XML 29 R13.htm IDEA: XBRL DOCUMENT

Convertible Note Receivable in Unigen Power, Inc.

12 Months Ended

Jan. 31, 2021

Investments, All Other Investments [Abstract]

Convertible Note Receivable in Unigen Power, Inc.

7. CONVERTIBLE NOTE RECEIVABLE IN UNIGEN POWER, INC.

On December 16, 2019, the Trust entered into a Convertible Debenture Purchase Agreement with UniGen Power Inc. (“UPI” or “UniGen”).

The Trust purchased secured convertible debentures (“Debentures”) in the aggregate amount of $1,000,000 (the “Loan Amount”) (the “Loan”) at an annual interest rate of 6%. The Debentures are convertible into Class A shares of UniGen Common Stock at an initial conversion rate of $1.00 per share. The Loan was structured into two (2) payments of $600,000 and $400,000. The first payment of $600,000 was made by the Trust at closing on December 16, 2019 and the second payment of $400,000 was made on February 3, 2020.

UniGen issued the Trust common stock purchase warrants (the “Debenture Warrants”) to purchase up to 1,000,000 shares of Class A Common Stock (600,000 issued on January 31, 2020, and 400,000 issued on February 3, 2020). The Debenture Warrants are exercisable at an exercise price of $1.00 per share of Class A Common Stock. Subsequent to January 31, 2021, UniGen issued an additional 300,000 warrants at $2.25.

UniGen, also, issued the Trust additional common stock purchase warrants (“Additional Warrants”) to purchase up to 200,000 shares of Class A Common Stock (120,000 issued at January 31, 2020, and 80,000 issued on February 3, 2020). The Additional Warrants are exercisable at an exercise price of $2.25 per share of Class A Common Stock. IHT may fund a $500,000 line of credit to be repaid in the form of UniGen stock at a rate of $1 per share. The total of all stock ownership upon conversion is 1 million shares and if all stock warrants are exercised, these would total to 3 million Unigen shares.

On the Trust’s balance sheet, the investment of the $1,000,000 made in the current fiscal year consists of approximately $700,000 in note receivables and approximately $300,000 as the fair value of the warrant issued with the Trust’s investment in UniGen. The value of the premium related to the fair value of the warrants will accrete over the life of the debentures.

The value of the warrants was based on Black-Scholes pricing model based on the following inputs:

Debenture Warrants

Type of option		Call option
Stock price		$	2.25
Exercise (Strike) price		$	1.00
Time to maturity (years)			2.0
Annualized risk-free rate			1.630	%
Annualized volatility			27.43	%

Additional Warrants

Type of option		Call option
Stock price		$	2.25
Exercise (Strike) price		$	2.25
Time to maturity (years)			3.0
Annualized risk-free rate			1.630	%
Annualized volatility			27.43	%

UniGen has also agreed to allow IHT to fund a $500,000 line of credit at the option of IHT convertible into 500,000 shares of UniGen stock at $1 per share. Upon full subscription of the UniGen 2021 $2 million syndication in February 2021, it would grant IHT an additional 300,000 warrants at $2.25 per share granted by Unigen. The balance on this line of credit as of January 31, 2021 is $0.

If all notes are converted and all available but not outstanding warrants exercised, IHT would hold up to approximately 25% of UniGen Ownership. Subsequent to January 31, 2021, no activity has occurred with this line of credit and thus no draws have been taken.

During the Fiscal Year ended January 31, 2021, 60,000 warrants were exercised for $60,000 and in return the Trust received 60,000 shares of UniGen. Management believes recording the investment at cost approximates fair value since there have been no significant changes in the operations of Unigen and Unigen’s projects are still in the R&D phase.

The Trust has valued Unigen investment as a level 3 fair value measurement, for the following reasons. The investment does not qualify for level 1 since there are no identical actively traded instruments or level 2 identical or similar unobservable markets.