Filed
pursuant to Rule 424(b)(5)
Registration
No. 333-239497
PROSPECTUS SUPPLEMENT
(To
Prospectus dated July 21, 2020)
1,363,637
Shares
Common
Stock
We
are offering 1,363,637 shares of our common stock, $0.0001 par value per share. Our common stock is listed on the Nasdaq
Capital Market under the symbol “CGIX.” On October 27, 2020, the last reported sale price of our common stock as reported
on the Nasdaq Capital Market was $3.66 per share.
The offering
is being underwritten on a firm commitment basis. The underwriters may offer the shares of common stock from time to time to purchasers
directly or through agents, or through brokers in brokerage transactions on the NASDAQ Capital Market, or to dealers in negotiated
transactions or in a combination of such methods of sale, or otherwise, at fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such prevailing market prices.
Investing
in our common stock involves a high degree of risk. See “Risk Factors” beginning on page S-6 of this prospectus
supplement and page 3 of the accompanying prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus supplement or the accompanying prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.
|
|
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Per Share
|
|
|
Total
|
|
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Public offering price
|
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$
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2.200
|
|
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$
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3,000,001
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|
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Underwriting discounts and commissions (1)
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$
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0.154
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$
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210,000
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Proceeds, before expenses, to us
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$
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2.046
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$
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2,790,001
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(1)
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In
addition, we have agreed to reimburse the underwriter for certain offering-related expenses, including a management fee of
1.0% of the gross proceeds raised in this offering, and to issue the underwriter or its designees warrants to purchase a number
of shares of common stock equal to 6.0% of the shares of common stock sold in this offering. See “Underwriting”
beginning on page S-17 for more information.
|
We
have granted the underwriter an option for a period of 30 days from the date of this prospectus supplement to purchase up to an
additional 204,545 shares of common stock at the public offering price less underwriting discounts and commissions. If
the underwriter exercises the option in full, the total underwriting discounts and commissions payable by us will be $241,500
and the total proceeds to us, before expenses, will be $3,208,500.
As
of October 27, 2020, the aggregate market value of our outstanding common stock held by non-affiliates was $12,773,063, based
on 2,507,155 shares of our common stock outstanding on October 27, 2020, of which 2,428,339 shares were held by non-affiliates,
and a price of $5.26 per share, the closing price of our common stock on September 8, 2020. We have not offered any securities
pursuant to General Instruction I.B.6 of Form S-3 during the 12 calendar months prior to and including the date of this prospectus.
The
underwriter expects to deliver the shares of common stock on or about November 2, 2020.
H.C.
Wainwright & Co.
The
date of this prospectus supplement is October 28, 2020.
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
PROSPECTUS
No
dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus
supplement or the accompanying prospectus. You must not rely on any unauthorized information or representations. This prospectus
supplement and the accompanying prospectus are an offer to sell only the securities offered hereby, but only under circumstances
and in jurisdictions where it is lawful to do so. The information contained in this prospectus supplement and the accompanying
prospectus is current only as of their respective dates.
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying prospectus are part of a registration statement that we filed with the U.S. Securities
and Exchange Commission utilizing a “shelf” registration process. This document is in two parts. The first part is
this prospectus supplement, which describes the specific terms of this offering and also adds to and updates information contained
in the accompanying prospectus and the documents incorporated by reference herein. The second part, the accompanying prospectus,
provides more general information. Generally, when we refer to this prospectus, we are referring to both parts of this document
combined. To the extent there is a conflict between the information contained in this prospectus supplement and the information
contained in the accompanying prospectus or any document incorporated by reference therein filed prior to the date of this prospectus
supplement, you should rely on the information in this prospectus supplement; provided that if any statement in one of these documents
is inconsistent with a statement in another document having a later date—for example, a document incorporated by reference
in the accompanying prospectus—the statement in the document having the later date modifies or supersedes the earlier statement.
We
further note that the representations, warranties and covenants made by us in any agreement that is filed as an exhibit to any
document that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including,
in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation,
warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made.
Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state
of our affairs.
You
should rely only on the information contained in this prospectus supplement or the accompanying prospectus, or incorporated by
reference herein. We have not authorized, and the underwriter has not authorized, anyone to provide you with information that
is different. The information contained in this prospectus supplement or the accompanying prospectus, or incorporated by reference
herein or therein is accurate only as of the respective dates thereof, regardless of the time of delivery of this prospectus supplement
and the accompanying prospectus or of any sale of our common stock. It is important for you to read and consider all information
contained in this prospectus supplement and the accompanying prospectus, including the documents incorporated by reference herein
and therein, in making your investment decision. You should also read and consider the information in the documents to which we
have referred you in the sections entitled “Where you can find more information” and “Incorporation of certain
information by reference” in this prospectus supplement and in the accompanying prospectus, respectively.
