UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberQuarterly Period Ended June 30, 2017
Commission file number File Number 001-35817
VYANT BIO, INC.
(Exact name of registrant as specified in itsthe charter)
| Delaware | 04-3462475 | |
(State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification Number) | |
2 Executive Campus
2370 State Route 17 North 2
Cherry Hill, NJ 07070
(Address including zip code, andof principal executive offices) (Zip Code)
Registrant’s telephone number, including area code,code: (201)479-8126
Securities registered pursuant to Section 12(b) of registrant’s principal executive offices)
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $0.0001 Par Value | ||||
| VYNT | 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
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes
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”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 registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards 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
There were 24,253,831 shares of common stock, par value $0.0001 of Cancer Genetics,Vyant Bio, Inc. outstanding.
Vyant Bio, Inc. and Subsidiaries
INDEX
| Page No. | ||
| Part I | Financial Information | 3 |
| Item 1: | ||
| 3 | ||
| Item 2: | ||
| 22 | ||
| Item 3: | ||
| 31 | ||
| Item 4: | ||
| 31 | ||
| Part II | Other Information | 32 |
| Item 1: | ||
| 32 | ||
| Item 1A: | ||
| 32 | ||
| Item 2: | ||
| 32 | ||
| Item 3: | ||
| 32 | ||
| Item 4: | ||
| 32 | ||
| Item 5: | ||
| 32 | ||
| Item 6: | Exhibits | 33 |
| Signatures | 34 | |
Part I — FINANCIAL INFORMATION
Item 1.1 Financial Statements (Unaudited)
Vyant Bio, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(unaudited)
(Shares and USD in thousands)
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 11,702 | $ | 20,608 | ||||
| Trade accounts and other receivables | 484 | 434 | ||||||
| Inventory | 437 | 475 | ||||||
| Prepaid expenses and other current assets | 1,524 | 895 | ||||||
| Assets of discontinuing operations – current | 2,101 | 802 | ||||||
| Total current assets | 16,248 | 23,214 | ||||||
| Non-current assets: | ||||||||
| Fixed assets, net | 1,101 | 1,020 | ||||||
| Operating lease right-of-use assets, net | 1,691 | 673 | ||||||
| Long-term prepaid expenses and other assets | 1,154 | 1,221 | ||||||
| Assets of discontinuing operations – non-current | 6,617 | 11,508 | ||||||
| Total non-current assets | 10,563 | 14,422 | ||||||
| Total assets | $ | 26,811 | $ | 37,636 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,040 | $ | 740 | ||||
| Accrued expenses | 1,334 | 764 | ||||||
| Deferred revenue | 72 | 74 | ||||||
| Obligations under operating leases, current portion | 293 | 174 | ||||||
| Obligation under finance lease, current portion | 161 | 157 | ||||||
| Liabilities of discontinuing operations – current | 4,607 | 3,522 | ||||||
| Total current liabilities | 7,507 | 5,431 | ||||||
| Obligations under operating leases, less current portion | 1,463 | 516 | ||||||
| Obligations under finance leases, less current portion | 217 | 293 | ||||||
| Long-term debt | 57 | 57 | ||||||
| Liabilities of discontinuing operations – non-current | 780 | 49 | ||||||
| Total liabilities | $ | 10,024 | $ | 6,346 | ||||
| Commitments and contingencies | - | |||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, authorized shares $ par value, issued | - | - | ||||||
| Common stock, authorized shares, $ par value, and shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively | 3 | 3 | ||||||
| Additional paid-in capital | 110,627 | 110,174 | ||||||
| Accumulated deficit | (93,781 | ) | (78,813 | ) | ||||
| Accumulated comprehensive loss | (62 | ) | (74 | ) | ||||
| Total stockholders’ equity | 16,787 | 31,290 | ||||||
| Total liabilities and stockholders’ equity | $ | 26,811 | $ | 37,636 | ||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
| 3 |
Vyant Bio, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(Shares and USD in thousands, except par value)per share amounts)
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Three months ended June 30, | Six months ended June, 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue: | ||||||||||||||||
| Service | $ | - | $ | 213 | $ | 94 | $ | 310 | ||||||||
| Product | 165 | 116 | 374 | 222 | ||||||||||||
| Total revenue | 165 | 329 | 468 | 532 | ||||||||||||
| Operating costs and expenses: | ||||||||||||||||
| Cost of goods sold – service | - | 103 | 38 | 167 | ||||||||||||
| Cost of goods sold – product | 304 | 345 | 652 | 741 | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Research and development | 1,688 | 910 | 3,239 | 1,730 | ||||||||||||
| Selling, general and administrative | 2,509 | 2,737 | 5,272 | 3,951 | ||||||||||||
| Merger related costs | - | 165 | - | 2,310 | ||||||||||||
| Total operating costs and expenses | 4,501 | 4,260 | 9,201 | 8,899 | ||||||||||||
| Loss from operations | (4,336 | ) | (3,931 | ) | (8,733 | ) | (8,367 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Change in fair value of warrant liability | - | - | - | 214 | ||||||||||||
| Change in fair value of share-settlement obligation derivative | - | - | - | (250 | ) | |||||||||||
| Loss on debt conversions | - | (2,518 | ) | |||||||||||||
| Other income (expense), net | - | (28 | ) | - | (28 | ) | ||||||||||
| Interest income (expense), net | 11 | 5 | 2 | (363 | ) | |||||||||||
| Total other income (expense) | 11 | (23 | ) | 2 | (2,945 | ) | ||||||||||
| Loss from continuing operations before income taxes | (4,325 | ) | (3,954 | ) | (8,731 | ) | (11,312 | ) | ||||||||
| Income tax expense (benefit) | - | - | - | - | ||||||||||||
| Loss from continuing operations | (4,325 | ) | (3,954 | ) | (8,731 | ) | (11,312 | ) | ||||||||
| Discontinuing operations (net of $44 tax benefit in 2022 and $0 in 2021) | (1,480 | ) | (232 | ) | (6,237 | ) | (240 | ) | ||||||||
| Net loss | (5,805 | ) | (4,186 | ) | (14,968 | ) | (11,552 | ) | ||||||||
| Cumulative translation adjustment | 8 | - | 12 | - | ||||||||||||
| Comprehensive loss | $ | (5,797 | ) | $ | (4,186 | ) | $ | (14,956 | ) | $ | (11,552 | ) | ||||
| Net loss per share attributed to common stock – basic and diluted: | ||||||||||||||||
| Net loss per share from continuing operations | $ | (0.15 | ) | $ | (0.13 | ) | $ | (0.30 | ) | $ | (0.70 | ) | ||||
| Net loss per share from discontinuing operations | (0.05 | ) | (0.01 | ) | (0.21 | ) | (0.02 | ) | ||||||||
| Net loss per share | $ | (0.20 | ) | $ | (0.14 | ) | $ | (0.51 | ) | $ | (0.72 | ) | ||||
| Weighted average shares outstanding: | ||||||||||||||||
| Weighted average common shares outstanding - Basic and Diluted | 29,413 | 28,986 | 29,214 | 16,156 | ||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
| 4 |
Vyant Bio, Inc.
Consolidated Statements of Temporary Equity and Common Stockholders’ Equity (Deficit)
(unaudited)
(Shares and USD in thousands)
| Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||||||||||||
| Three months ended June 30, 2022 and 2021 | |||||||||||||||||||||||||||
| Common Stock | Additional Paid In | Accumulated | Accumulated Comprehensive | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||||||||||||
| Balance as of April 1, 2022 | - | - | - | - | 29,412 | $ | 3 | $ | 110,411 | $ | (87,976 | ) | $ | �� (70 | ) | $ | 22,368 | ||||||||||
| Stock-based compensation | - | - | 365 | - | - | 365 | |||||||||||||||||||||
| Issuance of common stock, net of issuance costs | - | (149 | ) | - | - | (149 | ) | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 8 | 8 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (5,805 | ) | - | (5,805 | ) | |||||||||||||||
| Balance as of June 30, 2022 | - | - | - | - | 29,413 | $ | 3 | $ | 110,627 | $ | (93,781 | ) | $ | (62 | ) | $ | 16,787 | ||||||||||
| Common Stock | Additional Paid In | Accumulated | Accumulated Comprehensive | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||||||||||||
| Balance as of April 1, 2021 | - | - | - | - | 28,986 | $ | 3 | $ | 109,205 | $ | (45,320 | ) | $ | - | $ | 63,888 | |||||||||||
| Stock-based compensation | - | - | 362 | - | - | 362 | |||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | (1 | ) | (1 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (4,186 | ) | - | (4,186 | ) | |||||||||||||||
| Balance as of June 30, 2021 | - | - | - | - | 28,986 | $ | 3 | $ | 109,567 | $ | (49,506 | ) | $ | (1 | ) | $ | 60,063 | ||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
| 5 |
| September 30, 2017 | December 31, 2016 | ||||||
| ASSETS | |||||||
| CURRENT ASSETS | |||||||
| Cash and cash equivalents | $ | 4,807 | $ | 9,502 | |||
| Accounts receivable, net of allowance for doubtful accounts of 2017 $2,277; 2016 $1,387 | 15,797 | 11,748 | |||||
| Other current assets | 2,881 | 2,174 | |||||
| Total current assets | 23,485 | 23,424 | |||||
| FIXED ASSETS, net of accumulated depreciation | 6,009 | 4,738 | |||||
| OTHER ASSETS | |||||||
| Restricted cash | 300 | 300 | |||||
| Patents and other intangible assets, net of accumulated amortization | 8,356 | 1,503 | |||||
| Investment in joint venture | 247 | 268 | |||||
| Goodwill | 14,158 | 12,029 | |||||
| Other | 1,415 | 172 | |||||
| Total other assets | 24,476 | 14,272 | |||||
| Total Assets | $ | 53,970 | $ | 42,434 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| CURRENT LIABILITIES | |||||||
| Accounts payable and accrued expenses | $ | 9,314 | $ | 8,148 | |||
| Obligations under capital leases, current portion | 271 | 109 | |||||
| Deferred revenue | 109 | 789 | |||||
| Line of credit | 2,000 | — | |||||
| Term note, current portion | — | 2,000 | |||||
| Total current liabilities | 11,694 | 11,046 | |||||
| Term note | 4,936 | 2,654 | |||||
| Obligations under capital leases | 726 | 374 | |||||
| Deferred rent payable and other | 181 | 290 | |||||
| Warrant liability | 4,167 | 2,018 | |||||
| Deferred revenue, long-term | 1,130 | 428 | |||||
| Total Liabilities | 22,834 | 16,810 | |||||
| STOCKHOLDERS’ EQUITY | |||||||
| Preferred stock, authorized 9,764 shares, $0.0001 par value, none issued | — | — | |||||
| Common stock, authorized 100,000 shares, $0.0001 par value, 24,252 and 18,936 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 2 | 2 | |||||
| Additional paid-in capital | 158,068 | 139,576 | |||||
| Accumulated other comprehensive (loss) | (1 | ) | — | ||||
| Accumulated (deficit) | (126,933 | ) | (113,954 | ) | |||
| Total Stockholders’ Equity | 31,136 | 25,624 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 53,970 | $ | 42,434 | |||
Vyant Bio, Inc.
Consolidated Statements of Temporary Equity and Common Stockholders’ Equity (Deficit)
(unaudited)
(Shares and USD in Thousands)
| Six months ended June 30, 2022 and 2021 | |||||||||||||||||||||||||||
| Common Stock | Additional Paid In | Accumulated | Accumulated Comprehensive | Total Stockholders’ | |||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Loss | Equity | ||||||||||||||||||||||
| Balance as of January 1, 2022 | - | - | - | - | 28,993 | $ | 3 | $ | 110,174 | $ | (78,813 | ) | $ | (74 | ) | $ | 31,290 | ||||||||||
| Stock-based compensation | - | - | 699 | - | - | 699 | |||||||||||||||||||||
| Exercise of stock options | 5 | - | 4 | - | 4 | ||||||||||||||||||||||
| Vesting of restricted stock | 8 | - | - | - | - | - | |||||||||||||||||||||
| Issuance of common stock, net of issuance costs | 407 | - | (250 | ) | - | - | (250 | ) | |||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | 12 | 12 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (14,968 | ) | - | (14,968 | ) | |||||||||||||||
| Balance as of June 30, 2022 | - | - | - | - | 29,413 | $ | 3 | $ | 110,627 | $ | (93,781 | ) | $ | (62 | ) | $ | 16,787 | ||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Equity | Shares | Amount | Capital | Deficit | (Deficit) | |||||||||||||||||||||||||||||||||||||||||
| Series A Preferred Stock | Series B Preferred Stock | Series C Preferred Stock | Total Temporary | Common Stock | Additional Paid In | Accumulated | Accumulated Comprehensive | Total Common Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | Equity | Shares | Amount | Capital | Deficit | Loss | (Deficit) | ||||||||||||||||||||||||||||||||||||||||
| Balance as of January 1, 2021 | 4,612 | $ | 12,356 | 3,489 | $ | 16,651 | - | - | $ | 29,007 | 2,594 | - | $ | 1,514 | $ | (37,954 | ) | $ | - | $ | (36,440 | ) | ||||||||||||||||||||||||||||||
| Beginning balance | 4,612 | $ | 12,356 | 3,489 | $ | 16,651 | - | - | $ | 29,007 | 2,594 | - | $ | 1,514 | $ | (37,954 | ) | $ | (36,440 | ) | ||||||||||||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | - | - | - | - | - | 728 | - | - | 728 | |||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | - | - | - | - | - | - | - | - | - | 4 | - | - | 4 | |||||||||||||||||||||||||||||||||||||||
| Issuance of Series C Convertible Preferred shares, net of issuance costs of $214 | - | - | - | - | 567 | 1,786 | 1,786 | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Issuance of Common Stock for acquisition consideration | - | - | - | - | - | - | - | 11,007 | 2 | 59,918 | - | - | 59,920 | |||||||||||||||||||||||||||||||||||||||
| Issuance of Incremental shares to StemoniX shareholders upon Merger | - | - | - | - | - | - | - | 805 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Conversion of Preferred Stock to Common Stock upon Merger | (4,612 | ) | (12,356 | ) | (3,489 | ) | (16,651 | ) | (567 | ) | (1,786 | ) | (30,793 | ) | 11,197 | 1 | 30,792 | - | - | 30,793 | ||||||||||||||||||||||||||||||||
| Conversion of 2020 Notes to Common Stock upon Merger | - | - | - | - | - | - | - | 3,339 | - | 16,190 | - | - | 16,190 | |||||||||||||||||||||||||||||||||||||||
| Preferred stock warrant settled for Common Stock upon Merger | - | - | - | - | - | - | - | 44 | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Warrant liability reclassified to equity upon Merger | - | - | - | - | - | - | - | - | 421 | - | - | 421 | ||||||||||||||||||||||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | - | - | - | - | - | - | (1 | ) | (1 | ) | |||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | - | (11,552 | ) | - | (11,552 | ) | |||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2021 | - | $ | - | - | $ | - | - | $ | - | - | 28,986 | $ | 3 | $ | 109,567 | $ | (49,506 | ) | $ | (1 | ) | $ | 60,063 | |||||||||||||||||||||||||||||
| Ending balance | - | $ | - | - | $ | - | - | $ | - | - | 28,986 | $ | 3 | $ | 109,567 | $ | (49,506 | ) | (1 | ) | $ | 60,063 | ||||||||||||||||||||||||||||||
See Notes to Unaudited Condensed Consolidated Financial Statements.
