Annual report pursuant to Section 13 and 15(d)

OTHER RELATED PARTY TRANSACTIONS

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OTHER RELATED PARTY TRANSACTIONS
12 Months Ended
Apr. 30, 2022
Related Party Transactions [Abstract]  
OTHER RELATED PARTY TRANSACTIONS

9. OTHER RELATED PARTY TRANSACTIONS

 

In March 2021, the Company entered into the SPA with DPL pursuant to which the Company agreed to sell an aggregate of 6,666,667 shares of common stock for an aggregate of $10 million, or $1.50 per share, which sales were made in tranches. On March 9, 2021, DPL paid $4 million, less the $1.8 million in prior advances and the surrender for cancellation of a $50,000 convertible promissory note held by BitNile, for an aggregate of 2,666,667 shares of common stock. Under the terms of the SPA, DPL (i) purchased an additional 1,333,333 shares of common stock upon approval of the IND for Phase I clinical trials for AL001 for a purchase price of $2 million; and (ii) purchased 2,666,667 shares of common stock upon the completion of the Phase I clinical trials for AL001 for a purchase price of $4 million. In addition, the Company issued DPL warrants to purchase an aggregate of 6,666,667 shares of common stock at an exercise price of $3.00 per share. Finally, the Company agreed that for a period of eighteen (18) months following the date of the payment of the final tranche of $4 million, DPL will have the right to invest an additional $10 million on the same terms, except that no specific milestones have been determined with respect to the additional $10 million as of the date of this Annual Report.

 

In May 2021, the Board and Mr. Ault, the Company’s Founder and Chairman Emeritus, agreed to certain arrangements with regard to Board composition and other matters. Contemporaneously with the effectiveness of the IPO, and in consideration for (i) the conversion of 750,000 shares of the Company’s Series A Preferred Shares beneficially owned by Mr. Ault through Ault Life Sciences, Inc. into 15,000,000 shares of common stock; (ii) the extension of the maturity date of the note in the original principal amount of $15,000,000 issued to the Company by ALSF, an entity controlled by Mr. Ault, to December 31, 2023; and (iii) the resignation by Mr. Ault as a director and executive officer of the Company, the Board agreed that William B. Horne will become Chairman of the Board and remain in that position for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for which Mr. Horne will be paid $50,000 per year), and Henry Nisser will remain a member of the Company’s Board for so long as Mr. Ault beneficially owns no less than 5% of the outstanding shares of common stock (for no additional remuneration). Additionally, Mr. Ault will hold the position of Founder and Chairman Emeritus and, as such, have the right to nominate an observer to the Board for a period of five years after the closing date of the IPO. Following the closing of the IPO, the Company entered into a five-year consulting agreement with Mr. Ault under which he will provide strategic advisory and consulting services to the Company in consideration for annual fees of $50,000. For the year ended April 30, 2022, total expenses paid to related party consulting was $88,000.

 

On June 15, 2021, DPL, a related party, purchased 2,000,000 of the Company’s IPO shares at the public offering price of $5.00 per share.