DECONSOLIDATION OF IMAGION BIOSYSTEMS

6 Months Ended

Jun. 30, 2017

Notes to Financial Statements

NOTE 4 - DECONSOLIDATION OF IMAGION BIOSYSTEMS

Imagion Biosystems, previously a related-party entity and wholly-owned subsidiary of the Company, completed its initial public offering. As a result of the offering, the Company’s ownership in Imagion became diluted from 100% to 29%. As of June 30, 2017, we no longer have a controlling interest in Imagion. Imagion and the Company will remain related-party entities due to the Company’s equity stake in Imagion. The Company’s ongoing involvement with Imagion is solely as a shareholder of Imagion.

Due to the spin-off of Imagion, the Company changed its accounting treatment from the consolidation method to the equity method. During the quarter ended June 30, 2017, the Company is no longer consolidating the operations of Imagion into the Company's condensed consolidated financial statements. This change in accounting treatment resulted in a gain of $8,758,000 during the three months ended June 30, 2017. The gain on deconsolidation includes the following:

Fair value of the Company’s retained noncontrolling interest	$	9,615,000
Carrying amount of the Company’s noncontrolling interest		818,000
Derecognition of Imagion’s net assets		(1,675,000	)
Gain from change in accounting treatment of investment	$	8,758,000

Gains or losses attributed to the Company’s noncontrolling interest in Imagion is reflected as a component of non-operating income (losses). During the six months ended June 30, 2017 and 2016, the net loss attributable to its noncontrolling interest in Imagion was $330,000 and $0.