Annual report pursuant to Section 13 and 15(d)

CONVERTIBLE LOANS

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CONVERTIBLE LOANS
12 Months Ended
Nov. 30, 2018
CONVERTIBLE LOANS [Text Block]

NOTE 8– CONVERTIBLE LOANS

a. Long term convertible loans outstanding as of November 30, 2018 and 2017 are as follows:

                                        Shares and Warrants  
                                        Issued Upon Conversion  
                                  Accumulated     Shares     Warrant  
                                  Interest Up to           s  
Principal   Issuance     Interest     Maturity     Exercise     BCF     Conversion           (5)  
Amount   Year     Rate      Period     Price           Date              
(in                                 (in thousands)              
thousands)               (Years)                                
Convertible Loans Outstanding as of November 30, 2018                                
                                                 
                                                 
$1,250   2018     2%     3   $ 7 (1)   114   $   -     -     -  
Convertible Loans converted during the year ended November 30, 2018                    
                                                 
220   2018     6%     2   $ 6.24     87   $ 2     35,543     35,543  
500 (2)   2018     6%     0.5   $ 6.24     106     4     80,756     80,756  
5,050   2017     6%     2   $ 6.24     2,311     235     846,961     846,961  
798 (3)   2017     6%     0.5 - 1.7   $ 6.24     81     40     134,372     34,269  
1,388   2016     6%     2   $ 6.24     251     132     243,443     243,443  
100   2014     6%/24% (4)   0.5   $ 4.8     85     81     37,662     -  
8,056                               $ 494     1,378,737     1,240,972  
                                                 
Convertible Loans repaid during the year ended November 30, 2017                          
                                                 
$400 (6)   2017     6%     0.25   $ 6.24           -     -     -  

(1) The holders, at their option, may convert the outstanding principal amount and accrued interest under this note into a total of 178,570 shares and 178,570 three-year warrants to purchase up to an additional 178,570 shares of the Company’s common stock at a per share exercise price of $7. In the initial two years, the holders have the right to convert the outstanding principal amount and accrued interest into shares of capital stock of Hemogenyx-Cell or Immugenyx, LLC according under the relevant note agreement, subsidiaries of Hemogenyx Pharmaceuticals Plc, at a price per share based on a pre-money valuation of Hemogenyx-Cell or Immugenyx, LLC of $12 million and $8 million, respectively, pursuant to the collaboration agreement with Hemogenyx Pharmaceuticals Plc and Immugenyx, LLC. As of November 30, 2018, the loans are presented in long term convertible notes in the balance sheet. See Note 11(f) and 11(g).

(2) On the issuance date of the note the Company issued to certain investors 40,064 three-year warrants to purchase up to an additional one share of the Company’s common stock at a per share exercise price of $6.24.

(3) On the issuance date of the note the Company issued to certain investors 145,509 three-year warrants to purchase up to an additional one share of the Company’s common stock at a per share exercise price of $6.24.

(4) The Company failed to reimburse the loan by the maturity date, therefore the interest expenses increase to loan had a default interest of 24% under the terms of the agreement.

(5) The warrant, exercisable for a period of three years from the date of conversion, for an additional share of Common Stock, at a per share exercise price of $6.24.

(6) The principal amount and accrued interest were repaid by the Company on March 7, 2017. The fair value of the shares as of March 7, 2017, was $494 thousand and was recorded as financial expenses.

b. On February 27, 2017, the Company and Admiral Ventures Inc. (“Admiral”) entered into an agreement resolving the payment of convertible loan received in prior years and owed to Admiral. Under the terms of the settlement agreement, Admiral extended the maturity date to June 30, 2018. The Company agreed to pay to Admiral, on or before March 1, 2017, between $0.3 million and $1.5 million. Further, beginning April 2017, the Company agreed to make a monthly payment of $125 thousand on account of remaining unpaid balance, and also agreed to remit additional payments under the term of the agreement. The Company accounted for the above changes as a modification of the old debt.

     During the year ended November 30, 2017, the Company repaid $1,875 thousand on account of the principal amount and accrued interest. In January 2018, the Company repaid the remaining of accrued interest in total amount of $179 thousand. In 2018 and 2017 the Company was in arrears in its payment obligations under such agreement therefore, the Company issued to Admiral 120,193 units as forbearance fees according to the terms of the agreement. Each unit consisting of one share of the Company’s common Stock and one three-year warrant exercisable into an additional share of common stock at a per share exercise price of $6.24. The fair value of the units was recorded as financial expenses during the year ended November 30, 2018 and 2017 in total amount of $179 and 983 thousand, respectively, out of which $434 thousand reflect the fair value of the warrants using the Black-Scholes valuation model.

c. On November 2, 2016, the Company entered into unsecured convertible note agreements with accredited or offshore investors for an aggregate amount of NIS 1 million ($280 thousand). The loan bears a monthly interest rate of 2% and mature on May 1, 2017, unless converted earlier. On April 27, 2017 and November 2, 2017, the Company entered into extension agreements through November 2, 2017 and May 2, 2018, respectively

In March 2018, the investor submitted a notice of its intention to convert into shares of the Company's common stock the principal amount and accrued interest of approximately $383 thousand outstanding. A related party of such investor at the same time, exercised warrants issued in November 2016 to purchase shares of the Company's Common Stock. The exercise price of the warrants and conversion price were fixed at $0.52 per share (pre-reverse stock split implemented by the Company in November 2017). There is a significant disagreement between the Company and these two entities as to the number of shares of Common Stock issuable to these entities, and they contend that the number of shares of Common Stock issuable to them should not consider the reverse stock split. The Company rejects these contentions in their entirety and, based on the advice of specially retained counsel, believes that these claims are without legal merit and not made in good faith. The Company intends to vigorously defend its interests and pursue other avenues of legal address. Through its counsel, the Company has advised these entities that unless they withdraw their request within a specified period, the Company will cancel the above referenced agreements and these parties’ right to receive any shares of the Company’s Common Stock. In April 2018, the Company withdrew the agreements and deposited the shares in total amount of 107,985 issued under those agreements and the principal amount and accrued interest of the loan in escrow account. The deposit of the principal amount and accrued interest presented as restricted cash in the balance sheet as of November 30, 2018.

d. In January 2017, MaSTherCell repaid all but one of its bondholders (originally issued on September 14, 2014), and the aggregate payment amounted to $1.7 million (€ 1.5 million). On January 17, 2017, the remaining bondholder agreed to extend the duration of his Convertible bond until March 21, 2017. In consideration for the extension, the Company issued to the bondholder warrants to purchase 8,569 shares of the Company’s Common Stock, exercisable over a three-year period at a per share exercise price of $6.24. The fair value of those warrants as of the date of grant was $20 thousand using the Black-Scholes valuation model.

     On March 20, 2017, the remaining bondholder converted his convertible bonds into 40,682 shares of the Company’s Common Stock (See also note 13(c)).