x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2016 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from _____ to _____ |
Delaware | 91-1789357 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
12325 Emmet Street, Omaha, Nebraska | 68164 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | o | Accelerated filer | o | ||
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | x |
Page No. | |||
PART I. | |||
Item 1. | |||
8 | |||
Item 2. | |||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | ||
Item 4. | |||
PART II. | |||
Item 1. | |||
Item 1A. | |||
Item 6. | |||
Item 1. | Financial Statements |
June 30, | |||||||
2016 | December 31, | ||||||
(unaudited) | 2015 | ||||||
ASSETS | |||||||
CURRENT ASSETS: | |||||||
Cash and cash equivalents | $ | 421 | $ | 444 | |||
Accounts receivable, net | 328 | 264 | |||||
Inventories, net | 39 | 50 | |||||
Other current assets | 325 | 537 | |||||
Assets held for sale | 690 | 1,987 | |||||
Total current assets | 1,803 | 3,282 | |||||
PROPERTY AND EQUIPMENT: | |||||||
Equipment | 5,592 | 5,593 | |||||
Furniture, fixtures & leasehold improvements | 1,565 | 1,565 | |||||
7,157 | 7,158 | ||||||
Less: accumulated depreciation | (6,953 | ) | (6,899 | ) | |||
204 | 259 | ||||||
OTHER ASSETS: | |||||||
Intangibles, net | 1,029 | 1,170 | |||||
Other assets | 58 | 105 | |||||
$ | 3,094 | $ | 4,816 | ||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
CURRENT LIABILITIES: | |||||||
Current maturities of long-term debt | $ | 7,814 | $ | 7,596 | |||
Accounts payable | 5,620 | 3,781 | |||||
Accrued compensation | 259 | 321 | |||||
Accrued expenses | 2,847 | 3,734 | |||||
Deferred revenue | 111 | 217 | |||||
Other liabilities | 1,068 | 1,068 | |||||
Liabilities held for sale | — | 264 | |||||
Total current liabilities | 17,719 | 16,981 | |||||
LONG TERM LIABILITIES: | |||||||
Common stock warrant liability | 1,442 | 350 | |||||
Other long-term liabilities | 223 | 305 | |||||
Total liabilities | 19,384 | 17,636 | |||||
STOCKHOLDERS’ DEFICIT: | |||||||
Convertible preferred stock, $0.01 par value, 15,000,000 shares authorized, 214,705 and 4,029,502 shares issued and outstanding, respectively | 2 | 40 | |||||
Common stock, $0.01 par value, 150,000,000 shares authorized, 23,103,875 and 13,915,691 shares issued and outstanding, respectively | 231 | 139 | |||||
Additional paid-in capital | 201,140 | 200,403 | |||||
Accumulated other comprehensive income | — | 10 | |||||
Accumulated deficit | (217,663 | ) | (213,412 | ) | |||
Total stockholders’ deficit | (16,290 | ) | (12,820 | ) | |||
$ | 3,094 | $ | 4,816 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
NET SALES | $ | 505 | $ | 442 | $ | 741 | $ | 1,192 | |||||||
COST OF GOODS SOLD | 542 | 465 | 1,047 | 930 | |||||||||||
Gross profit | (37 | ) | (23 | ) | (306 | ) | 262 | ||||||||
OPERATING EXPENSES: | |||||||||||||||
Selling, general and administrative | 1,436 | 1,908 | 3,140 | 3,712 | |||||||||||
Research and development | 402 | 468 | 672 | 919 | |||||||||||
1,838 | 2,376 | 3,812 | 4,631 | ||||||||||||
OPERATING LOSS FROM CONTINUING OPERATIONS | (1,875 | ) | (2,399 | ) | (4,118 | ) | (4,369 | ) | |||||||
OTHER INCOME (EXPENSE): | |||||||||||||||
Interest expense, net | (328 | ) | (186 | ) | (497 | ) | (376 | ) | |||||||
Warrant revaluation | 24 | (270 | ) | 345 | (415 | ) | |||||||||
Other, net | — | — | — | (13 | ) | ||||||||||
(304 | ) | (456 | ) | (152 | ) | (804 | ) | ||||||||
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES | (2,179 | ) | (2,855 | ) | (4,270 | ) | (5,173 | ) | |||||||
INCOME TAX BENEFIT | — | (1 | ) | — | (1 | ) | |||||||||
LOSS FROM CONTINUING OPERATIONS | (2,179 | ) | (2,854 | ) | (4,270 | ) | (5,172 | ) | |||||||
INCOME (LOSS) FROM DISCONTINUED OPERATIONS, NET OF TAXES | 1,182 | (421 | ) | 9 | (1,144 | ) | |||||||||
NET LOSS | (997 | ) | (3,275 | ) | (4,261 | ) | (6,316 | ) | |||||||
PREFERRED STOCK DIVIDENDS | — | (331 | ) | (21 | ) | (662 | ) | ||||||||
NET LOSS FROM CONTINUING OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS | (2,179 | ) | (3,185 | ) | (4,291 | ) | (5,834 | ) | |||||||
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS AVAILABLE TO COMMON STOCKHOLDERS | 1,182 | (421 | ) | 9 | (1,144 | ) | |||||||||
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS | $ | (997 | ) | $ | (3,606 | ) | $ | (4,282 | ) | $ | (6,978 | ) | |||
BASIC AND DILUTED LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | (0.10 | ) | $ | (0.26 | ) | $ | (0.20 | ) | $ | (0.54 | ) | |||
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE FROM DISCONTINUED OPERATIONS | $ | 0.05 | $ | (0.03 | ) | $ | — | $ | (0.11 | ) | |||||
BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.05 | ) | $ | (0.30 | ) | $ | (0.20 | ) | $ | (0.65 | ) | |||
BASIC AND DILUTED WEIGHTED-AVERAGE SHARES OF COMMON STOCK OUTSTANDING | 21,797,442 | 12,149,632 | 21,060,387 | 10,778,857 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||
Net Loss | $ | (997 | ) | $ | (3,275 | ) | $ | (4,261 | ) | $ | (6,316 | ) | |||
Other comprehensive loss - foreign currency translation adjustment | — | 42 | — | 8 | |||||||||||
Comprehensive Loss | $ | (997 | ) | $ | (3,233 | ) | $ | (4,261 | ) | $ | (6,308 | ) | |||
Preferred Stock | Common Stock | ||||||||||||||||||||||||||||
Outstanding Shares | Par Value | Outstanding Shares | Par Value | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total | ||||||||||||||||||||||
Balance, December 31, 2015 | 4,029,502 | $ | 40 | 13,915,691 | $ | 139 | $ | 200,403 | $ | (213,412 | ) | $ | 10 | $ | (12,820 | ) | |||||||||||||
Net loss | — | — | — | — | — | (4,261 | ) | — | (4,261 | ) | |||||||||||||||||||
Foreign currency translation adjustment | — | — | — | — | — | 10 | (10 | ) | — | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | 141 | — | — | 141 | |||||||||||||||||||||
Issuance of common shares | — | — | 257,467 | 2 | 105 | — | — | 107 | |||||||||||||||||||||
Private placement, net | 2,365,243 | 24 | — | — | 519 | — | — | 543 | |||||||||||||||||||||
Dividends on preferred stock | — | — | — | — | (4,475 | ) | — | — | (4,475 | ) | |||||||||||||||||||
Conversion of preferred stock and preferred stock dividends | (6,180,040 | ) | (62 | ) | 8,930,717 | 90 | 4,447 | — | — | 4,475 | |||||||||||||||||||
Balance, June 30, 2016 | 214,705 | $ | 2 | 23,103,875 | $ | 231 | $ | 201,140 | $ | (217,663 | ) | $ | — | $ | (16,290 | ) |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
CASH FLOWS USED IN OPERATING ACTIVITIES: | |||||||
Net loss | $ | (4,261 | ) | $ | (6,316 | ) | |
Less income from discontinued operations, net of tax | 9 | (1,144 | ) | ||||
Loss from continuing operations | (4,270 | ) | (5,172 | ) | |||
Adjustments to reconcile net loss to net cash flows used in operating activities: | |||||||
Depreciation and amortization | 189 | 156 | |||||
Stock-based compensation | 119 | 322 | |||||
Provision for losses on doubtful accounts | 70 | — | |||||
Warrant revaluation | (345 | ) | 415 | ||||
Loss on sale of fixed assets | — | 14 | |||||
Deferred interest | 47 | 61 | |||||
Deferred tax provision | — | 81 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (134 | ) | 301 | ||||
Inventories | 11 | — | |||||
Other current assets | 253 | (243 | ) | ||||
Accounts payable | 1,839 | 367 | |||||
Accrued expenses and other liabilities | (613 | ) | (240 | ) | |||
Net cash used in continuing operations | (2,834 | ) | (3,938 | ) | |||
Net cash provided by (used in) discontinued operations | 79 | (2,074 | ) | ||||
Net cash used in operating activities | (2,755 | ) | (6,012 | ) | |||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: | |||||||
Purchases of property and equipment | (19 | ) | (194 | ) | |||
Other assets | (7 | ) | (46 | ) | |||
Net cash used in continuing operations | (26 | ) | (240 | ) | |||
Net cash provided by discontinued operations | 962 | — | |||||
Net cash provided by (used in) investing activities | 936 | (240 | ) | ||||
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES: | |||||||
Principal payments on capital lease obligations | (1 | ) | (34 | ) | |||
Issuance of preferred stock, net | 1,779 | — | |||||
Issuance of common stock, net | 68 | 6,209 | |||||
Proceeds from borrowings | 500 | 923 | |||||
Principal payment on note payable | (550 | ) | (148 | ) | |||
Net cash flows provided by financing activities | 1,796 | 6,950 | |||||
EFFECT OF FOREIGN CURRENCY EXCHANGE RATE CHANGES ON CASH | — | 2 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (23 | ) | 700 | ||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 444 | 1,609 | |||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ | 421 | $ | 2,309 | |||
SUPPLEMENTAL CASH FLOW INFORMATION | |||||||
Cash paid during the period for: | |||||||
Interest | $ | — | $ | 222 |
Dollars in Thousands | |||||||||||||||
Beginning Balance | Additions | Deductions | Ending Balance | ||||||||||||
Three Months Ended June 30, 2016 | $ | 108 | $ | 49 | $ | — | $ | 157 | |||||||
Three Months Ended June 30, 2015 | $ | 20 | $ | — | $ | — | $ | 20 | |||||||
Six Months Ended June 30, 2016 | $ | 87 | $ | 70 | $ | — | $ | 157 | |||||||
Six Months Ended June 30, 2015 | $ | 20 | $ | — | $ | — | $ | 20 |
Dollars in Thousands | |||||||||||||||
Beginning Balance | Additions | Deductions | Ending Balance | ||||||||||||
Three Months Ended June 30, 2016 | $ | 63 | $ | — | $ | — | $ | 63 | |||||||
Three Months Ended June 30, 2015 | $ | — | $ | — | $ | — | $ | — | |||||||
Six Months Ended June 30, 2016 | $ | 63 | $ | — | $ | — | $ | 63 | |||||||
Six Months Ended June 30, 2015 | $ | — | $ | — | $ | — | $ | — |
Leasehold improvements | 1 to 10 years |
Furniture and fixtures | 3 to 7 years |
Production equipment | 3 to 7 years |
Computer equipment | 3 to 7 years |
Research and development equipment | 2 to 7 years |
• | Persuasive evidence of an arrangement exists; |
• | Delivery has occurred or services have been rendered; |
• | The seller’s price to the buyer is fixed or determinable; and |
• | Collectability is reasonably assured. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net sales | $ | 574 | $ | 6,598 | $ | 1,677 | $ | 12,361 | |||||||
Cost of goods sold | 11 | 3,703 | 1,194 | 6,777 | |||||||||||
Gross profit | 563 | 2,895 | 483 | 5,584 | |||||||||||
Selling, general and administrative expense | 344 | 3,165 | 1,369 | 6,415 | |||||||||||
Research and development expense | — | 108 | 68 | 224 | |||||||||||
Operating income (loss) from discontinued operations | 219 | (378 | ) | (954 | ) | (1,055 | ) | ||||||||
Gain on sale of business/assets | 963 | — | 963 | — | |||||||||||
Income (loss) from discontinued operations before income taxes | 1,182 | (378 | ) | 9 | (1,055 | ) | |||||||||
Income tax expense | — | 43 | — | 89 | |||||||||||
Income (loss) from discontinued operations, net of taxes | $ | 1,182 | $ | (421 | ) | $ | 9 | $ | (1,144 | ) |
Dollars in Thousands | |||||||
June 30, 2016 | December 31, 2015 | ||||||
ASSETS | |||||||
Accounts receivable, net | $ | 647 | $ | 1,905 | |||
Other current assets | 43 | 82 | |||||
Total Assets | $ | 690 | $ | 1,987 | |||
LIABILITIES | |||||||
Accrued compensation | $ | — | $ | 264 | |||
Total Liabilities | $ | — | $ | 264 | |||
Dollars in Thousands | |||||||||||||||
Beginning Balance | Additions | Deductions | Ending Balance | ||||||||||||
Three Months Ended June 30, 2016 | $ | 14,542 | $ | — | $ | (4,080 | ) | $ | 10,462 | ||||||
Three Months Ended June 30, 2015 | $ | 9,173 | $ | 1,198 | $ | (1,965 | ) | $ | 8,406 | ||||||
Six Months Ended June 30, 2016 | $ | 14,664 | $ | — | $ | (4,202 | ) | $ | 10,462 | ||||||
Six Months Ended June 30, 2015 | $ | 7,927 | $ | 2,730 | $ | (2,251 | ) | $ | 8,406 |
Dollars in Thousands | |||||||||||
June 30, 2016 | |||||||||||
Cost | Accumulated Amortization | Net Book Value | |||||||||
Patents | 695 | 76 | 619 | ||||||||
Intellectual property | 672 | 262 | 410 | ||||||||
$ | 1,367 | $ | 338 | $ | 1,029 |
Dollars in Thousands | |||||||||||
December 31, 2015 | |||||||||||
Cost | Accumulated Amortization | Net Book Value | |||||||||
Patents | 980 | 274 | 706 | ||||||||
Intellectual property | 671 | 207 | 464 | ||||||||
$ | 1,651 | $ | 481 | $ | 1,170 |
Estimated Useful Life | |
Patents | Life of the patent |
Intellectual property | 7 years |
Dollars in Thousands | ||||||||
June 30, 2016 | December 31, 2015 | |||||||
Revolving Line of Credit(1) | $ | 3,243 | $ | 3,025 | ||||
Term Loan(2) | 4,000 | 4,000 | ||||||
Convertible Promissory Notes (3) | 571 | 571 | ||||||
Total debt | 7,814 | 7,596 | ||||||
Current portion of long-term debt | (7,814 | ) | (7,596 | ) | ||||
Long-term debt, net of current maturities | $ | — | $ | — |
(1) | Revolving Line of Credit. Amounts advanced under the Revolving Line accrue interest at an annual rate equal to the greater of (a) 6.25% or (b) the Wall Street Journal prime rate plus 3%. The current interest rate is 6.50%. Interest is payable on a monthly basis, with the balance payable at the maturity of the Revolving Line. Under the Loan Agreement, we pay the Lenders a commitment fee of $20,000 on each one-year anniversary of March 13, 2013, the Effective Date, during the term of the Revolving Line. In addition, a fee of 0.5% per annum is payable quarterly on the unused portion of the Revolving Line. The Revolving Line matures on November 1, 2017. |
(2) | Term Loan. We received $4.0 million under the Term Loan on the Effective Date. Pursuant to the terms of the Loan Agreement, as amended, the maturity date of the Loan Agreement was extended until November 1, 2017 and no principal payments on the Term Loan are due until such date. The current interest rate is 9.1%. |
Warrant Holder | Issue Year | Expiration | Underlying Shares | Exercise Price | ||||
Various Institutional Holders(1) | 2012 | February 2017 | 2,832,069 | $4.36 | ||||
Affiliates of Third Security, LLC(1) | 2012 | February 2017 | 430,019 | $4.36 | ||||
Various Institutional Holders(2) | 2013 | January 2018 | 441,655 | $9.00 | ||||
Affiliates of Third Security, LLC(2) | 2013 | January 2018 | 250,000 | $9.00 | ||||
Various Institutional Holders(3) | 2014 | April 2020 | 374,618 | $4.00 | ||||
Various Institutional Holders(4) | 2015 | February 2020 | 714,780 | $2.24 | ||||
Various Institutional Holders(5) | 2015 | December 2020 | 122,433 | $1.66 | ||||
Various Institutional Holders(5) | 2015 | December 2020 | 667,164 | $0.01 | ||||
Various Institutional Holders(6) | 2015 | January 2021 | 1,161,972 | $1.21 | ||||
Affiliates of Third Security, LLC(7) | 2016 | January 2021 | 161,026 | $1.21 | ||||
Various Institutional Holders(7) | 2016 | January 2021 | 1,720,430 | $1.21 | ||||
8,876,166 |
(1) | These warrants were issued in connection with the Private Placement completed in February 2012 and are classified as a liability in our financial statements. See Note 9 - “Fair Value” for additional information. These warrants also contain certain anti-dilution provisions that provide for an adjustment to the exercise price and number of shares issuable upon exercise of the warrant in the event that we engage in certain issuances of shares of our common stock at a price lower than the exercise price of the warrant. |
(2) | These warrants were issued in connection with the 2013 Offering, which was completed in January 2013. |
(3) | These warrants were issued in connection with the 2014 Private Placement, which was completed in October 2014. |
(4) | These warrants were issued in connection with the February 2015 Offering, which was completed in February 2015. |
(5) | These warrants were issued in connection with the July 2015 Offering, which was completed in July 2015. |
(6) | These warrants were originally issued in connection with the July 2015 Offering, which was completed in July 2015, and were amended in connection with the January 2016 Offering, which was completed in January 2016. |
(7) | These warrants were issued in connection with the January 2016 Offering, which was completed in January 2016. |
Dollars in Thousands | ||||||||
For the Three Months Ended | ||||||||
June 30, 2016 | June 30, 2015 | |||||||
Beginning balance at April 1 | $ | 20 | $ | 290 | ||||
Total (gains) or losses: | ||||||||
Recognized in earnings | (20 | ) | 270 | |||||
