WARRANTS

3 Months Ended

Sep. 30, 2022

WARRANTS

WARRANTS

NOTE 10. WARRANTS

Warrant to Purchase Seed Preferred Stock

On August 4, 2022, in accordance with a credit facility (ref: Note 11(h)) the Company issued to the Administrative Agent a seven-year warrant to purchase up to 1,300,123 shares of the Company’s Seed Preferred Stock at an exercise price of $2.00 per share. The stock warrants vested immediately and were valued using the Black-Scholes pricing model. The Black-Scholes pricing model applied the following assumptions: risk-free interest rate of 2.73%, expected term of 7 years, expected volatility of 62.56% and dividend yield of 0%. The Company recorded $3,627,980 as financing costs, included in professional and consulting fees, during the three months ended September 30, 2022.

Warrant to purchase Seed Preferred Stock transactions are summarized as follows:

	Number of shares		Weighted Average Exercise Price ($)		Weighted Average Remaining Recognition Period (Years)
Balance, June 30, 2022		-	$	-		-
Warrants issued		1,300,123	$	2.00		7
Warrants expired		-	$	-		-
Balance, September 30, 2022		1,300,123	$	2.00		6.83

Warrant to Purchase Seed Preferred Stock (Cont’d)

Number of Warrants	Exercise Price ($)	Expiry Date
1,300,123	2.00	August 04, 2029

Warrant to Purchase Common Stock

On September 9, 2022, in conjunction with a Loan Purchase and Sale Agreement, (ref: Note 12 – Loan Purchase and Sale Agreement) the Company issued the Seller a warrant to purchase 1,500,000 restricted shares of the Company’s common stock at an exercise price of $2.00 per share. This warrant will begin to vest on the one-year anniversary of the closing of the purchase of the Loan with 12.5% of the Warrant amount (187,500 shares) vesting on that date and the remaining portion of the Warrant vesting in seven quarterly installments of 187,500 shares each over the next seven quarters. Vesting of the Warrant will be accelerated upon the occurrence of a sale or merger of the Company. The Warrant will terminate on the seventh anniversary of the closing date and will be subject to customary adjustments of the warrant price and number of shares for splits, stock dividends, recapitalizations and the like. The stock warrants were valued using Black-Scholes pricing model. The Black-Scholes pricing model applied the following assumptions: risk-free interest rate of 3.44%, expected term of 7 years, expected volatility of between 67.44% to 69.38% and dividend yield of 0%. The Company has valued the warrants as of the transaction date with a total value of $3,910,320, all of which remains unamortized as of the date of this report. The first tranche of warrants do not initially vest until the one year anniversary of the agreement date, and therefore there is no financial impact as a result of the warrant during the current reporting period ended September 30, 2022.

Transactions involving Warrants to purchase Common Stock are summarized as follows:

	Number of shares		Weighted Average Exercise Price ($)		Weighted Average Remaining Recognition Period (Years)
Nonvested at June 30, 2022		-	$	-		-
Granted		1,500,000	$	2.00		7
Vested		-		-		-
Forfeited		-		-		-
Nonvested at September 30, 2022		1,500,000	$	2.00		6.92