VRML Vermillion Inc

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.



These statements involve a number of risks and uncertainties. Words such as “may,” “expects,” “intends,” “anticipates,” “believes,” “estimates,” “plans,” “seeks,” “could,” “should,” “continue,” “will,” “potential,” “projects” and similar expressions are intended to identify such forward-looking statements. Readers are cautioned that these forward-looking statements speak only as of the date on which this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission (the “SEC”), and, except as required by law, Vermillion, Inc. (“Vermillion” and, together with its subsidiaries, the “Company,” “we,” “our,” or “us”) does not assume any obligation to update, amend or clarify them to reflect events, new information or circumstances occurring after such date.



Examples of forward-looking statements regarding our business include the following:

Forward-looking statements are subject to significant risks and uncertainties, including those discussed in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018 (our “2018 Annual Report”) , as supplemented by the section entitled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q , that could cause actual results to differ materially from those projected in such forward-looking statements due to various factors, including our ability to continue as a going concern; ability to increase the volume of our product sales; failures by third-party payers to reimburse OVA1 or Overa or changes or variances in reimbursement rates; our ability to secure additional capital on acceptable terms to execute our business plan; our ability to comply with Nasdaq’s continued listing requirements to remain publicly traded; in the event that we succeed in commercializing OVA1 , Overa , OVA 1 P LUS and ASPiRA GenetiX outside the United States, the political, economic and other conditions affecting other countries; our ability to continue developing existing technologies; our ability to develop and commercialize additional diagnostic products and achieve market acceptance with respect to these products; our ability to compete successfully; our ability to obtain any regulatory approval required for our future diagnostic products; our or our suppliers’ ability to comply with Food and Drug Administration (“FDA”) requirements for production, marketing and post-market monitoring of our products; additional costs that may be required to make further improvements to our manufacturing operations; our ability to

maintain sufficient or acceptable supplies of immunoassay kits from our suppliers; our ability to continue to develop, protect and promote our proprietary technologies; our ability to use intellectual property directed to diagnose biomarkers; our ability to successfully defend our proprietary technology against third parties; future litigation against us, including infringement of intellectual property and product liability exposure; our ability to retain key employees; business interruptions; changes in healthcare policy; our ability to comply with environmental laws; our ability to comply with the additional laws and regulations that apply to us in connection with the operation of ASPiRA LABS; our ability to comply with FDA regulations that relate to our products and to obtain any FDA clearance or approval required to develop and perform LDTs ; our ability to integrate and achieve anticipated results from any acquisitions or strategic alliances ;   our ability to use our net operating loss carryforwards; and liquidity and trading volume of our common stock .   



Overview

Our vision is to drive the advancement of women’s health by providing innovative methods to detect, monitor and manage the treatment of both benign and malignant gynecologic disease.

We expanded our commercial strategy in late 2018 and in the first quarter of 2019 through an investment in our commercial team and the establishment of medical and advisory support and a Key Opinion Leader Network aligned with our territories in the U.S. 

We ultimately plan to commercialize OVA1 ,   Overa OVA1PLUS and ASPiRA GenetiX on a global level. We currently hold CE marks for OVA1 and Overa . During 2018 we put OVA1 and Overa on a global testing platform, which allows both tests to be deployed  worldwide.

We also plan to develop an LDT product series, which we refer to internally as Diagnostic Algorithms #1 (“ DxA1 ”) and Diagnostic Algorithms #2 (“DxA2”). We anticipate that DxA1 and DxA2 will include not only biomarkers, but also clinical risk factors, other diagnostics and patient history data in order to boost predictive value. In the second half of 2018 and the first quarter of 2019, we reorganized internally and reinvested in a stronger sales and marketing team in order to better position our new commercial offerings.

Our initial product, OVA1, is a blood test designed to, in addition to a physician’s clinical assessment of a woman with a pelvic mass, identify women who are at high risk of having a malignant ovarian tumor prior to planned surgery. The FDA cleared OVA1 in September 2009, and we commercially launched OVA1 in March 2010. In March 2016, we received FDA clearance for a second-generation biomarker panel known as Overa, which is intended to maintain our product’s high sensitivity while improving specificity. OVA1 and Overa each use the Roche cobas 4000, 6000 and 8000 platform s.