Balance at June 30 | $ | — | $ | 560 |
Dollars in Thousands | ||||||||
For the Six Months Ended | ||||||||
June 30, 2016 | June 30, 2015 | |||||||
Beginning balance at January 1 | $ | 350 | $ | 145 | ||||
Total (gains) or losses: | ||||||||
Recognized in earnings | (350 | ) | 415 | |||||
Balance at June 30 | $ | — | $ | 560 |
Dollars in Thousands | |||||
For the Three Months Ended | |||||
June 30, 2016 | |||||
Beginning balance at April 1 | $ | 1,446 | |||
Total (gains) or losses: | |||||
Recognized in earnings | (4 | ) | |||
Balance at June 30 | $ | 1,442 |
Dollars in Thousands | |||||
For the Six Months Ended | |||||
June 30, 2016 | |||||
Beginning balance at January 1 | $ | — | |||
Additions | 1,437 | ||||
Total (gains) or losses: | |||||
Recognized in earnings | 5 | ||||
Balance at June 30 | $ | 1,442 |
Number of Options | Weighted-Average Exercise Price | |||||
Outstanding at January 1, 2016 | 1,107,794 | $ | 3.45 | |||
Granted | 14,000 | 1.07 | ||||
Forfeited | (121,140 | ) | 3.69 | |||
Outstanding at June 30, 2016 | 1,000,654 | $ | 3.39 | |||
Exercisable at June 30, 2016 | 648,246 | $ | 4.01 |
Number of SARs | Weighted-Average Exercise Price | |||||
Outstanding at January 1, 2016 | 98,333 | $ | 4.14 | |||
Outstanding at June 30, 2016 | 98,333 | $ | 4.14 | |||
Exercisable at June 30, 2016 | 84,445 | $ | 4.21 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Launched First Rapid Turnaround Breast Cancer Analysis Panel - Transgenomic’s new liquid biopsy test uses Multiplexed ICE COLD-PCR to detect actionable tumor mutations in genes relevant to treatment decisions with high sensitivity. Notably, results are available in 7-10 days, in contrast to turnaround times of up to four weeks for other testing methods. |
• | Transgenomic Study at ASCO Shows High Concordance between ICE COLD-PCR Liquid Biopsies and Conventional Tissue Biopsies - Study released at ASCO confirmed concordance of ICP-enriched and conventional testing, identifying 97% of the mutations detected by standard tissue biopsy PCR. The study confirmed that ICP’s ultra-high sensitivity enables accurate use of plasma-based liquid biopsies for cancer mutation detection. |
• | Licensed Commercial Rights to Long QT Syndrome Testing Portfolio to LabCorp - In July 2016, we signed a commercial license agreement with Laboratory Corporation of America® Holdings for Transgenomic’s portfolio of intellectual property pertaining to DNA testing for Long QT syndrome (LQTS), a congenital heart rhythm disorder. Certain medications and activities can trigger LQTS, so accurately identifying individuals at risk is important. |
• | Launched First Commercially Available CLIA Test for Detection of EGFR C797S Mutations that Predict Resistance to New Kinase Therapies for Lung Cancer - In July 2016, we launched high sensitivity Multiplexed ICE COLD-PCR based-assays and panels that can use blood, serum or tissue samples to detect predictors of resistance to 3rd-generation TKI drugs in non-small cell lung cancer patients. The C797S detection test is available as a solo assay and in three EGFR panels. |
• | VWR to Distribute Transgenomic’s ICEme Kits that Enable Liquid Biopsies - In July 2016, we signed a non-exclusive agreement with VWR for distribution of ICEme™ Kits to researchers and laboratories in North America. The kits are based on Multiplexed ICE COLD-PCR technology and are designed to facilitate genomics-based cancer research by providing accurate detection of mutations using any type of sample and any downstream sequencing platform. |
Dollars in Thousands | ||||||||||||||
Three Months Ended | ||||||||||||||
June 30, | Change | |||||||||||||
2016 | 2015 | $ | % | |||||||||||
Total Net Sales | $ | 505 | $ | 442 | $ | 63 | 14 | % |
Dollars in Thousands | |||||||||||||
Three Months Ended | |||||||||||||
June 30, | Margin % | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Gross Profit | $ | (37 | ) | $ | (23 | ) | (7 | )% | (5 | )% |
Dollars in Thousands | ||||||||||||||
Six Months Ended | ||||||||||||||
June 30, | Change | |||||||||||||
2016 | 2015 | $ | % | |||||||||||
Total Net Sales | $ | 741 | $ | 1,192 | $ | (451 | ) | (38 | )% |
Dollars in Thousands | |||||||||||||
Six Months Ended | |||||||||||||
June 30, | Margin % | ||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||
Gross Profit | $ | (306 | ) | $ | 262 | (41 | )% | 22 | % |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
(Dollars in thousands) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Net sales | $ | 574 | $ | 6,598 | $ | 1,677 | $ | 12,361 | |||||||
Net income (loss) from discontinued operations, before tax | $ | 1,182 | $ | (378 | ) | $ | 9 | $ | (1,055 | ) | |||||
Income tax expense | — | 43 | — | 89 | |||||||||||
Income (loss) from discontinued operations, net of tax | $ | 1,182 | $ | (421 | ) | $ | 9 | $ | (1,144 | ) |
Dollars in Thousands | |||||||||||
June 30, 2016 | December 31, 2015 | Change | |||||||||
Current assets (including cash and cash equivalents of $421 and $444, respectively) | $ | 1,803 | $ | 3,282 | $ | (1,479 | ) | ||||
Current liabilities | 17,719 | 16,981 | 738 | ||||||||
Working capital | $ | (15,916 | ) | $ | (13,699 | ) | $ | (2,217 | ) |
Item 4. | Controls and Procedures. |
Item 1. | Legal Proceedings |
Item 1A. | Risk Factors |
• | we will be required to use a substantial portion of our cash flow from operations to pay principal and interest on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, product development efforts, acquisitions, investments and strategic alliances and other general corporate requirements; |
• | our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and our industry and could limit our ability to pursue other business opportunities, borrow more money for operations or capital in the future and implement our business strategies; |
• | our level of indebtedness and the covenants within our debt instruments may restrict us from raising additional financing on satisfactory terms to fund working capital, capital expenditures, product development efforts, strategic acquisitions, investments and alliances, and other general corporate requirements; and |
• | our outstanding indebtedness may make it difficult for us to attract additional financing when needed. |
• | Revenue generated by sales of our products; |
• | Expenses incurred in manufacturing and selling our products; |
• | Costs of developing new products or technologies; |
• | Costs associated with capital expenditures; |
• | The number and timing of strategic transactions; and |
• | Working capital requirements related to growing existing business. |
• | Payment cycles in foreign markets are typically longer than in the U.S., and capital spending budgets for research agencies can vary over time with foreign governments; |
• | Changes in foreign currency exchange rates can make our products more costly in local currencies because our foreign sales are typically paid for in British Pounds or in Euros; |
• | The potential for changes in U.S. and foreign laws or regulations that result in additional import or export restrictions, higher tariffs or other taxes, more burdensome licensing requirements or similar impediments may limit our ability to sell products and services profitably in these markets; and |
• | The fluctuation of foreign currency exchange rates to the U.S. Dollar and the Euro to the British Pound can cause our net sales and expenses to increase or decrease, which adds risk to our financial statements. |
Item 6. | Exhibits |
(a) | Exhibits |
†2.1 | Asset Purchase Agreement among the Registrant, Scoli Acquisition Sub, Inc. and Axial Biotech, Inc. dated August 27, 2012 (incorporated by reference to Exhibit 2.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 8, 2012). | ||
3.1 | Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q filed on November 14, 2005). | ||
3.2 | Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 29, 2012). | ||
3.3 | Certificate of Amendment of Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 28, 2014). | ||
3.4 | Certificate of Designation of Series A-1 Convertible Preferred Stock of the Registrant, as filed with the Secretary of State of the State of Delaware on January 8, 2016 (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 11, 2016 at 7:33 a.m. Eastern Time). | ||
3.5 | Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3(ii) to the Registrant’s Current Report on Form 8-K filed on May 25, 2007). | ||
4.1 | Form of Certificate of the Registrant’s Common Stock (incorporated by reference to Exhibit 4 to the Registrant’s Registration Statement on Form S-1 (Registration No. 333-32174) filed on March 10, 2000). | ||
4.2 | Form of Warrant issued by the Registrant to the Third Security Entities on February 7, 2012 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 7, 2012). | ||
4.3 | Form of Warrant issued by the Registrant to the Investors on February 7, 2012 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on February 7, 2012). | ||
4.4 | Form of Registration Rights Agreement entered into by and among the Registrant, the Third Security Entities and the Investors dated February 2, 2012 (incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on February 7, 2012). | ||
4.5 | Registration Rights Agreement, entered into by and among the Registrant and the Investors, dated January 24, 2013 (incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K/A filed on January 31, 2013). | ||
4.6 | Form of Warrant issued by the Registrant to the Investors on January 30, 2013 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K/A filed on January 31, 2013). | ||
4.7 | Registration Rights Agreement, dated as of March 5, 2014, by and among the Registrant, Third Security Senior Staff 2008 LLC, Third Security Staff 2014 LLC and Third Security Incentive 2010 LLC (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on March 6, 2014). | ||
4.8 | Securities Purchase Agreement, dated as of October 22, 2014, by and among Transgenomic, Inc. and the Investors (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on October 22, 2014). | ||
4.9 | Form of Warrant issued by Transgenomic, Inc. to the Investors and the advisor on October 22, 2014 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on October 22, 2014). | ||
4.10 | Unsecured Convertible Promissory Note Purchase Agreement, dated as of December 31, 2014, by and among Transgenomic, Inc. and the Investors (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on January 7, 2015). | ||
4.11 | Form of Unsecured Convertible Promissory Note issued by Transgenomic, Inc. to the Investor pursuant to the Unsecured Convertible Promissory Note Purchase Agreement, dated as of December 31, 2014 (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on January 7, 2015). | ||
4.12 | Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on February 27, 2015). | ||
4.13 | Registration Rights Agreement, dated June 30, 2015, by and among Transgenomic, Inc. and the Investors (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K/A filed on July 7, 2015). | ||
4.14 | Form of Series B Warrant to Purchase Common Stock issued by Transgenomic, Inc. to an Investor on July 7, 2015 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K/A filed on July 7, 2015). | ||
4.15 | Form of Series A Warrant to Purchase Common Stock issued by Transgenomic, Inc. to Investors on July 7, 2015 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K/A filed on July 7, 2015). | ||
4.16 | Form of Warrant to Purchase Common Stock issued by Transgenomic, Inc. to the Placement Agent on July 7, 2015 (incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K/A filed on July 7, 2015). | ||
4.17 | Registration Rights Agreement, by and among Transgenomic, Inc. and the Investors, dated January 8, 2016 (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 11, 2016 at 7:33 a.m. Eastern Time). | ||
4.18 | Form of Warrant, issued by Transgenomic, Inc. to the Investors on January 8, 2016 (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed on January 11, 2016 at 7:33 a.m. Eastern Time). | ||
4.19 | Form of Amended Warrant, issued by Transgenomic, Inc. to an affiliate of an Investor on January 8, 2016 (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on Form 8-K filed on January 11, 2016 at 7:33 a.m. Eastern Time). | ||
4.20 | Form of Warrant, issued by Transgenomic, Inc. to the Placement Agent on January 8, 2016 (incorporated by reference to Exhibit 4.4 to the Registrant’s Current Report on Form 8-K filed on January 11, 2016 at 7:33 a.m. Eastern Time). | ||
10.1 | Limited Waiver and Ninth Amendment to Loan and Security Agreement, dated June 6, 2016, by and among Transgenomic, Inc., Third Security Senior Staff 2008 LLC, as administrative agent and a lender, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on June 7, 2016). | ||
10.2 | At the Market Offering Agreement, dated June 7, 2016, by and between Transgenomic, Inc. and Craig-Hallum Capital Group LLC (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on June 7, 2016). | ||
31.1 | Certification of Paul Kinnon, President, Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, as amended. | ||
32.1 | Certification of Paul Kinnon, President, Chief Executive Officer and Interim Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, as amended. | ||
101.INS | XBRL Instance Document | ||
101.SCH | XBRL Taxonomy Extension Schema Document | ||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | ||
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | ||
101.LAB | XBRL Taxonomy Extension Label Linkbase Document | ||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | ||
† | Pursuant to Item 601(b)(2) of Regulation S-K, the schedules to this agreement have been omitted. The Registrant agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. | ||
TRANSGENOMIC, INC. | |||
Date: | August 12, 2016 | By: | /S/ PAUL KINNON |
Paul Kinnon President, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) | |||
1. | I have reviewed this quarterly report on Form 10-Q of Transgenomic, Inc. (the Registrant); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and I have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiary, is made known to me by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and |
5. | I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the audit committee of the Registrant's board of directors (or persons performing the equivalent function): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal control over financial reporting. |
/s/ PAUL KINNON |
Paul Kinnon |
President, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
(1) | Such Quarterly Report on Form 10-Q of Transgenomic, Inc. for the period ended June 30, 2016, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in such Quarterly Report on Form 10-Q of Transgenomic, Inc. for the period ended June 30, 2016, fairly presents, in all material respects, the financial condition and results of operations of Transgenomic, Inc. |
/s/ PAUL KINNON |
Paul Kinnon |
President, Chief Executive Officer and Interim Chief Financial Officer (Principal Executive Officer and Principal Financial Officer) |
DOCUMENT AND ENTITY INFORMATION - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2016 |
Jul. 31, 2016 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TRANSGENOMIC INC | |
Entity Central Index Key | 0001043961 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 23,547,946 |
CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICALS) - $ / shares |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 15,000,000 | 15,000,000 |
Preferred stock, shares issued (in shares) | 214,705 | 4,029,502 |
Preferred stock, shares outstanding (in shares) | 214,705 | 4,029,502 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 23,103,875 | 13,915,691 |
Common stock, shares outstanding (in shares) | 23,103,875 | 13,915,691 |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net Loss | $ (997) | $ (3,275) | $ (4,261) | $ (6,316) |
Other comprehensive loss - foreign currency translation adjustment | 0 | 42 | 0 | 8 |
Comprehensive Loss | $ (997) | $ (3,233) | $ (4,261) | $ (6,308) |
