STOCKHOLDERS’ DEFICIT

12 Months Ended

May 31, 2023

Equity [Abstract]

STOCKHOLDERS’ DEFICIT

NOTE 9 – STOCKHOLDERS’ DEFICIT

Share Based Compensation 

The Company made grants of options for the purchase of 650,000 shares of its common stock, at a strike price of $0.19 per share, during the first quarter of fiscal year 2023. These options vested immediately and expire on June 2, 2032. The Company made grants for the purchase of 1,600,000 shares of its common stock at a strike price of $0.074 per share, during the first quarter of fiscal year 2022. These options vest monthly over three years, beginning on August 1, 2021, and expire on August 1, 2031. The Company used the Black-Scholes option pricing model to estimate the fair value of options granted under its stock incentive plan. 

The fair value of the stock option grants, as of the respective grant date, during the years ending May 31, 2023 and 2022 amounted to approximately $123,487 and $278,578, respectively. The weighted average assumptions used in calculating these values were based on the following:

	2023			2022
Risk-free interest rate		2.94	%		1.85	%
Expected dividend yield		0	%		0	%
Expected volatility		315.1	%		314.9	%
Expected life of options		6.0 years			6.0 years

The risk-free interest rate is based upon the U.S. Treasury interest rate in effect at the time of grant for a bond with a similar term. The Company does not anticipate declaring dividends in the foreseeable future. Volatility is estimated based on the historical share prices over the same period as the expected life of the stock options. The Company uses the simplified method for determining the expected term of its stock options. 

The Company recorded share-based compensation for stock option grants totaling $161,984 and $278,578 in general, selling and administrative expense during the year ended May 31, 2023 and 2022, respectively.

Stock Options

As of May 31, 2023 and 2022, there were 618,776 and 1,143,761 unvested and unrecognized shares. As of May 31, 2023, unrecognized compensation cost related to nonvested stock options amounted to $45,287 which is expected to be recognized over the next two years.

The following table summarizes information about options granted during the years ended May 31, 2023 and 2022:

	Number of Shares			Weighted Average Exercise Price
Balance, May 31, 2021		4,300,000		$	0.94
Options granted and assumed		4,175,000			0.10
Options expired		(1,500,000	)		2.00
Options cancelled, forfeited		(1,700,000	)		0.36
Options exercised		-			-
Balance, May 31, 2022		5,275,000		$	0.16
Options granted and assumed		650,000			0.19
Options expired		-			-
Options cancelled, forfeited		-			-
Options exercised		-			-
Balance, May 31, 2023		5,925,000		$	0.16

All stock options are exercisable upon vesting. As of May 31, 2023, there were 5,306,224 vested options outstanding.

As of May 31, 2023 and 2022, 5,925,000 and 5,275,000 options are outstanding at a weighted average exercise price of $0.16 and $0.16, respectively.

Restricted Stock 

The Company entered into a financial advisory agreement, dated July 21, 2022 (the “Advisory Agreement”), pursuant to which the Company engaged Dawson James Securities, Inc. (“Dawson”) to render services as a corporate finance consultant. The term of the Advisory Agreement is twelve months from the date of the Advisory Agreement, unless terminated by either party with 30 days prior written notice to the other party, beginning 60 days following the date of the Advisory Agreement. Under the terms of the Advisory Agreement, Dawson will provide advice to the Company concerning business and financial planning, corporate organization and structure, private and public equity and debt financing, and such other matters as the parties may mutually agree. 

As compensation to Dawson for the services provided under the Advisory Agreement, the Company is obligated to pay Dawson $30,000 per calendar quarter, with the first such payment being paid one day after the date of execution, and each subsequent payment being due three months after the previous payment. The Company made the first $30,000 payment in July 2022. The Company also agreed to issue to Dawson 2,600,000 shares of the Company’s common stock, payable in four installments of (i) 1,000,000 shares issued within three business days after the date of the Advisory Agreement, (ii) 550,000 shares for the subsequent quarter, and (iii) 525,000 shares for each of the remaining two quarters of the term of the Advisory Agreement. The first 1,000,000 restricted shares were issued in July 2022. During the twelve months ending May 31, 2023, the Company recorded advisory service fees totaling $160,000 with respect to the 1,000,000 shares of the Company’s common stock issued pursuant to the Advisory Agreement. After the first $30,000 payment and issuance of 1,000,000 shares of common stock, the Advisory Agreement has been suspended indefinitely. 

If during the term of the Advisory Agreement, the Company decides to (i) finance or refinance any indebtedness using a manager or an agent, or (ii) raise funds by means of a public offering or private placement of equity or debt securities, Dawson will have the right to act as lead manager, placement agent or agent (or have any affiliate act in such role) for such financing, provided that Dawson has then secured at least $5,000,000 in equity financing for the Company. As of the date of this filing, Dawson has not secured any equity financing for the Company. 

In April 2022, the Company entered into a consulting agreement with an individual for corporate structuring and strategic planning and compliance services. Pursuant to this agreement, the Company agreed to compensate the consultant with cash and restricted shares of the Company’s common stock, which shares vest equally over the 12-month term of the consulting agreement. During the twelve months ending May 31, 2023, the Company recorded $27,257 in professional fees with respect to the issuance of the first two tranches of 272,474 restricted shares. The consulting agreement was terminated in July 2022. 

The Company granted no shares of restricted stock during fiscal year 2023.