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Subsequent Events
12 Months Ended
Dec. 31, 2019
Subsequent Events [Abstract]  
Subsequent Events

Note 17. Subsequent Events

2019 ATM Offering

From January 1, 2020 through March 15, 2020, the Company has sold 4,399,062 shares of common stock under the 2019 ATM Offering at then-market prices for total gross proceeds of approximately $2.6 million. After deferred offering costs included as non-current assets in the condensed balance sheets as of December 31, 2019 of approximately $0.1 million and sales commissions owed in connection with the 2019 ATM Offering, the Company’s aggregate net proceeds through March 15, 2020 were approximately $2.5 million.

 

Private Placement Agreement

On February 25, 2020, the Company entered into an Exchange and Purchase Agreement (the “Exchange Agreement”) with certain accredited investors (the “Investors”) pursuant to which the Company agreed to (i) issue to the Investors an aggregate of 41,100 shares of its newly designated Series A Convertible Preferred Stock, par value $0.001 per share (“Series A Preferred”), in exchange for the Investors surrendering to the Company for cancellation an aggregate of 4,110,000 shares of its common stock (the “Exchange”) and (ii) sell and issue to the Investors an aggregate of 10,170 shares of Series A Preferred for an aggregate purchase price of $600,030, or $59.00 per share (the “Private Placement”), both of which were completed prior to the end of February 2020.

 

The Series A Preferred have not been registered under the Securities Act or any state securities laws. The Company relied on exemptions from the registration requirements of the Securities Act by virtue of Section 3(a)(9) and Section 4(a)(2) thereof. Each Investor represented that it was acquiring the securities for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof.

 

In February 2020, in connection with the Exchange Agreement and the planned issuance of shares of Series A Preferred pursuant to the Exchange and Private Placement, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock (the “Series A Certificate of Designation”). The Series A Certificate of Designation establishes and designates the Series A Preferred and the rights, preferences and privileges thereof.

 

Each share of Series A Preferred is convertible into 100 shares of the Company’s common stock, subject to proportional adjustment and beneficial ownership limitations as provided in the Series A Certificate of Designation. In the event of the Company’s liquidation, dissolution or winding up, holders of Series A Preferred will participate pari passu with any distribution of proceeds to holders of the Company’s common stock. Holders of Series A Preferred are entitled to receive dividends on shares of Series A Preferred equal (on an as converted to common stock basis) to and in the same form as dividends actually paid on the Company’s common stock. Shares of Series A Preferred generally have no voting rights, except as required by law.

 

MidCap Credit Facility

On February 26, 2020 (the “Amendment Effective Date”), the Company entered into (i) Amendment No. 2 to its MidCap Term Loan (the “MidCap Term Loan Amendment”), and (ii) Amendment No. 3 to its MidCap Revolving Loan, (the “MidCap Revolving Loan Amendment,” and together with the MidCap Term Loan Amendment, the “Amendments”).

The MidCap Term Loan Amendment extends the interest only payments on the term loan advances by an additional 11 months, with principal on each term loan advance payable in 25 equal monthly installments beginning March 1, 2021 until paid in full on March 1, 2023. If the Company achieves a stated revenue milestone for the 12-month period ending on December 31, 2020, the interest-only period will be further extended by an additional four months, with principal on each term loan advance then payable in 21 equal monthly installments beginning July 1, 2021. 

In addition, both Amendments (i) permit the use of the $3.3 million of escrowed funds previously deposited by the Company for repayment of the QNAH Convertible Note, subject to such repayment not being made before September 1, 2020, the Company having at least $18.0 million of unrestricted cash and cash equivalents and there being no default under the MidCap Term Loan or the MidCap Revolving Loan and (ii) include a grant by the Company of a security interest in its intellectual property, effective as of the Amendment Effective Date.

 

LP Purchase Agreement

On March 24, 2020, we entered into a purchase agreement ("LP Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), pursuant to which, upon the terms and subject to the conditions and limitations set forth therein, we have the right to sell to Lincoln Park up to $20,000,000 of shares of our common stock (“Purchase Shares”) from time to time over the 36-month term of the LP Purchase Agreement. The purchase price of the Purchase Shares will be based on recent closing prices of our common stock at the time of sale. We issued Lincoln Park an aggregate of 615,384 shares of our common stock as consideration for their purchase commitment pursuant to the LP Purchase Agreement.

 

COVID-19 Pandemic

 

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”) and the risks to the international community as the virus spreads globally. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic.

 

The full impact of the COVID-19 outbreak continues to evolve as of the date of this report and likewise the full impact of the pandemic on the Company’s financial condition, liquidity, and future results of operations is uncertain. Management is actively monitoring the global situation on its financial condition, liquidity, operations, suppliers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition or liquidity for fiscal year 2020.

 

While significant uncertainty remains as to the potential impact of the COVID-19 outbreak on the Company’s operations, and on the global economy as a whole, the Company believes it is likely that the COVID-19 outbreak will have a negative impact on the Company’s product and product-related services revenue and collaborative development services revenue in 2020. The Company believes this negative impact will be primarily demand-side driven as its customers experience disruptions in their own businesses from the pandemic. However, it is possible that the COVID-19 pandemic will also impact the Company’s workforce, supply chains or distribution networks or otherwise impact the Company’s ability to conduct sample processing services and custom assay development services and its ability to provide collaborative development services for companion diagnostic development programs.

 

Although the Company cannot estimate the length or gravity of the impact of the COVID-19 outbreak at this time, if the pandemic continues, it may have a material adverse effect on the Company’s results of operations, financial position and liquidity in fiscal year 2020.