We
are offering to sell, and seeking offers to buy, the securities offered by this prospectus supplement only in jurisdictions where
offers and sales are permitted. The distribution of this prospectus supplement and the accompanying prospectus and the offering
of the securities offered by this prospectus supplement in certain jurisdictions may be restricted by law. Persons outside the
United States who come into possession of this prospectus supplement and the accompanying prospectus must inform themselves about,
and observe any restrictions relating to, the offering of the common stock and the distribution of this prospectus supplement
and the accompanying prospectus outside the United States. This prospectus supplement and the accompanying prospectus do not constitute,
and may not be used in connection with, an offer to sell, or a solicitation of an offer to buy, any securities offered by this
prospectus supplement and the accompanying prospectus by any person in any jurisdiction in which it is unlawful for such person
to make such an offer or solicitation.
All
references in this prospectus supplement and the accompanying prospectus to “Cancer Genetics,” “CGI,”
the “Company,” “we,” “us,” “our,” or similar references refer Cancer Genetics,
Inc., a Delaware corporation, and its subsidiaries taken as a whole, except where the context otherwise requires or as otherwise
indicated.
PROSPECTUS
SUPPLEMENT SUMMARY
This
summary highlights selected information about us, this offering and information appearing elsewhere in this prospectus supplement,
in the accompanying prospectus and in the documents incorporated by reference herein and therein. This summary is not complete
and does not contain all the information you should consider before investing in our securities pursuant to this prospectus supplement
and the accompanying prospectus. Before making an investment decision, to fully understand this offering and its consequences
to you, you should carefully read this entire prospectus supplement and the accompanying prospectus, including “Risk Factors,”
the financial statements, and related notes, and the other information incorporated by reference herein and therein.
Overview
Cancer
Genetics, Inc. supports the efforts of the biotechnology and pharmaceutical industries to develop innovative new drug therapies.
Following the Business Disposals (as defined below), the Company currently has an extensive set of anti-tumor referenced data
based on predictive xenograft and syngeneic tumor models from the acquisition of vivoPharm, Pty Ltd. (“vivoPharm”)
in 2017, to provide Discovery Services such as contract research services, focused primarily on unique specialized studies to
guide drug discovery and development programs in the oncology and immuno-oncology fields. vivoPharm is a contract research
organization (“CRO”) that specializes in planning and conducting unique, specialized studies to guide drug discovery
and development programs with a concentration in oncology and immuno-oncology. These studies range from early compound selection
to developing comprehensive sets of in vitro and in vivo data, as needed for FDA Investigational New Drug (“IND”)
applications.
The
Company offers preclinical services such as predictive tumor models, human orthotopic xenografts and syngeneic immuno-oncology
relevant tumor models in its Hershey, PA facility, and is a leader in the field of immuno-oncology preclinical services in the
United States. This service is supplemented with GLP toxicology and extended bioanalytical services in the Company’s Australian-based
facilities in Clayton, Victoria, and Gilles Plains, South Australia.
Our
business is based on demand for preclinical and discovery services from biotechnology and pharmaceutical companies, academia and
the research community. Biotechnology and pharmaceutical companies engaged in designing and running clinical trials to determine
the safety and effectiveness of treatments and therapeutics continuously benefit from our services. In particular our preclinical
development of biomarker detection methods, response to immuno-oncology directed novel treatments and early prediction of clinical
outcome is supported by our extended portfolio of orthotopic, xenografts and syngeneic tumor test systems as a specialized service
offering in the immuno-oncology space.
vivoPharm
has developed industry recognized capabilities in early phase development and discovery, especially in immuno-oncology models,
tumor micro-environment studies, and specialized pharmacology services that support basic discovery, preclinical and phase 1 clinical
trials. vivoPharm’s studies have been utilized to support over 250 IND submissions to date across a range of therapeutic
indications, including lymphomas, leukemia, GI-cancers, liver cancer, pancreatic cancer, non-small cell lung cancer, and other
non-cancer rare diseases. vivoPharm is presently serving over 50 biotechnology and pharmaceutical companies across four
continents in over 100 studies and trials with highly specialized development, clinical and preclinical research. Over the past
17 years, vivoPharm has also generated an extensive library of human xenograft and syngeneic tumor models, including subcutaneous,
orthotopic and metastatic models. vivoPharm offers its expertise in small and bio-molecules.
