ITEM 1. FINANCIAL STATEMENTS
BIONANO GENOMICS, INC.
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
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(Unaudited)
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
Assets
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
17,194,000
|
|
|
$
|
17,311,000
|
|
Accounts receivable, net
|
3,249,000
|
|
|
6,334,000
|
|
Inventory, net
|
3,290,000
|
|
|
3,444,000
|
|
Prepaid expenses and other current assets
|
921,000
|
|
|
1,169,000
|
|
Total current assets
|
24,654,000
|
|
|
28,258,000
|
|
Property and equipment, net
|
2,550,000
|
|
|
1,950,000
|
|
Total assets
|
$
|
27,204,000
|
|
|
$
|
30,208,000
|
|
|
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$
|
2,850,000
|
|
|
$
|
2,699,000
|
|
Accrued expenses
|
2,431,000
|
|
|
3,225,000
|
|
Contract liabilities
|
289,000
|
|
|
358,000
|
|
Current portion of long-term debt
|
13,938,000
|
|
|
20,085,000
|
|
Total current liabilities
|
19,508,000
|
|
|
26,367,000
|
|
|
|
|
|
Long-term debt, net of current portion
|
1,775,000
|
|
|
—
|
|
Long-term contract liabilities
|
84,000
|
|
|
183,000
|
|
Other non-current liabilities
|
—
|
|
|
44,000
|
|
Total liabilities
|
21,367,000
|
|
|
26,594,000
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
Common stock, $0.0001 par value, 200,000,000 and 200,000,000 shares authorized at June 30, 2020 and December 31, 2019, respectively; 91,975,000 and 34,274,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively
|
9,000
|
|
|
3,000
|
|
|
|
|
|
Additional paid-in capital
|
126,989,000
|
|
|
106,188,000
|
|
Accumulated deficit
|
(121,161,000)
|
|
|
(102,577,000)
|
|
Total stockholders’ equity
|
5,837,000
|
|
|
3,614,000
|
|
Total liabilities and stockholders’ equity
|
$
|
27,204,000
|
|
|
$
|
30,208,000
|
|
See accompanying notes to the condensed consolidated financial statements
BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
|
|
|
|
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|
|
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|
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|
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|
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|
|
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|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Revenue:
|
|
|
|
|
|
|
|
Product revenue
|
$
|
940,000
|
|
|
$
|
2,021,000
|
|
|
$
|
1,923,000
|
|
|
$
|
3,708,000
|
|
Service and other revenue
|
242,000
|
|
|
154,000
|
|
|
395,000
|
|
|
319,000
|
|
Total revenue
|
1,182,000
|
|
|
2,175,000
|
|
|
2,318,000
|
|
|
4,027,000
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
Cost of product revenue
|
515,000
|
|
|
1,525,000
|
|
|
1,289,000
|
|
|
2,645,000
|
|
Cost of service and other revenue
|
88,000
|
|
|
30,000
|
|
|
170,000
|
|
|
57,000
|
|
Total cost of revenue
|
603,000
|
|
|
1,555,000
|
|
|
1,459,000
|
|
|
2,702,000
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
2,401,000
|
|
|
2,408,000
|
|
|
5,075,000
|
|
|
4,508,000
|
|
Selling, general and administrative
|
5,613,000
|
|
|
5,056,000
|
|
|
12,981,000
|
|
|
9,846,000
|
|
Total operating expenses
|
8,014,000
|
|
|
7,464,000
|
|
|
18,056,000
|
|
|
14,354,000
|
|
Loss from operations
|
(7,435,000)
|
|
|
(6,844,000)
|
|
|
(17,197,000)
|
|
|
(13,029,000)
|
|
Other expenses:
|
|
|
|
|
|
|
|
Interest expense
|
(561,000)
|
|
|
(645,000)
|
|
|
(1,322,000)
|
|
|
(959,000)
|
|
Loss on debt extinguishment
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,333,000)
|
|
Other expenses
|
(73,000)
|
|
|
(171,000)
|
|
|
(55,000)
|
|
|
(186,000)
|
|
Total other expenses
|
(634,000)
|
|
|
(816,000)
|
|
|
(1,377,000)
|
|
|
(2,478,000)
|
|
Loss before income taxes
|
(8,069,000)
|
|
|
(7,660,000)
|
|
|
(18,574,000)
|
|
|
(15,507,000)
|
|
Provision for income taxes
|
(5,000)
|
|
|
(5,000)
|
|
|
(10,000)
|
|
|
(9,000)
|
|
Net loss
|
$
|
(8,074,000)
|
|
|
$
|
(7,665,000)
|
|
|
$
|
(18,584,000)
|
|
|
$
|
(15,516,000)
|
|
Net loss per share, basic and diluted
|
$
|
(0.09)
|
|
|
$
|
(0.71)
|
|
|
$
|
(0.29)
|
|
|
$
|
(1.47)
|
|
Weighted-average common shares outstanding basic and diluted
|
90,907,000
|
|
|
10,860,000
|
|
|
63,238,000
|
|
|
10,542,000
|
|
|
|
|
|
|
|
|
|
See accompanying notes to the condensed consolidated financial statements.
BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
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|
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|
|
|
|
|
Common Stock
|
|
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Total Stockholders' Equity (Deficit)
|
|
|
Shares
|
|
Amount
|
|
|
|
|
|
|
Balance at January 1, 2019
|
|
10,055,000
|
|
|
$
|
1,000
|
|
|
$
|
82,898,000
|
|
|
$
|
(72,762,000)
|
|
|
$
|
10,137,000
|
|
Stock option exercises
|
|
42,000
|
|
|
—
|
|
|
54,000
|
|
|
—
|
|
|
54,000
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
289,000
|
|
|
—
|
|
|
289,000
|
|
Issue common stock
|
|
748,000
|
|
|
—
|
|
|
2,410,000
|
|
|
—
|
|
|
2,410,000
|
|
Issue warrants for debt
|
|
—
|
|
|
—
|
|
|
630,000
|
|
|
—
|
|
|
630,000
|
|
Issue stock for debt
|
|
—
|
|
|
—
|
|
|
202,000
|
|
|
—
|
|
|
202,000
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,852,000)
|
|
|
(7,852,000)
|
|
Balance at March 31, 2019
|
|
10,845,000
|
|
|
1,000
|
|
|
86,483,000
|
|
|
(80,614,000)
|
|
|
5,870,000
|
|
Stock option exercises
|
|
9,000
|
|
|
—
|
|
|
11,000
|
|
|
—
|
|
|
11,000
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
336,000
|
|
|
—
|
|
|
336,000
|
|
Issue stock for employee stock purchase plan
|
|
44,000
|
|
|
—
|
|
|
103,000
|
|
|
—
|
|
|
103,000
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,665,000)
|
|
|
(7,665,000)
|
|
Balance at June 30, 2019
|
|
10,898,000
|
|
|
1,000
|
|
|
86,933,000
|
|
|
(88,279,000)
|
|
|
(1,345,000)
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
364,000
|
|
|
—
|
|
|
364,000
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,398,000)
|
|
|
(6,398,000)
|
|
Balance at September 30, 2019
|
|
10,898,000
|
|
|
1,000
|
|
|
87,297,000
|
|
|
(94,677,000)
|
|
|
(7,379,000)
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
357,000
|
|
|
—
|
|
|
357,000
|
|
Issue common stock, net of issuance costs
|
|
