Quarterly Report (10-q)

Date : 08/15/2019 @ 9:32PM
Source : Edgar (US Regulatory)
Stock : Cytori Therapeutics Inc (CYTX)
Quote : 0.2077  0.0 (0.00%) @ 12:00AM

Quarterly Report (10-q)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                 to                 

Commission file number 001-34375

 

PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

(Exact name of Registrant as Specified in Its Charter)

 

 

Delaware

 

33-0827593

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

4200 MARATHON BLVD., SUITE 200, AUSTIN, TX

 

78756

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code: (737) 255-7194

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company .  See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer

 

Accelerated Filer

Non-Accelerated Filer

 

Smaller reporting company

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financing accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

As of July 31, 2019, there were 453,116 shares of the registrant’s common stock outstanding.

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001

PSTV

Nasdaq Capital Market

Series S Warrant

PSTVZ

Nasdaq Capital Market

 


PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

INDEX

 

 

 

 

 

Page

PART I

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

3

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets

 

3

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Statements of Operations and Comprehensive Loss

 

4

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Statements of Stockholders’ Equity ( Deficit)

 

5

 

 

 

 

 

 

 

 

 

 

 

Consolidated Condensed Statements of Cash Flows

 

6

 

 

 

 

 

 

 

 

 

 

 

Notes to Consolidated Condensed Financial Statements

 

7

 

 

 

 

 

 

 

 

 

Item 2.

 

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

 

18

 

 

 

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

 

25

 

 

 

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

 

25

 

 

 

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

 

 

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

 

25

 

 

 

 

 

 

 

 

 

Item 1A.

 

Risk Factors

 

25

 

 

 

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

38

 

 

 

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

 

39

 

 

 

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

 

39

 

 

 

 

 

 

 

 

 

Item 5.

 

Other Information

 

39

 

 

 

 

 

 

 

 

 

Item 6.

 

Exhibits

 

40

 

2


PART I. FINANC IAL INFORMATION

Item 1. Financial Statements

PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

CONSOLIDATED CONDENSED BALANCE SHEETS

(UNAUDITED)

(in thousands, except share and par value data)

 

 

 

As of June 30,

2019

 

 

As of December 31,

2018

 

Assets

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

4,530

 

 

$

5,261

 

Accounts receivable, net of reserves of $181 in 2019 and $185 in 2018

 

 

80

 

 

 

178

 

Restricted cash

 

 

40

 

 

 

40

 

Inventories, net

 

 

107

 

 

 

107

 

Other current assets

 

 

503

 

 

 

785

 

Current assets held for sale

 

 

 

 

 

3,277

 

Total current assets

 

 

5,260

 

 

 

9,648

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

2,297

 

 

 

2,299

 

Operating lease right-of-use assets

 

 

905

 

 

 

 

Other assets

 

 

50

 

 

 

39

 

Noncurrent assets held for sale

 

 

 

 

 

11,633

 

Goodwill

 

 

372

 

 

 

372

 

Total assets

 

$

8,884

 

 

$

23,991

 

Liabilities and Stockholders’ Equity (Deficit)

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

2,953

 

 

$

2,777

 

Operating lease liability

 

 

157

 

 

 

 

Term loan obligations, net of discount

 

 

10,813

 

 

 

14,202

 

Current liabilities held for sale

 

 

 

 

 

580

 

Total current liabilities

 

 

13,923

 

 

 

17,559

 

 

 

 

 

 

 

 

 

 

Other noncurrent liabilities

 

 

65

 

 

 

46

 

Noncurrent operating lease liability

 

 

748

 

 

 

 

Warrant liability

 

 

424

 

 

 

916

 

Noncurrent liabilities held for sale

 

 

 

 

 

245

 

Total liabilities

 

 

15,160

 

 

 

18,766

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Notes 8 and 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value; 5,000,000 shares authorized; 30,233 shares

    issued; 4,540 and 4,606 shares outstanding in 2019 and 2018, respectively

 

 

 

 

 

 

Common stock, $0.001 par value; 100,000,000 shares authorized; 443,117 and

  296,609 shares issued and outstanding in 2019 and 2018, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

420,404

 

 

 

418,390

 

Accumulated other comprehensive income

 

 

 

 

 

1,218

 

Accumulated deficit

 

 

