Quarterly report pursuant to Section 13 or 15(d)

Subsequent Events

Subsequent Events
9 Months Ended
Feb. 28, 2023
Subsequent Events  
Subsequent Events

Note 11. Subsequent Events

In March 2023, the Company’s former CEO, Nader Pourhassan, withdrew his claims against the Company described in Note 9, Commitments and Contingencies—Former CEO indemnification dispute.

During March 2023, in satisfaction of redemptions, the Company and the April 2, 2021 Noteholder entered into exchange agreements, pursuant to which a portion of the April 2, 2021 Note was partitioned into new notes with an aggregate principal amount of $1.0 million, which were exchanged concurrently with the issuance of approximately 3.8 million shares of common stock.

During March 2023, approximately 5.5 million additional units were sold in the private placement conducted by the Company through a placement agent, for gross proceeds of approximately $1.3 million and net proceeds of approximately $1.1 million. Each unit comprised a fixed combination of one share of common stock and one warrant to purchase one share of common stock for a purchase price of $0.23 per unit. The warrants issued to investors in the private placement, which covered a total of approximately 5.5 million shares, have a five-year term and an exercise price of $0.50 per share, and are immediately exercisable. Refer to Note 6, Equity Awards and Warrants – Private Placement of Common Stock and Warrants through Placement Agent for additional information.

In March 2023, as required and in connection with the Backstop Amendment extension, as described in Note 6, Equity Awards and Warrants—Private placement of warrants under Surety Bond Backstop Agreement, the Company relieved the Indemnitor of the remaining $1.4 million of cash collateral pledged by the Indemnitor in support of the Surety Bond. Subsequently, the Indemnitor released its security interest in the Company’s patents securing the Company’s obligations under the Surety Bond Backstop Agreement and the Company fully assumed the surety bond.

In April 2023, the Company and the holders of convertible notes issued by the Company on April 2, 2021, and April 23, 2021 (the “Noteholders”) agreed to extend the original maturity date of each of the notes by two years, and for which the Company agreed to pay an Extension Fee. The Extension Fee is equal to 2.5% of the outstanding balance of each of the notes as of April 10, 2023, and increased the outstanding balance of each of the Notes as of April 10, 2023.