11,081,000
|
|
|
1,000
|
|
|
8,549,000
|
|
|
—
|
|
|
8,550,000
|
|
Issue stock for covenant waiver
|
|
573,000
|
|
|
—
|
|
|
504,000
|
|
|
—
|
|
|
504,000
|
|
Issue stock for employee stock purchase plan
|
|
44,000
|
|
|
—
|
|
|
39,000
|
|
|
—
|
|
|
39,000
|
|
Issue stock for warrant exercises
|
|
11,678,000
|
|
|
1,000
|
|
|
9,396,000
|
|
|
—
|
|
|
9,397,000
|
|
Reduce warrant exercise price for covenant waiver
|
|
—
|
|
|
—
|
|
|
46,000
|
|
|
—
|
|
|
46,000
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,900,000)
|
|
|
(7,900,000)
|
|
Balance at December 31, 2019
|
|
34,274,000
|
|
|
3,000
|
|
|
106,188,000
|
|
|
(102,577,000)
|
|
|
3,614,000
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
328,000
|
|
|
—
|
|
|
328,000
|
|
Issue stock for warrant exercises
|
|
3,478,000
|
|
|
—
|
|
|
2,355,000
|
|
|
—
|
|
|
2,355,000
|
|
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
(10,510,000)
|
|
|
(10,510,000)
|
|
Balance at March 31, 2020
|
|
37,752,000
|
|
|
$
|
3,000
|
|
|
$
|
108,871,000
|
|
|
$
|
(113,087,000)
|
|
|
$
|
(4,213,000)
|
|
Stock-based compensation expense
|
|
—
|
|
|
—
|
|
|
328,000
|
|
|
—
|
|
|
328,000
|
|
Issue common stock, net of issuance costs
|
|
16,896,000
|
|
2,000
|
|
|
16,364,000
|
|
|
—
|
|
|
16,366,000
|
|
Issue stock for employee stock purchase plan
|
|
44,000
|
|
|
—
|
|
|
21,000
|
|
|
—
|
|
|
21,000
|
|
Issue stock for covenant waiver
|
|
873,000
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|
300,000
|
|
Issue stock for warrant exercises
|
|
36,410,000
|
|
|
4,000
|
|
|
1,105,000
|
|
|
$
|
—
|
|
|
1,109,000
|
|
Net loss
|
|
|
|
|
|
|
|
$
|
(8,074,000)
|
|
|
(8,074,000)
|
|
Balance at June 30, 2020
|
|
91,975,000
|
|
|
9,000
|
|
|
126,989,000
|
|
|
(121,161,000)
|
|
|
5,837,000
|
|
See accompanying notes to the condensed consolidated financial statements
BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
2019
|
Operating activities:
|
|
|
|
Net loss
|
$
|
(18,584,000)
|
|
|
$
|
(15,516,000)
|
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
|
|
|
Depreciation and amortization expense
|
591,000
|
|
|
537,000
|
|
Non-cash interest
|
651,000
|
|
|
296,000
|
|
Stock-based compensation
|
656,000
|
|
|
625,000
|
|
Provision for bad debt expense
|
1,290,000
|
|
|
—
|
|
Loss on debt extinguishment
|
—
|
|
|
1,333,000
|
|
Employee stock purchase plan compensation
|
—
|
|
|
103,000
|
|
Changes in operating assets and liabilities:
|
|
|
|
Accounts receivable
|
1,795,000
|
|
|
(469,000)
|
|
Inventory
|
(1,037,000)
|
|
|
(1,954,000)
|
|
Prepaid expenses and other current assets
|
244,000
|
|
|
288,000
|
|
Accounts payable
|
150,000
|
|
|
2,257,000
|
|
Accrued expenses and contract liabilities
|
(1,006,000)
|
|
|
(368,000)
|
|
Net cash used in operating activities
|
(15,250,000)
|
|
|
(12,868,000)
|
|
Investing Activities:
|
|
|
|
Purchases of property and equipment
|
—
|
|
|
(30,000)
|
|
Net cash used in investing activities
|
—
|
|
|
(30,000)
|
|
Financing activities:
|
|
|
|
Proceeds from issuance of term debt, net of issuance costs
|
—
|
|
|
19,207,000
|
|
Repayment of term-loan debt
|
(5,000,000)
|
|
|
(10,812,000)
|
|
Proceeds from PPP Loan
|
1,775,000
|
|
|
—
|
|
Proceeds from borrowing from line of credit
|
760,000
|
|
|
1,106,000
|
|
Repayments of borrowing from line of credit
|
(2,258,000)
|
|
|
(306,000)
|
|
Proceeds from sale of common stock, net of offering costs
|
16,366,000
|
|
|
2,410,000
|
|
Proceeds from sale of common stock under employee stock purchase plan
|
21,000
|
|
|
—
|
|
Proceeds from warrant and option exercises
|
3,469,000
|
|
|
65,000
|
|
Net cash provided by financing activities
|
15,133,000
|
|
|
11,670,000
|
|
Net decrease in cash and cash equivalents
|
(117,000)
|
|
|
(1,228,000)
|
|
Cash and cash equivalents at beginning of period
|
17,311,000
|
|
|
16,523,000
|
|
Cash and cash equivalents at end of period
|
$
|
17,194,000
|
|
|
$
|
15,295,000
|
|
|
|
|
|
Supplemental cash flow disclosures:
|
|
|
|
Cash paid for interest
|
$
|
715,000
|
|
|
$
|
245,000
|
|
|
|
|
|
Supplemental disclosure of non-cash investing and financing activities:
|
|
|
|
Property and equipment costs incurred but not paid included in accounts payable and accrued expenses
|
$
|
—
|
|
|
$
|
9,000
|
|
Fair value of warrants issued with debt
|
$
|
—
|
|
|
$
|
630,000
|
|
Transfer of instruments and servers from inventory to property and equipment
|
$
|
1,191,000
|
|
|
$
|
—
|
|
Issue common stock for covenant waiver
|
$
|
300,000
|
|
|
|
Fair value of stock issued with debt
|
$
|
—
|
|
|
$
|
202,000
|
|
See accompanying notes to the condensed consolidated financial statements
BIONANO GENOMICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Basis of Presentation
Description of Business
Bionano Genomics, Inc. (collectively, with its consolidated subsidiary, the “Company”) is a life sciences instrumentation company in the genome analysis space. The Company currently develops and markets the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics.
Basis of Presentation
The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting purposes. The condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of the Company's management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, changes in equity, and comprehensive loss and cash flows for each period presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). All intercompany transactions and balances have been eliminated. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019. Certain prior year numbers were reclassified to conform with current year presentation. Such reclassification had no impact on the previously reported results of operations.
Going Concern
The Company is required to perform an analysis regarding its ability to continue as a going concern. The Company must evaluate whether there are conditions and events that raise substantial doubt about the Company’s ability to continue as a going concern and to meet its obligations as they become due within one year after the date that the financial statements are issued. If the Company concludes that substantial doubt is raised, the Company is also required to consider whether its plans alleviate that doubt.
