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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cancer Genetics Inc | NASDAQ:CGIX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 4.61 | 4.56 | 4.63 | 0 | 01:00:00 |
|
|
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
Delaware
|
|
04-3462475
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
||
|
|
|
Item 1.
|
|
|
|
||
|
Consolidated Statements of Operations
and Other Comprehensive Loss
|
|
|
||
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
|
||
|
|
|
Item 1.
|
||
|
|
|
Item 1A.
|
||
|
|
|
Item 2.
|
||
|
|
|
Item 3.
|
||
|
|
|
Item 4.
|
||
|
|
|
Item 5.
|
||
|
|
|
Item 6.
|
||
|
|
|
|
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
ASSETS
|
|
|
|
||||
CURRENT ASSETS
|
|
|
|
||||
Cash and cash equivalents
|
$
|
1,206
|
|
|
$
|
9,541
|
|
Accounts receivable, net of allowance for doubtful accounts of 2018 $7,967; 2017 $6,539
|
8,981
|
|
|
10,958
|
|
||
Other current assets
|
2,928
|
|
|
2,707
|
|
||
Total current assets
|
13,115
|
|
|
23,206
|
|
||
FIXED ASSETS, net of accumulated depreciation
|
4,499
|
|
|
5,550
|
|
||
OTHER ASSETS
|
|
|
|
||||
Restricted cash
|
350
|
|
|
350
|
|
||
Patents and other intangible assets, net of accumulated amortization
|
4,121
|
|
|
4,478
|
|
||
Investment in joint venture
|
242
|
|
|
246
|
|
||
Goodwill
|
17,257
|
|
|
17,992
|
|
||
Other
|
301
|
|
|
399
|
|
||
Total other assets
|
22,271
|
|
|
23,465
|
|
||
Total Assets
|
$
|
39,885
|
|
|
$
|
52,221
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
CURRENT LIABILITIES
|
|
|
|
||||
Accounts payable and accrued expenses
|
$
|
13,040
|
|
|
$
|
8,715
|
|
Obligations under capital leases, current portion
|
324
|
|
|
272
|
|
||
Deferred revenue
|
2,409
|
|
|
516
|
|
||
Line of credit
|
2,764
|
|
|
4,137
|
|
||
Term note
|
6,000
|
|
|
6,000
|
|
||
Convertible note, net
|
2,302
|
|
|
—
|
|
||
Advance from NovellusDx, Ltd.
|
1,500
|
|
|
—
|
|
||
Total current liabilities
|
28,339
|
|
|
19,640
|
|
||
Obligations under capital leases
|
451
|
|
|
624
|
|
||
Deferred rent payable and other
|
283
|
|
|
360
|
|
||
Warrant liability
|
1,122
|
|
|
4,403
|
|
||
Deferred revenue, long-term
|
442
|
|
|
429
|
|
||
Total Liabilities
|
30,637
|
|
|
25,456
|
|
||
STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Preferred stock, authorized 9,764 shares, $0.0001 par value, none issued
|
—
|
|
|
—
|
|
||
Common stock, authorized 100,000 shares, $0.0001 par value, 27,726 and 27,754 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively
|
3
|
|
|
3
|
|
||
Additional paid-in capital
|
163,092
|
|
|
161,527
|
|
||
Accumulated other comprehensive income
|
104
|
|
|
69
|
|
||
Accumulated (deficit)
|
(153,951
|
)
|
|
(134,834
|
)
|
||
Total Stockholders’ Equity
|
9,248
|
|
|
26,765
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
39,885
|
|
|
$
|
52,221
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenue
|
$
|
5,940
|
|
|
$
|
8,028
|
|
|
$
|
20,643
|
|
|
$
|
21,598
|
|
Cost of revenues
|
4,654
|
|
|
4,588
|
|
|
14,589
|
|
|
12,831
|
|
||||
Gross profit
|
1,286
|
|
|
3,440
|
|
|
6,054
|
|
|
8,767
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Research and development
|
692
|
|
|
981
|
|
|
2,046
|
|
|
3,080
|
|
||||
General and administrative
|
5,004
|
|
|
4,346
|
|
|
14,950
|
|
|
11,352
|
|
||||
Sales and marketing
|
1,280
|
|
|
1,301
|
|
|
4,212
|
|
|
3,437
|
|
||||
Restructuring costs
|
1,418
|
|
|
—
|
|
|
2,151
|
|
|
—
|
|
||||
Merger costs
|
890
|
|
|
—
|
|
|
890
|
|
|
—
|
|
||||
Total operating expenses
|
9,284
|
|
|
6,628
|
|
|
24,249
|
|
|
17,869
|
|
||||
Loss from operations
|
(7,998
|
)
|
|
(3,188
|
)
|
|
(18,195
|
)
|
|
(9,102
|
)
|
||||
Other income (expense):
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
(465
|
)
|
|
(350
|
)
|
|
(1,282
|
)
|
|
(797
|
)
|
||||
Interest income
|
—
|
|
|
10
|
|
|
21
|
|
|
37
|
|
||||
Change in fair value of acquisition note payable
|
(13
|
)
|
|
105
|
|
|
68
|
|
|
(114
|
)
|
||||
Change in fair value of warrant liability
|
12
|
|
|
2,790
|
|
|
2,858
|
|
|
(3,927
|
)
|
||||
Other (expense)
|
(55
|
)
|
|
—
|
|
|
(78
|
)
|
|
(46
|
)
|
||||
Total other income (expense)
|
(521
|
)
|
|
2,555
|
|
|
1,587
|
|
|
(4,847
|
)
|
||||
Loss before income taxes
|
(8,519
|
)
|
|
(633
|
)
|
|
(16,608
|
)
|
|
(13,949
|
)
|
||||
Income tax (benefit)
|
—
|
|
|
—
|
|
|
—
|
|
|
(970
|
)
|
||||
Net (loss)
|
$
|
(8,519
|
)
|
|
$
|
(633
|
)
|
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Basic net (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.65
|
)
|
Diluted net (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.65
