Quarterly report pursuant to Section 13 or 15(d)

Note Payable

v3.3.1.900
Note Payable
3 Months Ended
Feb. 29, 2016
Debt Disclosure [Abstract]  
Note Payable

Note 6– Note Payable

On June 30, 2015, the Company entered into a note payable in the amount of $1,300,000 in connection with the APA (Note 2). The note is payable in 48 monthly installments of $29,938 including principal and interest at the rate of 5% per annum, commencing on July 31, 2015, and ending on June 30, 2019. Pursuant to the APA, the note is secured by all assets, inventory, molds and tools sold and transferred to the Company, tangible personal property held for sale or lease, accounts, contract rights, and other rights to payment and general intangibles.

In the event the Company sells less than 8,000 Prepacyte CB Processing System Units (“Units”) to outside customers during each of the twelve month periods during the note term beginning each July 1 and ending June 30, the note will be reduced by the lesser of $100,000 plus interest at the rate of 5% per annum or $25 times the difference between 8,000 and the actual number of Units sold plus interest at the rate of 5% per annum. Any annual note reduction shall serve to lower the remaining monthly note payments.

In addition, in the event that during the period from July 1, 2018 to June 30, 2019, the Company shall sell 4,000 Units, it will receive an additional $120,000 note reduction. However, if the Company sells more than 4,000 Units, it will owe additional principal in the amount of $25 times the difference between 8,000 and the actual number of Units sold plus interest at the rate of 5% per annum, which is payable on June 30, 2019. The Company expects that it will sell more than 4,000 Units for the periods noted and does not expect a note reduction.

As of the three months ended February 29, 2016, the Company made three installments of $29,938 and recognized $14,391 of interest expense related to the note payable. The remaining principal balance of the note payable is $1,100,944 and $1,176,367 and is reflected on the accompanying balance sheets as of February 29, 2016 and November 30, 2015, respectively.