Quarterly report pursuant to Section 13 or 15(d)


6 Months Ended
May 31, 2019



Effective July 9, 2019, the Company appointed William B. Richards, Beatrice Mitchell and Herbert Hughes as directors of the Company. Effective July 9, 2019, Thrasher resigned from the board of directors.


On July 22, 2019, the Company entered into a Securities Purchase Agreement (the “Agreement”) with several investors (the “Purchasers”) and Northeast Industrial Partners, LLC as collateral agent for the Purchasers (the “Collateral Agent”) to sell a total of $2,282,500 units, with each $1,000 of units consisting of (i) a $1,000 unsecured convertible promissory note (collectively the “Notes”), convertible into the Company’s common stock at a conversion price of $0.15 per share, and (ii) four thousand (4,000) warrants each exercisable for one share of common stock at an exercise price of $0.25 per share, on or before January 22, 2024.

The outstanding principal amount of the Notes accrues interest at a rate of 10% per annum, provided that, in the event of default on the Notes, the interest rate will be 15% during the period of default. The maturity date of the Notes is June 30, 2021, which date is subject to optional extension by each Purchaser if a change of control of the Company is announced prior to such date. Interest on the Notes is payable in arrears on the last day of each January and July while the Notes are outstanding. The Company has the option to redeem the Notes by paying the Purchasers the optional redemption price as described in the Notes. Each Note is convertible into common stock, at the option of the Purchaser. Upon such optional conversion, the outstanding principal amount of the Note converts into shares of common stock at a conversion price of $0.15 per share, subject to adjustment upon issuance of other securities as set forth in the Notes. The Notes contain restrictive covenants which, among other things, restrict the Company’s ability to incur additional indebtedness, grant security interests on its assets, or make distributions on or repurchase its common stock. The Notes are secured, pursuant to the Agreement, with a security interest in substantially all of the Company’s assets.