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - 6 months ended Jun. 30, 2016 - USD ($) $ in Thousands |
Total |
Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income |
Private Placement |
Private Placement
Preferred Stock
|
Private Placement
Additional Paid-in Capital
|
---|---|---|---|---|---|---|---|---|---|
Balance at beginning of period (in shares) at Dec. 31, 2015 | 4,029,502 | 13,915,691 | |||||||
Balance at beginning of period at Dec. 31, 2015 | $ (12,820) | $ 40 | $ 139 | $ 200,403 | $ (213,412) | $ 10 | |||
Increase (Decrease) in Stockholders' Equity | |||||||||
Net loss | (4,261) | (4,261) | |||||||
Foreign currency translation adjustment | 0 | 10 | (10) | ||||||
Stock-based compensation | 141 | 141 | |||||||
Stock issued during period (in shares) | 257,467 | 2,365,243 | |||||||
Stock issued during period | 107 | $ 2 | 105 | $ 543 | $ 24 | $ 519 | |||
Dividends on preferred stock | (4,475) | (4,475) | |||||||
Conversion of preferred stock and preferred stock dividends (in shares) | (6,180,040) | 8,930,717 | |||||||
Conversion of preferred stock and preferred stock dividends | 4,475 | $ (62) | $ 90 | 4,447 | |||||
Balance at end of period (in shares) at Jun. 30, 2016 | 214,705 | 23,103,875 | |||||||
Balance at end of period at Jun. 30, 2016 | $ (16,290) | $ 2 | $ 231 | $ 201,140 | $ (217,663) | $ 0 |
BUSINESS DESCRIPTION |
6 Months Ended |
---|---|
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BUSINESS DESCRIPTION | BUSINESS DESCRIPTION Business Description. Transgenomic, Inc. (“we”, “us”, “our”, the “Company” or “Transgenomic”) is a biotechnology company advancing personalized medicine for the detection and treatment of cancer and inherited diseases through our proprietary molecular technologies and clinical and research services. A key goal is to bring our Multiplexed ICE COLD-PCR (“MX-ICP”) product to the clinical market through strategic partnerships and licensing agreements, enabling the use of blood and other bodily fluids for more effective and patient-friendly diagnosis, monitoring and treatment of cancer. MX-ICP is technology proprietary to Transgenomic. It is a reagent that improves the ability to detect genetic mutations. This technology has been validated internally on all currently available sequencing platforms, including Sanger, Next Gen Sequencing and Digital PCR. By enhancing the level of detection of genetic mutations and suppressing the normal or wild-type DNA, several benefits are provided. Historically, our operations were organized and reviewed by management along our major product lines and presented in two business segments: Laboratory Services and Genetic Assays and Platforms. Beginning with the quarter ended September 30, 2015, our operations are now organized as one business segment, our Laboratory Services segment, and during the second half of 2015, we began presenting our Genetic Assays and Platforms segment and a portion of our Laboratory Services segment in discontinued operations. Our current Laboratory Services business consists of our laboratory in Omaha, Nebraska, which is focused on providing genetic analytical services related to Oncology and pharmacogenomics research services supporting Phase II and Phase III clinical trials conducted by pharmaceutical and biotechnology companies. Our laboratory employs a variety of genomic testing service technologies, including our proprietary MX-ICP technology. Our laboratory in Omaha is certified under the Clinical Laboratory Improvement Amendments (“CLIA”) as a high complexity laboratory and is accredited by the College of American Pathologists. Our condensed consolidated balance sheets, statements of operations and statements of cash flows for all periods presented reflect our former Genetic Assays and Platforms activities and Patient Testing business as discontinued operations (See Note 3 - “Discontinued Operations”). Going Concern. The condensed consolidated financial statements have been prepared using accounting principles generally accepted in the United States of America (“GAAP”) applicable for a going concern, which assume that we will realize our assets and discharge our liabilities in the ordinary course of business. We have incurred substantial operating losses and have used cash in our operating activities for the past few years. As of June 30, 2016, we had negative working capital of $15.9 million. Our ability to continue as a going concern is dependent upon a combination of generating additional revenue, improving cash collections, potentially selling underutilized assets and, if necessary, raising additional financing to meet our obligations and pay our liabilities arising from normal business operations when they come due. The outcome of these matters cannot be predicted with any certainty at this time and raises substantial doubt that we will be able to continue as a going concern. These condensed consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. We cannot be certain that additional financing will be available on acceptable terms, or at all, and our failure to raise capital when needed could limit our ability to continue our operations. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation. The accompanying condensed consolidated financial statements are presented in conformity with GAAP. All amounts are presented in U.S. Dollars (“$”). Supplemental cash flows from discontinued operations are presented in Note 3 - “Discontinued Operations”. We have evaluated events occurring subsequent to June 30, 2016 for potential recognition or disclosure in the consolidated financial statements and concluded there were no subsequent events that required recognition or disclosure. The condensed consolidated balance sheet as of December 31, 2015 was derived from our audited balance sheet as of that date. There has been no change in the balance sheet from December 31, 2015. The accompanying condensed consolidated financial statements as of and for the three and six months ended June 30, 2016 and 2015 are unaudited and reflect all adjustments (consisting of only normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015 contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2016. The results of operations for the interim periods presented are not necessarily indicative of the results for fiscal year 2016. Certain prior year amounts have been reclassified to conform to the current year presentation in our condensed consolidated financial statements, which consists of the effects of reclassifications from the presentation of our discontinued operations. Principles of Consolidation. The condensed consolidated financial statements include the accounts of Transgenomic, Inc. and our wholly owned subsidiary. All inter-company balances and transactions have been eliminated in consolidation. Risks and Uncertainties. Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our financial statements. The more significant of those risks are presented below and throughout the notes to the unaudited condensed consolidated financial statements. Use of Estimates. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. In addition, estimates and assumptions associated with the determination of the fair value of certain assets and related impairments require considerable judgment by management. Actual results could differ from the estimates and assumptions used in preparing these condensed consolidated financial statements. Fair Value. Unless otherwise specified, book value approximates fair market value. The common stock warrant liability is recorded at fair value. See Note 9 - “Fair Value” for additional information. Cash and Cash Equivalents and Other Current Assets. Cash and cash equivalents include cash and investments with original maturities at the date of acquisition of three months or less. Other current assets as of June 30, 2016 of $0.3 million include prepaid assets of $0.1 million and other receivables of $0.2 million. Concentrations of Cash. From time to time, we may maintain a cash position with financial institutions in amounts that exceed federally insured limits. We have not experienced any losses on such accounts as of June 30, 2016. Accounts Receivable. The following is a summary of activity for the allowance for doubtful accounts from continuing operations during the three and six months ended June 30, 2016 and 2015:
While payment terms are generally 30 days, we have also provided extended payment terms in certain cases. Accounts receivable are carried at original invoice amount and shown net of allowance for doubtful accounts. The estimate made for doubtful accounts is based on a review of all outstanding amounts on a quarterly basis. We determine the allowance for doubtful accounts by regularly evaluating individual payor receivables and considering a payor’s financial condition, credit history, reimbursement rates and current economic conditions. Accounts receivable are written off when deemed uncollectible and after all collection efforts have been exhausted. Recoveries of accounts receivable previously written off are recorded as a reduction in bad debt expense when received. Inventories. Inventories are stated at the lower of cost or market net of allowance for obsolete inventory. Cost is computed using standard costs for finished goods and average or latest actual cost for raw materials and work in process, which approximates the first-in, first-out (FIFO) method. At June 30, 2016, our net inventories were less than $0.1 million and were comprised predominantly of raw materials. The following is a summary of activity for the allowance for obsolete inventory during the three and six months ended June 30, 2016 and 2015:
We determine the allowance for obsolescence by evaluating inventory quarterly for items deemed to be slow moving or obsolete. Property and Equipment. Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:
Depreciation expense in continuing operations related to property and equipment was less than $0.1 million for each of the three month periods ended June 30, 2016 and 2015. Depreciation expense was $0.1 million for each of the six month periods ended June 30, 2016 and 2015. Depreciation expense during each period includes depreciation related to equipment acquired under capital leases. Intangible Assets. Intangible assets include intellectual property and patents. 1. Intellectual Property. Initial costs paid to license intellectual property from independent third parties are capitalized and amortized using the straight-line method over the license period. Ongoing royalties related to such licenses are expensed as incurred. 2. Patents. We capitalize legal costs, filing fees and other expenses associated with obtaining patents on new discoveries and amortize these costs using the straight-line method over the shorter of the legal life of the patent or its economic life beginning on the date the patent is issued. Stock-Based Compensation. All stock-based awards to date have exercise prices equal to the market value of the shares at the date of grant and have 10-year contractual terms. Unvested awards as of June 30, 2016 had vesting periods of up to three years from the date of grant. None of the awards outstanding at June 30, 2016 are subject to performance or market-based vesting conditions. We measure and recognize compensation expense for all stock-based awards made to employees and directors. Compensation expense, net of estimated forfeitures, is based on the calculated fair value of the awards as measured at the grant date and is expensed over the service period of the awards. During the three and six months ended June 30, 2016, we recorded compensation expense for all stock awards of less than $0.1 million and $0.1 million, respectively, within selling, general and administrative expense. During the three and six months ended June 30, 2015, we recorded compensation expense for all stock awards of $0.2 million and $0.3 million, respectively. As of June 30, 2016, the unrecognized compensation expense related to unvested stock awards was $0.2 million, which is expected to be recognized over a weighted-average period of 1.2 years. We granted stock options to purchase an aggregate of zero and 14,000 shares of our common stock during the three and six months ended June 30, 2016, respectively. The fair value of the stock options granted was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions: risk-free interest rates of 1.91% based on the U.S. Treasury yield in effect at the time of grant; dividend yields of zero percent; expected lives of 6.00 years, based on expected exercise activity behavior; and volatility of 85% based on the historical volatility of our common stock over a time that is consistent with the expected life of the options. Included in our stock awards outstanding as of June 30, 2016 were stock appreciation rights (“SARs”) to purchase 98,333 shares of our common stock. The SARs were issued solely to our executive officers and will vest over three years from the date of grant. Net Sales Recognition. Revenue is realized and earned when all of the following criteria are met:
In our Biomarker Identification laboratory, we perform services on a project by project basis. When we receive payment in advance, we initially defer the revenue and recognize it when we deliver the service. These projects typically do not extend beyond one year. At each of June 30, 2016 and December 31, 2015, deferred net sales associated with pharmacogenomics research projects included in the balance sheet in deferred revenue was $0.1 million. Net sales from Patient Testing laboratories, reported as part of discontinued operations, are recognized on an individual test basis and take place when the test report is completed, reviewed and sent to the client less the reserve for insurance, Medicare and Medicaid contractual adjustments. There are no deferred net sales associated with our Patient Testing services. Adjustments to the allowances, based on actual receipts from third party payers, are reflected in the estimated contractual allowance applied prospectively. In the fourth quarter of 2015, we adjusted our contractual allowance rates to better reflect the reimbursement level we expect to achieve on Patient Testing billings. The adjustment negatively impacted our Patient Testing revenues for all periods after the third quarter of 2015. (See Note 3 - “Discontinued Operations”). Net sales of Genetic Assays and Platforms products, reported as discontinued operations (See Note 3 - “Discontinued Operations”) are recognized in accordance with the terms of the sales arrangement. Such recognition is based on receipt of an unconditional customer order and transfer of title and risk of ownership to the customer, typically upon shipment of the product under a purchase order. Our sales terms do not provide for the right of return unless the product is damaged or defective. Net sales from certain services associated with the analytical instruments, to be performed subsequent to shipment of the products, is deferred and recognized when the services are provided. Such services, mainly limited to installation and training services that are not essential to the functionality of the instruments, typically are performed in a timely manner subsequent to shipment of the instrument. We also enter into various service contracts that cover installed instruments. These contracts cover specific time periods and net sales associated with these contracts are deferred and recognized ratably over the service period. Common Stock Warrants. Certain of our issued and outstanding warrants to purchase common stock do not qualify to be treated as equity and, accordingly, are recorded as a liability (“Common Stock Warrant Liability”). We are required to present these instruments at fair value at each reporting date and any changes in fair values are recorded as an adjustment to earnings. The Common Stock Warrant Liabilities are considered Level Three financial instruments for purposes of fair value measurement. See Note 9 - “Fair Value” for additional information. Loss Per Share. Basic loss per share is calculated based on the weighted-average number of common shares outstanding during each period. Diluted loss per share includes shares issuable upon exercise of outstanding stock options, warrants or conversion rights that have exercise or conversion prices below the market value of our common stock. Options, warrants and conversion rights pertaining to 10,721,464 and 8,286,963 shares of our common stock have been excluded from the computation of diluted loss per share at June 30, 2016 and 2015, respectively, because the effect is anti-dilutive due to the net loss. Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to a customer. ASU No. 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB decided to defer the effective date of this new accounting guidance by one year. As a result, ASU No. 2014-09 will be effective for us for all annual and interim reporting periods beginning after December 15, 2017 and early adoption would be permitted as of the original effective date. The new standard permits the use of either the retrospective or cumulative effect transition method. We do not expect to early adopt this guidance and we have not selected a transition method. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40)(“ASU No. 2014-15”). This guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We do not expect to early adopt this guidance and do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard amends the recognition of lease assets and lease liabilities by lessees for those leases currently classified as operating leases and amends disclosure requirements associated with leasing arrangements. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently assessing the impact that the adoption of this ASU will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements, forfeitures and classification on the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016; however, early adoption is permitted. We do not expect to early adopt this guidance and are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows. |