|
)
|
Basic weighted-average shares outstanding
|
27,370
|
|
|
21,577
|
|
|
27,156
|
|
|
20,059
|
|
||||
Diluted weighted-average shares outstanding
|
27,370
|
|
|
22,359
|
|
|
27,156
|
|
|
20,059
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net (loss)
|
$
|
(8,519
|
)
|
|
$
|
(633
|
)
|
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Foreign currency translation gain (loss)
|
(30
|
)
|
|
(1
|
)
|
|
35
|
|
|
(1
|
)
|
||||
Comprehensive (loss)
|
$
|
(8,549
|
)
|
|
$
|
(634
|
)
|
|
$
|
(16,573
|
)
|
|
$
|
(12,980
|
)
|
|
Nine Months Ended September 30,
|
||||||
|
2018
|
|
2017
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net (loss)
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Adjustments to reconcile net (loss) to net cash (used in) operating activities:
|
|
|
|
||||
Depreciation
|
1,266
|
|
|
1,436
|
|
||
Amortization
|
396
|
|
|
234
|
|
||
Provision for bad debts
|
1,428
|
|
|
890
|
|
||
Stock-based compensation
|
731
|
|
|
1,395
|
|
||
Change in fair value of warrant liability and acquisition note payable
|
(2,926
|
)
|
|
4,041
|
|
||
Amortization of discount of debt and debt issuance costs
|
130
|
|
|
185
|
|
||
Loss on sale of assets and India subsidiary
|
204
|
|
|
—
|
|
||
Modification of 2017 Debt warrants
|
83
|
|
|
—
|
|
||
Loss in equity method investment
|
4
|
|
|
21
|
|
||
Loss on extinguishment of debt
|
—
|
|
|
78
|
|
||
Changes in:
|
|
|
|
||||
Accounts receivable
|
184
|
|
|
(4,029
|
)
|
||
Other current assets
|
(237
|
)
|
|
(606
|
)
|
||
Other non-current assets
|
—
|
|
|
251
|
|
||
Accounts payable, accrued expenses and deferred revenue
|
3,970
|
|
|
(1,057
|
)
|
||
Deferred rent payable and other
|
(64
|
)
|
|
(109
|
)
|
||
Net cash (used in) operating activities
|
(11,439
|
)
|
|
(10,249
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Purchase of fixed assets
|
(799
|
)
|
|
(1,192
|
)
|
||
Patent costs
|
(32
|
)
|
|
(73
|
)
|
||
Purchase of cost method investment
|
—
|
|
|
(200
|
)
|
||
Acquisition of vivoPharm, Pty Ltd., net of cash acquired
|
—
|
|
|
(656
|
)
|
||
Cash received in the sale of India subsidiary, net of cash transferred
|
1,551
|
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
720
|
|
|
(2,121
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Principal payments on capital lease obligations
|
(271
|
)
|
|
(170
|
)
|
||
Proceeds from warrant and option exercises
|
—
|
|
|
1,834
|
|
||
Proceeds from borrowings on Silicon Valley Bank line of credit
|
6,831
|
|
|
2,000
|
|
||
Repayment of borrowings on Silicon Valley Bank line of credit
|
(8,204
|
)
|
|
—
|
|
||
Proceeds from Convertible Note
|
2,500
|
|
|
—
|
|
||
Advance from NovellusDx, Ltd.
|
1,500
|
|
|
—
|
|
||
Proceeds from Partners for Growth IV, L.P. term note
|
—
|
|
|
6,000
|
|
||
Proceeds from Aspire Capital common stock purchases, net of certain offering costs
|
—
|
|
|
2,965
|
|
||
Principal payments on Silicon Valley Bank term note
|
—
|
|
|
(4,667
|
)
|
||
Payment of debt issuance costs and loan fees
|
—
|
|
|
(287
|
)
|
||
Net cash provided by financing activities
|
2,356
|
|
|
7,675
|
|
||
Effect of foreign exchange rates on cash and cash equivalents and restricted cash
|
28
|
|
|
—
|
|
||
Net (decrease) in cash and cash equivalents and restricted cash
|
(8,335
|
)
|
|
(4,695
|
)
|
||
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
||||
Beginning
|
9,891
|
|
|
9,502
|
|
||
Ending
|
$
|
1,556
|
|
|
$
|
4,807
|
|
SUPPLEMENTAL CASH FLOW DISCLOSURE
|
|
|
|
||||
Cash paid for interest
|
$
|
827
|
|
|
$
|
633
|
|
SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
||||
Fixed assets acquired through capital lease arrangements
|
$
|
150
|
|
|
$
|
567
|
|
Derivative warrants issued with debt
|
—
|
|
|
1,004
|
|
||
Acquisition of vivoPharm business
|
—
|
|
|
9,856
|
|
||
Fair value of warrants reclassified from liabilities to equity
|
423
|
|
|
—
|
|
||
Beneficial conversion feature on Convertible Note
|
328
|
|
|
—
|
|
||
Sale of India subsidiary:
|
|
|
|
||||
Accounts receivable, net
|
$
|
365
|
|
|
$
|
—
|
|
Other current assets
|
16
|
|
|
—
|
|
||
Fixed assets, net
|
608
|
|
|
—
|
|
||
Goodwill
|
735
|
|
|
—
|
|
||
Other noncurrent assets
|
98
|
|
|
—
|
|
||
Accounts payable, accrued expenses and deferred revenue
|
(180
|
)
|
|
—
|
|
||
Deferred rent and other
|
(13
|
)
|
|
—
|
|
||
Loss on sale of India subsidiary
|
(78
|
)
|
|
—
|
|
||
Cash received in the sale of India subsidiary, net of cash transferred
|
$
|
1,551
|
|
|
$
|
—
|
|
|
|
Three Months Ended September 30, 2018
|
|
Nine Months Ended September 30, 2018
