What changed in this filing

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Item 1. Financial Statements

2020-08-13 compared with 2020-06-18 · 212 added, 90 removed, 246 unchanged (55% of the section changed)

1 unchanged sentence

BIONANO GENOMICS, INC.

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Balance Sheets

2020 December 31,

Current assets:

5 unchanged sentences

Property and equipment, net 2,550,000 1,950,000

Liabilities and stockholders’ equity (deficit)

Total assets $ 27,204,000 $ 30,208,000

Liabilities and stockholders’ equity

Current liabilities:

4 unchanged sentences

Total current liabilities 19,508,000 26,367,000

Long-term debt, net of current portion 1,775,000 —

Long-term contract liabilities 84,000 183,000

2 unchanged sentences

Commitments and contingencies

Stockholders’ equity (deficit):

Common stock, $0.0001 par value, 200,000,000 and 200,000,000 shares authorized at March 31, 2020 and December 31, 2019, respectively;

37,752,000 and 34,274,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

Stockholders’ equity:

Common stock, $ 0.0001 par value, 200,000,000 and 200,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively;

91,975,000 and 34,274,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

126,989,000 106,188,000

Accumulated deficit

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

( 121,161,000 ) ( 102,577,000 )

Total stockholders’ equity

5,837,000 3,614,000

Total liabilities and stockholders’ equity

$ 27,204,000 $ 30,208,000

See accompanying notes to the condensed consolidated financial statements

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Product revenue $ 940,000 $ 2,021,000 $ 1,923,000 $ 3,708,000

10 unchanged sentences

Loss from operations ( 7,435,000 ) ( 6,844,000 ) ( 17,197,000 ) ( 13,029,000 )

Other income (expenses):

Other expenses:

Interest expense ( 561,000 ) ( 645,000 ) ( 1,322,000 ) ( 959,000 )

Loss on debt extinguishment — — — ( 1,333,000 )

Other income (expenses)

Other expenses ( 73,000 ) ( 171,000 ) ( 55,000 ) ( 186,000 )

Total other expenses ( 634,000 ) ( 816,000 ) ( 1,377,000 ) ( 2,478,000 )

1 unchanged sentence

Provision for income taxes ( 5,000 ) ( 5,000 ) ( 10,000 ) ( 9,000 )

Net loss $ ( 8,074,000 ) $ ( 7,665,000 ) $ ( 18,584,000 ) $ ( 15,516,000 )

Net loss per share, basic and diluted $ ( 0.09 ) $ ( 0.71 ) $ ( 0.29 ) $ ( 1.47 )

Weighted-average common shares outstanding basic and diluted

90,907,000 10,860,000 63,238,000 10,542,000

See accompanying notes to the condensed consolidated financial statements.

1 unchanged sentence

Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)

Total Stockholders' Equity (Deficit)

Common Stock Additional

Capital Accumulated

Deficit Total Stockholders' Equity (Deficit)

Shares Amount

Balance at January 1, 2019

10,055,000 $ 1,000 $ 82,898,000 $ ( 72,762,000 ) $ 10,137,000

Stock option exercises

42,000 — 54,000 — 54,000

Stock-based compensation expense

— — 289,000 — 289,000

Issue common stock

748,000 — 2,410,000 — 2,410,000

Issue warrants for debt

— — 630,000 — 630,000

Issue stock for debt

— — 202,000 — 202,000

— — — ( 7,852,000 ) ( 7,852,000 )

Balance at March 31, 2019

10,845,000 1,000 86,483,000 ( 80,614,000 ) 5,870,000

Stock option exercises

9,000 — 11,000 — 11,000

Stock-based compensation expense

— — 336,000 — 336,000

Issue stock for employee stock purchase plan

44,000 — 103,000 — 103,000

— — — ( 7,665,000 ) ( 7,665,000 )

Balance at June 30, 2019

10,898,000 1,000 86,933,000 ( 88,279,000 ) ( 1,345,000 )