The Company has experienced recurring net losses from operations, negative cash flows from operating activities, financial covenant breaches, and significant accumulated deficit since its inception and expects to continue to incur net losses into the foreseeable future. The Company had an accumulated deficit of $121.2 million as of June 30, 2020. The Company had cash and cash equivalents of $17.2 million as of June 30, 2020. Management expects operating losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to research and commercialization efforts. Management has prepared cash flow forecasts which indicate that based on the Company’s expected operating losses, negative cash flows and debt obligations, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date these financial statements are issued.
COVID-19 continues to spread in the United States and globally and as a result the Company is subject to additional risks and uncertainties. The degree to which the Company's business will be affected by the COVID-19 pandemic is highly uncertain. The negative effects of COVID-19 could continue to have a material impact on the Company’s financial results. To comply with various applicable guidelines and legal requirements in the jurisdictions in which the Company operates, the Company has temporarily reduced its business operations in response to stay-at-home orders, travel restrictions and other social distancing measures. The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational reductions. This overall reduction in activity has contributed to a decrease in sales which has negatively impacted the Company’s first and second quarter 2020 financial results. Future effects of COVID-19 are unknown and the Company’s financial results may continue to be negatively affected in the future.
There may be long-term negative effects of the COVID-19 pandemic, even after it has subsided. Specifically, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, reduction in consumer confidence, or any similar negative economic condition. These negative effects could have a material impact on the Company’s operations, business, earnings, and liquidity.
The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding. The Company will need to raise additional capital through equity offerings or debt financings to fulfill its operating and capital requirements for at least 12 months and to maintain compliance with certain financial covenants in the Innovatus LSA (as defined below). To raise such additional capital, the Company may pursue equity or debt financings, strategic collaborations, licensing
arrangements, asset sales, or other arrangements. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all, and may not be able to comply with current covenants.
Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its products or proprietary technologies or grant licenses on terms that are not favorable to the Company. If the Company does not have or is not able to obtain sufficient funds, it may have to reduce commercialization efforts or delay its development of new products. The Company also may have to reduce marketing, customer support or other resources devoted to its products or cease operations. As a result, the aforementioned conditions, among others, raise substantial doubt about the Company's ability to continue as a going concern within one year after the date these financial statements are issued. Such financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the outcome of this uncertainty.
As a publicly-traded company listed on The Nasdaq Stock Market LLC ("Nasdaq"), the Company is required to comply with rules and regulations issued by Nasdaq. If the Company is not able to comply with such rules and regulations, which it has not met from time-to-time since the Company's initial public offering in August 2018, the Company may not be able to maintain its Nasdaq listing.
In April 2020, we received a Notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that for 30 consecutive trading days preceding the date of the Notice, the bid price of our common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Notice has no effect on the listing of our common stock at this time, and our common stock continues to trade on The Nasdaq Capital Market under the symbol “BNGO.” We intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the Minimum Bid Price Requirement.
Significant Accounting Policies
During the six months ended June 30, 2020, there were no changes to the Company's significant accounting policies as described in the Company's Annual Report on Form 10-K for the year ended December 31, 2019.
Recently Issued But Not Yet Adopted Accounting Pronouncements
In April 2012, the Jump-Start Our Business Startups Act (the “JOBS Act”) was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an emerging growth company. As an emerging growth company, the Company may elect to adopt new or revised accounting standards when they become effective for non-public companies, which typically is later than when public companies must adopt the standards. The Company has elected to take advantage of the extended transition period afforded by the JOBS Act and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies, which are the dates included below.
In February 2015, the FASB issued Accounting Standards Update ("ASU") 2016-2, Leases (Topic 842), which amends the accounting guidance for leases and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. ASU 2016-2 initially mandated a modified retrospective transition method, however, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which amends ASU 2016-2, permitting entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity in the year of adoption and include required disclosures for prior periods but will not restate prior periods. The Company anticipates implementing the accounting guidance for leases using the alternative method beginning with the annual reporting period ending December 31, 2022 and interim reporting periods in 2023. The Company is in the process of evaluating the impact of adoption of the lease accounting guidance on the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: Measurement of credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The standard is effective for the company beginning in the first quarter of 2023, with early adoption permitted. the Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.
In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major seperation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas. The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years, beginning December 15, 2021. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and adoption must be as of the beginning of the Company's annual fiscal year. The company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.
2. Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities which include outstanding stock options under the Company’s equity incentive plan have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.
Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
June 30,
2019
|
Stock options
|
2,988,000
|
|
|
1,717,000
|
|
Warrants
|
79,914,000
|
|
|
4,224,000
|
|
Total
|
82,902,000
|
|
|
5,941,000
|
|
3. Revenue Recognition
Revenue by Source
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Instruments
|
$
|
229,000
|
|
|
$
|
1,591,000
|
|
|
$
|
763,000
|
|
|
$
|
2,892,000
|
|
Consumables
|
711,000
|
|
|
430,000
|
|
|
1,160,000
|
|
|
816,000
|
|
Total product revenue
|
940,000
|
|
|
2,021,000
|
|
|
1,923,000
|
|
|
3,708,000
|
|
Service and other
|
242,000
|
|
|
154,000
|
|
|
395,000
|
|
|
319,000
|
|
Total revenue
|
$
|
1,182,000
|
|
|
$
|
2,175,000
|
|
|
$
|
2,318,000
|
|
|
$
|
4,027,000
|
|
Revenue by Geographic Location
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
North America
|
$
|
788,000
|
|
|
66
|
%
|
|
$
|
1,379,000
|
|
|
64
|
%
|
|
$
|
1,514,000
|
|
|
66
|
%
|
|
$
|
2,218,000
|
|
|
55
|
%
|
EMEIA
|
315,000
|
|
|
27
|
%
|
|
507,000
|
|
|
23
|
%
|
|
705,000
|
|
|
30
|
%
|
|
1,425,000
|
|
|
35
|
%
|
Asia Pacific
|
79,000
|
|
|
7
|
%
|
|
289,000
|
|
|
13
|
%
|
|
99,000
|
|
|
4
|
%
|
|
384,000
|
|
|
10
|
%
|
Total
|
$
|
1,182,000
|
|
|
100
|
%
|
|
$
|
2,175,000
|
|
|
100
|
%
|
|
$
|
2,318,000
|
|
|
100
|
%
|
|
$
|
4,027,000
|
|
|
100
|
%
|
The table above provides revenue from contracts with customers by business and geographic region on a disaggregated basis. North America consists of the United States and Canada. EMEIA consists of Europe, the Middle East, India and Africa. Asia
Pacific includes China, Japan, South Korea, Singapore and Australia. For the three months ended June 30, 2020 and 2019, the United States represented 60% and 63% of total revenue, and for the six months ended June 30, 2020 and 2019, 63% and 55%, respectively.
Remaining Performance Obligations
As of June 30, 2020, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was $373,000. These remaining performance obligations primarily relate to extended warranty and support and maintenance obligations. The Company expects to recognize approximately 44% of this amount as revenue during the remainder of 2020, 52% in 2021 and 4% in 2022. Warranty revenue is included in Service and other revenue.
The Company recognized revenue of $106,000 and $67,000 during the three months ended June 30, 2020 and 2019, respectively, and revenue of $232,000 and $156,000 during the six months ended June 30, 2020 and 2019, respectively, which was included in the contract liability balance at the end of the previous year.
Concentrations
As of June 30, 2020 and December 31, 2019, one customer represented 14% and 10%, respectively, of the Company's accounts receivable balance.
