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Elo Transaction

3 Months Ended

Mar. 31, 2022

Deconsolidation Of Subsidiary [Abstract]

NOTE 8:

Elo Transaction

On December 17, 2021, the Company and its wholly owned subsidiary, Elo Life Systems, Inc., entered into the Elo Transaction. In connection with the Elo Transaction, the Company granted New Elo an exclusive license to certain of the Company’s intellectual property for use in non-medical applications with respect to plants, farm animals and certain other organisms. In addition, all of the Company’s employees in its Food segment, including its management, became employees of New Elo.

Note Receivable

As partial consideration for the assets contributed and license granted by the Company to New Elo, the Company received a $10.0 million promissory note payable from New Elo (the “Note Receivable”). The Note Receivable matures on the earlier of (i) December 1, 2028 or (ii) a Deemed Liquidation Event (as defined in the New Elo’s Amended and Restated Certificate of Incorporation). The Note accrues interest at 2.00% per annum, and is payable annually on December 17th.

The fair value of the Note Receivable at acquisition was $6.9 million. The note discount of $3.1 million will be amortized to interest income over the life of the Note.

Investment in New Elo

As partial consideration for the assets contributed and license granted by the Company to New Elo, the Company received Common Stock in New Elo. It was determined that the noncontrolling shareholders of New Elo have substantive rights to participate in the financial and operating decisions of New Elo. As such, it was determined that the Company does not possess control over New Elo or have significant decision-making authority. Accordingly, New Elo is not consolidated in the Company’s financial statements.

However, as the Company obtained approximately 55% of the voting shares in New Elo, it was determined that the Company possesses the ability to exercise significant influence over the operating and financial policies of New Elo. As such, the Company accounts for its investment in New Elo under the equity method.

The Company’s proportionate share of New Elo’s net loss for the three months ended March 31, 2022 was $1.0 million, resulting in a decrease in the carrying value of the Investment in New Elo and corresponding loss from equity method investments.