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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 March 31, 2023

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 May 5, 2023, the registrant had 2,214,233 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 March 31, 2023 and December 31, 2022

 

1

 

 

Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022

 

2

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2023 and 2022

 

3

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2023 and 2022

 

4

 

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022

 

5

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

6

Item 2.

 

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

 

20

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

28

Item 4.

 

Controls and Procedures

 

28

PART II.

 

OTHER INFORMATION

 

30

Item 1.

 

Legal Proceedings

 

30

Item 1A.

 

Risk Factors

 

30

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

64

Item 5.

 

Other Information

 

64

Item 6.

 

Exhibits

 

65

Signatures

 

67

 

i


 

PART I—FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited).

 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Balance Sheets

 

 

March 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

(Unaudited)

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,996,409

 

 

$

12,210,857

 

Investments available-for-sale, at fair value

 

 

3,566,628

 

 

 

 

Accounts receivable

 

 

1,131,980

 

 

 

1,421,695

 

Inventory, net

 

 

654,917

 

 

 

909,328

 

Prepaid expenses and other

 

 

837,170

 

 

 

1,109,571

 

Total current assets

 

 

9,187,104

 

 

 

15,651,451

 

Operating lease right-of-use assets

 

 

892,685

 

 

 

1,007,202

 

Property and equipment, net

 

 

528,527

 

 

 

598,006

 

Other non-current assets

 

 

257,312

 

 

 

520,996

 

Total assets

 

$

10,865,628

 

 

$

17,777,655

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,097,538

 

 

$

1,157,449

 

Accrued liabilities

 

 

1,321,771

 

 

 

2,209,606

 

SVB Term Loan, net of discount and debt issuance costs

 

 

3,075,506

 

 

 

3,812,498

 

NuvoGen obligation - current

 

 

446,031

 

 

 

446,031

 

Operating lease liabilities - current

 

 

481,967

 

 

 

475,126

 

Other current liabilities

 

 

136,074

 

 

 

170,047

 

Total current liabilities

 

 

6,558,887

 

 

 

8,270,757

 

NuvoGen obligation - non-current, net of discount

 

 

3,370,279

 

 

 

3,519,058

 

Operating lease liabilities - non-current, net of discount

 

 

423,237

 

 

 

546,324

 

Other non-current liabilities

 

 

38,723

 

 

 

49,819

 

Total liabilities

 

 

10,391,126

 

 

 

12,385,958

 

Commitments and Contingencies (Note 15)

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock, $0.001 par value; 26,666,667 shares authorized at
   March 31, 2023 and December 31, 2022;
2,214,077 shares issued
   and outstanding at March 31, 2023 and
2,213,897 shares issued
   and outstanding at December 31, 2022

 

 

2,214

 

 

 

2,214

 

Additional paid-in-capital

 

 

235,450,053

 

 

 

235,314,311

 

Accumulated other comprehensive income

 

 

4,514

 

 

 

2,679

 

Accumulated deficit

 

 

(234,982,279

)

 

 

(229,927,507

)

Total stockholders’ equity

 

 

474,502

 

 

 

5,391,697

 

Total liabilities and stockholders' equity

 

$

10,865,628

 

 

$

17,777,655

 

 

See notes to the unaudited condensed consolidated financial statements.

1


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Product and product-related services revenue

 

$

1,032,510

 

 

$

1,184,454

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

Cost of product and product-related services revenue

 

 

1,149,608

 

 

 

855,048

 

Selling, general and administrative

 

 

3,282,948

 

 

 

4,663,011

 

Research and development

 

 

1,612,553

 

 

 

1,920,430

 

Total operating expenses

 

 

6,045,109

 

 

 

7,438,489

 

Operating loss

 

 

(5,012,599

)

 

 

(6,254,035

)

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

Interest expense

 

 

(138,399

)

 

 

(249,312

)

Interest income

 

 

98,444

 

 

 

6,214

 

Total other income (expense)

 

 

(39,955

)

 

 

(243,098

)

Net loss before income taxes

 

 

(5,052,554

)

 

 

(6,497,133

)

Provision for income taxes

 

 

(2,218

)

 

 

(386

)

Net loss

 

$

(5,054,772

)

 

$

(6,497,519

)

Net loss per share, basic and diluted

 

$

(2.28

)

 

$

(9.73

)

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

 

 

2,214,082

 

 

 

667,647

 

 

See notes to the unaudited condensed consolidated financial statements.

2


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Net loss

 

$

(5,054,772

)

 

$

(6,497,519

)

Other comprehensive income (loss), net of tax effect:

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

780

 

 

 

(2,293

)

Unrealized gain on investments and cash equivalents

 

 

1,055

 

 

 

 

Total other comprehensive income (loss)

 

 

1,835

 

 

 

(2,293

)

Comprehensive loss

 

$

(5,052,937

)

 

$

(6,499,812

)

See notes to the unaudited condensed consolidated financial statements.