DISCONTINUED OPERATIONS |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On September 8, 2015, we entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Edge BioSystems, Inc. (“Edge Bio”), pursuant to which we sold our manufacturing, marketing and selling of high quality polymer and silica based beads and resin and chromatography columns business (collectively, the “Columns Business”). The Columns Business was part of our former segment, Genetic Assays and Platforms. Pursuant to the Asset Purchase Agreement, Edge Bio acquired substantially all of the assets used solely in connection with the Columns Business and assumed certain liabilities of the Columns Business for a total cash purchase price of approximately $2.1 million (the “Asset Sale”), which was paid on September 8, 2015 upon the closing of the Asset Sale. During the year ended December 31, 2015, we recorded a gain on the sale of the Columns Business of $1.5 million. On November 25, 2015, we entered into an Asset Purchase Agreement (the “Purchase Agreement”) with ADSTEC Corporation (“ADSTEC”) and ADS Biotec Inc., a wholly-owned subsidiary of ADSTEC (“Buyer”), pursuant to which we sold (1) to ADSTEC our facilities located in Glasgow, Scotland and on Irvington Road in Omaha, Nebraska (together, the “Facilities”) and all of our stock, inventory and raw materials located at the Facilities (collectively, the “Inventory”), and (2) to Buyer (a) all of the remaining assets relating to our Genetic Assays and Platforms business segment (the “Business”), other than the Inventory (the “Purchased Assets”), and (b) all of the ordinary shares of Transgenomic Limited, a wholly-owned subsidiary of ours (the “Shares”). Pursuant to the Purchase Agreement, ADSTEC and Buyer acquired the Facilities, the Inventory, the Purchased Assets and the Shares for an aggregate purchase price of approximately $300,000, and Buyer assumed our financial and human resources commitments related to the Business (the “Transaction”). During the year ended December 31, 2015, we recorded a loss on the Transaction of $1.7 million. Together, the Asset Sale and the Transaction represent the divestiture of our Genetic Assays and Platforms business, resulting in a strategic shift that had a major effect on our operations and financial results. Therefore, the divested operations of our Genetic Assays and Platforms business meet the criteria to be reported as discontinued operations. During the fourth quarter of 2015, our Board of Directors took actions to begin the process of divesting our Patient Testing business in New Haven, Connecticut. In March 2016, we announced that we had suspended testing services in our Patient Testing laboratory as we review and evaluate various strategic alternatives for that business. As a result of these actions, as of December 31, 2015, our Patient Testing business met the criteria to be reported as discontinued operations. We anticipate that we will complete the divestiture of the Patient Testing business during 2016. The related assets, liabilities, results of operations and cash flows for both the Genetic Assays and Platforms business and Patient Testing business are classified as assets held for sale, liabilities held for sale and discontinued operations for all periods presented. Results of the discontinued operations consisted of the following:
Income from discontinued operations for both the three and six month periods ended June 30, 2016, includes approximately $1.0 million in proceeds received from the sale of assets of our discontinued Patient Testing business. Assets and liabilities of the discontinued operations are classified as assets held for sale and liabilities held for sale in the condensed consolidated balance sheets and consisted of the following:
The following is a summary of activity for the allowance for doubtful accounts from discontinued operations during the three and six months ended June 30, 2016 and 2015. The allowance for doubtful accounts from discontinued operations is included in the assets held for sale in the condensed consolidated balance sheets.
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INTANGIBLES AND OTHER ASSETS |
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INTANGIBLES AND OTHER ASSETS | INTANGIBLES AND OTHER ASSETS We review our amortizable long-lived assets for impairment annually or whenever events indicate that the carrying amount of the asset (group) may not be recoverable. An impairment loss may be needed if the sum of the future undiscounted cash flows is less than the carrying amount of the asset (group). The amount of the loss would be determined by comparing the fair market value of the asset to the carrying amount of the asset (group). Long-lived intangible assets as of June 30, 2016 and December 31, 2015 consisted of the following:
Other assets include U.S. security deposits and deferred tax assets, net of applicable valuation allowances. Amortization expense for intangible assets was $0.1 million during each of the six month periods ended June 30, 2016 and 2015. Amortization expense for intangible assets is expected to be $0.1 million for each of the years ending December 31, 2016, 2017, 2018, 2019 and 2020. |
DEBT |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
DEBT | DEBT
We will pay the Lenders an additional final payment of $120,000 at maturity or prepayment of the Term Loan. In addition, if we repay the Term Loan prior to maturity, we will pay the Lenders a prepayment penalty of 1% of the total outstanding balance under the Term Loan. Additional Terms. The Loan Agreement contains affirmative and negative covenants. Under the Term Loan, we agreed not to (i) pledge or otherwise encumber our assets other than to the Lenders, (ii) enter into additional borrowings or guarantees, (iii) repurchase our capital stock, or (iv) enter into certain mergers or acquisitions without the Lenders’ consent. Additionally, the Loan Agreement contains a subjective acceleration clause at the discretion of the Lenders. As of June 30, 2016, the Company was in compliance with the Loan Agreement, as amended by the Ninth Amendment, however, as of August 12, 2016 we have not made the required July 2016 interest payment and have not received a waiver for the non-compliance and as such all debt has been classified as current at June 30, 2016. To secure the repayment of any amounts borrowed under the Revolving Line and the Term Loan, we granted the Lenders a security interest in all of our assets. The occurrence of an event of default under the Loan Agreement could result in the acceleration of our obligations under the Loan Agreement, would increase the applicable interest rate under the Revolving Line or Term Loan (or both) by 5% and would permit the Lenders to exercise remedies with respect to the collateral under the Loan Agreement. As of the date these financials were available for release, the Lenders have not exercised the remedies under the Loan Agreement. (3) Convertible Promissory Notes. The Notes accrue interest at a rate of 6% per year and mature on December 31, 2016. Revolving Line and Term Loan. On March 13, 2013 (the “Effective Date”), we entered into a Loan and Security Agreement with affiliates of Third Security, LLC (the “Lenders”) for (a) a revolving line of credit (the “Revolving Line”) with borrowing availability of up to $4.0 million, subject to reduction based on our eligible accounts receivable, and (b) a term loan (the “Term Loan” and, together with the Revolving Line, the “Loan Agreement”) of $4.0 million. Proceeds were used to pay off a three year senior secured promissory note payable to PGxHealth, LLC, which was entered into on December 29, 2010 in conjunction with our acquisition of the FAMILION family of genetic tests, and for general corporate and working capital purposes. On August 2, 2013, we entered into an amendment to the Loan Agreement (the “Amendment”). The Amendment, which became effective as of June 30, 2013, reduced our future minimum revenue covenants under the Loan Agreement and modified the interest rates applicable to the amounts advanced under the Revolving Line. On November 14, 2013, we entered into a second amendment to the Loan Agreement (the “Second Amendment”). The Second Amendment, which became effective as of October 31, 2013, reduced our future minimum revenue covenants under the Loan Agreement. On January 27, 2014, we entered into a third amendment to the Loan Agreement (the “Third Amendment”). Pursuant to the Third Amendment, the Lenders agreed to waive certain events of default under the Loan Agreement, and the parties amended certain provisions of the Loan Agreement, including the minimum liquidity ratio that we must maintain during the term of the Loan Agreement. On March 3, 2014, we entered into a fourth amendment to the Loan Agreement (the “Fourth Amendment”). Pursuant to the terms of the Fourth Amendment, we were not required to make any principal or interest payments under the Term Loan for the period from March 1, 2014 through March 31, 2015. The interest on the debt that was deferred and not paid was capitalized as part of the Term Loan. The amount of interest that was capitalized from March 1, 2014 to March 31, 2015 was $0.4 million. On October 22, 2014, we entered into a fifth amendment to the Loan Agreement (the “Fifth Amendment”). Pursuant to the Fifth Amendment, the parties amended certain provisions of the Loan Agreement, including reducing the minimum liquidity and revenue covenants under the Loan Agreement. The Fifth Amendment also reduced the aggregate amount that we may borrow under the Revolving Line from $4.0 million to $3.0 million. On April 1, 2015, we entered into a sixth amendment to the Loan Agreement (the “Sixth Amendment”). Pursuant to the Sixth Amendment, among other things, (a) the Lenders waived specified events of default under the terms of the Loan Agreement, (b) commencing April 1, 2015, we began making monthly interest payments with respect to the Term Loan to the Lenders, (c) we were not be obligated to make monthly payments of principal under the Term Loan to the Lenders until April 1, 2016, (d) we made an initial prepayment of a portion of the Term Loan balance in the amount of approximately $148,000 on April 1, 2015 and will make one or more additional prepayments to the Lenders under the Loan Agreement upon the occurrence of certain events, as defined in the Loan Agreement, and (e) we were not required to comply with the minimum liquidity ratio under the terms of the Loan Agreement until the earliest to occur of a specified event, as defined in the Loan Agreement, or March 31, 2016. The Sixth Amendment also extends the time period in which we must provide certain reports and statements to the Lenders and amends the circumstances pursuant to which we may engage in certain sales or transfers of our business or property without the consent of the Lenders. As of June 30, 2015, we were in compliance with all financial covenants of the Loan Agreement, but were not in compliance with the restrictions limiting the amount that we may borrow under the Revolving Line. Accordingly, on August 10, 2015, we received a waiver from the Lenders relating to this non-compliance and paid the Lenders an aggregate of $0.7 million, which brought us back into compliance with the terms of the Revolving Line. On September 4, 2015, we entered into a seventh amendment to the Loan Agreement (the “Seventh Amendment”). The Seventh Amendment, among other things, (a) provided that the Lenders waived specified events of default under the terms of the Loan Agreement, (b) reduced our future minimum revenue covenants under the Loan Agreement, (c) reduced our borrowing availability under the Revolving Line to approximately $2.3 million, and (d) limited our borrowing base under the Loan Agreement to the amount of the Revolving Line. On January 6, 2016, we entered into an eighth amendment to the Loan Agreement (the “Eighth Amendment”). The Eighth Amendment, among other things, (a) provided that the Lenders waived specified events of default under the terms of the Loan Agreement, (b) reduced our future minimum revenue covenants under the Loan Agreement, (c) extended the maturity date of the Loan Agreement until November 1, 2017, and (d) provided for the repayment of an overadvance of $750,000 previously provided by the Lenders to us pursuant to the Loan Agreement. On June 6, 2016, we entered into a ninth amendment to the Loan Agreement (the “Ninth Amendment”). The Ninth Amendment, among other things, (a) provided that the Lenders waived specified events of default under the terms of the Loan Agreement, (b) amended the prepayment terms of the Loan Agreement, (c) provided for the reduction of amounts available under the Revolving Line upon the prepayment or repayment of certain amounts by us, (d) removed the minimum liquidity ratio and minimum net revenue financial covenants applicable to us under the Loan Agreement, (e) amended the circumstances pursuant to which we may engage in certain sales or transfers of our business or property without the consent of the Lenders, and (f) capitalized certain amounts owed by us to the Lenders and added such overdue amounts to the outstanding principal amount of the Revolving Line. As a result of the Ninth Amendment, the overadvance that existed at March 31, 2016 was added to the outstanding principal amount of the Revolving Line and no overadvance existed as of June 30, 2016. Convertible Promissory Notes. On December 31, 2014, we entered into an Unsecured Convertible Promissory Note Purchase Agreement (the “Note Purchase Agreement”) with an accredited investor (the “Investor”), pursuant to which we agreed to issue and sell to the Investor in a private placement an unsecured convertible promissory note (the “Initial Note”). We issued the Initial Note in the aggregate principal amount of $750,000 to the Investor on December 31, 2014. Pursuant to the terms of the Initial Note, interest accrued at a rate of 6% per year and the Initial Note was set to mature on December 31, 2016. Under the Initial Note, the outstanding principal and unpaid interest accrued was convertible into shares of our common stock as follows: (i) commencing upon the date of issuance of the Initial Note (but no earlier than January 1, 2015), the Investor was entitled to convert, on a one-time basis, up to 50% of the outstanding principal and unpaid interest accrued under the Initial Note, into shares of our common stock at a conversion price equal to the lesser of (a) the average closing price of the common stock on the principal securities exchange or securities market on which our common stock is then traded (the “Market”) for the 20 consecutive trading days immediately preceding the date of conversion, and (b) $2.20 (subject to adjustment for stock splits, stock dividends, other distributions, recapitalizations and the like); and (ii) commencing February 15, 2015, the Investor was entitled to convert, on a one-time basis, any or all of the remaining outstanding principal and unpaid interest accrued under the Initial Note, into shares of our common stock at a conversion price equal to 85% of the average closing price of our common stock on the Market for the 15 consecutive trading days immediately preceding the date of conversion. The Initial Note has been converted in full into 502,786 shares of our common stock, in accordance with the terms of the Initial Note. On January 15, 2015, we entered into the Note Purchase Agreement with seven accredited investors (the “Additional Investors”) and, on January 20, 2015, issued and sold to the Additional Investors, in a private placement, notes (the “Additional Notes”) in an aggregate principal amount of $925,000. The Additional Notes have the same terms and conditions as the Initial Note. As of June 30, 2016, $400,000 of the aggregate principal amount of the Additional Notes, and accrued interest thereon, has been converted into an aggregate of 281,023 shares of our common stock. |