4. Balance Sheet Account Details
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
|
December 31,
2019
|
Accounts receivable, net:
|
|
|
|
|
Accounts receivable, trade
|
$
|
5,094,000
|
|
|
|
$
|
6,889,000
|
|
Less allowance for doubtful accounts
|
(1,845,000)
|
|
|
|
(555,000)
|
|
|
$
|
3,249,000
|
|
|
|
$
|
6,334,000
|
|
The Company extends credit to its customers in the normal course of business based upon an evaluation of each customer’s credit history, financial condition, and other factors. Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due, and economic and other factors. During the three and six months ended June 30, 2020, the Company recorded bad debt expense of $332,000 and $1,290,000 respectively. These amounts are included in selling, general and administrative expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
Inventory:
|
|
|
|
Materials and supplies
|
$
|
2,180,000
|
|
|
$
|
951,000
|
|
Finished goods
|
1,110,000
|
|
|
2,493,000
|
|
|
$
|
3,290,000
|
|
|
$
|
3,444,000
|
|
5. Debt
Paycheck Protection Program
On April 17, 2020, the Company received loan proceeds of approximately $1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (“the PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (the “SBA”).
The PPP Loan is scheduled to mature on April 17, 2022 (the “Maturity Date”), bears interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.
The PPP Loan is evidenced by a promissory note, dated as of April 17, 2020, issued by East West Bank (the “PPP Lender”), which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. Upon an event of default under the PPP Note, the PPP Lender may, among other things, require immediate payment of all amounts owing under the PPP Note or file suit and obtain judgment. Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of such loan granted under the PPP. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”). Pursuant to the Paycheck Protection Program Flexibility Act (the “PPPFA”), enacted on June 5, 2020, the Company may continue to use loan proceeds on Eligible Costs through October 2, 2020, or the date that is 24 weeks from the PPP Loan origination date (the “Covered Period”). The Company is continuing to evaluate guidance released by the SBA regarding qualification for forgiveness of the PPP Loan, however, no assurance is provided that forgiveness for any portion of the Company’s PPP Loan will be obtained.
Under the PPPFA, payments of principal and interest due under the PPP Loan are deferred until the date on which the SBA remits the forgiveness amount, if any, back to the PPP Lender, or if forgiveness isn't sought within 10 months after the last day of the Covered Period, until the date that is 10 months from the last day of the Covered Period. The amounts outstanding under the PPP Loan may be prepaid by the Company at any time prior to maturity without penalty.
In order to apply for the PPP Loan, the Company was required to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support the Company’s ongoing operations. This certification further required the Company to take into account the maintenance of its workforce, the Company’s need for additional funding to continue operations, and the Company’s ability to access alternative forms of capital in the current market environment to offset the effects of the COVID-19 pandemic.
Loan Agreements
The carrying value of the Company's debt for the periods presented was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
Term Loans
|
$
|
15,741,000
|
|
|
$
|
20,473,000
|
|
Revolver
|
—
|
|
|
1,498,000
|
|
PPP Loan
|
1,775,000
|
|
|
—
|
|
Total principal
|
17,516,000
|
|
|
21,971,000
|
|
Less unamortized debt issuance costs
|
(1,803,000)
|
|
|
(1,886,000)
|
|
Total carrying value of debt
|
$
|
15,713,000
|
|
|
$
|
20,085,000
|
|
In March 2019, the Company entered into a Loan and Security Agreement (the “Innovatus LSA”) by and among Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent and the lenders listed on Schedule 1.1 thereto, including East West Bank. The Innovatus LSA provided a first term loan of $17.5 million, a second term loan of $2.5 million and a third term loan of $5.0 million (collectively, “Term Loans”) if the Company satisfied certain funding conditions. Interest on the Term Loans is due on the first of each month at a rate of 10.25% per annum in cash or a discounted rate of 7.25% in cash with 3.0% of the 10.25% per annum rate added to the principal of the loan and subject to accruing interest through the end of the interest only payment period, which ends March 1, 2022. At inception, the Company elected to pay interest in cash at a rate of 7.25% per annum and have 3.0% per annum of the interest added back to the outstanding principal. As of June 30, 2020, the effective interest rate, including debt issuance costs, for Term Loans was 16.7%. Beginning in April 2022, the Company must make 24 equal monthly payments of principal and interest with a final maturity date in March 2024, which may be earlier due to an event of default if not cured within time specified.
The Innovatus LSA also provides for a revolving line of credit in an amount not to exceed $5.0 million (the “Revolver”). The Company may repay and reborrow amounts under the Revolver at any time prior to the March 1, 2024 maturity date without penalty or premium. The outstanding balance of amounts borrowed under the Revolver bears interest at a rate equal to 2.0% above the variable rate of interest, per annum, as specified in the terms of the Revolver.
The Innovatus LSA is collateralized by substantially all of the Company’s assets, including its intellectual property. The Innovatus LSA requires the Company to comply with various affirmative and negative covenants, including: (1) a liquidity covenant requiring the Company to maintain a minimum cash balance at all times in a collateral account; (2) a revenue
covenant requiring the Company to meet certain minimum revenue targets measured at the end of each calendar quarter. The Innovatus LSA also includes standard events of default, including a provision that Innovatus could declare an event of default upon the occurrence of any event that it interprets as having a material adverse change in the Company's business, operations, or condition, a material impairment on the Company's ability to pay the secured obligations under the Innovatus LSA, or upon a material adverse effect on the collateral under the agreement, thereby requiring us to repay the loan immediately, together with a prepayment fee and other applicable fees. As of June 30, 2020, the Company has not received any notification or indication from Innovatus to invoke the material adverse change clause. However, due to the Company’s current cash flow position and the substantial doubt about its ability to continue as a going concern, the entire principal amount of the Term Loans are presented as short-term. The Company will continue to evaluate the debt classification on a quarterly basis and evaluate for reclassification in the future should its financial condition improve.
As of December 31, 2019, the Company did not achieve certain financial covenants under the Innovatus LSA. As a result, in March 2020, the Company and Innovatus entered into an amendment to the Innovatus LSA (the “Second Amendment”) to, among other things: (i) waive the events of default from not achieving the specific financial covenants for the December 31, 2019 measurement date, (ii) require an immediate partial repayment of $2.1million, (iii) require an additional partial repayment of $2.9 million on the earlier of completion of an Equity Event (as defined in the Second Amendment), or April 30, 2020, (iv) modify the liquidity covenant, such that the Company’s minimum cash balance shall vary based on outstanding borrowing capacity under the Revolver (provided, however, that the Company shall maintain a minimum cash balance of $2 million at any given time), (v) reduce the dollar amount of certain minimum revenue covenants and (vi) modify the terms of certain events of default. For example, the Second Amendment provides for a cure period in connection with the breach of certain minimum revenue financial covenants, as long as the Company submits an updated management plan and financial projections, which are subject to Innovatus approval, and completes a Qualified Financing Event (as defined in the Second Amendment) within 45 days of such breach.
In connection with the Second Amendment, the Company was obligated to pay Innovatus a waiver fee in the amount of $200,000 and a prepayment fee of $100,000, payable in cash or in shares of the Company’s common stock at the Company's election, no later than following completion of the Equity Event. As described in Note 6 below, the Company completed the follow-on offering in April 2020 that constituted an Equity Event under the Second Amendment. A portion of the proceeds from the follow-on offering were used to pay-down $2.9 million of principal balance outstanding under the Innovatus term loan in accordance with the Second Amendment. In addition, the Company issued 872,601 shares of its common stock to Innovatus to satisfy the $200,000 waiver fee and $100,000 prepayment fee due under the Second Amendment.