Stock-based compensation expense

— — 364,000 — 364,000

— — — ( 6,398,000 ) ( 6,398,000 )

Balance at September 30, 2019

10,898,000 1,000 87,297,000 ( 94,677,000 ) ( 7,379,000 )

Stock-based compensation expense

— — 357,000 — 357,000

Issue common stock, net of issuance costs

11,081,000 1,000 8,549,000 — 8,550,000

Issue stock for covenant waiver

573,000 — 504,000 — 504,000

Issue stock for employee stock purchase plan

44,000 — 39,000 — 39,000

Issue stock for warrant exercises

11,678,000 1,000 9,396,000 — 9,397,000

Reduce warrant exercise price for covenant waiver

— — 46,000 — 46,000

— — — ( 7,900,000 ) ( 7,900,000 )

Balance at December 31, 2019

34,274,000 3,000 106,188,000 ( 102,577,000 ) 3,614,000

Stock-based compensation expense

— — 328,000 — 328,000

Issue stock for warrant exercises

3,478,000 — 2,355,000 — 2,355,000

— — — $ ( 10,510,000 ) ( 10,510,000 )

Balance at March 31, 2020

37,752,000 $ 3,000 $ 108,871,000 $ ( 113,087,000 ) $ ( 4,213,000 )

Stock-based compensation expense

— — 328,000 — 328,000

Issue common stock, net of issuance costs

16,896,000 2,000 16,364,000 — 16,366,000

Issue stock for employee stock purchase plan

44,000 — 21,000 — 21,000

Issue stock for covenant waiver

873,000 — 300,000 — 300,000

Issue stock for warrant exercises

36,410,000 4,000 1,105,000 $ — 1,109,000

Net loss $ ( 8,074,000 ) ( 8,074,000 )

Balance at June 30, 2020

91,975,000 9,000 126,989,000 ( 121,161,000 ) 5,837,000

See accompanying notes to the condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Six Months Ended

Operating activities:

$ ( 18,584,000 ) $ ( 15,516,000 )

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

Depreciation and amortization expense

591,000 537,000

Non-cash interest

651,000 296,000

Stock-based compensation

656,000 625,000

Provision for bad debt expense

Loss on debt extinguishment

Employee stock purchase plan compensation — 103,000

Changes in operating assets and liabilities:

Accounts receivable

1,795,000 ( 469,000 )

( 1,037,000 ) ( 1,954,000 )

Prepaid expenses and other current assets

244,000 288,000

Accounts payable

150,000 2,257,000

Accrued expenses and contract liabilities

( 1,006,000 ) ( 368,000 )

Net cash used in operating activities

( 15,250,000 ) ( 12,868,000 )

Investing Activities:

Purchases of property and equipment

Net cash used in investing activities — ( 30,000 )

Financing activities:

1 unchanged sentence

Repayment of term-loan debt

( 5,000,000 ) ( 10,812,000 )

Proceeds from PPP Loan 1,775,000 —

Proceeds from borrowing from line of credit

760,000 1,106,000

Repayments of borrowing from line of credit

( 2,258,000 ) ( 306,000 )

Proceeds from sale of common stock, net of offering costs

16,366,000 2,410,000

Proceeds from sale of common stock under employee stock purchase plan 21,000 —

Proceeds from warrant and option exercises

Net cash provided by / (used in) financing activities

Net (decrease) increase in cash and cash equivalents

3,469,000 65,000

Net cash provided by financing activities

15,133,000 11,670,000

Net decrease in cash and cash equivalents

( 117,000 ) ( 1,228,000 )

Cash and cash equivalents at beginning of period

17,311,000 16,523,000

Cash and cash equivalents at end of period

$ 17,194,000 $ 15,295,000

Supplemental cash flow disclosures:

Cash paid for interest

$ 715,000 $ 245,000

Supplemental disclosure of non-cash investing and financing activities:

1 unchanged sentence

Fair value of warrants issued with debt

$ — $ 630,000

Transfer of instruments and servers from inventory to property and equipment

$ 1,191,000 $ —

Issue common stock for covenant waiver $ 300,000

Fair value of stock issued with debt

$ — $ 202,000

See accompanying notes to the condensed consolidated financial statements

19 unchanged sentences

The Company has experienced recurring net losses from operations, negative cash flows from operating activities, financial covenant breaches, and significant accumulated deficit since its inception and expects to continue to incur net losses into the foreseeable future.