(426,680

)

 

 

(414,383

)

Total stockholders’ equity (deficit)

 

 

(6,276

)

 

 

5,225

 

Total liabilities and stockholders’ equity (deficit)

 

$

8,884

 

 

$

23,991

 

 

See Accompanying Notes to these Consolidated Condensed Financial Statements

3


PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Development revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Government contracts and other

 

$

302

 

 

$

899

 

 

$

1,039

 

 

$

1,816

 

 

 

 

302

 

 

 

899

 

 

 

1,039

 

 

 

1,816

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,289

 

 

 

1,267

 

 

 

2,715

 

 

 

2,661

 

Sales and marketing

 

 

97

 

 

 

185

 

 

 

211

 

 

 

478

 

General and administrative

 

 

875

 

 

 

1,293

 

 

 

2,237

 

 

 

3,302

 

Total operating expenses

 

 

2,261

 

 

 

2,745

 

 

 

5,163

 

 

 

6,441

 

Operating loss

 

 

(1,959

)

 

 

(1,846

)

 

 

(4,124

)

 

 

(4,625

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

7

 

 

 

5

 

 

 

14

 

 

 

19

 

Interest expense

 

 

(597

)

 

 

(444

)

 

 

(1,111

)

 

 

(866

)

Change in fair value of warrants

 

 

282

 

 

 

 

 

 

492

 

 

 

 

Total other expense

 

 

(308

)

 

 

(439

)

 

 

(605

)

 

 

(847

)

Loss from continuing operations

 

$

(2,267

)

 

$

(2,285

)

 

$

(4,729

)

 

$

(5,472

)

Loss from discontinued operations

 

 

(6,880

)

 

 

(1,374

)

 

 

(7,568

)

 

 

(2,596

)

Net loss

 

$

(9,147

)

 

$

(3,659

)

 

$

(12,297

)

 

$

(8,068

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share attributable to common

   stockholders from continuing operations

 

$

(5.12

)

 

$

(18.53

)

 

$

(11.89

)

 

$

(44.91

)

Basic and diluted net loss per share attributable to common

   stockholders from discontinued operations

 

 

(15.55

)

 

 

(11.14

)

 

 

(19.02

)

 

 

(21.31

)

Net loss per share, basic and diluted

 

$

(20.67

)

 

$

(29.67

)

 

$

(30.91

)

 

$

(66.22

)

Basic and diluted weighted average shares used in calculating net loss

   per share attributable to common stockholders

 

 

442,512

 

 

 

123,330

 

 

 

397,827

 

 

 

121,843

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(9,147

)

 

$

(3,659

)

 

$

(12,297

)

 

$

(8,068

)

Other comprehensive (loss) income – foreign currency translation

   adjustments

 

 

 

 

 

131

 

 

 

 

 

 

(150

)

Comprehensive loss

 

$

(9,147

)

 

$

(3,528

)

 

$

(12,297

)

 

$

(8,218

)

 

See Accompanying Notes to these Consolidated Condensed Financial Statements

 

4


PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Convertible

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

Total

 

 

 

preferred stock

 

 

Common stock

 

 

Additional

 

 

other

 

 

 

 

 

stockholders’

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

paid-in

capital

 

 

comprehensive

income

 

 

Accumulated

deficit

 

 

equity

(deficit)

 

Balance at December 31, 2017

 

 

2,431

 

 

$

 

 

 

115,652

 

 

$

 

 

$

413,362

 

 

$

1,387

 

 

$

(401,749

)

 

$

13,000

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

143

 

 

 

 

 

 

 

 

 

143

 

Sale of common stock, net

 

 

 

 

 

 

 

 

202

 

 

 

 

 

 

27

 

 

 

 

 

 

 

 

 

27

 

Conversion of Series B Convertible Preferred

   Stock into common stock

 

 

(1,228

)

 

 

 

 

 

7,375

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment and

   accumulated other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(281

)

 

 

 

 

 

(281

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,409

)

 

 

(4,409

)

Balance at March 31, 2018

 

 

1,203

 

 

$

 

 

 

123,229

 

 

$

 

 

$

413,532

 

 

$

1,106

 

 

$

(406,158

)

 

$

8,480

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

96

 

 

 

 

 

 

 

 

 

96

 

Sale of common stock, net

 