COMMITMENTS AND CONTINGENCIES |
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Jun. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES We are subject to a number of claims of various amounts that arise out of the normal course of our business. In our opinion, the disposition of pending claims, in excess of recorded accruals, could have a material adverse effect on our financial position, results of operations or cash flows. On February 25, 2016, the Board of Regents of the University of Nebraska (“UNMC”) filed a lawsuit against us in the District Court of Douglas County, Nebraska, for breach of contract and seeking recovery of $0.7 million owed by us to UNMC. We and UNMC are currently in discussions to determine a mutually agreeable means by which to settle the outstanding liability. A $0.7 million liability has been recorded at December 31, 2015 and June 30, 2016. In addition, on April 13, 2016, Fox Chase Cancer Center (“Fox Chase”) filed a lawsuit against us in the Court of Common Pleas of Philadelphia County, First Judicial District of Pennsylvania Civil Trial Division (the “Court of Common Pleas”), alleging, among other things, breach of contract, tortious interference with present and prospective contractual relations, unjust enrichment, fraudulent conversion and conspiracy and seeking punitive damages in addition to damages and other relief. This lawsuit relates to a license agreement we entered into with Fox Chase in August 2000, as amended (the “License Agreement”), as well as the assignment of certain of our rights under the License Agreement to Integrated DNA Technologies, Inc. (“IDT”) pursuant to the Surveyor Kit Patent, Technology and Inventory Purchase Agreement we entered into with IDT effective as of July 1, 2014 (the “IDT Agreement”). Pursuant to the terms of the IDT Agreement, we agreed to indemnify IDT with respect to certain of the claims asserted in the Fox Chase proceeding. On July 8, 2016, the Court of Common Pleas sustained our preliminary objections to several of Fox Chase’s claims and dismissed the claims for tortious interference, fraudulent conversion, conspiracy, punitive damages and attorney’s fees. Accordingly, the case has been narrowed so that only certain contract claims and an unjust enrichment claim remain pending against us. We believe that we have good and substantial defenses to the claims asserted by Fox Chase. We are unable to determine whether any loss will occur or to estimate the range of such potential loss; therefore, no amount of loss has been accrued by us as of the date of filing of this Quarterly Report on Form 10-Q. Furthermore, there is no guarantee that we will prevail in this suit or receive any damages or other relief if we do prevail. On June 23, 2016, the Icahn School of Medicine at Mount Sinai (“Mount Sinai”) filed a lawsuit against us in the Supreme Court of the State of New York, County of New York, alleging, among other things, breach of contract and, alternatively, unjust enrichment and quantum merit, and seeking recovery of $0.7 million owed by us to Mount Sinai for services rendered. We and Mount Sinai are currently in discussions to determine a mutually agreeable means by which to settle the outstanding liability. A $0.7 million liability has been recorded at December 31, 2015 and June 30, 2016. The outcome of legal proceedings and claims brought against us are subject to significant uncertainty. Therefore, although management considers the likelihood of such an outcome to be remote, if one or more of these legal matters were resolved against us in the same reporting period for amounts in excess of management’s expectations, our financial statements for such reporting period could be materially adversely affected. In general, the resolution of a legal matter could prevent us from offering our services or products to others, could be material to our financial condition or cash flows, or both, or could otherwise adversely affect our operating results. We lease certain equipment, vehicles and operating facilities under non-cancellable operating leases that expire on various dates through 2022. The future minimum lease payments required under these leases are $0.4 million for the remainder of 2016, $0.7 million in 2017, $0.7 million in 2018, $0.7 million in 2019, $0.7 million in 2020 and $0.4 million thereafter. Rent expense for each of the six month periods ended June 30, 2016 and 2015 was $0.1 million. At June 30, 2016, firm commitments to vendors totaled $0.1 million. |
INCOME TAXES |
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Jun. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Annually, we file U.S. Federal, state and foreign income tax returns. All U.S. Federal and most state loss carryforwards remain subject to adjustment in the event of an income tax examination. Income tax expense from continuing operations was zero for the three and six months ended June 30, 2016 and 2015. We maintain a full valuation allowance on our net deferred tax assets, having concluded that we are not more likely than not going to realize the benefit of our deferred tax assets, including our net operating loss carryforwards. During each of the three and six month periods ended June 30, 2016 and 2015, there were no material changes to the liability for uncertain tax positions. |
STOCKHOLDERS' EQUITY |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCKHOLDERS' EQUITY | STOCKHOLDERS’ EQUITY Common Stock. Pursuant to our Third Amended and Restated Certificate of Incorporation, as amended, we currently have 150,000,000 shares of common stock authorized for issuance. On February 2, 2012, we entered into definitive agreements with institutional and other accredited investors and raised approximately $22.0 million in a private placement financing (the “Private Placement”), which included an aggregate of $3.0 million in convertible notes issued in December 2011 to entities affiliated with Third Security, LLC, a related party, that automatically converted into shares of our common stock and warrants to purchase such common stock on the same terms as all investors in the Private Placement. Pursuant to the purchase agreement, we issued an aggregate of 1,583,333 shares of our common stock at a price per share of $12.00, as well as five-year warrants to purchase up to an aggregate of 823,333 shares of our common stock with an exercise price of $15.00 per share. In connection with the conversion of the convertible notes issued by us to the entities affiliated with Third Security, LLC, the entities received an aggregate of 250,000 shares of our common stock and 125,000 warrants on the same terms as all investors in the Private Placement. Craig-Hallum Capital Group LLC (“Craig-Hallum”) served as the sole placement agent for the offering. In consideration for services rendered as the placement agent in the offering, we agreed to (a) pay to the placement agent cash commissions equal to $1,330,000, or 7.0% of the gross proceeds received in the offering; (b) issue to the placement agent a five-year warrant to purchase up to 31,666 shares of our common stock (representing 2% of the shares sold in the Private Placement) with an exercise price of $15.00 per share and other terms that are the same as the terms of the warrants issued in the Private Placement; and (c) reimburse the placement agent for reasonable out-of-pocket expenses, including fees paid to the placement agent’s legal counsel, incurred in connection with the offering, which reimbursable expenses were not to exceed $125,000. The costs incurred to complete the Private Placement were recorded as a reduction in equity in the amount of $1.5 million. Net proceeds from this offering were used for general corporate and working capital purposes, primarily to accelerate development of several of our key initiatives. On January 24, 2013, we entered into a Securities Purchase Agreement with certain institutional and other accredited investors pursuant to which we: (a) sold to the investors an aggregate of 1,383,333 shares of our common stock at a price per share of $6.00 for aggregate gross proceeds of approximately $8.3 million; and (b) issued to the investors warrants to purchase up to an aggregate of 691,655 shares of our common stock with an exercise price of $9.00 per share (the “2013 Offering”). The warrants may be exercised, in whole or in part, at any time from January 30, 2013 until January 30, 2018 and contain both cash and “cashless exercise” features. Affiliates of Third Security, LLC purchased an aggregate of 500,000 shares of common stock and warrants to purchase an aggregate of 250,000 shares of common stock in the 2013 Offering on the same terms as the other investors. Net proceeds from the 2013 Offering were used for general corporate and working capital purposes. In connection with the 2013 Offering, we entered into a registration rights agreement with the investors (the “Registration Rights Agreement”). The Registration Rights Agreement required that we file with the SEC a registration statement to register for resale the shares of common stock sold and the shares of common stock issuable upon exercise of the warrants (the “Warrant Shares”) by March 16, 2013. The registration statement was filed with the SEC on March 15, 2013 and was declared effective by the SEC on March 29, 2013. The 2013 Offering required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of the warrants decreased from $15.00 per share to $12.96 per share and the number of shares issuable upon exercise of the warrants increased from 948,333 to 1,097,600. On October 22, 2014, we entered into a Securities Purchase Agreement with certain accredited investors (the “October 2014 Investors”), pursuant to which we, in a private placement, issued and sold to the October 2014 Investors (the “2014 Private Placement”) an aggregate of 730,776 shares of our common stock at a price per share of $3.25 for an aggregate purchase price of approximately $2.4 million, and warrants to purchase up to an aggregate of 365,388 shares of our common stock with an initial exercise price of $4.00 per share that are exercisable for the period from April 22, 2015 through April 22, 2020. In connection with the 2014 Private Placement, we also issued a warrant to purchase up to an aggregate of 9,230 shares of our common stock to one advisor. The warrants issued in the 2014 Private Placement include both cash and “cashless exercise” features. The 2014 Private Placement required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the February 2012 common stock and warrant sale. The exercise price of the warrants decreased from $11.73 per share to $10.86 per share and the number of shares issuable upon exercise of the warrants increased from 1,212,665 to 1,309,785. On December 31, 2014, we entered into the Note Purchase Agreement with the Investor pursuant to which we agreed to issue and sell the Initial Note to the Investor (the “Note Private Placement”). See Note 5 - “Debt-Convertible Promissory Notes” for additional information regarding the terms of the Initial Note. Pursuant to the terms of the Note Purchase Agreement, we are subject to certain registration obligations and we may be required to effect one or more other registrations to register for resale the shares of our common stock issued or issuable under the Initial Note in connection with certain “piggy-back” registration rights granted to the Investor. The Note Private Placement required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the February 2012 common stock and warrant sale. The exercise price of the 2012 warrants decreased from $10.86 per share to $10.25 per share and the number of shares issuable upon exercise of the warrants increased from 1,309,785 to 1,387,685. On January 15, 2015, we entered into the Note Purchase Agreement with the Additional Investors and, on January 20, 2015, issued and sold to the Additional Investors, in a private placement, the Additional Notes in an aggregate principal amount of $925,000 (the “Additional Note Private Placement”). The Additional Notes have the same terms and conditions as the Initial Note. Craig-Hallum acted as the sole placement agent for the sale and issuance of the Additional Notes. In connection with the sale and issuance of the Additional Notes, we issued to Craig-Hallum an unsecured convertible promissory note, upon the same terms and conditions as the Notes, in an aggregate principal amount equal to 5% of the proceeds received by us pursuant to the sale and issuance of the Additional Notes, or $46,250 (the “Placement Agent Note”). As of the date of filing of this Quarterly Report on form 10-Q, the Placement Agent Note remains outstanding. The Additional Note Private Placement required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of these warrants decreased from $10.25 per share to $9.59 per share and the number of shares issuable upon exercise of the warrants increased from 1,387,685 to 1,483,161. On February 27, 2015, we entered into a purchase agreement with Craig-Hallum (the “Underwriter”) relating to our sale and issuance of 3,573,899 shares of our common stock and corresponding warrants to purchase up to 714,780 shares of our common stock (the “February 2015 Offering”). Each share of common stock was sold in combination with a warrant to purchase 0.20 of a share of common stock. The purchase price to the public for each share of common stock and accompanying warrant was $1.95. The purchase price paid by the Underwriter to us for the common stock and accompanying warrants was $1.8135. The net proceeds from the February 2015 Offering, after deducting the Underwriter’s discount and other estimated February 2015 Offering expenses, were approximately $6.2 million. The accompanying warrants are exercisable immediately upon their initial issuance date at an exercise price of $2.24 per share and will expire five years from the date of issuance. The exercise price will also be subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting our common stock. The February 2015 Offering required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of these warrants decreased from $9.59 per share to $7.56 per share and the number of shares issuable upon exercise of the warrants increased