|
||||||||||||||||||||
|
|
As Reported
|
|
ASC 606 Adjustments
|
|
Balances Without Adoption
|
|
As Reported
|
|
ASC 606 Adjustments
|
|
Balances Without Adoption
|
||||||||||||
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Biopharma Services
|
|
$
|
3,850
|
|
|
$
|
(35
|
)
|
|
3,815
|
|
|
11,099
|
|
|
$
|
(797
|
)
|
|
10,302
|
|
|||
Clinical Services
|
|
1,555
|
|
|
—
|
|
|
1,555
|
|
|
6,019
|
|
|
—
|
|
|
6,019
|
|
||||||
Discovery Services
|
|
535
|
|
|
—
|
|
|
535
|
|
|
3,525
|
|
|
(650
|
)
|
|
2,875
|
|
||||||
|
|
$
|
5,940
|
|
|
$
|
(35
|
)
|
|
$
|
5,905
|
|
|
$
|
20,643
|
|
|
$
|
(1,447
|
)
|
|
$
|
19,196
|
|
|
|
September 30, 2018
|
||||||||||
|
|
As Reported
|
|
ASC 606 Adjustments
|
|
Balances Without Adoption
|
||||||
CURRENT LIABILITIES
|
|
|
|
|
|
|
||||||
Deferred revenue
|
|
|
|
|
|
|
||||||
Biopharma Services
|
|
$
|
1,180
|
|
|
$
|
(1,062
|
)
|
|
$
|
118
|
|
Clinical Services
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Discovery Services
|
|
1,229
|
|
|
—
|
|
|
1,229
|
|
|||
|
|
$
|
2,409
|
|
|
$
|
(1,062
|
)
|
|
$
|
1,347
|
|
|
|
|
|
|
|
|
||||||
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
||||||
Deferred revenue
|
|
|
|
|
|
|
||||||
Biopharma Services
|
|
$
|
428
|
|
|
$
|
—
|
|
|
$
|
428
|
|
Clinical Services
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Discovery Services
|
|
14
|
|
|
—
|
|
|
14
|
|
|||
|
|
$
|
442
|
|
|
$
|
—
|
|
|
$
|
442
|
|
|
|
|
|
|
|
|
||||||
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
||||||
Accumulated (deficit)
|
|
$
|
(153,951
|
)
|
|
$
|
1,062
|
|
|
$
|
(152,889
|
)
|
Cash
|
|
$
|
544
|
|
Accounts receivable
|
|
905
|
|
|
Lab supplies
|
|
350
|
|
|
Prepaid expenses and other current assets
|
|
60
|
|
|
Fixed assets
|
|
765
|
|
|
Intangible assets
|
|
3,160
|
|
|
Goodwill
|
|
5,960
|
|
|
Accounts payable and accrued expenses
|
|
(913
|
)
|
|
Deferred revenue
|
|
(814
|
)
|
|
Deferred rent and other
|
|
(222
|
)
|
|
Obligations under capital leases
|
|
(76
|
)
|
|
Total purchase price
|
|
$
|
9,719
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
|
2017
|
|
2017
|
||||
Revenue
|
$
|
9,069
|
|
|
$
|
25,335
|
|
Net loss
|
(976
|
)
|
|
(13,788
|
)
|
||
|
|
|
|
||||
Basic net loss per share
|
$
|
(0.04
|
)
|
|
$
|
(0.61
|
)
|
Dilutive net loss per share
|
(0.16
|
)
|
|
(0.61
|
)
|
|
|
For the Three Months Ended September 30, 2018
|
|
For the Nine Months Ended September 30, 2018
|
||||
Disposal activity costs
|
|
$
|
243
|
|
|
$
|
692
|
|
Costs to consolidate facilities
|
|
375
|
|
|
405
|
|
||
Contract termination costs
|
|
267
|
|
|
521
|
|
||
Employee termination costs
|
|
533
|
|
|
533
|
|
||
|
|
$
|
1,418
|
|
|
$
|
2,151
|
|
|
|
Restructuring Liability at December 31, 2017
|
|
Cost Incurred / Additions
|
|
Payments / Adjustments
|
|
Restructuring Liability at September 30, 2018
|
||||||||
Disposal activity costs
|
|
$
|
—
|
|
|
$
|
692
|
|
|
$
|
(692
|
)
|
|
$
|
—
|
|
Costs to consolidate facilities
|
|
—
|
|
|
405
|
|
|
(319
|
)
|
|
86
|
|
||||
Contract termination costs
|
|
—
|
|
|
521
|
|
|
(304
|
)
|
|
217
|
|
||||
Employee termination costs
|
|
—
|
|
|
533
|
|
|
(91
|
)
|
|
442
|
|
||||
|
|
$
|
—
|
|
|
$
|
2,151
|
|
|
$
|
(1,406
|
)
|
|
$
|
745
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Biopharma Services
|
$
|
3,850
|
|
|
$
|
4,168
|
|
|
11,099
|
|
|
$
|
11,175
|
|
|
Clinical Services
|
1,555
|
|
|
2,880
|
|
|
6,019
|
|
|
8,887
|
|
||||
Discovery Services
|
535
|
|
|
980
|
|
|
3,525
|
|
|
1,536
|
|
||||
|
$
|
5,940
|
|
|
$
|
8,028
|
|
|
$
|
20,643
|
|
|
$
|
21,598
|
|
|
September 30,
2018 |
|
December 31,
2017 |
||||
Biopharma Services
|
$
|
4,103
|
|
|
$
|
3,746
|
|
Clinical Services
|
12,080
|
|
|
12,205
|
|
||
Discovery Services
|
765
|
|
|
1,546
|
|
||
Allowance for doubtful accounts
|
(7,967
|
)
|
|
(6,539
|
)
|
||
|
$
|
8,981
|
|
|
$
|
10,958
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Medicare
|
8%
|
|
11%
|
|
10%
|
|
14%
|
Other third party payors
|
18%
|
|
25%
|
|
19%
|
|
27%
|
|
26%
|
|
36%
|
|
29%
|
|
41%
|
|
Biopharma Services
|
|
Clinical Services
|
|
Discovery Services
|
Performance Obligation Satisfaction and Revenue Recognition:
|
Performance obligations are satisfied at a point in time as the Company processes samples delivered by the customer. Project level activities, including study setup and project management, are satisfied over the life of the contract. Revenues are recognized at a point in time when the test results or other deliverables are reported to the customer. Project level fee revenue is recognized ratably over the life of the contract.
