Complete 2012 forensic audit documents - Kansas Bioscience ...

Debt Service Payments
Debt service payments consist of interest only or interest and principal depending on timing. For
the first 24 months, or the “Construction Period” (December 1, 2009 – December 1, 2011),
interest only payments are due on the UMB Bonds. Beginning January 1, 2012, interest and
principal payments will be due. The furniture and equipment portions of the loan payments are
amortized over seven years, and the real estate improvement portion is amortized over 20 years.
In January 2012, KBA will start making monthly debt service payments of $72,445.52, which is
broken down by bond and summarized below.
Loan Amount Years Monthly Pmt.
Tax-exempt building $ 3,249,850.00 20 $ 19,065.64
Tax-exempt equipment 225,150.00 7 3,039.33
Taxable building 5,950,150.00 20 40,930.33
Taxable equipment 654,850.00 7 9,410.22
$10,080,000.00 $ 72,445.52
UMB Bank’s amortization schedule shows that $5,364,794.38 in interest will be paid if
payments are made over the entire life of the debt. There is no penalty for pre-payment of the
debt.
Interest
Loan Amount Rate Total Interest
Tax-exempt building $ 3,249,850.00 3.63% $1,325,903.31
Tax-exempt equipment 225,150.00 3.63% 30,153.99
Taxable building 5,950,150.00 5.50% 3,873,128.40
Taxable equipment 654,850.00 5.50% 135,608.68
$10,080,000.00 $5,364,794.38
KBA Self-Funded Series 2009C bonds are at a flat interest rate of 5.00%; however, there is no
requirement that KBA actually make payments of principal and interest to itself on these bonds.
Each month, KBA has been issuing letters to the UMB Bank, as bond trustee, to note the monies
in the Series 2009C that have been expended.
HEARTLAND BIOVENTURES
Despite its recognized bioscience research strengths, at KBA’s inception, Kansas ranked very
low in both the number of bioscience start-ups and the amount of private venture capital they
attracted. The BOD believed that effectively addressing these issues would be critical if KBA
was to be successful in its mission to make Kansas a national leader in the bioscience industry.
Therefore, the BOD looked for other organizations that were effectively fostering and attracting
start-up companies in the bioscience industry to study their operations with the goal of
identifying best practices.
BioEnterprise Model
In the spring of 2005, Director Bill Sanford introduced the BOD to BioEnterprise of Cleveland,
Ohio as a successful bioscience commercialization organization on which KBA could model its
own commercialization efforts. Director Sanford was a co-founder of BioEnterprise and COB.
BioEnterprise’s other founders and partners are Cleveland Clinic, University Hospitals, Case
Western Reserve University, Summa Health System and BioInnovation Institute in Akron.
62