Xcede Technologies, Inc. Joint Venture

9 Months Ended

Jun. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 4 – Xcede Technologies, Inc. Joint Venture

In October, 2013, the Company formed Xcede Technologies, Inc. (“Xcede”), a joint venture with Mayo Clinic, in order to spin out and separately fund the development of its tissue sealant technology, which formerly comprised the majority of its biomedical segment. As of June 30, 2016, Xcede has raised approximately $3.0 million in the form of Convertible Notes (the “Notes”), of which $2.4 million was from external funding to outside investors and to certain officers and directors of the Company and $0.6 million was from the Company. The Notes accrue interest at 5%. The total interest accrued at June 30, 2016 was approximately $0.2 million. On July 15, 2016, Xcede amended the Note Purchase Agreement for such Notes to extend the Notes’ maturity date from June 30, 2016 to June 30, 2017 and to increase the principal amount of Notes authorized to be issued thereunder from $3.0 million to up to $5.2 million.

Upon the closing of a capital stock financing raising of at least $3.0 million, inclusive of the Notes and interest, the outstanding principal amount of the Notes plus all accrued interest will be converted into shares of the same capital stock sold in the financing at a 20% discount to the price per share of that capital stock. Alternatively, at any time prior to a capital stock financing the Note holders can convert, at their option, the principal amount of the Notes plus accrued interest into common stock based on a $5 million valuation.

Ninety percent of Xcede’s common stock is owned by Dynasil Biomedical and, as a result, is included in the Company’s consolidated balance sheets, results of operations and cash flows. The Company expects Xcede to require significant additional funding prior to commencing human trials.

On January 6, 2016, Xcede announced that it had signed three agreements with Cook Biotech Inc. of West Lafayette, IN including a Development Agreement, a License Agreement and a Supply Agreement in connection with the development, regulatory approval and production of Xcede’s resorbable hemostatic patch.

On June 2, 2016, Xcede issued 239,000 shares of its Common Stock to the Mayo Foundation for Medical Education and Research (“Mayo”) as the final anti-dilution adjustment in satisfaction of the anti-dilution clause in the existing licensing agreement between Xcede and Mayo. As a result, a charge of $0.2 million was recorded in stock compensation expense during the third quarter 2016.

On July 19, 2016, Xcede issued an additional $0.5 million in principal amount of Notes pursuant to the Note Purchase Agreement, allowing Xcede to continue to fund the development of its tissue sealant product.