Annual report pursuant to Section 13 and 15(d)

Liquidity

v3.8.0.1
Liquidity
 12 Months Ended
Dec. 31, 2017
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Liquidity

3. Liquidity

 

As of December 31, 2017, the Company had cash and cash equivalents of $15.2 million, net accounts receivable of $3.4 million, total current assets of $19.8 million and total current liabilities of $8.1 million. For the year ended December 31, 2017, the Company had a net loss of $12.2 million and cash used in operating activities was $15.3 million, including non-recurring charges.

 

During the year ended December 31, 2017, the Company closed on various equity offerings and a warrant issuance raising gross proceeds of $34.0 million (or $29.9 million, net of expenses). The details are as follows:

 

  ● On January 6, 2017, the Company completed a registered direct public offering (the “First 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 $4.3 million.
     
  ● On January 25, 2017, the Company completed a registered direct public offering (the “Second 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 Second Registered Direct Offering, (or the “Private Placement”). The Second Registered Direct Offering and the Private Placement together resulted in gross proceeds to the Company of approximately $4.0 million.
     
  ● 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. The CMPO resulted in gross proceeds to the Company of approximately $3.9 million, including the exercise of the over-allotment option.
     
  ● 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 (the “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. The issuance of the 9,900,000 shares of common stock at $1.10 per share, along with 2,600,000 prefunded warrants at $1.09 per share resulted in combined gross proceeds of the Offering totaling $13.7 million, with approximately $12.3 million of net funds available to the Company after deducting underwriting discounts and other stock issuance expenses. On July 31, 2017 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. During September 2017 the Company received approximately $0.9 million from the exercise of 747,800 Base Warrants issued as part of the Offering.

 

Also in 2017 the Company received approximately $6.2 million from the exercise of Base Warrants issued as part of the above Offering, as follows:

 

  ● During October 2017 the Company received approximately $1.2 million from the exercise of approximately 925,000 Base Warrants.
     
  ● On October 12, 2017 the Company entered into an agreement with certain holders of Base Warrants to exercise 4 million Base Warrants at the exercise price of $1.25 in exchange for the issuance of 3.2 million additional private placement warrants with an exercise price of $1.80, resulting in gross proceeds to the Company of $5.0 million. The new warrants may not be exercised for six months from the issue date and expire in five and one-half years from their issuance date. As a result of this transaction, the Company recorded a $2.0 million charge within Other (expense) income, net within the consolidated statement of operations as such transaction was deemed to be an inducement to the existing warrant holders.

 

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 a single institutional investor (the “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 settled.

 

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. On February 14, 2018 the Credit Agreement was terminated and no funds were ever drawn down under the Credit Agreement.

 

While the Company has significantly increased its cash balance and has eliminated all of its Long-term debt, the Company does not expect to generate positive cash flows from operations for the year ending December 31, 2018. The Company believes however, that it has sufficient cash balances to meet near term obligations and further intends to meet its capital needs by revenue growth, containing costs, entering into strategic alliances as well as exploring other options, including the possibility of raising additional debt or equity capital as necessary. There is, however, no assurance the Company will be successful in meeting its capital requirements prior to becoming cash flow positive.