Cover
Cover - USD ($) | 12 Months Ended | ||
May 31, 2021 | Sep. 03, 2021 | Nov. 30, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | May 31, 2021 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Current Fiscal Year End Date | --05-31 | ||
Entity File Number | 001-34673 | ||
Entity Registrant Name | Life On Earth, Inc. | ||
Entity Central Index Key | 0001579010 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 800,000 | ||
Entity Common Stock, Shares Outstanding | 46,424,344 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | May 31, 2021 | May 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 34,629 | $ 3,831 |
Accounts receivable | 5,802 | |
Inventory | ||
Prepaid expenses | 3,226 | |
Other receivable | 70,000 | |
Total current assets | 113,657 | 3,831 |
Other Assets | ||
Furniture and Equipment, net of accumulated depreciation of $15,629 and $0 as of May 31, 2021 and 2020 | 3,687 | |
Intellectual Property - Software development, net of accumulated amortization of $177,903 and $0 as of May 31, 2021 and 2020, respectively | 5,102,000 | |
Total Assets | 5,219,344 | 3,831 |
Current Liabilities | ||
Accounts payable and accrued expenses | 2,163,858 | 1,833,205 |
Accrued contingent liability for the purchase cost of the SA acquisition | 5,044,127 | |
Contingent liability | 415,227 | 57,273 |
Derivative liability | 110,588 | 146,715 |
Note payable - related party | 58,491 | 61,860 |
Note payable | 118,031 | |
Convertible notes payable, net of unamortized deferred financing costs of $0 and $99,683 as of February 28, 2021 and May 31, 2020, respectively | 1,932,964 | 2,164,498 |
Lines of credit | 37,849 | 26,124 |
Total current liabilities | 9,881,135 | 4,289,675 |
Total Liabilities | 9,881,135 | 4,289,675 |
Commitments and contingencies | ||
Stockholders' Equity (Deficiency) | ||
Common stock, $0.001 par value; 200,000,000 shares authorized, 29,548,676 and 13,081,380 shares issued and outstanding, as of May 31, 2021 and 2020, respectively | 29,549 | 13,081 |
Additional paid-in capital | 13,942,216 | 12,901,158 |
Accumulated deficit | (18,635,356) | (17,201,283) |
Total Stockholders' Deficiency | (4,661,791) | (4,285,844) |
Total Liabilities and Stockholders' Deficiency | 5,219,344 | 3,831 |
Series A Preferred Stock [Member] | ||
Stockholders' Equity (Deficiency) | ||
Preferred stock | 1,200 | 1,200 |
Series B Preferred Stock [Member] | ||
Stockholders' Equity (Deficiency) | ||
Preferred stock | 100 | |
Series C Preferred Stock | ||
Stockholders' Equity (Deficiency) | ||
Preferred stock | 290 | |
Series D Preferred Stock [Member] | ||
Stockholders' Equity (Deficiency) | ||
Preferred stock | $ 210 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | May 31, 2021 | May 31, 2020 |
Doubtful Accounts | $ 41,900 | $ 33,356 |
Accumulated Depreciation | 15,629 | |
Accumulated Amortization | $ 177,903 | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, Authorized | 200,000,000 | 200,000,000 |
Common stock, Issued | 29,548,676 | 13,081,380 |
Common stock, outstanding | 29,548,676 | 13,081,380 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | 1,200,000 | 1,200,000 |
Preferred stock, outstanding shares | 1,200,000 | 1,200,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, issued shares | 100,000 | |
Preferred stock, outstanding shares | 100,000 | |
Series C Preferred Stock | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, issued shares | 290,000 | |
Preferred stock, outstanding shares | 290,000 | |
Series D Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, issued shares | 210,000 | |
Preferred stock, outstanding shares | 210,000 | |
Convertible Note Payable [Member] | ||
Capitalized financing costs | $ 0 | $ 99,683 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Income Statement [Abstract] | ||
Sales, net | ||
Cost of goods sold | 55,701 | |
Gross profit | (55,701) | |
Expenses: | ||
Professional fees | 319,955 | 766,790 |
Officers compensation | 185,000 | 626,200 |
Salaries and benefits | 16,935 | 365,487 |
Other selling, general and administrative | 62,402 | 200,931 |
Amortization | 79,272 | |
Impairment of goodwill | ||
Impairment of intangible assets | ||
Total expenses | 663,564 | 1,959,408 |
Loss from operations | (663,564) | (2,015,109) |
Other income (expenses) | ||
Change in fair value of contingent consideration | (357,955) | 325,309 |
Change in fair value of derivative liability | 36,127 | 1,274 |
Interest and financing costs | (423,546) | (744,461) |
Los from continuing operations | (1,408,938) | (2,432,987) |
Loss on discontinued operations | (25,135) | (786,435) |
Gain on disposal of subsidiary | 893,515 | |
Net loss | $ (1,434,073) | $ (2,325,907) |
Basic and diluted loss per share from continuing operations | $ (0.07) | $ 0.27 |
Basic and diluted loss per share from discontinued operations | 0.09 | |
Basic and diluted loss per share from disposal of subsidiary | $ 0.10 | |
Basic and diluted weighted average number of shares outstanding | 21,123,838 | 8,987,117 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Equity - USD ($) | Preferred Stock [Member]Series A Preferred Stock | Preferred Stock [Member]Series B Preferred Stock [Member] | Preferred Stock [Member]Series C Preferred Stock | Preferred Stock [Member]Series D Preferred Stock [Member] | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Shares at May. 31, 2019 | 1,200,000 | 8,042,075 | ||||||
Beginning Balance, Amount at May. 31, 2019 | $ 1,200 | $ 8,042 | $ 12,115,864 | $ (14,875,376) | $ (2,750,270) | |||
Sale of Series B preferred shares, shares | ||||||||
Sale of Series B preferred shares, amount | ||||||||
Sale of Series C preferred shares, shares | ||||||||
Sale of Series C preferred shares, amount | ||||||||
Issuance of common shares for services,shares | 645,029 | |||||||
Issuance of common shares services, amount | $ 645 | 379,500 | 380,145 | |||||
Issuance of common shares Directors, shares | 633,865 | |||||||
Issuance of common shares Directors, amount | $ 634 | 340,361 | 340,996 | |||||
Issuance of common shares for sale of subsidiary, shares | 78,398 | |||||||
Issuance of common shares for sale of subsidiary, amount | $ 78 | 62,640 | 62,718 | |||||
Issuance of common shares for deferred financing costs, shares | 235,750 | |||||||
Issuance of common shares for deferred financing costs, amount | $ 236 | 62,309 | 62,545 | |||||
Issuance of common shares for convertible debt, shares | 4,496,543 | |||||||
Issuance of common shares for convertible debt, amount | $ 4,497 | 201,334 | $ 205,830 | |||||
Common shares retired and cancelled, shares | 1,050,280 | |||||||
Common shares retired and cancelled GBC, shares | (291,000) | |||||||
Common shares retired and cancelled GBC, amount | $ (291) | (261,609) | $ (261,900) | |||||
Net loss | (2,325,907) | (2,325,907) | ||||||
Ending Balance, Shares at May. 31, 2020 | 1,200,000 | 13,081,380 | ||||||
Ending Balance, Amount at May. 31, 2020 | $ 1,200 | $ 13,081 | 12,901,158 | (17,201,283) | (4,285,844) | |||
Sale of Series B preferred shares, shares | 100,000 | |||||||
Sale of Series B preferred shares, amount | $ 100 | 99,900 | ||||||
Sale of Series C preferred shares, shares | 290,000 | |||||||
Sale of Series C preferred shares, amount | $ 290 | 289,710 | 290,000 | |||||
Sale of Series D preferred shares, shares | 210,000 | |||||||
Sale of Series D preferred shares, amount | $ 210 | (210) | ||||||
Issuance of common shares for services,shares | 368,593 | |||||||
Issuance of common shares services, amount | $ 369 | 28,074 | 28,443 | |||||
Acquisition of net assets from Smart Axiom | 279,127 | 279,127 | ||||||
Issuance of common shares for deferred financing costs, shares | 1,297,500 | |||||||
Issuance of common shares for deferred financing costs, amount | $ 1,296 | 136,615 | 137,913 | |||||
Issuance of common shares for convertible debt, shares | 14,801,203 | |||||||
Issuance of common shares for convertible debt, amount | $ 14,801 | 486,969 | 501,770 | |||||
Net loss | (1,434,073) | (1,434,073) | ||||||
Ending Balance, Shares at May. 31, 2021 | 1,200,000 | 100,000 | 290,000 | 210,000 | 29,548,676 | |||
Ending Balance, Amount at May. 31, 2021 | $ 1,200 | $ 100 | $ 290 | $ 210 | $ 26,549 | $ 13,942,216 | $ (18,635,356) | $ (4,661,791) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Cash Flows From Operating Activities | ||
Net loss | $ (1,434,073) | $ (2,325,907) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Stock based compensation | 28,443 | 579,067 |
Depreciation and amortization | 79,273 | 92,000 |
Goodwill impairment | ||
Impairment of intangible assets | ||
Provision for obsolete and excess inventory | 96,609 | |
Amortization of interest and financing costs | 542,317 | |
Share based finance costs | 219,571 | 16,825 |
Provision for bad debts | 990 | (57,506) |
Change in fair value of contingent liability | 357,954 | (325,309) |
Change in fair value of derivative liability | (36,127) | |
Disposal of discontiuned subsidiary | (812,677) | |
Changes in operating assets and liabilities: (Increase) decrease in: | ||
Accounts receivable | (990) | 89,047 |
Inventory | 118,894 | |
Prepaid expenses and other current assets | 149 | 77 |
Other receivable | (70,000) | |
Changes in operating assets and liabilities: Increase (decrease) in: | ||
Accounts payable, accrued expenses and contingent liability | 467,203 | 913,578 |
Cash used by operating activities of continuing operations | (387,607) | |
Cash used by operating activities of discontinued operations | (25,135) | |
Cash used by operating activities | (412,742) | (578,985) |
Cash Flows From Investing Activities | ||
Acquisition of subsidiary, net of cash acquired | 39,878 | |
Cash used by investing activities | 39,878 | |
Cash Flows From Financing Activities | ||
Repayment of notes payable | (54,042) | |
Proceeds from notes payable | 30,000 | |
Repayment of notes payable | (1,288) | |
Proceeds from lines of credit, net of financing costs | 19,426 | 58,649 |
Payment of lines of credit | (31,107) | (67,256) |
Proceeds from loans payable - related party | 5,631 | 53,369 |
Repayment of loans payable - related party | (9,000) | (5,300) |
Proceeds from convertible notes payable, net of financing costs | 447,240 | |
Repayment of convertible notes payable | (6,000) | |
Proceeds from sales of Series B preferred stock | 100,000 | |
Proceeds from sale of Series C preferred stock | 290,000 | |
Cash (used)/provided by financing activities | 403,662 | 426,660 |
Net Increase (decrease) in Cash and Cash Equivalents | 30,798 | (152,325) |
Cash and Cash Equivalents - beginning | 3,831 | 156,156 |
Cash and Cash Equivalents - end | 34,629 | 3,831 |
Noncash investing and financing activities: | ||
Derivative liability associated with convertible debt | 110,588 | 146,715 |
Common stock issued to satisfy accounts payable and accrued expenses | 184,885 | |
Common stock issued for convertible debt | 501,770 | 205,830 |
Common stock issued with convertible debt as financing fee | 137,913 | 62,545 |
Common stock issued for sale of subsidiary | $ 62,718 |
Note 1. NATURE OF OPERATIONS AN
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Basis of Presentation Life On Earth, Inc. is a cloud enterprise software developer/ provider that enables rapid innovation to keep enterprise operations safe, compliant and manageable. The Company’s products offered are designed to help organizations innovate and modernize legacy systems while minimizing cost and risk of business disruptions and ensure regulatory compliance. Through its recent acquisition of SmartAxiom, Inc., the Company The accompanying consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, Smart Axiom Inc. (“SA”), Victoria’s Kitchen, LLC (“VK”) and The Chill Group, LLC (“JC”). All intercompany transactions and balances have been eliminated in consolidation. On June 21, 2019, the Company made the determination to shut down and discontinue the operations of Energy Source Distributors, Inc. (“ESD”) and further focus on the brand portfolio. Effective November 4, 2019, ESD filed for Chapter 7 bankruptcy protection. On December 11, 2019, the Company received a final decree from the United States Bankruptcy Court ruling that a Chapter 7 bankruptcy estate for ESD had been fully administered. The results of operations of ESD for the years ended May 31, 2020 and 2019 are included herein as discontinued operations in the financial statements. The Company has recognized a gain on the disposal of ESD in the amount of $893,515 for the year ended May 31, 2020, as reported in the consolidated statements of operations. LFER was incorporated in Delaware in April 2013 and acquired SA in May 2021, VK in October 2017, and JC in August 2018. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Revenue Recognition In May 2014, the FASB issued guidance codified in ASC 606 which amends the guidance in former ASC 605, “Revenue Recognition.” The core principle of the standard is to recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received for those goods or services. The standard also requires additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle: Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation Because the Company’s agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product. Shipping and handling amounts are included in cost of goods sold. Sales tax and other similar taxes are excluded from net sales. Sales are recorded net of provisions for discounts, slotting fees payable by us to retailers to stock our products and promotion allowances, which are typically agreed to upfront with the customer and do not represent variable consideration. Discounts, slotting fees and promotional allowances vary from customer to customer. The consideration the Company is entitled to in exchange for the sale of products to distributors. The Company estimates these discounts, slotting fees and promotional allowances in the same period that the revenue is recognized for products sales to customers. The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. All sales to distributors and customers are generally final. In limited instances the Company may accept returned product due to quality issues or distributor terminations, in which situations the Company would have variable consideration. To date, returns have not been material. The Company’s customers generally pay within 30 days from the receipt of a valid invoice. The Company offers prompt pay discounts of up to 2% to certain customers typically for payments made within 15 days. Prompt pay discounts are estimated in the period of sale based on experience with sales to eligible customers. Early pay discounts are recorded as a deduction to the accounts receivable balance presented on the consolidated balance sheets. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made in prior year’s financial statements to conform to classifications used in the current year. Reverse Stock Split On November 11, 2019, the Company’s Board of Directors (the “Board”) and a majority of shareholders approved a reverse stock split at a ratio of one-for-five shares of common stock, without changing the par value, rights, terms, conditions, and limitations of such shares of common stock, (the “Reverse Stock Split”). The Reverse Stock Split became effective on March 25, 2020 (the “Effective Date”), pursuant to approval from the Financial Industry Regulatory Authority (“FINRA”), whereupon the shares of our common stock will begin trading on a split adjusted basis. All share and per share information has been retroactively adjusted to reflect the impact of this reverse stock split. Net Loss Per Common Share Basic loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of May 31, 2021, and 2020, respectively, warrants and convertible notes payable could be converted into approximately 3,088,000 and 2,779,000 shares of common stock, respectively. Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities, and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized when it is more likely than not that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the consolidated financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of May 31, 2021 and does not expect this to change significantly over the next 12 months. Accounting for Equity Awards The cost of services received in exchange for an award of equity instruments related to employees and non-employees is based on the grant-date fair value of the award and allocated over the requisite service period of the award. Cash and Cash Equivalents The Company considers only those investments which are highly liquid, readily convertible to cash, and that mature within three months from date of purchase to be cash equivalents. At May 31, 2021 and 2020, respectively, the Company had cash and cash equivalents of $34,629 and $3,831 respectively. At May 31, 2021 and May 31, 2020, cash equivalents were comprised of funds in checking accounts, savings accounts and money market funds. Accounts Receivable Our accounts receivable balance primarily includes balances from trade sales to distributors and retail customers. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance for doubtful accounts based primarily on historical write-off experience. Account balances that are deemed uncollectible, are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers. A significant change in demand for certain products as compared to forecasted amounts may result in recording additional provisions for obsolete inventory. Provisions for obsolete or excess inventory are recorded as cost of goods sold. As of May 31, 2021, and May 31, 2020, the allowance for doubtful accounts was $41,900 and $33,356, respectively. Inventory Inventory consists of finished goods and raw material which are stated at the lower of cost (first-in, first-out) and net realizable value and include adjustments for estimated obsolete or excess inventory. A significant change in demand for certain products as compared to forecasted amounts may result in recording additional provisions for obsolete inventory. During the years ended May 31, 2021 and 2020, the Company recorded and provision for obsolete and excess inventory of $0 and $96,000, respectively, which was recorded as cost of goods sold. On May 31, 2021 and 2020, there was $0 on hand. Intangible Assets The Company's intangible assets include developed technology, customer relationships and tradenames and were acquired in a purchase business combination. The Company carries these intangibles at cost, less accumulated amortization. Amortization is recorded on a straight-line basis over the estimated useful lives of the respective assets, which is estimated to be 5 years. Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to five years. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. There were no indefinite-lived intangible assets as of May 31, 2021 or 2020. The Company reviews its finite-lived intangible and other long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Fair value of finite-lived intangible assets and property and equipment is based on various valuation techniques. If the carrying amount of an asset or group of assets exceeds its net realizable value, the asset will be written down to its fair value. Goodwill Goodwill is deemed to have an indefinite life, and accordingly, is not amortized, but evaluated annually (or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable) for impairment. The most significant assumptions, which are used in this test, are estimates of future cash flows. If these assumptions differ significantly from actual results, impairment charges may be required in the future. Advertising Advertising and promotion costs are expensed as incurred. Advertising and promotion expense amounted to approximately $15,449 and $38,639 for the years ended May 31, 2021 and 2020, respectively. Shipping and Handling Shipping and handling costs are included in costs of goods sold. Business combination GAAP requires that all business combinations not involving entities or businesses under common control be accounted for under the acquisition method. The Company applies ASC 805, “Business combinations”, whereby the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive income. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash flows over that period. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any changes to provisional amounts identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. Deferred Finance Cost Deferred financing costs or debt issuance costs are costs associated with issuing debt, such as various fees and commissions paid to investment banks, law firms, auditors, regulators, and so on. Since these payments do not generate future benefits, they are treated as a contra debt account. The costs are capitalized, reflected in the balance sheet as a contra long-term liability, and amortized using the effective interest method or over the finite life of the underlying debt instrument, if below de minimis. Derivative Liability The Company accounts for certain instruments, which do not have fixed settlement provisions, as derivative instruments in accordance with FASB ASC 815-40, Derivative and Hedging – Contracts in Entity’s Own Equity. This is due to the conversion features of certain convertible notes payable being tied to the market value of our common stock. As such, our derivative liabilities are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changes in estimated fair value are recorded as non-cash adjustments within other income (expenses), in the Company’s accompanying Consolidated Statements of Operations. Fair Value Measurements In August 2018, the FASB issued a new guidance which modifies the disclosure requirements on fair value measurements. We categorize our financial instruments into a three-level fair value hierarchy that prioritize the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on our consolidated balance sheets are categorized as follows: Level 1 inputs—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs—Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). Level 3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. Recent Accounting Pronouncements On February 25, 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-2, "Leases" (Topic 842), which is intended to improve financial reporting for lease transactions. This ASU requires organizations that lease assets, such as real estate and manufacturing equipment, to recognize assets and liabilities on their balance sheets for the rights to use those assets for the lease term and obligations to make lease payments created by those leases that have terms of greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU also requires disclosures to help investors and other financial statement users better understand the amount and timing of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. This ASU became effective for public entities beginning the first quarter 2019. During 2019 the Company sold the Giant Beverage Company which resulted in elimination of the Company’s lease obligation related to that operation. The remaining lease obligation related to Energy Source Distributors which was terminated on July 31, 2019 reducing the remaining terms of the lease to 2 months. The Company has adopted ASU 2016-2 Leases which does not have material impact on Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses (“ASU 2016-13”), which changes the impairment model for most financial instruments, including trade receivables from an incurred loss method to a new forward-looking approach, based on expected losses. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU become effective for fiscal years beginning after December 15, 2019. and must be adopted using a modified retrospective transition approach. The Company adopted ASU 2016-13 which did not have a material impact on Company’s financial statements. In January 2017, the FASB issued an update to the accounting guidance to simplify the testing for goodwill impairment. The update removes the requirement to determine the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. A company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill. The guidance is effective prospectively for public business entities for annual reporting periods beginning after December 15, 2019. This standard is required to take effect in the Company’s first quarter (August 2020) of our fiscal year ending May 31, 2021. Adoption of this new guidance did not have a material impact on our financial statements. In November 2018, the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The Company does not have any collaborative arrangements or revenue from contracts and therefore Topic 808 does not have an impact on our consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Note 2 - BASIS OF REPORTING AND
Note 2 - BASIS OF REPORTING AND GOING CONCERN | 12 Months Ended |
May 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Note 2 - BASIS OF REPORTING AND GOING CONCERN | Note 2 - BASIS OF REPORTING AND GOING CONCERN The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred losses from inception of approximately $18,600,000, has a working capital deficiency of approximately $9,800,000 and a net capital deficiency of approximately $4,700,000, which, among other factors, raises substantial doubt about the Company's ability to continue as a going concern. As of May 31, 2021, the Company did not have sufficient cash on hand to fund operations for the next 12 months. The ability of the Company to continue as a going concern is dependent upon management's plans to raise additional capital from the sale of stock and receive additional loans from third parties and related parties. The accompanying consolidated financial statements do not include any adjustments that might be required should the Company be unable to continue as a going concern. |
Note 3 - CONCENTRATIONS
Note 3 - CONCENTRATIONS | 12 Months Ended |
May 31, 2021 | |
Risks and Uncertainties [Abstract] | |
Note 3 - CONCENTRATIONS | Note 3 - CONCENTRATIONS Concentration of Credit Risk The Company’s financial instruments that are exposed to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high quality credit institutions. At times, balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limit. Cash in banks is insured by the FDIC up to $250,000 per institution, per entity. The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its account receivable credit risk exposure is limited. Sales and Accounts Receivable One customer accounted for 100% of the Company’s accounts receivable as of May 31, 2021. |
Note 4 - FAIR VALUE MEASUREMENT
Note 4 - FAIR VALUE MEASUREMENTS | 12 Months Ended |
May 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Note 4 - FAIR VALUE MEASUREMENTS | Note 4 – FAIR VALUE MEASUREMENTS We follow the provisions of ASC 820-10, Fair Value Measurements and Disclosures Topic Financial assets and liabilities recorded on the accompanying condensed consolidated balance sheets are categorized based on the inputs to the valuation techniques as follows: Level 1 – Unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets and liabilities. Level 2 – Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability. Level 2 – Inputs include the following: • Quoted prices for similar assets and liabilities in active markets • Quoted prices for identical or similar assets or liabilities in markets that are not active • Observable inputs other than quoted prices that are used in the valuation of the assets or liabilities (i.e., interest rate and yield curve quotes at commonly quoted intervals) • Inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3 – Unobservable inputs for the asset or liability (i.e., supported by little or no market activity). Level 3 inputs include management’s own assumption about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). The level in the fair value hierarchy within which the fair value measurement is classified is determined based upon the lowest level of input that is significant to the fair value measurement in its entirety. Certain of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate their fair value due to their liquid or short-term nature, such as cash and cash equivalents, accounts payable and accrued expenses and notes payable. The carrying value of our contingent liability approximated the fair value as of May 31, 2021 in considering Level 1 inputs within the hierarchy. The carrying value of our derivative liability as of May 31, 2021 approximated the fair value in considering Level 3 inputs within the hierarchy. The Company’s derivative liability is measured at fair value using the Black Scholes valuation methodology. For the year ended May 31, 2021 the following input were utilized to derive the fair value of our derivative liability: May 31, 2021 Risk free interest rate 0.14% - 0.13 % Expected dividend yield 0 Expected term (in years) 1 Expected volatility 16.95% -38.84 % The following tables set forth by level, within the fair value hierarchy, the Company’s financial instruments carried at fair value as of May 31, 2021 and May 31, 2020: May 31, 2020 Level 1 Level 2 Level 3 Total Contingent liability $ 415,227 $ — $ — $ 415,227 Derivative liability — — 110,588 110,588 Total $ 415,227 $ — $ 110,588 $ 525,815 May 31, 2020 Level 1 Level 2 Level 3 Total Contingent liability $ 57,273 $ — $ — $ 57,273 Derivative liability — — 146,715 146,715 Total $ 57,273 $ — $ 146,715 $ 203,988 |
Note 5 _ SA ACQUISITION
Note 5 – SA ACQUISITION | 12 Months Ended |
May 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Note 5 SA ACQUISITION | Note 5 – SA ACQUISITION On April 16, 2021, the Company entered into a stock purchase agreement with SmartAxiom, Inc. (“SA”) and its shareholders providing for the Company to purchase of all the outstanding common stock shares of SA. The Agreement was supplemented by First and Second Addendum Agreements, dated April 30, 2021, and May 11, 2021, respectively. The SA Acquisition Agreement and the First and Second addendum agreements provide for the purchase of 100% of the SA’s issued and outstanding shares, providing for the Company’s acquisition of SA with consideration consisting of 13,000,000 shares of the Company’s common stock; 210,000 shares of the Company’s new Series D Convertible Preferred Shares, convertible, over an eighteen month earn out schedule, into our common stock shares with a floor price of twenty cents, and an earn-out, as defined, by SA to be paid in our common stock. The SA Agreement also specifies that the liabilities acquired by the Company will be limited to $75,000. We will also provide an additional $2,000,000 in working capital from the public or private markets by no later than 18 months from the close of the SA Acquisition. On May 11, 2021, we closed on the SA Acquisition. The acquisition of SA supports the Company’s strategic initiatives. SmartAxiom’s patented software technology manages and secures IoT systems through patented, lite blockchain and cyber security technologies. The following table summarizes the purchase price as of May 11, 2021, the date of acquisition: Issuance of 13,000,000 shares of the Company’s common stock per share $ 2,730,000 Issuance of 210,000 Series 'D" Preferred convertible stock, each share is convertible into 10 common shares 203,613 A maximum of $2,200,000 of LFER common shares to be issued, subject to an earn-out, as defined, by SA over 18 month period from closing date of the acquisition. 2,221,777 Excess of SA liabilities over the $75,000 acquired by the Company (111,263 ) Total purchase consideration $ 5,044,127 The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed on May 11, 2021, the date of acquisition: Cash $ 39,878 Accounts receivable, net of an allowance for doubtful account of $7,554 5,802 Prepaid expenses and other current assets 3,375 Furniture and fixture, net 3,687 Intangible assets - Capitalized software development costs, patents, customer lists net of accumulated amortization of 98,630; 5,177,643 Accounts payable and accrued expenses (73,533 ) Line of credit (23,406 ) Notes payable (89,319 ) Total purchase consideration $ 5,044,127 The intangibles consist of capitalized software development costs, patents and customer lists and are being trademarks amortized over a 5-year period from the date of acquisition. For the period ended May 31, 2021, the Company recorded amortization expense of $39,708. We performed an analysis of the intellectual property acquired from SA. This analysis involved a net present value (“NPV”) calculation over the current 5-year projections for the intellectual property. Based on our analysis, no impairment is required as of May 31, 2021. Estimated future amortization of the intangible assets are as follows: 2022 $ 1,055,981 2023 1,055,981 2024 1,055,981 2025 1,055,981 2026 878,076 $ 5,102,000 From the date of acquisition through May 31, 2021, SA generated $0 net sales, incurred approximately $89,000 of operating expenses, including $79,272 of amortization, and a net loss of approximately $89,000. The following table presents the unaudited pro forma consolidated statements of operations for the year ended May 31, 2021: LFER SA Proforma Combined Sales, net $ $ 38,300 $ 38,300 Cost of goods sold _ 5,714 5,714 Gross profit _ 32,586 32,586 Operating expenses 663,564 1,218,609 1,882,173 Net loss before other expenses (663,564 ) (1,186,022 ) (1,849,587 ) Other expenses, net (745,374 ) (3,963 ) (749,337 Net loss from continuing operations $ (1,408,938 ) $ (1,189,986 ) $ (2,598,924 ) The following table presents the unaudited pro forma consolidated statements of operations for the year ended May 31, 2020: LFER SA Proforma Combined Sales, net $ 64,407 $ 63,415 $ 127,822 Cost of goods sold 166,681 31,679 198,360 Gross profit (102,274 ) 31,736 (70,538 ) Operating expenses 2,618,373 1,193,797 3,812,170 Net loss before other expenses (2,720,647 ) (1,162,061 ) (3,882,708 )) Other expenses, net (417,937 ) (5,679 ) (423,616 )) Net loss from continuing operations $ (3,138,584 ) $ (1,167,740 ) $ (4,306,324 ) |
Note 6 - ESD DISCONTINUED OPERA
Note 6 - ESD DISCONTINUED OPERATIONS | 12 Months Ended |
May 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Note 6 - ESD DISCONTINUED OPERATIONS | Note 6 – ESD DISCONTINUED OPERATIONS On June 21, 2019 the Company shut down the ESD operation to further concentrate its efforts and available resources on its core brands and any additional brands it acquires. On November 4, 2019, ESD filed for Chapter 7 bankruptcy protection. On December 11, 2019, the Company received a final decree from the United States Bankruptcy Court that a Chapter 7 bankruptcy estate for ESD had been fully administered. As a result, the Company discharged approximately $851,000 in accounts payable and accrued expenses and recorded a gain on the disposal of discontinued subsidiary in the amount of $894,000 during the year ended May 31, 2020. Accordingly, the results of operations for ESD have been reclassed to discontinued operations for the year ended May 31, 2020. The Company recognized a loss from discontinued operations of $80,838 during the year ended May 31, 2020, related to the ESD operations. Below are the results from discontinued operations for the year ended May 31, 2021 and 2020: For the year ended May 31, For the year ended May 31, 2021 2020 Sales, net $ 0 $ 5,911 Cost of goods sold 0 16,303 Gross profit 0 ) (10,392 ) Operating expenses 0 33,321 Loss from operations 0 ) (43,713 ) Other expenses: Interest and finance costs 0 ) (8,074 ) Loss on sale of fixed assets 0 ) (29,050 ) Net loss $ 0 ) $ (80,838 ) The table below summarizes the net assets and liabilities of the discontinued operations of ESD that were discharged during the year ended May 31, 2020. Liabilities Accounts payable and accrued expenses $ 851,481 Lines of credit 42,034 Total Liabilities $ 893,515 |
Note 7 - JCG ACQUISITION
Note 7 - JCG ACQUISITION | 12 Months Ended |
May 31, 2021 | |
Business Combinations [Abstract] | |
