The Company’s subsidiaries include PF Medical, a majority-owned Polish subsidiary acquired in April 2014. PF Medical continues to conduct R&D of its new medical isotope production technology which it plans for eventual commercialization.

 

During August 2014, PF Medical executed stock subscription agreements totaling approximately $2,357,000 for 250,000 shares of its Series E Common Stock to non-U.S. persons in an offshore private placement. In connection with this transaction, PF Medical has received approximately $1,478,000 and $67,000 in proceeds (before deduction for commissions and legal expenses relating to this offering of approximately $242,000) in 2014 and 2015, respectively, for the 250,000 shares. As of December 31, 2015, the $67,000 is being held in an escrow account and is expected to be released from the escrow account during the first quarter of 2016 for payment of certain expenses related to the medical isotope project. The Company has recorded the amount held in escrow as restricted cash on the accompanying Consolidated Balance Sheets as of December 31, 2015. PF Medical has elected to transfer all the rights, title, and interests of the remaining approximately 86,585 unpaid shares back to PF Medical. The unpaid shares to be transferred back to PF Medical will require the termination of the original stock subscription agreements for the 86,585 shares.

 

On July 24, 2015, PF Medical and Digirad Corporation, a Delaware corporation (“Digirad”), Nasdaq: DRAD, entered into a multi-year Tc-99m Supplier Agreement (the “Supplier Agreement”) and a Series F Stock Subscription Agreement (the “Subscription Agreement”), (together, the “Digirad Agreements”). The Supplier Agreement became effective upon the completion of the Subscription Agreement. Pursuant to the terms of the Digirad Agreements,

Digirad purchased, in a private placement, 71,429 shares of PF Medical’s restricted Series F Stock for an aggregate purchase price of $1,000,000, which was received on July 24, 2015. As of December 31, 2015, legal expenses incurred for this offering totaled approximately $29,000. The 71,429 share investment made by Digirad constituted approximately 5.4% of the outstanding common shares of PF Medical. As a result of this transaction, the Company’s ownership interest in PF Medical diluted from approximately 64.0% to 60.5%. The Supplier Agreement provides, among other things, that upon PF Medical’s commercialization of certain Tc99m generators, Digirad will purchase agreed upon quantities of Tc-99m for its nuclear imaging operations either directly or in conjunction with its preferred nuclear pharmacy supplier and PF Medical will supply Digirad, or its preferred nuclear pharmacy supplier, with Tc-99m at a preferred pricing, subject to certain conditions.