Quarterly report pursuant to Section 13 or 15(d)

Promissory Notes Payable

v3.8.0.1
Promissory Notes Payable
3 Months Ended
Sep. 30, 2017
Promissory Notes Payable/Notes Payable [Abstract]  
PROMISSORY NOTES PAYABLE

NOTE 8 – PROMISSORY NOTES PAYABLE

 

In September 2017, the Company issued two-year Convertible Promissory Notes and warrants, for aggregate gross proceeds of $4,480,000. The notes have an interest rate of 7% per annum. The notes are convertible at the option of the holder at any time prior to maturity into shares of the Company’s common stock at $0.75 per share. In addition, the notes automatically convert at a discount upon the Company attaining an Equity Financing, as defined in the note agreements. The warrants have a 7-year term and are exercisable at $1.50 per share for 2,986,666 common shares. The redemption features in the notes is an embedded derivative which has been bifurcated and will be adjusted to fair value at each reporting period.

 

In connection with the notes, the Company incurred fees to the placement agent and other professionals of approximately $550,000. In addition, the placement agent received 398,000 warrants convertible into the Company’s common stock at $1.65 per share. The warrants were valued at $75,600 using the Black Scholes option pricing model. The fees were recorded as a reduction to the notes payable amount and will be recognized over the term of the notes as additional interest using the effective interest method.

 

In October 2017, the Company issued additional two year convertible promissory notes and warrants with the identical terms as the notes for aggregate proceeds of $2,610,000.