SENIOR SECURED DEBENTURES |
9 Months Ended |
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Sep. 30, 2021 | |
| Debt Disclosure [Abstract] | |
| SENIOR SECURED DEBENTURES |
6. SENIOR SECURED DEBENTURES
On March 24, 2021, the Company entered into a securities purchase agreement with certain accredited investors for the purchase of $750,000 in principal amount ($600,000 subscription amount) of senior secured debentures originally due June 24, 2021 (the “Bridge Loan”). The imputed interest rate is encompassed within the original issue discount of the debentures and no additional cash interest shall be due. The debentures were issued pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, to certain purchasers who are accredited investors within the meaning of Rule 501 under the Securities Act of 1933, as amended. Transaction costs of $69,000 have been recorded in connection with the Bridge Loan.
On June 24, 2021, the due date was extended, for which the Company paid an extension fee of common shares with a fair value of $60,000. The senior secured debentures were repaid in full on July 13, 2021.
As part of the bridge loan, the debenture holder was issued warrants (the “Bridge Warrants”) to purchase 93,938 common shares with a strike price of $3.99 per share. The term of the warrants is years. In accordance with U.S. GAAP, the fair value of the warrants was recorded as a liability in the accompanying balance sheet at September 30, 2021 using Black-Scholes option-pricing model. The Company remeasures the fair value of the warrants liability at each reporting date until the warrants are exercised or have expired. Changes in the fair value of the warrants liability is reported in the statements of comprehensive income / (loss) as income or expense. The fair value of the warrants liability is subject to significant fluctuation based on changes in the inputs to the Black-Scholes option-pricing model, including our common stock price, expected volatility, expected term, the risk-free interest rate and dividend yield. The market price for our common stock may be volatile. Consequently, future fluctuations in the price of our common stock may cause significant increases or decreases in the fair value of the warrants.
The changes in the fair value of the Bridge Warrants amounting to $199,255 is charged to the statement of comprehensive income / (loss). The fair value of the warrants estimated at $ determined using the Black-Scholes option pricing model was based on the following assumptions; stock price $, dividend yield – nil, expected volatility 75%, risk free rate of return 0.67%, expected term of 3 years.
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