The Company had an accumulated deficit of $113.1 million as of March 31, 2020 .

The Company had cash and cash equivalents of $8.1 million as of March 31, 2020 .

The Company had an accumulated deficit of $ 121.2 million as of June 30, 2020.

The Company had cash and cash equivalents of $ 17.2 million as of June 30, 2020.

Management expects operating losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to research and commercialization efforts.

Management has prepared cash flow forecasts which indicate that based on the Company’s expected operating losses, negative cash flows and debt obligations, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements for the three months ended March 31, 2020 are issued.

In March 2020, the World Health Organization announced the novel coronavirus COVID-19 as a global pandemic.

COVID-19 continues to spread in the United States and globally and as a result the Company is subject to additional risks and uncertainties.

The degree to which our business will be affected by the COVID-19 pandemic is highly uncertain.

The Company expects the disruption to be temporary, however, the Company cannot reasonably estimate the duration of the disruption at this time.

The negative effects of COVID-19 could have a material impact on the Company’s financial results.

To comply with Governmental authorities in the jurisdictions in which the Company operates, the Company has temporarily reduced its business operations to comply with social distancing restrictions.

The degree to which the Company's business will be affected by the COVID-19 pandemic is highly uncertain.

The negative effects of COVID-19 could continue to have a material impact on the Company’s financial results.

To comply with various applicable guidelines and legal requirements in the jurisdictions in which the Company operates, the Company has temporarily reduced its business operations in response to stay-at-home orders, travel restrictions and other social distancing measures.

The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational reductions.

This overall reduction in activity has resulted in a decrease in sales which has negatively impacted the Company’s first quarter 2020 financial results.

This overall reduction in activity has contributed to a decrease in sales which has negatively impacted the Company’s first and second quarter 2020 financial results.

Future effects of COVID-19 are unknown and the Company’s financial results may continue to be negatively affected in the future.

There may be long-term negative effects of the COVID-19 pandemic, even after the outbreak has subsided.

There may be long-term negative effects of the COVID-19 pandemic, even after it has subsided.

Specifically, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, reduction in consumer confidence, or any similar negative economic condition.

1 unchanged sentence

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding.

The Company has plans to raise additional capital through equity offerings or debt financings to fulfill its operating and capital requirements for at least 12 months and to maintain compliance with certain financial covenants in the Innovatus LSA (as defined

The Company’s plans include continuing to fund its operating losses and capital funding needs through equity or debt financings, strategic collaborations, licensing arrangements, asset sales, or other arrangements.

However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all.

As a publicly-traded company on The Nasdaq Stock Market LLC ("Nasdaq"), the Company is required to comply with rules and regulations issued by Nasdaq.

If the Company is not able to comply with such rules and regulations, which it has not met from time-to-time since the Company's initial public offering in August 2018, the Company may not be able to maintain its Nasdaq listing.

The Company will need to raise additional capital through equity offerings or debt financings to fulfill its operating and capital requirements for at least 12 months and to maintain compliance with certain financial covenants in the Innovatus LSA (as defined below).

To raise such additional capital, the Company may pursue equity or debt financings, strategic collaborations, licensing

arrangements, asset sales, or other arrangements.

However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all, and may not be able to comply with current covenants.

Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.

2 unchanged sentences

The Company also may have to reduce marketing, customer support or other resources devoted to its products or cease operations.

As a result, the aforementioned conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year after the date the financial statements for the three months ended March 31, 2020 are issued.