Note 6 - JCG ACQUISITION | Note 7 – JCG ACQUISITION To support the company’s strategic initiatives, the Company acquired JCG and the JCG brands. Effective August 2, 2018, the Company entered into an agreement (the “JCG Agreement”) to acquire all of the outstanding stock of JCG in exchange for 327,293 shares of the Company’s restricted common stock valued at $1.95 per share for a total value of approximately $638,000. If these shares are trading below $1.50 after August 2, 2019, the Company would be required to issue additional shares so that the value of the 327,293 shares plus these additional shares, with a floor price of $1.00, will be equal to $900,000. On August 2, 2019, the 12-month anniversary of the acquisition of JCG the Company determined that the Company’s stock price closed below the contractual floor for remeasurement of the purchase consideration and additional consideration was due to the sellers. As of May 31,2019, the Company accrued approximately $383,000 to reflect the fair value of the contingent consideration related to the acquisition. During the years ended May 31, 2021, and 2020, respectively, The Company recorded a charge in the statement of operations for a change in the fair value of the contingent liability of $357,955 and recorded a credit in the statement of operations for the change in the fair value of the contingent liability of $325,309, during the years ended May 31, 2021 and 2020, respectively. On July 15, 2021, the Company issued 572,727 contingent shares valued at $0.11 per share. The JCG Agreement also provides for the issuance of a warrant for 200,000 shares of common stock with a two-year term and an exercise price of $4.25 with a value of approximately $9,400. The warrants expired on August 2, 2020. The JCG Agreement also provides for an additional 218,182 shares of restricted common stock to be issued when the gross revenues of the JCG brands reach $900,000 in a twelve-month period. The JCG Agreement further provides for additional shares of restricted common stock, with a market value of $500,000 on the date of issuance, to be issued when the gross revenues of the JCG brands reach $3,000,000 in a twelve-month period, and again when the gross revenues of the JCG brands reach $5,000,000 in a twelve-month period. The JCG Agreement also provides for the issuance of the restricted common stock and warrants to the shareholders of JCG on a pro rata basis according to their respective percentage of ownership as of August 2, 2018. The restricted common stock may not be transferred, sold, gifted, assigned, pledged, or otherwise disposed of, directly or indirectly, for a period of twelve months (the “Lock-Up Period”). After the Lock-Up Period, the maximum shares that may be sold by each restricted common stockholder during any given one-day period shall be 5% of their total holdings or no more than 20% of the average trading volume of the preceding 30 days, whichever is less. The Company has determined the value of the contingent shares and warrants, in excess of the initial 327,293 shares, to be approximately $722,000, for a total purchase price value of approximately $1,360,000. The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of acquisition: Issuance of 327,293 shares of common stock with an estimated fair value of $1.95 per share $ 638,182 Contingent consideration for additional shares (included in additional paid-in capital) 684,641 Warrants to purchase additional shares 37,177 Total purchase consideration $ 1,360,000 Cash $ 265 Accounts receivable 167,700 Inventory 72,035 Accounts payable (65,000 ) Intangibles - Trademarks and copyrights 1,185,000 Total consideration $ 1,360,000 The intangibles relate to trademarks and copyrights acquired in the JC acquisition and are being amortized over a 5-year period. During the years ended May 31, 2021 and 2020 the Company recorded amortization expense of $92,000 and $0, respectively, related to the JC intangibles. The Company recorded an impairment charge of $725,000 against the intangibles recorded related to the acquisition of JCG during the year ended May 31, 2019, and recorded an impairment charge of $299,000 during the year ended May 31, 2020. The balance of the intangibles related to the JC acquisition as of May 31, 2021 and 2020 was $0. |
Note 8 _ DISCONTINUED OPERATION
Note 8 – DISCONTINUED OPERATIONS | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
Note 8 DISCONTINUED OPERATIONS | Note 8 – DISCONTINUED OPERATIONS During the year ended May 31, 2021, the Company discontinued the wholesale beverage distribution operations, and the Company announced its intention divest away from its business as a Consumer-Packaged Goods (“CPG”) Company. Accordingly, the Company’s results of operations for the year ended May 31, 2020, reflect a charge in the aggregate amount of $786,436, The following table details of the Company’s discontinued operations for the years ended May 31, 2021, and 2020: 2021 2020 LFER $ 25,135 ESD — $ 80,838 VK — 241,214 JCG — 464,384 $ 25,135 $ 786,436 |
Note 9 -_INTANGIBLE ASSETS
Note 9 - INTANGIBLE ASSETS | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Note 10 - INTANGIBLE ASSETS | Note 9 – INTANGIBLE ASSETS Intangible assets as of May 31, 2021 and 2020 were as follows: May 31, 2021 May 31, 2020 Intangible assets: Intangible assets to be amortized: Brand recognition, business relationships and customer lists $ — $ 1,185,000 Software development, patents, business relationships and customer lists acquired from SA 5,181,272 Less: accumulated amortization: Intangible assets to be amortized: Brand recognition, business relationships and customer lists — 161,000 Software development, patents, business relationships and customer lists acquired from SA 79,272 Less: Impairment — 1,024,000 Net book value at the end of period $ 5,102,000 $ — The Company amortizes its intangible assets using the straight-line method over a 5 year period. The Company reviews its intangible assets when there are indications of performance issues. During year ended May 31, 2020, the JCG brands did not perform at the level we anticipated, and sales milestones were not achieved. The Company did not have the resources to support the brand during year ended May 31, 2020 and this had a direct impact on its performance. Based on this review and analysis, the Company recorded an impairment charge of $299,000 against the intangibles recorded related to the acquisition of JCG during the year ended May 31, 2020. Amortization expense for the years ended May 31, 2021 and 2020 was $79,272 and $92,000, respectively. |
Note 10 - GOODWILL
Note 10 - GOODWILL | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Note 10 - GOODWILL | Note 10 - GOODWILL Goodwill represents the excess of the purchase price over the fair value of the net assets acquired from VK. The changes in the carrying amount of goodwill for the years ended May 31, 2021 and 2020 were as follows: May 31, 2021 May 31, 2020 Balance – beginning $ — $ 195,000 Less-impairment $ — $ 195,000 Balance – end $ — $ — Goodwill resulting from the business acquisitions had been allocated to the financial records of the acquired entity. The Company did not have the resources to support the brand during years ended May 31, 2021 and 2020 and this had a direct impact on its performance. Based on this review and analysis, the Company recorded an impairment charge of $195,000 during the year ended May 31, 2020. |
Note_11 - NOTES PAYABLE-RELATED
Note 11 - NOTES PAYABLE-RELATED PARTY | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
Note 11 - NOTES PAYABLE- RELATED PARTY | Note 11 – NOTES PAYABLE – RELATED PARTIES On January 23, 2019, ESD issued a demand note in the amount of $10,000 to a related party. The note is unsecured, bears interest at an annual rate of 20% and had an original maturity date of March 1, 2019. On March 12, 2019, the obligations due under the terms of the note were assigned to the Company. The maturity date on the note had been extended to March 1, 2020. During years ended May 31, 2021 and 2020, the Company recorded interest expense of $2,000 and $2,000, respectively, and accrued interest on the note at May 31, 2020 amounted to $4,707. On January 28, 2020, the Company issued a demand note in the amount of $8,200 to a related party. The note is unsecured, bears interest at an annual rate of 20% and has maturity date of January 28, 2021. During the years ended May 31, 2021 and 2020, the Company recorded interest expense of $1,640 and $557, respectively. Prior to ESD’s bankruptcy declaration, ESD became indebted to certain creditors in the total amount of $45,169 which indebtedness was personally guaranteed by Fernando Leonzo, the Company’s CEO. The debt was not protected under the ESD bankruptcy. On February 20, 2020, the Company and Fernando Leonzo entered into an agreement under which Fernando Leonzo would discharge the indebtedness personally and directly and the Company would pay Fernando Leonzo, $3,000 per month beginning February 2020 until such time that the indebtedness is fully discharged. Interest will accrue at an annual rate of 5% on any monthly payments not made by the 21 st The following table summarizes the Company’s Note Payable – Related Parties as of May 31, 2021: Issue Date Maturity Date Interest Rate Original Amount Accumulated Payments as of May 31, 2021 Accumulated Accrued interest as of May 31, 2021 Balance May 31, 2021 1/23/2019 3/1/2020 20 % $ 10,000 $ — $ 4,707 $ 14,707 1/28/2020 1/28/2021 20 % $ 8,200 $ — $ 2,197 $ 10,397 2/20/2020 2/19/2021 5 % $ 45,169 $ 14,300 $ 2,518 $ 33,387 $ 58,491 The following table summarizes the Company’s Note Payable – Related Parties as of May 31, 2020: Issue Date Maturity Date Interest Rate Original Amount Accumulated Payments as of May 31, 2020 Accumulated Accrued interest as of May 31, 2020 Balance May 31, 2020 1/23/2019 3/1/2020 20.0 % $ 10,000 $ — $ 2,707 $ 12,707 1/28/2020 1/28/2021 20.0 % $ 8,200 $ — $ 557 $ 8,757 2/20/2020 2/19/2021 5.0 % $ 45,169 $ 5,300 $ 527 $ 40,396 Total $ 61,860 |
Note_12- NOTES PAYABLE
Note 12- NOTES PAYABLE | 12 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
Note 12 - NOTES PAYABLE | Note 12– NOTES PAYABLE On September 15, 2020, the Company issued a Note in the principal amount of $30,000 which had a maturity date of December 15, 2020. The Note was note repaid by the maturity date and thus bears interest at an annual rate of 6% from the date of maturity. During years ended May 31, 2021 and 2020, the Company recorded interest expense of $528 and $0, respectively. As part of the SA Acquisition, the Company has the following loans outstanding: Date of note Amount Maturity date Annual interest Rate Interest exp 5/11-5/31/21 PayPal Loan 04/22/21 $ 50,000 04/22/22 6.9 % $ 253 SBA PPP Loan 5/2/2021 12,937 05/02/26 1.0 % $ — SBA PPP Loan 4/16/2020 3,500 None Waived Waived SBA EIDL Loan 10/6/2020 11,500 10/06/50 3.75 % $ — Short Term Loan 10,094 Demand 0.0 % $ — Total $ 88,031 $ 253 The Company has applied for forgiveness from the SBA for the outstanding PPP loans. The aggregate balance of the Company’s notes outstanding as of May 31, 2021, and 2020 was $118,031 and $0, respectively. As of May 31, 2021, future principal payments of the notes payable were approximately as follows: For the twelve months ending May 31, 2022 $ 60,094 |
Note_13 - CONVERTIBLE NOTES PAY
Note 13 - CONVERTIBLE NOTES PAYABLE | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
Note 13- CONVERTIBLE NOTES PAYABLE | Note 13– CONVERTIBLE NOTES PAYABLE The following table summarizes the Company’s convertible notes payable as of May 31, 2021 and May 31, 2020: 31-May-21 May 31, 2020 Unamortized deferred finance costs and original issue discount Principal Net Unamortized deferred finance costs and original issue discount Principal Net 2017 NPA Notes — 737,500 737,500 — 737,500 737,500 The 2nd Note Offering — 280,000 280,000 — 355,000 355,000 2021 Note Issuances 29,633 77,000 47,367 2020 Note Issuances — 385,500 385,500 83,277 504,300 421,023 2019 Note Issuances — 482,597 482,597 16,406 667,381 650,975 $ 29,633 $ 1,962,597 $ 1,932,964 $ 99,683 $ 2,264,181 $ 2,164,498 As of May 31, 2021, 15 convertible notes with principal amounts aggregating $1,885,597 have passed their maturity date, of which, one convertible note with a principal of $100,000 is in default as the holder has submitted a request for payment and declared in default by the note holder. The 2017 NPA Note On September 25, 2017, the Company entered into a note purchase agreement (“NPA”), pursuant to which the Company issued a 7% secured promissory note (“SPN”) in the principal amount of $650,000 (the “650K Note”), which had an original maturity date of March 25, 2019. As additional consideration for the issuance of the SPN, the Company issued 300,000 restricted shares of the Company’s common stock at $1.00 per share, which was recorded as a deferred finance cost. The deferred finance cost is being amortized over the life of the SPN. On November 3, 2017, the NPA was amended and an additional 7% SPN was issued to the purchaser in the principal amount of $175,000 (the “$175K Note”), which had an original maturity date of May 3, 2019. As additional consideration for the issuance of the $175K Note, the Company issued 160,000 restricted shares of the Company’s common stock at $2.10 per share, which was recorded as a deferred finance cost. The deferred finance cost is being amortized over the life of the SPN. Both SPN’s are secured by a continuing security interest in substantially all assets of the Company. Under the terms of the NPA, the Company was required to pay a consulting fee of $65,000 to the purchaser. In November 2017, the purchaser agreed to and accepted from the Company, 86,667 shares of the Company’s common stock, which shares were issued at $2.00 per share, in lieu of payment of the consulting fee, which was recorded by the Company as a deferred finance cost. The deferred finance cost is being amortized over the life of the SPN’s. On January 26, 2018, the Company entered into an NPA, pursuant to which the Company issued a Note in the amount of $125,000 (the “Note Purchase”). The Note bears interest at 7% per annum and had an original maturity date of January 26, 2019. In connection with the NPA, the Company and the Purchaser also entered into a Side Letter, pursuant to which, as additional consideration for the NPA, the Company agreed to (i) pay to the Purchaser, the first $125,000 in cash proceeds received by the Company in connection with a NPA from third parties unaffiliated with the Purchaser (the “Cash Payment”) shall be used to reduce the amount due to the Purchaser under the $175K Note, and (ii), with certain exceptions, not issue any shares of common stock or other securities convertible into shares of common stock unless and until the Cash Payment has been made in full. In January 2019, the $125,000 note which was issued on January 26, 2018 plus accrued and unpaid interest amounting to $8,654 was converted into 178,205 shares of the Company’s common stock at $0.75 per share. As of May 31, 2021, and May 31, 2020, the outstanding balance was $0, respectively. As further consideration for the Note Purchase, the Company entered into an agreement to amend certain SPN’s (the “Note Amendment”), pursuant to which the $175K Note and the $650K Note (together, the “Old Notes”) were amended to provide the Purchaser with the ability to convert the principal amount of such Old Notes, together with accrued interest thereon, into shares of the Company’s common stock (the “Conversion Shares”). Pursuant to the Note Amendment, the conversion price shall be equal to $1.50, subject to adjustments as set forth in the Note Amendment, and the number of Conversion Shares issuable upon conversion of the Old Notes shall be equal to the outstanding principal amount and accrued but unpaid interest due under the terms of the Old Notes to be converted, divided by the Conversion Price. The Note Amendment was treated as an extinguishment of the old notes and an issuance of new notes (the “New Notes”). As a result of this transaction, the Company expensed the unamortized deferred financing costs of $557,462 as of the date of the extinguishment and recorded deferred financing costs on the New Notes, and the $125,000 note purchase, of $538,335, which has been fully amortized as of May 31, 2020. In July 2018, the Company (i) issued 100,000 common shares to note holder at a conversion price of $0.875 per share, to cancel $87,500 of principal amount due by the Company regarding the $175K Note; (ii) issued 60,000 shares at $0.875 per share to the note holder representing 20,000 shares per month penalty for the 3 month period from February 2018 through April 2018; (iii) paid the note holder an aggregate of $19,250 representing 4 months of accrued interest due by the Company from January 2018 through April 30, 2018 regarding the $650K and the $175K Notes; and, (iv) shall issue 39,333 shares to the note holder representing the remainder of interest due through December 31, 2018, representing $4,302 per month due on the total principal amount due of $737,500. As a result of this transaction, the Company recorded finance costs of $151,250 during the year ended May 31, 2019. The Company recorded interest expense of $51,625 and $51,625 during years ended May 31, 2021 and 2020, respectively, on the 2017 NPA Notes. The total amount of accrued and unpaid interest expense on the 2017 NPA Notes as of May 31, 2021 and May 31, 2020 was $159,260 and 107,635, respectively. As of May 31, 2021, and May 31, 2020, the outstanding balance was $737,500 and 737,500, respectively. The Second Note offering In May 2018, the Company offered an NPA, in the aggregate amount of up to $500,000 (the “2nd Note Offering”) and, as of February 28, 2021, issued secured convertible promissory notes to eighteen (18) investors under the terms of the 2nd Note Offering in the aggregate amount of $830,000. Notes issued under the 2nd Note Offering shall mature one year from the date of issuance (the “Maturity Date”), shall accrue interest at the simple rate of 7% per annum, and are convertible, at the holder’s option, prior to the Maturity Date into that number of shares of the Company’s common stock, equal to the lower of (i) $1.50 per share of common stock, or (ii) that number of shares of common stock equal to the average closing price of the Company’s common stock as reported on the OTC Markets for the preceding 30 trading days prior to the date of conversion, multiplied by 0.65 (the “Conversion Price”); provided, however, in the event the Conversion Price is calculated based on (ii) above, the Conversion Price shall not be lower than $1.00 per share of common stock. All amounts due under the terms of the Notes shall be secured by a continuing security interest in substantially all of the assets of the Company. As additional consideration for the issuance of the notes issued under the 2nd Note Offering, the Company issued one (1) restricted share of the Company’s common stock to each note holder for each $1 invested, which was recorded as deferred finance cost. On September 12, 2019 the Company was served with a summons from the Supreme Court of the State of New York to answer a complaint filed by the Gankaku Living Trust (“Gankaku”) (Gankaku Living Trust v. Life on Earth Inc., Supreme Court of New York, No.655189/2019) claiming a breach of contract and default upon the Note. The Note was issued to the Gankaku Living Trust (“Gankaku”) by the Company on May 24, 2018 with an original maturity date of May 24, 2019. This maturity date of this note was extended on May 24, 2019 until June 24, 2019. The Company paid the outstanding interest on the note of $7,000 as part of this extension. On June 25, 2019, Gankaku’s legal counsel sent a demand letter to the Company requesting payment in full. Under the terms of the convertible note, the Company had 10 business days to pay the outstanding balance or the note would be in default. Under the terms of the note, upon default, the Holder shall be issued the number of common stock equal to the outstanding balance multiplied by 125%, divided by the average price, as defined. On July 17, 2019 the Gankaku’s counsel sent the Company’s counsel an official notice of default for the note and demanded the immediate issuance of Common Stock per the convertible note agreement and also demanded that the Company make all of its assets available to the Gankaku Living Trust as collateral. The Company retained counsel to represent it in this case. On July 1, 2020, the Court granted Gankaku’s Motion for Summary Judgment (the July 1, 2020 Order) in the amount of $100,000, with 7% interest per annum from June 24, 2019, $722 of court costs, and $8,040 of attorney fees (the “Judgment Amount”), and that the Company shall pay the Judgment Amount by issuing Gankaku the Company’s Common Stock equivalent to said amount as provided for in Section 5 of the Note. The Company then moved to vacate the Court’s July 1, 2020 Order, which the Court denied on November 17, 2020. The Court issued a declaratory judgment requiring the Company to