| 6 |
Vyant Bio, Inc.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(USD in Thousands)
| 2022 | 2021 | |||||||
| Six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net loss | $ | (14,968 | ) | $ | (11,552 | ) | ||
| Net loss from discontinuing operations | 6,237 | 240 | ||||||
| Reconciliation of net loss to net cash used in operating activities, continuing operations: | ||||||||
| Stock-based compensation | 560 | 698 | ||||||
| Amortization of operating lease right-of-use assets | 171 | 79 | ||||||
| Depreciation and amortization expense | 276 | 244 | ||||||
| Change in fair value of share-settlement obligation derivative | - | 250 | ||||||
| Change in fair value of warrant liability | - | (214 | ) | |||||
| Change in fair value of 2020 Convertible Note with fair value election | - | 4 | ||||||
| Accretion of debt discount | - | 173 | ||||||
| Loss on conversion of debt | - | 2,518 | ||||||
| Loss on disposal of equipment | - | 6 | ||||||
| Changes in operating assets and liabilities net of impacts of business combination: | ||||||||
| Trade accounts and other receivables | (50 | ) | 34 | |||||
| Inventory | 38 | 8 | ||||||
| Prepaid expenses and other current assets | (562 | ) | (1,016 | ) | ||||
| Accounts payable | 300 | (1,206 | ) | |||||
| Obligations under operating leases | (122 | ) | (103 | ) | ||||
| Accrued expenses and other current liabilities | 570 | (808 | ) | |||||
| Net cash used in operating activities, continuing operations | (7,550 | ) | (10,645 | ) | ||||
| Net cash used in operating activities, discontinuing operations | (585 | ) | (25 | ) | ||||
| Net cash used in operating activities | (8,135 | ) | (10,670 | ) | ||||
| Cash Flows from Investing Activities: | ||||||||
| Equipment purchases and leasehold improvements | (361 | ) | (507 | ) | ||||
| Cash acquired from acquisition | - | 30,163 | ||||||
| Net cash (used in) provided by investing activities, continuing operations | (361 | ) | 29,656 | |||||
| Net cash used in investing activities, discontinuing operations | (72 | ) | (13 | ) | ||||
| Net cash (used in) provided by investing activities | (433 | ) | 29,643 | |||||
| Cash Flows from Financing Activities: | ||||||||
| Issuance of common stock, net of issuance costs | (246 | ) | 4 | |||||
| Issuance of Series C Preferred Stock, net of issuance costs | - | 1,786 | ||||||
| 2020 Convertible Note proceeds | - | 5,022 | ||||||
| Principal payments on long-term debt | - | (82 | ) | |||||
| Principal payments on obligations under finance leases | (72 | ) | - | |||||
| Net cash (used in) provided by financing activities, continuing operations | (318 | ) | 6,730 | |||||
| Net cash used in financing activities, discontinuing operations | (20 | ) | (10 | ) | ||||
| Net cash (used in) provided by financing activities | (338 | ) | 6,720 | |||||
| Net (decrease) increase in cash and cash equivalents | (8,906 | ) | 25,693 | |||||
| Cash and cash equivalents beginning of the period | 20,608 | 792 | ||||||
| Cash and cash equivalents end of the period | $ | 11,702 | $ | 26,485 | ||||
| Supplemental disclosure of cash flow information from continuing operations: | ||||||||
| Cash paid for interest | $ | 14 | $ | - | ||||
| Cash paid for income taxes | 8 | - | ||||||
| Non-cash investing activities from continuing operations: | ||||||||
| Fair value of non-cash merger consideration | $ | - | $ | 59,920 | ||||
| Right-of-use asset obtained in exchange for new lease | 1,189 | 83 | ||||||
| Equipment purchases in accounts payable | - | 37 | ||||||
| Non-cash financing activities from continuing operations: | ||||||||
| Conversion of Preferred Stock to Common Stock upon Merger | $ | - | $ | 30,793 | ||||
| Conversion of 2020 Convertible Notes and Accrued Interest to Common Stock upon Merger | - | 16,190 | ||||||
| Reclass warrant liability to equity upon Merger | - | 421 | ||||||
See Notes to Unaudited Consolidated Financial Statements.
| 7 |
Vyant Bio, Inc. and Subsidiaries
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenue | $ | 8,028 | $ | 6,750 | $ | 21,598 | $ | 19,819 | |||||||
| Cost of revenues | 4,588 | 4,444 | 12,831 | 12,832 | |||||||||||
| Gross profit | 3,440 | 2,306 | 8,767 | 6,987 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 981 | 1,594 | 3,080 | 4,806 | |||||||||||
| General and administrative | 4,346 | 3,701 | 11,352 | 11,677 | |||||||||||
| Sales and marketing | 1,301 | 1,054 | 3,437 | 3,731 | |||||||||||
| Total operating expenses | 6,628 | 6,349 | 17,869 | 20,214 | |||||||||||
| Loss from operations | (3,188 | ) | (4,043 | ) | (9,102 | ) | (13,227 | ) | |||||||
| Other income (expense): | |||||||||||||||
| Interest expense | (350 | ) | (111 | ) | (797 | ) | (344 | ) | |||||||
| Interest income | 10 | 4 | 37 | 21 | |||||||||||
| Change in fair value of acquisition note payable | 105 | 18 | (114 | ) | 119 | ||||||||||
| Change in fair value of warrant liability | 2,790 | 712 | (3,927 | ) | 729 | ||||||||||
| Other expense | — | (325 | ) | (46 | ) | (325 | ) | ||||||||
| Total other (expense) | 2,555 | 298 | (4,847 | ) | 200 | ||||||||||
| Loss before income taxes | (633 | ) | (3,745 | ) | (13,949 | ) | (13,027 | ) | |||||||
| Income tax (benefit) | — | — | (970 | ) | — | ||||||||||
| Net (loss) | $ | (633 | ) | $ | (3,745 | ) | $ | (12,979 | ) | $ | (13,027 | ) | |||
| Basic net (loss) per share | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.65 | ) | $ | (0.88 | ) | |||
| Diluted net (loss) per share | $ | (0.15 | ) | $ | (0.23 | ) | $ | (0.65 | ) | $ | (0.88 | ) | |||
| Basic weighted-average shares outstanding | 21,577 | 16,519 | 20,059 | 14,868 | |||||||||||
| Diluted weighted-average shares outstanding | 22,359 | 16,519 | 20,059 | 14,868 | |||||||||||
| Net (loss) | (633 | ) | (3,745 | ) | (12,979 | ) | (13,027 | ) | |||||||
| Foreign currency translation (loss) | (1 | ) | — | (1 | ) | — | |||||||||
| Comprehensive (loss) | (634 | ) | (3,745 | ) | (12,980 | ) | (13,027 | ) | |||||||
Notes to Unaudited Consolidated Financial Statements.
| Nine Months Ended September 30, | |||||||
| 2017 | 2016 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||||
| Net (loss) | $ | (12,979 | ) | $ | (13,027 | ) | |
| Adjustments to reconcile net (loss) to net cash (used in) operating activities: | |||||||
| Depreciation | 1,436 | 1,502 | |||||
| Amortization | 234 | 260 | |||||
| Provision for bad debts | 890 | 8 | |||||
| Stock-based compensation | 1,395 | 1,538 | |||||
| Change in fair value of acquisition note payable | 114 | (119 | ) | ||||
| Change in fair value of warrant liability | 3,927 | (729 | ) | ||||
| Amortization of debt issuance costs | 51 | 9 | |||||
| Amortization of discount on debt | 134 | — | |||||
| Loss in equity method investment | 21 | 45 | |||||
| Loss on extinguishment of debt | 78 | — | |||||
| Changes in: | |||||||
| Accounts receivable | (4,029 | ) | (7,066 | ) | |||
| Other current assets | (606 | ) | (67 | ) | |||
| Other non-current assets | 251 | (9 | ) | ||||
| Accounts payable, accrued expenses and deferred revenue | (1,057 | ) | 372 | ||||
| Deferred rent payable and other | (109 | ) | (16 | ) | |||
| Net cash (used in) operating activities | (10,249 | ) | (17,299 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||
| Purchase of fixed assets | (1,192 | ) | (345 | ) | |||
| Patent costs | (73 | ) | (127 | ) | |||
| Purchase of cost method investment | (200 | ) | — | ||||
| Acquisition of vivoPharm, Pty Ltd., net of cash acquired | (656 | ) | — | ||||
| Net cash (used in) investing activities | (2,121 | ) | (472 | ) | |||
| CASH FLOWS FROM FINANCING ACTIVITIES | |||||||
| Principal payments on capital lease obligations | (170 | ) | (101 | ) | |||
| Proceeds from warrant exercises | 1,827 | — | |||||
| Proceeds from option exercises | 7 | — | |||||
| Proceeds from offerings of common stock with derivative warrants, net of certain offering costs | — | 9,962 | |||||
| Proceeds from borrowings on Silicon Valley Bank line of credit | 2,000 | — | |||||
| 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 | ) | (833 | ) | |||
| Payment of debt issuance costs and loan fees | (287 | ) | — | ||||
| Net cash provided by financing activities | 7,675 | 9,028 | |||||
| Net (decrease) in cash and cash equivalents | (4,695 | ) | (8,743 | ) | |||
| CASH AND CASH EQUIVALENTS | |||||||
| Beginning | 9,502 | 19,459 | |||||
| Ending | $ | 4,807 | $ | 10,716 | |||
| SUPPLEMENTAL CASH FLOW DISCLOSURE | |||||||
| Cash paid for interest | $ | 633 | $ | 250 | |||
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES | |||||||
| Fixed assets acquired through capital lease arrangements | $ | 567 | $ | — | |||
| Derivative warrants issued with debt | 1,004 | — | |||||
| Acquisition of vivoPharm business | 9,856 | — | |||||
Period Ended June 30, 2022
(Unaudited)
Note 1. Organization and Description of Business Basis
Vyant Bio, Inc. (the “Company”, “Vyant Bio”, “VYNT” or “we”), is an innovative biotechnology company transforming drug discovery for complex neurodevelopmental and neurodegenerative disorders. Our central nervous system (“CNS”) drug discovery platform combines the scientific knowhow of Presentation, Acquisitionour team coupled with the application of human-derived organoid models of brain disease, scaled biology, and Recent Accounting Pronouncements
As further described in Note 3, in December 2021, the oncologyCompany’s Board of Directors approved a plan to sell the vivoPharm Pty Ltd and immune-oncology fields.
The accompanying unaudited condensed consolidated financial statements of the Companyinclude all accounts and wholly-owned subsidiaries, have been prepared in accordance with accounting principles generally accepted in the United States of AmericaU.S. (“GAAP”) for interim financial information and with the instructions for interim reporting as prescribed by the Securities and Exchange Commission. Accordingly, they do not includereflect all of the information and footnotes required by accounting principles generally acceptedadjustments (including normal recurring accruals) which, in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals)are considered necessary to makefor the fair presentation of the results for the periods presented. All intercompany transactions have been eliminated. In accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the audited consolidated financial statements not misleadingof the Company.
No new accounting pronouncement issued or effective has had, or is expected to have, been included. As such,a material impact on the information included in this quarterly report on Form 10-QCompany’s condensed consolidated financial statements.
These unaudited condensed consolidated financial statements should be read in conjunctiontogether with the audited consolidated financial statements as of and for the year ended December 31, 2016,2021, and notes thereto included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 23, 2017.SEC. The consolidated balance sheet aspreparation of December 31, 2016, included herein was derived from the auditedcondensed consolidated financial statements asin conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of thatassets and liabilities, the disclosure of contingent liabilities at the date but does not include all disclosures including notes required by GAAP. Interimof the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Ultimate results could differ from those estimates. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for any future interim period orthe entire 2022 year.
Dollar amounts in tables are stated in thousands of U.S. dollars.
| 8 |
Note 2. Cancer Genetics, Inc. Merger
The Company formerly known as Cancer Genetics, Inc. (“CGI”), StemoniX and CGI Acquisition, Inc. (“Merger Sub”) entered into a merger agreement on August 21, 2020, which was amended on February 8, 2021 and February 26, 2021 (as amended, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub was merged (the “Merger”) with and into StemoniX on March 30, 2021, with StemoniX surviving the Merger as a wholly owned subsidiary of the Company. For U.S. federal income tax purposes, the Merger qualified as a tax-free “reorganization”. Concurrent with the Merger closing, the Company changed its name to Vyant Bio, Inc. Under the terms of the Merger Agreement, upon consummation of the Merger, the Company issued (i) an aggregate of shares of VYNT common stock, par value $ per share (the “Common Stock”) to the holders of StemoniX capital stock (after giving effect to the conversion of all StemoniX preferred shares and StemoniX 2020 Convertible Notes) and StemoniX warrants (which does not include a certain warrant (the “Investor Warrant”) issued to a certain StemoniX convertible note holder (the “Major Investor”)), (ii) options to purchase an aggregate of shares of Common Stock to the holders of StemoniX options with exercise prices ranging from $ to $ per share and a weighted average exercise price of $ per share, and (iii) a warrant (the “Major Investor Warrant”) to the Major Investor, expiring February 23, 2026 to purchase shares of Common Stock at a price of $ per share in exchange for the year ending December 31, 2017.