In June 2014, Vermillion launched ASPiRA LABS, a Clinical Laboratory Improvements Amendments of 1988 (“CLIA”) certified national laboratory based in Austin, Texas, which specializes in applying biomarker-based technologies to address critical needs in the management of gynecologic cancers and disease. ASPiRA LABS provides expert diagnostic services using a state-of-the-art biomarker-based diagnostic algorithm to aid in clinical decision making and advance personalized treatment plans. The lab currently processes our OVA1 and Overa tests, and we plan to expand the testing to other gynecologic conditions with high unmet need. We also plan to develop and perform LDTs at ASPiRA LABS. ASPiRA LABS holds a CLIA Certificate of Registration and a state laboratory license in California, Florida, Maryland, New York, Pennsylvania and Rhode Island. This allows the lab to process OVA1 on a national basis. The Centers for Medicare and Medicaid Services (“CMS”) issued a provider number to ASPiRA LABS in March 2015.

In the fourth quarter of 2018, we launched our new generation of technology, OVA1 PLUS . OVA1 PLUS was designed to improve accuracy and reduce false elevations in the intermediate risk area by nearly 40% by leveraging the strengths of OVA1’s sensitivity and Overa’s specificity.  It is a combination of OVA1 and Overa, where Overa is used as a second test for those samples that fall in the intermediate risk zone based on the OVA1 test results. These complementary tests help drive earlier detection, which in turn lowers overall healthcare costs and reduces inefficiencies in the care pathway. OVA1PLUS is available through a decentralized platform structure, which will allow other facilities, including hospital networks and super groups, to perform OVA1 locally and upload raw data to us and receive the OVA1 score, enabling increased reach and access in the geographic areas we serve. We plan to eventually pursue larger-scale partnerships to leverage this decentralized platform .

In the first quarter of 2019, we announced that Cigna added OVA1®(MIA) to its national preferred coverage list effective January 15, 2019.  

I n June 2019, we announced that both BlueCross BlueShield of Texas and BlueCross BlueShield of Arizona are now offering preferred coverage for OVA1®(MIA) .

I n June 2019, our first CA125 disparity data manuscript, Multivariate Index Assay is Superior to CA125   and HE4 Testing in Detection of Ovarian Malignancy in African-American Women , was published. Our second manuscript was accepted in July 2019 .



Strategy:

We are focused on the execution of four core strategic business drivers in ovarian cancer diagnostics and specialized laboratory services to build long-term value for our investors:



We believe that these business drivers will contribute significantly to addressing unmet medical needs for women faced with gynecologic disease and other conditions and the continued development of our business.

We have active international distribution agreements for Overa with Pro-Genetics LTD in Israel and MacroHealth, Inc. in the Philippines. The MacroHealth, Inc. agreement was our first decentralized international agreement with Overa specimen testing to be performed in the Philippines.

In the United States, revenue for diagnostic tests comes from several sources, including third-party payers such as insurance companies, government healthcare programs, such as Medicare and Medicaid, client bill accounts and patients. Novitas Solutions, a Medicare contractor, covers and reimburses for OVA1   tests performed in certain states, including Texas. Due to OVA1 tests being performed exclusively at ASPiRA LABS in Texas, the local coverage determination from Novitas Solutions essentially provides national coverage for patients enrolled in Medicare as well as Medicare Advantage health plans. ASPiRA LABS also bills third-party commercial and other government payers as well as client bill accounts and patients for OVA1.

In November 2016, the ACOG issued Practice Bulletin Number 174 which included OVA1 as a “Multivariate Index Assay” ,   outlin ing ACOG's clinical management guidelines for adnexal mass management. Practice Bulletin Number 174 recommends that obstetricians and gynecologists evaluating women with adnexal masses who do not meet Level A criteria of a low risk transvaginal ultrasound should proceed with Level B clinical guidelines. Level B guidelines state that the physician may use risk assessment tools such as existing CA125 technology or OVA1 (“Multivariate Index Assay”) as listed in the bulletin. Based on this, OVA1 achieved parity with CA125 as a Level B clinical recommendation for the management of adnexal masses.

Practice Bulletins summarize current information on techniques and clinical management issues for the practice of obstetrics and gynecology. Practice Bulletins are evidence-based documents, and recommendations are based on the evidence. This is also the only clinical management tool used for adnexal masses. Although there are

Practice Bulletins, guidelines do not exist for adnexal masses. ACOG guidelines do exist, however, for ovarian cancer management.  

