Quarterly report pursuant to Section 13 or 15(d)

Commitments and Contingencies

v3.19.1
Commitments and Contingencies
3 Months Ended
Mar. 31, 2019
Notes to Financial Statements  
Note 9 - Commitments and Contingencies

a) Finance Lease Obligations

 

In 2015, the Company entered into an equipment finance lease to purchase three Tecan machines (automated liquid handling robots) for €550,454 Euros. As of March 31, 2019, the balance payable was $112,347.

 

In 2016, the Company entered into a real estate finance lease with ING Asset Finance Belgium S.A. (“ING”) to purchase a property located in Belgium for €1.12 million Euros.  As of March 31, 2019, the balance payable was $673,787.

 

In 2018, the Company entered into a finance lease with BNP Paribas leasing solutions to purchase a freezer for the Belgium facility for €25,000 Euros. The leased equipment is amortized on a straight line basis over 5 years. As of March 31, 2019, the balance payable was $26,107.

 

The following is a schedule showing the future minimum lease payments under finance leases by years and the present value of the minimum payments as of March 31, 2019.

 

2019 - remaining   $ 121,733  
2020   $ 114,584  
2021   $ 69,907  
2022   $ 61,762  
2023   $ 60,353  
Greater than 5 years   $ 505,433  
Total   $ 933,772  
Less: Amount representing interest   $ (121,531 )
         
Present value of minimum lease payments   $ 812,241  

 

b) Operating Lease Right-of-Use Obligations

 

The Company adopted Topic 842 on January 1, 2019. The Company elected to adopt this standard using the optional modified retrospective transition method and recognized a cumulative-effect adjustment to the condensed consolidated balance sheet on the date of adoption. Comparative periods have not been restated. With the adoption of Topic 842, the Company’s condensed consolidated balance sheet now contains the following line items: Operating lease right-of-use assets, Current portion of operating lease liabilities and Operating lease liabilities, net of current portion.

 

As all the existing leases subject to the new lease standard were previously classified as operating leases by the Company, they were similarly classified as operating leases under the new standard. The Company has determined that the identified operating leases did not contain non-lease components and require no further allocation of the total lease cost. Additionally, the agreements in place did not contain information to determine the rate implicit in the leases, so we used our incremental borrowing rate as the discount rate. Our weighted average discount rate is 4.50% and the weighted average remaining lease term is 26 months.

 

As of March 31, 2019, operating lease right-of-use assets and liabilities arising from operating leases was $97,096, respectively. During the three months ended March 31, 2019, cash paid for amounts included for the measurement of lease liabilities was $12,494 and the Company recorded operating lease expense of $13,052.

 

The following is a schedule showing the future minimum lease payments under operating leases by years and the present value of the minimum payments as of March 31, 2019.

 

2019-remaining   $ 37,536  
2020   $ 49,296  
2021   $ 14,835  
Total Operating Lease Obligations   $ 101,667  
Less: Amount representing interest   $ (4,571 )
Present Value of minimum lease payments   $ 97,096  

 

The Company’s office spaces are short term. The Company has elected not to recognize them on the balance sheet under the short-term recognition exemption. During the three-months ended March 31, 2019, $45,264 was recognized in short-term lease costs associated with office space leases. The annual payments remaining for short term office leases were as follows:

  

2019-remaining   $ 128,953  
2020   $ 13,708  
Total Lease Obligations   $ 142,661  

 

c) Grants Repayable

 

In 2010, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €1.05 million Euros. Per the terms of the agreement, €314,406 Euros of the grant is to be repaid.by instalments over the period from June 30, 2014 to June 30, 2023. The Company has recorded the balance of €733,614 Euros to other income in previous years as there is no obligation to repay this amount. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 6% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €314,406 Euros and the 6% royalty on revenue, is twice the amount of funding received. As of March 31, 2019, the grant balance repayable was $176,620.