The Merger was accounted for our foreign currency translation in other comprehensive income (loss). Assets and liabilities recorded in foreign currencies are translated at the exchange rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. Translation adjustments for prior periods have not been presented, as they are not material.
The Company incurred $165 thousand and $2.3 million of costs associated with the Merger that have been reported on the condensed consolidated statement of operations as Merger related costs for the three and six months ended June 30, 2021, respectively. As of June 30, 2021 accounts payable includes $20 thousand of Merger-related costs.
The following details the allocation of the preliminary purchase price consideration transferred to consummaterecorded on June 30, 2021, the acquisition is being allocateddate, with adjustments recorded through March 30, 2022, the end of the period for which purchase accounting adjustments can be recorded, and the final purchase price allocation.
Schedule of Preliminary Allocation of the Purchase Price Consideration
| Preliminary | Adjustments | Final | ||||||||||
| Assets acquired: | ||||||||||||
| Cash and equivalents | $ | 30,163 | $ | - | $ | 30,163 | ||||||
| Accounts receivable | 705 | - | 705 | |||||||||
| Other current assets | 806 | 227 | 1,033 | |||||||||
| Intangible assets | 9,500 | - | 9,500 | |||||||||
| Fixed assets | 416 | (256 | ) | 160 | ||||||||
| Goodwill | 22,164 | 216 | 22,380 | |||||||||
| Long-term prepaid expenses and other assets | 1,381 | - | 1,381 | |||||||||
| Total assets acquired | $ | 65,135 | $ | 187 | $ | 65,322 | ||||||
| Liabilities assumed: | ||||||||||||
| Accounts payable and accrued expenses | $ | 2,670 | $ | 437 | $ | 3,107 | ||||||
| Current liabilities of discontinuing operations | 588 | (141 | ) | 447 | ||||||||
| Obligations under operating leases | 198 | - | 198 | |||||||||
| Obligations under finance leases | 106 | - | 106 | |||||||||
| Deferred revenue | 1,293 | (114 | ) | 1,179 | ||||||||
| Payroll and income taxes payable | 360 | 5 | 365 | |||||||||
| Total liabilities assumed | $ | 5,215 | $ | 187 | $ | 5,402 | ||||||
| Net assets acquired: | $ | 59,920 | $ | - | $ | 59,920 | ||||||
| 9 |
The Company has completed valuation analyses necessary to assess the identifiablefair values of the tangible and intangible assets acquired and liabilities assumed based on their respective fair valuesand the amount of goodwill to be recognized as of the closing dateacquisition date. Fair values were based on management’s estimates and assumptions. The Company recognized intangible assets related to the Merger, which consist of the acquisition.tradename valued at $1.5 million with an estimated useful life of ten years and customer relationships valued at $8.0 million with an estimated useful life of ten years. The acquisition methodinitial measurements of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible andthese intangible assets acquired and liabilities assumed. Accordingly,were classified as Level 3 measurements within the allocationfair value hierarchy. The value of the consideration transferred is preliminaryvivoPharm tradename was determined using the relief from royalty method based on analysis of profitability and will be adjusted upon completionreview of market royalty rates. The Company determined that a 1.0% royalty rate was appropriate given the business-to-business nature of the final valuationvivoPharm operations. The value of the assets acquiredvivoPharm customer relationships was determined using an excess earnings method based on projected discounted cash flows and liabilities assumed. historic customer data. Key assumptions in this analysis included an estimated 10% annual customer attrition rate based on historical vivoPharm operations, a blended U.S. federal, state and Australian income tax rate of 27.1%, a present value factor of 8.5% as well as revenue, cost of revenue and operating expense assumptions regarding the future growth, operating expenses, including corporate overhead charges, and required capital investments.
The final valuationfollowing presents the unaudited pro forma combined financial information as if the Merger had occurred as of January 1, 2020:
Schedule of Proforma Financial Information
| Three months ended June 30, 2021 | Six months ended June 30, 2021 | |||||||
| Total revenue | $ | 1,947 | $ | 3,788 | ||||
| Net loss | (4,021 | ) | (5,560 | ) | ||||
| Pro forma loss per common share, basic and diluted | (0.14 | ) | (0.19 | ) | ||||
| Pro forma weighted average number of common shares basic and diluted | 28,985,924 | 28,973,370 | ||||||
The pro forma combined results of operations are not necessarily indicative of the results of operations that actually would have occurred had the Merger been completed as of January 1, 2020, nor are they necessarily indicative of future consolidated results.
Note 3. Discontinuing Operations
In December 2021, the Company’s Board of Directors approved a plan to sell the vivoPharm Pty Ltd and related subsidiaries (“vivoPharm”) business to focus the Company on the development of neurological developmental and degenerative disease therapeutics. In December 2021, the Company engaged an investment bank to sell the vivoPharm business which is expected to be completed 2022.
The Company classified the vivoPharm business as soonheld for sale as practicable but no later than twelve months afterof December 31, 2021, and, given the closing datesignificance of the acquisition.
| Cash | $ | 544 | ||
| Accounts receivable | 905 | |||
| Lab supplies | 1,258 | |||
| Prepaid expenses and other current assets | 101 | |||
| Fixed assets | 949 | |||
| Intangible assets | 7,014 | |||
| Goodwill | 2,129 | |||
| Accounts payable and accrued expenses | (913 | ) | ||
| Deferred revenue | (814 | ) | ||
| Obligations under capital leases | (117 | ) | ||
| Total purchase price | $ | 11,056 | ||
| Three Months Ended September 30 | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Revenue | $ | 9,069 | $ | 7,958 | $ | 25,335 | $ | 23,595 | |||||||
| Net loss | (976 | ) | (3,919 | ) | (13,788 | ) | (13,596 | ) | |||||||
| Basic net loss per share | $ | (0.04 | ) | $ | (0.20 | ) | $ | (0.61 | ) | $ | (0.76 | ) | |||
| Diluted net loss per share | (0.16 | ) | (0.20 | ) | (0.61 | ) | (0.76 | ) | |||||||
| 10 |
Also included in discontinuing operations are pre-Merger-related payables related to Cancer Genetic’s sale of its BioPharma and Clinical businesses (“Pre-Merger discontinuing operations”). As of June 30, 2022 and December 31, 2021, $345 thousand and $409 thousand, respectively of liabilities relating to these businesses are classified as other current liabilities – discontinuing operations on the Company’s resultscondensed consolidated balance sheets.
Results of discontinuing operations were as follows for the three and ninesix months ended SeptemberJune 30, 2017 was approximately $380,000.
Schedule of Discontinuing Operations from Contracts with Customers (Topic 606) (“ASU 2014-09”), requiring an entity to recognize the amountIncome Statement and Balance Sheet
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Three months ended June, 30 | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenue | $ | 1,687 | $ | 1,618 | $ | 3,040 | $ | 1,636 | ||||||||
| Cost of goods sold | 605 | 924 | 1,380 | 949 | ||||||||||||
| General and administrative | 1,096 | 928 | 2,141 | 930 | ||||||||||||
| Impairment of goodwill and intangible assets | 1,513 | - | 5,803 | - | ||||||||||||
| Total operating costs and expenses | 3,214 | 1,852 | 9,324 | 1,879 | ||||||||||||
| Loss from discontinuing operations | (1,527 | ) | (234 | ) | (6,284 | ) | (243 | ) | ||||||||
| Total other income | 3 | 2 | 3 | 3 | ||||||||||||
| Loss from discontinuing operations before income taxes | (1,524 | ) | (232 | ) | (6,281 | ) | (240 | ) | ||||||||
| Income tax benefit | 44 | - | 44 | - | ||||||||||||
| Net loss from discontinuing operations | $ | (1,480 | ) | $ | (232 | ) | $ | (6,237 | ) | $ | (240 | ) | ||||
Asset and liabilities of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. As issued and amended, ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either a full retrospective or retrospective with cumulative effect transition method. The updated standard becomes effective for the Company in the first quarter of fiscal year 2018. Early adoption is permitted in the first quarter of fiscal year 2017. The Company believes its Biopharma Service and Discovery Service revenues will be affected by the new standard. The Company is presently evaluating all of its contracts for performance obligations and variable consideration provisions that may affect the timing of revenue recognition subsequent to ASU 2014-09’s adoption. The Company expects to adopt the new standard on January 1, 2018, using the modified retrospective approach, which involves applying the new standard to all contracts initiated on or after the effective date and recording an adjustment to opening equity for pre-existing contracts that have remaining obligationsdiscontinuing operations were as follows as of June 30, 2022 and December 31, 2021:
| June 30, 2022 | December 31, 2021 | |||||||
| Accounts receivable | $ | 1,631 | $ | 457 | ||||
| Other current assets | 470 | 345 | ||||||
| Assets of discontinuing operations - current | 2,101 | 802 | ||||||
| Fixed assets, net of accumulated depreciation | 237 | 163 | ||||||
| Operating lease right-of-use assets | 891 | 30 | ||||||
| Intangible assets, net | 5,123 | 8,787 | ||||||
| Goodwill | - | 2,164 | ||||||
| Other assets | 366 | 364 | ||||||
| Assets of discontinuing operations - non-current | 6,617 | 11,508 | ||||||
| Accounts payable | $ | 1,122 | $ | 358 | ||||
| Accrued expense | 377 | 418 | ||||||
| Obligation under operating lease, current | 151 | 29 | ||||||
| Obligation under finance lease, current | 31 | 32 | ||||||
| Deferred revenue | 2,260 | 1,911 | ||||||
| Taxes payable | 321 | 365 | ||||||
| Other current liabilities | 345 | 409 | ||||||
| Liabilities of discontinued operations - current | 4,607 | 3,522 | ||||||
| Obligations under operating leases, less current | 752 | 2 | ||||||
| Obligations under finance leases, less current | 28 | 47 | ||||||
| Liabilities of discontinued operations - non-current | 780 | 49 | ||||||
In January 2022, the effective date.vivoPharm business signed an extension to its Hershey, Pennsylvania facility lease and a new lease in South Australia resulting in an increase of $1.0 million of right-of-use (“ROU”) assets and related liability within discontinuing operations.
| 11 |
Intangible assets consisted of the following (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Biopharma Services | $ | 4,168 | $ | 3,805 | 11,175 | $ | 11,374 | ||||||||
| Clinical Services | 2,880 | 2,687 | 8,887 | 7,685 | |||||||||||
| Discovery Services | 980 | 258 | 1,536 | 760 | |||||||||||
| $ | 8,028 | $ | 6,750 | $ | 21,598 | $ | 19,819 | ||||||||
Schedule of Intangible Assets
June 30, 2022 | December 31, 2021 | |||||||
| Customer relationships | $ | 4,914 | $ | 8,000 | ||||
| Trade name | 922 | 1,500 | ||||||
| Intangible assets, net | 5,836 | 9,500 | ||||||
| Less accumulated amortization | (713 | ) | (713 | ) | ||||
| Intangible assets, net | $ | 5,123 | $ | 8,787 | ||||
Goodwill arising from the Merger was solely attributed to the vivoPharm business. The following is a roll forward of goodwill as of and for the six months ended June 30, 2022:
Schedule of Goodwill Rollforward
| 2022 | ||||
| Beginning balance, January 1 | $ | 2,164 | ||
| Purchase price adjustments | - | |||
| Impairment charge | (2,164 | ) | ||
| Ending balance, June 30 | $ | - | ||
Note 4. Inventory
Inventory consists of the following (in thousands):
| September 30, 2017 | December 31, 2016 | ||||||
| Biopharma Services | $ | 3,702 | $ | 3,683 | |||
| Clinical Services | 13,072 | 8,972 | |||||
| Discovery Services | 1,300 | 480 | |||||
| Allowance for doubtful accounts | (2,277 | ) | (1,387 | ) | |||
| $ | 15,797 | $ | 11,748 | ||||
| Allowance for Doubtful Accounts (in thousands) | |||
| Balance, December 31, 2016 | $ | 1,387 | |
| Bad debt expense | 890 | ||
| Balance, September 30, 2017 | $ | 2,277 | |
Schedule of Inventory
| June 30, 2022 | December 31, 2021 | |||||||
| Finished goods | $ | 5 | $ | 23 | ||||
| Work in process | 43 | 138 | ||||||
| Raw materials | 389 | 314 | ||||||
| Total inventory | $ | 437 | $ | 475 | ||||
Note 5. Fixed Assets
Presented in the table below are customized solutions for patient stratification and treatment selection through an extensive suitethe major classes of DNA-based testing services. Clinical Services are tests performed to provide information on diagnosis, prognosis and theranosisfixed assets by category:
Schedule of cancers to guide patient management. These tests can be billed to Medicare, another third party insurer or the referring community hospital or other healthcare facility. Discovery Services are services that provide the tools and testing methods for companies and researchers seeking to identify new DNA-based biomarkers for disease. The breakdown of our Clinical Services revenue (as a percent of total revenue) is as follows:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
| 2017 | 2016 | 2017 | 2016 | ||||
| Medicare | 11% | 14% | 14% | 13% | |||
| Other insurers | 19% | 21% | 22% | 20% | |||
| Other healthcare facilities | 6% | 5% | 5% | 6% | |||
| 36% | 40% | 41% | 39% | ||||
| June 30, 2022 | December 31, 2021 | |||||||
| Equipment | $ | 2,744 | $ | 2,733 | ||||
| Furniture and fixtures | 6 | 6 | ||||||
| Leasehold improvements | 580 | 251 | ||||||
| Fixed assets, gross | 3,330 | 2,990 | ||||||
| Less accumulated depreciation | (2,229 | ) | (1,970 | ) | ||||
| Total | $ | 1,101 | $ | 1,020 | ||||
Depreciation expense recognized during the three months ended SeptemberJune 30, 20172022 and 2016 accounted2021 was $134 thousand and $141 thousand, respectively, and for approximately 45% and 39% of our testing volumes, respectively. During the threesix months ended SeptemberJune 30, 2017, there2022 and 2021, was one biopharmaceutical company which accounted for approximately 11% of our total revenue. During the three months ended September 30, 2016, there was one biopharmaceutical company which accounted for approximately 18% of our total revenue.$276 thousand and $267 thousand, respectively.
| 12 |
Note 3. Common Stock Purchase Agreement with Aspire Capital
The Company leases its laboratory, research and Aspire Capital also may mutually agree to increase the number of shares that may be sold to as much as an additional 2,000,000 Purchase Shares per business day. The purchase price per Purchase Share will be $3.00. As consideration for entering into the Purchase Agreement, we issued 320,000 shares of our common stock to Aspire Capital (“Commitment Shares”).