The
Company continues to leverage vivoPharm’s international presence to access global market opportunities. vivoPharm’s
facilities in Australia specializes in safety and toxicology studies, including mammalian, genetic and in vitro, along
with bioanalytical services including immune-analytical capabilities. The Company operates from multiple locations in Victoria
and South Australia. vivoPharm’s U.S.-based laboratory, located at the Hershey Center for Applied Research in Hershey,
Pennsylvania, primarily focuses on screening and efficacy testing for a wide range of pharmaceutical and chemical products. The
Company’s office in Munich, Germany hosts project management and business development personnel.
Proposed
Merger with StemoniX, Inc.
Merger
Transaction
On
August 21, 2020, CGI entered into an Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) with
StemoniX, Inc., a Minnesota corporation (“StemoniX”), and CGI Acquisition, Inc., a Minnesota corporation and wholly-owned
subsidiary of CGI (“Merger Sub”). Upon the terms and subject to the satisfaction of the conditions described in the
Merger Agreement, including approval of the transaction by CGI’s stockholders and StemoniX’s shareholders, Merger
Sub will be merged with and into StemoniX, with StemoniX surviving the merger as a wholly-owned subsidiary of CGI (the “Merger”).
The
post-merger company will continue to operate CGI’s vivoPharm, Pty. Ltd. business and will also focus on advancing StemoniX’s
microOrgans® platform and augmented intelligence tools for drug discovery and development. StemoniX, a private
company, is a leader in developing human models for specific diseases via its microOrgan® platform, based on living micro-tissues
engineered from human induced pluripotent stem cells (iPSC). CGI believes that the merger will position the post-merger company
to harness the synergies between two critical modalities of drug discovery and development - advanced animal models and relevant
human high-throughput organoid platforms. CGI further believes that the resulting integration of scientific and technology-based
expertise, skilled management teams, and ability to offer customers an end-to-end platform will de-risk and accelerate discovery
and development of preclinical and clinical pipelines for biopharma partners as well as for the proprietary pipeline of the post-merger
company.
Pursuant
to, and subject to the conditions of, the Merger Agreement, each share of common stock of StemoniX (other than Dissenting Shares
(as defined in the Merger Agreement)), issued and outstanding immediately prior to the effective time of the Merger (the “Effective
Time”) shall be automatically converted into the right to receive an amount of shares of common stock, par value $0.0001
per share, of CGI (“CGI Common Stock”) equal to the Exchange Ratio (as defined in the Merger Agreement). All options
to purchase shares of StemoniX Common Stock (“StemoniX Options”) outstanding immediately prior to the Effective Time,
whether vested or unvested, will be converted into a stock option to purchase shares of CGI Common Stock, proportionately adjusted
based on the Exchange Ratio. All warrants to purchase shares of StemoniX Common Stock (“StemoniX Warrants”) outstanding
immediately prior to the Effective Time will be cancelled and converted into the right to receive the same consideration such
warrantholder would have received had they exercised the StemoniX Warrants immediately prior to the merger, based on the Exchange
Ratio, net of the exercise price.
As
a result, immediately following the Effective Time, but prior to the proportionate dilution to come from the contemplated private
placement that is a condition of the merger (the “Private Placement”), the former StemoniX shareholders will hold
approximately 78% of the outstanding shares of CGI Common Stock (which outstanding shares, the “Deemed Outstanding Shares”,
in this context, includes the CGI Common Stock issuable on a net exercise basis with respect to any in-the-money CGI options,
in-the-money CGI warrants, in-the-money StemoniX Options and in-the-money StemoniX Warrants but does not include any shares issued
in the Private Placement) and the stockholders of CGI, including stockholders who purchase shares in this offering, will retain
ownership of approximately 22% of the Deemed Outstanding Shares, with such percentages subject to certain closing adjustments
based on the Net Cash (as defined in the Merger Agreement) held by each company (such adjustment, the “Net Cash Adjustment”)
and, proportionately for all equity holders of the post-merger company, dilution from the Private Placement. The exact number
of shares of CGI Common Stock that will be issued to StemoniX shareholders will be fixed immediately prior to the Effective Time
to reflect the capitalization of CGI as of immediately prior to such time as well as the Net Cash Adjustment.
