Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.22.1
Related Party Transactions
3 Months Ended
Mar. 31, 2022
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 7 – RELATED PARTY TRANSACTIONS

 

Rental Revenue from Related Party and Rent Receivable – Related Party

 

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. The term of the related party lease agreement is five years commencing on May 1, 2021 and will expire on April 30, 2026. For the three months ended March 31, 2022, the related party rental revenue amounted to $12,600, and has been included in real property rental on the accompanying condensed consolidated statements of operations and comprehensive loss. The related party rent receivable totaled $46,200 and $33,600, respectively, and no allowance for doubtful accounts was deemed to be required on rent receivable – related party at March 31, 2022 and December 31, 2021.

 

Services Provided by Related Party

 

From time to time, Wilbert Tauzin, a director of the Company, and his son provide consulting services to the Company. As compensation for professional services provided, the Company recognized consulting expenses of $51,138 and $57,405 for the three months ended March 31, 2022 and 2021, respectively, which have been included in professional fees on the accompanying condensed consolidated statements of operations and comprehensive loss.

 

Accrued Liabilities and Other Payables – Related Parties

 

In 2017, the Company acquired Beijing Genexosome for a cash payment of $450,000. As of March 31, 2022 and December 31, 2021, 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 March 31, 2022 and December 31, 2021, 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 $408,120 and $368,433, 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. In March 2022, the Company and Wenzhao Lu entered into a Loan Extension and Modification Agreement (the “Extension”) to extend the maturity date to March 19, 2024.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 March 31, 2022 and December 31, 2021, 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. For the three months ended March 31, 2022 and 2021, the interest expense related to above borrowings amounted to $39,686 and $45,149, respectively, and has been included in interest expense – related party on the accompanying condensed consolidated statements of operations and comprehensive loss.

 

As of March 31, 2022 and December 31, 2021, the related accrued and unpaid interest for above borrowings was $408,120 and $368,433, respectively, and has been included in accrued liabilities and other payables – related parties on the accompanying condensed consolidated balance sheets.