CONVERTIBLE NOTES PAYABLE |
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CONVERTIBLE NOTES PAYABLE |
NOTE 5 — CONVERTIBLE NOTES PAYABLE Between January and April 2018, the Company entered into convertible notes payable with an aggregate principal balance of $5.3 million (the “Fiscal 2018 Notes”). The Fiscal 2018 Notes provided for interest at the contractual rate of 15.0% for the period from July 1, 2019 through the conversion date. The Fiscal 2018 Notes also provided that the unpaid principal and accrued interest would automatically convert at a 20% discount to the class of securities issued upon completion of a subsequent equity financing for at least $15 million. This feature that enabled conversion at a discount was a contingent BCF that was not calculated and recorded until the financing that triggered conversion was completed. The closing of the Series AA Financing resulted in the conversion of the Fiscal 2018 Notes whereby the contingent BCF was measured and recognized on January 30, 2019 as shown below (in thousands).
Presented below is a summary of the components of interest expense related to Fiscal 2018 Notes for the fiscal year ended June 30, 2019 (in thousands):
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