Upon
completion of the Merger, the board of directors of the post-merger company will be comprised of seven members, including John
A. Roberts, President and Chief Executive Officer of CGI, Yung-Ping Yeh, Chief Executive Officer of StemoniX, Geoffrey Harris,
current chairman of the board of CGI, Howard McLeod, a current director of CGI, John Fletcher, a current director of StemoniX,
and two additional individuals to be designated by StemoniX prior to closing (subject to the reasonable consent of CGI). In addition,
it is currently anticipated that the executive officers of the post-merger company will be John A. Roberts, Yung-Ping Yeh, Andrew
D.C. LaFrence, currently Chief Financial Officer and Chief Operating Officer of StemoniX, and Ralf Brandt, PhD, currently President
of Discovery & Early Development Services of CGI.
In
connection with and for purposes of seeking the approval from the stockholders of CGI for the issuance of shares of CGI Common
Stock in the Merger, among other items, on October 16, 2020, CGI filed a registration statement on Form S-4 (File No. 333-249513)
(the “Form S-4”) with the U.S. Securities and Exchange Commission (“SEC”) that contains a proxy statement/prospectus/information
statement, which Form S-4 is incorporated by reference into this prospectus supplement in its entirety.
The
closing of the Merger, which is expected in the fourth quarter of 2020 or the first quarter of 2021, is subject to satisfaction
or waiver of certain conditions including, among other things, (i) the required approvals by the parties’ shareholders,
(ii) the accuracy of the representations and warranties, subject to certain materiality qualifications, (iii) compliance by the
parties with their respective covenants, (iv) the effectiveness of the Form S-4, (v) no law or order preventing the Merger and
related transactions, (vi) the listing of the shares issued in the Merger on The Nasdaq Capital Market and (vii) consummation
of the Private Placement by CGI in an amount to be mutually agreed upon by CGI and StemoniX, and currently anticipated to be $10
million, but which may be more or less as agreed by the parties, and depending on market demand. CGI has no commitment with respect
to the Private Placement as of the date of this prospectus supplement.
The
Merger Agreement contains certain termination rights for both CGI and StemoniX. In connection with the termination of the Merger
Agreement under specified circumstances, CGI and StemoniX may be required to reimburse the other party’s expenses in an
amount up to $500,000, including upon either party’s due acceptance of a third-party competing proposal during the term
or within 12 months after termination of the Merger Agreement. In addition, either CGIX or StemoniX may terminate the Merger Agreement
if the Merger is not consummated on or before January 15, 2021 (the “End Date”), provided that in the event the meeting
of CGI stockholders is adjourned or postponed, the End Date shall automatically be extended to the date that is ten (10) days
following such adjournment or postponement.
The
foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement,
which is included as Annex A to the proxy statement/prospectus/information statement forming part of the Form S-4 and incorporated
herein by reference.
About
StemoniX
StemoniX
develops and manufactures human induced pluripotent stem cell (iPSC) based neural, cardiac and pancreatic screening platforms
for drug discovery and development. Engineered from human skin and blood cells, iPSCs are made with in-licensed patented processes
discovered by 2012 Nobel prize recipient Dr. Shinya Yamanaka. StemoniX’s iPSC innovations are made from living human cells
and have organ-like, or organoid, characteristics; referred to as microOrgans®. StemoniX has industrialized these microOrgans
into standard multi-well plate formats that are sufficiently robust and reproducible to enable drug screening and optimization
activities.
StemoniX
combines its microOrgan platform with software analytics and augmented intelligence, referred to as AnalytiX™. StemoniX’s
integrated approach provides a compelling value proposition to pharmaceutical companies and other entities because StemoniX enables
standardized, high-throughput screening of drug candidates on complex human organoids prior to human clinical studies, mitigating
or in some cases avoiding the inadequacies of testing in clonal cell lines or rodents. StemoniX and its customers and collaborators
believe that StemoniX’s technologies will permit drug discovery in human disease areas that are difficult to address using
current methodologies, accelerate preclinical drug discovery and development, reduce risk of clinical failure, predict with greater
degrees of confidence and ultimately, reduce the cost of discovering new therapeutic agents.
StemoniX’s
business model combines both collaborations with integrated pharmaceutical companies on the derivation and subsequent supply of
iPSC-based disease models and screens, and internal drug discovery efforts to identify drug candidates for licensure or clinical
development. In StemoniX’s disease model effort, StemoniX creates novel models per the specifications of its partners, then
either sells microOrgan plates to them or performs Discovery as a Service (“DaaS”) on their behalf in its facilities.