|
|
Performance obligations are satisfied at a point in time when the tests are reported to the customer. Revenues are recognized at a point in time when the test results are reported to the ordering site.
|
|
Performance obligations are satisfied over time and as study data is transmitted to the customer. Revenue is recognized using the time elapsed method and at a point in time as the Company delivers study results to the customers.
|
|
|
|
|
|
|
Significant Payment Terms:
|
Monthly invoices at a contractual rate are generated as services are delivered for work completed during the prior month. Some contracts have prepayments prior to services being rendered that are recorded as deferred revenue.
|
|
The Company invoices at its list price or contractually negotiated price. Payments realized vary from amounts invoiced. Accordingly, the Company estimates the variable consideration it expects to collect.
|
|
As results are delivered, the invoices are generated based on contractual rates. Some contracts have prepayments prior to services being rendered that are recorded as deferred revenue.
|
|
|
|
|
|
|
Nature of Services:
|
Biopharma testing services, study setup and study management
|
|
Clinical testing services
|
|
Discovery services
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net (loss) for basic earnings per share
|
$
|
(8,519
|
)
|
|
$
|
(633
|
)
|
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Change in fair value of warrant liability
|
—
|
|
|
2,790
|
|
|
—
|
|
|
—
|
|
||||
Net (loss) for diluted earnings per share
|
$
|
(8,519
|
)
|
|
$
|
(3,423
|
)
|
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Weighted-average basic common shares outstanding
|
27,370
|
|
|
21,577
|
|
|
27,156
|
|
|
20,059
|
|
||||
Assumed conversion of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Common stock purchase warrants
|
—
|
|
|
782
|
|
|
—
|
|
|
—
|
|
||||
Potentially dilutive common shares
|
—
|
|
|
782
|
|
|
—
|
|
|
—
|
|
||||
Denominator for diluted earnings per share – adjusted weighted-average shares
|
27,370
|
|
|
22,359
|
|
|
27,156
|
|
|
20,059
|
|
||||
Basic net (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.65
|
)
|
Diluted net (loss) per share
|
$
|
(0.31
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.61
|
)
|
|
$
|
(0.65
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
Common stock purchase warrants
|
10,055
|
|
|
4,163
|
|
|
10,055
|
|
|
6,574
|
|
Stock options
|
3,041
|
|
|
2,816
|
|
|
3,041
|
|
|
2,816
|
|
Convertible note
|
3,349
|
|
|
—
|
|
|
3,349
|
|
|
—
|
|
Restricted shares of common stock
|
47
|
|
|
115
|
|
|
47
|
|
|
115
|
|
|
16,492
|
|
|
7,094
|
|
|
16,492
|
|
|
9,505
|
|
Convertible Note, net of discounts of $305
|
2,320
|
|
Less unamortized debt issuance costs
|
18
|
|
Convertible Note, net
|
2,302
|
|
|
Options Outstanding
|
|
Weighted-
Average
Remaining
Contractual
Term (in years)
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|||||||
|
Number of
Shares
(in thousands)
|
|
Weighted-
Average
Exercise
Price
|
|
||||||||
Outstanding January 1, 2018
|
2,844
|
|
|
$
|
7.00
|
|
|
6.96
|
|
$
|
4
|
|
Granted
|
757
|
|
|
0.91
|
|
|
|
|
|
|||
Cancelled or expired
|
(560
|
)
|
|
5.14
|
|
|
|
|
|
|||
Outstanding September 30, 2018
|
3,041
|
|
|
$
|
5.83
|
|
|
5.97
|
|
$
|
92
|
|
Exercisable September 30, 2018
|
1,838
|
|
|
$
|
8.50
|
|
|
3.91
|
|
$
|
—
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Volatility
|
76.89
|
%
|
|
75.28
|
%
|
|
77.69
|
%
|
|
74.60
|
%
|
||||
Risk free interest rate
|
2.76
|
%
|
|
1.92
|
%
|
|
2.88
|
%
|
|
1.97
|
%
|
||||
Dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
|
0.00
|
%
|
||||
Term (years)
|
6.32
|
|
|
5.73
|
|
|
6.47
|
|
|
5.90
|
|
||||
Weighted-average fair value of options granted during the period
|
$
|
0.72
|
|
|
$
|
1.91
|
|
|
$
|
0.64
|
|
|
$
|
1.89
|
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||
Volatility
|
74.39
|
%
|
|
76.06
|
%
|
Risk free interest rate
|
2.17
|
%
|
|
2.19
|
%
|
Dividend yield
|
0.00
|
%
|
|
0.00
|
%
|
Term (years)
|
6.64
|
|
|
6.89
|
|
|
Non-vested Restricted Stock Awards
|
|||||
|
Number of
Shares (in thousands) |
|
Weighted-Average Grant Date Fair Value
|
|||
Non-vested at January 1, 2018
|
91
|
|
|
$
|
4.21
|
|
Vested
|
(21
|
)
|
|
4.10
|
|
|
Cancelled
|
(23
|
)
|
|
6.66
|
|
|
Non-vested at September 30, 2018
|
47
|
|
|
$
|
3.08
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Cost of revenues
|
$
|
52
|
|
|
$
|
122
|
|
|
$
|
233
|
|
|
$
|
250
|
|
Research and development
|
13
|
|
|
11
|
|
|
44
|
|
|
110
|
|
||||
General and administrative
|
101
|
|
|
356
|
|
|
399
|
|
|
949
|
|
||||
Sales and marketing
|
23
|
|
|
30
|
|
|
55
|
|
|
86
|
|
||||
Total stock-based compensation
|
$
|
189
|
|
|
$
|
519
|
|
|
$
|
731
|
|
|
$
|
1,395
|
|
Issued With / For
|
Exercise
Price |
|
Warrants
Outstanding January 1, 2018 |
|
Transfer Between Derivative Warrants and Non-Derivative Warrants
|
|
Warrants Outstanding September 30, 2018
|
|||||
Non-Derivative Warrants:
|
|
|
|
|
|
|
|
|||||
Financing
|
$
|
10.00
|
|
|
243
|
|
|
—
|
|
|
243
|
|
Financing
|
15.00
|
|
|
276
|
|
|
—
|
|
|
276
|
|
|
2015 Offering
|
5.00
|
|
|
3,450
|
|
|
—
|
|
|
3,450
|
|
|
2017 Debt
|
0.92
|
|
B
|
—
|
|
|
443
|
|
|
443
|
|
|
Total non-derivative warrants
|
5.49
|
|
C
|
3,969
|
|
|
443
|
|
|
4,412
|
|
|
Derivative Warrants:
|
|
|
|
|
|
|
|
|||||
2016 Offerings
|
2.25
|
|
A
|
1,968
|
|
|
—
|
|
|
1,968
|
|
|
2017 Debt
|
2.82
|
|
B
|
443
|
|
|
(443
|
)
|
|
—
|
|
|
2017 Offering
|
2.35
|
|
A
|
3,500
|
|
|
—
|
|
|
3,500
|
|
|
2017 Offering
|
2.50
|
|
A
|
175
|
|
|
—
|
|
|
175
|
|
|
Total derivative warrants
|
2.32
|
|
C
|
6,086
|
|
|
(443
|
)
|
|
5,643
|
|
|
Total
|
$
|
3.71
|
|
C
|
10,055
|
|
|
—
|
|
|
10,055
|
|
A
|
These warrants are subject to fair value accounting and contain a contingent net cash settlement feature. See Note 9.
