Quarterly report pursuant to Section 13 or 15(d)

Notes Payable

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Notes Payable
9 Months Ended
Feb. 29, 2024
Debt Disclosure [Abstract]  
Debt Disclosure [Text Block]

Note 17: Notes Payable

 

   

February 29, 2024

   

May 31, 2023

 

Debenture 1

Debenture in the principal amount of $250,000 (the “Debenture 1”) dated December 1, 2021, which bears interest, payable quarterly commencing six months after issuance, at a rate of 15% per annum. Principal on Debenture 1 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 75,758 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 1 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $17,223 on Debenture 1.

 

On May 31, 2023, the Debenture 1 was amended as follows: (1) the maturity date was extended to October 31, 2024; (2) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 1 was amended as follows: The original issue discount in the amount of $187,000 was reduced to $37,500. A gain on extinguishment of debt in the amount of $110,772 was recognized in connection with this transaction, and a discount in the amount of $11,272 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $7,500 and $25,833, respectively, on the Debenture 1. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $5,352 and $35,653, respectively.

  $ 204,167     $ 250,000  
                 

Debenture 2

Debenture in the principal amount of $250,000 (the “Debenture 2”) dated December 21, 2021, which bears interest, payable quarterly commencing six months after issuance, at a rate of 15% per annum. Principal on Debenture 2 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 75,758 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 2 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $10,428 on Debenture 2.

 

On May 31, 2023, the Debenture 2 was amended as follows: (1) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and Interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 2 was amended as follows: The original issue discount in the amount of $187,000 was reduced to $37,500. A gain on extinguishment of debt in the amount of $117,883 was recognized in connection with this transaction, and a discount in the amount of $12,577 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $2,344 and $12,084, respectively, on the Debenture 2. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $6,721 and $45,029, respectively.

    71,667       250,000  

 

   

February 29, 2024

   

May 31, 2023

 

Debenture 3

Debenture in the principal amount of $500,000 (the “Debenture 3”) dated December 21, 2021, which bears interest, payable quarterly commencing nine months after issuance, at a rate of 15% per annum. Principal on Debenture 3 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 151,516 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 3 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $19,335 on Debenture 3. During the three and nine months ended February 29, 2024, $1,541 and $3,082, respectively, of this discount was charged to operations. The Company recorded an original issue discount in the amount of $375,000 on Debenture 3. During the three and nine months ended February 29, 2024, $29,886 and $59,772, respectively, of this original issue discount was charged to operations. During the three and nine months ended February 29, 2024, the Company accrued interest in the amounts of $17,917 and $36,667, respectively, on Debenture 3, respectively. During the three and nine months ended February 29, 2024, respectively, the Company made interest payments in the amounts of $30,417 and $49,167. During the three and nine months ended February 29, 2024, the Company made principal payments in the amount of $66,667 on Debenture 3.

 

On May 31, 2023, the Debenture 3 was amended as follows: (1) the maturity date was extended to October 31, 2024; (2) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 3 was amended as follows: The original issue discount in the amount of $375,000 was reduced to $75,000. A gain on extinguishment of debt in the amount of $219,528 was recognized in connection with this transaction, and a discount in the amount of $24,284 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $10,417 and $47,084, respectively, on the Debenture 3. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $11,127 and $73,981, respectively.

 

On February 22, 2024, the Company settled the amounts due under Debentures 3, 4, and 5 for a cash payment in the aggregate amount of $1,250,000 and the return of 13,174,402 shares of the Company’s common stock and the cancellation of 454,548 common stock warrants. A gain in the aggregate amount of $596,949 was recognized on this transaction. See note 19.

    -       500,000  
                 

Debenture 4

Debenture in the principal amount of $500,000 (the “Debenture 4”) dated January 4, 2022, which bears interest, payable quarterly commencing nine months after issuance, at a rate of 15% per annum. Principal on Debenture 4 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 151,516 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 4 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $17,154 on Debenture 4. During the three and nine months ended February 29, 2024, $1,413 and $2,826, respectively, of this discount was charged to operations. The Company recorded an original issue discount in the amount of $375,000 on Debenture 4. During the three and nine months ended February 29, 2024, $30,882 and $61,764, respectively, of this original issue discount was charged to operations. During the three and nine months ended February 29, 2024, the Company accrued interest in the amounts of $17,917 and $36,667, respectively, on Debenture 4. During the three months ended February 29, 2024, the Company made interest payments in the amounts of $30,417 and $49,167, respectively. During the three and nine months ended February 29, 2024, the Company made principal payments in the amount of $66,667 on Debenture 4.

