Convertible Notes

6 Months Ended

Dec. 31, 2021

Convertible Notes [Abstract]

Convertible notes

Note 12. Convertible notes:

On December 19, 2021, the Company issued two Senior Convertible Notes (the “Convertible Notes”) to two non-U.S. investors for an aggregate purchase price of $10,000,000. 

The Convertible Notes bear interest at 5% annually and may be converted into shares of the Company’s common stock, no par value per share (“Common Stock”) at a conversion price of $3.76 per share, the closing price of the Common Stock on December 17, 2021. The Convertible Notes are unsecured senior obligations of the Company, and the maturity date of the Convertible Notes is December 18, 2023. The Company may repay any portion of the outstanding principal, accrued and unpaid interest, without penalty for early repayment. The Company may make any repayment of principal and interest in (a) cash, (b) Common Stock at the conversion price or (c) a combination of cash or Common Stock at the conversion price.

The investors may convert any conversion amount into Common Stock on any date beginning on June 19, 2022.

The Company evaluated the convertible notes agreement under ASC 815 Derivatives and Hedging (“ASC 815”) amended by ASU 2020-06. ASC 815 generally requires the analysis embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. Based on terms of the convertible notes agreements, the Company’s notes is converted on fixed number of shares and does not require the Company to net settle. None of the embedded terms required bifurcation and liability classification.

For the three and six months ended December 31, 2021, interest expenses related to the aforementioned convertible notes amounted to $16,438.