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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37369

 

HTG Molecular Diagnostics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-0912294

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

3430 E. Global Loop

Tucson, AZ

85706

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (877) 289-2615

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.001 par value per share

HTGM

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

 

 

Accelerated filer

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 3, 2022, the registrant had 11,049,948 shares of common stock, $0.001 par value per share, outstanding.

 


 

Table of Contents

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

1

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

 

1

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2022 and 2021

 

2

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021

 

3

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021

 

4

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

 

6

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Consolidated Results of Operations

 

23

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

32

Item 4.

 

Controls and Procedures

 

32

PART II.

 

OTHER INFORMATION

 

33

Item 1.

 

Legal Proceedings

 

33

Item 1A.

 

Risk Factors

 

33

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

68

Item 5.

 

Other Information

 

68

Item 6.

 

Exhibits

 

69

Signatures

 

71

 

i


 

PART I—FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited).

 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Balance Sheets

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

3,212,451

 

 

$

9,599,950

 

Short-term investments available-for-sale, at fair value

 

 

3,317,627

 

 

 

12,343,456

 

Accounts receivable, net of allowance of $20,315 at September 30, 2022
and December 31, 2021

 

 

960,414

 

 

 

2,092,466

 

Inventory, net

 

 

1,690,234

 

 

 

1,987,753

 

Prepaid directors and officers insurance

 

 

654,772

 

 

 

365,453

 

Prepaid expenses and other

 

 

936,358

 

 

 

797,886

 

Total current assets

 

 

10,771,856

 

 

 

27,186,964

 

Operating lease right-of-use assets

 

 

1,039,999

 

 

 

1,345,361

 

Property and equipment, net

 

 

654,813

 

 

 

1,118,886

 

Inventory - non-current, net

 

 

1,007,811

 

 

 

711,296

 

Other non-current assets

 

 

135,824

 

 

 

98,180

 

Total assets

 

$

13,610,303

 

 

$

30,460,687

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

709,905

 

 

$

1,649,440

 

Accrued liabilities

 

 

1,378,302

 

 

 

2,022,569

 

Current portion of long-term debt

 

 

3,694,979

 

 

 

5,167,586

 

NuvoGen obligation - current

 

 

472,624

 

 

 

548,301

 

Operating lease liabilities - current

 

 

435,377

 

 

 

413,865

 

Other current liabilities

 

 

129,437

 

 

 

141,749

 

Total current liabilities

 

 

6,820,624

 

 

 

9,943,510

 

NuvoGen obligation - non-current, net of discount

 

 

3,595,276

 

 

 

3,900,880

 

Long-term debt, net of current portion, discount and debt issuance costs

 

 

1,302,021

 

 

 

5,178,629

 

Operating lease liabilities - non-current, net of discount

 

 

620,607

 

 

 

949,461

 

Other non-current liabilities

 

 

63,399

 

 

 

88,383

 

Total liabilities

 

 

12,401,927

 

 

 

20,060,863

 

Commitments and Contingencies (Note 15)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Series A convertible preferred stock, $0.001 par value; no shares authorized,
   issued and outstanding at September 30, 2022;
23,770 shares authorized,
   issued and outstanding at December 31, 2021

 

 

 

 

 

24

 

Common stock, $0.001 par value; 26,666,667 shares authorized at
   September 30, 2022 and December 31, 2021,
11,048,111 shares issued
   and outstanding at September 30, 2022 and
7,588,085 shares issued
   and outstanding at December 31, 2021

 

 

11,048

 

 

 

7,588

 

Additional paid-in-capital

 

 

226,442,794

 

 

 

218,723,349

 

Accumulated other comprehensive (loss) income

 

 

(10,559

)

 

 

1,894

 

Accumulated deficit

 

 

(225,234,907

)

 

 

(208,333,031

)

Total stockholders’ equity

 

 

1,208,376

 

 

 

10,399,824

 

Total liabilities and stockholders' equity

 

$

13,610,303

 

 

$

30,460,687

 

 

See notes to the unaudited condensed consolidated financial statements.

1


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Product and product-related services revenue

 

$

1,250,879

 

 

$

2,520,410

 

 

$

3,926,915

 

 

$

6,029,760

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product and product-related services revenue

 

 

670,863

 

 

 

983,761

 

 

 

2,540,380

 

 

 

2,740,004

 

Selling, general and administrative

 

 

3,400,998

 

 

 

4,232,313

 

 

 

12,370,925

 

 

 

11,995,747

 

Research and development

 

 

1,527,036

 

 

 

1,534,818

 

 

 

5,294,567

 

 

 

4,188,219

 

Total operating expenses

 

 

5,598,897

 

 

 

6,750,892

 

 

 

20,205,872

 

 

 

18,923,970

 

Operating loss

 

 

(4,348,018

)

 

 

(4,230,482

)

 

 

(16,278,957

)

 

 

(12,894,210

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(200,483

)

 

 

(266,593

)

 