As a result, the aforementioned conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued.

Such financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the outcome of this uncertainty.

In April 2020, the Company received a letter (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising the Company that for 30 consecutive trading days preceding the date of the Notice, the bid price of the Company’s common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

The Notice has no effect on the listing of the Company’s common stock at this time, and the Company’s common stock continues to trade on The Nasdaq Capital Market under the symbol “BNGO.”

Under Nasdaq Listing Rule 5810(c)(3)(A), the Company has 180 calendar days following the date of the Notice to regain compliance with the Minimum Bid Price Requirement.

However, due to recent extraordinary market conditions, Nasdaq has determined to toll the compliance period for the Minimum Bid Price Requirement through June 30, 2020 (the “Tolling Period”).

As a result, the compliance Period will end on December 28, 2020 (the “Compliance Period”) instead of October 20, 2020.

If at any time during the Tolling Period or the Compliance Period the closing bid price of the Company’s common stock is at least $1.00 for a minimum of 10 consecutive business days, the Company will regain compliance with the Minimum Bid Price Requirement and its common stock will continue to be eligible for listing on The Nasdaq Capital Market absent noncompliance with any other requirement for continued listing.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the Compliance Period, the Company may be afforded an additional 180 calendar days to regain compliance with the Minimum Bid Price Requirement (the “Additional Compliance Period”) if on the last day of the Compliance Period the Company is in compliance with the market value of publicly held shares requirement for continued listing as well as all other standards for initial listing of its common stock on The Nasdaq Capital Market (other than the Minimum Bid Price Requirement), unless the Company does not indicate its intent to cure the deficiency, or if it appears to Nasdaq that it is not possible for the Company to cure the deficiency.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the Compliance Period, or the Additional Compliance Period, if applicable, the Company’s common stock will be subject to delisting.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options to regain compliance with the Minimum Bid Price Requirement.

For example, the Company is seeking stockholder approval at its 2020 Annual Meeting of Stockholders of a series of alternate amendments to the Company’s Amended and Restated Certificate of Incorporation (each, a “Reverse Split Amendment”), to among other things, effect, at the discretion of the Company’s Board of Directors, a reverse stock split of the Company’s common stock, which may, absent other factors, proportionately increase the market price of the Company’s common stock above $1.00 per share.

As a publicly-traded company listed on The Nasdaq Stock Market LLC ("Nasdaq"), the Company is required to comply with rules and regulations issued by Nasdaq.

In April 2020, we received a Notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that for 30 consecutive trading days preceding the date of the Notice, the bid price of our common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

The Notice has no effect on the listing of our common stock at this time, and our common stock continues to trade on The Nasdaq Capital Market under the symbol “BNGO.” We intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the Minimum Bid Price Requirement.

Significant Accounting Policies

During the three months ended March 31, 2020 , there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 .

Recent Issued But Not Yet Adopted Accounting Pronouncements

During the six months ended June 30, 2020, there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.

Recently Issued But Not Yet Adopted Accounting Pronouncements

In April 2012, the Jump-Start Our Business Startups Act (the “JOBS Act”) was signed into law.

7 unchanged sentences

The Company is in the process of evaluating the impact of adoption of the lease accounting guidance on the consolidated financial statements.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses:

Measurement of credit Losses on Financial Instruments (ASU 2016-13) , which amends the impairment model by requiring entities to use a forward looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities.

The standard is effective for the company beginning in the first quarter of 2023, with early adoption permitted.

the Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

In August 2020, the FASB issued ASU No.

2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06") , which simplifies accounting for convertible instruments by removing major seperation models required under current U.S.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas.

The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years, beginning December 15, 2021.

For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and adoption must be as of the beginning of the Company's annual fiscal year.