The components of approximately $2,965,000, net of offering costs of approximately $35,000. The Company has also issued 320,000 shares as consideration for entering into the Purchase Agreement. The Company has not deferred any offering costs associated with this
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Numerator: | |||||||||||||||
| Net (loss) for basic earnings per share | $ | (633 | ) | $ | (3,745 | ) | $ | (12,979 | ) | $ | (13,027 | ) | |||
| Change in fair value of warrant liability | 2,790 | — | — | — | |||||||||||
| Net (loss) for diluted earnings per share | $ | (3,423 | ) | $ | (3,745 | ) | $ | (12,979 | ) | $ | (13,027 | ) | |||
| Denominator: | |||||||||||||||
| Weighted-average basic common shares outstanding | 21,577 | 16,519 | 20,059 | 14,868 | |||||||||||
| 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 | 22,359 | 16,519 | 20,059 | 14,868 | |||||||||||
| Basic net (loss) per share | $ | (0.03 | ) | $ | (0.23 | ) | $ | (0.65 | ) | $ | (0.88 | ) | |||
| Diluted net (loss) per share | $ | (0.15 | ) | $ | (0.23 | ) | $ | (0.65 | ) | $ | (0.88 | ) | |||
Components of Lease Expense and Supplemental Information
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Three months ended June, 30 | Six months ended June, 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Operating lease costs | $ | 124 | $ | 150 | $ | 222 | $ | 292 | ||||||||
| Finance lease costs: | ||||||||||||||||
| Depreciation of ROU assets | 40 | - | 80 | - | ||||||||||||
| Interest on lease liabilities | 7 | - | 14 | - | ||||||||||||
| Total finance lease cost | 47 | - | 94 | - | ||||||||||||
| Variable lease costs | - | - | - | - | ||||||||||||
| Short-term lease costs | - | - | - | - | ||||||||||||
| Total lease cost | $ | 171 | $ | 150 | $ | 316 | $ | 292 | ||||||||
Amounts reported in the derivative warrants were dilutivecondensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 are as follows:
Schedule of Amounts Reported in the change in fair valueConsolidated Balance Sheet
| 2022 | 2021 | |||||||
| Operating leases: | ||||||||
| Operating lease ROU assets, net | $ | 1,691 | $ | 673 | ||||
| Operating lease current liabilities | 293 | 174 | ||||||
| Operating lease long-term liabilities | 1,463 | 516 | ||||||
| Total operating lease liabilities | 1,756 | 690 | ||||||
| Finance leases: | ||||||||
| Equipment | 477 | 477 | ||||||
| Accumulated depreciation | (119 | ) | (63 | ) | ||||
| Finance leases, net | 358 | 414 | ||||||
| Current installment obligations under finance leases | 161 | 157 | ||||||
| Long-term portion of obligations under finance leases | 217 | 293 | ||||||
| Total finance lease liabilities | $ | 378 | $ | 450 | ||||
Other information related to leases from continuing operations for the six months ended June 30, are as follows:
| 2022 | 2021 | |||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flow from operating leases | $ | 122 | $ | 292 | ||||
| Financing cash flow from finance leases | 72 | - | ||||||
| Weighted average remaining lease term: | ||||||||
| Operating leases | 4.94 years | 5.68 years | ||||||
| Finance leases | 2.25 years | - | ||||||
| Weighted average discount rate: | ||||||||
| Operating leases | 8.3 | % | 9.9 | % | ||||
| Finance leases | 6.5 | % | - | |||||
| 13 |
Annual payments of lease liabilities under noncancelable leases from continuing operations as of June 30, 2022 are as follows:
Schedule of Annual Payments of Lease Liabilities Under Noncancelable Leases
| Operating leases | Finance leases | |||||||
| Remainder of 2022 | $ | 212 | $ | 90 | ||||
| 2023 | 433 | 181 | ||||||
| 2024 | 423 | 136 | ||||||
| 2025 | 427 | - | ||||||
| 2026 | 441 | - | ||||||
| 2027 | 210 | - | ||||||
| Thereafter | - | - | ||||||
| Total undiscounted lease payments | 2,146 | 407 | ||||||
| Less: Imputed interest | (390 | ) | (29 | ) | ||||
| Total lease liabilities | $ | 1,756 | $ | 378 | ||||
Note 7. Income Taxes
The Company recognizes deferred tax assets and liabilities for the derivative warrants was a gain.
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
| Common stock purchase warrants | 4,163 | 7,145 | 6,574 | 7,145 | |||||||
| Stock options | 2,816 | 2,128 | 2,816 | 2,128 | |||||||
| Restricted shares of common stock | 115 | 73 | 115 | 73 | |||||||
| 7,094 | 9,346 | 9,505 | 9,346 | ||||||||
As of June 30, 2022 and December 31, 2021, the Company’s liability for gross unrecognized tax benefits (excluding interest and penalties) totaled $0 thousand and $0, respectively, in continuing operations. The Company had accrued interest and penalties relating to unrecognized tax benefits of $0 and $0 on a gross basis as of June 30, 2022 and December 31, 2021, respectively in continuing operations. The Company does not currently expect significant changes in the amount of unrecognized tax benefits during the next twelve months.
Note 8. Long-Term Debt
Long-term debt as of June 30, 2022 and December 31, 2021 consists of a $57 thousand Economic Injury Disaster Loan with annual principal payments of approximately $1 thousand per year.
2020 Convertible Notes
Effective February 8, 2021 the Company’s shareholders and 2020 Convertible Note holders approved amendments to the 2020 Convertible Notes to allow for the issuance of up to $10.0 million in 2020 Convertible Notes for cash (plus up to approximately $3.9 million of 2020 Convertible Notes in exchange for the cancellation of Series B Preferred stock) as well as modifications to the financing’s terms for any 2020 Convertible Noteholder that invested at least $3.0 million of cash since May 4, 2020 in the offering (a “Major Investor”). As of March 12, 2021, the Company ofcompleted the $10.0 million 2020 Convertible Note offering. The Company raised approximately $970,000. This figure includes all costs and expenses associated with$5.0 million from the sale of these state tax attributes2020 Convertible Notes from January 1, 2021 through March 12, 2021 of which approximately $3.9 million were to related parties, including former StemoniX Board members as deducted fromwell as a more than 5% owner of Series B Preferred stock. For any Major Investor, the gross salesmodified terms provide for a fixed conversion discount on the 2020 Convertible Notes of 20% and a common stock warrant equal to 20% of the amount invested in all 2020 Convertible Notes by such Major Investor divided by the weighted average share price of $1,043,517.
| 14 |
Payroll Protection Plan Loan
In April 2020, the Company applied for and received a $730 thousand loan under the Payroll Protection Plan (“PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act’s (“CARES Act”). Under the PPP, the Company was able to receive funds for two and a half months of payroll, rent, utilities, and interest cost. In April 2021 the SBA fully forgave the PPP loan. The $730 thousand of PPP loan forgiveness was recorded as a reduction of operating costs during 2020.
Economic Injury Disaster Loan
The Company applied for and received a $57 thousand Economic Injury Disaster Loan (“EIDL”) loan and a $10 thousand grant from the Small Business Administration in connection with the COVID-19 impact on the Company’s business. This loan bears interest at 3.75% and is repayable in monthly installments starting in December 2022 with a final balance due on June 21, 2050.
Note 9. Stockholders’ Equity
Common Stock
Holders of common stock are entitled to one vote per share, to receive dividends if and when declared, and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to the preferred stock with respect to dividend rights and rights upon liquidation, winding up and dissolution of the Company.
Lincoln Park Capital Fund, LLC Agreement
On March 28, 2022, the Company entered into a purchase agreement, or Purchase Agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which, subject to the terms and conditions, provides that the Company has the right to sell to Lincoln Park and Lincoln Park is obligated to purchase up to $15.0 million of its common shares. Additionally, on March 28, 2022, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park, pursuant to which the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”), covering the resale of shares of common stock issued to Lincoln Park under the Purchase Agreement. In addition, under the Purchase Agreement, the Company agreed to issue a commitment fee of common shares, or the Commitment Shares, as consideration for Lincoln Park entering into the Purchase Agreement. Under the Purchase Agreement, the Company may from time to time for 30 months following May 9, 2022 (the “Commencement Date”), at its discretion, direct Lincoln Park to purchase on any single business day, or a Regular Purchase, up to (i) 50,000 common shares, (ii) 75,000 common shares if the closing sale price of its common shares is not below $1.50 per share on Nasdaq or (iii) 100,000 common shares if the closing sale price of its common shares is not below $2.50 per share on Nasdaq. In addition to Regular Purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases on the terms and subject to the conditions set forth in the Purchase Agreement. In any case, Lincoln Park’s commitment in any single Regular Purchase may not exceed $1.0 million absent a mutual agreement to increase such amount. The purchase price per share for each Regular Purchase will be based on prevailing market prices of the Common Stock immediately preceding the time of sale as computed in accordance with the terms set forth in the Purchase Agreement. There are no upper limits on the price per share that Lincoln Park must pay for shares of Common Stock under the Purchase Agreement. The Purchase Agreement may be terminated by the Company at any time after the Commencement Date, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park to terminate the Purchase Agreement.
| 15 |
At The Market (“ATM”) Financing
On April 8, 2022, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $20,000,000 (the “Shares”), depending on market demand, with the Agent acting as an agent for sales. Sales of the Shares may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the NASDAQ Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the Sales Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the Sales Agreement. The Company will pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of Shares by the Agent under the Sales Agreement. The Company has also agreed to reimburse the Agent for its reasonable documented out-of-pocket expenses, including fees and disbursements of its counsel, in the amount of $75,000. In addition, the Company has agreed to provide customary indemnification rights to the Agent. The Offering will terminate upon the earlier of (i) the issuance and sale of all Shares subject to the Sales Agreement, or (ii) the termination of the Sales Agreement as permitted therein, including by either party at any time without liability of any party
For the three and six months ended June 30, 2022, the Company incurred $149 thousand and $250 thousand, respectively of issuance costs related to Lincoln Park and Canaccord Genuity LLC ATM arrangements which were recorded in the Condensed Consolidated Statements of Stockholders’ Equity. As of the date of this report, the Company has not issued any shares of common stock under the Purchase Agreement with Lincoln Park or the Sales Agreement with the Agent, other than the Commitment Shares issued to Lincoln Park.
Preferred Stock
Series A and B Preferred Stock
As of December 31, 2020, the Company had shares of Series A Preferred Stock (the “Series A Preferred”) shares of Series B Preferred Stock (the “Series B”) issued and outstanding (collectively the “Preferred Stock”). The Company had classified the Preferred Stock as temporary equity in the condensed consolidated balance sheets as the Preferred Shareholders controlled a Deemed Liquidation Event, as defined below, under the terms of the Series A and Series B Preferred Stock as described below. Effective with the Merger, all the Series A Preferred and the Series B Preferred shares were exchanged for and shares of common stock, respectively, and the related carrying value was reclassified to common stock and additional paid-in capital.
Series C Preferred Stock
Effective March 15, 2021, StemoniX’s shareholders approved the Merger with Cancer Genetics and the authorization of $2.0 million of StemoniX’s Series C Preferred Stock (“Series C Preferred”). Effective with the Merger on March 30, 2021, the Series C Preferred shares were exchanged for shares of Vyant Bio common stock and the related carrying value was reclassified to common stock and additional paid-in capital.
Warrants
Common Stock Warrants
The Company issued the Investor Warrant on February 23, 2021. Effective with the Merger, the Investor Warrant was exchanged for a warrant to purchase 143,890 shares of the Company’s common stock at an exercise price of $5.9059. Prior to this exchange, the Investor Warrant was classified as a liability and the Company recognized a $214 thousand gain in the first quarter of 2021 related to fair value adjustments. The fair value of the Investor Warrant was $421 thousand at the time of the Merger and reclassified to additional paid in capital.
| 16 |
In connection with the Merger, the Company assumed 2,157,686 common stock warrants issued in prior financings of which 2,149,106 remain outstanding as of June 30, 2022. A summary of all common stock warrants outstanding as of June 30, 2022 is as follows:
Summary of All Common Stock Warrants Outstanding
| Issuance Related to: | Exercise Price | Outstanding Warrants | Expiration Dates | |||||||
| 2020 Convertible Note | $ | 5.91 | 143,890 | Feb 23, 2026 | ||||||
| 2021 offerings | $ | 3.50 | 1,624,140 | Feb 10, 2026 - Aug 3, 2026 | ||||||
| Advisory fees | $ | 2.42 - $7.59 | 492,894 | Jan 9, 2024 - Oct 28, 2025 | ||||||
| Debt | $ | 27.60 | 14,775 | Mar 22, 2024 | ||||||
| Debt | $ | 450.00 | 9,185 | Oct 17, 2022 - Dec 7, 2022 | ||||||
| Debt | $ | 300.00 | 8,112 | Oct 17, 2022 | ||||||
| Total | 2,292,996 | |||||||||
Preferred Stock Warrants
In connection with the issuance of the Series A Convertible Preferred and Series B Convertible Preferred, the Company issued warrants (the “Series A Warrants” and “Series B Warrants”, respectively, and collectively, the “Preferred Warrants”) as compensation to non-employee placement agents. The Series A Warrants and Series B Warrants were issued on April 28, 2017 and May 18, 2019, respectively. The Company determined the Preferred Warrants should be classified as equity as they were issued as vested share-based payment compensation to nonemployees. The Preferred Warrants were recorded in stockholders’ equity at fair value upon issuance with no subsequent remeasurement. As part of the Merger, the Preferred Warrants were converted and settled for a total of 43,107 shares of the Company’s common stock.
