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Equity Transactions
 3 Months Ended
Sep. 30, 2022
Equity Transactions  
Equity Transactions

Note 8 - Equity Transactions

On September 14, 2022 the Company’s Board of Directors approved the employment extension of Dr. Anil Diwan, President and Chairman of the Board. On October 6, 2022, the Company and Dr. Anil Diwan executed an extension of his employment agreement for a period of one year from July 1, 2022 through June 30, 2023 under the same general terms and conditions. The Company granted Dr. Anil 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, 2022, December 31, 2022, March 31, 2023 and June 30, 2023 and are subject to forfeiture. The Company recognized non-cash compensation expense related to the issuance of the Series A preferred stock of $10,930 for the three months ended September 30, 2022. The balance of $32,791 will be recognized as the remaining 7,653 shares vest and service is rendered for the year ended June 30, 2023.

For the three months ended September 30, 2022, the Company’s Board of Directors authorized the issuance of 387 fully vested shares of its Series A preferred stock for employee compensation. The Company recorded expense of $2,934 for the three months ended September 30, 2022 related to these issuances.

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

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​

​

​

​

​

​

Date

    

Shares

    

Fair Value

07/31/2022

​

10,333

​

$

44,623

08/31/2022

​

129

​

 

1,178

09/30/2022

​

129

​

 

854

​

​

10,591

​

$

46,655

​

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 three months ended September 30, 2022 was in the range $1.53 to $3.65. 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.28.4% discount for lack of marketability (based upon a call put analysis): 85.12%% historical volatility, 4.16% risk free rate applied to the converted common stock.

The Scientific Advisory Board was granted in August 2022 fully vested warrants to purchase 286 shares of common stock with an exercise price of $3.40 per share expiring in August 2026. The fair value of the warrants was $480 for the three months ended September 30, 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:

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​

​

​

​

Expected life (year)

    

4

 

​

​

​

​

Expected volatility

 

85.12

%

​

​

​

​

Expected annual rate of quarterly dividends

 

0.00

%

​

​

​

​

Risk-free rate(s)

 

3.025

%

​

For the three months ended September 30, 2022, the Company’s Board of Directors authorized the issuance of 12,710 fully vested shares of its common stock with a restrictive legend for consulting services. The Company recorded expense of $27,000 for the three months ended September 30, 2022, which is the fair value on the date of issuance.

For the three months ended September 30, 2022, the Company’s Board of Directors authorized the issuance of 5,154 fully vested shares of its common stock with a restrictive legend for director services. The Company recorded an expense of $11,250 for the three months ended September 30, 2022, which is the fair value on the date of issuance.