The company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Net Loss Per Share

5 unchanged sentences

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):

2020 June 30,

Stock options 2,988,000 1,717,000

Warrants 79,914,000 4,224,000

Total 82,902,000 5,941,000

Revenue Recognition

Revenue by Source

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Instruments $ 229,000 $ 1,591,000 $ 763,000 $ 2,892,000

Consumables 711,000 430,000 1,160,000 816,000

Total product revenue 940,000 2,021,000 1,923,000 3,708,000

Services and other

Service and other 242,000 154,000 395,000 319,000

Total revenue $ 1,182,000 $ 2,175,000 $ 2,318,000 $ 4,027,000

Revenue by Geographic Location

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

$ % $ % $ % $ %

North America $ 788,000 66 % $ 1,379,000 64 % $ 1,514,000 66 % $ 2,218,000 55 %

EMEIA 315,000 27 % 507,000 23 % 705,000 30 % 1,425,000 35 %

Asia Pacific 79,000 7 % 289,000 13 % 99,000 4 % 384,000 10 %

Total $ 1,182,000 100 % $ 2,175,000 100 % $ 2,318,000 100 % $ 4,027,000 100 %

The table above provides revenue from contracts with customers by business and geographic region on a disaggregated basis.

1 unchanged sentence

EMEIA consists of Europe, the Middle East, India and Africa.

Asia Pacific includes China, Japan, South Korea, Singapore and Australia.

For the three months ended March 31, 2020 and 2019 , the United States represented 64% and 45% , and China represented 0% and 4% , respectively of total revenue.

Pacific includes China, Japan, South Korea, Singapore and Australia.

For the three months ended June 30, 2020 and 2019, the United States represented 60 % and 63 % of total revenue, and for the six months ended June 30, 2020 and 2019, 63 % and 55 %, respectively.

Remaining Performance Obligations

As of March 31, 2020 , the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was $445,000 .

As of June 30, 2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was $ 373,000 .

These remaining performance obligations primarily relate to extended warranty and support and maintenance obligations.

1 unchanged sentence

Warranty revenue is included in Service and other revenue.

The Company recognized revenue of $127,000 and $89,000 during the three months ended March 31, 2020 and 2019 , respectively, which was included in the contract liability balance at the end of the previous year.

The Company recognized revenue of $ 106,000 and $ 67,000 during the three months ended June 30, 2020 and 2019, respectively, and revenue of $ 232,000 and $ 156,000 during the six months ended June 30, 2020 and 2019, respectively, which was included in the contract liability balance at the end of the previous year.

Concentrations

Accounts receivable is subject to concentration risk whenever a customer has a balance that meets or exceeds 10% of the total balance.

As of March 31, 2020 and December 31, 2019 , one customer represented 17% and 10% , respectively, of the Company's accounts receivable balance.

As of June 30, 2020 and December 31, 2019, one customer represented 14 % and 10 %, respectively, of the Company's accounts receivable balance.

Balance Sheet Account Details

2020 December 31,

Accounts receivable, net:

1 unchanged sentence

Less allowance for doubtful accounts ( 1,845,000 ) ( 555,000 )

$ 3,249,000 $ 6,334,000

The Company extends credit to its customers in the normal course of business based upon an evaluation of each customer’s credit history, financial condition, and other factors.

Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due, and economic and other factors.

Bad debt expense is recorded as necessary to maintain an appropriate level of allowance for doubtful accounts in selling, general and administrative expense.

During the three months ended March 31, 2020, for a portion of the Company's accounts, the Company determined that its collection efforts had been exhausted and deemed the accounts receivables balance as uncollectible.

The Company recorded bad debt expense of $958,000 charged against selling, general, and administrative expense and increased its allowance for doubtful accounts from $555,000 as of December 31, 2019 to $1,513,000 .

During the three and six months ended June 30, 2020, the Company recorded bad debt expense of $ 332,000 and $ 1,290,000 respectively.

These amounts are included in selling, general and administrative expenses.

2020 December 31,

Materials and supplies $ 2,180,000 $ 951,000

Finished goods 1,110,000 2,493,000

$ 3,290,000 $ 3,444,000

Paycheck Protection Program

2 unchanged sentences

The PPP Loan is scheduled to mature on April 17, 2022 (the “Maturity Date”), bears interest at a rate of 1.00 % per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.