|
B
|
These warrants were subject to fair value accounting until the number of shares issuable upon the exercise of the warrants became fixed on April 2, 2018. Effective June 30, 2018, the exercise price was reduced from
$2.82
per share to
$0.92
per share. See Note 9.
|
C
|
Weighted-average exercise prices are as of
September 30, 2018
.
|
Issued with/for
|
Fair value of warrants
outstanding as of December 31, 2017 |
|
Change in fair
value of warrants |
|
Reclassification of warrants from liability to equity
|
|
Fair value of warrants
outstanding as of September 30, 2018 |
||||||||
2016 Offerings
|
$
|
1,929
|
|
|
$
|
(1,134
|
)
|
|
$
|
—
|
|
|
$
|
795
|
|
2017 Debt
|
501
|
|
|
(78
|
)
|
|
(423
|
)
|
|
—
|
|
||||
2017 Offering
|
1,973
|
|
|
(1,646
|
)
|
|
—
|
|
|
327
|
|
||||
|
$
|
4,403
|
|
|
$
|
(2,858
|
)
|
|
$
|
(423
|
)
|
|
$
|
1,122
|
|
|
|
|
|
|
Exercised During the
|
||||||||||
2016 Offerings
|
As of September 30, 2018
|
|
As of December 31, 2017
|
|
Three Months Ended September 30, 2017
|
|
Nine Months Ended September 30, 2017
|
||||||||
Exercise price
|
$
|
2.25
|
|
|
$
|
2.25
|
|
|
$
|
2.25
|
|
|
$
|
2.25
|
|
Expected life (years)
|
3.33
|
|
|
4.08
|
|
|
4.30
|
|
|
4.78
|
|
||||
Expected volatility
|
80.88
|
%
|
|
73.44
|
%
|
|
74.20
|
%
|
|
76.24
|
%
|
||||
Risk-free interest rate
|
2.88
|
%
|
|
2.11
|
%
|
|
1.81
|
%
|
|
1.94
|
%
|
||||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
2017 Debt
|
As of December 31, 2017
|
|
Reclassified to Equity During the Nine Months Ended September 30, 2018
|
|
Issued During the Nine Months Ended September 30, 2017
|
||||||
Exercise price
|
$
|
2.82
|
|
|
$
|
2.82
|
|
|
$
|
2.82
|
|
Expected life (years)
|
6.22
|
|
|
5.97
|
|
|
7.00
|
|
|||
Expected volatility
|
74.18
|
%
|
|
73.40
|
%
|
|
74.61
|
%
|
|||
Risk-free interest rate
|
2.33
|
%
|
|
—
|
%
|
|
2.22
|
%
|
|||
Expected dividend yield
|
—
|
%
|
|
2.55
|
%
|
|
—
|
%
|
2017 Offering
|
As of September 30, 2018
|
|
As of December 31, 2017
|
|
Issued During the Nine Months Ended September 30, 2017
|
|||||
Exercise price
|
$
|
2.36
|
|
|
$
|
2.36
|
|
|
2.82
|
|
Expected life (years)
|
0.69
|
|
|
1.43
|
|
|
7.00
|
|
||
Expected volatility
|
93.26
|
%
|
|
77.55
|
%
|
|
74.61
|
%
|
||
Risk-free interest rate
|
2.36
|
%
|
|
1.83
|
%
|
|
2.22
|
%
|
||
Expected dividend yield
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
September 30, 2018
|
||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Warrant liability
|
$
|
1,122
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,122
|
|
Note payable
|
88
|
|
|
—
|
|
|
—
|
|
|
88
|
|
||||
|
$
|
1,210
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,210
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017
|
||||||||||||||
|
Total
|
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
|
Significant Other
Observable Inputs (Level 2) |
|
Significant
Unobservable Inputs (Level 3) |
||||||||
Warrant liability
|
$
|
4,403
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,403
|
|
Note payable
|
156
|
|
|
—
|
|
|
—
|
|
|
156
|
|
||||
|
$
|
4,559
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,559
|
|
|
|
|
|
|
|
|
|
|
Note Payable
|
|
Warrant
|
||||
|
to VenturEast
|
|
Liability
|
||||
Fair value at December 31, 2017
|
$
|
156
|
|
|
$
|
4,403
|
|
Fair value of warrants reclassified to equity
|
—
|
|
|
(423
|
)
|
||
Change in fair value
|
(68
|
)
|
|
(2,858
|
)
|
||
Fair value at September 30, 2018
|
$
|
88
|
|
|
$
|
1,122
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenue
|
$
|
5,940
|
|
|
$
|
8,028
|
|
|
$
|
(2,088
|
)
|
|
(26
|
)%
|
Cost of revenues
|
4,654
|
|
|
4,588
|
|
|
66
|
|
|
1
|
%
|
|||
Research and development expenses
|
692
|
|
|
981
|
|
|
(289
|
)
|
|
(29
|
)%
|
|||
General and administrative expenses
|
5,004
|
|
|
4,346
|
|
|
658
|
|
|
15
|
%