Note 10. Fair Value Measurements
During the first quarter of 2021, the Company elected to account for the $3.0 million investment in the 2020 Convertible Notes issued to the Major Investor using the fair value method. Further, the Major Investor Warrant was deemed to be a liability classified instrument due its variable settlement features. Both of these instruments were classified as Level 3 measurements within the fair value hierarchy.
The fair value of the Company’s 2020 Convertible Note issued to the Major Investor is measured as the sum of the instrument’s parts, being the underlying debt instrument and the conversion feature. The conversion feature was valued using the probability weighted conversion price discount. The instrument provided the holder the right to convert the instrument into shares of Series B Preferred Stock at a 20% discount. Given the timing of the issuance of the instrument near the Merger date, management determined that there was a 99.5% probability of the holders converting the instrument to Company shares at a 20% discount.
The Company valued the warrants issued with the 2020 Convertible Notes using a Black-Scholes-Merton model using the value of the underlying stock and exercise price of $2.01, along with a risk-free interest rate of 0.59% and volatility of 86%. The Company estimated the term of the warrant to be 5 years.
The Company’s 2020 Convertible Notes contain a share settled redemption feature (“Embedded Derivative”) that requires conversion at the lesser of specified discounts from qualified financing price per share or the fair value of the common stock at the time of conversion. The discount changes based on the passage of time between issuance of the convertible note and the conversion event. This feature is considered a derivative that requires bifurcation because it provides a specified premium to the holder of the note upon conversion. The Company measures the share-settlement obligation derivative at fair value based on significant inputs that are not observable in the market. This results in the liability classified as a Level 3 measurement within the fair value hierarchy.
| 17 |
Upon the Merger, all of the Level 3 instruments were exchanged for Vyant Bio equity classified instruments. Prior to their exchange, all of these instruments were marked to their fair market values with corresponding changes recorded in the statement of operations in the first quarter of 2021.
In the fourth quarter of 2021, the Company classified the vivoPharm business as discontinuing operations and applied held for sale accounting. The Company valued the vivoPharm business as of December 31, 2021 equally weighting public company revenue multiples as of December 31, 2021 and comparable transaction revenue multiples, which are classified as Level 3 measurements within the fair value hierarchy. The Company updated the valuation of the vivoPharm business during the quarter ending March 31, 2022 based on equally weighting public company revenue multiples and comparable transaction revenue multiples, which resulted in a $4.5 million decrease to the fair value of vivoPharm in the first quarter of 2022. The fair value of the vivoPharm business was estimated to be $11.0 million and $6.5 million as of December 31, 2021 and March 31, 2022, respectively. The Company recognized an impairment charge of $4.3 million during the quarter ended March 31, 2022, which decreased vivoPharm’s net carrying value, net of estimated disposal costs from $9.2 million as of December 31, 2021 to $4.9 million. During the second quarter of 2022, the Company received two offers for mutually exclusive components of the vivoPharm business and assessed the carrying value of each asset group using the estimated net sales proceeds based on these non-binding offers. As a result, the Company recorded a net impairment charge of $1.5 million during the second quarter of 2022 resulting in a net carrying value of $3.7 million for the vivoPharm business.
The following tables present changes in fair value of level 3 valued instruments as of and for the six months ended June 30, 2022 and 2021:
Schedule of Changes in Fair Value of Level 3 Valued Instruments
| vivoPharm Business | ||||
| Balance – December 31, 2021 | $ | 11,000 | ||
| Additions | - | |||
| Measurement adjustments | (5,150 | ) | ||
| Settlement | - | |||
| Balance – June 30, 2022 | $ | 5,850 | ||
| 2020 Convertible Note | Warrant | Embedded Derivative | ||||||||||
| Balance – December 31, 2020 | $ | - | $ | - | $ | 1,690 | ||||||
| Additions | 3,746 | 635 | 325 | |||||||||
| Measurement adjustments | 4 | (214 | ) | 250 | ||||||||
| Settlement | (3,750 | ) | (421 | ) | (2,265 | ) | ||||||
| Balance – June 30, 2021 | $ | - | $ | - | $ | - | ||||||
Basic loss per share is computed by dividing the net loss after tax attributable to common stockholders by the weighted average shares outstanding during the period. Diluted loss per share is computed by including potentially dilutive securities outstanding during the period in the calculation of weighted average shares outstanding. The Company did not have any dilutive securities during the periods presented; therefore, diluted loss per share is equal to basic loss per share. The number
Schedule of Reconciliation of Numerator and Denominator for Basic and Diluted Loss Per Share
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Net loss from continuing operations | $ | (4,325 | ) | $ | (3,954 | ) | $ | (8,731 | ) | $ | (11,312 | ) | ||||
| Net loss from discontinuing operations | (1,480 | ) | (232 | ) | (6,237 | ) | (240 | ) | ||||||||
| Net loss | $ | (5,805 | ) | $ | (4,186 | ) | $ | (14,968 | ) | $ | (11,552 | ) | ||||
| Basic and diluted weighted average shares outstanding | 29,412,648 | 28,985,924 | 29,213,697 | 16,156,291 | ||||||||||||
| Basic and diluted net loss per share: | ||||||||||||||||
| Continuing operations | $ | (0.15 | ) | $ | (0.13 | ) | $ | (0.30 | ) | $ | (0.70 | ) | ||||
| Discontinuing operations | (0.05 | ) | (0.01 | ) | (0.21 | ) | (0.02 | ) | ||||||||
| Net loss per shares attributable to common stockholder, basic and diluted | $ | (0.20 | ) | $ | (0.14 | ) | $ | (0.51 | ) | $ | (0.72 | ) | ||||
| 18 |
| September 30, 2017 | December 31, 2016 | ||||||
| SVB Term Note, repaid in 2017 | $ | — | $ | 4,667 | |||
| PFG Term Note, net of discount of $865 | 5,135 | — | |||||
| Less unamortized debt issuance costs | 199 | 13 | |||||
| Term notes, net | 4,936 | 4,654 | |||||
| Less current maturities | — | 2,000 | |||||
| Long-term portion | $ | 4,936 | $ | 2,654 | |||
Schedule of the PFG Term Computation of Diluted Shares Outstanding
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Three months ended June 30, | Six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Common stock warrants | 2,292,996 | 2,301,576 | 2,292,996 | 2,301,576 | ||||||||||||
| Common stock options | 2,568,572 | 2,176,036 | 2,568,572 | 2,176,036 | ||||||||||||
| Total | 4,861,568 | 4,477,612 | 4,861,568 | 4,477,612 | ||||||||||||
| Anti-dilutive securities | 4,861,568 | 4,477,612 | 4,861,568 | 4,477,612 | ||||||||||||
The Company has two pre-Merger legacy equity incentive plans: the 2008 Stock Option Plan (the “2008 Plan”) and theCancer Genetics Inc. 2011 Equity Incentive Plan (the “2011 Plan”), and together with the 2008StemoniX Inc. 2015 Stock Option Plan (the “2015 Plan”, and collectively, the “Stock“Frozen Stock Option Plans”). The Frozen Stock Option Plans as well as the 2021 Plan (as defined below) are meant to provide additional incentive to officers, employees and consultants to remain in ourthe Company’s employment. Options granted are generally exercisable for up to years.
As StemoniX was the acquirer for future awards underaccounting purposes, the 2011 Plan and 134,354 shares remain available for future awardspre-Merger vested stock options granted by CGI under the 2008 Plan.
| 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, 2017 | 2,198 | $ | 9.09 | 7.04 | $ | — | ||||||
| Granted | 860 | 2.87 | ||||||||||
| Exercised | (3 | ) | 2.23 | |||||||||
| Cancelled or expired | (239 | ) | 10.80 | |||||||||
| Outstanding September 30, 2017 | 2,816 | $ | 7.05 | 7.19 | $ | 367 | ||||||
| Exercisable September 30, 2017 | 1,533 | $ | 9.54 | 5.69 | $ | 76 | ||||||
For StemoniX stock options as of September 30, 2017.
The Company uses a simplified method to determine the expected term for the valuation of employee options. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to options with service conditions. For options granted to nonemployees, the contractual term is used for the valuation of the options.
On March 30, 2021, the Company granted stock options to officers and other employees, stock options to independent Board members and a restricted stock unit (“RSU”) of shares to the Company’s Board chair. The options granted to officers and employees vest % one year from the grant date and thereafter equally over the next 36 months. The options granted to Board members vested upon grant. The Board chair RSU vested one year from the grant date.
| 19 |
During the six months ended June 30, 2022, the Company granted stock options to officers and other employees and restricted stock units (“RSUs”) to the Company’s Board of Directors. The options granted to officers and employees vest over various terms based on the underlying agreement, as contain performance vesting criteria. The RSUs granted to Board members vest one year from the grant date.
As of June 30, 2022, there were additional shares available for the Company to grant under the 2021 Plan. The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The assumptions for periods corresponding withstock option grants during the expected life of the option. We use an expected dividend yield of zero, as we do not anticipate paying any dividendssix months ended June 30, 2022 and 2021 are provided in the foreseeable future. Forfeitures will be recorded when they occur.
| 2022 | 2021 | |||||||
| Valuation assumptions | ||||||||
| Expected dividend yield | % | % | ||||||
| Expected volatility | % – | % | - | % | ||||
| Expected term (years) – simplified method | – | – | ||||||
| Risk-free interest rate | % – | % | % – | % | ||||
Schedule of Stock Option Activity
| Number of Options | Weighted average exercise price | Weighted average remaining contractual term | ||||||||||
| Balance as of January 1, 2021 | 756,383 | $ | 1.82 | |||||||||
| Granted | 1,229,590 | 4.61 | ||||||||||
| Additional options grant StemoniX holders | 205,856 | 4.61 | ||||||||||
| Options assumed in Merger | 55,840 | 45.95 | ||||||||||
| Exercised | (29,916 | ) | 1.24 | |||||||||
| Forfeited | (34,717 | ) | 2.00 | |||||||||
| Expired | (7,000 | ) | 1.39 | |||||||||
| Balance as of June 30, 2021 | 2,176,036 | $ | 4.80 | |||||||||
| Balance as of January 1, 2022 | 2,320,097 | 4.19 | ||||||||||
| Granted | 739,801 | 1.01 | ||||||||||
| Exercised | (5,174 | ) | 0.96 | |||||||||
| Forfeited | (440,385 | ) | 3.54 | |||||||||
| Expired | (45,767 | ) | 25.62 | |||||||||
| Balance as of June 30, 2022 | 2,568,572 | $ | 2.80 | |||||||||
| Exercisable as of June 30, 2022 | 1,123,471 | $ | 3.50 | |||||||||
The following table presents the weighted-average assumptions used to estimate theweighted average grant-date fair value of options granted to employees during the periods presented:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
| Volatility | 75.28 | % | 74.30 | % | 74.60 | % | 74.30 | % | |||
| Risk free interest rate | 1.92 | % | 1.17 | % | 1.97 | % | 1.17 | % | |||
| Dividend yield | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||
| Term (years) | 5.73 | 5.92 | 5.90 | 5.92 | |||||||
| Weighted-average fair value of options granted during the period | 1.91 | 1.30 | 1.89 | 1.30 | |||||||
The following table presents the weighted-average assumptions used to estimate the fairaggregate intrinsic value of options reaching their measurement dateoutstanding as of June 30, 2022 was $ thousand. The intrinsic value of options exercisable as of June 30, 2022 was $ thousand. The total intrinsic value of options exercised was $ thousand and $ thousand for non-employees during the periods presented:six months ended June 30, 2022 and 2021, respectively.
| 20 |
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||
| Volatility | 74.39 | % | 72.97 | % | 76.06 | % | 74.50 | % | |||
| Risk free interest rate | 2.17 | % | 1.46 | % | 2.19 | % | 1.43 | % | |||
| Dividend yield | 0.00 | % | 0.00 | % | 0.00 | % | 0.00 | % | |||
| Term (years) | 6.64 | 7.64 | 6.89 | 7.89 | |||||||
Schedule of Share Based Compensation Activity
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| For the three months ended June 30, | For the six months ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Stock Options | $ | 139 | $ | 322 | $ | 397 | $ | 688 | ||||||||
| Shares issued for services | 143 | 10 | 163 | 10 | ||||||||||||
| Total | $ | 282 | $ | 332 | $ | 560 | $ | 698 | ||||||||
| Share based compensation | $ | 282 | $ | 332 | $ | 560 | $ | 698 | ||||||||
As of June 30, 2017,2022, there was $383,829$ million of total unrecognized compensation cost related to non-vested restrictedunvested stock options granted under the Plan. That cost is expected to employeesbe recognized over a weighted average period of years.
Note 13. Segment Information
The Company reports segment information based on how the Company’s chief operating decision maker (“CODM”) regularly reviews operating results, allocates resources and directors; we expect to recognizemakes decisions regarding business operations. For segment reporting purposes, the cost over 1.50 years.
During the activitiesthree and six months ended June 30, 2022, three and six customers accounted for our non-vested restricted stock awardsapproximately 95% and 78%, respectively, of the consolidated revenue. During the three and six months ended June 30, 2021 six and five customers accounted for approximately 89% and 70% of the respective consolidated revenue.
During the three and six months ended June 30, 2022, approximately, 47% and 44% respectively, of the Company’s consolidated revenue were earned outside of the U.S. During the three and six months ended June 30, 2021, approximately, 15% and 24% respectively, of the Company’s consolidated revenue were earned outside of the U.S.