 

 

 

 

 

 

 

192

 

 

 

 

 

 

(297

)

 

 

 

 

 

 

 

 

(297

)

Conversion of Series B Convertible Preferred

   Stock into common stock

 

 

(17

)

 

 

 

 

 

103

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment and

   accumulated other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

131

 

 

 

 

 

 

 

131

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,659

)

 

 

(3,659

)

Balance at June 30, 2018

 

 

1,186

 

 

$

 

 

 

123,524

 

 

$

 

 

$

413,331

 

 

$

1,237

 

 

$

(409,817

)

 

$

4,751

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2018

 

 

4,606

 

 

$

 

 

 

296,609

 

 

$

 

 

$

418,390

 

 

$

1,218

 

 

$

(414,383

)

 

$

5,225

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

 

 

 

 

 

 

49

 

Sale of common stock, net

 

 

 

 

 

 

 

 

139,855

 

 

 

 

 

 

1,873

 

 

 

 

 

 

 

 

 

1,873

 

Conversion of Series C Convertible Preferred

   Stock into common stock

 

 

(66

)

 

 

 

 

 

1,653

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment and

   accumulated other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(140

)

 

 

 

 

 

(140

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,150

)

 

 

(3,150

)

Balance at March 31, 2019

 

 

4,540

 

 

$

 

 

 

438,117

 

 

$

 

 

$

420,312

 

 

$

1,078

 

 

$

(417,533

)

 

$

3,857

 

Share-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28

 

 

 

 

 

 

 

 

 

28

 

Sale of common stock, net

 

 

 

 

 

 

 

 

5,000

 

 

 

 

 

 

64

 

 

 

 

 

 

 

 

 

64

 

Foreign currency translation adjustment and

   accumulated other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,078

)

 

 

 

 

 

(1,078

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,147

)

 

 

(9,147

)

Balance at June 30, 2019

 

 

4,540

 

 

$

 

 

 

443,117

 

 

$

 

 

$

420,404

 

 

$

 

 

$

(426,680

)

 

$

(6,276

)

 

See Accompanying Notes to these Consolidated Condensed Financial Statements

5


PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

 

 

 

For the Six Months Ended June 30,

 

 

 

2019

 

 

2018

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

Net loss

 

$

(12,297

)

 

$

(8,068

)

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

 

 

 

 

 

 

 

 

Non Cash Lease Expense

 

39

 

 

 

 

Depreciation and amortization

 

 

617

 

 

 

975

 

Amortization of deferred financing costs and debt discount

 

 

257

 

 

 

212

 

Provision for excess inventory

 

 

 

 

 

398

 

Change in fair value of warrants

 

 

(492

)

 

 

 

Share-based compensation expense

 

 

77

 

 

 

239

 

Loss on asset disposal

 

 

 

 

 

20

 

Loss on sale of business

 

 

6,306

 

 

 

 

Increases (decreases) in cash caused by changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(28

)

 

 

(274

)

Inventories

 

 

235

 

 

 

371

 

Other current assets

 

 

216

 

 

 

344

 

Other assets

 

 

257

 

 

 

(1

)

Accounts payable and accrued expenses

 

 

(94

)

 

 

(1,165

)

Deferred revenues

 

 

29

 

 

 

123

 

Other long-term liabilities

 

 

54

 

 

 

(14

)

Net cash used in operating activities

 

 

(4,824

)

 

 

(6,840

)

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Purchases of property and equipment

 

 

(6

)

 

 

(78

)

Proceeds from sale of business, net

 

 

2,789

 

 

 

 

Net cash used in investing activities

 

 

2,783

 

 

 

(78

)

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Principal payment of long-term obligations

 

 

(642

)

 

 

 

Payment of financing lease liability

 

 

(28

)

 

 

 

Proceeds from sale of common stock, net

 

 

1,984

 

 

 

(200

)

Net cash provided by (used in) financing activities

 

 

1,314

 

 

 

(200

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(4

)

 

 

12

 

Net decrease in cash and cash equivalents

 

 

(731

)

 

 

(7,106

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

5,301

 

 

 

10,225

 

Cash, cash equivalents, and restricted cash at end of period

 

$

4,570

 

 

$

3,119

 

Supplemental disclosure of cash flows information:

 

 

 

 

 

 

 

 

Cash paid during period for:

 

 

 

 

 

 

 

 

Interest

 

$

826

 

 

$

649

 

Supplemental schedule of non-cash investing and financing activities:

 

 

 

 

 

 

 

 

Proceeds from sales of business, net, paid directly to lender for principal payment of long-term obligations

 

$

3,050

 

 

$

 

Conversion of preferred stock into common stock

 

$

 

 

$

4

 

 

See Accompanying Notes to these Consolidated Condensed Financial Statements

6


PLUS THERAPEUTICS, INC.