 

On May 31, 2023, the Debenture 4 was amended as follows: (1) the maturity date was extended to October 31, 2024; (2) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 4 was amended as follows: The original issue discount in the amount of $375,000 was reduced to $75,000. A gain on extinguishment of debt in the amount of $216,634 was recognized in connection with this transaction, and a discount in the amount of $24,284 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $10,417 and $47,084, respectively, on the Debenture 4. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $11,416 and $76,006, respectively. 

 

On February 22, 2024, the Company settled the amounts due under Debentures 3, 4, and 5 for a cash payment in the aggregate amount of $1,250,000 and the return of 13,174,402 shares of the Company’s common stock and the cancellation of 454,548 common stock warrants. A gain on settlement of debt in the aggregate amount of $596,949 was recognized on this transaction. See note 19.

    -       500,000  
   

February 29, 2024

   

May 31, 2023

 
                 

Debenture 5

Debenture in the principal amount of $500,000 (the “Debenture 5”) dated January 4, 2022, which bears interest, payable quarterly commencing nine months after issuance, at a rate of 15% per annum. Principal on Debenture 5 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 151,516 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 5 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $17,154 on Debenture 5. During the three and nine months ended February 29, 2024, $1,413 and $2,826, respectively, of this discount was charged to operations. The Company recorded an original issue discount in the amount of $375,000 on Debenture 5. During the three and nine months ended February 29, 2024, $30,882 and $61,764, respectively, of this original issue discount was charged to operations. During the three and nine months ended February 29, 2024, the Company accrued interest in the amounts of $17,917 and $36,667, respectively, on Debenture 5. During the three and nine months ended February 29, 2024, the Company made interest payments in the amounts of $30,417 and $49,167, respectively. During the three and nine months ended February 29, 2024, the Company made principal payments in the amount of $66,667 on Debenture 5.

On May 31, 2023, the Debenture 5 was amended as follows: (1) the maturity date was extended to October 31, 2024; (2) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 5 was amended as follows: The original issue discount in the amount of $375,000 was reduced to $75,000. A gain on extinguishment of debt in the amount of $216,634 was recognized in connection with this transaction, and a discount in the amount of $24,284 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $10,417 and $47,084, respectively, on the Debenture 5. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $11,416 and $76,006, respectively.

 

On February 22, 2024, the Company settled the amounts due under Debentures 3, 4, and 5 for a cash payment in the aggregate amount of $1,250,000 and the return of 13,174,402 shares of the Company’s common stock and the cancellation of 454,548 common stock warrants. A gain on settlement of debt in the aggregate amount of $596,949 was recognized on this transaction. See note 19.

    -       500,000  
                 

Debenture 6

Debenture in the principal amount of $500,000 (the “Debenture 6”) dated January 4, 2022, which bears interest, payable quarterly commencing nine months after issuance, at a rate of 15% per annum. Principal on Debenture 6 is due in two equal installments 18 months after issuance and at maturity on July 10, 2024. With the Debenture, the purchaser received warrants to purchase 151,516 shares of common stock at an exercise price of $1.65 per share of common stock. The Company shall make additional quarterly payments under Debenture 6 beginning 90 days after the end of its first fiscal quarter after January 10, 2025, and for the next five years, on an annual basis, equal to the greater of (a) 15% of the original principal amount, or (b) the purchaser’s pro rata portion of 5% of the distributions the Company receives as a result of the Quinn River Joint Venture during the prior fiscal year. The Company recorded a discount in the amount of $17,154 on Debenture 6. During the three and nine months ended February 29, 2024, $1,413 and $2,826, respectively, of this discount was charged to operations. The Company recorded an original issue discount in the amount of $375,000 on Debenture 6. During the three and nine months ended February 29, 2024, $30,882 and $61,764, respectively, of this original issue discount was charged to operations. During the three and nine months ended February 29, 2024, the Company accrued interest in the amounts of $17,917 and $49,167, respectively, on Debenture 6. During the three and nine months ended February 29, 2024, the Company made interest payments in the amounts of $30,417 and $49,167, respectively. During the three and nine months ended February 29, 2024, the Company made principal payments in the amount of $66,667 on Debenture 6.