StemoniX strives to receive a mixture of upfront payments, including licensing fees, milestone-based fees, and ongoing royalty
payments in addition to any charges for microOrgan plates and services. While the revenue from StemoniX’s disease model
and screening activities represents an important component of its business, StemoniX’s long-term strategy is to leverage
its iPSC technology to pursue partnered and wholly-owned drug discovery projects that yield higher value assets. In its current
drug discovery efforts, StemoniX typically collaborates with a partner by pooling its expertise in iPSC biology and screening
analytics with the partner’s medicinal chemistry capabilities.
StemoniX
was incorporated in 2014 in Minnesota with headquarters in Maple Grove, Minnesota, and a research and development team located
in La Jolla, California. StemoniX focuses on new iPSC differential protocols, plating procedures, and expansion techniques. StemoniX’s
Maple Grove manufacturing facility focuses on the growth, differentiation, plating, and shipping of its microOrgan platforms in
a highly standardized and rigorous process. The Maple Grove facility includes clean-room and biohazard safe environments to house
its incubators, biological safety cabinets, liquid handling machines, refrigerators, and office space. Both facilities also have
diagnostic equipment for quality control and assurance. The majority of StemoniX’s DaaS revenue is generated from its Maple
Grove facility.
For
a more detailed description of the business of StemoniX, as well as other information about StemoniX, CGI and the Merger, please
see the Form S-4, which is incorporated herein by reference, including the section titled “Business of StemoniX.”
Corporate
Information
The
Company was incorporated in the State of Delaware on April 8, 1999. On July 16, 2014, the Company purchased substantially all
of the assets of Gentris Corporation, a laboratory specializing in pharmacogenomics profiling for therapeutic development, companion
diagnostics and clinical trials. On October 9, 2015, the Company acquired substantially all the assets and assumed certain liabilities
of Response Genetics, Inc.
On
August 18, 2014 the Company acquired BioServe Biotechnologies (India) Pvt. Ltd. (“BioServe”). On April 26, 2018, the
Company sold BioServe to Reprocell, Inc.
On
August 15, 2017, the Company purchased all of the outstanding stock of vivoPharm, with its principal place of business
in Victoria, Australia.
On
July 5, 2019, the Company entered into an asset purchase agreement with siParadigm, LLC, pursuant to which the Company sold to
siParadigm certain assets associated with the Company’s clinical laboratory business and agreed to cease operating the Clinical
Business (the “Clinical Business Disposal”). On July 15, 2019, the Company entered into commercial agreements with
the Company’s senior lenders to divest all of the assets relating to the BioPharma Business (the “BioPharma Business
Disposal” and, together with the Clinical Business Disposal, the “Business Disposals”), in satisfaction of all
of the Company’s senior debt.
The
Company’s principal executive offices are located at 201 Route 17 North, 2nd Floor, Rutherford, New Jersey 07070. The Company’s
telephone number is (201) 528-9200 and the corporate website address is www.cancergenetics.com. The Company included the website
address in this prospectus supplement only as an inactive textual reference and does not intend it to be an active link to the
Company website. The information on the website is not incorporated by reference in this prospectus supplement.
The
Company’s most recent annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments
to those reports, as well as other documents the Company files with the U.S. Securities and Exchange Commission (“SEC”),
such as the Form S-4, are available free of charge through the Investors section of the Company website as soon as reasonably
practicable after such material is electronically filed with or furnished to the SEC. The public can obtain documents that the
Company files with the SEC at www.sec.gov.
THE
OFFERING
|
Issuer
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Cancer
Genetics, Inc.
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Securities
offered by us in this offering
|
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1,363,637
shares of our common stock, par value $0.0001 per share
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|
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Offering
price
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$2.20
per share of common stock
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Common
stock outstanding immediately before this offering
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2,507,155
shares
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Common
stock outstanding immediately after this offering
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3,870,792 shares (4,075,337
shares if the underwriter exercises its option to purchase additional shares in full).
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|
|
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Option
to purchase additional shares
|
|
We
have granted the underwriter an option to purchase up to 204,545 additional shares of common stock at the public offering
price per share, less underwriting discounts and commissions. This option is exercisable, in whole or in part, for a period
of 30 days from the date of this prospectus supplement.
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Use
of proceeds
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We
intend to use the net proceeds from this offering to fund working capital and other general corporate purposes. See “Use
of Proceeds.”
