Quarterly report pursuant to Section 13 or 15(d)

NON-CONTROLLING INTEREST

v3.20.2
NON-CONTROLLING INTEREST
9 Months Ended
Sep. 30, 2020
Noncontrolling Interest [Abstract]  
Noncontrolling Interest Disclosure [Text Block]

NOTE 10 – NON-CONTROLLING INTEREST

 

On November 7, 2018, the Company formed ViralClear Pharmaceuticals, Inc., a Delaware Corporation, formerly known as NeuroClear Technologies, Inc. for the purpose to pursue additional applications of the PURE EP™ signal processing technology outside of electrophysiology and subsequently in 2020 was repurposed to develop a broad-spectrum anti-viral agent that had potential against the COVID-19 virus (See Note 15-Subsequent Events). 

 

In 2019, ViralClear sold 896,690 shares of its common stock for net proceeds of $5,011,310 to fund initial operations. At December 31, 2019, the Company had a majority interest in ViralClear of 87.8%.

 

On March 24, 2020, ViralClear entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Trek Therapeutics, PBC (“Trek”), a related party; an entity controlled by a member of the Company’s board of directors.  Pursuant to the Asset Purchase Agreement, Trek sold to ViralClear all right, title and interest of Trek and its affiliates to certain assets (the “Purchased Assets”). As consideration for the Purchased Assets, ViralClear agreed to pay Trek in upfront and milestone payments a combination of cash, shares of ViralClear’s common stock, which common stock may equal up to 10% of ViralClear’s outstanding equity, and sublicense fees in the event ViralClear sublicenses the Purchased Assets. On March 30, 2020, pursuant to the Asset Purchase Agreement, ViralClear paid $350,000 in cash and issued 634,910 shares of ViralClear’s common stock valued at $3,174,550 to Trek. In addition, in the event of sublicensing, sale, transfer, assignment or similar transaction, ViralClear agreed to pay Trek 10% of the consideration received.

 

As part of the Purchased Assets, ViralClear received an assignment and licensing rights agreement from Trek with a third-party vendor regarding certain formulas and compounds usage. The agreement, as amended on September 2, 2020, calls for milestone payments upon marketing authorization (as defined) in any first and second country of $10 million and $5 million, respectively, in addition to 6% royalty payments.

 

The common stock issued, and cash paid was accounted for as acquired research and development. 

 

On April 8, 2020, ViralClear entered into a know-how license agreement (the “Agreement”) with Mayo Foundation for Medical Education and Research (“Mayo”).  In connection with the Agreement, ViralClear issued to Mayo 259,959 shares of ViralClear’s common stock, par value $0.001 per share. 

 

On May 20, 2020, ViralClear entered into securities purchase agreements with investors pursuant to which the Company issued 1,068,550 shares of its common stock for aggregate proceeds of $10,592,075, net of $93,425 in expenses.

 

As of September 30, 2020, the Company had a majority interest in ViralClear of 69.4%.  

 

A reconciliation of the ViralClear Pharmaceuticals, Inc. non-controlling loss attributable to the Company:

 

Net loss attributable to the non-controlling interest for the three months ended September 30, 2020:

 

Net loss

  $ (5,540,402

)

Average Non-controlling interest percentage of profit/losses

    30.62

%

Net loss attributable to the non-controlling interest

  $ (1,696,582

)

 

Net loss attributable to the non-controlling interest for the three months ended September 30, 2019:

 

Net loss

  $ (239,308

)

Average Non-controlling interest percentage of profit/losses

    8.58

%

Net loss attributable to the non-controlling interest

  $ (20,538

)

 

Net loss attributable to the non-controlling interest for the nine months ended September 30, 2020:

 

Net loss

  $ (26,272,250

)

Average Non-controlling interest percentage of profit/losses

    23.96

%

Net loss attributable to the non-controlling interest

  $ (6,282,420

)

 

Net loss attributable to the non-controlling interest for the nine months ended September 30, 2019:

 

Net loss

  $ (239,308

)

Average Non-controlling interest percentage of profit/losses

    8.58

%

Net loss attributable to the non-controlling interest

  $ (20,538

)

 

The following table summarizes the changes in non-controlling interest for the nine months ended September 30, 2020:

  

Balance, December 31, 2019

  $ 514,828  

Allocation of equity to non-controlling interest due to equity-based compensation issued

    2,636,298  

Allocation of equity to non-controlling interest due to sale of common stock

    3,467,709  

Allocation of equity to non-controlling interest due to issuance of equity to acquire Trek and research and development

    983,897  

Net loss attributable to non-controlling interest

    (6,282,420

)

Balance, September 30, 2020

  $ 1,320,312