Universal Biosensors, Inc.
Notes to Consolidated Condensed Financial Statements (Unaudited)
On January 1, 2020 the Company adopted the new accounting pronouncement ASU 2016-02. The
adoption of ASU No. 2016-02 resulted in ROU asset and lease liability balances of A$4,486,745 on the Companys consolidated condensed balance sheets as of January 1, 2020. The Company has updated its control framework for new internal controls
and made changes to existing internal controls related to the new standard.
ASU No.2014-09, Revenue
from Contracts with Customers
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards
Update (ASU) 2014-09, Revenue from Contracts with Customers (Topic 606), which provides companies with a single revenue recognition model for recognizing revenue from contracts with customers. The core
principle of the new standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those
goods or services. There are two permitted transition methods under the new standard, the full retrospective method or the modified retrospective method. The new standard is effective for annual reporting periods beginning after December 15,
2017. As an emerging growth Company, the Company has adopted this guidance effective from January 1, 2019 and it has not had a material impact on the Companys consolidated financial statements.
UBI has selected the modified retrospective method where the effect of applying the standard is recognized at the date of initial application,
without restating previous years.
Related Party Transactions
Details of related party transactions material to the operations of the Group other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business, are set out below:
Mr. Coleman is a
Non-Executive Chairman of the Company and Executive Chairman of Viburnum Funds Pty Ltd. Viburnum Funds Pty Ltd, as an investment manager for its associated funds, holds a beneficial interest and voting power
over approximately 21% of our shares.
An employee of Viburnum Funds Pty Ltd has on occasions been seconded to Universal Biosensors to
assist the Company on strategic matters. During these periods Viburnum Funds Pty Ltd continues to pay all the salary entitlements of the seconded person. Universal Biosensors is solely responsible for the reimbursement of certain expenditures such
as travel and rental whilst the employee is on secondment. The total expenditure reimbursed by the Company to Viburnum Funds Pty Ltd for the three months ended March 31, 2020 and 2019 was A$1,281 and A$7,245, respectively.
There were no other related party transactions as at March 31, 2020 other than as disclosed above.
On December 19,
2013, UBI and its wholly owned subsidiary, UBS (together UBI and UBS, the Transaction Parties) entered into a credit agreement with Athyrium Opportunities Fund (A) LP (Athyrium A), as administrative agent (the
Administrative Agent) and as a lender, and Athyrium Opportunities Fund (B) LP (Athyrium B) as a lender (Athyrium A and Athyrium B together with any other lenders party thereto from time to time, the Lenders)
for a secured term loan of US$15,000,000, which was amended on January 30, 2015 and December 29, 2017 (Credit Agreement). The term loan was voluntary prepaid in November 2018 and a Deed of Release was executed in December 2018
releasing all the Transaction Parties securities and obligations under the term loan. Pursuant to the Credit Agreement, UBI issued to the Lenders warrants entitling the holder to purchase up to an aggregate total of 4,500,000 million shares of
UBIs common stock in the form of CDIs at a price of A$1.00 per share (the Exercise Price), which represents a 117% premium over the closing price of UBIs common stock on December 19, 2013. The warrants are immediately
exercisable and have a term of seven years.
The warrants may be exercised at any time until December 19, 2020, in whole or in part
in minimum multiples of 500,000 shares of common stock. The holder of the warrants can pay the Exercise Price in cash or it has the right to pay all or a portion of the Exercise Price by making a cashless exercise, therefore reducing the number of
shares of common stock the holder would otherwise be issued.