On May 31, 2023, the Debenture 6 was amended as follows: (1) the maturity date was extended to October 31, 2024; (2) the first payment of principal and interest on June 30, 2023, followed by quarterly payment of principal and interest on September 30, 2023, beginning October 31, 2023, the Company is required to pay the note holder principal and interest monthly through the maturity date.

 

On December 31, 2023, the Debenture 6 was amended as follows: The original issue discount in the amount of $375,000 was reduced to $75,000. A gain on extinguishment of debt in the amount of $206,856 was recognized in connection with this transaction, and a discount in the amount of $14,270 was recorded. During the three and nine months ended February 29, 2024, the Company accrued interest in the amount of $15,479 and $52,146, respectively, on the Debenture 6. During the three and nine months ended February 29, 2024, the Company amortized discounts in the amount of $11,208 and $76,000, respectively.

    485,063       500,000  
                 

Debenture 7

Debenture in the principal amount of $475,000 (the “Debenture 7”) dated January 2, 2024, which bears interest at a rate of 12% per annum. Principal and interest payments are due monthly for 36 months in the amount $15,917 beginning February 29, 2024. During the three and nine months ended February 29, 2024, the Company made principal and interest payments on the Debenture 7 in the amount of $6,892 and $9,025, respectively.

    468,108       -  
                 

Debenture 8

Debenture in the principal amount of $465,000 (the “Debenture 8”) dated January 2, 2024, which bears interest a rate of 12% per annum. Principal and interest payments are due monthly for 36 months in the amount $15,582 beginning February 29, 2024. During the three and nine months ended February 29, 2024, the Company made principal and interest payments on the Debenture 8 in the amount of $6,747 and $8,835, respectively.

    458,253       -  
                 

Debenture 9

Debenture in the principal amount of $450,000 (the “Debenture 9”) dated February 22, 2024, which bears interest a rate of 12% per annum. Principal and interest payments are due monthly for 24 months in the amount $21,239 beginning March 31, 2024. During the three and nine months ended February 29, 2024, the Company made no principal and interest payments on the Debenture 9.

    450,000       -  
                 

Debenture 10

Debenture in the principal amount of $300,000 (the “Debenture 10”) dated February 22, 2024, which bears interest a rate of 12% per annum. Principal and interest payments are due monthly for 24 months in the amount $14,159 beginning March 31, 2024. During the three and nine months ended February 29, 2024, the Company made no principal and interest payments on the Debenture 10.

    300,000       -  
                 

Debenture 11

Debenture in the principal amount of $350,000 (the “Debenture 11”) dated February 22, 2024, which bears interest a rate of 12% per annum. Principal and interest payments are due monthly for 24 months in the amount $16,519 beginning March 31, 2024. During the three and nine months ended February 29, 2024, the Company made no principal and interest payments on the Debenture 11.

    350,000       -  
                 
Debenture 12                

Debenture in the principal amount of $250,000 (the “Debenture 12”) dated February 22, 2024, which bears interest a rate of 12% per annum. Principal and interest payments are due monthly for 24 months in the amount $11,799 beginning March 31, 2024. During the three and nine months ended February 29, 2024, the Company made no principal and interest payments on the Debenture 12.

    250,000       -  
                 

Total

    3,037,257       2,500,000  

Original Issue Discount

    -       1,875,000  

Notes Payable, Gross

    3,037,257       4,375,000  

Less: Discount

    (37,071 )     (902,339 )

Notes Payable, Net of Discount

    3,000,186       3,472,661  

 

   

February 29, 2024

   

May 31, 2023

 

Total – Notes Payable, Net of Discounts, Current Portion

  $ 1,190,703     $ 1,439,584  

Total – Notes Payable, Net of Discounts. Long Term Portion

  $ 1,809,483     $ 2,033,077  

 

During the three months ended February 29, 2024 and February 28, 2023, the Company amortized discounts to interest expense in the amount of $162,718 and $194,774, respectively. During the three and nine months ended February 29, 2024 and February 28, 2023, the Company amortized discounts to interest expense in the amount of $57,240 and $382,676, respectively.

 

Aggregate maturities of notes payable and convertible notes payable, and convertible notes payable – related parties as of February 29, 2024 are as follows (not including unamortized debt discounts in the amount of $37,071):

 

For the twelve months ended February 28,

 

2025

  $ 1,483,194  

2026

    1,451,550  

2027

    965,088  

2028

    3,177,489  

2029

    -  

Thereafter

    -  

Total

  $ 7,077,321