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Risk
factors
|
|
Investing
in our common stock involves a high degree of risk. You should carefully read and consider the information beginning on page
S-6 of this prospectus supplement and page 3 of the accompanying prospectus set forth under the headings “Risk
Factors” and all other information set forth in this prospectus supplement, the accompanying prospectus, and the
documents incorporated herein and therein by reference before deciding to invest in our common stock.
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|
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Nasdaq
Capital Market symbol for common stock
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“CGIX”
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The
number of shares of common stock to be outstanding immediately after this offering is based on 2,507,155 shares of our common
stock outstanding as of October 27, 2020, and excludes, as of such date:
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●
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70,795
shares issuable upon exercise of outstanding stock options at a weighted-average exercise price of $83.90 per share;
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●
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279,289
shares issuable upon exercise of outstanding warrants at a weighted-average exercise price of $104.38 per share;
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●
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24,552
shares available for future grants under our 2011 Equity Incentive Plan, or the 2011 Plan; and
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●
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81,819
additional shares (94,092 shares if the underwriter exercises
its option to purchase additional shares in full) of common stock issuable upon the exercise of the underwriter’s
warrants, with an exercise price of $2.42 per share, to be issued to the underwriter in connection with this offering.
|
Except
as otherwise indicated, all information in this prospectus supplement assumes no exercise of the underwriter’s option to
purchase additional shares of common stock and no exercise of the underwriter’s warrants to be issued to the underwriter
in connection with this offering.
RISK
FACTORS
Investing
in our shares involves a high degree of risk. Before deciding whether to invest in our shares, you should consider carefully the
risks and uncertainties described below, together with the other information in this prospectus supplement, the accompanying prospectus,
the information and documents incorporated by reference, and in any free writing prospectus that we have authorized for use in
connection with this offering. You should also consider the risks, uncertainties and assumptions discussed under the heading “Risk
Factors” included in the Form S-4, filed on October 16, 2020, and in our most recent annual report on Form 10-K and the
subsequent quarterly reports on Form 10-Q and other reports that we file with the SEC, all of which are on file with the SEC and
are incorporated herein by reference, and which may be amended, supplemented or superseded from time to time by other reports
we file with the SEC in the future. There may be other unknown or unpredictable economic, business, competitive, regulatory or
other factors that could have material adverse effects on our future results. If any of these risks actually occurs, our business,
business prospects, financial condition or results of operations could be seriously harmed. This could cause the trading price
of our common stock to decline, resulting in a loss of all or part of your investment. Please also read carefully the section
above titled “Forward-Looking Statements.”
Risks
Relating to the Merger and the Post-Merger Company
Investors
in this offering will receive equal, proportionate treatment to historic CGI stockholders if the Merger with StemoniX is consummated.
Under
the terms of the Merger Agreement with StemoniX, immediately following the Effective Time, but prior to the proportionate
dilution to come from the contemplated Private Placement that is a condition of the Merger, the former StemoniX shareholders
will hold approximately 78% of the outstanding shares of CGI Common Stock and the stockholders of CGI, including stockholders
who purchase shares in this offering, will retain ownership of approximately 22% of the outstanding shares of CGI Common
Stock, with such percentages subject to the Net Cash Adjustment and, proportionately for all equity holders of the
post-merger company, dilution from the Private Placement. Accordingly, based on the 2,507,155 shares of CGI Common Stock
outstanding immediately prior to this offering, after the Merger with StemoniX, the shares to be issued in this offering
would represent approximately 7.8% of the outstanding shares of the post-merger company, and the 2,507,155 historic
shares of CGI Common Stock would represent approximately 14.2% of the outstanding shares of the post-merger company
(in each case prior to any Net Cash Adjustment and prior to the dilutive effects of the Private Placement).
The
consummation of the transactions contemplated by the Merger Agreement is dependent upon CGI and StemoniX obtaining all relevant
and necessary consents and approvals.
A
condition to consummation of the Merger is that CGI and StemoniX obtain certain consents or approvals from third parties, including
consents from parties to certain commercial agreements, leases and debt agreements in connection with the Merger and approval
from NASDAQ to maintain the listing of the CGI Common Stock on the Nasdaq Capital Market following the Merger and to list the
shares of CGI Common Stock being issued in the Merger. In addition, the stockholders of CGI must approve the issuance of CGI Common
Stock pursuant to the Merger Agreement and, if needed to maintain the listing of the CGI Common Stock on the Nasdaq Capital Market,
a proposal to approve a reverse stock split of CGI Common Stock contained in the Form S-4. The StemoniX shareholders must adopt
the Merger Agreement and approve by written consent the merger and the transactions and related corporate changes contemplated
by the Merger Agreement. There can be no assurance that CGI or StemoniX will be able to obtain all such relevant consents and
approvals on a timely basis or at all. Each of CGI and StemoniX has incurred, and expects to continue to incur, significant costs
and expenses in connection with the proposed Merger. Any failure to obtain, or delay in obtaining, the necessary consents or approvals
would prevent CGI and StemoniX from being able to consummate, or delay the consummation of, the transactions contemplated by the
Merger Agreement, which could materially adversely affect the business, financial condition and results of operations of CGI and
StemoniX, and, correspondingly, the post-merger company if the merger is consummated. There is no guarantee that such approvals
will be obtained or that such conditions will be satisfied.
