Item 2. Unregistered Sales of Equity Securities
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
On September 30, 2024, the Company executed a $10 million Promissory Note under the Supplemental Line of Credit. The interest rate on this draw is 6.13% (Applicable Federal Rate for short term loans
on date of draw of 5.01% plus 2%). The effective interest rate is approximately 6.4%. The principal and accrued interest is convertible at the option of the Lender at $3.00 per share. In accordance with the Credit Agreement, the Company issued
the Lender a Warrant to purchase up to 200,000 shares of Company’s Common Stock at an exercise price of $4.13 per share, which Warrant is exercisable upon issuance.
The fair value of the 200,000 warrants vested at closing on September 30, 2024, was $307,780 at the date of issuance based on the following assumptions: an expected life of 4.83 years, volatility of
78%, risk free interest rate of 3.58% and zero dividends. The proceeds were allocated between the Promissory Note and the warrants issued, and the amount allocated to the warrants was recorded as a debt discount netted against principal
amortized on a straight-line basis, which is not materially different than the effective interest method, from October 1, 2024 through January 31, 2026.
Item 3.
Defaults Upon Senior Securities
None
26
Index
Item 4.
Mine Safety Disclosures
Not Applicable
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