Notes Payable-Related Parties-In Default

12 Months Ended

Feb. 28, 2022

Notes Payable Related Parties [Abstract]

NOTES PAYABLE-RELATED PARTIES-IN DEFAULT

NOTE 10 – NOTES PAYABLE-RELATED PARTIES-IN DEFAULT

Notes payable-related parties consisted of the following:

	February 28, 2022		February 28, 2021
Unsecured notes payable
(a) Notes payable-Koppel-in default	$	5,607,323	$	5,607,323
Accrued interest-Koppel-in default		6,533,318		5,710,464
Subtotal-Koppel-in default		12,140,641		11,317,787
(b) Note payable- Gagerman-in default		82,000		82,000
Accrued interest-Gagerman-in default		73,428		65,228
Subtotal-Gagerman-in default		155,428		147,228
(c) Note payable-Jiangsu Shengfeng-in default		700,000		700,000
Total	$	12,996,069	$	12,165,015
Non-current		-		-
Current	$	12,996,069	$	12,165,015

(a) Kopple Notes

In fiscals 2013 through 2018, the Company issued notes payable to Robert Kopple and associated entities (collectively “Kopple”) in the aggregate of $6,107,323. Robert Kopple was the former Vice-Chairman of the Company’s Board of Directors and is a current shareholder in the Company. The notes are unsecured, bear interest at rates ranging from 5% and 15% per annum, and were due in fiscal 2014 through fiscal 2018. At February 28, 2022 and 2021, the accrued interest due to Kopple totaled $6,533,318 and $5,710,464, respectively. Due to its significance, the balance of accrued interest is added to the note payable principal for presentation on the accompanying balance sheets. As of February 28, 2022 and 2021, the outstanding balance of the Kopple notes payable and accrued interest amounted to $12,140,641 and $11,317,787, respectively.

Kopple brought suit against the Company beginning in 2017 for repayment of the notes.

On March 14, 2022, the Company reached an agreement with Kopple to resolve all remaining litigation between them. Under the terms of the settlement, the Company agreed to pay Kopple an aggregate amount of $10,000,000, and granted Koppel warrants exercisable into 3,331,664 shares of the Company’s common stock. The fair value of the warrants is estimated to be $1,000,000, resulting in total consideration to Kopple of approximately $11,000,00 (see Note 19).

(b) Note payable-Gagerman

In April 2014, the Company issued a note payable to Gagerman, former CEO and CFO of the Company, for $82,000. The note is unsecured, bears interest at a rate of 10% per annum and matured in March 2019. At February 28, 2022 and 2021, accrued interest on notes payable-Gagerman totaled $73,428 and $65,228, respectively, and is added to the note principal for presentation on the accompanying balance sheets. As of February 28, 2022 and 2021, the outstanding balance of the Gagerman notes payable and accrued interest amounted to $155,428 and $147,228, respectively.

(c) Jiangsu Shengfeng Note

On November 20, 2019, the Company reached an agreement with its joint venture partner Jiangsu Shengfeng (see Note 5) regarding the return of $700,000 that had been advanced to the Company, and the Company issued a non-interest-bearing promissory note for $700,000 to be paid over a 11-month period beginning March 15, 2020, through February 15, 2021. As of February 28, 2022 and February 28, 2021, the principal due was $700,000, respectively. As of February 28, 2022, the note is past due and deemed in default.