pay the Judgment Amount by issuing its Common Stock Shares to Gankaku as had been provided in the July 1, 2020 Order. On February 3, 2021, the Company filed an appeal from the Court’s Order denying the Motion to Vacate the July 1, 2020 Order, which the Court has not yet ruled upon. Effective as of June 17, 2021, we settled litigation with Gankaku Living Trust (“Gankaku”), Gankaku Living Trust v. Life on Earth, Inc., Case No. 655189/2019 (New York Supreme Court) (the “Settlement”) in connection with Gankaku’s complaint on September 12, 2019 claiming a breach of contract and default upon a Note. The Settlement provides that Gankaku file with the Court a Satisfaction of Judgment and Stipulation of Discontinuance, which stipulation was filed by Gankaku on June 24, 2021. This Settlement does not involve the issuance of any additional shares to Gankaku as part of the settlement amount. The Settlement settles all matters pertaining to the Gankaku complaint and litigation, and we no longer owe Gankaku any further consideration. As per the Settlement Agreement, both parties mutually released one another from any and all claims. As a result of this settlement, the Company paid Gankaku $100,000 of principal and $21,976 of accrued interest. During the year ended May 31, 2021, two (2) investors converted $75,000 of notes into 3,125,000 shares of the Company’s common stock at $0.024 per share and each investor irrevocably waived the accrued interest totally $7,451, which was recorded as a credit to interest and finance costs in the statement of operation for the year ended May 31, 2021. The Company recorded interest expense of $23,650 and $26,150 for the years ended May 31, 2021, and 2020, respectively. The total amount of accrued and unpaid interest expense on the 2 nd nd The 2021 Notes On March 19, 2021, the Company issued three (3) convertible Notes to three (3) investors. The aggregate principal amount of the Notes is $77,000, which includes an original issue discount (“OID”) amount that totals $7,000. The OID was recorded as a finance cost on the date the Note were issued. The 2021 Notes bear interest at an annual rate of 8% and each has a maturity date of December 19, 2021. As consideration for the 2021 Notes, the Company issued 450,000 shares of the Company’s common stock at prices ranging from $0.84-$0.85 per share. As a result of this transaction the Company recorded deferred finance costs of $38,100 during the year ended May 31, 2021, which is being amortized over the life of the note. The Company recorded amortization expense of $8,467 during the year ended May 31, 2021. As of May 31, 2021, and 2020 the amount of unamortized capitalized finance costs amounted to $29633 and $0, respectively. As of May 31, 2021, and 2020 the outstanding balance of the 2021 Notes was $77,000 and $0, respectively. The 2020 Notes On September 10, 2019, the Company issued a Convertible Promissory Note, in the principal amount of $110,000 which matures on September 9, 2020. The note bears interest at an annual rate of 10% and is due on maturity. The note was issued with a 10% original issue discount. On or after the maturity date, the note may be converted into the Company’s common stock at a conversion price equal to $0.75 per share or 70% of the average closing price on the primary trading market on which the Company’s common stock is quoted for the last thirty (30) trading days immediately prior to but not including the conversion date, whichever is lower (the “Conversion Price”). Upon the occurrence of any Event of Default, as defined by the note, then the conversion price shall be reduced to a price of $0.60 per share or 56% of the average closing price on the primary trading market on which the Company’s common stock is quoted for the last thirty (30) trading days, whichever is lower. As additional consideration for the funding of the note, the Company has issued an aggregate of 33,000 restricted shares of the Company’s common stock as of the date of the note at $0.54 per share. As a result of this transaction, the Company recorded deferred finance costs totaling $28,820, which is being amortized over the life of the note. The Company recorded $10.808 and $18,012 of Amortization expense during the years ended May 31, 2021, and 2020, respectively. The Company received a notice of default and breach of contract notice from the Note Holder. The default annual interest rate is 20%. The Company recorded interest expense of $23,899 and $7,956 during the years ended May 31, 2021, and 2020, respectively. As of May 31, 2021, and 2020, the outstanding balance of the Note was $110,000 and $110,000, respectively. On December 14, 2020, the Company received a Complaint from the note holder, L & H, Inc. (“L&H”) filed in the First Judicial District Court of Nevada, Carson City, alleging breaches of contract regarding the Company’s failure to repay amounts due or failing to issuing shares upon demand and breach of implied covenant of good faith and fair dealing in connection with the $110,000 September 10, 2019 Convertible Promissory Note between L&H and the Company. The Complaint seeks an unspecified amount of damages representing the balance of the unconverted debt and penalties. Prior to the Complaint, the Company attempted to negotiate a settlement with L&H. The Company will answer the Complaint and attempt to negotiate a settlement with L&H but cannot assure the outcome of any attempted settlement, or the litigation. On September 23, 2019, the Company issued a 10% Convertible Redeemable Note, in the principal amount of $287,500 which matures on September 23, 2020. The note bears interest at an annual rate of 10% and is due on maturity but may be paid during the term of the note in Company common stock. Any portion of the principal amount note may be converted into the Company’s common stock at a conversion price equal to 60% of average of 2 lowest closing days with 15-day lookback, based on conversion notice date. The proceeds of the note were reduced by $37,500 to pay for management fees and legal services. As a result of this transaction, the Company recorded a derivative liability of $122,174 and a deferred finance cost totaling $159,674, which is being amortized over the life of the note. During the years ended May 31, 2021, and 2020, the Company recorded amortization of the deferred finance cost of $59,879 and $99,795, respectively. Also, the Company recorded credit changes in the fair value of the derivative liability of $1,070 and $10,516 during the years ended May 31, 2021 and 2020, respectively. The Company recorded interest expense of $26,713 and $19,765 during the years ended May 31, 2021 and 2020, respectively. On May 28, 2020, the note holder converted $6,500 of principal and $438 of accrued interest into 564,072 shares of the Company’s common stock at $0.0123 per share, and, on June 15, 2020, the note holder converted $5,500 of principal into 666,590 shares of the Company’s common stock at $0.0103 per share. As of May 31, 2021, and May 31, 2020, the outstanding balance was $275,500 and $281,000, respectively. On July 19, 2021, The Company and the note holder agreed to settle the outstanding balance of the 10% Convertible Redeemable Note whereby the note holder converted $213,878 of the note at the note’s applicable conversion price (10%) into 2,138,775 shares of the Company’s common stock and the remaining balance of the note ($111,665) was satisfied via the Company’s cash payment of $45,331 to be paid upon the closing of the borrower’s Series C Preferred financing and the Company issued the note holder, 66,333 shares of the Company’s Series C Preferred Shares. On October 25, 2019, the Company issued a Convertible Promissory Note, in the principal amount of $68,000 which matures on October 25, 2020. Under the terms of the Note, in the event of a default, the principal amount of the note shall increase by 150%. Because the Company failed to timely deliver shares of its common stock to the Note Holder upon receipt of the Note Holder’s notice of exercise of conversion, the note was placed in default. As a result, the Company recorded a finance expense of $34,000 during the year ended May 31, 2020. The note bears interest at an annual rate of 10% and is due on maturity. Any portion of the principal amount note may be converted into the Company’s common stock at a conversion price equal to 65% of average of 2 lowest closing days with a 15-day lookback based on the conversion notice date. The proceeds of the note were reduced by $7,760 to pay for management fees and legal services. As a result of this transaction, the Company recorded a derivative liability of $25,815 and deferred finance costs totaling $33,575, which is being amortized over the life of the note. During the year ended May 31, 2020, the note holder converted $26,700 of principal into an aggregate of 2,438,112 shares of the Company’s common stock at conversion prices ranging from $0.0069-$0.0136 per share. During the years ended May 31, 2021, and 2020, the Company recorded amortization of deferred finance cost of $12,590 and $20,985, respectively. During the years ended May 31, 2021, and 2020, the Company recorded interest expense of $6,086 and $4,355, respectively. During the year ended May 31, 2021, the Company also recorded a credit in the statement of operations for the change in the fair value of the derivative liability of $27,420 and a charge in the statement of operations for the change in the fair value of the derivative liability of $1,605 during the year ended May 31, 2020. During the year ended May 31, 2021, the note holder converted $57,400 of principal into an aggregate of 5,407,042 shares of the Company’s common stock at conversion prices ranging from $0.0101-$0.0121 per share. On March 23, 2021, the Company and the note holder reached a settlement and, as of that date, The Company no longer owes the note holder any further consideration. On March 5, 2020, the Company issued a Convertible Promissory Note, in the principal amount of $38,000 which matures on March 5, 2021. The note bears interest at an annual rate of 10% and is due on maturity. After 180 days of the issuance of the Note, the note may be converted into the Company’s common stock at a conversion price equal to 61% of the average closing price on the primary trading market on which the Company’s common stock is quoted for the last twenty (20) trading days immediately prior to but not including the conversion date. As a result of this transaction, the Company recorded a derivative liability of $7,637 during the year ended May 31, 2020. The Company recorded a credit in the amount of $7,637 as a change in the fair value of the derivative liability during the year ended May 31, 2021. The Company recorded interest expense of $3,071 and $895 during the years ended May 31, 2021, and 2020, respectively. On March 23, 2021, the Company and the note holder reached a settlement and, as of that date, the Company no longer owes the note holder any further consideration. As of May 31, 2021, and 2020, the outstanding balance was $0 and $38.000, respectively. On March 23, 2021, the Company and the note holder reached a settlement and, as of that date, The Company no longer owes the note holder any further consideration. On March 23, 2021, the Company and the note holder of the Notes issued on October 25, 2019, and March 5, 2020 reached a settlement and, as of that date, agreed that the Debt Obligations shall be paid, as follows: (i) the Company shall pay note holder $70,000 and (ii) 700,000 Common Stock Shares of the Company, which were issued on March 23, 2021 at $0.109 per share. As a result of this transaction the Company recorded a finance expense of $90,400. The Company no longer owes the note holder any further consideration. The 2019 Notes On October 29, 2018, the Company issued a Secured Promissory Note (“SPN”), in the principal amount of $131,250 which had an original maturity date of November 15, 2019. The SPN does not bear interest. The SPN was issued with a 5% original issue discount. Under the terms of the Note, the Company shall repay the SPN note holder in 12 equal monthly installments of $10,938 beginning December 15, 2018. As additional consideration for the funding of the SPN, the Company has issued an aggregate of 20,000 restricted shares of the Company’s common stock as of the date of the SPN at $1.60 per share and is obligated to issue an additional 20,000 shares, 180 days from the date of the SPN and an additional 20,000 shares, 270 days from the date of the SPN. As a result of this transaction, the Company recorded a deferred finance cost of $102,250, which is being amortized over the life of the SPN. On November 29, 2019, the maturity date of the note was extended to November 15, 2020. All other terms of the note remain the same. In consideration for the extension of the maturity date, the Company issued 131,250 shares of the Company’s restricted common stock, at $0.25 per share, the closing market price per share. As a result, the Company has recorded an additional deferred finance cost of $32,813. During the year ended May 31, 2021 and 2020, the Company recorded amortization of deferred finance costs of $16,406 and $58,516, respectively. As of May31, 31, 2021, the Company had not paid any of the monthly installments. As of May 31, 2021, the outstanding balance of the note was $131,250. On February 27, 2019, the Company issued a Secured Note (“SN”), in the principal amount of $312,500 which had an original maturity date of February 27, 2020. The SN does not bear interest. The SN was issued with a 20% original issue discount. Under the terms of the SN, the Company shall repay the SN note holder in 12 equal monthly installments of $26,042, beginning in March 2019. As additional consideration for the funding of the SPN, the Company has issued an aggregate of 50,000 restricted shares of the Company’s common stock as of the date of the SN at $2.0495, and the Company recorded a charge to finance expense in the amount of $102,475. In addition, as a result of this transaction, the Company recorded a deferred finance cost of $62,500, which has been fully amortized as of May 31, 2020. On December 23, 2019, the Company and a Note Holder agreed to amend the Secured Note dated February 27, 2019 because of three amortization payment failures that have occurred since the original date of the Secured Note. As a result of the amendment, (1) the Company shall issue 50,000 restricted common stock shares to the Note Holder; (2) Through January 31, 2020 (the “30 Day Period), the Note Holder will not issue any notices, demands, or otherwise or file any lawsuits regarding any alleged breach of the Secured Note or the SPA; (3) During the 30 Day Period, the Note Holder shall have the right to convert up to $39,063 (which amount equals the Monthly Principal Amortization Amount, as defined in the Secured Note times 1.5 (plus a conversion fee of $750 for each conversion amount) at a conversion price of $0.10 per share; (4) The Company shall bring the Note current during the 30 Day Period; (5) Should the Company fail to bring the Note current within the 30 Day Period, the Note Holder may elect to exercise its conversion rights for an additional 30 day period of between January 31, 2020 to February 28, 2020 (the “Second 30 Day Period”) as a follow on conversion after the 30 Day Period for the principal amount equal to or greater than $39,063, each such conversion of which shall reduce the principal amount then owed; and, (6) Should the Note Holder elect to proceed with the Second 30 Day Period, the Note Holder agrees to extend the Forbearance for the Second 30 Day Period. As of February 28, 2021, the 50,000 shares of restricted common stock have not been issued, and, the Note Holder has not exercised his conversion rights. In October 2020, the Company received notice from the Note Holder that, under the terms of the Note, the Note Holder is entitled to default principal and fees aggregating $111,422, which has been recorded as a finance expense during the year ended May 31, 2021. On May 20, 2021, the Company and the noteholder reached a settlement agreement whereby the Company agreed to pay the noteholder $24,000 and the noteholder would convert $260,000 of the principal and accrued interest of the note into 2,600,000 shares of the Company’s common stock. The shares were issued on June 2, 2021, and as of May 31, 2021, the Company has not paid the $24,000 due under the agreement. The outstanding balance of the note at May 31, 2021 was $122,980. On March 21, 2019, the Company issued a 2nd Secured Note (“2-SN”), in the principal amount of $312,500 which had an original maturity date of March 21, 2020. The 2-SN does not bear interest. The 2-SN was issued with a 20% original issue discount. Under the terms of the SN, the Company shall repay the 2-SN note holder in 12 equal monthly installments of $26,042 beginning in April 2019. As additional consideration for the funding of the S,N, the Company has issued an aggregate of 50,000 restricted shares of the Company’s common stock as of the date of the 2-SN at $1.825, and, as a result of this transaction, the Company recorded a charge to finance expense in the amount of $91,250. In addition, as a result of this transaction, the Company recorded a deferred finance cost of $62,500, all of which has been amortized as of May 31, 2020. Since execution date of the 2-SN, the Company made two scheduled payments aggregating $52,083. On October 30, 2019, in order to avoid default under the note for any further missed payments, the Company and the 2-SN note holder have agreed to a series of amendments to the 2-SN which, (i) increase the principal due under the 2-SN by a total of $55,000, which has been recorded as a finance cost during the year ended February 28, 2021, (ii) the Company paid $28,000, and (iii) the Company shall repay the remaining unpaid principal due on the 2-SN note in 7 equal monthly installments of $41,059 beginning on November 30, 2019. As of February 28, 2021, the Company has not made an installment payment. The series of amendments to the 2-SN was treated as an extinguishment of the old 2-SN and an issuance of a new 2-SN. As a result of the extinguishment of the old 2-S, the Company has recorded an additional charge to finance expense in the amount of $19,121, during the year ended May 31, 2020, the amount of which represents the remaining balance of the unamortized 20% original issue discount as of October 30, 2019, the date of the most recent amendment. On December 18, 2019, the Note Holder converted $20,000 of the outstanding debt into 307,692 shares of the Company’s common stock at $0.065 per share and the maturity date of the Note was extended to May 31, 2020. On March 20, 2020, the Note Holder converted $22,500 of the outstanding debt into 450,000 shares of the Company’s common stock at $0.05 per share, on May 28, 2020, the Note Holder converted $5,130 of the outstanding debt into 570,000 shares of the Company’s common stock at $0.009 per share, on June 15, 2020, the Note Holder converted $4,894 of the outstanding debt into 675,000 shares of the Company’s common stock at $0.0073 per share, and, on July 7, 2020, the Note Holder converted $6,525 of the outstanding debt into 900,000 shares of the Company’s common stock at $0.00725 per share. During the year ended May 31, 2021, the Company recorded interest expense of $37,164. As of May 31, 2021, the outstanding balance of the note was $228,368. On May 16, 2019, the Company issued a Second Secured Promissory Note (“2-SPN”), in the principal amount of $75,000 which had an original maturity date of February 16, 2020. The 2-SPN bears interest at an annual rate of 7% and is due on maturity. As additional consideration for the funding of the 2-SPN, the Company has issued an aggregate of 7,500 restricted shares of the Company’s common stock as of the date of the 2-SPN at $2.00 per share and is obligated to issue an additional 7,500 shares, 180 days from the date of the 2-SPN and an additional 7,500 shares, at maturity. The Company recorded interest expense of $4,521 and 5,480 during the years ended May 31, 2021, and 2020. On March 25, 2021, the note holder converted $50,915 of principal and accrued interest into 1,000,000 shares of the Company’s common stock at $.05092 per share. On May 17, 2021, the note holder converted $34,086 of principal and accrued interest into 428,479 shares of the Company’s common stock at $.0795 per share. As of May 31, 2021 the outstanding balance of the note is $0. As of May 31, 2021, future principal payments of the convertible notes payable were approximately as follows: For the twelve months ending May 31, 2022 $ 1,962,597 |