Commencing November 17, 2020, the Company is required to pay regular monthly payments in an amount equal to one month’s accrued interest.

All interest which accrues during the initial six months of the loan period will be deferred and payable on the Maturity Date.

The amounts outstanding under the PPP Loan may be prepaid by the Company at any time prior to maturity without penalty.

The PPP Loan is evidenced by a promissory note, dated as of April 17, 2020, issued by East West Bank (the “PPP Lender”), which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties.

1 unchanged sentence

Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of such loan granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”).

Pursuant to the Paycheck Protection Program Flexibility Act (the “PPPFA”), enacted on June 5, 2020, the Company may continue to use loan proceeds on Eligible Costs through October 2, 2020, or the date that is 24 weeks from the PPP Loan origination date (the “Covered Period”).

The Company is continuing to evaluate guidance released by the SBA regarding qualification for forgiveness of the PPP Loan, however, no assurance is provided that forgiveness for any portion of the Company’s PPP Loan will be obtained.

Under the PPPFA, payments of principal and interest due under the PPP Loan are deferred until the date on which the SBA remits the forgiveness amount, if any, back to the PPP Lender, or if forgiveness isn't sought within 10 months after the last day of the Covered Period, until the date that is 10 months from the last day of the Covered Period.

The amounts outstanding under the PPP Loan may be prepaid by the Company at any time prior to maturity without penalty.

In order to apply for the PPP Loan, the Company was required to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support the Company’s ongoing operations.

2 unchanged sentences

The carrying value of the Company's debt for the periods presented was as follows:

2020 December 31,

Term Loans $ 15,741,000 $ 20,473,000

Revolver — 1,498,000

PPP Loan 1,775,000 —

Total principal 17,516,000 21,971,000

4 unchanged sentences

Interest on the Term Loans is due on the first of each month at a rate of 10.25 % per annum in cash or a discounted rate of 7.25 % in cash with 3.0 % of the 10.25 % per annum rate added to the principal of the loan and subject to accruing interest through the end of the interest only payment period, which ends March 1, 2022.

At inception, the Company elected to pay interest in cash

at a rate of 7.25% per annum and have 3.0% per annum of the interest added back to the outstanding principal.

As of March 31, 2020 , the effective interest rate, including debt issuance costs, for Term Loans was 13.7% .

At inception, the Company elected to pay interest in cash at a rate of 7.25 % per annum and have 3.0 % per annum of the interest added back to the outstanding principal.

As of June 30, 2020, the effective interest rate, including debt issuance costs, for Term Loans was 16.7 %.

Beginning in April 2022, the Company must make 24 equal monthly payments of principal and interest with a final maturity date in March 2024, which may be earlier due to an event of default if not cured within time specified.

5 unchanged sentences

(1) a liquidity covenant requiring the Company to maintain a minimum cash balance at all times in a collateral account;

(2) a revenue covenant requiring the Company to meet certain minimum revenue targets measured at the end of each calendar quarter.

(2) a revenue

covenant requiring the Company to meet certain minimum revenue targets measured at the end of each calendar quarter.

The Innovatus LSA also includes standard events of default, including a provision that Innovatus could declare an event of default upon the occurrence of any event that it interprets as having a material adverse change in the Company's business, operations, or condition, a material impairment on the Company's ability to pay the secured obligations under the Innovatus LSA, or upon a material adverse effect on the collateral under the agreement, thereby requiring us to repay the loan immediately, together with a prepayment fee and other applicable fees.

As of March 31, 2020, the Company has not received any notification or indication from Innovatus to invoke the material adverse change clause.

As of June 30, 2020, the Company has not received any notification or indication from Innovatus to invoke the material adverse change clause.

However, due to the Company’s current cash flow position and the substantial doubt about its ability to continue as a going concern, the entire principal amount of the Term Loans are presented as short-term.

