7. Debt

Senior secured notes


	March 31,		September 30,
	2020		2019
Convertible senior secured notes	$	7,589,027	$	6,699,000
Unamortized debt discount		(403,034)		—
	$	7,185,993	$	6,699,000

In December 2019, the Company entered into an exchange agreement with the holders of its approximately $7.3 million outstanding aggregate principal amount and accrued interest of senior secured notes (the “Old Senior Notes”) originally issued pursuant to the certain Note and Warrant Purchase Agreement dated December 22, 2017, as amended on April 13, 2017, November 5, 2018, and June 28, 2019 (the “Exchange Agreement”). Pursuant to the Exchange Agreement, the holders of the Old Senior Notes exchanged the entire outstanding principal and accrued interest for new senior secured notes having an aggregate outstanding original principal amount of $7.6 million, which includes an aggregate exchange fee of approximately $0.3 million.

The new senior secured notes are substantially similar to the Old Senior Notes, as amended through the date of the Exchange Agreement, bear interest at a rate of 12.0% per annum and will mature December 31, 2020 (subject to extension to June 30, 2021 at the Company’s option upon payment of an extension fee equal to 3% of the outstanding balance and being in compliance with applicable Nasdaq listing requirements). The new senior secured notes are convertible, at the option of the holder, beginning April 1, 2020, into shares of the Company’s common stock at a conversion price equal to 90% of the two lowest closing bid prices in the 20 trading days immediately preceding such conversion, subject to a floor price of $0.232 per share. In the event the conversion price is lower than the floor price for 20 consecutive trading days, the Company is required to make a cash redemption equal to $350,000 (provided that it shall not be required to make more than one redemption in any calendar month, nor shall a trading day where the conversion price is lower than the floor price be included in more than one 20-trading day period). The conversion feature was determined to be a redemption feature and was bifurcated from the debt instrument. The estimated fair value of the redemption feature was $8.3 million at issuance (see Note 4).

The Exchange Agreement was accounted for as an extinguishment of debt. Loss on extinguishment of convertible senior secured notes recognized during the six months ended March 31, 2020 was $8.1 million and equal to the excess fair value of the notes and bifurcated redemption feature over the notes’ net carrying value.

Aggregate interest expense on the Old Senior Notes and the new senior secured notes for the three months ended March 31, 2020 and 2019 was $348,541 and $561,485, respectively, and $550,062 and $1,162,917 for the six months ended March 31, 2020 and 2019, respectively.

Stockholder notes

The Company previously repurchased shares of its restricted stock in exchange for notes in the amount of $800,000 that do not bear interest and are due on demand.

The Company has a $2,812,500 note payable related to the previous repurchase of common stock that does not bear interest and is due on demand.