Customers representing 10% or more of the Company’s total revenue for the ninethree and six months ended SeptemberJune 30, 2017:
| Non-vested Restricted Stock Awards | ||||||
| Number of Shares (in thousands) | Weighted-Average Grant Date Fair Value | |||||
| Non-vested at January 1, 2017 | 80 | $ | 6.30 | |||
| Granted | 65 | 3.29 | ||||
| Vested | (30 | ) | 8.30 | |||
| Non-vested at September 30, 2017 | 115 | $ | 4.09 | |||
Schedule of Customers Representing Revenues
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Customer A | 49 | % | 14 | % | 36 | % | 19 | % | ||||||||
| Customer B | 24 | % | n/a | 13 | % | n/a | ||||||||||
| Customer C | 22 | % | 10 | % | 8 | % | n/a | |||||||||
| Customer D | n/a | 15 | % | 1 | % | 8 | % | |||||||||
| Customer E | n/a | 25 | % | n/a | 17 | % | ||||||||||
| Customer F | n/a | 4 | % | 15 | % | 15 | % | |||||||||
| Customer G | n/a | 21 | % | 5 | % | 11 | % | |||||||||
Note 14. Related Party Transactions
The following table presentsCompany raised approximately $3.9 million from the effectssale of stock-based compensation2020 Convertible Notes from January 1, 2021 through March 12, 2021 from related toparties, including former StemoniX Board members as well as one shareholder who owned more than 5% of Series B Preferred stock. This Series B preferred stock optionshareholder was also a Major Investor and restricted stock awards to employees and non-employeesreceived an Investor Warrant on our Consolidated Statements of Operations duringFebruary 23, 2021. Effective with the periods presented (in thousands):
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Cost of revenues | $ | 122 | $ | 83 | $ | 250 | $ | 219 | |||||||
| Research and development | 11 | 45 | 110 | 140 | |||||||||||
| General and administrative | 356 | 356 | 949 | 1,095 | |||||||||||
| Sales and marketing | 30 | 30 | 86 | 84 | |||||||||||
| Total stock-based compensation | $ | 519 | $ | 514 | $ | 1,395 | $ | 1,538 | |||||||
During the three and nine months ended September 30, 2017, the Company received approximately $56,000 and $1,827,000, respectively, from shareholders who exercised warrants to purchase 25,000 and 811,900 shares of common stock, respectively, at $2.25. In addition, on March 28, 2017, warrant holders exercised warrants to purchase 90,063 shares of common stock at an exercise price of $2.25 per share using the net issuance exercise method whereby 45,162 shares were surrendered as payment in full of the exercise price resulting in a net issuance of 44,901 shares.
| Issued With / For | Exercise Price | Warrants Outstanding January 1, 2017 | 2017 Warrants Issued | 2017 Warrants Exercised | Warrants Outstanding September 30, 2017 | ||||||||||
| Non-Derivative Warrants: | |||||||||||||||
| Financing | $ | 10.00 | 243 | — | — | 243 | |||||||||
| Financing | 15.00 | 361 | — | — | 361 | ||||||||||
| Debt guarantee | 15.00 | 109 | — | — | 109 | ||||||||||
| 2015 Offering | 5.00 | 3,450 | — | — | 3,450 | ||||||||||
| Total non-derivative warrants | 6.42 | C | 4,163 | — | — | 4,163 | |||||||||
| Derivative Warrants: | |||||||||||||||
| 2016 Offerings | 2.25 | A | 2,870 | — | (902 | ) | 1,968 | ||||||||
| 2017 Debt | 2.82 | B | — | 443 | — | 443 | |||||||||
| Total derivative warrants | 2.35 | C | 2,870 | 443 | (902 | ) | 2,411 | ||||||||
| Total | $ | 4.93 | C | 7,033 | 443 | (902 | ) | 6,574 | |||||||
| Issued with/for | Fair value of warrants outstanding as of December 31, 2016 | Fair value of warrants issued | Fair value of warrants exercised | Change in fair value of warrants | Fair value of warrants outstanding as of September 30, 2017 | ||||||||||||||
| 2016 Offerings | $ | 2,018 | $ | — | $ | (2,782 | ) | $ | 4,107 | $ | 3,343 | ||||||||
| 2017 Debt | — | 1,004 | — | (180 | ) | 824 | |||||||||||||
| $ | 2,018 | $ | 1,004 | $ | (2,782 | ) | $ | 3,927 | $ | 4,167 | |||||||||
| Issued During the | Exercised During the | ||||||||||||||||||||
| 2016 Offerings | Three Months Ended September 30, 2016 | Nine Months Ended September 30, 2016 | Three Months Ended September 30, 2017 | Nine Months Ended September 30, 2017 | As of September 30, 2017 | As of December 31, 2016 | |||||||||||||||
| Exercise price | $ | 2.25 | $ | 2.25 | $ | 2.25 | $ | 2.25 | $ | 2.25 | $ | 2.25 | |||||||||
| Expected life (years) | 5.50 | 5.50 | 4.30 | 4.78 | 4.33 | 5.06 | |||||||||||||||
| Expected volatility | 73.28 | % | 74.36 | % | 74.20 | % | 76.24 | % | 75.07 | % | 72.82 | % | |||||||||
| Risk-free interest rate | 1.21 | % | 1.30 | % | 1.81 | % | 1.94 | % | 1.92 | % | 1.93 | % | |||||||||
| Expected dividend yield | — | % | — | % | — | % | — | % | — | % | — | % | |||||||||
| 2017 Debt | Issued During the Nine Months Ended September 30, 2017 | As of September 30, 2017 | |||||
| Exercise price | $ | 2.82 | $ | 2.82 | |||
| Expected life (years) | 7.00 | 6.48 | |||||
| Expected volatility | 74.61 | % | 74.07 | % | |||
| Risk-free interest rate | 2.22 | % | 2.16 | % | |||
| Expected dividend yield | — | % | — | % | |||
| September 30, 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 | $ | 4,167 | $ | — | $ | — | $ | 4,167 | |||||||
| Note payable | 228 | — | — | 228 | |||||||||||
| $ | 4,395 | $ | — | $ | — | $ | 4,395 | ||||||||
| December 31, 2016 | |||||||||||||||
| Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Warrant liability | $ | 2,018 | $ | — | $ | — | $ | 2,018 | |||||||
| Note payable | 114 | — | — | 114 | |||||||||||
| $ | 2,132 | $ | — | $ | — | $ | 2,132 | ||||||||
| Note Payable | Warrant | ||||||
| to VenturEast | Liability | ||||||
| Fair value at December 31, 2016 | $ | 114 | $ | 2,018 | |||
| Fair value of warrants issued | — | 1,004 | |||||
| Fair value of warrants exercised | — | (2,782 | ) | ||||
| Change in fair value | 114 | 3,927 | |||||
| Fair value at September 30, 2017 | $ | 228 | $ | 4,167 | |||
Note 15. Contingencies
We are not currently subject to any material legal proceedings. However, we paid Dr. Chaganti $50,000 which was recognized as an expensemay from time to time become a party to various legal proceedings arising in fiscal 2015 when one patent was issued.
Note 16. Subsequent Event
In July 2022, the Company may become involvedsigned a new lease for equipment in various claims and legal proceedings. In the opinionits Maple Grove facility. The new three-year lease commencing in August 2022 requires monthly payments of management, the ultimate liability or disposition thereof is not expected to have a material adverse effect on our financial condition, results of operations, or liquidity.$8 thousand.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis provides information management believes is intended to help facilitate anuseful in understanding of ourthe operating results, cash flows and financial condition and our historical results of operations for the periods presented. This MD&AVyant Bio, Inc. The discussion should be read in conjunction with both the unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes theretoand Management’s Discussion and Analysis of Financial Condition and Results of Operations, each included in our annual reportAnnual Report on Form 10-K filedfor the year ended December 31, 2021. This discussion contains various “Forward-Looking Statements” within the meaning of the Private Securities Litigation Reform Act of 1995. We refer readers to the statement entitled “Forward-Looking Statements” located at the end of this Item 2.
Overview
Vyant Bio, Inc. (the “Company”, “Vyant Bio”, “VYNT” or “we”), is an innovative biotechnology company transforming drug discovery for complex neurodevelopmental and neurodegenerative disorders. Our central nervous system (“CNS”) drug discovery platform combines the scientific knowhow of our team coupled with the SEC on March 23, 2017. This MD&A may contain forward-looking statements that involve risksapplication of human-derived organoid models of brain disease, scaled biology, and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements” below.
In December 2021, the Company’s Board of Directors approved a plan to pharmaceuticals, and particularlysell the vivoPharm Pty Ltd (“vivoPharm”) business to oncology drugs, thereby increasingallow the efficiency of trials while lowering related costs. We believe tailored therapeutics can revolutionize oncology medicine through molecular- and biomarker-based testing services, enabling physicians and researchersCompany to target the factors that make each patient and disease unique.
Recent Developments
In July 2022, as part of the Company’s periodic evaluation of factors that impact the Company’s execution of its business, financial and research and development plans, particularly in light of the current status of the overall biotech financial markets, the Company determined to emphasize its operational focus and capital resources on developing therapeutic candidates to treat Rett Syndrome (“Rett”). Our specific intent is to be highly focused on the validation of the power of our proprietary programs, such as MatBAdrug discovery platform in a planned human proof-of-concept clinical trial currently anticipated to begin in early 2023. We have identified an FDA-approved drug and Focus::NGS.
Consistent with expertisethe Company’s strategy, the Company will continue its CDD and PD programs with its teams of experts in early stage discovery servicesboth areas, although at a reduced pace, and pre-clinical testing.
Cancer Genetics, Inc. Merger
On March 30, 2021, Vyant Bio, Inc. (the “Company”, “Vyant Bio”, “VYNT” or “we”), formerly known as Cancer Genetics, Inc. (“CGI”), completed its business combination (the “Merger”) with StemoniX, Inc., a range of therapeutic indications, including lymphomas, leukemia, GI-cancers, liver cancer, pancreatic cancer, non-small cell lung cancer, and other non-cancer rare diseases. vivoPharm is presently serving over forty biotechnology and pharmaceutical companies across five continents in over 55 studies and trials with highly specialized development, clinical and preclinical research. Over the past 10 years, vivoPharm has also generated an extensive library of human xenograft and syngeneic tumor models, including subcutaneous, orthotopic and metastatic models.
| 22 |
The Merger was accounted for as a reverse acquisition with StemoniX being the accounting acquirer of CGI using the acquisition method of accounting. Under acquisition accounting, the assets and liabilities (including executory contracts, commitments and other obligations) of CGI, as of March 30, 2021, the closing date of the Merger, were recorded at their respective fair values and added to those of StemoniX. Any excess of purchase price consideration over the fair values of the identifiable net assets is recorded as goodwill. The total consideration paid by StemoniX in the Merger amounted to $59.9 million, which represents the fair value of CGI’s 11,007,186 shares of Common Stock or $50.74 million, 2,157,686 Common Stock warrants or $9.04 million and 55,907 Common Stock options outstanding on the closing date of the Merger with a fair value of $139 thousand. In addition, at the effective time of the Merger, existing StemoniX shareholders received an additional 804,711 incremental shares in accordance with the conversion ratio set forth in the Merger Agreement.
Business Disposals - Discontinuing Operations
In December 2021, vivoPharm met the criteria to be reported as discontinuing operations. Therefore, the related assets, liabilities, operating results and cash flows of the vivoPharm business are billedreported as discontinuing operations as of December 31, 2021, and for period from the Merger date of March 30, 2021 through December 31, 2021. See Note 3. Discontinuing Operations, to the customer directly. While we have agreements with our Biopharma clients, volumescondensed consolidated financial statements included in Part I, Item 1 above for additional information.
Revenue from these clientsContinuing Operations
The Company’s primary revenue sources are subjectmicroOrgan plate product sales and prior to the progression and continuationend of the clinical trials which can impactfirst quarter of 2022 the performance of preclinical drug testing volume. We also deriveservices using our microOrgan technology, referred to as Discovery as a Service, or DaaS. The Company plans to focus its resources on internal drug discovery development programs and will wind down substantially all customer revenue generation in 2022. During the three and six months ended June 30, 2022, 47% and 44 %, respectively, of revenue from Discovery Services, which are services provided incontinuing operations was generated from customers located outside of the developmentUnited States. During the three and six months ended June 30, 2021, 15% and 24%, respectively, of new testing assays and methods. Discovery Services are billed directly to the customer.
Cost of Goods Sold from Continuing Operations
The Company separately reports cost of goods sold for product sales and service revenue. During the three months ended September 30, 2016, one Biopharma client accounted for approximately 18% of our revenue.
Operating Expenses
The Company classifies its operating expenses into three categories: research and development, sales and marketing, andselling, general and administrative. Our operatingadministrative as well as merger related costs. Operating expenses principally consist of personnel costs including non-cash stock-based compensation, facility costs, outside services, laboratory consumables, andrent, overhead, disease model development costs, and marketing program costs, and legal and accounting fees.
Research and Development Expenses.
| 23 |
Selling, General and Administrative Expenses.
Merger Related Costs. Merger related costs are direct professional service and investor banker costs incurred by the Company in connection with the Merger.
Coronavirus (COVID-19) Pandemic. On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. Many of the Company’s customers worldwide were impacted by COVID-19 and temporarily closed their facilities which impacted revenue in the first half of 2020. While the impact of the pandemic on our business lessened in 2021, the global outbreak of COVID-19 has continued in 2022 with new variants and has impacted the way we operate our business, including remote working, including its impact on technology security risks and employee retention. The extent to which the COVID-19 pandemic may impact the Company’s future business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as, the duration of the outbreak, travel restrictions and social distancing in the U.S. and other selling costs including sales collateralscountries, business closures or business disruptions, and trade shows. We expect our salesthe effectiveness of actions taken in the U.S. and marketing expensesother countries to increase as we expand into new geographiescontain and add new clinical teststreat the disease.
The Company is actively monitoring the impact of the COVID-19 pandemic on its business, results of operations and services.
As the Merger was consummated at the close of business on March 30, 2021, the Company’s condensed consolidated statement of operations for the six months ended June 30, 2021 includes three months and one day of operations associated with the December holiday season when patients are less likelyhistorical CGI business. Further, as noted in Note 3. Discontinuing Operations, to visit their health care providers. We expect this trendthe condensed consolidated financial statements included herein, the vivoPharm business has been classified as discontinuing operations commencing in seasonality to continuethe fourth quarter of 2021. Therefore, the results for the foreseeable future.