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In connection with the Second Amendment, the Company was obligated to pay Innovatus a waiver fee in the amount of $ 200,000 and a prepayment fee of $ 100,000 , payable in cash or in shares of the Company’s common stock at the Company's election, no later than following completion of the Equity Event.

As described in Note 6, the Company completed the follow-on offering in April 2020 that constituted an Equity Event under the Second Amendment.

As described in Note 6 below, the Company completed the follow-on offering in April 2020 that constituted an Equity Event under the Second Amendment.

A portion of the proceeds from the follow-on offering were used to pay-down $ 2.9 million of principal balance outstanding under the Innovatus term loan in accordance with the Second Amendment.

In addition, the Company issued 872,601 shares of its common stock to Innovatus to satisfy the $ 200,000 waiver fee and $ 100,000 prepayment fee due under the Second Amendment.

The Company was in compliance with all financial covenants under the Innovatus LSA for the three months ended March 31, 2020.

The Company was in compliance with all financial covenants under the Innovatus LSA for the three months ended June 30, 2020.

Stockholders’ Equity and Stock-Based Compensation

2 unchanged sentences

Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock.

public offering price of each share of common stock and accompanying common warrant was $0.33 and $0.329 for each pre-funded warrant.

The public offering price of each share of common stock and accompanying common warrant was $ 0.33 and $ 0.329 for each pre-funded warrant.

The pre-funded warrants are immediately exercisable at a price of $ 0.001 per share of common stock.

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The gross proceeds to the Company were approximately $ 18.0 million before deducting underwriting discounts and commissions and other offering expenses.

Stock Warrants

A summary of the Company’s warrant activity for the six months ended June 30, 2020 was as follows:

Shares of Stock under Warrants Weighted-

Price Weighted-

Term Aggregate

Outstanding at January 1, 2020 24,406,000 $ 1.76 4.82 $ 7,933,000

Granted 95,396,000 0.22 4.78

Exercised ( 39,888,000 ) 0.09 15,863,000

Outstanding at June 30, 2020 79,914,000 $ 0.76 4.62 $ 18,232,000

Vested and exercisable at June 30, 2020 79,914,000 $ 0.76 4.62 $ —

Warrant Exercise Update

From July 1, 2020 through August 12, 2020, the Company has received gross proceeds of approximately $ 13.9 million pursuant to the exercise of outstanding and common and pre-funded warrants to purchase an aggregate of 46,505,000 shares of the Company's common stock.

Warrant Inducement

As previously reported, the Company issued warrants (the “Original Warrants”) to purchase shares of the Company’s Common Stock to certain investors in the Company’s underwritten public offering completed on October 23, 2019.

The Original Warrants were immediately exercisable upon issuance at an exercise price per share of $ 0.86 and are set to expire on October 23, 2024.

On March 2, 2020, the Company entered into a Warrants Amendment and Agreement (the “Inducement Agreement”) with certain holders (“Holders”) of the Original Warrants that are exercisable for an aggregate of up to 3,200,000 shares of Common Stock.

The Inducement Agreement provided that, commencing immediately following the delivery to the Holders of a prospectus supplement (the “Prospectus Supplement”) relating to the impact of the Inducement Agreement on the Original Warrants and ending at 9:15 a.m.

Eastern Time on the business day following the date of such delivery (the “Modified Exercise Price Term”), the exercise price per share for the Original Warrants will be equal to $ 0.75 but only with respect to a cash exercise under Section 1(a) of the Original Warrants.

In addition, the Company and each Holder agreed that if and only if the Holders exercise for cash all of their Original Warrants as amended pursuant to the Inducement Agreement during the Modified Exercise Price Term, the Company will issue to each Holder a new warrant (collectively, the “New Warrants”) to purchase up to the same number of shares of Common Stock issued to such Holder pursuant to the exercise of its Original Warrant during the Modified Exercise Price Term.