 

3


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

 

 

Three Months Ended March 31, 2023

 

 

 

Series A Convertible
Preferred Stock

 

 

Common Stock

 

 

Additional
Paid-In

 

 

Accumulated
Other
Comprehensive

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Equity

 

Balance at January 1, 2023

 

 

 

 

$

 

 

 

2,213,897

 

 

$

2,214

 

 

$

235,314,311

 

 

$

2,679

 

 

$

(229,927,507

)

 

$

5,391,697

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

129,332

 

 

 

 

 

 

 

 

 

129,332

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

312

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement of restricted stock awards

 

 

 

 

 

 

 

 

(54

)

 

 

 

 

 

(215

)

 

 

 

 

 

 

 

 

(215

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,776

 

 

 

 

 

 

 

 

 

7,776

 

Issuance costs related to December 2022 Securities Purchase Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(511

)

 

 

 

 

 

 

 

 

(511

)

Cash in lieu of fractional shares

 

 

 

 

 

 

 

 

(78

)

 

 

 

 

 

(640

)

 

 

 

 

 

 

 

 

(640

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,054,772

)

 

 

(5,054,772

)

Unrealized gain on investments and cash equivalents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,055

 

 

 

 

 

 

1,055

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

780

 

 

 

 

 

 

780

 

Balance at March 31, 2023

 

 

 

 

$

 

 

 

2,214,077

 

 

$

2,214

 

 

$

235,450,053

 

 

$

4,514

 

 

$

(234,982,279

)

 

$

474,502

 

 

 

 

Three Months Ended March 31, 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

 

 

 

632,340

 

 

$

632

 

 

$

218,730,305

 

 

$

1,894

 

 

$

(208,333,031

)

 

$

10,399,824

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

251,214

 

 

 

 

 

 

 

 

 

251,214

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

346

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net share settlement of restricted stock awards

 

 

 

 

 

 

 

 

(126

)

 

 

 

 

 

(8,129

)

 

 

 

 

 

 

 

 

(8,129

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16,591

 

 

 

 

 

 

 

 

 

16,591

 

Issuance of common stock and pre-funded warrants from March 2022 Securities Purchase Agreement, net of issuance costs of $0.4 million

 

 

 

 

 

 

 

 

69,505

 

 

 

70

 

 

 

7,108,716

 

 

 

 

 

 

 

 

 

7,108,786

 

Conversion of Series A convertible preferred stock for common stock

 

 

(23,770

)

 

 

(24

)

 

 

13,206

 

 

 

13

 

 

 

11

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,497,519

)

 

 

(6,497,519

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,293

)

 

 

 

 

 

(2,293

)

Balance at March 31, 2022

 

 

 

 

$

 

 

 

715,271

 

 

$

715

 

 

$

226,098,708

 

 

$

(399

)

 

$

(214,830,550

)

 

$

11,268,474

 

 

See notes to the unaudited condensed consolidated financial statements.

4


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended March 31,

 

 

 

2023

 

 

2022

 

Operating activities

 

 

 

 

 

 

Net loss

 

$

(5,054,772

)

 

$

(6,497,519

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

86,104

 

 

 

185,492

 

Accretion of interest on NuvoGen obligation

 

 

(2,747

)

 

 

(2,983

)

Write off deferred offering costs

 

 

80,692

 

 

 

 

Provision for excess inventory

 

 

409,670

 

 

 

59,353

 

Amortization of SVB Term Loan discount and issuance costs

 

 

71,832

 

 

 

117,727

 

Stock-based compensation expense

 

 

129,332

 

 

 

251,214

 

Employee stock purchase plan expense

 

 

7,776

 

 

 

16,591

 

Non-cash operating lease expense

 

 

114,517

 

 

 

100,316

 

Accrued interest on available-for-sale securities investments

 

 

(27,183

)

 

 

(5,128

)

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

289,715

 

 

 

1,343,246

 

Inventory

 

 

5,511

 

 

 

(120,164

)

Prepaid expenses and other

 

 

278,042

 

 

 

93,299

 

Accounts payable

 

 

(25,921

)

 

 

(352,934

)

Accrued liabilities

 

 

(571,519

)

 

 

(1,069,543

)

Contract liabilities

 

 

(38,394

)

 

 

40,279

 

Operating lease liabilities

 

 

(116,246

)

 

 

(98,809

)

Net cash used in operating activities

 

 

(4,363,591

)

 

 

(5,939,563

)

Investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(6,238

)

 

 

(8,415

)

Maturities of available-for-sale securities

 

 

 

 

 

5,400,000

 

Purchase of available-for-sale securities

 

 

(3,538,390

)

 

 

 

Net cash (used in) provided by investing activities

 

 

(3,544,628

)

 

 

5,391,585

 

Financing activities

 

 

 

 

 

 

Proceeds from March 2022 Securities Purchase Agreement, net of issuance costs of $0.4 million

 

 

 

 

 

7,207,499

 

Payments on SVB Term Loan

 

 

(808,824

)

 

 

(1,250,000

)

Payments of December 2022 Securities Purchase Agreement issuance costs

 

 

(350,523

)

 

 

 

Payments on NuvoGen obligation

 

 

(146,032

)

 

 

(172,624

)

Payments of deferred offering costs

 

 

 

 

 

(38,500

)

Payments on financing leases

 

 

(3,866

)

 

 

(4,635

)

Taxes paid for net share settlement of restricted stock awards

 

 

(215

)

 

 

(8,129

)

Cash in lieu of fractional shares related to reverse stock split

 

 

(640

)

 

 

 

Payments on 2021 Insurance Note

 

 

 

 

 

(167,586

)

Net cash (used in) provided by financing activities

 

 

(1,310,100

)

 

 

5,566,025

 

Effect of exchange rates on cash

 

 

3,871

 

 

 

(3,570

)

(Decrease) increase in cash and cash equivalents