Item 8.01 - Other Events.
On November 16, 2016, Xcede Technologies, Inc. (“Xcede”)
a subsidiary of Dynasil Corporation of America (“Dynasil”) entered into a strategic in-kind loan arrangement with Cook
Biotech Inc. (CBI) of West Lafayette, IN, with respect to the planned first-in-human (FIH) clinical trials of the Xcede Patch.
Xcede and CBI already have existing manufacturing, licensing and supply agreements, pursuant to which, among other things, CBI
supplies Xcede with its extracellular matrix technology, a component of the Patch.
Pursuant to this new arrangement, CBI has agreed to provide
Xcede with preclinical and clinical services necessary to complete FIH trials, and will oversee and execute such work on behalf
of Xcede. In exchange for the value of such services, Xcede will issue to CBI, at a various times, secured promissory notes of
Xcede in the aggregate principal amount of $1.5 million, bearing interest at 2% per annum.
As part of this arrangement, the following other transactions
occurred:
• Dynasil committed to invest $1.2 million in Xcede
to fund the anticipated operating costs of Xcede through the anticipated completion of the FIH trials. These investments will be
in the form of senior preferred stock.
• Peter Sulick, Dynasil Chairman and CEO, and members
of his family also made an additional cash investment in Xcede of $450,000 in junior preferred stock.
With these arrangements, it is expected that Xcede will have
sufficient funds to complete the FIH trials and related preclinical studies for the Patch. The preclinical studies are anticipated
to begin in 2016 and the FIH trial is expected to begin in 2017.
A Special Committee of the Dynasil Board of Directors, consisting
of independent directors responsible for overseeing Dynasil’s investments in Xcede, reviewed the foregoing and unanimously
approved Dynasil’s investment. Immediately prior to these investments, the existing convertible notes of Xcede were restructured
so that holders (including Dynasil) were converted into junior preferred securities. Once Dynasil’s investment is fully funded,
the anticipated Xcede’s capitalization shall consist of the long-term secured debt owed to CBI and the following outstanding
equity: approximately 945,000 shares of senior preferred stock (with Dynasil holding 100%); approximately 5,400,000 shares of junior
preferred stock (with Dynasil holding 43%) and approximately 3,240,000 shares of common stock (with Dynasil holding 83%). On a
fully converted common stock basis, the foregoing would equal a Dynasil interest of approximately 54%.
The Dynasil press release dated November 18, 2016 announcing
titled “Dynasil Corporation and Cook Biotech Inc. Join Together to Advance Xcede Technologies Patch through First in Human
Trials” is attached as Exhibit 99.1 and incorporated by reference herein.