from 1,483,161 to 1,881,396. On June 30, 2015, we entered into a Securities Purchase Agreement with certain accredited investors (the “July 2015 Investors”) pursuant to which, on July 7, 2015, we sold to the July 2015 Investors (a) an aggregate of approximately 1.5 million shares of our common stock at a price per share of $1.42, (b) warrants (the “Series B Warrants”) to purchase up to an aggregate of 0.7 million shares of our common stock with an exercise price of $0.01 per share, and (c) warrants (the “Series A Warrants” and, together with the Series B Warrants, the “July 2015 Warrants”) to purchase up to an aggregate of 1.2 million shares of our common stock, with an exercise price of $1.66 per share (collectively, the “July 2015 Offering”). Each of the July 2015 Warrants has a term of 5 and 1/2 years. The Series B Warrants were immediately exercisable upon issuance. The Series A Warrants became exercisable on January 7, 2016, six months from the date of issuance. The aggregate gross proceeds to us from the July 2015 Offering were approximately $3.0 million. Craig-Hallum (the “2015 Placement Agent”) served as the sole placement agent for the July 2015 Offering. In consideration for services rendered as the placement agent in the July 2015 Offering, we (a) paid to the 2015 Placement Agent cash commissions equal to approximately $212,783, or 7.0% of the gross proceeds received in the July 2015 Offering; (b) issued to the 2015 Placement Agent a five-year warrant to purchase up to 107,033 shares of our common stock with an exercise price of $1.66 per share and which is subject to other terms that are the same as the terms of the Series A Warrants; and (c) reimbursed the 2015 Placement Agent for reasonable out-of-pocket expenses, including fees paid to the 2015 Placement Agent’s legal counsel, incurred in connection with the July 2015 Offering, which reimbursable expenses did not exceed $50,000. The July 2015 Offering required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of these warrants decreased from $7.56 per share to $6.50 per share and the number of shares issuable upon exercise of the warrants increased from 1,881,396 to 2,188,177. On January 6, 2016, we entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (the “2016 Investors”), pursuant to which, on January 8, 2016, we sold to the 2016 Investors, and the 2016 Investors purchased from us (the “January 2016 Offering”), an aggregate of approximately $2.2 million of units (the “Units”) consisting of (a) an aggregate of 2,365,243 shares (the “A-1 Preferred Shares”) of our Series A-1 Convertible Preferred Stock (the “A-1 Preferred”), and (b) warrants (the “2016 Warrants”) to purchase up to an aggregate of 1,773,929 shares of our common stock. Each Unit was sold to the 2016 Investors at a purchase price of $0.93 per Unit. The A-1 Preferred Shares are convertible into shares of our common stock at an initial rate of 1-for-1, which conversion rate is subject to further adjustment as set forth in our Certificate of Designation of Series A-1 Convertible Preferred Stock, which was filed with the Secretary of State of the State of Delaware on January 8, 2016 (the “Series A-1 Certificate of Designation”). Pursuant to the terms of the Series A-1 Certificate of Designation, the holders of the A-1 Preferred Shares will generally be entitled to that number of votes as is equal to the product obtained by multiplying: (i) the number of whole shares of our common stock into which the A-1 Preferred may be converted as of the record date of such vote or consent, by (ii) 0.93, rounded down to the nearest whole number. Therefore, every 1.075269 shares of A-1 Preferred will generally initially be entitled to one vote. In May 2016, 2,150,538 of the A-1 Preferred Shares were converted into 2,150,538 shares of our common stock. At June 30, 2016, there were 214,705 A-1 Preferred Shares outstanding. The 2016 Warrants were immediately exercisable upon issuance, have a term of five years and have an exercise price of $1.21 per share of our common stock. Each 2016 Warrant includes both cash and “cashless exercise” features and an exchange feature whereby the holder of the 2016 Warrant may exchange (the “Exchange Right”) all or any portion of the 2016 Warrant for a number of shares of our common stock equal to the quotient obtained by dividing the “Exchange Amount” by the closing bid price of our common stock on the second trading day prior to the date the 2016 Warrant is exchanged (the “Exchange Price”). Under the 2016 Warrants, the “Exchange Amount” is based upon a Black Scholes option pricing model, and the aggregate Exchange Amount under all of the 2016 Warrants will be $1,436,882, subject to adjustment to the extent that the risk-free U.S. Treasury rate fluctuates between the date of issuance of the 2016 Warrants and the date the 2016 Warrants are exchanged. Each 2016 Warrant provides that the number of shares that may be issued upon exercise of the Exchange Right is limited to the number of shares that may be purchased pursuant to the terms of the 2016 Warrant, unless we have previously obtained stockholder approval or approval from The Nasdaq Stock Market LLC to issue any additional shares of our common stock (the “Additional Shares”) pursuant to the Exchange Right (the “Required Approvals”). For any Exchange Right exercised more than 90 days following the issuance of the 2016 Warrants, if we have not obtained either of the Required Approvals, we will be required to pay the 2016 Warrant holder an amount in cash for any Additional Shares that we cannot issue without the Required Approvals based on the Exchange Amount. The 2016 Warrants further provide that, to the extent the closing bid price of our common stock on the second trading day prior to the date the 2016 Warrant is exchanged is less than $0.50, the Exchange Price will be deemed to be equal to $0.50, and, in addition to issuing shares of our common stock based on this Exchange Price, we will be required to pay to the 2016 Warrant holder an amount in cash equal to the product obtained by multiplying (a) $0.50 minus the closing bid price of our common stock on the second trading day prior to the date the 2016 Warrant is exchanged, by (b) the aggregate number of shares of our common stock issued to the 2016 Warrant holder by the Company in such exchange at an Exchange Price equal to $0.50. Therefore, if the Required Approvals are obtained, based on the Exchange Amount of $1,436,882 (which, as noted above, is subject to adjustment to the extent that the risk-free U.S. Treasury rate fluctuates between the date of the issuance of the 2016 Warrants and the date the 2016 Warrants are exchanged), the maximum number of shares of our common stock issuable pursuant to the Exchange Right in the 2016 Warrants will be 2,873,765. In addition, if, for example, assuming an Exchange Amount of $1,436,882, the closing bid price of our common stock on the second trading day prior to the date the 2016 Warrants are exchanged is $0.25, we would be required to pay to the 2016 Warrant holders cash in an aggregate amount of $718,441 in addition to issuing the 2016 Warrant holders 2,873,765 shares. In accordance with the terms of the SPA, we amended that certain Series A Warrant to purchase up to an aggregate of 1,161,972 shares of our common stock previously issued by us to an affiliate of one of the 2016 Investors on July 7, 2015 (the “Original Warrant”), as previously reported by us on our Amendment No. 1 to Current Report on Form 8-K/A, filed with the SEC on July 7, 2015 (as so amended, the “Amended Warrant”). The Amended Warrant amends the Original Warrant to provide that the Amended Warrant is subject to the same terms and conditions as the 2016 Warrants and, therefore, includes both cash and “cashless exercise” features and an Exchange Right whereby the number of shares issuable pursuant to the Exchange Right is equal to the “Amended Warrant Exchange Amount”, which is based on a Black Scholes option pricing model, and will be $941,197, subject to adjustment to the extent that the risk-free U.S. treasury rate fluctuates between the date of issuance of the Amended Warrant and the date the Amended Warrant is exchanged. The Amended Warrant is exercisable for up to 1,161,972 shares of our common stock in the event we have obtained either of the Required Approvals with respect to the Amended Warrant. In the event the Amended Warrant holder exercises the Amended Warrant more than 90 days following the issuance of the Amended Warrant, if we have not obtained either of the Required Approvals, we will be required to pay the Amended Warrant holder an amount in cash for the shares of our common stock that we cannot issue under the Amended Warrant pursuant to such exercise without the Required Approvals based on the Amended Warrant Exchange Amount. The Amended Warrant also provides that, to the extent the closing bid price of our common stock on the second trading day prior to the date the Amended Warrant is exchanged is less than $0.50, the Exchange Price will be deemed to be equal to $0.50, and, in addition to issuing shares of our common stock based on this Exchange Price (assuming receipt of the Required Approvals), we will be required to pay to the Amended Warrant holder an amount in cash equal to the product obtained by multiplying (a) $0.50 minus the closing bid price of our common stock on the second trading day prior to the date the Amended Warrant is exchanged, by (b) the aggregate number of shares of our common stock issued to the Amended Warrant holder by us in such exchange at an Exchange Price equal to $0.50. Therefore, if the Required Approvals are obtained, based on the Amended Warrant Exchange Amount of $941,197 (which, as noted above, is subject to adjustment to the extent that the risk-free U.S. Treasury rate fluctuates between the issuance of the Amended Warrant and the date the Amended Warrant is exchanged), the maximum number of shares of our common stock issuable pursuant to the Exchange Right in the Amended Warrant will be 1,882,395. In addition, if, for example, assuming an Amended Warrant Exchange Amount of $941,197, the closing bid price of our common stock on the second trading day prior to the date the Amended Warrant is exchanged is $0.25, we would be required to pay to the Amended Warrant holder cash in an aggregate amount of $470,599 in addition to issuing the Amended Warrant holder 1,882,395 shares. In connection with entering into the SPA, we also entered into a Registration Rights Agreement, dated January 8, 2016, with the 2016 Investors. Pursuant to the terms of the Registration Rights Agreement, we were required to file with the SEC a registration statement to register for resale the shares of our common stock issuable upon conversion of the A-1 Preferred Shares and the shares of our common stock issuable upon exercise of the 2016 Warrants and the Amended Warrant by January 25, 2016. We filed the required registration statement with the SEC on January 25, 2016. Craig-Hallum (the “Placement Agent”) served as the sole placement agent for the January 2016 Offering. In consideration for services rendered as the Placement Agent in the January 2016 Offering, we (1) paid to the Placement Agent cash commissions equal to approximately $140,000, or 7.0% of the gross proceeds received in the January 2016 Offering, excluding any proceeds received from Third Security, LLC or any of its affiliates; (2) issued to the Placement Agent, for a price of $50, a five-year warrant to purchase up to 107,527 shares of our common stock at an exercise price of $1.21 per share (the “Agent Warrant”), which is subject to the same terms as the 2016 Warrants except that the Agent Warrant was not exercisable until July 8, 2016 and does not contain the Exchange Right; and (3) reimbursed the Placement Agent for reasonable out-of-pocket expenses, including fees paid to the Placement Agent’s legal counsel, incurred in connection with the January 2016 Offering, which reimbursable expenses did not exceed $50,000. The January 2016 Offering and the payment of all accrued and unpaid dividends on the Series A Preferred Stock and Series B Preferred Stock in the form of shares of our common stock at a rate of $1.00 per share of our common stock discussed under “-Conversion of Preferred Stock” below required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of these warrants decreased to $4.39 per share and the number of shares issuable upon exercise of the warrants increased from 2,188,177 to 3,239,827. On May 31, 2016, we issued to a vendor an aggregate of 78,000 shares of our common stock and, on June 14, 2016, we issued to a second vendor an aggregate of 64,153 shares of our common stock. Such shares of common stock were issued to the vendors in lieu of an aggregate cash amount of approximately $89,000 owed by us to such vendors for services previously performed by such vendors. We issued the shares to the vendors in transactions exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), in reliance on the exemptions provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder and in reliance on similar exemptions under applicable state laws. The offering of the shares to the vendors did not involve a public offering, and no general solicitation or advertisement was made in connection with the offering of the shares to the vendors. On June 7, 2016, we entered into an At the Market Offering Agreement (the “ATM Agreement”) with Craig-Hallum, as sales agent, pursuant to which we may offer and sell, from time to time, through Craig-Hallum, up to $3,500,000 of shares (the “Shares”) of our common stock. Any Shares offered and sold in the offering will be issued pursuant to our effective shelf registration statement on Form S-3 (File No. 333-201907) and the related prospectus previously declared effective by the SEC on February 13, 2015, as supplemented by a prospectus supplement, dated June 7, 2016, that we filed with the SEC pursuant to Rule 424(b)(5) under the Securities Act of 1933, as amended (the “Securities Act”). The number of shares eligible for sale under the ATM Agreement will be subject to the limitations of General Instruction I.B.6 of Form S-3. Under the terms of the ATM Agreement, we will pay Craig-Hallum a placement fee of 3.25% of the gross sales price of the Shares, unless Craig-Hallum acts as principal, in which case we may sell Shares to Craig-Hallum as principal at a price to be agreed upon by us and Craig-Hallum. We will also reimburse Craig-Hallum for certain expenses incurred in connection with the ATM Agreement, and agreed to provide indemnification and contribution to Craig-Hallum with respect to certain liabilities, including liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended. During the three and six months ended June 30, 2016, we sold 115,314 shares under the ATM Agreement. The average sales price per common share was $0.67 and the aggregate net proceeds from the sales totaled less than $0.1 million. During the three months ended June 30, 2016, the issuance of shares to our vendors and the sale of shares under the ATM Agreement required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of these warrants decreased to $4.36 per share and the number of shares issuable upon exercise of the warrants increased from 3,239,827 to 3,262,088. Common Stock Warrants. During the six months ended June 30, 2016 and 2015, we issued warrants to purchase 2,933,106 and 1,208,491 shares of common stock, respectively. None of the issued warrants were exercised during such periods. The warrants issued in the six months ended June 30, 2016 included 1,073,911 warrants issued due to repricing requirements of the Private Placement and 1,881,456 warrants issued in connection with the January 2016 Offering. The warrants issued in the six months ended June 30, 2015 included 493,711 warrants issued due to repricing requirements of the Private Placement and 714,780 warrants issued in connection with the February 2015 Offering. Warrants to purchase an aggregate of 8,876,166 shares of common stock were outstanding at June 30, 2016.