In October 2018, ASPiRA LABS launched OVA1 PLUS , a new clinical pathway which combines the strengths of OVA1® and Overa®. The new offering improves accuracy and reduces false elevated risk results by nearly 40%.

In the fourth quarter of 2018, we launched our new platform and cloud service for decentralizing OVA1 testing. The platform and web service will allow other facilities to perform OVA1 and calculate OVA1 scores locally, enabling increased reach and access in the markets we serve.



Recent Developments

In parallel to building our OVA platform offering and our commercial deployment, we have been working on several key publications and product extensions.

In May 2019, our first CA125 disparity publication series “Multivariate Index Assay is Superior to CA125 and HE4 Testing in Detection of Ovarian Malignancy in African American Women” was accepted for publication by Biomarkers in Cancer, an international peer-reviewed journal. The research was initiated after the publication of four independent articles showing that African American and non-Caucasian women have lower CA125 levels than Caucasian women. CA125 and HE4 have been used to evaluate women with pelvic masses to determine clinical management. Our review of data from previous prospective studies from ASPiRA Labs revealed that the OVA1 multivariate index assay had superior sensitivity to CA125 and HE4 in detecting ovarian malignancy with marked increases in the African American population. CA125 and HE4 detected only 54.5% of malignancy while OVA1 was able to detect 79.1% in African American women. OVA1 was superior in Caucasian women as well at 93.2% versus 82.9% for CA125 and HE4. This is the first peer reviewed paper on this topic. Our goal is to offer an ethnicity specific pelvic mass risk assessment starting with African American women.

In addition to an ethnicity-specific risk assessment, we are in the development stage of a third generation algorithm. The new test will have a   negative predictive value of greater than 99% , which will allow physicians to monitor women with a mass to delay or avoid unnecessary surgery. In May 2019, we submitted an abstract to the European Society of Gynaecological Oncology, as well as a manuscript to a domestic journal supporting the launch of our test. The test will initially be launched as an LDT in the fourth quarter of 2019 , but the prospective monitoring study will be designed to enable us to submit for FDA clearance if we choose to do so.

In June 2019, we launch ed genetic testing for specific women’s health diseases , called ASPiRA GenetiX , with a core focus on ovarian cancer. Our initial launch is an offering to detect hereditary breast and ovarian cancer syndrome (“HBOC”) and carriers of the gene. Women who test positive for HBOC mutations have a significantly elevated risk of developing ovarian cancer. This complementary product offering will be at the same call point as OVA1 PLUS , and, in time, testing results will be reported in a combined report with OVA1 PLUS .

In June 2019, a study was published indicating that in a comparison of Overa against ROMA ( HE4 + CA125) and CA125 , Overa ,   had the highest performance in early stage ovarian cancer risk (90.5 % sensitivity) assessment outperforming ROMA (HE4 + CA125) (76.2 % sensitivity) and CA125 (63.1 % sensitivity).

In July 2019, a new study was accepted for publication indicating that Overa, when used in conjunction with imaging methods as part of a clinical workup for an adnexal mass ,   increased sensitivity over imaging alone.



Critical Accounting Policies and Estimates

Our product revenue is generated by performing diagnostic services using our OVA1 and Overa tests, and the service is completed upon the delivery of the test result to the prescribing physician. Under the previous revenue recognition accounting methodology, certain product revenue was recognized upon the ultimate receipt of cash. Under ASC Topic 606, Revenue from Contracts with Customers (“ ASC 606”), all revenue is recognized upon completion of the OVA1 or Overa test based on estimates of amounts that will ultimately be realized. In determining the amount to accrue for a delivered test result, we consider factors such as historical payment history and amount,

payer coverage, whether there is a reimbursement contract between the payer and us, and any current developments or changes that could impact reimbursement. These estimates require significant judgment by management. We also reviewed our patient account population and determined an appropriate distribution of patient accounts by payer ( i.e. , Medicare, patient pay, other third-party payer, etc .) into portfolios with similar collection experience. When evaluated for collectability, this results in a materially consistent revenue amount for such portfolios as if each patient account were evaluated on an individual contract basis.





