NOTE 19 – STOCKHOLDERS’ EQUITY

At the Company's annual meeting of stockholders on November 28, 2023, the Company’s shareholders voted to increase the number of shares of authorized common stock from 187,500,000 shares to 350,000,000 shares. At May 31, 2024, the Company’s authorized capital stock consists of 345,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share. The Company had 124,500,873 and 72,543,141 shares of common stock issued and outstanding as of May 31, 2024 and 2023, respectively.

On September 15, 2022, the Company effected a reverse stock split of its issued and outstanding common stock (“the “Reverse Split”) at a ratio of 1-for-4, whereby four shares of the Company’s common stock issued and outstanding were exchanged for one share. The number of shares of common stock issued and outstanding immediately before the Reverse Split was 290,070,272; the number of shares outstanding immediately after the reverse split was 72,517,570, a decrease of 217,552,702 shares. All share and per-share information in these financial statements have been adjusted to reflect the effects of the Reverse Split. As a result of the split, an additional 574 shares were issued due to rounding. The authorized Common Stock was also reduced as a result of the Reverse Split from 750,000,000 shares to 187,500,000 shares, and the authorized preferred stock was reduced from 20,000,000 shares to 5,000,000 shares.

Year ended May 31, 2024:

On December 6, 2023, 32,000,000 shares of common stock were issued at a price of $0.0345 per share in connection with the conversion of four convertible notes payable in the aggregate principal amount of $960,000 and interest in the amount of $144,000. No gain or loss was recorded on this transaction as the shares were issued according to the terms of the convertible notes.

On January 15, 2024, 32,132,135 shares of common stock were issued at a price of $0.0333 per share in connection with the conversion of four convertible notes payable in the aggregate principal amount of $1,070,000. No gain or loss was recorded on this transaction as the shares were issued according to the terms of the convertible notes.

On January 30, 2024, the Board of Directors approved the issuance of 1,000,000 shares of common stock at a price of $0.0388 per share to the Company’s CEO pursuant to his employment agreement.  The total value of these shares in the amount of $38,800 was charged to operations during the year ended May 31, 2024.

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. These shares were valued at the market price on the date of the transaction of $0.045 per share; the amount of $1,318 was credit to common stock and $$591,350 was charged to paid-in capital during the year ended May 31, 2024. These shares were returned to the Company and cancelled on April 19, 2024. See note 17.

Year ended May 31, 2023:

Common Stock and Warrants Issued upon Conversion of Notes Payable:

On September 15, 2022, the Company issued 28,414,149 shares and three-year warrants to acquire 14,207,075 shares of common stock at a price of $0.40 per share as a result of the mandatory conversion provided in the amendments to the Canaccord Debentures. The conversion was for the total amount of $8,098,033, of which $7,965,278 was principal and $132,755 was accrued interest. (See note 16 for details). A loss in the amount of $4,547,660 was recorded in connection with the extinguishment of the Canaccord Debentures. The fair values of the warrants and conversion options included in the calculation of the loss on extinguishment of the Canaccord Debentures were $2,623,852 and $1,923,808, respectively. No gain or loss was recorded on the issuance of the shares because the conversion was made pursuant to the terms of the Restructured Canaccord Debenture Agreement.

On September 15, 2022, the Company issued 12,051,397 shares and three-year warrants to acquire 6,025,700 shares of common stock at a price of $0.40 per share as a result of the mandatory conversion provided in the amendments to the U.S. Convertible Debenture holders. The conversion was for the total amount of $3,434,647, of which $3,378,342 was principal and $56,305 was accrued interest. (See note 16 for details). A loss in the amount of $2,111,699 was recorded in connection with the extinguishment of the U.S. Convertible Debentures 1 and 2. The fair values of the warrants and conversion options included in the calculation of the loss on extinguishment of the U.S Convertible Debentures 1 and 2 were $1,117,606 and $994,093, respectively. No gain or loss was recorded on the issuance of the shares because the conversion was made pursuant to the terms of the Restructured U.S. Convertible Debentures 1 and 2 Agreements.

During the year ended May 31, 2023, the Company issued 12,500 shares with a fair value of $4,390 to an officer that were previously subscribed.

During the year ended May 31, 2023, the Company granted 12,500 to an officer; the fair value of these shares in the amount of $656 was charged to operations.

Other Warrant Transactions

On September 15, 2022, the Company amended $18,846,721 in outstanding debentures to reduce the conversion price of the debentures from $1.20 per unit to $0.40 per unit, increasing the warrants issuable upon conversion of such debentures from 3,400,652 to 6,801,298. As amended, each warrant issuable pursuant to the conversion of such debentures is exercisable for one share of the Company’s common stock at a price of $0.40 per share.

The amendments to the Canaccord Debentures and the U.S. Convertible Debenture were accounted for pursuant to Statement of Financial Accounting Standard ASC 820-10-35-37, Fair Value of Financial Instruments (“FAS 820”) and Statement of Financial Accounting Standards 815, Accounting for Derivative Instruments and Hedging Activities (“FAS 815”). The fair values of the warrants and conversion options were determined using a lattice model based on probability-weighted scenarios and future projections. The following assumptions were used in valuing the Canaccord Debentures and the U.S. Convertible Debentures:

Warrants

The following table summarizes the significant terms of warrants outstanding at May 31, 2024. This table does not include the unit warrants. See Unit Warrants section below.

Transactions involving warrants are summarized as follows. This table does not include the unit warrants. See Unit Warrants section below.

Unit Warrants

In February and March 2018, in connection with the Westpark offering, the Company issued five-year warrants to purchase 51,310 of the Company’s units at an exercise price of $5.00 per unit. Each unit consists of four shares of common stock and one warrant to purchase a share of common stock for $3.00. These warrants expired in March of 2023.

Because the unit warrants are exercisable for Common Stock and warrants, they are not included in the warrant tables above.

Stock Options

Year ended May 31, 2024:

On February 2, 2024, the Company issued stock options as follows:

The options were priced at the closing price of the Company’s common stock on the date of the grant.

On May 3, 2024, the Company terminated the employment of its Chief Science Officer, and 208,333 options were cancelled.

The following table summarizes the significant terms of options outstanding at May 31, 2024.

Transactions involving options are summarized as follows.

Year ended May 31, 2023:

None.

The Company valued options using the Black-Scholes valuation model utilizing the following variables:

During the years ended May 31, 2024 and 2023, the Company charged $25,756 and $0, respectively, to stock based compensation expense, in connection with the vesting of stock options.

The aggregate intrinsic value of options outstanding and exercisable at May 31, 2024 and 2023 was $10,300 and $0, respectively. Aggregate intrinsic value represents the difference between the fair value of the Company’s stock on the last day of the fiscal period, which was $0.05 as of May 31, 2024, and the exercise price multiplied by the number of options outstanding and exercisable.