The
Private Placement may not be consummated, or may be consummated on terms that you do not believe to be favorable.
The
consummation of the Merger is conditioned upon the closing, prior to or concurrently with the Merger, of a private placement of
CGI securities resulting in gross proceeds in an amount to be mutually agreed upon by CGI and StemoniX, which is currently anticipated
to be approximately $10 million, but which may be more or less as agreed by the parties, and depending on market demand. If such
Private Placement is not consummated on acceptable terms, the parties may not be able to consummate the merger. Further, CGI has
no commitment from any third parties at this time with respect to any financing, so no assurance can be given as to the terms
of such financing, if available, or that the terms would be viewed as acceptable to investors.
If
the conditions to the Merger are not met, the Merger may not occur.
Even
if the proposals contained in the Form S-4 are approved by the stockholders of CGI and StemoniX, as applicable, specified other
conditions must be satisfied or waived to complete the Merger. These conditions are set forth in the Merger Agreement and described
in the section titled “The Merger Agreement—Conditions to the Closing of the Merger” in the Form S-4,
incorporated by reference herein. CGI cannot assure you that all of the conditions will be satisfied or waived. If the conditions
are not satisfied or waived, the Merger may not occur or will be delayed, and CGI and StemoniX each may lose some or all of the
intended benefits of the Merger.
Failure
to complete the Merger may result in CGI paying an expense reimbursement to StemoniX and could harm the common stock price of
CGI and its future business and operations.
If
the Merger is not completed, CGI is subject to the following risks:
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if
the Merger Agreement is terminated under certain circumstances and certain events occur, CGI or StemoniX will be required
to pay the other party an amount equal to all reasonable and documented out-of-pocket fees and expenses incurred by such other
party in connection with the preparation and negotiation of the Merger Agreement, due diligence efforts by the party or otherwise
in connection with the Merger; provided, however, that the amount payable may be up to and will in no event exceed $500,000;
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the
price of CGI stock may decline; and
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costs
related to the Merger, such as legal, accounting and investment banking fees must be paid even if the Merger is not completed.
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In
addition, if the Merger Agreement is terminated and the CGI board of directors determines to seek another business combination,
there can be no assurance that CGI will be able to find a partner willing to provide equivalent or more attractive consideration
than the consideration to be provided by StemoniX in the Merger.
CGI
may be unable to identify and complete an alternative strategic transaction or continue to operate the business due to limited
cash availability, and it may be required to dissolve and liquidate its assets. In such case, CGI would be required to pay all
of its debts and contractual obligations, and to set aside certain reserves for potential future claims, and there can be no assurances
as to the amount or timing of available cash, if any, left to distribute to stockholders after paying the debts and other obligations
of CGI and setting aside funds for reserves.
If
the Merger does not close, CGI does not project that its cash at June 30, 2020 will be sufficient to fund normal operations for
the twelve months from the issuance of its financial statements in its most recent Quarterly Report on Form 10-Q. Absent the Merger,
CGI’s ability to continue as a going concern is dependent on reduced losses and improved future cash flows. Alternatively,
CGI may be required to raise additional equity or debt capital, or consummate other strategic transactions. These factors raise
substantial doubt about CGI’s ability to continue as a going concern. CGI can provide no assurance that these actions will
be successful or that additional sources of financing will be available on favorable terms, if at all.
In
the event that capital is not available CGI may then have to scale back or freeze its organic growth plans, sell assets on less
than favorable terms, reduce expenses, curtail future acquisition plans to manage its liquidity and capital resources and/or pursue
bankruptcy protection.
The
post-merger company will need to raise additional capital by issuing securities or debt or through licensing arrangements, which
may cause dilution to the post-merger company’s stockholders or restrict the post-merger company’s operations or proprietary
rights. CGI and StemoniX have recurring losses from operations which have raised substantial doubt regarding their respective
ability to continue as a going concern.