|
|||
Sales and marketing expenses
|
1,280
|
|
|
1,301
|
|
|
(21
|
)
|
|
(2
|
)%
|
|||
Restructuring costs
|
1,418
|
|
|
—
|
|
|
1,418
|
|
|
N/A
|
|
|||
Merger costs
|
890
|
|
|
—
|
|
|
890
|
|
|
N/A
|
|
|||
Loss from operations
|
(7,998
|
)
|
|
(3,188
|
)
|
|
(4,810
|
)
|
|
151
|
%
|
|||
Interest income (expense)
|
(465
|
)
|
|
(340
|
)
|
|
(125
|
)
|
|
37
|
%
|
|||
Change in fair value of acquisition note payable
|
(13
|
)
|
|
105
|
|
|
(118
|
)
|
|
(112
|
)%
|
|||
Change in fair value of warrant liability
|
12
|
|
|
2,790
|
|
|
(2,778
|
)
|
|
(100
|
)%
|
|||
Other income (expense)
|
(55
|
)
|
|
—
|
|
|
(55
|
)
|
|
N/A
|
|
|||
Net (loss)
|
$
|
(8,519
|
)
|
|
$
|
(633
|
)
|
|
$
|
(7,886
|
)
|
|
1,246
|
%
|
|
|
Three Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Reconciliation of net (loss):
|
|
|
|
|
||||
Net (loss)
|
|
$
|
(8,519
|
)
|
|
$
|
(633
|
)
|
Adjustments:
|
|
|
|
|
||||
Change in fair value of acquisition note payable
|
|
13
|
|
|
(105
|
)
|
||
Change in fair value of warrant liability
|
|
(12
|
)
|
|
(2,790
|
)
|
||
Adjusted net (loss)
|
|
$
|
(8,518
|
)
|
|
$
|
(3,528
|
)
|
Reconciliation of basic net (loss) per share:
|
|
|
|
|
||||
Basic net (loss) per share
|
|
$
|
(0.31
|
)
|
|
$
|
(0.03
|
)
|
Adjustments to net (loss)
|
|
—
|
|
|
(0.13
|
)
|
||
Adjusted basic net (loss) per share
|
|
$
|
(0.31
|
)
|
|
$
|
(0.16
|
)
|
Basic weighted-average shares outstanding
|
|
27,370
|
|
|
21,577
|
|
||
Reconciliation of diluted net (loss) per share:
|
|
|
|
|
||||
Diluted net (loss) per share
|
|
$
|
(0.31
|
)
|
|
$
|
(0.15
|
)
|
Adjustments to net (loss)
|
|
—
|
|
|
(0.01
|
)
|
||
Adjusted diluted net (loss) per share
|
|
$
|
(0.31
|
)
|
|
$
|
(0.16
|
)
|
Diluted weighted-average shares outstanding
|
|
27,370
|
|
|
22,359
|
|
|
Three Months Ended September 30,
|
|
Change
|
|||||||||||||||||
|
2018
|
|
2017
|
|
|
|
|
|||||||||||||
(dollars in thousands)
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Biopharma Services
|
$
|
3,850
|
|
|
65
|
%
|
|
$
|
4,168
|
|
|
52
|
%
|
|
$
|
(318
|
)
|
|
(8
|
)%
|
Clinical Services
|
1,555
|
|
|
26
|
%
|
|
2,880
|
|
|
36
|
%
|
|
(1,325
|
)
|
|
(46
|
)%
|
|||
Discovery Services
|
535
|
|
|
9
|
%
|
|
980
|
|
|
12
|
%
|
|
(445
|
)
|
|
(45
|
)%
|
|||
Total Revenue
|
$
|
5,940
|
|
|
100
|
%
|
|
$
|
8,028
|
|
|
100
|
%
|
|
$
|
(2,088
|
)
|
|
(26
|
)%
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||
(dollars in thousands)
|
2018
|
|
2017
|
|
$
|
|
%
|
|||||||
Revenue
|
$
|
20,643
|
|
|
$
|
21,598
|
|
|
$
|
(955
|
)
|
|
(4
|
)%
|
Cost of revenues
|
14,589
|
|
|
12,831
|
|
|
1,758
|
|
|
14
|
%
|
|||
Research and development expenses
|
2,046
|
|
|
3,080
|
|
|
(1,034
|
)
|
|
(34
|
)%
|
|||
General and administrative expenses
|
14,950
|
|
|
11,352
|
|
|
3,598
|
|
|
32
|
%
|
|||
Sales and marketing expenses
|
4,212
|
|
|
3,437
|
|
|
775
|
|
|
23
|
%
|
|||
Restructuring costs
|
2,151
|
|
|
—
|
|
|
2,151
|
|
|
N/A
|
|
|||
Merger costs
|
890
|
|
|
—
|
|
|
890
|
|
|
N/A
|
|
|||
Loss from operations
|
(18,195
|
)
|
|
(9,102
|
)
|
|
(9,093
|
)
|
|
100
|
%
|
|||
Interest income (expense)
|
(1,261
|
)
|
|
(760
|
)
|
|
(501
|
)
|
|
66
|
%
|
|||
Change in fair value of acquisition note payable
|
68
|
|
|
(114
|
)
|
|
182
|
|
|
(160
|
)%
|
|||
Change in fair value of warrant liability
|
2,858
|
|
|
(3,927
|
)
|
|
6,785
|
|
|
(173
|
)%
|
|||
Other income (expense)
|
(78
|
)
|
|
(46
|
)
|
|
(32
|
)
|
|
70
|
%
|
|||
Loss before income taxes
|
(16,608
|
)
|
|
(13,949
|
)
|
|
(2,659
|
)
|
|
19
|
%
|
|||
Income tax provision (benefit)
|
—
|
|
|
(970
|
)
|
|
970
|
|
|
(100
|
)%
|
|||
Net (loss)
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
|
$
|
(3,629
|
)
|
|
28
|
%
|
|
|
Nine Months Ended September 30,
|
||||||
|
|
2018
|
|
2017
|
||||
Reconciliation of net (loss):
|
|
|
|
|
||||
Net (loss)
