Xcede Technologies, Inc. Joint Venture

12 Months Ended

Sep. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

Note 3 – Xcede Technologies, Inc. Joint Venture

In October 2013, the Company formed 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 September 30, 2016, Xcede had raised approximately $3.4 million in the form of Convertible Notes (the “Notes”), of which $2.9 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 accrued interest at 5%. The total interest accrued due to the external funding sources at September 30, 2016 was approximately $0.3 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.

In January 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.

In June 2016, Xcede issued 238,535 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 for the year ended September 30, 2016.

In November 2016, Xcede announced Cook Biotech Inc. committed to fund the pre-clinical testing of, and subject to the receipt of applicable regulatory approvals initiate clinical trials for, its first tissue sealant product. In addition, in November 2016, the Company committed to invest $1.2 million of cash into Xcede over the following 18 months and all $5.1 million in existing notes and accrued interest were converted into 5,394,120 shares of preferred stock of Xcede at a 20% discount to the price per share of the investment the Company has committed to make in Xcede, in accordance with the provisions of the notes.

As of September 30, 2016, Dynasil Biomedical owned 83% of Xcede’s common stock and, as a result, Xcede is included in the Company’s consolidated balance sheets, results of operations and cash flows. As of December 1, 2016, approximately 59% of Xcede’s outstanding equity was owned by Dynasil Biomedical as a result of the conversion of the outstanding notes described above.