Results of Operations
Three and Six Months Ended SeptemberJune 30, 20172022 and 2016
The following table sets forth certain information concerning ourthe Company’s results offrom continuing operations for the periods shown:
Three months ended June 30, | Dollar | % | Six months ended June 30, | Dollar | % | |||||||||||||||||||||||||||
| 2022 | 2021 | Change | Change | 2022 | 2021 | Change | Change | |||||||||||||||||||||||||
| Revenue: | ||||||||||||||||||||||||||||||||
| Service | $ | - | $ | 213 | $ | (213 | ) | (100 | )% | $ | 94 | $ | 310 | $ | (216 | ) | (70 | )% | ||||||||||||||
| Product | 165 | 116 | 49 | 42 | % | 374 | 222 | 152 | 68 | % | ||||||||||||||||||||||
| Total revenue | $ | 165 | $ | 329 | $ | (164 | ) | (50 | )% | $ | 468 | $ | 532 | $ | (64 | ) | (12 | )% | ||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||||||||||||||||
| Cost of goods sold – service | - | 103 | (103 | ) | (100 | )% | 38 | 167 | (129 | ) | (77 | )% | ||||||||||||||||||||
| Cost of goods sold – product | 304 | 345 | (41 | ) | (12 | )% | 652 | 741 | (89 | ) | (12 | )% | ||||||||||||||||||||
| Research and development | 1,688 | 910 | 778 | 85 | % | 3,239 | 1,730 | 1,509 | 87 | % | ||||||||||||||||||||||
| Selling, general and administrative | 2,509 | 2,737 | (228 | ) | (8 | )% | 5,272 | 3,951 | 1,321 | 33 | % | |||||||||||||||||||||
| Merger related costs | - | 165 | (165 | ) | (100 | )% | - | 2,310 | (2,310 | ) | (100 | )% | ||||||||||||||||||||
| Total operating costs and expenses | 4,501 | 4,260 | 241 | 6 | % | 9,201 | 8,899 | 302 | 3 | % | ||||||||||||||||||||||
| Loss from operations | (4,336 | ) | (3,931 | ) | (405 | ) | 10 | % | (8,733 | ) | (8,367 | ) | (366 | ) | 4 | % | ||||||||||||||||
| Other (expense) income: | ||||||||||||||||||||||||||||||||
| Change in fair value of warrant liability | - | - | - | n/a | - | 214 | (214 | ) | (100 | )% | ||||||||||||||||||||||
| Change in fair value of share-settlement obligation derivative | - | - | - | n/a | - | (250 | ) | 250 | (100 | )% | ||||||||||||||||||||||
| Loss on debt conversions | - | - | - | n/a | - | (2,518 | ) | 2,518 | (100 | )% | ||||||||||||||||||||||
| Other income (expense), net | 11 | (23 | ) | 34 | (148 | )% | 2 | (391 | ) | 393 | (100 | )% | ||||||||||||||||||||
| Total other (expense) income | 11 | (23 | ) | 34 | (148 | )% | 2 | (2,945 | ) | 2,947 | (100 | )% | ||||||||||||||||||||
| Loss from continuing operations before income taxes | (4,325 | ) | (3,954 | ) | (371 | ) | 9 | % | (8,559 | ) | (11,312 | ) | 2,581 | 23 | % | |||||||||||||||||
| Income tax expense (benefit) | - | - | - | - | - | - | - | |||||||||||||||||||||||||
| Net loss from continuing operations | $ | (4,325 | ) | $ | (3,954 | ) | $ | (371 | ) | 9 | % | $ | (8,559 | ) | $ | (11,312 | ) | $ | 2,581 | 23 | % | |||||||||||
| 24 |
| Three Months Ended September 30, | Change | |||||||||||||
| (dollars in thousands) | 2017 | 2016 | $ | % | ||||||||||
| Revenue | $ | 8,028 | $ | 6,750 | $ | 1,278 | 19 | % | ||||||
| Cost of revenues | 4,588 | 4,444 | 144 | 3 | % | |||||||||
| Research and development expenses | 981 | 1,594 | (613 | ) | (38 | )% | ||||||||
| General and administrative expenses | 4,346 | 3,701 | 645 | 17 | % | |||||||||
| Sales and marketing expenses | 1,301 | 1,054 | 247 | 23 | % | |||||||||
| Loss from operations | (3,188 | ) | (4,043 | ) | 855 | (21 | )% | |||||||
| Interest income (expense) | (340 | ) | (107 | ) | (233 | ) | 218 | % | ||||||
| Change in fair value of acquisition note payable | 105 | 18 | 87 | 483 | % | |||||||||
| Change in fair value of warrant liability | 2,790 | 712 | 2,078 | 292 | % | |||||||||
| Other expense | — | (325 | ) | 325 | (100 | )% | ||||||||
| Net (loss) | $ | (633 | ) | $ | (3,745 | ) | $ | 3,112 | (83 | )% | ||||
Operating results: Comparison for the future. The non-GAAP financial measures in the table below include adjusted net (loss)three and the related adjusted basicsix months ended June 30, 2022 and diluted net (loss) per share amounts.
Revenue from GAAPContinuing Operations
Total revenue decreased 50%, or $164 thousand, to Non-GAAP Results (in thousands, except per share amounts):
| Three Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Reconciliation of net (loss): | ||||||||
| Net (loss) | $ | (633 | ) | $ | (3,745 | ) | ||
| Adjustments: | ||||||||
| Change in fair value of acquisition note payable | (105 | ) | (18 | ) | ||||
| Change in fair value of warrant liability | (2,790 | ) | (712 | ) | ||||
| Adjusted net (loss) | $ | (3,528 | ) | $ | (4,475 | ) | ||
| Reconciliation of basic net (loss) per share: | ||||||||
| Basic net (loss) per share | $ | (0.03 | ) | $ | (0.23 | ) | ||
| Adjustments to net (loss) | (0.13 | ) | (0.04 | ) | ||||
| Adjusted basic net (loss) per share | $ | (0.16 | ) | $ | (0.27 | ) | ||
| Basic weighted-average shares outstanding | 21,577 | 16,519 | ||||||
| Reconciliation of diluted net (loss) per share: | ||||||||
| Diluted net (loss) per share | $ | (0.15 | ) | $ | (0.23 | ) | ||
| Adjustments to net (loss) | (0.01 | ) | (0.04 | ) | ||||
| Adjusted diluted net (loss) per share | $ | (0.16 | ) | $ | (0.27 | ) | ||
| Diluted weighted-average shares outstanding | 22,359 | 16,519 | ||||||
Total revenue decreased 41%12%, or $64 thousand, to $0.16 during$468 thousand for the six months ended June 30, 2022, as compared with $532 thousand for the six months ended June 30, 2021. The decrease in the current-year periods were the result of our planned decrease in revenue generating activities at our Maple Grove facility as we transition its operations to an internal research and development facility in 2022. Product revenue increased in the current-year periods as compared with the prior-year periods, primarily from increased shipping volumes as we wind down our customer sales, as well as increased pricing.
Cost of Goods Sold from Continuing Operations
Cost of goods sold – service aggregated $103 thousand for the three months ended SeptemberJune 30, 2017, down from $0.27 during2021, resulting in a cost of goods sold of 48% of service revenue. The 2021 period was negatively impacted by incremental costs incurred to achieve contract deliverables. All service revenue contracts were completed in the first quarter of 2022 resulting in no service revenue or cost of sales in the second quarter of 2022.
Cost of goods sold – service aggregated $38 thousand and $167 thousand, respectively, for the six months ended June 30, 2022 and 2021, resulting in a cost of goods sold of 40% and 54%, respectively, of service revenue. The 2022 period was favorably impacted by a higher margin project and the 2021 period was negatively impacted by incremental costs incurred to achieve contract deliverables.
Cost of goods sold – product aggregated $304 thousand and $345 thousand for the three months ended SeptemberJune 30,
Operating Expenses from $0.27 during the three months ended September 30, 2016.
| Three Months Ended September 30, | Change | |||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| (dollars in thousands) | $ | % | $ | % | $ | % | ||||||||||||||
| Biopharma Services | $ | 4,168 | 52 | % | $ | 3,805 | 56 | % | $ | 363 | 10 | % | ||||||||
| Clinical Services | 2,880 | 36 | % | 2,687 | 40 | % | 193 | 7 | % | |||||||||||
| Discovery Services | 980 | 12 | % | 258 | 4 | % | 722 | 280 | % | |||||||||||
| Total Revenue | $ | 8,028 | 100 | % | $ | 6,750 | 100 | % | $ | 1,278 | 19 | % | ||||||||
Research and development expenses increased 19%by 85%, or $1.3 million,$778 thousand, to $8.0$1.7 million for the three months ended SeptemberJune 30, 2017,2022 from $6.8$910 thousand for the three months ended June 30, 2021. Research and development expenses increased by 87%, or $1.5 million, to $3.2 million for the six months ended June 30, 2022 from $1.7 million for the six months ended June 30, 2021. This increase is principally due to a $853 thousand increase in payroll-related and consulting expenses, a $417 thousand increase in research and development activities at our Maple Grove facility, and $230 thousand related to moving to a new facility in California in order to reduce our annual lease expense in that location.
Selling, general and administrative expenses decreased by 8%, or $228 thousand, to $2.5 million for the three months ended SeptemberJune 30, 2016, principally due to an increase in Discovery Services of $0.7 million and an increase in our Biopharma Services of $0.4 million. Our average revenue per test decreased to $376 per test for the three months ended September 30, 2017 from $397 per test for the three months ended September 30, 2016, principally due to the additional Clinical Services volume from our Los Angeles facility, which yields lower average revenue per test. Test volume increased by 11% from 12,348 tests for the three months ended September 30, 2016 to 13,726 tests for the three months ended September 30, 2017.
Merger related costs for the six months ended June 30, 2021 were $2.3 million. These professional service-related costs and investment banker fees were incurred related to the Merger.
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Other Expenses, net from $3.8Continuing Operations
Total other income, net was not significant for the quarter ended June 30, 2022 and 2021.
Total other income, net was not significant for the six months ended June 30, 2022. Total other expense for the six months ended June 30, 2021 was $2.9 million, which consisted of a $250 thousand mark-to-market loss for an embedded compound derivative from the 2020 Convertible Notes, $2.5 million loss on the conversion of these notes to equity upon the closing of the Merger, a $214 thousand mark to market warrant liability gain, and interest expense of $368 thousand primarily related to the 2020 Convertible Notes.
Discontinuing Operations
In connection with the Merger, the Company was deemed to be the accounting acquiror of the vivoPharm business on March 30, 2021. Therefore, the vivoPharm business is reflected in discontinued operations for three months and one day in the period ended June 30, 2021.
In the three months ended SeptemberJune 30, 2016 due to completing more studies from its top ten customers. Revenue from Clinical Services customers increased by $0.22022, the vivoPharm business generated $1.7 million or 7%, compared toin revenue and incurred a $1.5 million non-cash net impairment loss. During the threesecond quarter of 2022, the Company received two offers for mutually exclusive components of the vivoPharm business and assessed the carrying value of each asset group using the estimated net sales proceeds based on these non-binding offers.
In the six months ended SeptemberJune 30, 2016, due to increased clinical test volume. Revenue2022, the vivoPharm business generated $3.0 million in revenue and incurred a $6.2 million net loss. This net loss includes a goodwill impairment charge of $2.2 million and an impairment charge of $3.6 million for intangible assets arising from Discovery Services increased 280%, or $0.7the Merger. The impairment loss of $5.8 million during the threesix months ended SeptemberJune 30, 2017 due to2022 was the acquisition of vivoPharm, which accounted for $0.8 million of the increase.
| Nine Months Ended September 30, | Change | |||||||||||||
| (dollars in thousands) | 2017 | 2016 | $ | % | ||||||||||
| Revenue | $ | 21,598 | $ | 19,819 | $ | 1,779 | 9 | % | ||||||
| Cost of revenues | 12,831 | 12,832 | (1 | ) | — | % | ||||||||
| Research and development expenses | 3,080 | 4,806 | (1,726 | ) | (36 | )% | ||||||||
| General and administrative expenses | 11,352 | 11,677 | (325 | ) | (3 | )% | ||||||||
| Sales and marketing expenses | 3,437 | 3,731 | (294 | ) | (8 | )% | ||||||||
| Loss from operations | (9,102 | ) | (13,227 | ) | 4,125 | (31 | )% | |||||||
| Interest income (expense) | (760 | ) | (323 | ) | (437 | ) | 135 | % | ||||||
| Change in fair value of acquisition note payable | (114 | ) | 119 | (233 | ) | (196 | )% | |||||||
| Change in fair value of warrant liability | (3,927 | ) | 729 | (4,656 | ) | (639 | )% | |||||||
| Other income | (46 | ) | (325 | ) | 279 | (86 | )% | |||||||
| Loss before income taxes | (13,949 | ) | (13,027 | ) | (922 | ) | 7 | % | ||||||
| Income tax provision (benefit) | (970 | ) | — | (970 | ) | n/a | ||||||||
| Net (loss) | $ | (12,979 | ) | $ | (13,027 | ) | $ | 48 | — | % | ||||
| Nine Months Ended September 30, | ||||||||
| 2017 | 2016 | |||||||
| Reconciliation of net (loss): | ||||||||
| Net (loss) | $ | (12,979 | ) | $ | (13,027 | ) | ||
| Adjustments: | ||||||||
| Change in fair value of acquisition note payable | 114 | (119 | ) | |||||
| Change in fair value of warrant liability | 3,927 | (729 | ) | |||||
| Adjusted net (loss) | $ | (8,938 | ) | $ | (13,875 | ) | ||
| Reconciliation of basic and diluted net (loss) per share: | ||||||||
| Basic and diluted net (loss) per share | $ | (0.65 | ) | $ | (0.88 | ) | ||
| Adjustments to net (loss) | 0.20 | (0.05 | ) | |||||
| Adjusted basic and diluted net (loss) per share | $ | (0.45 | ) | $ | (0.93 | ) | ||
| Basic and diluted weighted-average shares outstanding | 20,059 | 14,868 | ||||||
| Nine Months Ended September 30, | Change | |||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||
| (dollars in thousands) | $ | % | $ | % | $ | % | ||||||||||||||
| Biopharma Services | 11,175 | 52 | % | $ | 11,374 | 57 | % | $ | (199 | ) | (2 | )% | ||||||||
| Clinical Services | 8,887 | 41 | % | 7,685 | 39 | % | 1,202 | 16 | % | |||||||||||
| Discovery Services | 1,536 | 7 | % | 760 | 4 | % | 776 | 102 | % | |||||||||||
| Total Revenue | $ | 21,598 | 100 | % | $ | 19,819 | 100 | % | $ | 1,779 | 9 | % | ||||||||
Liquidity and Capital Resources
The Company’s operating activities have been primarily funded with proceeds from the sale of Liquidity
| Nine Months Ended September 30, | |||||||
| (in thousands) | 2017 | 2016 | |||||
| Cash provided by (used in): | |||||||
| Operating activities | $ | (10,249 | ) | $ | (17,299 | ) | |
| Investing activities | (2,121 | ) | (472 | ) | |||
| Financing activities | 7,675 | 9,028 | |||||
| Net (decrease) in cash and cash equivalents | $ | (4,695 | ) | $ | (8,743 | ) | |
| 26 |
The Company expects to continue to incur operating losses in the future, unless and until the Company’s drug discovery efforts or other revenue from collaborators are able to demonstrate a level of success that would lead to potential out- licensing or sale of therapeutic assets. In addition, the Company will continue to incur the costs of being public, including legal and audit fees and director’s and officer’s liability insurance. These losses have had, and will continue to have, an adverse effect on the Company’s working capital, total assets and stockholders’ equity. Because of the numerous risks and uncertainties associated with drug discovery and development efforts and costs associated with being a public company, the Company is unable to predict when it will become profitable, and it may never become profitable. Even if the Company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis. The Company’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows.
