SUBSEQUENT EVENTS - SALE OF COMMON STOCK, SECURED LOAN AND PAY OFF OF CONVERTIBLE PROMISSORY NOTES

6 Months Ended

Jun. 30, 2017

Note F:

SUBSEQUENT EVENTS – SALE OF COMMON STOCK, SECURED LOAN AND PAY OFF OF CONVERTIBLE PROMISSORY NOTES

As described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on July 17, 2017, on July 14, 2017, the Company entered into a Securities Purchase, Loan and Security Agreement (the “Agreement”) with BP Peptides, LLC (“Brookstone"). The net funds will be used to fund our operations, infuse new capital into our joint venture, LipimetiX Development, Inc. ("JV") (As described in Note B to this Quarterly Report on Form 10-Q, in August 2017, the Company purchased 93,458 shares of LipimetiX Development, Inc.’s Series B-2 Preferred Stock for $1,000,000.), to continue its AEM-28-14 development activities, and pay off the Convertible Promissory Notes (as described in Note C to this Quarterly Report on Form 10-Q) totaling $1,000,000, plus $79,000 in accrued interest.

Pursuant to the Agreement, Brookstone funded an aggregate of $3,440,000, with net proceeds of approximately $2,078,000, after paying off the Convertible Promissory Notes and transaction costs, of which $1,102,500 was for the purchase of 13,500,000 newly issued shares of our Common Stock, and $2,427,500 was in the form of a secured loan, due October 15, 2020. The secured loan bears interest at 6% per annum, with interest payable quarterly, and is secured by a security interest in all of our assets. As part of the Agreement, the Company and Brookstone entered into a Registration Rights Agreement granting Brookstone certain demand and piggyback registration rights.

As disclosed above, management has determined that the Company will require additional capital above its current cash and working capital balances to further develop AEM-28-14. Accordingly, the Company will continue to limit its development activities. The Company’s corporate strategy is to raise funds either by the Company, or directly in its joint venture, by possibly engaging in a strategic/merger transaction, or conducting a private or public offering of debt or equity securities for capital.