Quarterly report pursuant to Section 13 or 15(d)

CONVERTIBLE NOTE ??? RELATED PARTY

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CONVERTIBLE NOTE – RELATED PARTY
3 Months Ended
Jul. 31, 2021
Convertible Note Related Party  
CONVERTIBLE NOTE – RELATED PARTY

 

12. CONVERTIBLE NOTE – RELATED PARTY

 

In August 2020, the Company entered into a securities purchase agreement with Ault Global to sell a convertible promissory note in the aggregate principal amount of $50,000 and issue a 5-year warrant to purchase 16,667 shares of Common Stock. The convertible promissory note bears interest at 8% per annum, which principal and all accrued and unpaid interest are due six months from the date of issuance. The principal and interest earned on the convertible promissory note may be converted into shares of the Company’s Common Stock at $1.50 per share any time on or after the maturity date. The exercise price of the warrant is $3.00 per share.

 

The fair value of the equity warrant was recorded as a discount to the convertible promissory note with a corresponding increase to additional paid-in capital. The Company computed the estimated fair value of the warrants using the Black-Scholes option pricing model and, as a result of this calculation, recorded debt discount in the amount of $14,300 based on the estimated fair value of the warrants. The risk-free rate of 0.28% was derived from the U.S. Treasury yield curve, matching the term of the warrant, in effect at the measurement date. The volatility factor of 103.7% was determined based on the historical volatility data of similar companies, considering the industry, products and market capitalization of such other entities. The convertible promissory note was cancelled in March 2021 pursuant to a securities purchase agreement with DPL (see Note 8).