Note 14 - LINES OF CREDIT
Note 14 - LINES OF CREDIT | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
Note 14 - LINES OF CREDIT | Note 14 – LINES OF CREDIT In April 2017, the Company entered into three credit lines with small business lenders that allows the Company to borrow up to $35,000 and bears interest at 94% per annum. The facilities require weekly payments of principal and interest. At May 31, 2021 the aggregate outstanding balance was $37,849, including two lines of credit acquired from Smart Axiom which had a combined outstanding balance of $22,515 as of May 31, 2021. As of May 31, 2020, the aggregate outstanding balance was $26,124. |
Note 15 - CAPITAL STOCK
Note 15 - CAPITAL STOCK | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
Note 15 - CAPITAL STOCK | Note 15 – CAPITAL STOCK As of May 31, 2021, the authorized common stock of the Company was 200,000,000 shares of common stock, $0.001 par value per share, and 10,000,000 shares of preferred stock, $0.001 par value per share. At May 31, 2021 and 2020, there were 1,200,000 shares of Series A preferred stock outstanding; 100,000 shares of shares of Series B preferred stock outstanding; and, 290,000 shares of Series C preferred stock outstanding. Pursuant to the SA acquisition agreement, 210,000 shares of the Company’s preferred D shares were issued in June 2021. On November 11, 2019, the Board of Directors and a majority of the voting power approved a resolution to effectuate a 5:1 Reverse Stock Split. Under this Reverse Stock Split each 5 shares of our Common Stock were automatically converted into 1 share of Common Stock. To avoid the issuance of fractional shares of Common Stock, the Company issued an additional share to all holders of fractional shares. In addition, as discussed below, the Board of Directors and the holders of a majority of the voting power approved a resolution to effectuate an increase in authorized Shares of Common Stock from One Hundred million (100,000,000) to Two Hundred million (200,000,000) shares of common stock, $0.001 par value. The Company received approval from FINRA on March 25, 2020 an, on that date, the reverse stock split became effective The number of authorized, issued and outstanding, and available shares of common shares as of March 25, 2020, immediately after the reverse stock split was approved by FINRA are disclosed in the table below: Authorized Shares of Common Stock Number of Issued and Outstanding Shares of Common Stock Number of Shares of Common Stock Available in Treasury for Issuance As of March 25, 2020, Pre-Increase in Authorized and Reverse Stock Split 100,000,000 shares of Common Stock 46,937,678 shares of Common Stock 53,062,322 shares of Common Stock As of March 25, 2020, Post- Increase in Authorized and Reverse Stock Split 200,000,000 shares of Common Stock 9,387,536 shares of Common Stock 190,612,464 shares of Common Stock Preferred Stock On April 22, 2020, the Company, pursuant to the provisions of Section 151 of the Delaware General Corporation Law, created a new Preferred Series class of shares designated as Series B out of the already 10 million shares of Preferred Stock authorized in the Company’s Certificate of Incorporation. The Company already, since its inception, had designated and issued a Class A Series of Preferred Stock consisting of one million two hundred thousand shares (1,200,000), $0.001 par value share. The new Series B Preferred are for a total of two hundred fifty thousand shares (250,000), $0.001 par value per share, to be designated as Series B Preferred Stock. Series A Preferred Stock The Series A Preferred Stock has the following rights and privileges: Voting – One share of Series A Preferred Stock has the equivalent voting rights as 50 shares of common stock. Series A Preferred Shares Outstanding: May 31, 2020 Shares Outstanding Fernando Oswaldo Leonzo 600,000 Robert Gunther 300,000 Jerry Gruenbaum 100,000 John Romagosa 200,000 Total 1,200,000 The Series A Preferred Shares do not have liquidation preferences but have 50-1 preferred voting rights. Series B Preferred Stock Holders of Series B Preferred Shares have the following rights and privileges: Voting - The Series B Preferred Shares shall have no voting rights. Conversion - The holders of Series B Preferred Shares shall have the rights to convert their Series B Preferred Shares into Common Stock shares. Dividends - The Company shall pay the holders of Series B Preferred Stock a 10% annual cash dividend paid quarterly. The number of Preferred Series B shares outstanding as of May 31, 2021, were: Holder Number of Shares J.Craig Holding Corp. 50,000 Massoud Toghraie 25,000 John Romagosa 25,000 Total 100,000 Series C Preferred Stock The Company has designated 3,000,000 shares of Series C Preferred Stock, par value $0.001 per share. As of May 31, 2021 The Series C Preferred Stock does not have liquidation preferences. The Series C Preferred Stock has no voting rights except to the extent that they hold Common Stock Shares from conversion, in which case each Common Stock share will be equal to one vote. The Company shall pay the holders of Series C Preferred Stock a 10% annual cash dividend paid quarterly., $290,000 of our Series C Preferred Stock are issued and outstanding. The number of Preferred Series C shares outstanding as of May 31, 2021 were: Holder Number of Shares Dr. Anshu Sharma, M.D. 150,000 Mahmood Khan 50,000 Rafael Collado 50,000 Axon Capital Management, Inc. 20,000 W. S. Gamble 20,000 Total 290,000 Series D Preferred Stock We have designated 210,000 shares of Series D Preferred Stock, par value $0.001 per share. As of May 31, 2021, 210,000 shares of our Series D Preferred Stock are issued and outstanding. The Series D Preferred Stock does not have liquidation preferences. The Series D Preferred Stock has no voting rights except to the extent that they hold Common Stock Shares from conversion, in which case each Common Stock share will be equal to one vote. Each share of the Series D preferred stock converts into 10 shares of the Company’s common stock. The Series D Preferred Stock pays no dividend. The number of Preferred Series D shares outstanding as of May 31, 2021 were: Holder Number of Shares Amit Biyana 128,822 Twenty-two (22) minority shareholders of Smart Axiom, as a group 81,178 Total 210,000 Common Stock Shares of common stock have the following rights and privileges: Voting – The holder of each share of common stock is entitled to one vote per share held. The holders of common stock are entitled to elect members of the Board of Directors. Dividends – Common stockholders are entitled to receive dividends, if, and when, dividends are declared by the Board of Directors. The Company has not declared dividends since inception. The Company issues shares of common stock in exchange for financing and services provided by select individuals and or vendors. During the years ended May 31, 2021 and 2020 the Company issued 368,593 and 645,029 shares, respectively. Also, the Company cancelled 1,050,280 shares during the year ended May 31, 2020. Warrants Warrants outstanding 2021 2020 Weighted Weighted Average Average Warrants Exercise price Warrants Exercise price Outstanding 349,000 $ 4.25 349,000 $ 4.25 Granted - JC acquisition — — Exercised — — Expired 200,000 $ 4.25 — Outstanding 149,000 $ 4.25 349,000 $ 4.25 Exercisable at year end 149,000 $ 4.25 349,000 $ 4.25 Warrants Strike Underlying Shares Expiration Price 80,000 September 30, 2021 $ 4.25 33,000 October 7, 2021 $ 4.25 6,000 September 20, 2021 $ 4.25 30,000 September 29, 2021 $ 4.25 149,000 |
Note 16 - COMMITMENTS AND CONTI
Note 16 - COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
May 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 16 - COMMITMENTS AND CONTINGENCIES | Note 16 - COMMITMENTS AND CONTINGENCIES In connection with the acquisition of ESD, the Company assumed a lease for approximately 13,000 square feet of warehouse space located in Gilroy, California at a base rent of $5,248 per month. The lease terminates on June 30, 2021. In addition, the Company entered into an employment agreement with a general manager, for a period of one year at a cost of $58,000. The employment agreement expired in July 2017. During the year ended May 31, 2020, the Company shut down ESD’s operations. As part of this shut down, the Company and the landlord agreed to find a new tenant for the facility. The landlord has leased the property to a third party and the Company’s obligation under the lease ended effective August 1, 2019. Rent expense for the years ended May 31, 2021 and 2020, respectively, totaled $1,736 and $2,487, respectively. On November 20, 2019, a Complaint was filed with the Superior Court-Judicial District of New Haven by a former employee, naming the Company as Defendant. The Complaint claims that the Company owes the former employee back wages of $60,000 and unpaid expenses of $20,000, which were due to be paid to the former employee upon his termination from the Company on November 1, 2019, in accordance with an employment agreement dated November 18, 2018. The Company has responded that the employee was terminated for cause and, as such, no longer obligated under the terms of the employment agreement. As of August 17, 2020, the parties have not engaged in extensive discovery or any substantial motion practice and no trial date has been set. In addition to the back wages of $60,000, severance of $45,000 and unpaid expenses of $20,000, the Company has recorded legal expenses of $15,000 during the year ended May 31, 2020, as a result of receiving the Complaint. On March 23, 2021, the Company and Redstart Holdings Corp (“Redstart”) settled litigation in connection with a complaint by Redstart in the Supreme Court of Nassau County, New York alleging events of default under the terms of 2 Convertible Notes of which Redstart was the Holder. In connection with settlement of the litigation, Redstart filed a motion to dismiss their complaint against the Company with prejudice, which settles all matters pertaining to the Redstart litigation and complaint. The Company no longer owes Redstart any further consideration. As per the Settlement Agreement, both parties mutually released one another from any and all claims. On March 16, 2021, we received a complaint filed by Anshu Sharma and Aditya Sharma against the Company and the Company's officers/directors in the County of Hennepin, Minnesota (District Court; Fourth Judicial District) in connection with our agreement regarding an investment by the Plaintiffs in our Preferred C Shares. On March 29, 2021, we filed “Defendant’s Joint Motion to Dismiss” to dismiss the complaint. The Company believes that there is no merit to the complaint and it intends to vigorously defend this matter. |
Note 17 - INCOME TAXES
Note 17 - INCOME TAXES | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Note 17 - INCOME TAXES | Note 17 - INCOME TAXES The deferred tax attributes consist of the following: May 31, 2021 May 31, 2020 Net operating loss carryforward $ 4,743,000 $ 4,356,000 Stock based compensation 1,327,000 1,319,000 Valuation allowance (6,070,000 ) (5,674,000 ) Deferred tax asset, net $ — $ — For the year ended May 31, 2020, the valuation allowance increased by approximately $395,000. On December 22, 2017, the enactment date, the Tax Cuts and Jobs Act (“Act”) was signed into law. The Act enduringly reduces the top corporate tax rate from 35 percent to a flat 21 percent beginning January 1, 2018 and eliminates the corporate Alternative Minimum Tax. The Company has adjusted its deferred tax calculations to reflect this reduction in its tax rate. The deferred tax asset differs from the amount computed by applying the statutory federal and state income tax rates to the loss before income taxes. The sources and tax effects of the differences are as follows: Effective Income Tax Rate Reconciliation 2021 2020 Federal Rate 21 % 21 % State Rate 6 % 6 % Valuation Allowance (27 )% (27 )% Effective income tax rate 0 % 0 % As of May 31, 2021, the Company has net operating loss carryforwards of approximately $16,000,000 to reduce future federal and state taxable income. The Company currently has no federal or state tax examinations in progress, nor has it had any federal or state examinations since its inception. All of the Company’s tax years are subject to federal and state tax examinations |
Note 18 - RELATED PARTY TRANSAC
Note 18 - RELATED PARTY TRANSACTIONS | 12 Months Ended |
May 31, 2021 | |
Related Party Transactions [Abstract] | |
Note 18 - RELATED PARTY TRANSACTIONS | Note 18 - RELATED PARTY TRANSACTIONS In October 2013, the Company signed a distribution agreement with Gran Nevada Beverage, Inc. (“Gran Nevada”), an entity related through common management and ownership. During the years ended May 31, 2021 and 2020, the Company sales included $0 and $0 respectively, of the Gran Nevada products. The Gran Nevada products were produced by a third party copacker and were not purchased directly from Gran Nevada. The availability of third party copackers that can produce these products limited As there is currently limited co-packing available for this product the Company does not know if they will be able to produce this product again in the future. |
Note 19 - SUBSEQUENT EVENTS
Note 19 - SUBSEQUENT EVENTS | 12 Months Ended |
May 31, 2021 | |
Subsequent Events [Abstract] | |
Note 19 - SUBSEQUENT EVENTS | Note 19 - SUBSEQUENT EVENTS During the period June 1, 2021, through August 31, 2021, , the Company issued 16,875,668 shares of its common stock, valued at approximately $2,300,000, at prices ranging from $0.10 per share to $0.156 per share. On June 9, 2021, The Company issued 13,000,000 common shares at $0.13 per share as part of the SA acquisition; July 20, 2021, the Company issued 2,138,775 common shares at $0.10 for debt conversion; on July 15, 2021, the Company issued 572,727 common shares at $0.11 per share as the JCG contingency shares; at various dates during the period June 1, 2021, through August 31, 2021, the Company issued 589,666 common shares at prices ranging from $0.11 to $0.16 per share as consideration shares for the sale of 254,500 shares of Series B Preferred stock, for which the Company received $254,500 in proceeds and issued 66,333 shares of Series B Preferred stock in exchange for a note payable; also, at various dates during the period June 1, 2021, through August 31, 2021, the Company issued 424,500 shares of common stock at prices ranging from $0.135 to $0.156 for consulting services. |
Note 1. NATURE OF OPERATIONS _2
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
May 31, 2021 | |
Accounting Policies [Abstract] | |
Nature of Operations and Basis of Presentation | Nature of Operations and Basis of Presentation Life On Earth, Inc. is a cloud enterprise software developer/ provider that enables rapid innovation to keep enterprise operations safe, compliant and manageable. The Company’s products offered are designed to help organizations innovate and modernize legacy systems while minimizing cost and risk of business disruptions and ensure regulatory compliance. Through its recent acquisition of SmartAxiom, Inc., the Company The accompanying consolidated financial statements include the financial statements of the Company and its wholly owned subsidiaries, Smart Axiom Inc. (“SA”), Victoria’s Kitchen, LLC (“VK”) and The Chill Group, LLC (“JC”). All intercompany transactions and balances have been eliminated in consolidation. On June 21, 2019, the Company made the determination to shut down and discontinue the operations of Energy Source Distributors, Inc. (“ESD”) and further focus on the brand portfolio. Effective November 4, 2019, ESD filed for Chapter 7 bankruptcy protection. On December 11, 2019, the Company received a final decree from the United States Bankruptcy Court ruling that a Chapter 7 bankruptcy estate for ESD had been fully administered. The results of operations of ESD for the years ended May 31, 2020 and 2019 are included herein as discontinued operations in the financial statements. The Company has recognized a gain on the disposal of ESD in the amount of $893,515 for the year ended May 31, 2020, as reported in the consolidated statements of operations. LFER was incorporated in Delaware in April 2013 and acquired SA in May 2021, VK in October 2017, and JC in August 2018. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). |
