Annual report pursuant to Section 13 and 15(d)

NON-CONTROLLING INTEREST

v3.22.1
NON-CONTROLLING INTEREST
12 Months Ended
Dec. 31, 2021
Noncontrolling Interest [Abstract]  
Noncontrolling Interest Disclosure [Text Block]

NOTE 10 NON-CONTROLLING INTEREST

 

On November 7, 2018, the Company formed a subsidiary, now known as ViralClear, to pursue additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology, and subsequently in 2020, was repurposed to develop merimepodib, a broad-spectrum anti-viral agent that showed potential for the treatment of COVID-19. Since late 2020, ViralClear has been realigned with its original objective of pursuing additional applications of the PURE EP™ signal processing technology outside of cardiac electrophysiology.

 

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.

 

In November and December 2020, the Company issued an aggregate of 83,055 shares of its common stock in exchange for 80,958 previously issued shares of ViralClear pursuant with 2019 purchase agreements.

 

On April 1, 2021, ViralClear issued an aggregate of 40,000 shares of its common stock in exchange for vested restricted stock units.

 

On July 1, 2021, ViralClear issued an aggregate of 206,250 shares of its common stock in exchange for the cashless exercise of 550,000 previously issued options.

 

As of December 31, 2021, the Company had a majority interest in ViralClear of 68.4%.

 

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

 

Net loss attributable to the non-controlling interest for the year ended December 31, 2021 (000’s):

 

Net loss

  $ (3,077

)

Average Non-controlling interest percentage of profit/losses

    30.44

%

Net loss attributable to the non-controlling interest

  $ (939

)

 

Net loss attributable to the non-controlling interest for the year ended December 31, 2020 (000’s):

 

Net loss

  $ (28,372

)

Average Non-controlling interest percentage of profit/losses

    24.40

%

Net loss attributable to the non-controlling interest

  $ (6,922

)

 

The following table summarizes the changes in non-controlling interest for the two years ended December 31, 2021 (000’s):

 

Balance, January 1, 2020

  $ 515  

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

    2,782  

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

    3,468  

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

    983  

Allocation of equity from non-controlling interest due to parent reacquiring shares shareholders

    (24

)

Net loss attributable to non-controlling interest

    (6,922

)

Balance, December 31, 2020

    802  

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

    348  

Allocation of equity to non-controlling interest to due change in fair value of modified option

    8  

Net loss attributable to non-controlling interest

    (939

)

Balance, December 31, 2021

  $ 219