The Company was in compliance with all financial covenants under the Innovatus LSA for the three months ended June 30, 2020.
6. Stockholders’ Equity and Stock-Based Compensation
Follow-on Public Offering
In April 2020, the Company completed an underwritten public offering of 16,896,000 shares of its common stock and, to certain investors, pre-funded warrants to purchase 37,650,000 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 54,546,000 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock. The public offering price of each share of common stock and accompanying common warrant was $0.33 and $0.329 for each pre-funded warrant. The pre-funded warrants are immediately exercisable at a price of $0.001 per share of common stock. The common warrants are immediately exercisable at a price of $0.33 per share of common stock and will expire five years from the date of issuance. The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance. The gross proceeds to the Company were approximately $18.0 million before deducting underwriting discounts and commissions and other offering expenses.
Stock Warrants
A summary of the Company’s warrant activity for the six months ended June 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Stock under Warrants
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at January 1, 2020
|
24,406,000
|
|
|
$
|
1.76
|
|
|
4.82
|
|
$
|
7,933,000
|
|
Granted
|
95,396,000
|
|
|
0.22
|
|
|
4.78
|
|
|
Exercised
|
(39,888,000)
|
|
|
0.09
|
|
|
|
|
15,863,000
|
|
Canceled
|
—
|
|
|
|
|
|
|
|
Outstanding at June 30, 2020
|
79,914,000
|
|
|
$
|
0.76
|
|
|
4.62
|
|
$
|
18,232,000
|
|
Vested and exercisable at June 30, 2020
|
79,914,000
|
|
|
$
|
0.76
|
|
|
4.62
|
|
$
|
—
|
|
Warrant Exercise Update
From July 1, 2020 through August 12, 2020, the Company has received gross proceeds of approximately $13.9 million pursuant to the exercise of outstanding and common and pre-funded warrants to purchase an aggregate of 46,505,000 shares of the Company's common stock.
Warrant Inducement
As previously reported, the Company issued warrants (the “Original Warrants”) to purchase shares of the Company’s Common Stock to certain investors in the Company’s underwritten public offering completed on October 23, 2019. The Original Warrants were immediately exercisable upon issuance at an exercise price per share of $0.86 and are set to expire on October 23, 2024.
On March 2, 2020, the Company entered into a Warrants Amendment and Agreement (the “Inducement Agreement”) with certain holders (“Holders”) of the Original Warrants that are exercisable for an aggregate of up to 3,200,000 shares of Common Stock. The Inducement Agreement provided that, commencing immediately following the delivery to the Holders of a prospectus supplement (the “Prospectus Supplement”) relating to the impact of the Inducement Agreement on the Original Warrants and ending at 9:15 a.m. Eastern Time on the business day following the date of such delivery (the “Modified Exercise Price Term”), the exercise price per share for the Original Warrants will be equal to $0.75 but only with respect to a cash exercise under Section 1(a) of the Original Warrants. In addition, the Company and each Holder agreed that if and only if the Holders exercise for cash all of their Original Warrants as amended pursuant to the Inducement Agreement during the Modified Exercise Price Term, the Company will issue to each Holder a new warrant (collectively, the “New Warrants”) to purchase up to the same number of shares of Common Stock issued to such Holder pursuant to the exercise of its Original Warrant during the Modified Exercise Price Term.
The Company delivered the Prospectus Supplement on March 2, 2020 and each Holder exercised all of their Original Warrants for cash. As a result, on March 3, 2020, the Company issued the New Warrants to the Holders. The New Warrants are exercisable at an exercise price per share of $1.06 commencing on the six-month anniversary of the issuance date, and will terminate on the date that is five years, six months following the issuance date. The New Warrants and the shares of Common Stock issuable upon exercise of the New Warrants were not registered under the Securities Act of 1933, as amended (the "Securities Act"), and were offered pursuant to the exemption provided in Section 4(a)(2) under the Securities Act.
Stock-Based Compensation
Stock Options
A summary of the Company’s stock option activity for the six months ended June 30, 2020 was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares of Stock under Stock Options
|
|
Weighted-
Average
Exercise
Price
|
|
Weighted-
Average
Remaining
Contractual
Term
|
|
Aggregate
Intrinsic
Value
|
Outstanding at January 1, 2020
|
1,743,000
|
|
|
$
|
5.73
|
|
|
8.2
|
|
$
|
4,000
|
|
Granted
|
1,591,000
|
|
|
0.88
|
|
|
|
|
|
Exercised
|
—
|
|
|
—
|
|
|
|
|
$
|
—
|
|
Canceled
|
(346,000)
|
|
|
4.04
|
|
|
|
|
|
Outstanding at June 30, 2020
|
2,988,000
|
|
|
$
|
3.34
|
|
|
8.46
|
|
$
|
22,000
|
|
Vested and exercisable at June 30, 2020
|
1,021,000
|
|
|
$
|
5.65
|
|
|
6.93
|
|
$
|
—
|
|
For the three months ended June 30, 2020 and 2019, the Company granted to its employees options to purchase 443,000 and 42,000 shares with a weighted average exercise price of $0.46 and $3.00 per share, respectively. For the six months ended June 30, 2020 and 2019, the Company granted to its employees options to purchase 1,591,000 and 545,000 shares with a weighted average exercise price of $0.88 and $4.15 per share, respectively.
For the three months ended June 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $0.30 and $1.71 per share, respectively. For the six months ended June 30, 2020 and 2019, the weighted-average grant date fair value of stock options granted was $0.55 and $2.37 per share, respectively.
The Company recognized stock-based compensation expense for the periods presented were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Research and development
|
$
|
66,000
|
|
|
$
|
58,000
|
|
|
$
|
133,000
|
|
|
$
|
111,000
|
|
General and administrative
|
262,000
|
|
|
278,000
|
|
|
523,000
|
|
|
514,000
|
|
Total stock-based compensation expense
|
$
|
328,000
|
|
|
$
|
336,000
|
|
|
$
|
656,000
|
|
|
$
|
625,000
|
|
The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants during the periods presented were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Risk-free interest rate
|
0.4
|
%
|
|
2.0
|
%
|
|
1.1
|
%
|
|
2.4
|
%
|
Expected volatility
|
77.9
|
%
|
|
66.1
|
%
|
|
72.2
|
%
|
|
67.3
|
%
|
Expected term (in years)
|
5.5
|
|
5.4
|
|
5.9
|
|
5.0
|
Expected dividend yield
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
|
0.0
|
%
|
7. Legal Proceedings
The Company is subject to potential liabilities under various claims and legal actions that are pending or may be asserted. These matters arise in the ordinary course and conduct of the business. The Company intends to continue to defend itself vigorously in such matters. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any amount accrued as it is not a defendant in any claims or legal actions.
8. Income Taxes
The Company is subject to taxation in the United States, United Kingdom and various state jurisdictions. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The primary difference between the effective tax rate and the federal statutory tax rate relates to the full valuation allowance on the Company's U.S. net operating losses.
