Refinancing Agreement |
12. |
Refinancing Agreement |
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In April 2021, the Company extinguished certain convertible promissory notes held by Eagle Equities, LLC by way of full settlement of approximately $2,511,214, consisting of 2,325,200 in principal and $186,014 interest, paid as follows: |
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(i) |
1,500 shares B Preferred, valued at $1,500,000 as a part of the Preferred offering; and |
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(ii) |
$1,300,000 in cash from the proceeds of the offering. |
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Since the debt was exchanged in whole, the fair value of the consideration paid should be compared to the fair value of the debt settled (including related derivative liabilities), with the variance accounted for as a gain or loss on settlement. |
TOTAL GAIN/LOSS RELATED TO EXTINGUISHMENT |
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Debt principal ($2,325,200) plus interest payable ($186,014) |
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$ |
2,511,214 |
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Derivative liability |
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1,287,662 |
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Unamortized debt of discount |
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(340,795 |
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Cash paid from Escrow account |
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(1,300,000 |
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1,500 shares of Preferred B |
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(1,500,001 |
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Gain on extinguishment of debt upon refinancing |
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$ |
658,080 |
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Below is a reconciliation of the loss on debt extinguishment as presented
on the Company’s statement of operations for the fiscal year ended June 30, 2021:
Loss on convertible notes upon conversion |
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$ |
2,100,435 |
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(Gain) upon refinancing |
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(658,080 |
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Loss on extinguishment debt |
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$ |
1,442,325 |
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