The Company delivered the Prospectus Supplement on March 2, 2020 and each Holder exercised all of their Original Warrants for cash.

As a result, on March 3, 2020, the Company issued the New Warrants to the Holders.

The New Warrants are exercisable at an exercise price per share of $ 1.06 commencing on the six-month anniversary of the issuance date, and will terminate on the date that is five years, six months following the issuance date.

The New Warrants and the shares of Common Stock issuable upon exercise of the New Warrants were not registered under the Securities Act of 1933, as amended (the "Securities Act"), and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act.

Stock-Based Compensation

Stock Options

A summary of the Company’s stock option activity for the three months ended March 31, 2020 was as follows:

Shares of Stock under Stock Options

A summary of the Company’s stock option activity for the six months ended June 30, 2020 was as follows:

Shares of Stock under Stock Options Weighted-

Price Weighted-

Term Aggregate

Outstanding at January 1, 2020 1,743,000 $ 5.73 8.2 $ 4,000

Outstanding at March 31, 2020

Vested and exercisable at March 31, 2020

For the three months ended March 31, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $1.04 and $2.42 per share, respectively.

Granted 1,591,000 0.88

Exercised — — $ —

Canceled ( 346,000 ) 4.04

Outstanding at June 30, 2020 2,988,000 $ 3.34 8.46 $ 22,000

Vested and exercisable at June 30, 2020 1,021,000 $ 5.65 6.93 $ —

For the three months ended June 30, 2020 and 2019, the Company granted to its employees options to purchase 443,000 and 42,000 shares with a weighted average exercise price of $ 0.46 and $ 3.00 per share, respectively.

For the six months ended June 30, 2020 and 2019, the Company granted to its employees options to purchase 1,591,000 and 545,000 shares with a weighted average exercise price of $ 0.88 and $ 4.15 per share, respectively.

For the three months ended June 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $ 0.30 and $ 1.71 per share, respectively.

For the six months ended June 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $ 0.55 and $ 2.37 per share, respectively.

The Company recognized stock-based compensation expense for the periods presented were as follows:

Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Research and development $ 66,000 $ 58,000 $ 133,000 $ 111,000

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Three Months Ended

June 30, Six Months Ended

2020 2019 2020 2019

Risk-free interest rate 0.4 % 2.0 % 1.1 % 2.4 %

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Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 %

Stock Warrants

A summary of the Company’s warrant activity for the three months ended March 31, 2020 was as follows:

Shares of Stock under Warrants

Outstanding at January 1, 2020

Outstanding at March 31, 2020

Vested and exercisable at March 31, 2020

Warrant Inducement

The Original Warrants were immediately exercisable upon issuance at an exercise price per share of $0.86 and are set to expire on October 23, 2024.

Eastern Time on the business day following the date of such delivery (the “Modified Exercise Price Term”), the exercise price per share for the Original Warrants will be equal to $0.75 but only with respect to a cash exercise under Section 1(a) of the Original Warrants.

The Company delivered the Prospectus Supplement on March 2, 2020 and each Holder exercised all of their Original Warrants for cash.

As a result, on March 3, 2020, the Company issued the New Warrants to the Holders.

The New Warrants are exercisable at an exercise price per share of $1.06 commencing on the six -month anniversary of the issuance date, and will terminate on the date that is five years and six months following the issuance date.

The Original Warrants and the underlying shares of Common Stock were registered pursuant to the Company’s Registration Statement on Form S-1 (File No.

333-233828), as amended, filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended (“Securities Act”), which became effective on October 21, 2019, and the related prospectus dated October 21, 2019.

The New Warrants and the shares of Common Stock issuable upon exercise of the New Warrants were not registered under the Securities Act, and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act.

Legal Proceedings

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The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP).

The CARES Act had no material impact on the Company’s income tax provision for the three months ended March 31, 2020.

The CARES Act did not have a material impact on the Company’s income tax provision for the three months ended June 30, 2020.

The Company continues to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements