Quarterly report pursuant to Section 13 or 15(d)

Convertible Instruments (Tables)

v3.19.1
Convertible Instruments (Tables)
 9 Months Ended
Feb. 28, 2019
Activity Related to Notes
Activity related to the June 2018 Note and the January 2019 Note is as follows:
 
 
 
 February 28, 2019
 
 
  
 
 
 
 Short term
 
 
 Long term
 
 
 Total
 
 
 May 31, 2018
 
June 2018 Note
 
 $ 2,100,000
 
 
 $ 3,600,000
 
 
 $ 5,700,000
 
 
 
 —
 
Monthly redemption provision
 
 
 2,100,000
 
 
 
 (2,100,000 )
 
 
 —
 
 
 
 —
 
Note amendment, net
 
 
 —
 
 
 
 111,410
 
 
 
 111,410
 
 
 
  
 
Redemptions
 
 
 —
 
 
 
 (455,000 )
 
 
 (455,000 )
 
 
 —
 
January 2019 Note
 
 
 —
 
 
 
 69,006
 
 
 
 69,006
 
 
 
 —
 
Carrying value of Notes at February 28, 2019
 
 $ 4,200,000
 
 
 $ 1,225,416
 
 
 $ 5,425,416
 
 
 $ —
 
Warrants At Fair Value And Beneficial Conversion Feature At Intrinsic Value [Table Text Block] The net proceeds of $5.0 million were allocated first to the redemption provision at its fair value, then to the warrants at their relative fair value and the beneficial conversion feature at its intrinsic value as follows:
 
 
 
January 30, 2019
 
Fair value of redemption provision
 
$
1,465,008
 
Relative fair value of equity classified warrants
 
 
858,353
 
Beneficial conversion feature
 
 
2,676,639
 
Proceeds
 
$
5,000,000
  
Short-Term Convertible Notes  
Activity Related to Notes
Activity related to the 2018 Short-term Convertible Notes was as follows:
 
 
 
February 28, 2019
 
 
May 31, 2018
 
Face amount of Short-term Convertible Notes
 
$
—
 
 
$
6,038,500
 
Unamortized discount
 
 
—
 
 
 
—
 
Registered direct equity offering
 
 
—
 
 
 
(5,788,500
)
Note repayment
 
 
—
 
 
 
(250,000
)
Carrying value of Short-term Convertible Notes
 
$
—
 
 
$
—
 
Two Thousand And Nineteen Short Term Convertible Notes [Member]  
Activity Related to Notes
 
 
 
February 28, 2019
 
 
May 31, 2018
 
Face amount of Short-term Convertible Notes
 
$
5,460,000
 
 
$
—
 
Unamortized discount
 
 
(2,499,776
)
 
 
—
 
Unamortized issuance costs
 
 
(688,401
)
 
 
—
 
Carrying value of Short-term Convertible Notes
 
$
2,271,823
 
 
$
—
 
Summary of Fair Value Valuation Technique The Company determined the fair value of the warrants at issuance using the Black-Scholes option pricing model utilizing certain weighted average assumptions, such as expected stock price volatility, expected term of the warrants, risk-free interest rates and expected dividend yield at the grant date.
 
 
 
2018 - 2019
 
Expected dividend yield
 
 
0
%
 
Stock price volatility
 
 
55.8 - 55.88%
 
Expected term
 
 
5 year
 
Risk-free interest rate
 
 
2.48 - 2.56%
 
Grant-date fair value
 
 
$0.30 - $0.38
 
Investor Warrants  
Summary of Fair Value Valuation Technique
In connection with the sale of the 2018 Short-term Convertible Notes, detachable common stock warrants to purchase a total of 4,025,656 common shares, with an exercise price of $1.00 per share and a five-year term were issued to the
investors. The Company determined the fair value of the warrants at issuance using the Black-Scholes option pricing model utilizing certain weighted average assumptions, such as expected stock price volatility, expected term of the warrants, risk-free interest rates and expected dividend yield at the grant date.
 
 
 
 
2018
 
Expected dividend yield
 
 
0
%
 
Stock price volatility
 
 
69.80
%
 
Expected term
 
 
5 year
 
Risk-free interest rate
 
 
1.77-1.93%
 
Grant-date fair value
 
 
$0.30-0.39