2012 Annual Report - Prometic - Life Science, Inc.

8. RESTRICTED CASH
The restricted cash is composed of a guaranteed investment certificate, bearing interest at 0.35% per annum (two guaranteed investment
certificates at December 31, 2011, bearing interest at 1.0% and 0.25%, respectively), pledged as collateral for a letter of credit to a landlord in the
amount of $130 as at December 31, 2012 ($168 as at December 31, 2011 for two letters of credit), which automatically renews until the end of the
lease. Restricted cash also includes a Grant Treasury Deposit for a total of $68 as at December 31, 2012 ($65 as at December 31, 2011), pledged in
favour of the Isle of Man government for grants received.
9. OTHER INVESTMENT
The investment is composed of convertible preferred shares of AM-Pharma Holding B.V., a private company based in the Netherlands. During the
year ended December 31, 2012, no impairment was recorded to the investment ($25 for the year ended December 31, 2011).
10. INVESTMENT IN AN ASSOCIATED COMPANY
On June 29, 2012, the Company and an unrelated partner established an entity, NantPro BioSciences, LLC (“NantPro”) for the purposes of
developing and commercialising a plasma-derived biopharmaceutical product for the US market.
At inception, in exchange for 66.66% of the equity units in NantPro, the Company contributed a license to certain of its intellectual property. The
other investor in NantPro, NantWorks LLC (“NantWorks”), contributed $2,548 (US$ 2,500,000) in exchange for 33.33% of the equity units. The
Company measured the initial cost of its investment in NantPro based on the implied fair value of its contribution to the extent attributable to the
other investor. Consequently, the initial cost of the investment amounted to $1,699 (US$1,667,000), with a corresponding recognition of licensing
revenue. Concurrent with the initial investment, the Company also granted access to a specific protein to NantPro (the “Technology Access Fee”) for
a non-refundable amount of $2,549 (US$ 2,500,000). Of this sum, $102 (US$ 100,000) has been deferred as at December 31,2012. The Company
recognized $815 (US$ 800,160) as licensing revenue, which is based on the extent of the other investor’s interest. The balance of $1,632
(US$ 1,599,840) was recorded as a reduction in the carrying amount of the investment.
As a result of the composition of Nantpro’s board membership, the manner and timing in which substantive financing and operation decisions
will be made, and that NantWorks has the current right to make additional capital contributions that could ultimately decrease the Company’s
investment to 10% of the equity units. The Company has determined that it does not control the investment, but does have the ability to exercise
significant influence and will therefore account for it as an associate. The contributions will be used by NantPro to pay the Company to carry out
the development and manufacturing costs of a plasma-derived product. The additional capital contributions by NantWorks will result in dilution
gains or losses and corresponding adjustments in the carrying value of the investment.
During the year ended December 31, 2012, the Company provided development services to NantPro and recognized revenues from the rendering
of services of $1,549. As at December 31, 2012, the Company had a balance receivable from NantPro of $438.
The unaudited summarized financial information of NantPro as at December 31, 2012 is as follows:
Current assets $86
Non-current assets 7,375
Current liabilities -
Non-current liabilities -
Equity 7,461
The Company’s share of NantPro’s loss and other adjustments to the carrying amount of its investment for the year ended December 31, 2012 are
as follows:
2012
PROMETIC LIFE SCIENCES INC.
Carrying amount of the investment - January 1 -
Initial investment $67
Activity during the year:
Share of net losses (952)
Net dilution gains 954
Share of net profit of an associated company 2
Carrying amount of the investment - December 31 69
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