(previously known as Cytori Therapeutics, Inc.)

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

June 30, 2019

(UNAUDITED)

 

 

1.

Basis of Presentation and New Accounting Standards

Our accompanying unaudited consolidated condensed financial statements as of June 30, 2019 and for the three and six months ended June 30, 2019 and 2018 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for annual financial statements.  Our consolidated condensed balance sheet at December 31, 2018 has been derived from the audited financial statements at December 31, 2018, but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of operations of Plus Therapeutics, Inc., and our subsidiaries (collectively, the “Company” or “Plus Therapeutics”) have been included.  Operating results for the three and six months ended June 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. These financial statements should be read in conjunction with the consolidated financial statements and notes therein included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 29, 2019.

On March 30, 2019, the Company entered into an Asset and Share Sale and Purchase Agreement (the “Lorem Purchase Agreement”) with Lorem Vascular Pte. Ltd. (“Lorem”), pursuant to which, among other things, Lorem agreed to purchase the Company’s UK subsidiary, Cytori Ltd. (the “UK Subsidiary”), and the Company’s Cell Therapy assets, excluding such assets used in Japan or relating to the Company’s contract with the U.S. Department of Health and Human Service’s Biomedical Advanced Research and Development Authority (“ BARDA”). Both the Company and Lorem made customary representations, warranties and covenants in the Lorem Purchase Agreement. The transaction was completed on April 24, 2019 and the Company received $4.0 million of cash proceeds, of which $1.7 million was used to pay down principal, interest and fees under the Loan and Security Agreement, dated May 29, 2015 (the “Loan and Security Agreement”), with Oxford Finance, LLC (“Oxford”) .

On April 19, 2019, the Company entered into an Asset and Share Sale and Purchase Agreement (the “Shirahama Purchase Agreement”) with Seijirō Shirahama, pursuant to which, among other things, Mr. Shirahama agreed to purchase the Company’s Japanese subsidiary, Cytori Therapeutics, K.K. (the “Japanese Sub sidiary”), and substantially all of the Company’s Cell Therapy assets used in Japan. Both the Company and Mr. Shirahama made customary representations, warranties and covenants in the Shirahama Purchase Agreement. The transaction was completed on April 25, 2019 and the Company received $3.0 million of cash proceeds, of which $1.4 million was used to pay down principal, interest and fees under the Loan and Security Agreement (defined in Note 4)

Amendments to Certificate of Incorporation and Reverse Stock Splits

On July 29, 2019, the Company amended its Certificate of Incorporation with the State of Delaware to change its corporate name from Cytori Therapeutics, Inc. to Plus Therapeutics, Inc. The Company also changed its trading symbol for its common stock on the Nasdaq Capital Market to “PSTV”. Additionally, the Company changed its trading symbol for its Series S warrants to “PSTVZ”.

On May 23, 2018, following stockholder and Board approval, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation, as amended (the “Amendment”), with the Secretary of State of the State of Delaware to (i) effectuate a one-for-ten (1:10) reverse stock split (the “Reverse Stock Split”) of its common stock, par value $0.001 per share, without any change to its par value, and (ii) increase the number of authorized shares of the Company’s common stock from 75 million to 100 million shares (which amount is not otherwise affected by the Reverse Stock Split). The Amendment became effective on the filing date. Upon effectiveness of the Reverse Stock Split, the number of shares of the Company’s common stock (x) issued and outstanding  decreased from approximately 61.6 million shares (as of May 23, 2018) to approximately 6.2 million  shares; (y) reserved for issuance upon exercise of outstanding warrants and options decreased from approximately 23.4 million shares to approximately 2.3 million shares, and (z) reserved but unallocated under our current equity incentive plans (including the stockholder-approved share increase to the Company’s 2014 Equity Incentive Plan) decreased from approximately 9.1 million common shares to approximately 0.9 million common shares. The Company’s 5,000,000 shares of authorized Preferred Stock were not affected by the Reverse Stock Split. No fractional shares were issued in connection with the Reverse Stock Split. Proportional adjustments for the reverse stock split were made to the Company's outstanding stock options, warrants and equity incentive plans for all periods presented.

