Quarterly report pursuant to Section 13 or 15(d)

CONVERTIBLE NOTES PAYABLE

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CONVERTIBLE NOTES PAYABLE
9 Months Ended
Jun. 30, 2022
Debt Disclosure [Abstract]  
CONVERTIBLE NOTES PAYABLE

NOTE 6 – CONVERTIBLE NOTES PAYABLE

 

The Company’s convertible promissory notes consisted of the following as of September 30, 2021 and June 30, 2022. 

 

    September 30, 2021     June 30, 2022  
    Notes     Discount     Notes, Net 
of Discount
    Notes     Discount     Notes Net 
of Discount
 
Bridge Financing Notes   $ 227,000     $ (50,337 )   $ 176,663     $ 227,000     $   $ 227,000  
Total   $ 227,000     $ (50,337 )   $ 176,663     $ 227,000     $   $ 227,000  

 

Bridge Financing Notes

 

Between June and November 2016, the Company issued eleven convertible promissory notes (“Bridge Financing Notes”) with associated warrants in a private placement to accredited investors for total gross proceeds of $837,000, including $222,000 from related parties. These notes and associated warrants had an initial maturity of one year; however, the maturity on these notes was extended in the prior year to a maturity date of April 30, 2022. On April 30, 2022 the maturity date of the notes was further extended to April 30, 2024. The notes bear an annual interest rate of 8% and can be converted at the option of the holder at a conversion price of $0.025 per share. In addition, the convertible notes will automatically convert if a qualified equity financing of at least $3 million occurs before maturity and such mandatory conversion price will equal the effective price per share paid in the qualified equity financing. The note balances as of June 30, 2022 and September 30, 2021 were $277,000, with unamortized debt discounts of nil and approximately $50,000, respectively. Debt discount amortization for the three months ended June 30, 2022 and 2021 was approximately $7,000 and $21,000, respectively. Debt discount amortization for the nine months ended June 30, 2022 and 2021 was approximately $50,000 and $26,000, respectively. As noted above, the maturity date related to these notes was extended to April 30, 2024. In consideration for the extension of the notes, the Company extended the term of the related warrants until April 30, 2024. The incremental fair value of the modified warrants compared to the fair value of the pre-modification warrants at modification date was approximately $85,000 and was recognized as a loss on debt extinguishment in accordance with ASC 470 and ASU 2021-04 that was early adopted in 2022. At June 30, 2021, the incremental fair value of the modified warrants compared to the fair value of the pre-modification warrants at modification date was approximately $87,000 and was recognized as debt discount amortized over the term of the notes.

 

June 2019 Convertible Debenture

 

In November 2020, the Company made a $300,000 payment in full to satisfy the remaining balance of the convertible debenture and a gain on extinguishment of debt was recognized in the amount of $35,678. Debt discount amortization for the nine months ended June 30, 2021 was approximately $44,000.