Note 18: Gain on Settlement of Debt

On August 28, 2024, the Company raised $2,600,000 in cash from the issuance of PN9. See note 13. On August 30, 2024, the Company issued 56,847,545 shares of common stock pursuant to the conversion $2,200,000 of the principal amount of a note payable (see note 15). No gain or loss was recorded on this transaction as the conversion occurred according to the terms of the note.

On September 10, 2024, the Company utilized the proceeds of PN9 to settle three notes payable in the aggregate principal amount of $2,868,282 for a cash payment in the amount of $2,600,000. See note 17. In addition, the noteholders returned for cancellation a total of 15,488,901 shares of the Company’s common stock and warrants to purchase 6,177,216 shares of the Company’s common stock. The cancelled shares were valued at the closing price of the Company’s common stock on the date of the cancellation, or $0.044 per share for a total value of $681,510. The warrants were valued at $4,136 using the Black-Sholes valuation model. A gain in the amount of $949,793 was recorded on this transaction.

The Company valued the warrants using the Black-Scholes valuation model utilizing the following variables during the nine months ended February 28, 2025:

On December 27, 2024, the Company executed a Supplemental Indenture to amend that certain debenture indenture by and between the Company and Odyssey Trust Company in order to amended the terms of its outstanding $1,378,778 original principal amount unsecured convertible debentures Canaccord Debentures issued December 12, 2018 to provide the Company an option to redeem all outstanding Canaccord Debentures in cash at a redemption price equal to $600 per $1,000 principal and capitalized interest of Canaccord Debentures. See note 14.

On January 17, 2025, the Company exercised the option to redeem all outstanding Canaccord Debentures in the amount of $1,678,633 for cash in the amount of $1,006,800. A gain in the amount of $671,833 was recorded on this transaction.