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AETHLON MEDICAL INC FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Unregistered Sale of Equity Securities, Financial Statements and Exhibits

July 10, 2014



ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

On July 8, 2014, the Registrant entered into a restructuring agreement (the "Agreement") with the Estate of Allan Bird (the "Estate"), a holder of a Series A 12% Convertible Note (the "Note"), which previously was classified as being in default. In the Agreement, the Estate agreed to extend the expiration date of the Note to April 1, 2016, to convert approximately $116,970 of accrued interest to equity, and to waive anti-dilution price protection underlying the Note and warrants previously issued to the Estate.

As a result of the waiver of all anti-dilution price protection by the Estate,

the Registrant will reclassify to equity $1,238,292 of derivative liability based on the fair value of securities on the Registrant's fiscal year-end date of March 31, 2014.



Also, the execution of the Agreement results in the waiver of anti-dilution

price protection under agreements with three other note and warrant holders. As a result, the Registrant will reclassify into equity an additional $5,724,761 of derivative liability based on the fair value of securities on the Registrant's fiscal year-end date of March 31, 2014.



In addition, as a result of a note conversion and waiver of anti-dilution price

protection previously reported on Form 8-K on June 30, 2014, a combined $4,719,214 of principal, accrued interest and derivative liability has been reclassified into equity.



Based on the Agreement, the elimination of antidilution provisions and the note

and accrued interest conversions, all previously reported derivative liabilities will be reclassified into equity. As a result of the combination of the reclassification of the derivative liability based on its fair value as of March 31, 2014 and of the conversion of interest and principal, the Registrant's balance sheet equity will increase by $11,799,237.



The above numbers are unaudited and are subject to adjustment.

Under the Agreement, the Estate converted the entire $116,970 past due interest balance on the Note, which previously was in default, into an aggregate of 2,591,846 restricted shares of the Registrant's Common Stock. The Estate received five-year warrants to acquire up to 2,321,429 shares of the Registrant's Common Stock at an exercise price of $.042 per share (which exercise price was the result of certain contractual price adjustments previously made during 2011). Based on the Registrant's Common Stock prices during a period of negotiation with the Estate including during calendar year 2013, the Estate also received five-year warrants to acquire up to 135,417 shares of the Registrant's Common Stock at an exercise price of $.108 (collectively known as the "Conversion Securities").

In exchange for the Estate's extension of the Note, conversion of accrued interest and for the waivers of anti-dilution price protection in the previously issued warrants, in addition to the Conversion Securities, the Registrant also issued to the Estate 25,000 restricted shares of Common Stock as a service fee and extended the expiration date of all of the previously issued warrants to July 1, 2018.

The foregoing discussion merely summarizes the material terms of the documents described above and is qualified in its entirety by reference to the forms of those documents filed as exhibits hereto.

The above transactions were effected in reliance upon the exemption from registration set forth in Section 4(2) of the Act as the shares and warrants were issued to accredited investors and the transactions did not involve any form of general solicitation or general advertising.

1



ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OF A REGISTRANT.

The information called for by this item is contained in Item 1.01, which is incorporated herein by reference.

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.

The information called for by this item is contained in Item 1.01, which is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(d) EXHIBITS EXHIBIT NO. DESCRIPTION

4.1 Form of Common Stock Purchase Warrant 10.1 Form of Restructuring Agreement 2


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Source: Edgar Glimpses


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