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Subsequent Events
9 Months Ended
Jul. 31, 2023
Subsequent Events [Abstract]  
Subsequent Events

Note 11 – Subsequent Events

 

Stock Option Grant

 

On August 1, 2023, incentive stock options exercisable for up to 820,996 shares of Common Stock were awarded to two senior executives of the Company. These stock options have an exercise price of $0.59 and ten-year term from the grant date with the options fully vesting on August 1, 2027.

 

On August 22, 2023, incentive stock options exercisable for up to 158,000 shares of Common Stock were awarded to one senior executive of the Company. These stock options have an exercise price of $0.48 and a ten-year term from the grant date with the options fully vesting on August 22, 2027.

 

AJB Promissory Note 

 

On August 9, 2023, AJB Capital Investments, LLC., (“AJB Capital”) issued an unsecured promissory note for $650,000, with an original issue discount of $65,000 which will be amortized over the term of the note. The precomputed interest is being accounted for as a debt discount and amortized through the maturity date of the note. The note bears interest of 10% per year and the interest shall be payable on a monthly basis. In an event of default, the holder of the note shall have the right to convert the outstanding and unpaid principal, interest, penalties, and all other amounts under this note into non-assessable shares of Common Stock. The conversion price shall be the greater of: i) the minimum price which is $0.10 per share (however if closing price of the common stock on the trading market is greater than $1 for ten consecutive trading days then the minimum price shall be $0.40 per share) and ii) the average VWAP over the ten trading day period ending on the conversion date. The note is due and payable on February 9, 2024. The Company issued 400,000 shares of common stock as commitment fee shares. If the note payable has been repaid in full on or prior to within six months of issue, the Company has the right to redeem 200,000 of the commitment fee shares which were originally issued for an amount payable by the Company to the Buyer in cash of one dollar ($1.00) in the aggregate.

 

PMI Amendment

 

On August 12, 2023, the Company executed and entered into a Deed of Amendment (the “PMI License Amendment”) with PMPSA, Bidi and KBI. Pursuant to the PMI License Amendment (which has an effective date of June 30, 2023), the following material changes have been made to the PMI License Agreement:

 

1 Royalty Rate. The royalty paid by PMPSA to KBI will no longer be based on sales price of the Product being sold, but rather on the volume of liquid contained within Product being sold. The royalty will be on a sliding scale of between $0.08 to $0.10 per sale based on the volume of liquid contained in the Product, increasing to between $0.10 to $0.20 per sale upon meeting certain sales milestones. For purposes of determining aggregate sales threshold, all sales undertaken since commencement of the PMI Licensing Agreement will be counted.

 

2. Elimination of Certain Potential Royalty Adjustments. Certain potential adjustments to the royalties receivable by KBI as provided for in the PMI License Agreement have been eliminated.

 

3. Guaranteed Royalty. The guaranteed royalty payment owed to KBI under the PMI License Agreement has been eliminated. Instead, royalties will be paid on a quarterly basis going-forward based on actual sales. Any unpaid guaranteed royalty has been cancelled.

 

4. Insurance Tail Requirements. KBI’s requirement to keep certain tail insurance after the expiration or termination of the PMI Licensing Agreement was reduced from 6 years to 2 years.

 

5. Markets. The identification of the PMI Markets that PMI may enter has been expanded to cover certain additional territories.

 

6. Net Reconciliation Payment to KBI. As a result of the changes to the PMI License Agreement described in paragraphs 1 thought 3 above, the value of such changes was calculated and reconciled as of the date of commencement of the PMI Licensing Agreement through June 30, 2023. On September 8, 2023, the Company received both the Net Reconciliation Payment from PMPSA of $134,981 pursuant to this provision, and also received a royalty payment earned from July 1, 2023 through July 31, 2023, in the amount of $121,000.