Revenue Recognition | Revenue Recognition In May 2014, the FASB issued guidance codified in ASC 606 which amends the guidance in former ASC 605, “Revenue Recognition.” The core principle of the standard is to recognize revenue when control of the promised goods or services is transferred to customers in an amount that reflects the consideration expected to be received for those goods or services. The standard also requires additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods and services transferred to the customer. The following five steps are applied to achieve that core principle: Step 1: Identify the contract with the customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognize revenue when the company satisfies a performance obligation Because the Company’s agreements generally have an expected duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information about its remaining performance obligations. The Company’s performance obligations are satisfied at the point in time when products are received by the customer, which is when the customer has title and the significant risks and rewards of ownership. Therefore, the Company’s contracts have a single performance obligation (shipment of product). The Company primarily receives fixed consideration for sales of product. Shipping and handling amounts are included in cost of goods sold. Sales tax and other similar taxes are excluded from net sales. Sales are recorded net of provisions for discounts, slotting fees payable by us to retailers to stock our products and promotion allowances, which are typically agreed to upfront with the customer and do not represent variable consideration. Discounts, slotting fees and promotional allowances vary from customer to customer. The consideration the Company is entitled to in exchange for the sale of products to distributors. The Company estimates these discounts, slotting fees and promotional allowances in the same period that the revenue is recognized for products sales to customers. The amount of revenue recognized represents the amount that will not be subject to a significant future reversal of revenue. All sales to distributors and customers are generally final. In limited instances the Company may accept returned product due to quality issues or distributor terminations, in which situations the Company would have variable consideration. To date, returns have not been material. The Company’s customers generally pay within 30 days from the receipt of a valid invoice. The Company offers prompt pay discounts of up to 2% to certain customers typically for payments made within 15 days. Prompt pay discounts are estimated in the period of sale based on experience with sales to eligible customers. Early pay discounts are recorded as a deduction to the accounts receivable balance presented on the consolidated balance sheets. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated balance sheets and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. |
Reclassification | Reclassifications Certain reclassifications have been made in prior year’s financial statements to conform to classifications used in the current year. |
Reverse stock split | Reverse Stock Split On November 11, 2019, the Company’s Board of Directors (the “Board”) and a majority of shareholders approved a reverse stock split at a ratio of one-for-five shares of common stock, without changing the par value, rights, terms, conditions, and limitations of such shares of common stock, (the “Reverse Stock Split”). The Reverse Stock Split became effective on March 25, 2020 (the “Effective Date”), pursuant to approval from the Financial Industry Regulatory Authority (“FINRA”), whereupon the shares of our common stock will begin trading on a split adjusted basis. All share and per share information has been retroactively adjusted to reflect the impact of this reverse stock split. |
Net Loss Per Common Share | Net Loss Per Common Share Basic loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted loss per share is calculated by dividing net loss by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents, if any, are not considered, as their effect would be anti-dilutive. As of May 31, 2021, and 2020, respectively, warrants and convertible notes payable could be converted into approximately 3,088,000 and 2,779,000 shares of common stock, respectively. |
Income Taxes | Income Taxes The Company utilizes the accrual method of accounting for income taxes. Under the accrual method, deferred tax assets and liabilities are determined based on the differences between the financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. An allowance against deferred tax assets is recognized when it is more likely than not that such tax benefits will not be realized. The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the consolidated financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. The Company recognizes interest and penalties, if any, related to uncertain tax positions in income tax expense. The Company did not have any unrecognized tax benefits as of May 31, 2021 and does not expect this to change significantly over the next 12 months. |
Accounting for Equity Awards | Accounting for Equity Awards The cost of services received in exchange for an award of equity instruments related to employees and non-employees is based on the grant-date fair value of the award and allocated over the requisite service period of the award. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers only those investments which are highly liquid, readily convertible to cash, and that mature within three months from date of purchase to be cash equivalents. At May 31, 2021 and 2020, respectively, the Company had cash and cash equivalents of $34,629 and $3,831 respectively. At May 31, 2021 and May 31, 2020, cash equivalents were comprised of funds in checking accounts, savings accounts and money market funds. |
Accounts Receivable | Accounts Receivable Our accounts receivable balance primarily includes balances from trade sales to distributors and retail customers. The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance for doubtful accounts based primarily on historical write-off experience. Account balances that are deemed uncollectible, are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company extends credit to its customers in the normal course of business and performs ongoing credit evaluations of its customers. A significant change in demand for certain products as compared to forecasted amounts may result in recording additional provisions for obsolete inventory. Provisions for obsolete or excess inventory are recorded as cost of goods sold. As of May 31, 2021, and May 31, 2020, the allowance for doubtful accounts was $41,900 and $33,356, respectively. |
Inventory | Inventory Inventory consists of finished goods and raw material which are stated at the lower of cost (first-in, first-out) and net realizable value and include adjustments for estimated obsolete or excess inventory. A significant change in demand for certain products as compared to forecasted amounts may result in recording additional provisions for obsolete inventory. During the years ended May 31, 2021 and 2020, the Company recorded and provision for obsolete and excess inventory of $0 and $96,000, respectively, which was recorded as cost of goods sold. On May 31, 2021 and 2020, there was $0 on hand. |
Intangible Assets | Intangible Assets The Company's intangible assets include developed technology, customer relationships and tradenames and were acquired in a purchase business combination. The Company carries these intangibles at cost, less accumulated amortization. Amortization is recorded on a straight-line basis over the estimated useful lives of the respective assets, which is estimated to be 5 years. Costs that are related to the conceptual formulation and design of licensed software programs are expensed as incurred to research, development and engineering expense; costs that are incurred to produce the finished product after technological feasibility has been established are capitalized as an intangible asset. Capitalized amounts are amortized on a straight-line basis over periods ranging up to five years. The company performs periodic reviews to ensure that unamortized program costs remain recoverable from future revenue. There were no indefinite-lived intangible assets as of May 31, 2021 or 2020. The Company reviews its finite-lived intangible and other long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The carrying amount of an asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. Fair value of finite-lived intangible assets and property and equipment is based on various valuation techniques. If the carrying amount of an asset or group of assets exceeds its net realizable value, the asset will be written down to its fair value. |
Goodwill | Goodwill Goodwill is deemed to have an indefinite life, and accordingly, is not amortized, but evaluated annually (or more frequently if events or changes in circumstances indicate the carrying value may not be recoverable) for impairment. The most significant assumptions, which are used in this test, are estimates of future cash flows. If these assumptions differ significantly from actual results, impairment charges may be required in the future. |
Advertising | Advertising Advertising and promotion costs are expensed as incurred. Advertising and promotion expense amounted to approximately $15,449 and $38,639 for the years ended May 31, 2021 and 2020, respectively. |
Shipping and Handling | Shipping and Handling Shipping and handling costs are included in costs of goods sold. |
Business combination | Business combination GAAP requires that all business combinations not involving entities or businesses under common control be accounted for under the acquisition method. The Company applies ASC 805, “Business combinations”, whereby the cost of an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred, and equity instruments issued. The costs directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of the acquisition date, irrespective of the extent of any non-controlling interests. The excess of (i) the total of cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previously held equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the consolidated statements of operations and comprehensive income. The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on various assumptions and valuation methodologies requiring considerable management judgment. The most significant variables in these valuations are discount rates, terminal values, the number of years on which to base the cash flow projections, as well as the assumptions and estimates used to determine the cash inflows and outflows. Management determines discount rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons. Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash flows over that period. The Company’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Any changes to provisional amounts identified during the measurement period are recognized in the reporting period in which the adjustment amounts are determined. |
Deferred Finance Cost | Deferred Finance Cost Deferred financing costs or debt issuance costs are costs associated with issuing debt, such as various fees and commissions paid to investment banks, law firms , |
Derivative Liability | Derivative Liability The Company accounts for certain instruments, which do not have fixed settlement provisions, as derivative instruments in accordance with FASB ASC 815-40, Derivative and Hedging – Contracts in Entity’s Own Equity. This is due to the conversion features of certain convertible notes payable being tied to the market value of our common stock. As such, our derivative liabilities are initially measured at fair value on the contract date and are subsequently re-measured to fair value at each reporting date. Changes in estimated fair value are recorded as non-cash adjustments within other income (expenses), in the Company’s accompanying Consolidated Statements of Operations. |
Fair Value Measurements | Fair Value Measurements In August 2018, the FASB issued a new guidance which modifies the disclosure requirements on fair value measurements. We categorize our financial instruments into a three-level fair value hierarchy that prioritize the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the lowest priority level input that is significant to the fair value measurement of the instrument. Financial assets recorded at fair value on our consolidated balance sheets are categorized as follows: Level 1 inputs—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2 inputs—Significant other observable inputs (e.g., quoted prices for similar items in active markets, quoted prices for identical or similar items in markets that are not active, inputs other than quoted prices that are observable such as interest rate and yield curves, and market-corroborated inputs). Level 3 inputs—Unobservable inputs for the asset or liability, which are supported by little or no market activity and are valued based on management’s estimates of assumptions that market participants would use in pricing the asset or liability. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On February 25, 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-2, "Leases" (Topic 842), which is intended to improve financial reporting for lease transactions. This ASU requires organizations that lease assets, such as real estate and manufacturing equipment, to recognize assets and liabilities on their balance sheets for the rights to use those assets for the lease term and obligations to make lease payments created by those leases that have terms of greater than 12 months. The recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a finance or operating lease. This ASU also requires disclosures to help investors and other financial statement users better understand the amount and timing of cash flows arising from leases. These disclosures include qualitative and quantitative requirements, providing additional information about the amounts recorded in the financial statements. This ASU became effective for public entities beginning the first quarter 2019. During 2019 the Company sold the Giant Beverage Company which resulted in elimination of the Company’s lease obligation related to that operation. The remaining lease obligation related to Energy Source Distributors which was terminated on July 31, 2019 reducing the remaining terms of the lease to 2 months. The Company has adopted ASU 2016-2 Leases which does not have material impact on Company’s financial statements. In June 2016, the FASB issued ASU 2016-13, Financial Instruments: Credit Losses (“ASU 2016-13”), which changes the impairment model for most financial instruments, including trade receivables from an incurred loss method to a new forward-looking approach, based on expected losses. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU become effective for fiscal years beginning after December 15, 2019. and must be adopted using a modified retrospective transition approach. The Company adopted ASU 2016-13 which did not have a material impact on Company’s financial statements. In January 2017, the FASB issued an update to the accounting guidance to simplify the testing for goodwill impairment. The update removes the requirement to determine the implied fair value of goodwill to measure the amount of impairment loss, if any, under the second step of the current goodwill impairment test. A company will perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. A goodwill impairment charge will be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of the goodwill. The guidance is effective prospectively for public business entities for annual reporting periods beginning after December 15, 2019. This standard is required to take effect in the Company’s first quarter (August 2020) of our fiscal year ending May 31, 2021. Adoption of this new guidance did not have a material impact on our financial statements. In November 2018, the FASB issued new guidance to clarify the interaction between the authoritative guidance for collaborative arrangements and revenue from contracts with customers. The new guidance clarifies that, when the collaborative arrangement participant is a customer in the context of a unit-of-account, revenue from contracts with customers guidance should be applied, adds unit-of-account guidance to collaborative arrangements guidance, and requires, that in a transaction with a collaborative arrangement participant who is not a customer, presenting the transaction together with revenue recognized under contracts with customers is precluded. The Company does not have any collaborative arrangements or revenue from contracts and therefore Topic 808 does not have an impact on our consolidated financial statements. Management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements. |
Note 4 - FAIR VALUE MEASUREME_2
Note 4 - FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
May 31, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Convertible Notes | May 31, 2021 Risk free interest rate 0.14% - 0.13 % Expected dividend yield 0 Expected term (in years) 1 Expected volatility 16.95% -38.84 % |
Fair Value hierarchy | May 31, 2020 Level 1 Level 2 Level 3 Total Contingent liability $ 415,227 $ — $ — $ 415,227 Derivative liability — — 110,588 110,588 Total $ 415,227 $ — $ 110,588 $ 525,815 May 31, 2020 Level 1 Level 2 Level 3 Total Contingent liability $ 57,273 $ — $ — $ 57,273 Derivative liability — — 146,715 146,715 Total $ 57,273 $ — $ 146,715 $ 203,988 |
Note 5 _ SA ACQUISITION (Tables
Note 5 – SA ACQUISITION (Tables) | 12 Months Ended |
May 31, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
SA Acquisition | Issuance of 13,000,000 shares of the Company’s common stock per share $ 2,730,000 Issuance of 210,000 Series 'D" Preferred convertible stock, each share is convertible into 10 common shares 203,613 A maximum of $2,200,000 of LFER common shares to be issued, subject to an earn-out, as defined, by SA over 18 month period from closing date of the acquisition. 2,221,777 Excess of SA liabilities over the $75,000 acquired by the Company (111,263 ) Total purchase consideration $ 5,044,127 The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed on May 11, 2021, the date of acquisition: Cash $ 39,878 Accounts receivable, net of an allowance for doubtful account of $7,554 5,802 Prepaid expenses and other current assets 3,375 Furniture and fixture, net 3,687 Intangible assets - Capitalized software development costs, patents, customer lists net of accumulated amortization of 98,630; 5,177,643 Accounts payable and accrued expenses (73,533 ) Line of credit (23,406 ) Notes payable (89,319 ) Total purchase consideration $ 5,044,127 Estimated future amortization of the intangible assets are as follows: 2022 $ 1,055,981 2023 1,055,981 2024 1,055,981 2025 1,055,981 2026 878,076 $ 5,102,000 |
Pro forma consolidated statements | LFER SA Proforma Combined Sales, net $ $ 38,300 $ 38,300 Cost of goods sold _ 5,714 5,714 Gross profit _ 32,586 32,586 Operating expenses 663,564 1,218,609 1,882,173 Net loss before other expenses (663,564 ) (1,186,022 ) (1,849,587 ) Other expenses, net (745,374 ) (3,963 ) (749,337 Net loss from continuing operations $ (1,408,938 ) $ (1,189,986 ) $ (2,598,924 ) The following table presents the unaudited pro forma consolidated statements of operations for the year ended May 31, 2020: LFER SA Proforma Combined Sales, net $ 64,407 $ 63,415 $ 127,822 Cost of goods sold 166,681 31,679 198,360 Gross profit (102,274 ) 31,736 (70,538 ) Operating expenses 2,618,373 1,193,797 3,812,170 Net loss before other expenses (2,720,647 ) (1,162,061 ) (3,882,708 )) Other expenses, net (417,937 ) (5,679 ) (423,616 )) Net loss from continuing operations $ (3,138,584 ) $ (1,167,740 ) $ (4,306,324 ) |
