the YA II PN Note converted principal in the amount of $500,000 and accrued interest in the amount of $36,274 into 1,340,684 shares of common stock. Also during the year ended May 31, 2019, the Company made principal and interest payments in the amount of $250,000 and $2,630, respectively, along with a prepayment penalty in the amount of $62,500 on the YA II PN Note.

    -       750,000  
                 

Unsecured convertible note issued to Jay Lasky (the “Lasky Note”), dated May 3, 2018 in the original principal amount of $25,000.  This note bears interest at the rate of 10% per annum.  No interest payments are required until July 1, 2019, at which time all accrued interest becomes due and payable.  Commencing on October 1, 2019, the first of eight principal payments in the amount of $3,125 will become due; subsequent payments will become due on the first day of each January, April, July and October until paid in full.  The Lasky Note and accrued interest under the note may be converted, in whole or in part, into one share of common stock for each $0.40 converted.  The Company recognized a discount of $7,301 on the Lasky Note related to the beneficial conversion feature at the time of issuance.  During the year ended May 31, 2018, $149 of this discount was charged to operations.  During the year ended May 31, 2018, the Company accrued interest in the amount of $192 on this note.

 

During the year ended May 31, 2019, $7,152 of this discount was charged to operations. Also during the year ended May 31, 2019, the Company accrued interest in the amount of $993 on this note. During the year ended May 31, 2019, the holder of the Lasky Note converted $26,185, of which $25,000 was principal and $1,185 was accrued interest, into 65,462 shares of common stock.

    -       25,000  
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible promissory note payable to YA II PN, Ltd. (the “YA II PN Note 2”) dated July 20, 2018 and bearing interest at a rate of 8% per annum. The lender loaned the Company $500,000, and the note is due on November 14, 2019.  YA II PN may, at its option, convert all or a portion of the YA II PN Note 2 and accrued but unpaid interest into shares of common stock at a conversion price of $0.40 per share.  The YA II PN Note 2 also contains a reset feature, whereby, absent certain exceptions, if the Company issues equity securities at an effective price less than $0.40 per share of common stock, the conversion price of the YA II PN Note 2 will be reset to such lower price. The Company recognized a discount of $362,500 related to the beneficial conversion feature at the time of issuance.  Commencing on December 1, 2018, absent certain exceptions, the first of eight payments in the amount of 62,500 will become due; subsequent payments will become due on the first day of each of the following months until paid in full. During the year ended May 31, 2019, $362,500 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $24,438 on this note. Also during the year ended May 31, 2019, the Company made principal and interest payments in the amount of $500,000 and $24,658, respectively, along with a prepayment penalty in the amount of $125,000 on the YA II PN Note 2.

    -       -  
                 

Convertible debenture in the principal amount of $4,000,000 (the “U.S. Convertible Debenture 1”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 1. The U.S. Convertible Debenture 1 matures on a date that is three years following issuance. The U.S. Convertible Debenture 1 is convertible into units (the “Convertible Debenture Units”) at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 1 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 1 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $3,254,896 on the U.S. Convertible Debenture 1. During the year ended May 31, 2019, $632,896 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $191,363 on the U.S. Convertible Debenture 1. Also during the year ended May 31, 2019, the Company transferred the amount of $135,306 from accrued interest to principal of the U.S. Convertible Debenture 1.

    4,135,306       -  
                 

Convertible debenture in the principal amount of $1,000,000 (the “U.S. Convertible Debenture 2”) dated October 31, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 2. The U.S. Convertible Debenture 2 matures on a date that is three years following issuance. The U.S. Convertible Debenture 2 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 2 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 2 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $813,724 on the U.S. Convertible Debenture 2. During the year ended May 31, 2019, $158,224 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $47,841 on the U.S. Convertible Debenture 2. Also during the year ended May 31, 2019, the Company transferred the amount of $33,827 from accrued interest to principal of the U.S. Convertible Debenture 2.

    1,033,827       -  
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible debenture in the principal amount of $100,000 (the “U.S. Convertible Debenture 3”) dated October 24, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 3. The U.S. Convertible Debenture 3 matures on a date that is three years following issuance. The U.S. Convertible Debenture 3 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 3 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 3 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $75,415 on the U.S. Convertible Debenture 3. During the year ended May 31, 2019, $14,664 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $4,945 on the U.S. Convertible Debenture 3. Also during the year ended May 31, 2019, the Company transferred the amount of $3,541 from accrued interest to principal of the U.S. Convertible Debenture 3.