Issuance of Series B Preferred Stock. On March 5, 2014, we entered into a Series B Convertible Preferred Stock Purchase Agreement (the “Series B Purchase Agreement”) with affiliates of Third Security, LLC (the “2014 Third Security Investors”), pursuant to which we, in a private placement, sold and issued an aggregate of 1,443,297 shares of our Series B Preferred Stock, par value $0.01 per share (the “Series B Preferred Stock”), at a price per share of $4.85 for an aggregate purchase price of approximately $7.0 million. Each share of Series B Preferred Stock issued pursuant to the Series B Purchase Agreement was initially convertible into shares of our common stock at a rate of 1-for-1, which conversion rate was subject to further adjustment as set forth in the Certificate of Designation of Series B Convertible Preferred Stock. In connection with the Series B financing, we also entered into a Registration Rights Agreement, dated March 5, 2014, with the 2014 Third Security Investors, pursuant to which we granted certain demand, “piggy-back” and S-3 registrations rights covering the resale of the shares of common stock underlying the Series B Preferred Stock issued pursuant to the Series B Purchase Agreement and all shares of common stock issuable upon any dividend or other distribution with respect thereto. The Series B financing required the repricing and issuance of additional common stock warrants to the holders of warrants issued in the Private Placement. The exercise price of the warrants decreased from $12.96 per share to $11.73 per share and the number of shares issuable upon exercise of the warrants increased from 1,097,600 to 1,212,665. Conversion of Preferred Stock. On January 6, 2016, the Company entered into a Conversion Agreement (the “Conversion Agreement”) with the holders (the “Preferred Holders”) of all of the Company’s outstanding shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Preferred Stock”), and Series B Preferred Stock, pursuant to which, among other things, the Preferred Holders: (a) elected to convert all of the outstanding shares of Series A Preferred Stock and Series B Preferred Stock into shares of our common stock, in each case in accordance with the terms thereof, and (b) agreed that all accrued and unpaid dividends on the Series A Preferred Stock and Series B Preferred Stock would be paid by the Company in shares of our common stock at a rate of $1.00 per share of our common stock (collectively, the “Conversion”). The outstanding shares of Series A Preferred Stock were convertible into shares of our common stock at a rate of 1-for-3, and the outstanding shares of Series B Preferred Stock were convertible into shares of our common stock at a rate of 1-for-1. Prior to the entry into the Conversion Agreement, there were 2,586,205 shares of Series A Preferred Stock outstanding, which were converted into 862,057 shares of our common stock, and 1,443,297 shares of Series B Preferred Stock outstanding, which were converted into 1,443,297 shares of our common stock, for an aggregate of 2,305,354 shares of our common stock issued upon conversion of the Series A Preferred Stock and Series B Preferred Stock (the “Conversion Shares”). At the time of the entry into the Conversion Agreement, there were $3,681,591.90 in accrued and unpaid dividends on the outstanding shares of Series A Preferred Stock, which were converted, in accordance with the Conversion Agreement, into 3,681,590 shares of our common stock, and $793,236.17 in accrued and unpaid dividends on the outstanding shares of Series B Preferred Stock, which were converted, in accordance with the terms of the Conversion Agreement, into 793,235 shares of our common stock, for an aggregate of 4,474,825 shares of our common stock issued pursuant to the accrued and unpaid dividends on the Series A Preferred Stock and Series B Preferred Stock. Therefore, in connection with the full conversion of the Series A Preferred Stock and Series B Preferred Stock, plus the conversion of all accrued and unpaid dividends thereon, we issued an aggregate of 6,780,179 shares of our common stock to the Preferred Holders on January 6, 2016. Following the conversion of the shares of Series A Preferred Stock and Series B Preferred Stock into common stock, no shares of Series A Preferred Stock or Series B Preferred Stock remain outstanding. Preferred Stock Dividends. We had cumulative undeclared dividends on our Series A Preferred Stock and Series B Preferred Stock of zero and $4.4 million at June 30, 2016 and December 31, 2015, respectively. Since dividends should generally not be recognized as a liability until declared, we had a recorded liability of zero for these undeclared dividends. We had no undeclared dividends for the three months ended June 30, 2016. For the three months ended June 30, 2015 and the six months ended June 30, 2016 and 2015, we had undeclared dividends. In accordance with the FASB’s Accounting Standards Codification Topic 260-10-45-11, “Earnings per Share”, these dividends were added to the net loss per share calculation. |
FAIR VALUE |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE | FAIR VALUE FASB guidance on fair value measurements, which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements for our financial assets and liabilities, as well as for other assets and liabilities that are carried at fair value on a recurring basis in our consolidated financial statements. FASB guidance establishes a three-level fair value hierarchy based upon the assumptions (inputs) used to price assets or liabilities. The three levels of inputs used to measure fair value are as follows: Level 1—Unadjusted quoted prices in active markets for identical assets or liabilities; Level 2—Observable inputs other than those included in Level 1, such as quoted prices for similar assets and liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets; and Level 3—Unobservable inputs reflecting our own assumptions and best estimate of what inputs market participants would use in pricing the asset or liability. Debt. Our long term debt book value approximates fair market value due to the variable interest rate it bears. Common Stock Warrant Liabilities. Certain of our issued and outstanding warrants to purchase shares of common stock do not qualify to be treated as equity and, accordingly, are recorded as a liability. 2012 Warrant Liability The 2012 Warrant Liability represents the fair value of the 1.2 million warrants issued in February 2012, which, through a series of changes in exercise price since February 2012, are now exercisable for 3.3 million shares of common stock. We are required to record these instruments at fair value at each reporting date and changes are recorded as a non-cash adjustment to earnings. The gains or losses included in earnings are reported in other income (expense) in our Statement of Operations. Management does not believe that this liability will be settled by a use of cash. The 2012 Warrant Liability is considered a Level 3 financial instrument and is valued using a Monte Carlo simulation model. This method is well suited to valuing options with non-standard features, such as anti-dilution protection. A Monte Carlo simulation model uses repeated random sampling to simulate significant uncertainty in inputs. Assumptions and inputs used in the valuation of the common stock warrants are broken down into four sections: Static Business Inputs; Static Technical Inputs; Simulated Business Inputs; and Simulated Technical Inputs. Static Business Inputs include: our equity value, which was estimated using our stock price of $0.55 as of June 30, 2016; the amount of the down-round financing; the timing of the down-round financing; and the expected exercise period of 0.61 years from the valuation date. Static Technical Inputs include: volatility of 67% and the risk-free interest rate of 0.42% based on the 1-year U.S. Treasury yield interpolated from the six-month and one-year U.S. Treasury bonds. Simulated Business Inputs include: the probability of down-round financing, which was estimated to be 100% for simulated equity values below the down-round financing cut-off point. Simulated Technical Inputs include: our equity value follows a geometric Brownian motion and is simulated over weekly periods; and a down-round financing event that was randomly simulated in an iteration based on the 100% discrete probability of a down-round financing for those iterations where our simulated equity value at the expected timing of a down-round financing event was below the down-round financing cut-off point. During the three and six months ended June 30, 2016 and 2015, the changes in the fair value of the liability measured using significant unobservable inputs (Level 3) were comprised of the following:
2016 Warrant Liability The 2016 Warrant Liability represents the fair value of the 1.8 million warrants issued in January 2016. We are required to record these instruments at fair value at each reporting date and changes are recorded as a non-cash adjustment to earnings. The gains or losses included in earnings are reported in other income (expense) in our Statement of Operations. The Common Stock Warrant Liability is considered a Level 3 financial instrument and is valued using a binomial lattice simulation model. This method is well suited to valuing options with non-standard features. Assumptions and inputs used in the valuation of the common stock warrants include; our equity value, which was estimated using our stock price of $0.55 as of June 30, 2016; volatility of 135%; and a risk-free interest rate of 1.21%. During the three and six months ended June 30, 2016, the changes in the fair value of the liability measured using significant unobservable inputs (Level 3) were comprised of the following:
The change in unrealized gains or losses of Level 3 liabilities was included in earnings and was reported in other income (expense) in our Statement of Operations. |
STOCK OPTIONS |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
STOCK OPTIONS | STOCK OPTIONS Stock Options. The following table summarizes stock option activity during the six months ended June 30, 2016:
During the six months ended June 30, 2016, we granted options to purchase 14,000 shares of our common stock at a weighted-average exercise price of $1.07 per share under our 2006 Equity Incentive Plan, as amended (the “Plan”). Options to purchase an aggregate of 608,910 shares of our common stock were granted during the six months ended June 30, 2015. As of June 30, 2016, there were 648,246 options exercisable and 980,388 options that were vested or expected to vest with an aggregate intrinsic value of zero. Stock Appreciation Rights (“SARs”) The following table summarizes SARs activity under the Plan during the six months ended June 30, 2016:
All outstanding SARs were issued solely to our executive officers. As of June 30, 2016, 84,445 shares subject to outstanding SARs were exercisable and 98,333 shares were vested or expected to vest. The weighted-average exercise price of these SARs was $4.14 per share and the aggregate intrinsic value was zero. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||
Basis of Presentation | Basis of Presentation. The accompanying condensed consolidated financial statements are presented in conformity with GAAP. All amounts are presented in U.S. Dollars (“$”). Supplemental cash flows from discontinued operations are presented in Note 3 - “Discontinued Operations”. We have evaluated events occurring subsequent to June 30, 2016 for potential recognition or disclosure in the consolidated financial statements and concluded there were no subsequent events that required recognition or disclosure. The condensed consolidated balance sheet as of December 31, 2015 was derived from our audited balance sheet as of that date. There has been no change in the balance sheet from December 31, 2015. The accompanying condensed consolidated financial statements as of and for the three and six months ended June 30, 2016 and 2015 are unaudited and reflect all adjustments (consisting of only normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2015 contained in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the “SEC”) on April 14, 2016. The results of operations for the interim periods presented are not necessarily indicative of the results for fiscal year 2016. |
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Reclassification | Certain prior year amounts have been reclassified to conform to the current year presentation in our condensed consolidated financial statements, which consists of the effects of reclassifications from the presentation of our discontinued operations. |
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Principles of Consolidation | Principles of Consolidation. The condensed consolidated financial statements include the accounts of Transgenomic, Inc. and our wholly owned subsidiary. All inter-company balances and transactions have been eliminated in consolidation. |
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Risks and Uncertainties | Risks and Uncertainties. Certain risks and uncertainties are inherent in our day-to-day operations and in the process of preparing our financial statements. The more significant of those risks are presented below and throughout the notes to the unaudited condensed consolidated financial statements. |
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Use of Estimates | Use of Estimates. The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of net sales and expenses during the reporting period. In addition, estimates and assumptions associated with the determination of the fair value of certain assets and related impairments require considerable judgment by management. Actual results could differ from the estimates and assumptions used in preparing these condensed consolidated financial statements. |
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Fair Value | Fair Value. Unless otherwise specified, book value approximates fair market value. The common stock warrant liability is recorded at fair value. |
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Cash and Cash Equivalents | Cash and Cash Equivalents and Other Current Assets. Cash and cash equivalents include cash and investments with original maturities at the date of acquisition of three months or less. |
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Concentrations of Cash | Concentrations of Cash. From time to time, we may maintain a cash position with financial institutions in amounts that exceed federally insured limits. |
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Accounts Receivable | While payment terms are generally 30 days, we have also provided extended payment terms in certain cases. Accounts receivable are carried at original invoice amount and shown net of allowance for doubtful accounts. The estimate made for doubtful accounts is based on a review of all outstanding amounts on a quarterly basis. We determine the allowance for doubtful accounts by regularly evaluating individual payor receivables and considering a payor’s financial condition, credit history, reimbursement rates and current economic conditions. Accounts receivable are written off when deemed uncollectible and after all collection efforts have been exhausted. Recoveries of accounts receivable previously written off are recorded as a reduction in bad debt expense when received. |
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Property and Equipment | Property and Equipment. Property and equipment are carried at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:
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Intangible Assets | Intangible Assets. Intangible assets include intellectual property and patents. 1. Intellectual Property. Initial costs paid to license intellectual property from independent third parties are capitalized and amortized using the straight-line method over the license period. Ongoing royalties related to such licenses are expensed as incurred. 2. Patents. We capitalize legal costs, filing fees and other expenses associated with obtaining patents on new discoveries and amortize these costs using the straight-line method over the shorter of the legal life of the patent or its economic life beginning on the date the patent is issued. |