Note 6 - ESD DISCONTINUED OPE_2
Note 6 - ESD DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | For the year ended May 31, For the year ended May 31, 2021 2020 Sales, net $ 0 $ 5,911 Cost of goods sold 0 16,303 Gross profit 0 ) (10,392 ) Operating expenses 0 33,321 Loss from operations 0 ) (43,713 ) Other expenses: Interest and finance costs 0 ) (8,074 ) Loss on sale of fixed assets 0 ) (29,050 ) Net loss $ 0 ) $ (80,838 ) |
Discontinued operations net assets | Liabilities Accounts payable and accrued expenses $ 851,481 Lines of credit 42,034 Total Liabilities $ 893,515 |
Note 7 - JCG ACQUISITION (Table
Note 7 - JCG ACQUISITION (Tables) | 12 Months Ended |
May 31, 2021 | |
Business Combinations [Abstract] | |
Purchase Price of JCG | Issuance of 327,293 shares of common stock with an estimated fair value of $1.95 per share $ 638,182 Contingent consideration for additional shares (included in additional paid-in capital) 684,641 Warrants to purchase additional shares 37,177 Total purchase consideration $ 1,360,000 Cash $ 265 Accounts receivable 167,700 Inventory 72,035 Accounts payable (65,000 ) Intangibles - Trademarks and copyrights 1,185,000 Total consideration $ 1,360,000 |
Note 8 _ DISCONTINUED OPERATI_2
Note 8 – DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
DISCONTINUED OPERATIONS | 2021 2020 LFER $ 25,135 ESD — $ 80,838 VK — 241,214 JCG — 464,384 $ 25,135 $ 786,436 |
Note 9 -_INTANGIBLE ASSETS (Tab
Note 9 - INTANGIBLE ASSETS (Tables) | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | May 31, 2021 May 31, 2020 Intangible assets: Intangible assets to be amortized: Brand recognition, business relationships and customer lists $ — $ 1,185,000 Software development, patents, business relationships and customer lists acquired from SA 5,181,272 Less: accumulated amortization: Intangible assets to be amortized: Brand recognition, business relationships and customer lists — 161,000 Software development, patents, business relationships and customer lists acquired from SA 79,272 Less: Impairment — 1,024,000 Net book value at the end of period $ 5,102,000 $ — |
Note 10 - GOODWILL (Tables)
Note 10 - GOODWILL (Tables) | 12 Months Ended |
May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | May 31, 2021 May 31, 2020 Balance – beginning $ — $ 195,000 Less-impairment $ — $ 195,000 Balance – end $ — $ — |
Note_11 - NOTES PAYABLE-RELAT_2
Note 11 - NOTES PAYABLE-RELATED PARTY (Tables) | 12 Months Ended |
May 31, 2021 | |
Note11 - Notes Payable-related Party | |
Note 11 - NOTES PAYABLE-RELATED PARTY | The following table summarizes the Company’s Note Payable – Related Parties as of May 31, 2021: Issue Date Maturity Date Interest Rate Original Amount Accumulated Payments as of May 31, 2021 Accumulated Accrued interest as of May 31, 2021 Balance May 31, 2021 1/23/2019 3/1/2020 20 % $ 10,000 $ — $ 4,707 $ 14,707 1/28/2020 1/28/2021 20 % $ 8,200 $ — $ 2,197 $ 10,397 2/20/2020 2/19/2021 5 % $ 45,169 $ 14,300 $ 2,518 $ 33,387 $ 58,491 The following table summarizes the Company’s Note Payable – Related Parties as of May 31, 2020: Issue Date Maturity Date Interest Rate Original Amount Accumulated Payments as of May 31, 2020 Accumulated Accrued interest as of May 31, 2020 Balance May 31, 2020 1/23/2019 3/1/2020 20.0 % $ 10,000 $ — $ 2,707 $ 12,707 1/28/2020 1/28/2021 20.0 % $ 8,200 $ — $ 557 $ 8,757 2/20/2020 2/19/2021 5.0 % $ 45,169 $ 5,300 $ 527 $ 40,396 Total $ 61,860 |
Note_12 - NOTES PAYABLE (Tables
Note 12 - NOTES PAYABLE (Tables) | 12 Months Ended |
May 31, 2021 | |
Debt Disclosure [Abstract] | |
Notes Payable | Date of note Amount Maturity date Annual interest Rate Interest exp 5/11-5/31/21 PayPal Loan 04/22/21 $ 50,000 04/22/22 6.9 % $ 253 SBA PPP Loan 5/2/2021 12,937 05/02/26 1.0 % $ — SBA PPP Loan 4/16/2020 3,500 None Waived Waived SBA EIDL Loan 10/6/2020 11,500 10/06/50 3.75 % $ — Short Term Loan 10,094 Demand 0.0 % $ — Total $ 88,031 $ 253 |
Note_13 - CONVERTIBLE NOTES P_2
Note 13 - CONVERTIBLE NOTES PAYABLE (Tables) | 12 Months Ended |
May 31, 2021 | |
Notes to Financial Statements | |
Convertible Debt | 31-May-21 May 31, 2020 Unamortized deferred finance costs and original issue discount Principal Net Unamortized deferred finance costs and original issue discount Principal Net 2017 NPA Notes — 737,500 737,500 — 737,500 737,500 The 2nd Note Offering — 280,000 280,000 — 355,000 355,000 2021 Note Issuances 29,633 77,000 47,367 2020 Note Issuances — 385,500 385,500 83,277 504,300 421,023 2019 Note Issuances — 482,597 482,597 16,406 667,381 650,975 $ 29,633 $ 1,962,597 $ 1,932,964 $ 99,683 $ 2,264,181 $ 2,164,498 |
Note 15 - CAPITAL STOCK (Tables
Note 15 - CAPITAL STOCK (Tables) | 12 Months Ended |
May 31, 2021 | |
Equity [Abstract] | |
Common Stock | Authorized Shares of Common Stock Number of Issued and Outstanding Shares of Common Stock Number of Shares of Common Stock Available in Treasury for Issuance As of March 25, 2020, Pre-Increase in Authorized and Reverse Stock Split 100,000,000 shares of Common Stock 46,937,678 shares of Common Stock 53,062,322 shares of Common Stock As of March 25, 2020, Post- Increase in Authorized and Reverse Stock Split 200,000,000 shares of Common Stock 9,387,536 shares of Common Stock 190,612,464 shares of Common Stock |
Preferred Stock | Series A Preferred Stock Series A Preferred Shares Outstanding: May 31, 2020 Shares Outstanding Fernando Oswaldo Leonzo 600,000 Robert Gunther 300,000 Jerry Gruenbaum 100,000 John Romagosa 200,000 Total 1,200,000 Series B Preferred Stock The number of Preferred Series B shares outstanding as of May 31, 2021, were: Holder Number of Shares J.Craig Holding Corp. 50,000 Massoud Toghraie 25,000 John Romagosa 25,000 Total 100,000 Series C Preferred Stock The number of Preferred Series C shares outstanding as of May 31, 2021 were: Holder Number of Shares Dr. Anshu Sharma, M.D. 150,000 Mahmood Khan 50,000 Rafael Collado 50,000 Axon Capital Management, Inc. 20,000 W. S. Gamble 20,000 Total 290,000 Series D Preferred Stock The number of Preferred Series D shares outstanding as of May 31, 2021 were: Holder Number of Shares Amit Biyana 128,822 Twenty-two (22) minority shareholders of Smart Axiom, as a group 81,178 Total 210,000 |
Warrants | Warrants outstanding 2021 2020 Weighted Weighted Average Average Warrants Exercise price Warrants Exercise price Outstanding 349,000 $ 4.25 349,000 $ 4.25 Granted - JC acquisition — — Exercised — — Expired 200,000 $ 4.25 — Outstanding 149,000 $ 4.25 349,000 $ 4.25 Exercisable at year end 149,000 $ 4.25 349,000 $ 4.25 Warrants Strike Underlying Shares Expiration Price 80,000 September 30, 2021 $ 4.25 33,000 October 7, 2021 $ 4.25 6,000 September 20, 2021 $ 4.25 30,000 September 29, 2021 $ 4.25 149,000 |
Note 17 - INCOME TAXES (Tables)
Note 17 - INCOME TAXES (Tables) | 12 Months Ended |
May 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Deferred Tax | May 31, 2021 May 31, 2020 Net operating loss carryforward $ 4,743,000 $ 4,356,000 Stock based compensation 1,327,000 1,319,000 Valuation allowance (6,070,000 ) (5,674,000 ) Deferred tax asset, net $ — $ — |
Effective Income Tax | Effective Income Tax Rate Reconciliation 2021 2020 Federal Rate 21 % 21 % State Rate 6 % 6 % Valuation Allowance (27 )% (27 )% Effective income tax rate 0 % 0 % |
Note 1. NATURE OF OPERATIONS _3
Note 1. NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Accounting Policies [Abstract] | |||
Gain on disposal of subsidiary | $ 893,515 | ||
Common stock equivalents, outstanding | 3,088,000 | 2,779,000 | |
Cash and cash equivalents | $ 34,629 | $ 3,831 | $ 156,156 |
Allowance for doubful accounts | 41,900 | 33,356 | |
Inventory | 0 | 0 | |
Provision for obsolete and excess inventory | 96,000 | ||
Advertising and promotion expense | $ 15,449 | $ 38,639 |
Note 2 - BASIS OF REPORTING A_2
Note 2 - BASIS OF REPORTING AND GOING CONCERN (Details Narrative) | 80 Months Ended |
May 31, 2021USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Net loss from inception | $ 18,600,000 |
Working capital deficiency | 9,800,000 |
Net capital deficit | $ 4,700,000 |
Note 3 - CONCENTRATIONS (Detail
Note 3 - CONCENTRATIONS (Details Narrative) | May 31, 2021USD ($) |
FDIC Insured amount | $ 250,000 |
Note 4 - FAIR VALUE MEASUREME_3
Note 4 - FAIR VALUE MEASUREMENTS - Fair Value of Convertible Notes (Details 1) | 12 Months Ended |
May 31, 2021 | |
Risk interest rate [Member] | Minimum [Member] | |
Risk free interest rate | 0.14% |
Risk interest rate [Member] | Maximum [Member] | |
Risk free interest rate | 0.13% |
Expected dividend yield [Member] | |
Expected dividend yield | 0.00% |
Expected term [Member] | |
Expected term (in years) | 1 year |
Expected volatility [Member] | Minimum [Member] | |
Expected volatility | 16.95% |
Expected volatility [Member] | Maximum [Member] | |
Expected volatility | 38.84% |
Note 4 - FAIR VALUE MEASUREME_4
Note 4 - FAIR VALUE MEASUREMENTS - Fair Value hierarchy (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Contingent liability | $ 415,227 | $ 57,273 |
Derivatve liability | 110,588 | 146,715 |
Total | 357,018 | 203,988 |
Level 1 [Member] | ||
Contingent liability | 415,227 | 57,273 |
Total | 415,227 | 57,273 |
Level 2 [Member] | ||
Contingent liability | ||
Total | ||
Level 3 [Member] | ||
Contingent liability | ||
Derivatve liability | 110,588 | 146,715 |
Total | $ 110,588 | $ 146,715 |
Note 5 _ SA ACQUISITION - SA Ac
Note 5 – SA ACQUISITION - SA Acquisition (Details) - USD ($) | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | ||
Excess of SA liabilities over the $75,000 acquired by the Company | $ 357,954 | $ (325,309) | |
SA Acquisiton [Member] | |||
Issuance of common shares for acquisition,amount | $ 2,730,000 | ||
Issuance of common shares for acquisition,shares | 13,000,000 | ||
Issuance Series 'D" Preferred convertible stock, amount | $ 203,613 | ||
Issuance Series 'D" Preferred convertible stock, shares | 210,000 | ||
Issuance Series 'D" Preferred convertible stock into convertible common shares | 10 | ||
A maximum of $2,200,000 of LFER common shares to be issued, subject to an earn-out, as defined, by SA over 18 month period from closing date of the acquisition. | [1] | $ 2,221,777 | |
Excess of SA liabilities over the $75,000 acquired by the Company | [2] | $ (111,263) | |
Business Acquisition Share Price | $ 0.20 | ||
Cash | $ 39,878 | ||
Accounts receivable | 5,802 | ||
Prepaid expenses and other current assets | 3,375 | ||
Furniture and fixture, net | 3,687 | ||
Intangible assets - Capitalized software development costs, patents, customer lists net of accumulated amortization of 98,630; | 5,177,643 | ||
Accounts payable | (73,533) | ||
Line of credit | (23,406) | ||
Notes payable | (89,319) | ||
Net assets acquired | $ 5,044,127 | ||
[1] | maximum of $2,200,000 , over 18 month period | ||
[2] | over the $75,000 |
Note 5 _ SA ACQUISITION - SA _2
Note 5 – SA ACQUISITION - SA Acquisition (Details) (Parenthetical) - SA Acquisiton [Member] | 12 Months Ended |
May 31, 2021USD ($) | |
Ownership | 100.00% |
Intangible amortization Expense | $ 39,708 |
Net Sales | 0 |
Operating Expenses | 89,000 |
Amortization | 79,272 |
Net loss | 89,000 |
Future Amortization of intangible assets | |
2022 | 1,055,981 |
2023 | 1,055,981 |
2024 | 1,055,981 |
2025 | 1,055,981 |
2026 | 878,076 |
Total | $ 5,102,000 |
Note 5 _ SA ACQUISITION - Pro f
Note 5 – SA ACQUISITION - Pro forma consolidated statements (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Cost of goods sold | $ 55,701 | |
Gross profit | (55,701) | |
LFER [Member] | ||
Sales, net | 64,407 | |
Cost of goods sold | 166,681 | |
Gross profit | (102,274) | |
Operating expenses | 663,564 | 2,618,373 |
Net loss before other expenses | (663,564) | (2,720,647) |
Other expenses, net | (745,374) | (417,937) |
Net loss from continuing operations | (1,408,938) | (3,138,584) |
SA [Member] | ||
Sales, net | 38,300 | 63,415 |
Cost of goods sold | 5,714 | 31,679 |
Gross profit | 32,586 | 31,736 |
Operating expenses | 1,218,609 | 1,193,797 |
Net loss before other expenses | (1,186,022) | (1,162,061) |
Other expenses, net | (3,963) | (5,679) |
Net loss from continuing operations | (1,189,986) | (1,167,740) |
Proforma Combined[Member] | ||
Sales, net | 38,300 | 127,822 |
Cost of goods sold | 5,714 | 198,360 |
Gross profit | 32,586 | (70,538) |
Operating expenses | 1,882,173 | 3,812,170 |
Net loss before other expenses | (1,849,587) | (3,882,708) |
Other expenses, net | (749,337) | (423,616) |
Net loss from continuing operations | $ (2,598,924) | $ (4,306,324) |
Note 6 - ESD DISCONTINUED OPE_3
Note 6 - ESD DISCONTINUED OPERATIONS - Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Sales, net | ||
Cost of goods sold | 55,701 | |
Gross profit | (55,701) | |
Loss from operations | (663,564) | (2,015,109) |
Interest and finance costs | (423,546) | (744,461) |
Loss from discontinued operations - ESD | (25,135) | $ (786,435) |
ESD [Member] | ||
Sales, net | 5,911 | |
Cost of goods sold | 16,303 | |
Gross profit | (10,392) | |
Operating expenses | 33,321 | |
Loss from operations | (43,713) | |
Interest and finance costs | (8,075) | |
Loss on sale of fixed assets | (29,050) | |
Loss from discontinued operations - ESD | $ (80,838) |
Note 6 - ESD DISCONTINUED OPE_4
Note 6 - ESD DISCONTINUED OPERATIONS - Discontinued operations net assets (Details) | 12 Months Ended |
May 31, 2020USD ($) | |
Gain on disposal of subsidiary | $ 893,515 |
ESD [Member] | |
Gain on disposal of subsidiary | 894,000 |
Accounts payable and accrued expenses | 851,481 |
Lines of credit | 42,034 |
Total current liabilities | $ 893,515 |
Note 7 - JCG ACQUISITION - Purc
Note 7 - JCG ACQUISITION - Purchase Price of JCG (Details) - USD ($) | 2 Months Ended | 12 Months Ended | |
Aug. 02, 2018 | May 31, 2021 | May 31, 2020 | |
Change in fair value of contingent consideration | $ (357,955) | $ 325,309 | |
JCG [Member] | |||
Issuance of common shares for acquisition,amount | $ 638,182 | ||
Issuance of common shares for acquisition,shares | 327,293 | ||
Business Acquisition Share Price | $ 1.95 | ||
Contingent consideration for additional shares related to the acquisition of JCG, amount | $ 684,641 | ||
Warrant to purchase additional shares | 37,177 | ||
Cash | 265 | ||
Accounts receivable | 167,700 | ||
Inventory and work in process | 72,035 | ||
Accounts payable | (65,000) | ||
Intangibles-Trademarks and copyrights | 1,185,000 | ||
Net assets acquired | $ 1,360,000 |
Note 7 - JCG ACQUISITION - Pu_2
Note 7 - JCG ACQUISITION - Purchase Price of JCG (Details) (Parenthetical) | 12 Months Ended |
May 31, 2020 | |
JCG [Member] | |
Terms | The JCG Agreement also provides for the issuance of a warrant for 200,000 shares of common stock with a two-year term and an exercise price of $4.25 with a value of approximately $9,400. The JCG Agreement also provides for an additional 218,182 shares of restricted common stock to be issued when the gross revenues of the JCG brands reach $900,000 in a twelve-month period. The JCG Agreement further provides for additional shares of restricted common stock, with a market value of $500,000 on the date of issuance, to be issued when the gross revenues of the JCG brands reach $3,000,000 in a twelve-month period, and again when the gross revenues of the JCG brands reach $5,000,000 in a twelve-month period. The JCG Agreement also provides for the issuance of the restricted common stock and warrants to the shareholders of JCG on a pro rata basis according to their respective percentage of ownership as of August 2, 2018. The restricted common stock may not be transferred, sold, gifted, assigned, pledged, or otherwise disposed of, directly or indirectly, for a period of twelve months (the “Lock-Up Period”). After the Lock-Up Period, the maximum shares that may be sold by each restricted common stockholder during any given one-day period shall be 5% of their total holdings or no more than 20% of the average trading volume of the preceding 30 days, whichever is less. The Company has determined the value of the contingent shares and warrants, in excess of the initial 327,293 shares, to be approximately $722,000, for a total purchase price value of approximately $1,360,000. The warrants expired on August 2, 2020. |
Note 7 - JCG ACQUISITION (Detai
Note 7 - JCG ACQUISITION (Details Narrative) - USD ($) | 12 Months Ended | ||
May 31, 2021 | May 31, 2020 | May 31, 2019 | |
Change in fair value of contingent liability | $ 357,954 | $ (325,309) | |
JCG [Member] | |||
Amortization Expense | 92,000 | ||
Impairment charge | $ 299,000 | $ 725,000 | |
Intangible assets | $ 0 |
Note 8 _ DISCONTINUED OPERATI_3
Note 8 – DISCONTINUED OPERATIONS - DISCONTINUED OPERATIONS (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Discontinued operations | $ 25,135 | $ 786,436 |
LFER [Member] | ||
Discontinued operations | $ 25,135 | |
ESD [Member] | ||
Discontinued operations | 80,838 | |
VK [Member] | ||
Discontinued operations | 241,214 | |
JCG [Member] | ||
Discontinued operations | $ 464,384 |
Note 9 - INTANGIBLE ASSETS- Int
Note 9 - INTANGIBLE ASSETS- Intangible Assets (Details) - USD ($) | 12 Months Ended | |
May 31, 2020 | May 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Brand recognition, business relationships and customer lists | $ 1,185,000 | |
Software development, patents, business relationships and customer lists acquired from SA | $ 5,181,272 | |
Accumulated Amortization | 161,000 | 79,272 |
Less: Impairment | 1,024,000 | |
Intellectual Property | $ 5,102,000 |
Note 9 -INTANGIBLE ASSETS (Deta
Note 9 -INTANGIBLE ASSETS (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Impairment | $ 1,024,000 | |
Intangible Assets [Member] | ||
Impairment | 299,000 | |
Amortization Expense | $ 79,272 | $ 92,000 |
Note 10 - GOODWILL - Goodwill (
Note 10 - GOODWILL - Goodwill (Details) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Balance - beginning | $ 195,000 | |
Less-impairment | ||
Balance - end | $ 195,000 |
Note_11 - NOTES PAYABLE-RELAT_3
Note 11 - NOTES PAYABLE-RELATED PARTY (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Note payable - original amount | $ 88,031 | |
Accrued interest | 253 | |
Note Payable - related party | $ 58,491 | $ 61,860 |
Notes Payable [Member] | ||
Issue date | Jan. 23, 2019 | |
Maturity date | Mar. 1, 2020 | |
Interest rate | 20.00% | |
Note payable - original amount | $ 10,000 | |
Accrued interest | 4,707 | 2,707 |
Note Payable - related party | $ 14,707 | 12,707 |
Note Payable 2 [Member} | ||
Issue date | Jan. 28, 2020 | |
Maturity date | Jan. 28, 2021 | |
Interest rate | 20.00% | |
Note payable - original amount | $ 8,200 | |
Accrued interest | 2,197 | 557 |
Note Payable - related party | $ 10,397 | 8,757 |
Note Payable 3 [Member} | ||
Issue date | Feb. 20, 2020 | |
Maturity date | Feb. 19, 2021 | |
Interest rate | 5.00% | |
Note payable - original amount | $ 45,169 | |
Payment to related party | 8,300 | 5,300 |
Accrued interest | 2,518 | 527 |
Note Payable - related party | $ 33,387 | $ 40,396 |
Note_11 - NOTES PAYABLE-RELAT_4
