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14. Warrant liabilities

9 Months Ended

Mar. 31, 2021

Note 14 – Warrant liabilities

The Company’s warrant liabilities contained unobservable inputs that reflected the Company’s own assumptions in which there was little, if any, market activity for at the measurement date. Accordingly, the Company’s warrant liabilities were measured at fair value on a recurring basis using unobservable inputs and were classified as Level 3 measurements.

On December 30, 2020, the Company issued warrants to purchase 2,415 shares of Series A Convertible Preferred Stock to Boustead Securities, LLC (the “Placement Agent”) as compensation, which was recorded as financing expense. The exercise price of the warrants is $10 per share and expires in five years from the issuance date. This Series A Preferred Stock warrant were valued using Black Scholes Option Pricing Model at issuance date and recorded $8,047 as financing expense and warrant liability.

On January 27, 2021, the Company completed a private placement offering pursuant to which the Company sold to two accredited investors an aggregate of $3,000,000 in convertible notes and warrants to purchase shares of Class A Common Stock equaling 80% of the number of shares of Class A Common Stock issuable upon conversion of the Convertible Notes. The convertible note warrants shall be exercisable for a period of three years from the IPO completion date at a per share exercise price equal to the IPO. In the event the Convertible Notes are repaid in cash by the Company, the convertible notes warrants will expire and have no further value.

In connection with the convertible note offering, the Company also issued placement agent warrants to purchase 7.0% of the shares of Common Stock underlying the Convertible Notes exercisable at the conversion price of the Convertible Note (the “Conversion Price”). The placement agent warrants shall be exercisable for a period of five years from the issuance date.

On March 31, 2021, the Company remeasured the warrants to fair value using the Modified Black Scholes Option Pricing Model based on the expected fair value of the underlying stock with the following assumptions:

	As of March 31, 2021
Expected term	3 to 5 years
Expected volatility	56% to 58%
Risk-free interest rate	0.35% to 0.92%
Expected dividend rate	0%
Probability	60%

As of March 31, 2021, the fair value of the warrant liabilities was $905,713 and the change in fair value of $161,959 was recorded within other non-operating income (expenses).