Annual report pursuant to Section 13 and 15(d)

WARRANTS

v3.22.2
WARRANTS
12 Months Ended
Apr. 30, 2022
Warrants  
WARRANTS

8. WARRANTS

 

Warrant Issuances During 2022

 

During the year ended April 30, 2022, the Company issued warrants to purchase an aggregate of 2,000,000 shares of common stock at an exercise price of $3.00 per share and 61,250 shares of common stock at an exercise price of $6.25 per share.

 

(i) On June 17, 2021, the Company issued a warrant to purchase an aggregate of 61,250 shares of common stock at an exercise price equal to $6.25 per share of common stock in connection with the IPO. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815.

 

(ii) On July 28, 2021, the Company received from the FDA a “Study May Proceed” letter for a Phase I study under the Company’s IND application for AL001. Based on the achievement of this milestone, the Company sold an additional 1,333,333 shares of common stock to DPL for $2 million, or $1.50 per share, and issued to DPL warrants to acquire 666,667 shares of common stock with an exercise price of $3.00 per share (see Note 9). Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815.

 

(iii) On March 28, 2022, the Company received the full data set from the Phase I clinical trial for AL001. Based on the achievement of this milestone, on April 28, 2022, under the SPA, the Company sold an additional 2,666,667 shares of its common stock to DPL for $4 million, or $1.50 per share, and issued to DPL warrants to acquire 1,333,333 shares of its common stock with an exercise price of $3.00 per share. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the common stock, requires settlement in shares and would be classified as equity under ASC 815.

 

Warrant Issuances During 2021

 

During the year ended April 30, 2021, the Company issued warrants to purchase an aggregate of 123,000 shares of common stock at an exercise price of $3.00 per share.

 

(i)

On August 11, 2020, the Company issued a warrant to purchase an aggregate of 91,667 shares of common stock at an exercise price equal to $3.00 per share of common stock in connection with the issuance of a convertible promissory note in the principal amount of $275,000. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as an equity instrument as the warrant is indexed to the Company’s common stock, require settlement in shares and would be classified as equity under ASC 815.

 

(ii)

On August 31, 2020, the Company issued a warrant to purchase an aggregate of 16,667 shares of common stock at an exercise price equal to $3.00 per share of common stock in connection with the issuance of a convertible promissory note, related party in the principal amount of $50,000. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as equity instrument as the warrant is indexed to the Company’s common stock, require settlement in shares and would be classified as equity under ASC 815.

 

(iii)

In December 2020, the Company issued a warrant to purchase an aggregate of 14,666 shares of common stock at an exercise price equal to $3.00 per share of common stock in connection with the issuance of a convertible promissory note in the principal amount of $44,000. Based on the terms of the Company’s warrant agreement, the Company accounted for the warrant as equity instruments as the warrant is indexed to the Company’s common stock, require settlement in shares and would be classified as equity under ASC 815.

 

The following table summarizes information about common stock warrants outstanding at April 30, 2022:

 

Outstanding     Exercisable  
            Weighted                    
            Average     Weighted           Weighted  
            Remaining     Average           Average  
Exercise     Number     Contractual     Exercise     Number     Exercise  
Price     Outstanding     Life (years)     Price     Exercisable     Price  
$1.00       500,000       1.8     $ 1.00       500,000     $ 1.00  
$1.75       161,342       2.5     $ 1.75       161,342     $ 1.75  
$3.00       9,427,196       2.9     $ 3.00       9,427,196     $ 3.00  
$6.25       61,250       4.1     $ 6.25       61,250     $ 6.25  
$1.00 - $6.25       10,149,788       2.9     $ 2.90       10,149,788     $ 2.90  

 

The estimated fair value of warrants granted during the years ended April 30, 2022 and 2021, were calculated using the Black-Scholes option-pricing model using the following assumptions:

 

  For the Year Ended April 30,
  2022   2021
Expected term (in years) 5.00   5.00
Volatility 88.94%   103.70%
Risk-free interest rate 2.92%   0.27% - 0.28%
Dividend yield 0.0%   0.0%

 

Expected Term: The expected term represents the period that the warrants granted are expected to be outstanding.

 

Expected Volatility: The Company uses an average historical stock price volatility of comparable public companies within the biotechnology and pharmaceutical industry that were deemed to be representative of future stock price trends as the Company only has a limited trading history for its common stock. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

 

Risk-Free Interest Rate: The Company based the risk-free interest rate over the expected term of the warrants based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant.

 

Expected Dividend: The Company has not paid and does not anticipate paying any dividends in the near future. Therefore, the expected dividend yield was zero.