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Replies to post #82422 on Intellicell Biosciences Inc (fka SVFC)
11/23/14 2:06 PM
7. License Fees Payable
During the years ended December 31, 2013 and 2012, the Company executed various license agreements and collected an aggregate of $1,222,500 in license fees for six centers which never commenced operations. Recognition of such revenue had been deferred pending commencement of operations. The Company was unable to perform its obligations in regards to the licensing agreements and, accordingly, the agreements were cancelled. The Company has classified the amounts to be returned to the former licensees as Licensee Fees Payable on the condensed consolidated balance sheet.
In 2013, the Company converted three different license fees outstanding into convertible debentures totaling $300,000, bringing the total balance as of September 30, 2014 to $922,500.
License Fee Conversions
On December 31, 2013, the Company issued three separate secured convertible debentures totaling $300,000 to convert license fees due certain third parties. Bill Hess, POBD Holding Co. was issued a convertible debenture for $80,000. Patty Dixon, Allwin Scientific Corp. was issued a convertible debenture for $60,000. Brian Kozer, MD was issued a convertible debenture for $160,000. The terms of these convertible debentures were the same: a maturity date of January 1, 2014, 10% simple interest calculated on a 360 day year, and a conversion rate equal to 48.5% of the average of the three lowest traded prices (not the same day) of the common Stock, determined on the then current trading market for the Common Stock for 20 trading days immediately preceding the Conversion Date as quoted by Bloomberg, LP. The conversion feature of the debentures have been bifurcated from the host contract and accounted for separately as a derivative. The bifurcation of the embedded derivative created a debt discount which reduced the book value of the $300,000 debenture and increases prospectively the amount of interest expense to be recognized over the life of the debenture.
During the nine months ended September 30, 2014, $140,000 of the principal balance of the Brian Kozer, MD Debentures were assigned to various investors.
As of September 30, 2014 and December 31, 2013, the three convertible debentures from license fees had a balance due of $160,000 and $300,000, respectively, and had accrued interest of $26,000 and $30,000, respectively. These debentures are currently in default.
