Note 7 - Convertible Debentures

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

7

. 

Convertible Debentures

February 2016

Financing Transaction

In

February 2016

in exchange for aggregate proceeds of

$15,000,000

the Company sold and issued to Boyalife Investment Inc. and Boyalife (Hong Kong) Limited (i)

735,294

shares of common stock at a purchase price of

$3.40

per share (the “Stock Price”) for gross proceeds of

$2,500,000

(ii) Secured Convertible Debentures for

$12,500,000

(the “Debentures”) which are convertible into

3,676,471

shares of common stock, and (iii) warrants to purchase

3,529,412

additional shares of common stock at an exercise price of

$8.00

per share for a period of

five

years. The amount of warrants was based on

80%

coverage of the shares issued or to be issued for the equity transaction in (i) and the debt transaction in (ii) above. The warrants were exercisable on

August 13, 2016

and are outstanding at

December 31, 2018.

On

August 22, 2016,

all outstanding principal and interest accrued and otherwise payable under the Debentures were converted, which included the conversion of

$12,500,000

of principal and

$8,250,000

of interest up to and including the maturity date of the Debentures. Upon conversion,

6,102,941

shares of common stock were issued and the Debentures and all related security interest and liens were terminated.

The

2,426,470

common shares that were issued for payment of the interest had a fair market value of

$11,403,000

on

August 22, 2016.

Accordingly, an additional

$3,153,000

of interest expense was recorded on the date of conversion. At the time of the conversion, the remaining debt discount of

$9,538,000

and debt issue costs of

$155,000

were fully amortized.