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Stock-Based Compensation | Stock-Based Compensation. All stock-based awards to date have exercise prices equal to the market value of the shares at the date of grant and have 10-year contractual terms. Unvested awards as of June 30, 2016 had vesting periods of up to three years from the date of grant. None of the awards outstanding at June 30, 2016 are subject to performance or market-based vesting conditions. We measure and recognize compensation expense for all stock-based awards made to employees and directors. Compensation expense, net of estimated forfeitures, is based on the calculated fair value of the awards as measured at the grant date and is expensed over the service period of the awards. |
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Net Sales Recognition | Net Sales Recognition. Revenue is realized and earned when all of the following criteria are met:
In our Biomarker Identification laboratory, we perform services on a project by project basis. When we receive payment in advance, we initially defer the revenue and recognize it when we deliver the service. These projects typically do not extend beyond one year. At each of June 30, 2016 and December 31, 2015, deferred net sales associated with pharmacogenomics research projects included in the balance sheet in deferred revenue was $0.1 million. Net sales from Patient Testing laboratories, reported as part of discontinued operations, are recognized on an individual test basis and take place when the test report is completed, reviewed and sent to the client less the reserve for insurance, Medicare and Medicaid contractual adjustments. There are no deferred net sales associated with our Patient Testing services. Adjustments to the allowances, based on actual receipts from third party payers, are reflected in the estimated contractual allowance applied prospectively. In the fourth quarter of 2015, we adjusted our contractual allowance rates to better reflect the reimbursement level we expect to achieve on Patient Testing billings. The adjustment negatively impacted our Patient Testing revenues for all periods after the third quarter of 2015. (See Note 3 - “Discontinued Operations”). Net sales of Genetic Assays and Platforms products, reported as discontinued operations (See Note 3 - “Discontinued Operations”) are recognized in accordance with the terms of the sales arrangement. Such recognition is based on receipt of an unconditional customer order and transfer of title and risk of ownership to the customer, typically upon shipment of the product under a purchase order. Our sales terms do not provide for the right of return unless the product is damaged or defective. Net sales from certain services associated with the analytical instruments, to be performed subsequent to shipment of the products, is deferred and recognized when the services are provided. Such services, mainly limited to installation and training services that are not essential to the functionality of the instruments, typically are performed in a timely manner subsequent to shipment of the instrument. We also enter into various service contracts that cover installed instruments. These contracts cover specific time periods and net sales associated with these contracts are deferred and recognized ratably over the service period. |
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Common Stock Warrants | Common Stock Warrants. Certain of our issued and outstanding warrants to purchase common stock do not qualify to be treated as equity and, accordingly, are recorded as a liability (“Common Stock Warrant Liability”). We are required to present these instruments at fair value at each reporting date and any changes in fair values are recorded as an adjustment to earnings. The Common Stock Warrant Liabilities are considered Level Three financial instruments for purposes of fair value measurement. |
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Loss Per Share | Loss Per Share. Basic loss per share is calculated based on the weighted-average number of common shares outstanding during each period. Diluted loss per share includes shares issuable upon exercise of outstanding stock options, warrants or conversion rights that have exercise or conversion prices below the market value of our common stock. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (“ASU No. 2014-09”). This guidance requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to a customer. ASU No. 2014-09 will replace most existing revenue recognition guidance in GAAP when it becomes effective. In July 2015, the FASB decided to defer the effective date of this new accounting guidance by one year. As a result, ASU No. 2014-09 will be effective for us for all annual and interim reporting periods beginning after December 15, 2017 and early adoption would be permitted as of the original effective date. The new standard permits the use of either the retrospective or cumulative effect transition method. We do not expect to early adopt this guidance and we have not selected a transition method. We are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows. In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40)(“ASU No. 2014-15”). This guidance addresses management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The standard will be effective for the first interim period within annual reporting periods beginning after December 15, 2016. Early adoption is permitted. We do not expect to early adopt this guidance and do not believe that the adoption of this guidance will have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard amends the recognition of lease assets and lease liabilities by lessees for those leases currently classified as operating leases and amends disclosure requirements associated with leasing arrangements. The new standard is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2018. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition, and provides for certain practical expedients. Transition will require application of the new guidance at the beginning of the earliest comparative period presented. We are currently assessing the impact that the adoption of this ASU will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard simplifies several aspects related to the accounting for share-based payment transactions, including the accounting for income taxes, statutory tax withholding requirements, forfeitures and classification on the statement of cash flows. This guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2016; however, early adoption is permitted. We do not expect to early adopt this guidance and are currently evaluating the impact this guidance will have on our financial condition, results of operations and cash flows. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of activity for the allowance for doubtful accounts | The following is a summary of activity for the allowance for doubtful accounts from continuing operations during the three and six months ended June 30, 2016 and 2015:
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Activity for the allowance for obsolete inventory | The following is a summary of activity for the allowance for obsolete inventory during the three and six months ended June 30, 2016 and 2015:
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Schedule of property and equipment, useful lives | Depreciation is computed using the straight-line method over the estimated useful lives of the related assets as follows:
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DISCONTINUED OPERATIONS (Tables) |
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Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of discontinued operations impact on income statement and balance sheets | esults of the discontinued operations consisted of the following:
Assets and liabilities of the discontinued operations are classified as assets held for sale and liabilities held for sale in the condensed consolidated balance sheets and consisted of the following:
The following is a summary of activity for the allowance for doubtful accounts from discontinued operations during the three and six months ended June 30, 2016 and 2015. The allowance for doubtful accounts from discontinued operations is included in the assets held for sale in the condensed consolidated balance sheets.
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INTANGIBLES AND OTHER ASSETS (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of long-lived intangible assets | Long-lived intangible assets as of June 30, 2016 and December 31, 2015 consisted of the following:
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DEBT (Tables) |
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Schedule of debt |
We will pay the Lenders an additional final payment of $120,000 at maturity or prepayment of the Term Loan. In addition, if we repay the Term Loan prior to maturity, we will pay the Lenders a prepayment penalty of 1% of the total outstanding balance under the Term Loan. Additional Terms. The Loan Agreement contains affirmative and negative covenants. Under the Term Loan, we agreed not to (i) pledge or otherwise encumber our assets other than to the Lenders, (ii) enter into additional borrowings or guarantees, (iii) repurchase our capital stock, or (iv) enter into certain mergers or acquisitions without the Lenders’ consent. Additionally, the Loan Agreement contains a subjective acceleration clause at the discretion of the Lenders. As of June 30, 2016, the Company was in compliance with the Loan Agreement, as amended by the Ninth Amendment, however, as of August 12, 2016 we have not made the required July 2016 interest payment and have not received a waiver for the non-compliance and as such all debt has been classified as current at June 30, 2016. To secure the repayment of any amounts borrowed under the Revolving Line and the Term Loan, we granted the Lenders a security interest in all of our assets. The occurrence of an event of default under the Loan Agreement could result in the acceleration of our obligations under the Loan Agreement, would increase the applicable interest rate under the Revolving Line or Term Loan (or both) by 5% and would permit the Lenders to exercise remedies with respect to the collateral under the Loan Agreement. As of the date these financials were available for release, the Lenders have not exercised the remedies under the Loan Agreement. (3) Convertible Promissory Notes. The Notes accrue interest at a rate of 6% per year and mature on December 31, 2016. |
STOCKHOLDERS' EQUITY (Tables) |
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Schedule of stockholders' equity, including warrants and rights |
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FAIR VALUE (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in fair value of liability | During the three and six months ended June 30, 2016, the changes in the fair value of the liability measured using significant unobservable inputs (Level 3) were comprised of the following:
During the three and six months ended June 30, 2016 and 2015, the changes in the fair value of the liability measured using significant unobservable inputs (Level 3) were comprised of the following:
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STOCK OPTIONS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of stock option activity | The following table summarizes stock option activity during the six months ended June 30, 2016:
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Summary of SARs activity | The following table summarizes SARs activity under the Plan during the six months ended June 30, 2016:
|
BUSINESS DESCRIPTION (Details) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2016
USD ($)
operating_segments
|
Jun. 30, 2015
operating_segments
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of operating segments | operating_segments | 1 | 2 |
Working capital | $ | $ (15.9) |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Accounts Receivable) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Allowance for Doubtful Accounts Receivable [Roll Forward] | ||||
Beginning balance | $ 108 | $ 20 | $ 87 | $ 20 |
Additions | 49 | 0 | 70 | 0 |
Deductions | 0 | 0 | 0 | 0 |
Ending balance | $ 157 | $ 20 | $ 157 | $ 20 |
Accounts receivable, general payment terms | 30 days |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Inventories) (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Accounting Policies [Abstract] | ||||
Net raw materials inventory | $ 100 | $ 100 | ||
Obsolete inventory [Roll Forward] | ||||
Beginning Balance | 63 | $ 0 | 63 | $ 0 |
Additions | 0 | 0 | 0 | 0 |
Deductions | 0 | 0 | 0 | 0 |
Ending Balance | $ 63 | $ 0 | $ 63 | $ 0 |
DISCONTINUED OPERATIONS (Assets and Liabilities Held for Sale) (Details) - Discontinued operations - Genetic Assays and Platforms and Patient Testing - USD ($) $ in Thousands |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
ASSETS | ||
Accounts receivable, net | $ 647 | $ 1,905 |
Other current assets | 43 | 82 |
Total Assets | 690 | 1,987 |
LIABILITIES | ||
Accrued compensation | 0 | 264 |
Total Liabilities | $ 0 | $ 264 |
DISCONTINUED OPERATIONS (Allowance for Doubtful Accounts) (Details) - Genetic Assays and Platforms and Patient Testing - Discontinued operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Disposal Group, Including Discontinued Operations, Allowance for Doubtful Accounts [Roll Forward] | ||||
Beginning Balance | $ 14,542 | $ 9,173 | $ 14,664 | $ 7,927 |
Additions | 0 | 1,198 | 0 | 2,730 |
Deductions | (4,080) | (1,965) | (4,202) | (2,251) |
Ending Balance | $ 10,462 | $ 8,406 | $ 10,462 | $ 8,406 |
INTANGIBLES AND OTHER ASSETS (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Finite-Lived Intangible Assets, Net [Abstract] | |||
Cost | $ 1,367 | $ 1,651 | |
Accumulated Amortization | 338 | 481 | |
Net Book Value | 1,029 | 1,170 | |
Amortization expense for intangible assets | 100 | $ 100 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
Amortization expense, 2016 | 100 | ||
Amortization expense, 2017 | 100 | ||
Amortization expense, 2018 | 100 | ||
Amortization expense, 2019 | 100 | ||
Amortization expense, 2020 | 100 | ||
Patents | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Cost | 695 | 980 | |
Accumulated Amortization | 76 | 274 | |
Net Book Value | 619 | 706 | |
Intellectual property | |||
Finite-Lived Intangible Assets, Net [Abstract] | |||
Cost | 672 | 671 | |
Accumulated Amortization | 262 | 207 | |
Net Book Value | $ 410 | $ 464 | |
Estimated Useful Life | 7 years |
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions |
6 Months Ended | ||||
---|---|---|---|---|---|
Jun. 23, 2016 |
Feb. 25, 2016 |
Jun. 30, 2016 |
Jun. 30, 2015 |
Dec. 31, 2015 |
|
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||||
Future minimum payments due, remainder of 2016 | $ 0.4 | ||||
Future minimum payments due, 2017 | 0.7 | ||||
Future minimum payments due, 2018 | 0.7 | ||||
Future minimum payments due, 2019 | 0.7 | ||||
Future minimum payments due, 2020 | 0.7 | ||||
Future minimum payments, due thereafter | 0.4 | ||||
Rent expense | 0.1 | $ 0.1 | |||
Firm commitments to vendors | 0.1 | ||||
UNMC | Threatened Litigation | Breach of contract | |||||
Loss Contingencies [Line Items] | |||||
Damages sought in a lawsuit | $ 0.7 | ||||
Accrual of possible loss in a lawsuit | 0.7 | $ 0.7 | |||
Mount Sinai | Threatened Litigation | Breach of contract | |||||
Loss Contingencies [Line Items] | |||||
Damages sought in a lawsuit | $ 0.7 | ||||
Accrual of possible loss in a lawsuit | $ 0.7 | $ 0.7 |
INCOME TAXES (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2016 |
Jun. 30, 2015 |
Jun. 30, 2016 |
Jun. 30, 2015 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ 0 | $ (1) | $ 0 | $ (1) |
STOCKHOLDERS' EQUITY (Preferred Stock Dividends) (Details) - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Stockholders' Equity Note [Abstract] | ||
Cumulative undeclared dividends, preferred stock | $ 0 | $ 4,400,000 |
STOCK OPTIONS (Stock Appreciation Rights) (Details) - SARs - USD ($) |
Jun. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Number of SARs | ||
Outstanding (in shares) | 98,333 | 98,333 |
Exercisable (in shares) | 84,445 | |
Weighted-Average Exercise Price | ||
Outstanding (in dollars per share) | $ 4.14 | $ 4.14 |
Exercisable (in dollars per share) | $ 4.21 | |
Stock appreciation rights, nonvested (in shares) | 98,333 | |
Stock appreciation rights, aggregate intrinsic value, outstanding | $ 0 |
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