Notes Payable

12 Months Ended

Feb. 28, 2022

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 9 – NOTES PAYABLE

Notes payable consisted of the following:

	February 28, 2022		February 28, 2021
Secured notes payable
(a) Note payable-EID loan	$	150,000	$	150,000
(b) Notes payable-vehicles and equipment		265,616		-
Unsecured notes payable
(c) Notes payable-PPP loans		-		74,405
(d) Note payable-Abdou		-		120,181
(e) Note payable-other-in default		10,000		10,000
Total	$	425,616	$	354,586
Non-current		327,658		156,255

(a) Economic Injury Disaster (EID) Loan

Entities negatively impacted by the COVID-19 pandemic were eligible to apply for loans sponsored by the United States Small Business Administration (“SBA”) Economic Injury Disaster Loan (“EID Loan”) program. On July 1, 2020, the Company received a $150,000 loan under this program. The proceeds can be used to fund payroll, healthcare benefits, rent and other qualifying expenses, and the loan is not subject to a loan forgiveness provision. The loan is due July 1, 2050, interest accrues at 3.75% per annum, and is secured by the assets of the Company.

(b) Notes payable-vehicle and equipment

During fiscal 2022, the Company purchased two pieces of equipment and a vehicle for $329,297 as a part of its efforts to expand its operations and research and development capacities. The Company made down payments aggregating $41,300 with the balance financed by two notes payable aggregating $287,997. The notes are secured by the equipment and vehicle purchased. One note is due in 36 equal monthly payments of approximately $6,100 each, including interest at 2.9% per annum. The second note is due in 72 equal monthly payments of approximately $1,500 each, including interest at 10.9% interest per annum. As of February 28, 2022, the balance of the notes was $265,616.

(c) Paycheck Protection Plan (PPP) Loans

On April 23, 2020, the Company was granted a Paycheck Protection Program (“PPP”) loan in the amount of $74,405 pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The PPP matures on April 23, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, and is unsecured and guaranteed by the SBA. The Company applied ASC 470, Debt, to account for the PPP loan. Funds from the PPP loan may only be used for qualifying expenses, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company used the loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company applied for the forgiveness of the PPP Loan, and in April 2021 the Company was notified that the PPP loan, including accrued interest, was being forgiven under the terms of the PPP program. As a result, the Company recorded other income of approximately $75,100, representing the forgiven principal and interest.

In March 2021, the Company applied for and received a second PPP loan (“PPP-2”) in the amount of approximately $91,200 pursuant to CARES Act, as amended to allow a second loan. The terms of the PPP-2 loan were essentially the same as under the original PPP loan. The Company applied for the forgiveness of the PPP-2 loan, and in January 2022 we were notified that the PPP-2 loan, including accrued interest, was being forgiven under the terms of the PPP program. As a result, the Company recorded other income of approximately $92,000, representing the forgiven principal and interest. Total gain on extinguishment of debt recorded for the PPP and PPP-2 loans is $167,104

(d) Abdou

On June 20, 2013, the Company issued convertible notes payable to two individuals in the aggregate of $125,000. The notes were due June 20, 2014. The loans were not paid when due, and in September 2019, the note holders and the Company reached a settlement for past due principal, accrued interest, and fees of approximately $325,000. As of February 28, 2020, the outstanding balance of the settlement note was $215,181. During the year ended February 28, 2021, the Company paid $95,000 of the note, and as of February 28, 2021, the outstanding balance was $120,181. During the year ended February 28, 2022, the Company paid the remaining balance of $120,181.

(e) Other notes payable

Demand promissory notes as of February 28, 2022 and February 28, 2021 are for one individual issued in September 2015 that is payable on demand with an interest rate of 10% per annum.

During the year ended February 28, 2021, an aggregate of $743,386, consisting of $491,537 of demand notes principal and $251,849 of accrued interest, was extinguished as the related statute of limitations were determined to have expired (see Note 12).

At February 28, 2022 and 2021, accrued interest on notes payable totaled $36,541 and $28,822, respectively, and is included in accrued expenses (See Note 11).