Annual report pursuant to Section 13 and 15(d)

Convertible Instruments (Tables)

v3.20.2
Convertible Instruments (Tables)
 12 Months Ended
May 31, 2020
Warrants At Fair Value And Beneficial Conversion Feature At Intrinsic Value
The net proceeds of $5.0 million were allocated first to the redemption provision at its fair value, then to the warrants at their relative fair value and the beneficial conversion feature at its intrinsic value as follows:
 
  
January 30, 2019
 
Fair value of redemption provision
  
$
1,465,008
 
Relative fair value of equity classified warrants
  
 
858,353
 
Beneficial conversion feature
  
 
2,676,639
 
 
  
 
 
 
Net proceeds of January 2019 Note
  
$
5,000,000
 
 
  
 
 
 
Activity Related to Notes
Activity related to the June 2018 Note and the January 2019 Note is as follows:
 
 
  
Short Term
 
  
Long Term
 
  
Total
 
June 2018 Note
  
$
2,100,000
 
  
$
3,600,000
 
  
$
5,700,000
 
Monthly redemption provision
  
 
2,100,000
 
  
 
(2,100,000
) 
  
 
—  
 
Note amendment, net
  
 
—  
 
  
 
111,410
 
  
 
111,410
 
Redemptions
  
 
—  
 
  
 
(1,455,00
) 
  
 
(1,455,00
) 
Interest accretion - June 2018 and January 2019 Notes
  
 
—  
 
  
 
298,158
 
  
 
298,158
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Carrying value of Notes at May 31,
  
 
4,200,00
 
  
 
454,568
 
  
 
4,654,568
 
Redemptions
  
 
(10,688,640
) 
  
 
(56,597
) 
  
 
(10,745,237
) 
Interest accretion - June 2018
  
 
6,488,640
 
  
 
38,838
 
  
 
6,527,478
 
Extinguishment of note
  
 
—  
 
  
 
(436,809
) 
  
 
(436,809
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Carrying value of Notes at May 31, 2020
  
$
—  
 
  
$
—  
 
  
$
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Short-Term Convertible Notes  
Activity Related to Notes
Activity related to the 2018 Short-term Convertible Notes was as follows:
 
 
  
2018
 
Face amount of Short-term Convertible Notes
  
$
6,038,500
 
Unamortized discount
  
 
—  
 
Registered direct offering
  
 
(5,788,500
) 
Note repayment
  
 
(250,000
) 
 
  
 
 
 
Carrying value of Short-term Convertible Notes
  
$
—  
  
 
  
 
 
 
Two Thousand And Nineteen Short Term Convertible Notes [Member]  
Summary of Fair Value Valuation Technique
The Company determined the fair value of the warrants at issuance using the Black-Scholes option pricing model utilizing certain weighted average assumptions, such as expected stock price volatility, expected term of the warrants, risk-free interest rates and expected dividend yield at the grant date.
 
  
2018
Expected dividend yield
  
0%
Stock price volatility
  
69.80%
Expected term
  
5 year
Risk-free interest rate
  
1.77 - 1.93%
Grant-date fair value
  
$0.30 - $0.39
Activity Related to Notes
Activity related to the 2019 Short-term Convertible Notes was as follows:
 
 
  
May 31, 2020
 
  
May 31, 2019
 
  
May 31, 2018
 
Face value of Short-term convertible Notes
  
$
5,460,000
 
  
$
5,460,000
 
  
$
—  
  
 
  
 
 
 
  
      
  
      
Unamortized discount
  
 
—  
 
  
 
(1,469,625
) 
  
 
—  
 
Unamortized issuance costs
  
 
—  
 
  
 
(404,340
) 
  
 
—  
 
Accrued interest converted into principal
  
 
153,876
 
  
 
—  
 
  
 
—  
 
Note repayment
  
 
(460,000
) 
  
 
—  
 
  
 
—  
 
Note conversions into common stock
  
 
(5,153,876
) 
  
 
—  
 
  
 
—  
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Carrying value of Short-term Convertible Notes
  
$
—  
  
  
$
3,586,035
 
  
$
—  
  
 
  
 
 
 
  
 
 
 
  
 
 
 
Investor Warrants  
Summary of Fair Value Valuation Technique
 
  
2018 - 2019
Expected dividend yield
  
0%
Stock price volatility
  
55.8 - 55.88%
Expected term
  
5 year
Risk-free interest rate
  
2.48 - 2.56%
Grant-date fair value
  
$0.30 - $0.38