|
|
$
|
(16,608
|
)
|
|
$
|
(12,979
|
)
|
Adjustments:
|
|
|
|
|
||||
Change in fair value of acquisition note payable
|
|
(68
|
)
|
|
114
|
|
||
Change in fair value of warrant liability
|
|
(2,858
|
)
|
|
3,927
|
|
||
Adjusted net (loss)
|
|
$
|
(19,534
|
)
|
|
$
|
(8,938
|
)
|
Reconciliation of basic and diluted net (loss) per share:
|
|
|
|
|
||||
Basic and diluted net (loss) per share
|
|
$
|
(0.61
|
)
|
|
$
|
(0.65
|
)
|
Adjustments to net (loss)
|
|
(0.11
|
)
|
|
0.20
|
|
||
Adjusted basic and diluted net (loss) per share
|
|
$
|
(0.72
|
)
|
|
$
|
(0.45
|
)
|
Basic and diluted weighted-average shares outstanding
|
|
27,156
|
|
|
20,059
|
|
|
Nine Months Ended September 30,
|
|
Change
|
|||||||||||||||||
|
2018
|
|
2017
|
|
|
|
|
|||||||||||||
(dollars in thousands)
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|||||||||
Biopharma Services
|
11,099
|
|
|
54
|
%
|
|
$
|
11,175
|
|
|
52
|
%
|
|
$
|
(76
|
)
|
|
(1
|
)%
|
|
Clinical Services
|
6,019
|
|
|
29
|
%
|
|
8,887
|
|
|
41
|
%
|
|
(2,868
|
)
|
|
(32
|
)%
|
|||
Discovery Services
|
3,525
|
|
|
17
|
%
|
|
1,536
|
|
|
7
|
%
|
|
1,989
|
|
|
129
|
%
|
|||
Total Revenue
|
$
|
20,643
|
|
|
100
|
%
|
|
$
|
21,598
|
|
|
100
|
%
|
|
$
|
(955
|
)
|
|
(4
|
)%
|
|
Nine Months Ended
September 30, |
||||||
(in thousands)
|
2018
|
|
2017
|
||||
Cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
(11,439
|
)
|
|
$
|
(10,249
|
)
|
Investing activities
|
720
|
|
|
(2,121
|
)
|
||
Financing activities
|
2,356
|
|
|
7,675
|
|
||
Effect of foreign currency exchange rates on cash and cash equivalents
|
28
|
|
|
—
|
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
(8,335
|
)
|
|
$
|
(4,695
|
)
|
•
|
our ability to close the Merger and Private Placement;
|
•
|
our ability to secure financing and the amount thereof;
|
•
|
our ability to achieve revenue growth and profitability;
|
•
|
the costs for funding the operations we recently acquired and our ability to realize anticipated benefits from the vivoPharm acquisition;
|
•
|
our ability to save money by moving our California operations to New Jersey and North Carolina;
|
•
|
our ability to improve efficiency of billing and collection processes;
|
•
|
our ability to obtain approvals for our new diagnostic tests;
|
•
|
our ability to execute on our marketing and sales strategy for our tests and services and gain acceptance of our tests and services in the market;
|
•
|
our ability to obtain adequate reimbursement from governmental and other third-party payors for our tests and services;
|
•
|
our ability to maintain our present customer base and obtain new customers;
|
•
|
our ability to clinically validate our pipeline of tests currently in development;
|
•
|
the costs of operating and enhancing our laboratory facilities;
|
•
|
our ability to succeed with our cost control initiative;
|
•
|
our ability to satisfy US (FDA) and international regulatory regiments with respect to our tests and services, many of which are new and still evolving;
|
•
|
the costs of maintaining, expanding and protecting our intellectual property portfolio, including potential litigation costs and liabilities;
|
•
|
our ability to manage the costs of manufacturing our tests;
|
•
|
our rate of progress in, and cost of research and development activities associated with, products in research and early development;
|
•
|
the effect of competing technological and market developments;
|
•
|
costs related to expansion; and
|
•
|
other risks and uncertainties discussed in our annual report on Form 10-K for the year ended December 31, 2017, as updated in other reports, as applicable, we file with the Securities and Exchange Commission.
|
•
|
Revenue recognition;
|
•
|
Accounts receivable and bad debts;
|
•
|
Stock-based compensation; and
|
•
|
Warrant liability.