Product Revenue .  Product revenue was $ 1,100 ,000 for the three months ended June 30 , 2019 compared to $ 627 ,000 for the same period in 2018. Revenue for ASPiRA LABS is being recognized when the OVA1 test is being performed based on estimates of what we expect to ultimately realize. The 75 % product revenue increase is due to an increase in the number of our tests performed. We expect revenue to increase over the remainder of the year as the sales team continues to execute its   strategy .

The number of OVA1 tests performed increased 66 % to approximately 3,129 OVA1 tests during the three months ended June 30 , 2019 compared to approximately 1, 884 OVA1 tests for the same period in 2018. We expect the test volume to improve over the remainder of the year as we continue to realize returns from our sales and marketing investments.

Service Revenue .  Service revenue was $ 42 ,000 for the three months ended June 30 , 2019 compared to $ 81 ,000 for the same period in 2018. Service revenue varies from quarter to quarter based on the stages of ongoing customer projects. Revenue for ASPiRA IVD is being recognized once certain revenue recognition criteria have been met. We expect service revenue to de crease in the third quarter of 2019 compared to the second quarter of 2019.

Cost of Revenue - Product.  Cost of product revenue was $ 698 ,000 for the three months ended June 30 , 2019 compared to $ 528 ,000 for the same period in 2018, representing a n   increase of 3 2 % due primarily to increases in postage costs due to new kits, partially offset by decreases in depreciation and equipment costs. We expect the cost of product revenue to increase slightly in the third quarter of 2019 compared to the second quarter of 2019.

Cost of Revenue - Service.  Cost of service revenue was $ 210 ,000 for the three months ended   June 30 , 2019 compared to $ 280 ,000 for the same period in 2018. The 25 % decrease related primarily to lower headcount and depreciation . We expect the cost of service revenue to fluctuate consistent with service revenue to some extent . However , due to the fixed nature of the costs, we expect the third quarter costs to be largely consistent with those of the second quarter.  

Research and Development Expenses .  Research and development expenses represent costs incurred to develop our technology and carry out clinical studies, and include personnel-related expenses, regulatory costs, reagents and supplies used in research and development laboratory work, infrastructure expenses, contract services and other outside costs. Research and development expenses for the three months ended June 30 , 2019 increased by $ 71 ,000, or 46 %, compared to the same period in 2018. This increase was primarily due to purchases required for a study in 2019, as well as an increase in consulting expenses. We expect research and development expenses to increase slightly from the second to the third quarter of 2019 due to expenses in connection with the completion of ongoing studies and publications.

Sales and Marketing Expenses .  Our sales and marketing expenses consist primarily of personnel-related expenses, education and promotional expenses, and infrastructure expenses. These expenses include the costs of educating physicians and other healthcare professionals regarding OVA1 and Overa. Sales and marketing expenses also include the costs of sponsoring continuing medical education, medical meeting participation, and dissemination of scientific and health economic publications. Sales and marketing expenses for the three months ended   June 30 , 2019 increased $1, 302 ,000, or 88 %, compared to the same period in 2018. This increase was primarily due to increased headcount and personnel-related expenses in the second quarter of 2019 compared to 2018. We expect sales and marketing expenses to decrease modestly over the remainder of 2019 due to the termination of some consulting contracts , as well as the completing the expansion of our sales team .

General and Administrative Expenses .  General and administrative expenses consist primarily of personnel-related expenses, professional fees and other costs, including legal, finance and accounting expenses and other infrastructure expenses. General and administrative expenses for the three months ended June 30 , 2019   in creased by $ 235 ,000, or 1 8%, compared to the same period in 2018. This in crease is primarily due to a n   in crease in headcount   and personnel-related expenses , as well as some startup costs for the launch of our genetics offering in the second quarter of 2019 when compared with those in the second quarter of 2018. We expect general and administrative expenses to remain consistent with the second quarter in the third quarter of 2019.



Results of Operations – Six Months Ended June 30, 2019 Compared to Six Months Ended June 30, 2018



The selected summary financial and operating data of the Company for the three months ended June 30, 2019 and 2018 were as follows:











Product Revenue .  Product re venue was $ 1,87 9,000 for the six months ended June 30 , 2019 compared to $ 1,240 ,000 for the same period in 2018. The 52 % product revenue increase is due to an increase in our tests performed , as well as improvement in our price per test .