Note 11 - NOTES PAYABLE-RELATED PARTY (Details Narrative) (Parenthetical) - USD ($) | 9 Months Ended | 12 Months Ended | |
Feb. 21, 2020 | May 31, 2021 | May 31, 2020 | |
Notes Payable [Member] | |||
Interest expense | $ 2,000 | $ 2,000 | |
Note Payable 2 [Member} | |||
Interest expense | 1,640 | 557 | |
Note Payable 3 [Member} | |||
Interest expense | $ 1,991 | $ 527 | |
Periodic payment | $ 3,000 |
Note_12 - NOTES PAYABLE (Detail
Note 12 - NOTES PAYABLE (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Note payable - original amount | $ 88,031 | |
Accrued interest | 253 | |
Note payable | 118,031 | |
Future principal payments | $ 60,094 | |
Paypal Loan [Member] | ||
Issue date | Apr. 22, 2021 | |
Maturity date | Apr. 22, 2022 | |
Interest rate | 6.90% | |
Note payable - original amount | $ 50,000 | |
Accrued interest | $ 253 | |
SBA PPP Loan1 [Member] | ||
Issue date | May 2, 2021 | |
Maturity date | May 2, 2026 | |
Interest rate | 1.00% | |
Note payable - original amount | $ 12,937 | |
SBA PPP Loan 2 [Member] | ||
Issue date | Apr. 16, 2020 | |
Note payable - original amount | $ 3,500 | |
SBA EIDL Loan[Member] | ||
Issue date | Oct. 6, 2020 | |
Maturity date | Oct. 6, 2050 | |
Interest rate | 3.75% | |
Note payable - original amount | $ 11,500 | |
Short Term LoanMember] | ||
Interest rate | 0.00% | |
Note payable - original amount | $ 10,094 |
Note_13 - CONVERTIBLE NOTES P_3
Note 13 - CONVERTIBLE NOTES PAYABLE - Convertible Debt (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Convertible notes payable | $ 1,932,964 | $ 2,164,498 |
Convertible Note [Member] | ||
Unamortized deferred financing costs | 29,633 | 99,683 |
Principal | 1,962,597 | 2,264,181 |
Convertible notes payable | 1,932,964 | 2,164,498 |
2017 NPA Notes [Member] | ||
Unamortized deferred financing costs | ||
Principal | 737,500 | 737,500 |
Convertible notes payable | 737,500 | 737,500 |
The 2nd Note Offering [Member] | ||
Unamortized deferred financing costs | ||
Principal | 280,000 | 355,000 |
Convertible notes payable | 280,000 | 355,000 |
2021 Note Issuances [Member] | ||
Unamortized deferred financing costs | 29,633 | |
Principal | 77,000 | |
Convertible notes payable | 47,367 | |
2020 Note Issuances [Member] | ||
Unamortized deferred financing costs | 83,277 | |
Principal | 385,500 | 504,300 |
Convertible notes payable | 385,500 | 421,023 |
The 2019 Notes [Member] | ||
Unamortized deferred financing costs | 16,406 | |
Principal | 482,597 | 667,381 |
Convertible notes payable | $ 482,597 | $ 650,975 |
Note_13 - CONVERTIBLE NOTES P_4
Note 13 - CONVERTIBLE NOTES PAYABLE - Convertible Debt (DetailsNarrative) - USD ($) | Nov. 03, 2017 | Jun. 15, 2020 | Jul. 31, 2018 | Jan. 26, 2018 | Feb. 28, 2021 | Oct. 29, 2018 | Feb. 27, 2019 | Mar. 23, 2021 | Mar. 21, 2019 | May 31, 2021 | May 20, 2021 | May 31, 2020 | May 31, 2019 | May 16, 2019 | Jul. 19, 2021 | May 31, 2018 | Sep. 25, 2017 |
Proceed from convertible debt | $ 447,240 | ||||||||||||||||
Payment on loans | 1,962,597 | ||||||||||||||||
Stock repurchased and cancelled | 1,050,280 | ||||||||||||||||
Derivatve liability | 110,588 | $ 146,715 | |||||||||||||||
Change in fair value of derivative liability | 36,127 | $ 1,274 | |||||||||||||||
Convertible Note Payable [Member] | |||||||||||||||||
Default notes payable | 100,000 | ||||||||||||||||
Convertible debt, original amount | $ 1,885,597 | ||||||||||||||||
Description | 15 notes | ||||||||||||||||
2017 NPA Notes [Member] | |||||||||||||||||
Convertible debt, original amount | $ 175,000 | $ 125,000 | $ 650,000 | ||||||||||||||
Interest rate | 7.00% | 7.00% | |||||||||||||||
Issuance of common stock for debt, shares | 60,000 | 178,205 | |||||||||||||||
Issuance of common stock for debt, amount | $ 87,500 | $ 125,000 | |||||||||||||||
Share Price | $ .0875 | $ 0.875 | $ 0.75 | $ 1.50 | $ 1 | ||||||||||||
Warrant price per share | $ 2.10 | ||||||||||||||||
Shares per registration rights | 160,000 | 300,000 | |||||||||||||||
Shares authorized | 39,333 | ||||||||||||||||
Payment on loans | $ 737,500 | ||||||||||||||||
Interest Expense | 4,302 | $ 51,625 | |||||||||||||||
Convertible debt | 0 | ||||||||||||||||
Accrued and unpaid interest | $ 19,250 | $ 8,654 | 159,260 | $ 107,635 | |||||||||||||
Consulting fee | $ 65,000 | ||||||||||||||||
Issuance of common stock for consulting fees, shares | 86,667 | ||||||||||||||||
Deferred Finance cost | 151,250 | ||||||||||||||||
Unamortized deferred financing costs | $ 557,462 | 538,335 | 0 | ||||||||||||||
The 2nd Note Offering [Member] | |||||||||||||||||
Convertible debt, original amount | $ 830,000 | $ 500,000 | |||||||||||||||
Description | 2 investors | ||||||||||||||||
Interest rate | 7.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 3,125,000 | ||||||||||||||||
Issuance of common stock for debt, amount | $ 75,000 | ||||||||||||||||
Conversion price per share | $ 0.75 | $ 0.024 | |||||||||||||||
Interest Expense | $ 23,650 | 26,150 | |||||||||||||||
Convertible debt | 355,000 | 280,000 | |||||||||||||||
Accrued and unpaid interest | $ 62,668 | $ 46,469 | $ 7,451 | ||||||||||||||
Gankaku [Member] | |||||||||||||||||
Interest rate | 7.00% | ||||||||||||||||
Issuance of common stock for debt, amount | $ 150,000 | ||||||||||||||||
Interest Expense | 7,000 | ||||||||||||||||
Accrued and unpaid interest | 21,976 | ||||||||||||||||
Legal Judgment | 100,000 | ||||||||||||||||
2021 Note Issuances [Member] | |||||||||||||||||
Convertible debt, original amount | $ 77,000 | ||||||||||||||||
Interest rate | 8.00% | ||||||||||||||||
Share Price | $ 0.84 | ||||||||||||||||
Convertible debt | $ 77,000 | ||||||||||||||||
Deferred Finance cost | 38,100 | ||||||||||||||||
Finance cost | 70,000 | ||||||||||||||||
Unamortized deferred financing costs | 29,633 | ||||||||||||||||
Amortization of interest expense | 8,467 | ||||||||||||||||
2020 Note Issuances [Member] | |||||||||||||||||
Convertible debt, original amount | $ 110,000 | ||||||||||||||||
Interest rate | 20.00% | 10.00% | |||||||||||||||
Original issue discount, percentage | 10.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 33,000 | ||||||||||||||||
Conversion price per share | $ 0.75 | ||||||||||||||||
Share Price | $ 0.54 | ||||||||||||||||
Interest Expense | $ 23,899 | $ 7,956 | |||||||||||||||
Convertible debt | 110,000 | 110,000 | |||||||||||||||
Deferred Finance cost | 28,820 | ||||||||||||||||
Amortization of interest expense | 10,808 | 18,012 | |||||||||||||||
2020 Note Issuances 1[Member] | |||||||||||||||||
Convertible debt, original amount | $ 275,500 | 281,000 | |||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 666,590 | 700,000 | 564,072 | 2,138,775 | |||||||||||||
Issuance of common stock for debt, amount | $ 5,500 | $ 70,000 | $ 6,500 | $ 213,878 | |||||||||||||
Conversion price per share | $ 0.0103 | $ 0.109 | $ 0.123 | ||||||||||||||
Shares per registration rights | 66,333 | ||||||||||||||||
Payment on loans | $ 45,331 | ||||||||||||||||
Interest Expense | $ 26,713 | 19,765 | |||||||||||||||
Convertible debt | 275,500 | 281,000 | $ 111,665 | ||||||||||||||
Accrued and unpaid interest | 438 | ||||||||||||||||
Consulting fee | 37,500 | ||||||||||||||||
Finance cost | $ 90,400 | ||||||||||||||||
Unamortized deferred financing costs | 159,674 | ||||||||||||||||
Amortization of interest expense | 59,879 | ||||||||||||||||
Derivatve liability | 122,174 | ||||||||||||||||
Change in fair value of derivative liability | 1,070 | $ 10,516 | |||||||||||||||
Fees | 37,500 | ||||||||||||||||
2020 Note Issuances 2[Member] | |||||||||||||||||
Convertible debt, original amount | $ 68,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 5,407,042 | 2,438,112 | |||||||||||||||
Issuance of common stock for debt, amount | $ 57,400 | $ 26,700 | |||||||||||||||
Conversion price per share | $ .0101 | $ .0069 | |||||||||||||||
Interest Expense | $ 6,086 | $ 4,355 | |||||||||||||||
Convertible debt | 17,900 | 41,300 | |||||||||||||||
Consulting fee | 7,760 | ||||||||||||||||
Deferred Finance cost | 34,000 | ||||||||||||||||
Unamortized deferred financing costs | 33,575 | ||||||||||||||||
Amortization of interest expense | 12,590 | 20,985 | |||||||||||||||
Derivatve liability | 25,815 | ||||||||||||||||
Change in fair value of derivative liability | 27,420 | 1,605 | |||||||||||||||
2020 Note Issuances 3[Member] | |||||||||||||||||
Convertible debt, original amount | $ 38,000 | ||||||||||||||||
Interest rate | 10.00% | ||||||||||||||||
Interest Expense | $ 3,071 | 895 | |||||||||||||||
Convertible debt | 0 | 38,000 | |||||||||||||||
Derivatve liability | 7,637 | ||||||||||||||||
Change in fair value of derivative liability | 4,315 | (7,573) | |||||||||||||||
2019 Note Issuances[Member] | |||||||||||||||||
Convertible debt, original amount | $ 131,250 | ||||||||||||||||
Original issue discount, percentage | 5.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 20,000 | 2,600,000 | |||||||||||||||
Issuance of common stock for debt, amount | $ 260,000 | ||||||||||||||||
Share Price | $ 1.60 | ||||||||||||||||
Payment on loans | $ 10,938 | 24,000 | |||||||||||||||
Convertible debt | $ 122,980 | ||||||||||||||||
Unamortized deferred financing costs | $ 102,250 | ||||||||||||||||
Amortization of interest expense | 16,406 | $ 58,516 | |||||||||||||||
2019 Note Issuances SN[Member] | |||||||||||||||||
Convertible debt, original amount | $ 312,500 | ||||||||||||||||
Original issue discount, percentage | 20.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 50,000 | ||||||||||||||||
Share Price | $ 2.0495 | ||||||||||||||||
Payment on loans | $ 26,042 | ||||||||||||||||
Interest Expense | $ 11,472 | 65,614 | |||||||||||||||
Deferred Finance cost | 62,500 | ||||||||||||||||
Finance cost | 91,250 | 111,422 | |||||||||||||||
Unamortized deferred financing costs | $ 62,500 | ||||||||||||||||
2019 Note Issuances 2-SN[Member] | |||||||||||||||||
Convertible debt, original amount | $ 312,500 | ||||||||||||||||
Original issue discount, percentage | 20.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 50,000 | ||||||||||||||||
Share Price | $ 1.825 | ||||||||||||||||
Payment on loans | 28,000 | $ 52,083 | 41,059 | ||||||||||||||
Interest Expense | 37,164 | ||||||||||||||||
Convertible debt | 228,368 | ||||||||||||||||
Finance cost | $ 19,121 | 91,250 | $ 55,000 | ||||||||||||||
Unamortized deferred financing costs | $ 62,500 | ||||||||||||||||
2019 Note Issuances 2-SPN[Member] | |||||||||||||||||
Convertible debt, original amount | $ 75,000 | ||||||||||||||||
Interest rate | 7.00% | ||||||||||||||||
Issuance of common stock for debt, shares | 50,915 | 34,086 | 7,500 | ||||||||||||||
Issuance of common stock for debt, amount | $ 1,000,000 | $ 428,479 | |||||||||||||||
Conversion price per share | $ .05092 | $ .0795 | |||||||||||||||
Share Price | $ 2 | ||||||||||||||||
Interest Expense | $ 4,521 | $ 5,480 | |||||||||||||||
Deferred Finance cost | $ 60,679 |
Note 14 - LINES OF CREDIT (Deta
Note 14 - LINES OF CREDIT (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Credit Line facility capacity | $ 35,000 | |
Interest rate | 94.00% | |
Lines of credit | $ 37,849 | $ 26,124 |
SA [Member] | ||
Lines of credit | $ 22,515 |
Note 15 - CAPITAL STOCK - Commo
Note 15 - CAPITAL STOCK - Common Stock (Details) - shares | May 31, 2021 | May 31, 2020 | Mar. 25, 2020 | Mar. 24, 2019 |
Equity [Abstract] | ||||
Common stock, authorized | 200,000,000 | 200,000,000 | 200,000,000 | 100,000,000 |
Common stock, issued and outsanding | 29,548,676 | 13,081,380 | 9,387,536 | 46,937,678 |
Common stock available for Treasury stock | 190,612,464 | 53,062,322 |
Note 15 - CAPITAL STOCK - Prefe
Note 15 - CAPITAL STOCK - Preferred Stock (Details) - shares | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Perferred stock voting rights | 50-1 preferred voting rights | |
Series A Preferred Stock [Member] | ||
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, outstanding shares | 1,200,000 | 1,200,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, outstanding shares | 100,000 | |
Fernando Oswaldo Leonzo [Member] | ||
Preferred stock, outstanding shares | 600,000 | |
Robert Gunther [Member] | ||
Preferred stock, outstanding shares | 300,000 | |
Jerry Gruenbaum [Member] | ||
Preferred stock, outstanding shares | 100,000 | |
John Romagosa [Member] | ||
Preferred stock, outstanding shares | 200,000 |
Note 15 - CAPITAL STOCK - Warra
Note 15 - CAPITAL STOCK - Warrants (Details 1) - $ / shares | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Warrants | ||
Outstanding | 349,000 | 349,000 |
Granted - JC acquisition | ||
Exercised | ||
Expired | 200,000 | |
Outstanding and exercisable | 149,000 | 349,000 |
Exercise price | ||
Outstanding | $ 4.25 | $ 4.25 |
Granted - JC acquisition | ||
Exercised | ||
Expired | 4.25 | |
Outstanding and exercisable | $ 4.25 |
Note 15 - CAPITAL STOCK - War_2
Note 15 - CAPITAL STOCK - Warrants (Details 2) - $ / shares | Oct. 07, 2021 | Sep. 30, 2021 | Sep. 29, 2021 | Sep. 20, 2021 | May 31, 2021 |
Note 15 - Capital Stock - Warrants | |||||
Warrants | 33,000 | 80,000 | 30,000 | 6,000 | 149,000 |
Strike price, per share | $ 4.25 | $ 4.25 | $ 4.25 | $ 4.25 |
Note 15 - CAPITAL STOCK (Detail
Note 15 - CAPITAL STOCK (Details Narrative) - $ / shares | 12 Months Ended | |||
May 31, 2021 | May 31, 2020 | Mar. 25, 2020 | Mar. 24, 2019 | |
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Perferred stock voting rights | 50-1 preferred voting rights | |||
Common stock, par value | $ 0.001 | $ 0.001 | ||
Common stock, Authorized | 200,000,000 | 200,000,000 | 200,000,000 | 100,000,000 |
Common stock, Issued | 29,548,676 | 13,081,380 | 9,387,536 | 46,937,678 |
Common stock, outstanding | 29,548,676 | 13,081,380 | ||
Reverse stock split | 5:1 | |||
Common stock for services, shares | 368,593 | 645,029 | ||
Common shares retired and cancelled, shares | 1,050,280 | |||
Series A Preferred Stock [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, par value | $ 0.001 | $ 0.001 | ||
Preferred stock, authorized shares | 10,000,000 | 10,000,000 | ||
Preferred stock, issued shares | 1,200,000 | 1,200,000 | ||
Preferred stock, outstanding shares | 1,200,000 | 1,200,000 | ||
Series B Preferred Stock [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, par value | $ 0.001 | |||
Preferred stock, issued shares | 100,000 | |||
Preferred stock, outstanding shares | 100,000 | |||
Series B Preferred Stock [Member] | J.Craig Holding Corp. [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 50,000 | |||
Preferred stock, outstanding shares | 50,000 | |||
Series B Preferred Stock [Member] | Axon Capital Management, Inc. [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 25,000 | |||
Preferred stock, outstanding shares | 25,000 | |||
Series B Preferred Stock [Member] | John Romagosa [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 25,000 | |||
Preferred stock, outstanding shares | 25,000 | |||
Series C Preferred Stock | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, par value | $ 0.001 | |||
Preferred stock, issued shares | 290,000 | |||
Preferred stock, outstanding shares | 290,000 | |||
Series C Preferred Stock | Dr. Anshu Sharma, M.D. [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 150,000 | |||
Preferred stock, outstanding shares | 150,000 | |||
Series C Preferred Stock | Mahmood Kahn [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 50,000 | |||
Preferred stock, outstanding shares | 50,000 | |||
Series C Preferred Stock | Rafael Collado [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 50,000 | |||
Preferred stock, outstanding shares | 50,000 | |||
Series C Preferred Stock | Axon Capital Management, Inc. [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 20,000 | |||
Preferred stock, outstanding shares | 20,000 | |||
Series C Preferred Stock | W. S. Gamble [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 20,000 | |||
Preferred stock, outstanding shares | 20,000 | |||
Series D Preferred Stock [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, par value | $ 0.001 | |||
Preferred stock, issued shares | 210,000 | |||
Preferred stock, outstanding shares | 210,000 | |||
Series D Preferred Stock [Member] | Axon Capital Management, Inc. [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 81,178 | |||
Preferred stock, outstanding shares | 81,178 | |||
Series D Preferred Stock [Member] | Amit Biyana [Member] | ||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||
Preferred stock, issued shares | 128,822 | |||
Preferred stock, outstanding shares | 128,822 |
Note 16 - COMMITMENTS AND CON_2
Note 16 - COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent Expense, monthly | $ 5,248 | |
Rent expense. paid | 1,736 | $ 2,487 |
Employment agreement | $ 58,000 | |
Legal Actions sought | The Complaint claims that the Company owes the former employee back wages of $60,000 and unpaid expenses of $20,000, which were due to be paid to the former employee upon his termination from the Company on November 1, 2019, in accordance with an employment agreement dated November 18, 2018. The Company has responded that the employee was terminated for cause and, as such, no longer obligated under the terms of the employment agreement. In addition to the back wages of $60,000, severance of $45,000 and unpaid expenses of $20,000, | |
Legal expenses | $ 15,000 |
Note 17 - INCOME TAXES - Deferr
Note 17 - INCOME TAXES - Deferred Tax (Details) - USD ($) | May 31, 2021 | May 31, 2020 |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforward | $ 4,743,000 | $ 4,356,000 |
Stock based compensation | 1,327,000 | 1,319,000 |
Valuation allowance | (6,070,000) | (5,675,000) |
Deferred tax asset, net |
Note 17 - INCOME TAXES - Effect
Note 17 - INCOME TAXES - Effective Income Tax (Details) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Effective Income Tax Rate Reconciliation | ||
Federal Rate | 21.00% | 21.00% |
State Rate | 6.00% | 6.00% |
Valuation allowance | (27.00%) | (27.00%) |
Effective income tax rate | 0.00% | 0.00% |
Note 17 - INCOME TAXES (Details
Note 17 - INCOME TAXES (Details Narrative) | 12 Months Ended |
May 31, 2021USD ($) | |
Income Tax Disclosure [Abstract] | |
Valuation allowance | $ 395,000 |
Net operating loss carry forward | $ 16,000,000 |
Note 18 - RELATED PARTY TRANS_2
Note 18 - RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | |
May 31, 2021 | May 31, 2020 | |
Related Party Transactions [Abstract] | ||
Sales | $ 0 | $ 0 |
Note 19 - SUBSEQUENT EVENTS (De
Note 19 - SUBSEQUENT EVENTS (Details) - Subsequent Event [Member] - USD ($) | Jun. 09, 2021 | Jul. 15, 2021 | Jul. 20, 2021 | Aug. 31, 2021 |
Issuance of common stock, shares | 589,666 | 254,500 | 16,875,668 | |
Issuance of common stock, amount | $ 254,500 | $ 2,300,000 | ||
Share price | $ 0.11 | $ 0.10 | ||
Issuance of common stock for debt, shares | 2,138,775 | 66,333 | ||
Conversion price per share | $ 0.10 | |||
Issuance of common shares for acquisition,shares | 13,000,000 | 572,727 | ||
Issuance of common shares for acquisition,share price | $ 0.13 | $ 0.11 | ||
Issuance of common shares for services,shares | 424,500 | |||
Share Price | $ 0.135 |