|
•
|
our ability to close the Merger and Private Placement;
|
•
|
our ability to achieve revenue growth and profitability;
|
•
|
our ability to secure financing and the amount thereof;
|
•
|
our ability to save money by moving our California operations to New Jersey and North Carolina;
|
•
|
our ability to achieve profitability by increasing sales of our laboratory tests and services and to continually develop and commercialize novel and innovative laboratory tests and services focused on oncology and immuno-oncology;
|
•
|
our ability to improve efficiency of billing and collection processes;
|
•
|
with respect to our Clinical Services, our ability to obtain reimbursement from governmental and other third-party payors for our tests and services;
|
•
|
our ability to clinically validate our pipeline of tests currently in development;
|
•
|
our ability to execute on our marketing and sales strategy for our tests and services and gain acceptance of our tests and services in the market;
|
•
|
our ability to keep pace with rapidly advancing market and scientific developments;
|
•
|
our ability to satisfy U.S. (including FDA) and international regulatory requirements with respect to our tests and services, many of which are new and still evolving;
|
•
|
our ability to raise additional capital to meet our liquidity needs;
|
•
|
competition from clinical laboratory services companies, tests currently available or new tests that may emerge;
|
•
|
our ability to maintain our clinical collaborations and enter into new collaboration agreements with highly regarded organizations in the cancer field so that, among other things, we have access to thought leaders in the field and to a robust number of samples to validate our tests;
|
•
|
our ability to maintain our present customer base and obtain new customers;
|
•
|
potential product liability or intellectual property infringement claims;
|
•
|
our dependency on third-party manufacturers to supply or manufacture our tests;
|
•
|
our ability to attract and retain a sufficient number of scientists, clinicians, sales personnel and other key personnel with extensive experience in oncology and immuno-oncology, who are in short supply;
|
•
|
our ability to obtain or maintain patents or other appropriate protection for the intellectual property in our proprietary tests and services;
|
•
|
our dependency on the intellectual property licensed to us or possessed by third parties;
|
•
|
our ability to expand internationally and launch our tests and services in emerging markets, such as China and Japan;
|
•
|
our ability to adequately support future growth; and
|
•
|
the risk factors discussed in our annual report on Form 10-K for the year ended December 31, 2017, as updated in other reports, as applicable, that we file with the Securities and Exchange Commission.
|
•
|
if the Merger Agreement is terminated under certain circumstances and certain events occur, we will be required to pay NDX a termination fee of $800,000 plus expenses of up to $450,000 and repay all obligations to NDX under the credit agreement with NDX;
|
•
|
our stock price may decline; and
|
•
|
costs related to the Merger, such as legal, accounting and certain investment banking fees must be paid regardless of whether the Merger is completed.
|
•
|
the market price of our common stock may decline to the extent that the relevant current market price previously reflected a market assumption that the Merger will be completed;
|
•
|
many costs related to the Merger, such as legal, accounting and financial printing fees, must be paid regardless of whether the transactions completed; and
|
•
|
there may be substantial disruption to our business and distraction of our workforce and management team.
|
(1)
|
the transfer of the merger consideration to the exchange agent for the Merger is not subject to Israeli tax withholding;
|
(2)
|
with respect to holders of NDX share capital that are non−Israeli residents, (A) exempting CGI, Merger Sub, the exchange agent, their respective agents or any other payor from any obligation to withhold Israeli tax from any consideration payable or otherwise deliverable pursuant to the Merger Agreement or clarifying that no such obligation exists, or (B) clearly instructing CGI, Merger Sub, the exchange agent, their respective agents or any other payor on how such withholding is to be executed, and in particular, with respect to the classes or categories of holders of NDX share capital from which tax is to be withheld (if any), the rate or rates of withholding to be applied and how to identify any such non−Israeli residents;
|
(3)
|
treats the Merger in accordance with the provisions of Section 104H of the Israeli Income Tax Ordinance [New Version], 1961, and the rules and regulations promulgated thereunder (the “Israeli Tax Ordinance”); and
|
(4)
|
in relation to the consideration to be paid to the holders of NDX ordinary shares (“Section 102 Shares”) issued upon exercise of NDX options granted pursuant to Section 102(b)(2) of the Israeli Tax Ordinance, which will provide, among other things that (A) the payments made in respect of Section 102 Shares that are held by a trustee pursuant to Section 102 of the Israeli Tax Ordinance (the “102 Trustee”) shall not constitute a violation of Section 102 if deposited with the 102 Trustee and released only after the lapse of the minimum trust period required by Section 102, and (B) payments made to the 102 Trustee under the Merger Agreement shall not be subject to withholding of Israeli tax (which ruling may be subject to customary conditions regularly associated with such a ruling).
|
•
|
investors react negatively to the prospects of the combined company’s business and prospects from the Merger;
|
•
|
the effect of the Merger on the combined company’s business and prospects is not consistent with the expectations of financial or industry analysts; or
|
•
|
the combined company does not achieve the perceived benefits of the merger as rapidly or to the extent anticipated by financial or industry analysts.
|
•
|
the attention of CGI’s management may be directed toward the closing of the Merger and related matters and may be diverted from the day-to-day business operations; and
|
•
|
third parties may seek to terminate or renegotiate their relationships with CGI as a result of the Merger, whether pursuant to the terms of their existing agreements with CGI or otherwise.
|
•
|
competing claims for capital resources;
|
•
|
difficulties in assimilating acquired operations, technologies or products;
|
•
|
diversion of management’s attention from CGI’s core business;
|
•
|
risks of undertaking activities or entering markets in which CGI has limited or no prior experience; and
|
•
|
CGI’s management team has limited experience in purchasing and integrating new businesses.
|
•
|
the success of the development, validation and commercialization of the NDX technology;
|
•
|
retention of key management, marketing and technical personnel and the hiring of other appropriate management personnel after the transactions;
|
•
|
the ability of the combined company to increase the sales of products and services;
|
•
|
successfully implementing economies of scale;
|
•
|
success of integration of NDX’s and CGI’s respective businesses;
|
•
|
competitive conditions in the industry.
|
|
|
|
|
|
|
Cancer Genetics, Inc.
|
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|||
Date: November 19, 2018
|
|
|
|
|
|
/s/ John A. Roberts
|
|
|
|
|
|
|
John A. Roberts
|
|
|
|
|
|
|
President and Chief Executive Officer
(Principal Executive and Financial Officer)
|
|
|
|
|
|
|
|
Exhibit
No.
|
|
Description
|
|
|
|
2.1
|
|
|
|
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|
4.1
|
|
|
|
|
|
10.1
|
|
|
|
|
|
10.2
|
|
|
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|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5
|
|
|
|
|
|
10.6
|
|
|
|
|
|
10.7
|
|
|
|
|
|
10.8
|
|
|
|
|
|
10.9
|
|
|
|
|
|
31.1
|
|
|
|
|
|
32.1
|
|
|
|
|
1 Year Cancer Genetics Chart |
1 Month Cancer Genetics Chart |
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