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The accompanying consolidated
financial statements have been prepared on a basis that assumes that the Company will continue as a going concern and that contemplates
the continuity of operations, the realization of assets and the satisfaction of liabilities and commitments in the normal course
of business. As of June 30, 2017, the Company had cash and cash equivalents of $14.3 million, net accounts receivable of $2.7 million,
current assets of $18.3 million and current liabilities of $10.9 million. For the six months ended June 30, 2017, the Company had
a net loss of $3.9 million and cash used in operating activities was $8.6 million.
During the six months ended June
30, 2017, the Company closed on four equity offerings raising gross proceeds of $25.9 million. The details are as follows:
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On January 6, 2017, the Company completed a registered direct public offering (the “Second Registered Direct Offering”), to sell 630,000 shares of its common stock at a price of $6.81 per share to certain institutional investors, which resulted in gross proceeds to the Company of approximately $4.2 million. |
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On January 25, 2017, the Company completed a registered direct public offering (the “Third Registered Direct Offering”), to sell 855,000 shares of its common stock and a concurrent private placement of warrants to purchase 855,000 shares of its common stock (the “Concurrent Warrants”), to the same investors participating in the Third Registered Direct Offering, or the Private Placement. The Concurrent Warrants and the shares of its common stock issuable upon the exercise of the Concurrent Warrants were not registered under the Securities Act and were sold pursuant to the exemption provided in Section 4(a)(2) under the Securities Act and Rule 506(b) of Regulation D promulgated thereunder. The shares of common stock sold in the Third Registered Direct Offering and the Concurrent Warrants issued in the concurrent Private Placement were issued separately but sold together at a combined purchase price of $4.69 per share of common stock and accompanying Concurrent Warrant. The Third Registered Direct Offering and the Private Placement together resulted in gross proceeds to the Company of approximately $4.0 million. The Company used approximately $1.0 million of the proceeds to satisfy the obligations due to five former senior executives. |
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On February 8, 2017, the Company completed an underwritten, confidentially marketed public offering (“CMPO”), to sell 1,200,000 shares of its common stock at a price of $3.00 per share. In addition, the Company granted the underwriters an option to purchase up to an additional 9% of the total number of shares of common stock sold by the Company in the CMPO, solely for the purpose of covering over-allotments, if any. The underwriters exercised the over-allotment option in full. The CMPO resulted in gross proceeds to the Company of approximately $3.9 million. |
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On June 21, 2017, pursuant to its S-1 filing of its preliminary prospectus to register shares on May 22, 2017, as amended thereafter, the Company completed a public offering for 9,900,000 shares of common stock together with an equal number of common warrants (the “Base Warrants”), to purchase shares of its common stock (and the shares of common stock that are issuable from time to time upon exercise of the common warrants) for $1.10 per share. Each Base Warrant upon exercise at a price of $1.25 will result in the issuance of one share of common stock to the holder. A public trading market for the Base Warrants was established on July 5, 2017 on the OTC market under the trading symbol IDGGW. As part of the offering (the “Offering”), which closed on June 21, 2017, the related underwriters purchased the full over-allotment of 1,875,000 Base Warrants available to them for the specified $.01 per warrant. 2,600,000 of Pre-Funded Warrants were also sold at the specified $1.09 per warrant. The combined gross proceeds of the June 21st offering totaled $13.7 million with approximately $12.3 million of net funds available to the Company after deducting underwriting discounts and other stock issuance expenses. As of July 7, 2017 all of the 2,600,000 Pre-Funded Warrants were exercised for the $.01 per warrant exercise price and all 2,600,000 common shares related to the warrants have been issued. On July 31, the Company and the underwriters closed on the exercise of the underwriters’ over-allotment option to purchase an additional 875,000 shares of common stock at a price of $1.09 per share for gross proceeds of $0.960 million. |
As part of our acquisition of RedPath
Integrated Pathology, Inc., we issued a non-negotiable subordinated secured, non-interest bearing, promissory note, dated as of
October 31, 2014, with an aggregate principal amount of $10.7 million outstanding (the “RedPath Note”). In December
2016 we repaid $1.33 million in principal of the RedPath Note resulting in an outstanding balance of $9.34 million. The RedPath
Note was subsequently acquired by an institutional investor for $8.87 million on March 22, 2017. Also on that date we and the investor
exchanged the RedPath Note for a senior secured convertible note in the aggregate principal amount of $5.32 million and a senior
secured non-convertible note in the aggregate principal amount of $3.55 million. On April 18, 2017, we and the investor exchanged
the senior secured non-convertible note for $3.55 million of our senior secured convertible note. Between March 23, 2017 and April
18, 2017, the senior secured convertible notes were converted in full for 3,795,429 shares of our common stock. We no longer have
any outstanding secured debt, and any security interests and liens related to our former secured debt have been fully released.
The Company entered into a Credit
Agreement with SCM Specialty Finance Opportunities Fund, L.P. (the “Credit Agreement”) on September 28, 2016 for $1.2
million. The Credit Agreement contains customary representations and warranties in favor of the Lender and certain covenants, including,
among other things, financial covenants relating to loan turnover rates, liquidity and revenue targets. As of June 30, 2017 the
Company is renegotiating terms of the Credit Agreement and has not borrowed any funds under the Credit Agreement.
While the Company has increased
its cash balance and has made significant reductions in indebtedness, the Company is not cash flow positive from operations. The
Company intends to meet its capital needs by driving revenue growth, containing costs, entering into strategic alliances as well
as exploring other options, including the possibility of raising additional debt or equity capital. There is no assurance the
Company will be successful in meeting its capital requirements prior to becoming cash flow positive.
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