Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.21.2
Related Party Transactions
9 Months Ended
Sep. 30, 2021
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 8 – RELATED PARTY TRANSACTIONS

 

Accrued Liabilities and Other Payables – Related Parties

 

The Company acquired Beijing Genexosome for a cash payment of $450,000. As of September 30, 2021 and December 31, 2020, the unpaid acquisition consideration of $100,000, was payable to Dr. Yu Zhou, former director and former co-chief executive officer and 40% owner of Genexosome, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

 

As of September 30, 2021 and December 31, 2020, the accrued and unpaid interest related to borrowings from Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of Directors, amounted to $309,484 and $167,956, respectively, and have been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

 

Borrowings from Related Party

 

Promissory Note

 

On March 18, 2019, the Company issued Wenzhao Lu, the Company’s largest shareholder and Chairman of the Board of Directors, a Promissory Note in the principal amount of $1,000,000 (“Promissory Note”) in consideration of cash in the amount of $1,000,000. The Promissory Note accrues interest at the rate of 5% per annum and matures March 19, 2022. The Company repaid principal of $410,000 and $200,000 in the third quarter of 2019 and second quarter of 2020, respectively. As of both September 30, 2021 and December 31, 2020, the outstanding principal balance was $390,000.

 

Line of Credit

 

On August 29, 2019, the Company entered into a Line of Credit Agreement (the “Line of Credit Agreement”) providing the Company with a $20 million line of credit (the “Line of Credit”) from Wenzhao Lu (the “Lender”), the largest shareholder and Chairman of the Board of Directors of the Company. The Line of Credit allows the Company to request loans thereunder and to use the proceeds of such loans for working capital and operating expense purposes until the facility matures on December 31, 2024. The loans are unsecured and are not convertible into equity of the Company. Loans drawn under the Line of Credit bears interest at an annual rate of 5% and each individual loan will be payable three years from the date of issuance. The Company has a right to draw down on the line of credit and not at the discretion of the related party Lender. The Company may, at its option, prepay any borrowings under the Line of Credit, in whole or in part at any time prior to maturity, without premium or penalty. The Line of Credit Agreement includes customary events of default. If any such event of default occurs, the Lender may declare all outstanding loans under the Line of Credit to be due and payable immediately. As of September 30, 2021 and December 31, 2020, $3,963,189 and $3,200,000 was outstanding under the Line of Credit, respectively.

 

For the three months ended September 30, 2021 and 2020, the interest expense related to above borrowings amounted to $50,248 and $41,531, respectively, and has been included in interest expense – related party on the accompanying condensed consolidated statements of operations and comprehensive loss. For the nine months ended September 30, 2021 and 2020, the interest expense related to above borrowings amounted to $141,528 and $126,169, respectively, and has been included in interest expense – related party on the accompanying condensed consolidated statements of operations and comprehensive loss.

 

As of September 30, 2021 and December 31, 2020, the related accrued and unpaid interest for above borrowings was $309,484 and $167,956, respectively, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.

 

Rental Revenue from Related Party

 

Commencing from year 2021, the Company leases space of its commercial real property located in New Jersey to a company, which is controlled by Wenzhao Lu, the Company’s largest shareholder and chairman of the Board of Directors. For both the three and nine months ended September 30, 2021, the related party rental revenue amounted to $21,000, and has been included in real property rental on the accompanying condensed consolidated statements of operations and comprehensive loss.

 

As of September 30, 2021, the related party rent receivable totaled $21,000, which was included in rent receivable – related party on the accompanying condensed consolidated balance sheets.