Universal Biosensors, Inc.
Notes to Consolidated Condensed Financial Statements (Unaudited)
Related Party Transactions
Details of related party transactions material to the operations of the Group other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business, are set out below:
Mr. Coleman is a
Non-Executive Chairman of the Company and Executive Chairman of Viburnum Funds Pty Ltd. Viburnum Funds Pty Ltd, as an investment manager for its associated funds, holds a beneficial interest and voting power
over approximately 21% of our shares.
There were no other related party transactions as at June 30, 2020 other than as disclosed
December 19, 2013, UBI and its wholly owned subsidiary, UBS (together UBI and UBS, the Transaction Parties) entered into a credit agreement with Athyrium Opportunities Fund (A) LP (Athyrium A), as administrative
agent (the Administrative Agent) and as a lender, and Athyrium Opportunities Fund (B) LP (Athyrium B) as a lender (Athyrium A and Athyrium B together with any other lenders party thereto from time to time, the
Lenders) for a secured term loan of US$15,000,000, which was amended on January 30, 2015 and December 29, 2017 (Credit Agreement). The term loan was voluntary prepaid in November 2018 and a Deed of Release was
executed in December 2018 releasing all the Transaction Parties securities and obligations under the term loan. Pursuant to the Credit Agreement, UBI issued to the Lenders warrants entitling the holder to purchase up to an aggregate total of
4,500,000 million shares of UBIs common stock in the form of CDIs at a price of A$1.00 per share (the Exercise Price), which represents a 117% premium over the closing price of UBIs common stock on December 19,
2013. The warrants are immediately exercisable and have a term of seven years.
The warrants may be exercised at any time until
December 19, 2020, in whole or in part in minimum multiples of 500,000 shares of common stock. The holder of the warrants can pay the Exercise Price in cash or it has the right to pay all or a portion of the Exercise Price by making a cashless
exercise, therefore reducing the number of shares of common stock the holder would otherwise be issued.
The warrant is subject to
adjustments in the event of certain issuances by UBI, such as bonus issues, pro rata (rights) issues and reorganizations (e.g., consolidation, subdivision).
The Company assessed that the warrants are not liabilities within scope of ASC
480-10-25. The warrants are legally detachable from the loan and separately exercisable and as such meet the definition of a freestanding derivative instrument pursuant
to ASC 815.
However, the scope exception in accordance with ASC 815-10-15-74 applies to warrants and it meets the requirements of ASC 815 that would be classified in stockholders equity. Therefore, the warrants were initially accounted for within
stockholders equity, and subsequent changes in fair value will not be recorded. The fair value of the warrant was estimated using the Trinomial Lattice model.
The debt issuance costs were recorded as deferred issuance costs and are amortized as interest expense, using the effective interest method,
over the term of the loan pursuant to ASC 835-30-35-2.
The warrants issued in December 2013 had a grant fair value of US$815,655 and are included in equity.
unsecured loan is a government guaranteed loan of CAD$40,000 to help eligible businesses with operating costs. This is among the business support measures introduced in the Canadian Federal Governments
COVID-19 Economic Response Plan, with the following terms:
the loan is interest free, and 25% (i.e. CDN$10,000) of the loan is eligible for loan forgiveness if 75% (i.e.
CAD$30,000) has been fully repaid on or before December 31, 2022. It also has no principal repayments during this period;
if the loan is not repaid by December 31, 2022, it can be converted into a
3-year term loan, and will be charged an interest rate of 5%, payable monthly. It will still not incur any principal payment requirements until December 31, 2025; and
guaranteed by the Government of Canada.