Lincoln Park Capital Fund, LLC Agreement
On March 28, 2022, the Company entered into a purchase agreement, or Purchase Agreement, with Lincoln Park Capital Fund, LLC (“Lincoln Park”), which, subject to the terms and conditions, provides that the Company has the right to sell to Lincoln Park and Lincoln Park is obligated to purchase up to $15.0 million netof its common shares. Additionally, on March 28, 2022, the Company entered into a registration rights agreement (the “Registration Rights Agreement”) with Lincoln Park, pursuant to which the Company agreed to file a registration statement with the Securities and Exchange Commission (the “SEC”), covering the resale of shares of common stock issued to Lincoln Park under the Purchase Agreement. In addition, under the Purchase Agreement, the Company agreed to issue a commitment fee of 405,953 common shares, or the Commitment Shares, as consideration for Lincoln Park entering into the Purchase Agreement. Under the Purchase Agreement, the Company may from time to time for 30 months following May 9, 2022 (the “Commencement Date”), at its discretion, direct Lincoln Park to purchase on any single business day, or a Regular Purchase, up to (i) 50,000 common shares, (ii) 75,000 common shares if the closing sale price of its common shares is not below $1.50 per share on Nasdaq or (iii) 100,000 common shares if the closing sale price of its common shares is not below $2.50 per share on Nasdaq. In addition to Regular Purchases, the Company may also direct Lincoln Park to purchase other amounts as accelerated purchases or as additional accelerated purchases on the terms and subject to the conditions set forth in the Purchase Agreement. In any case, Lincoln Park’s commitment in any single Regular Purchase may not exceed $1.0 million absent a mutual agreement to increase such amount. The purchase price per share for each Regular Purchase will be based on prevailing market prices of the Common Stock immediately preceding the time of sale as computed in accordance with the terms set forth in the Purchase Agreement. There are no upper limits on the price per share that Lincoln Park must pay for shares of Common Stock under the Purchase Agreement. The Purchase Agreement may be terminated by the Company at any time after the Commencement Date, at its sole discretion, without any cost or penalty, by giving one business day notice to Lincoln Park to terminate the Purchase Agreement.
At The Market Financing
On April 8, 2022, the Company entered into an Equity Distribution Agreement (the “Sales Agreement”) with Canaccord Genuity LLC (the “Agent”), pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to $20,000,000 (the “Shares”), depending on market demand, with the Agent acting as an agent for sales. Sales of the Shares may be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended (the “Securities Act”), including, without limitation, sales made directly on or through the NASDAQ Capital Market. The Agent will use its commercially reasonable efforts to sell the Shares requested by the Company to be sold on its behalf, consistent with the Agent’s normal trading and sales practices, under the terms and subject to the conditions set forth in the Sales Agreement. The Company has no obligation to sell any of the Shares. The Company may instruct the Agent not to sell the Shares if the sales cannot be effected at or above the price designated by the Company from time to time and the Company may at any time suspend sales pursuant to the Sales Agreement. The Company will pay the Agent a commission of up to 3.0% of the gross proceeds from the sale of stockShares by the Agent under the Sales Agreement. The Company has also agreed to Aspire Capitalreimburse the Agent for its reasonable documented out-of-pocket expenses, including fees and disbursements of $3.0 million, proceeds from refinancing our debtits counsel, in the amount of $6.0 million$75,000. In addition, the Company has agreed to provide customary indemnification rights to the Agent. The Offering will terminate upon the earlier of (i) the issuance and borrowings on our line of credit of $2.0 million.
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During the ninenext twelve months, ended September 30, 2016 and principally resulted from proceeds received in the 2016 Offerings of $10.0 million, offset by principal payments made on the bank term note of $0.8 million and capital lease payments of $0.1 million.
In August 2022, in connection with efforts to sell its vivoPharm subsidiary, the Company determined that certain historical vivoPharm tax returns either had not been filed or were incorrectly filed with the U.S. Internal Revenue Service (“IRS”). As a result of this finding, the Company determined that it is more-likely-than not that the tax exposure is not significant to the consolidated financial statements taken as a whole. This conclusion is based on the specific facts related to this matter and how we believe the IRS will treat these facts. We plan to file corrective tax returns with the IRS as soon as possible. In the event the IRS does not accept our position, the Company’s tax liability could aggregate up to $3.6 million plus interest and penalties.
The Company’s forecast of the period of time through which ourits current financial resources will be adequate to support ourits operations and the costs to support our general and administrative, sales and marketing and research and development activities are forward-looking statements and involve risks and uncertainties.
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Cash Flows from Continuing Operations
Net cash flow from operating, investing and profitability;
Six Months Ended June 30, 2022 and 2021
| Six months ended June 30, | ||||||||
| 2022 | 2021 | |||||||
| Net cash used in operating activities | $ | (7,464 | ) | $ | (10,644 | ) | ||
| Net cash (used in) provided by investing activities | (361 | ) | 29,656 | |||||
| Net cash (used in) provided by financing activities | (318 | ) | 6,730 | |||||
| Net (decrease) increase in cash and cash equivalents from continuing operations | $ | (8,143 | ) | $ | 25,742 | |||
The Company had cash and cash equivalents of billing$11.7 million and collection processes;
Cash Used in Operating Activities
Net cash used in operating activities from continuing operations was $7.5 million for our new diagnostic tests;
Net cash used in operating activities from continuing operations was $10.6 million for our teststhe six months ending June 30, 2021, consisting of a net loss of $11.3 million, decreased for net non-cash adjustments of $3.8 million and CRO servicesadditional cash provided by operating assets and gain acceptanceliabilities items of our tests and CRO services$3.1 million. The non-cash adjustments include a loss from conversion of debt in the market;
Cash Used in Investing Activities
Net cash used in investing activities from continuing operations was $361 thousand for the six months ending June 30, 2022, related to investments in equipment. Net cash provided by investing activities from continuing operations was $29.7 million for the six months ended June 30, 2021, principally from CGI cash balances at the close of our tests;
Cash Used in Financing Activities
Net cash used in financing activities from continuing operations was $318 thousand, primarily related to succeed with our cost control initiative;
Off-Balance Sheet Arrangements
Since inception, we havethe Company has not engaged in any off-balance sheet activities as defined in Item 303(a)(4) of Regulation S-K.S-K.
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Critical Accounting Policies and Significant Judgment and Estimates
Critical accounting policies are those policies that require the application of management’s discussion and analysismost challenging subjective or complex judgment, often as a result of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of our consolidated financial statements requires usthe need to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates based on historical experience and make various assumptions, which management believes to be reasonable under the circumstances, which form the basis for judgments about the carrying valueseffect of assets and liabilitiesmatters that are not readily apparent from other sources. Actualinherently uncertain and may change in subsequent periods. Critical accounting policies involve judgments and uncertainties that are sufficiently likely to result in materially different results may differ from these estimates under different assumptions orand conditions.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 under Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include allstatements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions and future performance, and involve known and unknown risks, uncertainties and other factors, which may be beyond our control, and which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. All statements other than statements of historical fact are statements that are not historical facts. In some cases, youcould be forward-looking statements. You can identify these forward-looking statements by termsthrough our use of words such as “may,” “will,“can,” “anticipate,” “assume,” “should,” “could,“indicate,” “would,” “expects,“believe,” “plans,“contemplate,” “anticipates,“expect,” “believes,“seek,” “estimates,“estimate,” “projects,“continue,” “predicts,“plan,” “potential,“point to,” or“project,” “predict,” “could,” “intend,” “target,” “potential” and other similar words and expressions of the negative of those terms, and similar expressions and comparable terminology intended to identify forward-looking statements. These statements reflect our current views with respect to future events. future.
There are a number of important factors that could cause the actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to:
| ● | our strategic plans; | |
| ● | our ability to discover and develop novel therapeutics; | |
| ● | our ability to raise additional capital; | |
| ● | our ability to license any therapeutics we develop to larger companies; | |
| ● | the ability of our licensees to achieve milestones under future licensing agreements that will generate revenue for us; | |
| ● | our ability to secure strategic and clinical co-development partnerships with pharmaceutical and biotechnology companies; | |
| ● | our ability to make capital expenditures and to finance operations; | |
| ● | our cash position; | |
| ● | our ability to effectively manage current and future collaboration partnerships, joint venture or acquisition initiatives undertaken by the Company; | |
| ● | our ability to develop and build infrastructure and teams to manage our research and development, partnering and clinical development activities; | |
| ● | our ability to continue to retain and hire key talent; | |
| ● | our ability to sell the vivoPharm business and effectively operate the business during the sales process; | |
| ● | our ability to correct historical vivoPharm tax filings; | |
| ● | our ability to deter cyberattacks on our business; | |
| ● | our ability to obtain compounds used for drug discovery and development could be affected as a result of the tensions between Ukraine and Russia; and | |
| ● | the impact of COVID-19 on the economy, demand for our services and products and our operations, including measures taken by government authorities to address the pandemic, which may precipitate or exacerbate other risks and/or uncertainties. |
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The foregoing does not represent an exhaustive list of our laboratory tests and services and to continually develop and commercialize novel and innovative diagnostic tests and services for cancer patients;
All forward-looking statements are expressly qualified in their entirety by this cautionary notice. You are cautioned not to us or possessed by third parties;
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
Item 4.4: Controls and Procedures
Evaluation of Disclosure Controls and Procedures
The Company evaluated, under the supervision and with the participation of the principal executive officer and principal financial officer, the effectiveness of the design and operation of ourthe Company’s disclosure controls and procedures (as defined in RulesRule 13a-15(e) and Rule 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), as amended, as of SeptemberJune 30, 2017,2022, the end of the period covered by this report on Form 10-Q. Based on this evaluation, ourthe Company’s President and Chief Executive Officer (principal executive officer) and ourits Chief OperatingFinancial Officer (principal financial officer) have concluded that ourits disclosure controls and procedures were not effective at the reasonable assurance level at SeptemberJune 30, 2017.
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by usthe Company in the reports that we filethe Company files or submitsubmits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. Controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.
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Changes in Internal Control over Financial Reporting
Other than changes related to the remediation activities discussed below, there were no changes in ourthe Company’s internal control over financial reporting during the threesix months ended SeptemberJune 30, 20172022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Material Weakness in Internal Control over Financial Reporting
A material weakness in the Company’s internal control over financial reporting was reported in “Item 1. Legal Proceedings
| ● | Hired a new CFO with significant experience in internal controls, US GAAP and financial forecasting; |
| ● | Established a financial planning and analysis function in June 2021 to analyze, forecast and report on the Company’s operations; and |
| ● | Developed a financial model to forecast vivoPharm revenue based on inputs from management. |
We determined that the underlying revenue forecasting model to support the determination of cash flows for our vivoPharm business contained data input errors that required additional risks.
part II – Other information
ITEM 1: LEGAL PROCEEDINGS
We are not be sufficient for uscurrently subject to maintain our margins, and termination may result in lower resource utilization rates. In addition,any material legal proceedings. However, we may not realizefrom time to time become a party to various legal proceedings arising in the full benefitsordinary course of our backlog of contractually committed services if our clients cancel, delay or reduce their commitments under our contracts with them, which may occur if, among other things,business.
ITEM 1A: RISK FACTORS
As a client decides to shift its business to a competitor or revoke our status as a preferred provider. Thus, the loss or delay of a large contract or the loss or delay of multiple contracts could adversely affect our revenues and profitability. We believe the risk of loss or delay of multiple contracts potentially has greater effect where we are party to broader partnering arrangements with global biopharmaceutical companies.
ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4: MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5: OTHER INFORMATION
None.
ITEM 6: EXHIBITS
Exhibit No. | Description | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104* | Cover Page Interactive Data File—the |
* Filed herewith.
** Furnished, not filed.
# Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules upon request by the SEC.
† Indicates a management contract or compensation plan, contract or arrangement.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized on August 22, 2022.
| VYANT BIO, INC. | ||
| Date: August 22, 2022 | By: | /s/ John A. Roberts |
| John A. Roberts | ||
| President and Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| /s/ Andrew D. C. LaFrence | ||
| Andrew D. C. LaFrence | ||
| Chief Financial Officer | ||
| (Principal Financial Officer and Principal Accounting Officer) | ||
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