    103,541       -  
                 

Convertible debenture in the principal amount of $532,000 (the “U.S. Convertible Debenture 4”) dated October 25, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 4. The U.S. Convertible Debenture 4 matures on a date that is three years following issuance. The U.S. Convertible Debenture 4 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 4 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 4 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $416,653 on the U.S. Convertible Debenture 4. During the year ended May 31, 2019, $81,016 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $26,185 on the U.S. Convertible Debenture 4. Also during the year ended May 31, 2019, the Company transferred the amount of $18,719 from accrued interest to principal of the U.S. Convertible Debenture 4.

    550,719       -  
                 

Convertible debenture in the principal amount of $150,000 (the “U.S. Convertible Debenture 5”) dated October 26, 2018,  which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 5. The U.S. Convertible Debenture 5 matures on a date that is three years following issuance. The U.S. Convertible Debenture 5 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 5 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 5 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $120,100 on the U.S. Convertible Debenture 5. During the year ended May 31, 2019, $23,353 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $7,348 on the U.S. Convertible Debenture 5. Also during the year ended May 31, 2019, the Company transferred the amount of $5,244 from accrued interest to principal of the U.S. Convertible Debenture 5.

    155,244       -  
   

May 31,

2019

   

May 31,

2018

 
                 

Convertible debenture payable in the principal amount of $75,000 (the “U.S. Convertible Debenture 6”) dated October 26, 2018, which bears interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the U.S. Convertible Debenture 6. The U.S. Convertible Debenture 6 matures on a date that is three years following issuance. The U.S. Convertible Debenture 6 is convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The U.S. Convertible Debenture 6 has other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The U.S. Convertible Debenture 6 is an unsecured obligation of the Company and ranks pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $60,049 on the U.S. Convertible Debenture 6. During the year ended May 31, 2019, $11,676 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $3,674 on the U.S. Convertible Debenture 6. Also during the year ended May 31, 2019, the Company transferred the amount of $2,622 from accrued interest to principal of the U.S. Convertible Debenture 6.

    77,622       -  
                 

Seventy-two convertible debentures payable in the aggregate principal amount of $12,012,000 (the “Canaccord Debentures”) dated December 12, 2018, which bear interest, payable quarterly, at a rate of 8% per annum, with interest during the first eighteen months following issuance being payable by increasing, on a quarterly basis, the then-outstanding principal amount of the Canaccord Debentures. The Canaccord Debentures mature on a date that is three years following issuance. The Canaccord Debentures are convertible into Convertible Debenture Units at a conversion price of $0.80 per Convertible Debenture Unit. Each Convertible Debenture Unit consists of (i) one share of the Company’s common stock, and (ii) one-half of one warrant, with each warrant exercisable for three years to purchase a share of common stock at a price of $1.10. The value of the warrants will be recorded when the issuance becomes probable. The Canaccord Debentures have other features, such as mandatory conversion in the event the common stock trades at a particular price over a specified period of time and required redemption in the event of a “Change in Control” of the Company. The Canaccord Debentures are unsecured obligations of the Company and rank pari passu in right of payment of principal and interest with all other unsecured obligations of the Company. The Company recorded a discount in the amount of $2,938,690 on the Canaccord Debentures. During the year ended May 31, 2019, $456 of this discount was charged to operations. During the year ended May 31, 2019, the Company accrued interest in the amount of $458,759 on the Canaccord Debentures Also during the year ended May 31, 2019, the Company transferred the amount of $291,791 from accrued interest to principal of the Canaccord Debentures.

    12,303,971       -  
                 

Total - Convertible Notes Payable

  $ 18,360,230     $ 1,380,000  

Less: Discount

    (3,819,010

)

    (1,295,527

)

Convertible Notes Payable, Net of Discounts

  $ 14,541,220     $ 84,473  
                 

Total - Convertible Notes Payable, Net of Discounts, Current Portion

  $ -     $ 43,401  

Total - Convertible Notes Payable, Net of Discounts, Long-term Portion

  $ 14,541,220     $ 41,072  
Schedule of Amortization of Debt Discount [Table Text Block]

Discounts on notes payable amortized to interest expense – years ended May 31, 2019 and 2018, respectively

  $ 3,576,161     $ 2,534,104  
Schedule of Maturities of Long-term Debt [Table Text Block]
Aggregate maturities of notes payable and convertible notes payable as of May 31, 2019 are as follows:

2020

  $ 4,000,000  

2021

    -  

2022

    18,360,230  

2023

    -  

2024

    -  

Thereafter

    -  

Total

  $ 22,360,230