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Equity Transactions
 9 Months Ended
Mar. 31, 2022
Equity Transactions  
Equity Transactions

Note 8 - Equity Transactions

On September 9, 2021, the Company entered into a COVID-19 License Agreement to use, promote, offer for sale, import, export, sell and distribute drugs that treat Covid-19 infections, using TheraCour’s proprietary as well as patented technology and intellectual property. Pursuant to such license agreement, the Board of Directors authorized  the issuance of 100,000 fully vested shares of the Company’s Series A preferred stock as a license milestone payment and recorded an expense of $0 and $935,088 for the three and nine months ended March 31, 2022.

On September 14, 2021, the Board of Directors and Dr. Anil Diwan, President and Chairman of the Board agreed to the extension of Dr. Diwan’s employment agreement for a period of one year from July 1, 2021 through June 30, 2022 under the same general terms and conditions. The Company granted Dr. Diwan an award of 10,204 shares of the Company’s Series A preferred stock. The shares shall be vested in quarterly installments of 2,551 shares on September 30, 2021, December 31, 2021, March 31, 2022 and June 30, 2022 and are subject to forfeiture. The Company recognized non-cash compensation expense related to the issuance of the Series A preferred stock of $27,246 and $81,738 for the three and nine months ended March 31, 2022, respectively. The balance of $27,244 will be recognized as the remaining 2,551 shares vest and service is rendered for the year ended June 30, 2022.

For the three and nine months ended March 31, 2022, the Company’s Board of Directors authorized the issuance of 1,727 and 2,501, respectively of fully vested shares of its Series A preferred stock for employee compensation. The Company recorded expense of $12,155 and $23,920, respectively for the three and nine months ended March 31, 2022 related to these issuances.

The fair value of the Series A preferred stock was the following for the dates indicated:

​

​

​

​

​

​

​

Date

    

Shares

    

Value

07/31/2021

​

10,333

​

$

111,012

08/31/2021

​

129

​

 

1,718

09/30/2021

​

100,129

​

 

936,984

10/31/2021

​

129

​

 

2,166

11/30/2021

​

129

​

 

1,895

12/31/2021

​

129

​

 

2,060

01/31/2022

​

129

​

 

1,336

02/28/2022

​

129

​

​

1,008

03/01/2022

​

1,340

​

​

8,888

03/31/2022

​

129

​

​

923

​

​

112,705

​

$

1,067,990

​

There is currently no market for the shares of Series A preferred stock and they can only be converted into shares of common stock upon a change of control of the Company as more fully described in the Certificate of Designation. The Company, therefore, estimated the fair value of the Series A preferred stock granted to various employees and others on the date of grant. The conversion of the shares is triggered by a change of control. The valuations of the Series A Convertible preferred stock at each issuance used the following inputs:

a.The common stock price for the nine months ended March 31, 2022 was in the range $1.67 to $7.86. Series A preferred stock issued to employees as compensation, were valued at the common stock price on the date of issuance multiplied by the conversion rate of 3.5.
b.The conversion value is based on an assumption, for calculation purposes only, of a change in control in 3.5 years from the date of issuance.
c.32.2% discount for lack of marketability (based upon a call put analysis): 144.7% to 149.1% historical volatility, 0.57% to 0.51% risk free rate applied to the converted common stock.

During the nine months ended March 31, 2022, the Scientific Advisory Board was granted in August 2021 fully vested warrants to purchase 572 shares of common stock with an exercise price of $4.65 per share expiring in August 2025, in November 2021 fully vested warrants to purchase 572 shares of common stock with an exercise price of $5.92 per share expiring in November 2025, and in February 2022 fully vested warrants to purchase 572 shares of common stock with an exercise price of $2.69 per share expiring in February 2026. The fair value of the warrants was $785 for the three months ended March 31, 2022 and $3,781 for the nine months ended March 31, 2022 and was recorded as consulting expense.

The Company estimated the fair value of the warrants granted to the Scientific Advisory Board on the date of grant using the Black-Scholes Option-Pricing Model with the following weighted-average assumptions:

​

​

​

​

​

Expected life (year)

    

4

 

​

​

​

​

Expected volatility

 

86.0-91.4

%

​

​

​

​

Expected annual rate of quarterly dividends

 

0.00

%

​

​

​

​

Risk-free rate(s)

 

0.615-1.870

%

​

For the three and nine months ended March 31, 2022, the Company’s Board of Directors authorized the issuance of 11,632 and 24,134, respectively, fully vested shares of its common stock with a restrictive legend for consulting services. The Company recorded expense of $27,000 and $81,000, respectively, for the three and nine months ended March 31, 2022, which is reflective of the fair value on the dates of issuance.

For the three and nine months ended March 31, 2022, the Company’s Board of Directors authorized the issuance of 4,788 and 11,600, respectively, fully vested shares of its common stock with a restrictive legend for director services. The Company recorded an expense of $11,250 and $41,250 for the three and nine months ended March 31, 2022, which is reflective of the fair value on the dates of issuance.

For both the three and nine months ended March 31, 2022, the Company’s Board of Directors authorized the issuance of 3,572 of fully vested shares of its common stock for employee compensation. The Company recorded an expense of $6,768 for both the three and nine months ended March 31, 2022 which was the fair value on the date of issuance.