Quarterly report pursuant to Section 13 or 15(d)

Convertible Instruments (Tables)

v3.3.0.814
Convertible Instruments (Tables)
 3 Months Ended
Aug. 31, 2015
Fair Value of Warrants

The fair value of the warrants was determined using a Black-Scholes option model using the following assumptions:

 

     Warrants issued on
September 26, 2014		   Warrants issued on
February 6, 2015

Risk free interest rate

    1.82%   1.48%

Expected life

    5 years   5 years

Expected volatility

    136%   119%

Dividend yield

    0.00%   0.00%
Allocation of Cash Proceeds Derivative Liability at Its Fair Value and Warrant at Its Relative Fair Value, with Residual Allocation of Host AVCP Note Agreement

Based on the previous conclusions, the Company allocated the cash proceeds first to the derivative liability at its fair value and then to the warrants at their relative fair value, with the residual allocated to the host AVCP Convertible Notes as presented below.

 

            Three-months Ended August 31, 2015        
     May 31, 2015      Debt Discount      Fair Value     Conversion     August 31, 2015  

AVCP Convertible notes payable

    $ 2,637,618       $ 94,344       $ —        $ (2,731,962 )    $ —     

Compound embedded derivative

      2,008,907         —           (646,505 )      (1,362,402 )      —     

Warrants (equity allocation)

      215,732         —           —          —          —     

Accrued interest on notes payable

              (35,627 )   

Fair Value of Common Stock Issued

              4,714,168     

Loss on conversion

              (584,177 )   
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  
   $ 4,862,257       $ 94,344       $ (646,505 )    $ —        $ —     
  

 

 

     

 

 

     

 

 

    

 

 

    

 

 

  
2013 Convertible Notes  
Activity Related to Notes

Activity related to the 2013 Convertible Notes for the three months ended August 31, 2015 and fiscal year ended May 31, 2015 was as follows:

 

     August 31, 2015      May 31, 2015  

Face amount of Notes

    $ 50,000       $ 4,271,250   
  

 

 

     

 

 

  

Unamortized discount

      (2,375 )       (6,529 ) 

Conversions

      —           (4,221,250 ) 
  

 

 

     

 

 

  

Total carrying value of Notes

    $ 47,625       $ 43,471   
  

 

 

     

 

 

  
Short-Term Convertible Notes  
Activity Related to Notes

Activity related to the Short-Term Convertible Notes for the three months ended August 31, 2015, and fiscal year ended May 31, 2015 was as follows:

 

     August 31, 2015      May 31, 2015  

Face amount of Notes

    $ 3,981,050       $ 3,981,050   

Unamortized discounts

      (1,037,288 )       (2,390,063 ) 
  

 

 

     

 

 

  

Total carrying value of Notes

    $ 2,943,762       $ 1,590,987   
  

 

 

     

 

 

  
Detachable Common Stock Warrants  
Weighted Average Assumptions to Value Investor Warrants

The Company utilized the following weighted-average assumptions to value the above investor warrants:

 

     2015

Expected dividend yield

    0%

Stock price volatility

    88.79%

Expected term

    5 years

Risk-free interest rate

    1.46%-1.58%

Grant-date fair value

    $0.52-$0.76
Investor Warrants  
Weighted Average Assumptions to Value Investor Warrants

The Company determined the fair value of the new warrants using the Black-Scholes option pricing model utilizing certain weighted-average assumptions, such as expected stock price volatility, term of the warrants, risk-free interest rate and expected dividend yield at the commitment date.

 

     2015

Expected dividend yield

    0%

Stock price volatility

    88.79%

Expected term

    5 years

Risk-free interest rate

    1.46%-1.58%

Grant-date fair value

    $0.52-$0.76