|12 Months Ended|
Mar. 31, 2020
(a)Convertible Loans Payable
During the year ended March 31, 2020, the Company received loans from new and existing investors totaling $9,000,000 pursuant to an up to $9,000,000 convertible note offering. This included the conversion and satisfaction of an existing $500,000 term loan at June 30, 2019. The convertible notes bore interest at a fixed rate of 1% per month until September 30, 2019 and $6,070,000 of these convertible notes were converted into common shares of the Company on September 30, 2019 at a conversion price of $6.80 per share and $2,930,000 of these convertible notes were converted into common shares of the Company on September 30, 2019 at a conversion price of $8.265. The terms of the two tranches were identical outside of the conversion price.
The interest accrued on these convertible loans for the year ended March 31, 2020 was $143,927 and the accrued interest was converted into shares at the respective conversion prices.
In the event the Company raises capital through the sale of Common Stock for cash during the period ending on the three year anniversary of the earliest issuance date of the convertible notes, and the price per share thereof (the "Offering Price") is less than the original Conversion Price, then in such event the Company shall issue to all convertible loan holder, at no further cost, additional shares of common stock equal to the number of conversion shares the holders would have received upon conversion if the Conversion Price equaled the Offering Price, less the number of shares of conversion shares actually issued on or as of the Maturity Date. Since the Company has early adopted ASU 2017- 11, the anti-dilution protection clause does not contribute to the conversion feature to be a derivative liability.
(b)Convertible Loans Payable
During the year ended March 31, 2020, the Company received $70,000 from an existing investor pursuant to a $3,000,000 (or up to $7,000,000 at the discretion of the Company) convertible note offering. The convertible notes bear interest at a fixed rate at 1% per month and will be payable, along with the principal amount on the earlier of (the "Maturity Date"): (a) on March 30, 2020 (the Maturity Date was extended to June 30, 2020 and on June 2, 2020 the Maturity Date was extended to March 31, 2021) and
(b) the consummation of the offering provided that the Company raises in one or more tranches aggregate gross proceeds of no less than $3,000,000. The convertible loans will be convertible into equity of the Company upon the following events on the following terms:
(i)On the Maturity Date, the outstanding principal and accrued and unpaid interest under the convertible note will be converted into shares of common stock at a conversion price of $8.55 per shares in the event of an investment on or prior to December 31, 2019, and $9.50 per share in the event of an investment after December 31, 2019 (the "Conversion Price").
(ii)Upon a change of control transaction prior to the Maturity Date, the outstanding principal and accrued and unpaid interest under the convertible notes would, at the election of the holders of a majority of the outstanding principal of the loans under the offering, be either (i) payable upon demand as of the closing of such change of control transaction or (ii) convertible into shares of the Company's common stock immediately prior to such change of control transaction at a price per share equal to the lesser of (x) the Conversion Price or (y) the per share consideration to be received by the holders of the common stock in such change of control transaction.
The interest accrued on these convertible loans for the year ended March 31, 2020 was $4,317.
(c)Short term loan
On March 23, 2020, the Company received a $2,000,000 loan from an existing shareholder. The promissory note bears interest at a fixed rate of 1% per month and will be payable (a) one half of the accrued interest on each three months anniversary of the Issue Date (the “Quarterly Payments”) and (b) one half of the accrued interest along with the principal amount on (the “Maturity Date”); the earlier of (a) March 31, 2022 and (b) the consummation of a "Qualified Financing"; of a minimum of $5,000,000 from any equity or debt financing of the Company subsequent to the Issue Date of the promissory note; provided, however, that none of the following shall be deemed an equity or debt financing: (a) any Additional Loan; and (b) any loan, grant, funding or other payment from a domestic or foreign government or governmental entity (whether international, federal, state, local or otherwise) The loan is repayable or convertible to common shares at the loan holder’s option on March 31, 2022. Interest accrued on this loan at March 31, 2020 is $4,516.
The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef