SALE OF COMMON STOCK AND ISSUANCE OF SECURED DEBT

12 Months Ended

Dec. 31, 2018

Stockholders' Equity Note [Abstract]

Issuance Of Common Stock And Secured Debt Disclosure [Text Block]

10. SALE OF COMMON STOCK AND ISSUANCE OF SECURED debt

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 8 to this Annual Report on Form 10-K, in August 2017, the Company used part of the net proceeds to purchase 93,458 shares of LipimetiX Development, Inc.’s Series B-2 Preferred Stock for $1,000,000.), to continue its development activities, and pay off the Convertible Promissory Notes (as described in Note 9 to this Annual Report on Form 10-K) 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 $2,074,000, after paying off the Convertible Promissory Notes and transaction costs, of which $1,012,500 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. On July 14, 2017 Brookstone also purchased 5,041,197 shares of the Company’s Common Stock directly from Biotechnology Value Fund affiliated entities, resulting in ownership of 18,541,197 shares of the Company’s Common Stock, representing approximately 34.1% of outstanding shares of the Company’s Common Stock at December 31, 2018. Transaction costs of $287,000 have been deferred and will be written off over the life of the secured loan, thirty-nine months from July 14, 2017 to October 20, 2020, on the straight-line basis. Additional transaction costs of $12,000 were incurred with the Amendment (see Note 11) and will be written off over the period of the date of the Amendment, January 30, 2018, to October 15, 2020. At December 31, 2018 transaction costs of $134,000 ($93,000 in 2018 and $41,000 in the second half of 2017), have been amortized and included in the Consolidated Statements of Operations in Interest and Other Expenses. At December 31, 2018 and December 31, 2017, unamortized transaction costs of $165,000 and $246,000, respectively, have been netted against the outstanding Secured Debt balance on the Consolidated Balance Sheets. As discussed in Note 11 below, interest payable on the Secured Debt is now due at loan maturity, October 15, 2020, and, at December 31, 2018 and December 31, 2017, accrued interest of $213,000 and $68,000, respectively, has been included in the Secured Debt balance on the Consolidated Balance Sheets. The interest on the secured debt ($145,000 in 2018 and $68,000 in the second half of 2017) has been included in the Consolidated Statements of Operations in Interest and other income (expense), net.

A summary of the Secured Debt activity is as follows (000’s):

	December 31, 2018			December 31, 2017
Secured Debt	$	2,427		$	2,427
Transaction costs		(299	)		(287	)
	$	2,128		$	2,140
Amortization		134			41
	$	2,262		$	2,181
Accrued interest		213			68
	$	2,475		$	2,249

The secured loan bears interest at 6% per annum, with interest payable quarterly (now due at loan maturity see Note 11 below) 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. A provision in the Agreement entered into with Brookstone also requires the Company to nominate two candidates for a director position that have been recommended by Brookstone as long as Brookstone beneficially owns over 20% of the Company’s outstanding common stock and to nominate one candidate for a director position that has been recommended by Brookstone as long as Brookstone beneficially owns over 5% but less than 20% of the Company’s outstanding common stock.

On April 18, 2017, the Company and Computershare Trust Company, N.A., as Rights Agent (the “Rights Agent”) entered into Tax Benefit Preservation Plan Agreement (the “Plan”), dated as of April 18, 2017, between the Company and the Rights Agent, as described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on April 19, 2017. The Plan is intended to act as a deterrent to any person (together with all affiliates and associates of such person) acquiring “beneficial ownership” (as defined in the Plan) of 4.99% or more of the outstanding shares of Common Stock without the approval of the Board (an “Acquiring Person”), in an effort to protect against a possible limitation on the Company’s ability to use its net operating loss carryforwards. The Board, in accordance with the Plan, granted an Exemption to Brookstone with respect to the share acquisition described above, and Brookstone’s acquisition of 5,041,197 shares of the Company’s Common Stock from Biotechnology Value Fund affiliated entities, making Brookstone an Exempt Person in respect of such transactions.

As described in our Current Report on Form 8-K filed with the Securities and Exchange Commission on March 19, 2019, on March 15, 2019, the Company entered into the Second Amendment to Securities Purchase, Loan and Security Agreement (the “2nd Amendment”) with Brookstone. The 2nd Amendment provides for additional advances to the Company up to a Maximum amount of $500,000 to be used for Company operations. Advances made will be added to the secured debt and be subject to the terms and conditions of the Securities Purchase, Loan and Security Agreement. At Brookstone’s sole discretion, the Maximum amount of the advances may be increased to an amount not exceeding $700,000.