Quarterly report pursuant to Section 13 or 15(d)

Warrants

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Warrants
9 Months Ended
Mar. 31, 2022
Warrants [Abstract]  
Warrants
11. Warrants  

The following is a summary of the Company’s outstanding common stock purchase warrants.  

 

During the nine months ended March 31, 2022, holders of the Company’s Series B Preferred Stock converted 1,590 shares of Series B Preferred Stock into 7,950,000 shares of its common stock, along with 7,950,000 warrants issued to those holders with an initial exercise price of $.30 per share.

 

During the nine months ended March 31, 2022, 4,000,000 warrants were issued to the holder of the convertible notes in conjunction with the notes with an initial exercise price of $.25 per share, and 878,260 warrants issued to the placement agent with an initial exercise price of $.25 per share. The Company valued these warrants using the Black Scholes model utilizing a 143.39% volatility and a risk-free rate of 1.25%

       
     

During the nine months ended March 31, 2022, the Company entered into a warrant agreement with one of the Company’s Directors issuing 100,000 warrants at a strike price of $0.2626 having a term of five years. The Company valued these warrants using the Black Scholes model utilizing a 151.07% volatility and a risk-free rate of 0.79%.

 

During the nine months ended March 31, 2022, the Company entered into an Agreement For Shareholder Lock-Up And Acquisition of Warrants (the “Lock-Up Agreement”), with its Chairman, CEO and largest shareholder, Sean Folkson issuing 400,000 warrants at a strike price of $0.30 having a term of one year. The Company valued these warrants using the Black Scholes model utilizing a 80.67% volatility and a risk-free rate of 0.89%.

 

Certain warrants in the above table include dilution protection for the warrant holders, which could cause the exercise price to be reduced as a result of a financing event at a valuation below the exercise price in effect at the time. For example, as a result of the convertible note financing, we completed in December 2021 which would allow the new noteholders to convert their debt to shares of common stock at an exercise price of $.25/share, some of the $.30 warrants outstanding in the table above had their exercise price reduced from $.30 to $.2952. This reduction of less than half a penny in the exercise price of the 25,000,000 warrants associated with our Class B Preferred stock would result in proceeds to the Company of $7,380,000 rather than $7,500,000 should all those warrants be exercised. The result of the warrant exercise price downward adjustment on modification date was treated as a deemed dividend and fully amortized on the transaction date, and the Company recorded $68,722 to additional paid in capital and retained earnings for a null effect on the Company’s balance sheets.

 

      The aggregate intrinsic value of the warrants as of March 31, 2022 is $3,750.

 

Exercise Price    

June 30,

2021

    Issued     Repricing     Expired     Redeemed     March 31,
2022
 
$ 0.01       1,600,000                               (1,600,000 )    
-
 
$ 0.15       500,000                      
-
              500,000  
$ 0.20       2,250,000                                       2,250,000  
$ 0.25               4,878,260                               4,878,260  
$ 0.2626               100,000                               100,000  
$ 0.2952               7,950,000       2,250,000                       10,200,000  
$ 0.30       2,650,000       400,000       (2,250,000 )     (400,000 )             400,000  
$ 0.40       150,000                      
-
              150,000  
$ 0.50       500,000                      
-
              500,000  
$ 0.75       300,000                       (300,000 )            
-
 
$ 1.00       100,000                       (100,000 )            
-
 
          8,050,000       13,328,260               (800,000 )     (1,600,000 )     18,978,260