In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020. The CARES Act, among other things, includes tax provisions relating to refundable payroll tax credits, deferment of employer’s social security payments, net operating loss utilization and carryback periods, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property (QIP). The CARES Act did not have a material impact on the Company’s income tax provision for the three months ended June 30, 2020. The Company continues to evaluate the impact of the CARES Act on its financial position, results of operations and cash flows.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2019 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or the SEC, on March 10, 2020. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to any statements concerning the potential effects of the COVID-19 pandemic on our business , statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We are a life sciences instrumentation company in the genome analysis space. We develop and market the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics. Our Saphyr system comprises an instrument, chip consumables, reagents and a suite of data analysis tools.
We have incurred losses in each year since our inception. Our net losses were $8.1 million and $7.7 million for the three months ended June 30, 2020 and 2019, respectively, and $18.6 million and $15.5 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, we had an accumulated deficit of $121.2 million.
We expect to continue to incur significant expenses and operating losses as we:
•expand our sales and marketing efforts to further commercialize our products;
•continue research and development efforts to improve our existing products;
•hire additional personnel;
•enter into collaboration arrangements, if any;
•add operational, financial and management information systems; and
•incur increased costs as a result of operating as a public company.
COVID-19 Overview
The COVID-19 pandemic, and the measures imposed to contain this pandemic in areas where we operate our business and elsewhere have disrupted and are expected to continue to impact our business. For example, to comply with applicable regulations and to safeguard the health and safety of our employees and customers, we temporarily reduced our on-site business operations, implemented work-from-home practices, and modified other business practices, including those related to employee travel and physical participation in meetings, events, and conferences. In addition, the quarantine of our personnel and the inability to access our facilities or customer sites adversely affected, and is expected to continue to adversely affect, our operations.
During the six months ended June 30, 2020, we experienced a $1.7 million decrease in revenue, as compared to the same period of the prior year, which is largely due to the COVID-19 pandemic. While the COVID-19 pandemic did not prevent us from operating our business during the six months ended June 30, 2020, we have taken steps to reduce our cash used in operations to offset the decrease in cash generated from sales. For example, on April 15, 2020, our Board of Directors approved the implementation of temporary salary reductions for certain of our executive officers and other employees, including 50% salary reductions for Erik Holmlin, President and Chief Executive Officer, Mark Oldakowski, Chief Operating Officer, and Warren Robinson, Chief Commercial Officer. These reductions were effective for two months beginning on April 16, 2020 and ended on June 15, 2020. Also in April 2020, we implemented salary reductions for most of our salaried employees and reduced the number of working hours of most of our hourly employees by 25% , with such measures also ending on June 15, 2020.
These disruptions resulting from the COVID-19 pandemic, may continue to impact our operations and overall business. The impact of COVID-19 is evolving rapidly and its future effects remain uncertain. As a result of such uncertainties, the duration of the disruption and the related impact on our business, operating results and financial condition cannot be reasonably estimated at this time. We are continuing to closely monitor the impact of the COVID-19 pandemic on our business and are taking proactive efforts designed to protect the health and safety of our workforce, continue our business operations and advance our corporate objectives.
Financial Overview
Revenue
We generate product revenue from sales of our instruments and consumables. We currently sell our products for research use only applications and our customers are primarily laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies. Consumable revenue consists of sales of complete assays which are developed internally by us, plus sales of kits which contain all the elements necessary to run tests. Other revenue consists of warranty and other service-based revenue.
The following table presents our revenue for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Product revenue
|
$
|
940,000
|
|
|
$
|
2,021,000
|
|
|
$
|
1,923,000
|
|
|
$
|
3,708,000
|
|
Service and other revenue
|
242,000
|
|
|
154,000
|
|
|
395,000
|
|
|
319,000
|
|
Total
|
$
|
1,182,000
|
|
|
$
|
2,175,000
|
|
|
$
|
2,318,000
|
|
|
$
|
4,027,000
|
|
|
|
|
|
|
|
|
|
The following table reflects total revenue by geography and as a percentage of total revenue, based on the billing address of our customers. North America consists of the United States and Canada. EMEIA consists of Europe, Middle East, India and Africa. Asia Pacific includes China, Japan, South Korea, Singapore and Australia.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
2020
|
|
|
|
2019
|
|
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
|
$
|
|
%
|
North America
|
$
|
788,000
|
|
|
66
|
%
|
|
$
|
1,379,000
|
|
|
64
|
%
|
|
$
|
1,514,000
|
|
|
66
|
%
|
|
$
|
2,218,000
|
|
|
55
|
%
|
EMEIA
|
315,000
|
|
|
27
|
%
|
|
507,000
|
|
|
23
|
%
|
|
705,000
|
|
|
30
|
%
|
|
1,425,000
|
|
|
35
|
%
|
Asia Pacific
|
79,000
|
|
|
7
|
%
|
|
289,000
|
|
|
13
|
%
|
|
99,000
|
|
|
4
|
%
|
|
384,000
|
|
|
10
|
%
|
Total
|
$
|
1,182,000
|
|
|
100
|
%
|
|
$
|
2,175,000
|
|
|
100
|
%
|
|
$
|
2,318,000
|
|
|
100
|
%
|
|
$
|
4,027,000
|
|
|
100
|
%
|
Cost of Revenue
Cost of product revenue for our instruments and consumables includes costs from the manufacturer, raw material parts costs and associated freight, shipping and handling costs, contract manufacturer costs, salaries and other personnel costs, overhead and other direct costs related to those sales recognized as product revenue in the period. Cost of service and other revenue consists of salaries and other personnel costs and costs related to warranties and other costs of servicing equipment at customer sites.
Research and Development Expenses
Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception, and plan to continue to make investments in the future. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products. We believe that our continued investment in research and development is essential to our long-term competitive position.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal and accounting services.
Results of Operations
Comparison of the Three Months Ended June 30, 2020 and 2019
The following table sets forth our results of operations for the three months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Period-to-Period Change
|
|
|
|
2020
|
|
2019
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Product revenue
|
$
|
940,000
|
|
|
$
|
2,021,000
|
|
|
$
|
(1,081,000)
|
|
|
(53.5)
|
%
|
Service and other revenue
|
242,000
|
|
|
154,000
|
|
|
88,000
|
|
|
57.1
|
%
|
Total revenue
|
1,182,000
|
|
|
2,175,000
|
|
|
(993,000)
|
|
|
(45.7)
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
Cost of product revenue
|
515,000
|
|
|
1,525,000
|
|
|
(1,010,000)
|
|
|
(66.2)
|
%
|
Cost of other revenue
|
88,000
|
|
|
30,000
|
|
|
58,000
|
|
|
193.3
|
%
|
Total cost of revenue
|
603,000
|
|
|
1,555,000
|
|
|
(952,000)
|
|
|
(61.2)
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
2,401,000
|
|
|
2,408,000
|
|
|
(7,000)
|
|
|
(0.3)
|
%
|
Selling, general and administrative
|
5,613,000
|
|
|
5,056,000
|
|
|
557,000
|
|
|
11.0
|
%
|
Total operating expenses
|
8,014,000
|
|
|
7,464,000
|
|
|
550,000
|
|
|
7.4
|
%
|
Loss from operations
|
(7,435,000)
|
|
|
(6,844,000)
|
|
|
(591,000)
|
|
|
8.6
|
%
|
Other income (expenses):
|
|
|
|
|
|
|
|
Interest expense
|
(561,000)
|
|
|
(645,000)
|
|
|
84,000
|
|
|
(13.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
(73,000)
|
|
|
(171,000)
|
|
|
98,000
|
|
|
(57.3)
|
%
|
Total other income (expenses)
|
(634,000)
|
|
|
(816,000)
|
|
|
182,000
|
|
|
(22.3)
|
%
|
Loss before income taxes
|
(8,069,000)
|
|
|
(7,660,000)
|
|
|
(409,000)
|
|
|
5.3
|
%
|
Provision for income taxes
|
(5,000)
|
|
|
(5,000)
|
|
|
—
|
|
|
—
|
%
|
Net loss
|
$
|
(8,074,000)
|
|
|
$
|
(7,665,000)
|
|
|
$
|
(409,000)
|
|
|
5.3
|
%
|
|
|
|
|
|
|
|
|
Revenue
Total revenue decreased by $1.0 million, or 45.7%, to $1.2 million for the three months ended June 30, 2020 compared to $2.2 million for the same period in 2019. The decrease impacted all regions, largely driven by customers temporarily shutting down their lab operations in response to COVID-19 shelter-at-home orders. Below is a summary of changes for the three months ended June 30, 2020 as compared to the same period in 2019:
•North America revenue decreased by $0.6 million, or 43%;
•EMEIA revenue decreased by $0.2 million, or 38%; and
•Asia Pacific revenue decreased by $0.2 million, or 73%.