7


On August 5, 2019, following stockholder and Board approval, the Company filed a Certificate of Amendment (the “August 2019 Amendment”) to its Amended and Restated Certificate of Incorporation (the Amendment), as amended, with the Secretary of State of the State of Delaware to effectuate a one-for-fifty (1:50) reverse stock split (the “August 2019 Reverse Stock Split”)) of its common stock, par value $0.001 per share, without any change to its par value. The August 2019 Amendment became effect ive on the filing date. The August 2019 Reverse Stock Split became effective for trading purposes as of the commencement of trading on the Nasdaq Capital Market on August 6, 2019. There was no change in the Company’s Nasdaq ticker symbol, “PSTV,” as a resu lt of the August 2019 Reverse Stock Split. Upon effectiveness, each 50 shares of issued and outstanding Common Stock were converted into one newly issued and outstanding share of Common Stock. The Company’s 5,000,000 shares of authorized Preferred Stock we re not affected by the August 2019 Reverse Stock Split. No fractional shares were issued in connection with the August 2019 Reverse Stock Split. Any fractional shares of Common Stock that would have otherwise resulted from the August 2019 Reverse Stock Spl it were rounded up to the nearest whole share. Outstanding equity awards and the shares available for future grant under the Company’s Amended and Restated 2004 Equity Incentive Plan, 2011 Employee Stock Purchase Plan, 2014 Amended and Restated Equity Ince ntive Plan and 2015 New Employee Incentive Plan were proportionately reduced (rounded down to the nearest whole share), and the exercise prices of outstanding equity awards were proportionately increased (rounded up to the nearest whole cent) to give effec t to the August 2019 Reverse Stock Split.

Recently Issued and Recently Adopted Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2017, the Financial Accounting Standards Board (the “FASB”) issued ASU 2017-04, Simplifying the Test for Goodwill Impairment , to simplify how all entities assess goodwill for impairment by eliminating Step 2 from the goodwill impairment test. As amended, the goodwill impairment test will consist of one step comparing the fair value of a reporting unit with its carrying amount. An entity should recognize a goodwill impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value. This update is effective for annual periods beginning after December 15, 2019, and interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017.  We are currently evaluating the impact that this standard will have on our consolidated financial statements.

Recently Adopted Accounting Pronouncements

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases . Under this new guidance, at the commencement date, lessees will be required to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease t erm. This guidance is not applicable for leases with a term of 12 months or less. The Company adopted ASC 842 as of January 1, 2019, electing the optional transition method that allows for a cumulative-effect adjustment in the period of adoption and did not restate prior periods. The Company elected the package of practical expedients permitted under the transition guidance. As a result of the adoption, the Company recorded right-of-use assets and liabilities. As of June 30, 2019, the Company’s right-of-use assets and liabilities were $0.9 million associated with its operating leases. See Note 8 for further discussion on leases.

 

2.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period.  Our most significant estimates and critical accounting policies involve recognizing revenue, reviewing assets for impairment, determining the assumptions used in measuring share-based compensation expense, valuing warrants, measuring expense related to our in-process research and development acquisition, and valuing allowances for doubtful accounts.

Actual results could differ from these estimates. Management’s estimates and assumptions are reviewed regularly, and the effects of revisions are reflected in the consolidated financial statements in the periods they are determined to be necessary.

 

3.

Liquidity

We incurred losses from continuing operations of   $4.7 million for the six months ended June 30, 2019, respectively.  We have an accumulated deficit of $426.7 million as of June 30, 2019.  These factors raise substantial doubt about our ability to continue as a going concern.

8


Further, the Loan and Security Agreement with Oxford, as further described in Note 4, requires maintenance of a minimum of $2.0 million in unrestricted cash and cash equivalents on hand to avoid an event of default. Based on our cash and cas h equivalents on hand of approximately $4.5 million at June 30, 2019, we estimate that