 

(688,310

)

 

 

(797,239

)

Interest income

 

 

25,595

 

 

 

8,387

 

 

 

63,899

 

 

 

22,419

 

Other income

 

 

8,330

 

 

 

 

 

 

8,330

 

 

 

 

Gain on forgiveness of PPP Loan

 

 

 

 

 

 

 

 

 

 

 

1,735,792

 

Total other income (expense)

 

 

(166,558

)

 

 

(258,206

)

 

 

(616,081

)

 

 

960,972

 

Net loss before income taxes

 

 

(4,514,576

)

 

 

(4,488,688

)

 

 

(16,895,038

)

 

 

(11,933,238

)

Provision for income taxes

 

 

(1,572

)

 

 

(1,934

)

 

 

(6,838

)

 

 

(20,643

)

Net loss

 

$

(4,516,148

)

 

$

(4,490,622

)

 

$

(16,901,876

)

 

$

(11,953,881

)

Net loss per share, basic and diluted

 

$

(0.41

)

 

$

(0.60

)

 

$

(1.68

)

 

$

(1.78

)

Shares used in computing net loss per share, basic and diluted

 

 

11,048,171

 

 

 

7,440,287

 

 

 

10,031,923

 

 

 

6,727,916

 

 

See notes to the unaudited condensed consolidated financial statements.

2


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net loss

 

$

(4,516,148

)

 

$

(4,490,622

)

 

$

(16,901,876

)

 

$

(11,953,881

)

Other comprehensive loss, net of tax effect:

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on short-term investments

 

 

8,298

 

 

 

 

 

 

(3,916

)

 

 

 

Foreign currency translation adjustment

 

 

(3,147

)

 

 

(1,013

)

 

 

(8,537

)

 

 

(2,715

)

Total other comprehensive income (loss)

 

 

5,151

 

 

 

(1,013

)

 

 

(12,453

)

 

 

(2,715

)

Comprehensive loss

 

$

(4,510,997

)

 

$

(4,491,635

)

 

$

(16,914,329

)

 

$

(11,956,596

)

 

See notes to the unaudited condensed consolidated financial statements.

 

3


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

 

 

Three and Nine Months Ended September 30, 2022

 

 

 

Series A Convertible
Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2022

 

 

23,770

 

 

$

24

 

 

 

7,588,085

 

 

$

7,588

 

 

$

218,723,349

 

 

$

1,894

 

 

$

(208,333,031

)

 

$

10,399,824

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

251,214

 

 

 

 

 

 

 

 

 

251,214

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

4,148

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Net share settlement of restricted stock awards

 

 

 

 

 

 

 

 

(1,500

)

 

 

(1

)

 

 

(8,128

)

 

 

 

 

 

 

 

 

(8,129

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,591

 

 

 

 

 

 

 

 

 

16,591

 

Issuance of common stock from March 2022 Purchase Agreement, net of approximately $0.4 million of issuance costs

 

 

 

 

 

 

 

 

834,054

 

 

 

834

 

 

 

7,107,952

 

 

 

 

 

 

 

 

 

7,108,786

 

Conversion of Series A convertible preferred stock for common stock

 

 

(23,770

)

 

 

(24

)

 

 

158,466

 

 

 

158

 

 

 

(134

)

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,497,519

)

 

 

(6,497,519

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,293

)

 

 

 

 

 

(2,293

)

Balance at March 31, 2022

 

 

 

 

$

 

 

 

8,583,253

 

 

$

8,583

 

 

$

226,090,840

 

 

$

(399

)

 

$

(214,830,550

)

 

$

11,268,474

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

214,742

 

 

 

 

 

 

 

 

 

214,742

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

4,148

 

 

 

4

 

 

 

(4

)

 

 

 

 

 

 

 

 

 

Net share settlement of restricted stock awards

 

 

 

 

 

 

 

 

(1,355

)

 

 

(1

)

 

 

(1,884

)

 

 

 

 

 

 

 

 

(1,885

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,592

 

 

 

 

 

 

 

 

 

16,592

 

Stock issued under stock purchase plans

 

 

 

 

 

 

 

 

49,007

 

 

 

49

 

 

 

23,278

 

 

 

 

 

 

 

 

 

23,327

 

Exercise of pre-funded warrants

 

 

 

 

 

 

 

 

2,410,933

 

 

 

2,411

 

 

 

 

 

 

 

 

 

 

 

 

2,411

 

Issuance costs related to March 2022 Purchase Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(50,452

)

 

 

 

 

 

 

 

 

(50,452

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,888,209

)

 

 

(5,888,209

)

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,214

)

 

 

 

 

 

(12,214

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,097

)

 

 

 

 

 

(3,097

)

Balance at June 30, 2022

 

 

 

 

$

 

 

 

11,045,986

 

 

$

11,046

 

 

$

226,293,112

 

 

$

(15,710

)

 

$

(220,718,759

)

 

$

5,569,689

 

Stock-based compensation expense