Transition report pursuant to Rule 13a-10 or 15d-10

Convertible Notes Payable

Convertible Notes Payable
9 Months Ended
Dec. 31, 2018
Debt Disclosure [Abstract]  
Convertible Notes Payable



During the year ended March 31, 2018, the Company issued nine convertible notes payable for an aggregate of $1,015,000. Each note payable is unsecured, accrues interest at 5% compounded annually, and matures 24 months from the date issued. The conversion price for each note is to be at the lower of (i) a 20% discount to the pricing of shares in a financing or (ii) at a price per share implied by the valuation cap determined for each note. The Company reviewed the guidance of ASC 480-10-25-14, which requires liability accounting for a financial instrument that embodies an unconditional obligation to transfer a variable number of equity shares if the monetary value of the obligation at inception is based solely or predominantly on any of the following: (a) a fixed monetary amount known at inception, (b) variations in something other than the fair value of the issuer’s equity shares or (c) variations inversely related to changes in the fair value of the issuer’s equity shares.


Upon issuance, the Company anticipated that the convertible notes will be predominately paid off by the issuance of the Company’s equity shares. Accordingly, the Company determined that the Company’s obligation associated with the convertible notes payable are monetary amounts fixed at inception to be settled by a variable number of equity shares for the convertible notes. The Company determined that the fair value of the convertible notes was $1,181,250 which reflects the 20% discount to the conversion price. The convertible notes were being accreted to this fair value over the respective two year terms of the notes. At March 31, 2018, accretion of $41,000 was recorded and the balance of the convertible notes was $1,056,000.


On May 17, 2018, the Company and the convertible note holders entered into a conversion and settlement agreement whereby each note holder agreed to settle the outstanding principal of their note in exchange for shares of common stock of the Company. The amount of shares issued was agreed upon separately by each shareholder and the Company. The convertible notes payable principal totaled $1,015,000 and were converted into a total of 3,771,040 shares of common stock, at conversion prices ranging from $0.30 per share to $1.04 per share. On May 17, 2018, the convertible notes and accreted balance totaled $1,056,000, and the shares issued were measured at their fair value of $1,015,000. The difference of $41,000 was recorded as gain on settlement of debt.