Annual report pursuant to Section 13 and 15(d)

CONVERTIBLE NOTES

v3.22.2
CONVERTIBLE NOTES
12 Months Ended
Apr. 30, 2022
Debt Disclosure [Abstract]  
CONVERTIBLE NOTES

 

11. CONVERTIBLE NOTES

 

In February 2021, the Company entered into a securities purchase agreement with an institutional investor to sell a convertible promissory note in the aggregate principal amount of $348,000 for a purchase price of $335,000. The purchase price of the February 2021 convertible promissory note and equity warrants issued satisfies the principal and accrued interest of the August 2020 and December 2020 convertible promissory notes with the same institutional investor. Since the terms of the February 2021 convertible promissory note were not substantially different from the August 2020 and December 2020 convertible promissory notes, no gain or loss was recognized as a result of this debt issuance. The convertible promissory note bears interest at 10% per annum, which principal and all accrued and unpaid interest were due on December 31, 2021. As of April 30, 2022, the principal and interest earned on the convertible promissory note have been converted into shares of common stock at $1.50 per share, for a total of 252,265 shares.

 

The fair value of equity warrants related to the August 2020 and December 2020 convertible promissory note 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 $13,000 based on the estimated fair value of the warrants. The risk-free rate of 0.27% 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. In aggregate, the Company recorded debt discount in the amount of $137,000 based on the fair values of the warrants and original issue discount of $46,000. As of April 30, 2022, the debt discount has been fully amortized.