Investor also receives five-year warrant to purchase 283,333 shares
By Angela McDaniels
Tacoma, Wash., April 30 – Islet Sciences, Inc. issued a $170,000 10% 10-month convertible promissory note to Typenex Co-Investment, LLC on April 24 at an original issue discount of $15,000.
Because the company was also required to pay $5,000 of Typenex’s expenses, the net proceeds to the company were $150,000, according to an 8-K filing with the Securities and Exchange Commission.
Typenex also received a five-year warrant to purchase 283,333 shares of common stock at $0.30 per share on a cash or cashless basis. The strike price is a 30.4% premium to the company’s $0.23 closing share price on April 23.
The note is convertible into common stock beginning six months after the closing date. The conversion price is the lesser of (i) 115% of the volume-weighted average price on the date that is six months after the closing date and 70% of the average of the three lowest closing bid prices in the 20 trading days immediately preceding conversion, provided that if at any time the average of the three lowest closing bid prices in the 20 trading days immediately preceding any date of measurement is below $0.15, then the then-current conversion factor will be reduced by 5% for all future conversions. Additionally, if the shares in accordance with the Typenex note are not DTC eligible, then the conversion factor will automatically be reduced by an additional 5% for all future conversions.
Beginning six months after the closing date, the company must pay to Typenex each month $34,000 plus accrued interest. The payments may be made in cash or stock at the conversion price.
Twenty trading days after each date that the company delivers conversion shares to Typenex, there is a true-up date in which the company will deliver additional shares if the conversion price calculation on that date is less than on the date of conversion.
Except for securities issued under an approved stock plan, if the company sells or issues any of its securities to Typenex or a third party during the life of the note for a price that is less than the conversion price, then the conversion price will automatically be reduced to that lower issuance price.
The note is prepayable on any installment date at 125% of the outstanding balance.
The placement is part of a strategic financing strategy that includes the raising of short-term cash. The company said management's goal is to complete a larger financing to pay off these short-term borrowings, to finance the company’s operations, to make effective its license for Remogliflozin and to further develop its products.
Islet is a biotechnology company based in Raleigh, N.C.
| Issuer: | Islet Sciences, Inc.
|
| Issue: | Convertible promissory note
|
| Principal amount: | $170,000
|
| Price: | $155,000
|
| Tenor: | 10 months
|
| Coupon: | 10%
|
| Conversion price: | Lesser of (i) 115% of volume-weighted average price on date that is six months after closing date and 70% of average of three lowest closing bid prices in 20 trading days immediately preceding conversion, provided that if three lowest closing bid prices in 20 trading days immediately preceding any date of measurement is below $0.15, then conversion factor will be reduced by 5% for all future conversions
|
| Call option: | At 125 on any monthly installment date beginning six months after issuance
|
| Warrant: | For 283,333 shares
|
| Warrant strike price: | $0.30
|
| Investor: | Typenex Co-Investment, LLC
|
| Settlement date: | April 24
|
| Stock symbol: | OTCBB: ISLT
|
| Stock price: | $0.24 at close April 23
|
| Market capitalization: | $16.4 million
|
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