XML 18 R11.htm IDEA: XBRL DOCUMENT

Warrants

9 Months Ended

Apr. 30, 2018

NOTE 6 - WARRANTS

During the nine months ended April 30, 2018, the Company issued the following warrants:

In August 2017, the Company secured $240,000 from various accredited investors under a private placement and issued 480,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 90,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.

In October 2017, the Company secured $40,000 from an accredited investor under a private placement and issued 80,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 15,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.

In December 2017, Digerati issued 100,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. At time of issuance the company recognized approximately $49,000 in warrant expense using Black-Scholes valuation. Additionally, Digerati committed to issue 100,000 warrants if the Company’s stock price traded at $0.75 per share for 10 consecutive days, to issue 100,000 warrants if the Company’s stock price traded at $1.00 per share for 10 consecutive days, and to issue 100,000 warrants if the Company’s stock price traded at $1.25 per share for 10 consecutive days. The term of the Agreement is one year. As a result of the commitment to issue additional warrants in the future, the Company recorded a derivative liability at the origination of the Agreement of $77,000. This liability was re-measured at the April 30, 2018 which resulted in a gain on change in derivative value of $50,000 during the nine month period ended.

In January 2018, Digerati issued 100,000 warrants to various consultants for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.50. At time of issuance the company recognized approximately $49,000 in warrant expense using Black-Scholes valuation. These warrants were re-priced in April 2018 to have an exercise price of $0.15 per share resulting in a charge of $1,400 during April 2018.

In January 2018, Digerati issued 220,000 warrants to a consultant for services, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.001. At time of issuance the company recognized approximately $119,000 in warrant expense using Black-Scholes valuation.

In March 2018, the Company secured $80,000 from an accredited investor under a private placement and issued 160,000 shares of its common stock at a price of $0.50 per share and warrants to purchase an additional 30,000 shares of its common stock at an exercise price of $0.50 per share. We determined that the warrants issued in connection with the private placement were equity instruments and did not represent derivative instruments.

In March 2018, Digerati issued 300,000 warrants under a two promissory notes, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.10. At time of issuance the company recognized approximately $125,000 in warrant expense using Black-Scholes valuation.

In April 2018, Digerati issued 100,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 3 years, with an exercise price of $0.50. At time of issuance the company recognized approximately $29,000 in warrant expense using Black-Scholes valuation.

In April 2018, Digerati issued 300,000 warrants under a promissory note, the warrants vested at time of issuance. The warrants have a term of 5 years, with an exercise price of $0.15. At time of issuance the company recognized approximately $115,000 in warrant expense using Black-Scholes valuation.

The fair market value of all warrants issued was determined using the Black-Scholes option pricing model which used the following assumptions:

Expected dividend yield	0.00	%
Expected stock price volatility	160.93% - 176.73	%
Risk-free interest rate	2.24% - 2.80	%
Expected term	3.0 years - 5.0 years

A summary of the warrants as of April 30, 2018 and July 31, 2017 and the changes during periods are presented below:

					Weighted-average
			Weighted-average		remaining contractual
	Warrants		exercise price		term (years)
Outstanding at July 31, 2017		510,000	$	0.29		2.87
Granted		1,255,000	$	0.21		3.44
Exercised		-		-		-
Cancelled		-		-		-
Outstanding at April 30, 2018		1,765,000	$	0.23		3.00
Exercisable at April 30, 2018		1,765,000	$	0.23		3.00