The number of OVA1 tests performed increased 4 7% to approximately 5,442 OVA1 tests during the six months ended June 30 , 2019 compared to approximately 3,702 OVA1 tests for the same period in 2018.

Service Revenue .  Servi ce revenue was $ 66 ,000 for the six months ended June 30 , 2019 compared to $ 117 ,000 for the same period in 2018. Service revenue varies from quarter to quarter based on the stages of ongoing customer projects.

Cost of Revenue - Product.  Cost of product re venue was $ 1,214 ,000 for the six months ended June 30 , 2019 compared to $ 1,061 ,000 for the same period in 2018, representing a n   in crease of 14 % due to   increases in postage costs due to new kits, partially offset by decreases in depreciation and equipment costs incurred in 2019.

Cost of Revenue - Service.  Cost of service re venue was $ 338 ,000 for the six months ended   June 30 , 2019 compared to $ 550 ,000 for the same period in 2018. The 29 % decrease related primarily to lower headcount , lab supplies and depreciation .  

Research and Development Expenses .  Research and de velopment expenses for the six months ended June 30, 2019   increased by $138,000, or 47%, compared to the same period in 2018. This increase was primarily d u e to clinical utility studies in 2019.

Sales and Marketing Expenses .  Sales and marketing expenses for the six months ended June 30 , 2019 increased $ 2,441 ,000, or 9 0 %, compared to the same period in 2018. This increase was primarily due to increased headcount and personnel-related expenses, partially offset by decreased consulting costs in 2019 compared to 2018.

General and Administrative Expenses .  General and administrative expenses for the six months ended June 30 , 2019 in creased by $1 76 ,000, or 7 %, compared to the same period in 2018. This increase is primarily due to an increase in headcount, as well as increases to consulting and legal costs in 2019 when compared with those in 2018.



Liquidity and Capital Resources

We plan to continue to expend resources selling and marketing OVA1, Overa , OVA1PLUS and ASPiRA GenetiX and developing additional diagnostic tests and service capabilities.

We have incurred significant net losses and negative cash flows from operations since inception. At June 30 , 2019 , we had an accumulated deficit of $41 4,954 ,000 and stockholders’ equity of $ 13,366 ,000. As of   June 30 , 2019 , we had $ 1 6 , 179 ,000 of cash and cash equivalents and $3, 561 ,000 of current liabilities. The Company expects to incur a net loss in 2019 as well.  Working capital was $1 4,004 ,000 and $ 7,824 ,000 at June 30, 201 9  and December 31, 201 8 , respectively.  

On June 28, 2019, the Company completed the O ffering pursuant to which certain investors purchased Vermillion common stock for net proceeds of approximately $13, 800 ,000 after deducting underwriting discounts ,   commissions and certain underwriting expenses but before deducting other expenses payable by us .   On July  2, 2019, William Blair & Company, L.L.C., the sole underwriter of the O ffering , exercised its option to purchase additional

shares of Vermillion common stock for net proceeds of $2,092,500 ,   after deducting underwriting discounts and commissions .

On April 17, 2018, the Company completed the 2018 Offerings pursuant to which certain investors purchased shares of Vermillion common stock and shares of Vermillion Series B Convertible Preferred Stock for net proceeds of approximately $13,500,000 after deducting offering expenses.

On March 22, 2016, we entered into the Loan Agreement pursuant to which we may borrow up to $4,000,000 from the DECD. Proceeds from the loan were utilized primarily to fund the build-out, information technology infrastructure and other costs related to our Trumbull, Connecticut facility and operations. The loan bears interest at a fixed rate of 2.0% per annum and requires equal monthly payments of principal and interest until maturity, which occurs on April 15, 2026. As security for the loan, we have granted the DECD a blanket security interest in our personal and intellectual property. The DECD’s security interest in our intellectual property may be subordinated to a qualified institutional lender. Under the terms of the agreement, as amended, we may be eligible for forgiveness of up to $2,000,000 of the principal amount of the loan if we achieve certain job creation and retention milestones by March 1, 2021 (the “Measurement Date”). Conversely, if we are either unable to meet these job creation and retention milestones, namely, hiring and retaining for a consecutive two-year period 40 full-time employees with a specified average annual salary by the Measurement Date or do not maintain our Connecticut operations for a period of 10 years, the DECD may require early repayment of a portion or all of the loan depending on job attainment as compared to the required amount plus a penalty of 5% of the total funded loan.

