Quarterly report pursuant to Section 13 or 15(d)

Related Party Convertible Notes Receivable, At Fair Value

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Related Party Convertible Notes Receivable, At Fair Value
3 Months Ended
Mar. 31, 2016
Related Party Convertible Notes Receivable, At Fair Value [Abstract]  
RELATED PARTY CONVERTIBLE NOTES RECEIVABLE, AT FAIR VALUE

4. RELATED PARTY CONVERTIBLE NOTES RECEIVABLE, AT FAIR VALUE

 

Notes receivable are stated at fair value, as the Company has elected to fair value its notes receivable using the fair value option permitted to the Company. The following is a summary of outstanding related party convertible notes receivable as of March 31, 2016 (amount in thousands):

 

            Stated     Conversion     Carrying  
    Issue Date   Maturity Date   Interest Rate     Terms     Value  
Avant Diagnostics, Inc   3/7/2016   3/7/2017     12 %   $ 0.20     $ 100,000  
Theranostics Health, Inc   2/29/2016   2/28/2017     8 %   $ 40.64       400,000  
Ending balance as of March 31, 2016                           $ 500,000  

 

On March 1, 2016, the Company loaned $400,000 to Theranostic Health, Inc. (“THI”) which is evidenced by a convertible note issued by THI (the “THI Note”). The Company provided the financing evidenced by the Note in order to facilitate the proposed acquisition by Avant Diagnostics, Inc. (“Avant”) of the assets and certain liabilities of THI. In a concurrent transaction, the Company has entered into a non-binding letter of intent to sell its wholly-owned subsidiary, Amarantus Diagnostics, Inc. to Avant for 80 million shares of common stock of Avant.

 

The THI Note matures on February 28, 2017 and bears interest at 8% per annum payable at maturity in cash. The THI Note is convertible at any time at the option of the Company into shares of common stock of THI at a conversion price of $40.64 per share. The THI Note shall automatically convert into shares of common stock of THI upon a change of control of THI. It is expected that the THI Note will be assumed by Avant upon consummation of the transaction with THI. The conversion price of the THI Note is subject to weighted average anti-dilution price protection if the dilutive issuances are for less than $1 million and full ratchet anti-dilution protection if the dilutive issuances are for more than $1 million. The THI Note has events of default in for any default in the payment of principal or interest when due and for bankruptcy.

 

On March 7, 2016, the Company loaned $100,000 to Avant which is evidenced by a convertible note (the “Avant Note”). The Avant Note matures on March 7, 2017 and bears interest at 12% per annum payable at maturity in cash. The Avant Note is convertible at any time at the option of the Company into shares of common stock of Avant at a conversion price of $0.20 per share. The Avant Note shall automatically convert into shares of common stock of Avant upon a change of control of Avant.