Cost of Revenue
Total cost of revenue decreased by $1.0 million, or 61.2%, to $0.6 million for the three months ended June 30, 2020 compared to $1.6 million for the same period in 2019. Total cost of revenue decreased for the three months ended June 30, 2020 as compared to 2019 primarily due to a decrease in the number of instruments units sold during the quarter from 8 to 1. This was partially offset by an increase in consumable units sold of 189%.
Research and Development Expenses
There was no significant change to research and development expenses during the three months ended June 30, 2020 compared to the same period in 2019.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $0.5 million, or 11.0%, to $5.6 million for the three months ended June 30, 2020 compared to $5.1 million for the same period in 2019. This is primarily due to headcount additions to our global sales and marketing teams as well as back-office support teams to assist with the growth of our world-wide product distribution. In addition, we incurred increased professional fees to support business operations and our international presence. Salary reductions implemented in April 2020 partially offset cost increases driven by our headcount additions.
Comparison of the Six Months Ended June 30, 2020 and 2019
The following table sets forth our results of operations for the six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
|
Period-to-Period Change
|
|
|
|
2020
|
|
2019
|
|
$
|
|
%
|
Revenues:
|
|
|
|
|
|
|
|
Product revenue
|
$
|
1,923,000
|
|
|
$
|
3,708,000
|
|
|
$
|
(1,785,000)
|
|
|
(48.1)
|
%
|
Service and other revenue
|
395,000
|
|
|
319,000
|
|
|
76,000
|
|
|
23.8
|
%
|
Total revenue
|
2,318,000
|
|
|
4,027,000
|
|
|
(1,709,000)
|
|
|
(42.4)
|
%
|
Cost of revenue:
|
|
|
|
|
|
|
|
Cost of product revenue
|
1,289,000
|
|
|
2,645,000
|
|
|
(1,356,000)
|
|
|
(51.3)
|
%
|
Cost of other revenue
|
170,000
|
|
|
57,000
|
|
|
113,000
|
|
|
198.2
|
%
|
Total cost of revenue
|
1,459,000
|
|
|
2,702,000
|
|
|
(1,243,000)
|
|
|
(46.0)
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
5,075,000
|
|
|
4,508,000
|
|
|
567,000
|
|
|
12.6
|
%
|
Selling, general and administrative
|
12,981,000
|
|
|
9,846,000
|
|
|
3,135,000
|
|
|
31.8
|
%
|
Total operating expenses
|
18,056,000
|
|
|
14,354,000
|
|
|
3,702,000
|
|
|
25.8
|
%
|
Loss from operations
|
(17,197,000)
|
|
|
(13,029,000)
|
|
|
(4,168,000)
|
|
|
32.0
|
%
|
Other income (expenses):
|
|
|
|
|
|
|
|
Interest expense
|
(1,322,000)
|
|
|
(959,000)
|
|
|
(363,000)
|
|
|
37.9
|
%
|
|
|
|
|
|
|
|
|
Loss on debt extinguishment
|
—
|
|
|
(1,333,000)
|
|
|
1,333,000
|
|
|
—
|
%
|
Other income (expenses)
|
(55,000)
|
|
|
(186,000)
|
|
|
131,000
|
|
|
(70.4)
|
%
|
Total other income (expenses)
|
(1,377,000)
|
|
|
(2,478,000)
|
|
|
1,101,000
|
|
|
(44.4)
|
%
|
Loss before income taxes
|
(18,574,000)
|
|
|
(15,507,000)
|
|
|
(3,067,000)
|
|
|
19.8
|
%
|
Provision for income taxes
|
(10,000)
|
|
|
(9,000)
|
|
|
(1,000)
|
|
|
11.1
|
%
|
Net loss
|
$
|
(18,584,000)
|
|
|
$
|
(15,516,000)
|
|
|
$
|
(3,068,000)
|
|
|
19.8
|
%
|
Revenue
Total revenue decreased by $1.7 million, or 42.4%, to $2.3 million for the six months ended June 30, 2020 compared to $4.0 million for the same period in 2019. The decrease impacted all regions, largely driven by customers temporarily shutting down their lab operations in response to COVID-19 shelter-at-home orders and related restrictions to address the pandemic. Below is a summary of changes for the six months ended June 30, 2020 as compared to the same period in 2019:
•North America revenue decreased by $0.7 million, or 32%;
•EMEIA revenue decreased by $0.7 million, or 51%; and
•Asia Pacific revenue decreased by $0.3 million, or 74%.
Cost of Revenue
Total cost of revenue decreased by $1.2 million, or 46.0%, to $1.5 million for the six months ended June 30, 2020 compared to $2.7 million for the same period in 2019. Total cost of revenue decreased for the six months ended June 30, 2020 as compared to 2019 primarily due to a decrease in the number of instruments units sold from 14 to 4. This was partially offset by an increase in consumable units sold of 120%.
Research and Development Expenses
Research and development expenses increased $0.6 million, or 12.6%, to $5.1 million for the six months ended June 30, 2020 compared to $4.5 million for the same period in 2019. This is due to headcount additions to our development teams, but slightly offset by the salary reductions implemented in April 2020. In addition, our materials and supply expense increased during the six months ended June 30, 2020 due to continued efforts to innovate our product.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $3.2 million, or 31.8%, to $13.0 million for the six months ended June 30, 2020 compared to $9.8 million for the same period in 2019. This is primarily due to headcount additions to our global sales and marketing teams as well as back-office support teams to assist with the growth of our world-wide product distribution. In addition, we incurred increased professional fees to support ongoing business operations and international presence. Lastly, the Company determined that its collection efforts had been exhausted for a portion of its accounts and deemed the accounts receivables balance as not collectible. As a result, the Company recognized bad debt expense of $1.3 million during the six months ended June 30, 2020.