An initial disbursement of $2,000,000 was made to the Company on April 15, 2016 under the Loan Agreement. The remaining $2,000,000 will be advanced if and when the Company achieves certain other future milestones. The loan may be prepaid at any time without premium or penalty.

We expect to incur a net loss and negative cash flows from operations in 2019. Our management believes that successful achievement of our business objectives may require additional capital . 

The Company expects to raise capital, if necessary, through a variety of sources, which may include the exercise of common stock warrants, equity offerings, debt financing, collaborations, licensing arrangements, grants and government funding and strategic alliances. However, additional funding may not be available when needed or on terms acceptable to the Company. If the Company is unable to obtain additional capital, it may not be able to continue sales and marketing, research and development, or other operations on the scope or scale of current activity and that could have a material adverse effect on the Company’s business, results of operations and financial condition.

Net cash used in operating activities was $ 6,652 ,000 for the six months ended June 30 , 2019 , resulting primarily from the net loss reported of $ 8,030 ,000, partially offset by changes in stock compensation expense of $597,000, accounts payable, accrued and other liabilities of $ 509 ,000, and depreciation and amortization of $ 215 ,000.

Net cash used in operating activities was $ 4,776 ,000 for the six months ended June 30 , 2018, resulting primarily from the net loss reported of $ 5,899 ,000 partially offset by stock compensation expense of $543,000, depreciation and amortization of $ 370 ,000 and changes in accounts payable, accrued and other liabilities of $ 74 ,000.

Net cash used in investing activities was $ 82 ,000 and $ 34 ,000 for the six months ended June 30 , 2019 and 2018, respectively, which consisted primarily of property and equipment purchases.

Net cash provided by financing activities was $ 13,553 ,000 and $ 13,406 ,000 for the six months ended June 30 , 2019 and 2018, respectively , which resulted primarily from the proceeds from the sale of Vermillion common stock of $ 13,630 ,000 in our June 2019  public offering.

   Our future liquidity and capital requirements will depend upon many factors, including, among others:   

We have significant net operating loss (“NOL”) carryforwards as of June 30 , 2019 for which a full valuation allowance has been provided due to our history of operating losses. Section 382 of the Internal Revenue Code of 1986, as amended, as well as similar state provisions   may restrict our ability to use our NOL credit carryforwards due to ownership change limitations occurring in the past or that could occur in the future . These ownership changes may also limit the amount of NOL credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

Legislation commonly referred to as the Tax Cuts and Jobs Act (H.R. 1) was enacted in December   2017. As a result of the Tax Cuts and Jobs Act, NOLs arising before January 1, 2018 and NOLs arising after January 1, 2018 are subject to different rules. The Company’s pre-2018 NOLs will expire in varying amounts from 2023 through 2037, if not utilized, and can offset 100% of future taxable income for regular tax purposes. Any NOLs arising after January 1, 2018 can generally be carried forward indefinitely and can offset up to 80% of future taxable income. The Company’s ability to use its NOLs during this period will be dependent on its ability to generate taxable income, and the NOLs could expire before the Company generates sufficient taxable income. The Company’s ability to use NOL carryforwards may be restricted due to ownership change limitations occurring in the past or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (“Section 382”), as well as similar state specific provisions. These ownership changes may also limit the amount of NOL carryforwards that can be utilized annually to offset future taxable income and tax, respectively. 

The Company’s management believes that Section 382 ownership changes occurred as a result of the Company’s follow-on public offerings in 2011, 2013 and 2015. Any limitation may result in the expiration of a portion of the NOL carryforwards before utilization and any NOL carryforwards that expire prior to utilization as a result of such limitations will be removed from deferred tax assets with a corresponding reduction of the Company’s valuation allowance. Due to the existence of a valuation allowance, it is not expected that such limitations, if any, will have an impact on the Company’s results of operations or financial position. 



Off-Balance Sheet Arrangements



As of June 30 , 2019 , we had no off-balance sheet arrangements that are reasonably likely to have a current or future material effect on our condensed consolidated financial condition, results of operations, liquidity, capital expenditures or capital resources.