 

In 2018, the Company entered into an agreement with the Walloon Region government in Belgium for a colorectal cancer research grant for €605,000 Euros.  Per the terms of the agreement, €181,500 Euros of the grant is to be repaid by instalments over 12 years commencing in 2020. In the event that the Company receives revenue from products or services as defined in the agreement, it is due to pay a 3.53% royalty on such revenue to the Walloon Region. The maximum amount payable to the Walloon Region, in respect of the aggregate of the amount repayable of €181,500 Euros and the 3.53% royalty on revenue, is equal to the amount of funding received. As of March 31, 2019, the grant balance repayable was $199,748.

 

As of March 31, 2019, the total grant balance repayable was $376,368 and the annual payments remaining were as follows:

 

2019 - remaining   $ 39,272  
2020   $ 52,849  
2021   $ 49,939  
2022   $ 47,239  
2023   $ 48,408  
2024 +   $ 138,661  
Total Grants Repayable   $ 376,368  

 

d) Long-Term Debt

 

In 2016, the Company entered into a 7-year loan agreement with Namur Invest for €440,000 Euros with a fixed interest rate of 4.85%.  As of March 31, 2019, the principal balance payable was $375,675.

 

In 2016, the Company entered into a 15-year loan agreement with ING for €270,000 Euros with a fixed interest rate of 2.62%.  As of March 31, 2019, the principal balance payable was $265,523.

 

In 2017, the Company entered into a 4-year loan agreement with Namur Invest for €350,000 Euros with a fixed interest rate of 4.00%.  As of March 31, 2019, the principal balance payable was $258,722.

 

In 2017, the Company entered into a 7-year loan agreement with SOFINEX for up to €1 million Euros with a fixed interest rate of 4.50%.  As of March 31, 2019, €750,000 Euros has been drawn down under this agreement and the principal balance payable was $841,552.

 

In 2018, the Company entered into a 4-year loan agreement with Namur Innovation and Growth for €500,000 Euros with fixed interest rate of 4.00%. As of March 31, 2019, the principal balance payable was $523,509.

 

As of March 31, 2019, the total balance for long-term debt payable was $2,264,981 and the payments remaining were as follows:

 

2019 - remaining   $ 373,355  
2020   $ 674,736  
2021   $ 604,290  
2022   $ 447,953  
2023   $ 233,898  
Greater than 5 years   $ 198,788  
Total   $ 2,533,020  
Less: Amount representing interest   $ (268,039 )
Total Long-Term Debt   $ 2,264,981  

 

e) Collaborative Agreement Obligations

 

In 2015, the Company entered into a research sponsorship agreement with DKFZ, in Germany for a 3-year period for €338,984 Euros. As of March 31, 2019, $84,155 is still to be paid by the Company under this agreement.

 

In 2016, the Company entered into a research co-operation agreement with DKFZ, in Germany for a 5-year period for €400,000 Euros. As of March 31, 2019, $224,414 is still to be paid by the Company under this agreement.

 

In 2016, the Company entered into a collaborative research agreement with Munich University, in Germany for a 3-year period for €360,000 Euros.  As of March 31, 2019, $298,471 is still to be paid by the Company under this agreement.

 

In 2017, the Company entered into a clinical study research agreement with the University of Michigan for a 3-year period for up to $3 million.  As of March 31, 2019, up to $1.50 million is still to be paid by the Company under this agreement.

 

In 2018, the Company entered into a research collaboration agreement with the University of Taiwan for a 3-year period for a cost to the Company of up to $2.55 million payable over such period. As of March 31, 2019, $2.04 million is still to be paid by the Company under this agreement.

 

As of March 31, 2019, the total amount to be paid for future research and collaboration commitments was approximately $4.15 million and the annual payments remaining were as follows:

 

2019 - remaining   $ 2,262,077  
2020   $ 992,463  
2021   $ 892,500  
Total Collaborative Agreement Obligations    $ 4,147,040  

  

f) Legal Proceedings

 

There are no legal proceedings which the Company believes will have a material adverse effect on its financial position.