Interest Expense
Interest expense increased $0.4 million, or 37.9%, to $1.3 million for the six months ended June 30, 2020 compared to $0.9 million for the same period in 2019, driven by changes in our term-loan debt. In March 2019, the Company retired its $10 million Credit and Security Agreement with MidCap Financial (the “CSA”) and replaced it with a $20 million facility under our Loan and Security Agreement with Innovatus Life Sciences Lending Fund I, LP, as further discussed below.
Loss on Debt Extinguishment
A loss on debt extinguishment of $1.3 million was recognized during the six months ended June 30, 2019 in association with retiring the MidCap Financial CSA prior to maturity.
Liquidity and Capital Resources
Since our inception, we have incurred net losses and negative cash flows from operations. We incurred net losses of $8.1 million and $7.7 million for the three months ended June 30, 2020 and 2019, respectively, and $18.6 million and $15.5 million for the six months ended June 30, 2020 and 2019, respectively. As of June 30, 2020, we had an accumulated deficit of $121.2 million and cash and cash equivalents of $17.2 million.
Sources of Liquidity
Prior to our initial public offering (IPO) in August 2018, we financed our operations principally through private placements of convertible preferred stock, convertible notes, borrowings from credit facilities, and revenue from our commercial operations. Since our IPO, we have generated cash flows from sales of common stock and other equity instruments instead of convertible preferred stock. We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments, borrowings from credit facilities and revenue from our commercial operations. See Note 6 to our condensed consolidated financial statements for a discussion of our recent equity activity and Note 5 to our condensed consolidated financial statements for a discussion of terms and provisions of our debt included elsewhere in this Quarterly Report on Form 10-Q for more information.
Follow-On Offering
In April 2020, we completed an underwritten public offering of 16,896,000 shares of its common stock and, to certain investors, pre-funded warrants to purchase 37,650,000 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 54,546,000 shares of its common stock. Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock. The public offering price of each share of common stock and accompanying common warrant was $0.33 and $0.329 for each pre-funded warrant. The pre-funded warrants are immediately exercisable at a price of $0.001 per share of common stock. The common warrants are immediately exercisable at a price of $0.33 per share of common stock and will expire five years from the date of issuance. The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance. The gross proceeds to us were approximately $18.0 million, before deducting underwriting discounts and commissions and other offering expenses.
Warrant Exercise Update
From July 1, 2020 through August 12, 2020, we have received gross proceeds of approximately $13.9 million pursuant to the exercise of outstanding common and pre-funded warrants to purchase an aggregate of 46,505,000 shares of our common stock.
Cash Flows
The following table sets forth the cash flow from operating, investing and financing activities for the periods presented:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in):
|
Six Months Ended June 30,
|
|
|
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Operating activities
|
$
|
(15,250,000)
|
|
|
$
|
(12,868,000)
|
|
|
|
|
Investing activities
|
—
|
|
|
(30,000)
|
|
|
|
|
Financing activities
|
15,133,000
|
|
|
11,670,000
|
|
|
|
|
Operating Activities
We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support the growth of our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future.
Net cash used in operating activities was $15.3 million during the six months ended June 30, 2020 as compared to $12.9 million during the same period in 2019. The increase in cash used in operating activities of $2.4 million is attributed to increased headcount across the business, increased professional fees to support ongoing business operations and increase our international presence, and increased investments in marketing and promotions.
Investing Activities
Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure. We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods. There was no significant cash used in investing activities during the six months ended June 30, 2020 as well as for the same period in 2019.
Financing Activities
Net cash provided by financing activities was $15.1 million during the six months ended June 30, 2020 as compared to the same period in 2019 where we had net proceeds from financing activities of $11.7 million, a decrease of $3.4 million. During the six months ended June 30, 2020, we raised approximately $16.4 million in net proceeds from a follow-on offering, and $3.5 million from warrant exercises. In addition, we received approximately $1.8 million pursuant to the PPP Loan (as defined below). Offsets included payments of $1.5 million on our revolving line of credit and $5.0 million in term-loan principal prepayments in accordance with the Second Amendment. During the six months ended June 30, 2019, we had net proceeds from the issuance of the Innovatus LSA as well as aggregate proceeds from Innovatus and Aspire Purchase Agreements of approximately $11.0 million.
Paycheck Protection Program
In April 2020, we received loan proceeds of approximately $1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The PPP Loan is scheduled to mature in April 2022 (the “Maturity Date”), bears interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.
The PPP Loan is evidenced by a promissory note issued by East West Bank (the “Lender”). The PPP note contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”). Pursuant to the Paycheck Protection Program
Flexibility Act (the “PPPFA”), enacted on June 5, 2020, we may continue to use loan proceeds on Eligible Costs through October 2, 2020, or the date that is 24 weeks from the PPP Loan origination date (the “Covered Period”). However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained.
Pursuant to the PPPFA, payments of principal and interest due under the PPP Loan are deferred until the date on which the SBA remits the forgiveness amount, if any, back to the PPP Lender, or if forgiveness isn't sought within 10 months after the last day of the Covered Period, until the date that is 10 months from the last day of the Covered Period. The amounts outstanding under the PPP Loan may be prepaid by us at any time prior to maturity without penalty.
The PPP Loan is also described in Note 5 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Capital Resources
We performed an analysis of our ability to continue as a going concern. We believe, based on our current business plan, that our existing cash and cash equivalents as of June 30, 2020, plus proceeds from the recent warrant exercises described above, will be sufficient to fund our operations and obligations into the first quarter of 2021. We plan to continue to fund our operations through cash and cash equivalents on hand, as well as through public or private equity or debt financings, strategic collaborations, licensing arrangements, asset sales, or other arrangements. Additional funds may not be available when needed from any source or, if available, may not be available on terms that are acceptable to us. In addition, as a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability. It is possible that further deterioration in credit and financial markets and confidence in economic conditions will occur. If equity and credit markets deteriorate, it may affect our ability to raise equity capital, borrow on our existing facilities or make any additional necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. In addition, while we are currently in compliance with our loan agreement, the COVID-19 pandemic may compromise our ability to comply with the terms of our loan agreement and could result in an event of default. If an event of default were to occur, our lender could accelerate our repayment obligations or enforce other rights under our loan agreements. Any such default may also require us to seek additional or alternative financing, which may not be available on commercially reasonable terms or at all.
Even if we raise additional capital, we may also be required to modify, delay or abandon some of our plans which could have a material adverse effect on our business, operating results and financial condition and our ability to achieve our intended business objectives. Any of these actions could materially harm our business, results of operations and future prospects. See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.
As discussed in Note 1 to our condensed consolidated financial statements included in this Quarterly Report, in April 2020, we received a Notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) advising us that for 30 consecutive trading days preceding the date of the Notice, the bid price of our common stock had closed below the $1.00 per share minimum required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”). The Notice has no effect on the listing of our common stock at this time, and our common stock continues to trade on The Nasdaq Capital Market under the symbol “BNGO.” We intend to monitor the closing bid price of our common stock and may, if appropriate, consider implementing available options to regain compliance with the Minimum Bid Price Requirement.
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules, and similarly did not and do not have any holdings in variable interest entities.
Critical Accounting Policies and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that materially affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the
circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may materially differ from these estimates under different assumptions or conditions.
There were no material changes in our critical accounting policies and estimates during the six months ended June 30, 2020.
Recent Accounting Pronouncements
See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information concerning recent accounting pronouncements.