Although
management of CGI and StemoniX believe that, assuming the Merger and the transactions related thereto, including the Private Placement,
are consummated, the post-merger company’s cash reserves (assuming $10 million in proceeds from the Private Placement) and
cash flows from operations will be adequate to fund operations for the next 12 months, such estimate may prove to be wrong, and
we could use our available capital resources sooner than we currently expect. Accordingly, the post-merger company may be required
to raise funds sooner than currently planned.
In
addition, management of CGI and StemoniX believe that conditions exist that raise substantial doubt about each company’s
ability to continue as a going concern due to their recurring losses from operations. Each company has incurred recurring losses
since inception and anticipates operating losses to continue for the foreseeable future. The historical financial statements for
each company incorporated by reference in this prospectus supplement do not include any adjustments that might be necessary should
each be unable to continue as a going concern.
Accordingly,
the post-merger company’s ability to continue as a going concern will depend upon (among other things) the availability
and terms of future funding. Additional financing may not be available to the post-merger company when it needs it or may not
be available on favorable terms. To the extent that the post-merger company raises additional capital by issuing equity securities,
such an issuance may cause significant dilution to the post-merger company’s stockholders’ ownership and the terms
of any new equity securities may have preferences over the post-merger company’s common stock. Any debt financing the post-merger
company enters into may involve covenants that restrict its operations. These restrictive covenants may include limitations on
additional borrowing and specific restrictions on the use of the post-merger company’s assets, as well as prohibitions on
its ability to create liens, pay dividends, redeem its stock or make investments. In addition, if the post-merger company raises
additional funds through licensing arrangements, it may be necessary to grant licenses on terms that are not favorable to the
post-merger company.
The
Merger Agreement contains a Net Cash Adjustment, which, if triggered, could cause the stockholders of CGI (including investors
in this offering) to own less than the 22% of the post-closing Deemed Outstanding Shares that is currently contemplated by the
Merger Agreement.
Under
the Merger Agreement, if CGI’s Net Cash (as defined in the section titled “The Merger Agreement—Exchange
Ratio” in the Form S-4, incorporated herein by reference) is less than $2,000,000 (the “CGI Net Cash Target”)
by more than $250,000, then the CGI Percentage (as defined in the section titled “The Merger Agreement—Exchange
Ratio” in the Form S-4, incorporated herein by reference) will be adjusted downward as described below.
The
CGI Percentage was initially calculated assuming pro forma values of CGI and StemoniX of approximately $17.0 million and $60.3
million, respectively, which pro forma values initially include the CGI Net Cash Target and a Net Cash target of $500,000 for
StemoniX (the “StemoniX Net Cash Target”), respectively. At least 10 days prior to the anticipated closing date of
the Merger, each of CGI and StemoniX will provide their respective Net Cash schedule, setting forth their respective estimated
pro forma Net Cash at closing. Under the Merger Agreement, (i) if CGI’s Net Cash is less than the CGI Net Cash Target by
more than $250,000 or (ii) if StemoniX’s Net Cash is less than the StemoniX Net Cash Target by more than $250,000, then
the CGI Percentage (in the event of a shortfall described in foregoing clause (i)) and/or the Company Percentage (as defined in
the section titled “The Merger Agreement—Exchange Ratio” in the Form S-4, incorporated herein by reference)
(in the event of a shortfall described in foregoing clause (ii)) will be adjusted downward by replacing the CGI Net Cash Target
and/or StemoniX Net Cash Target, as applicable, initially contained in each party’s total pro forma value, with the party’s
newly determined pro forma Net Cash.
For
example, if CGI’s pro forma Net Cash is $1.0 million and StemoniX’s pro forma Net Cash is determined to be between
$500,000 and $250,000, then the CGI Percentage will be adjusted downward to approximately 21.0% and the Company Percentage will
be adjusted upward to approximately 79.0%.
It is currently anticipated that CGI will
need to raise at least $3.0 million in net proceeds from the sale of its equity securities, including from this offering,
in order to meet the CGI Net Cash Target at closing, but no assurance can be given that the CGI Net Cash Target will be met
even if an amount of proceeds equal to or greater than such amount is raised.
The
total number of shares of CGI Common Stock that StemoniX securityholders will be entitled to receive (or will be entitled to receive
upon the exercise of options to purchase CGI Common Stock issued in exchange for StemoniX Options) pursuant to the Merger Agreement
is not adjustable based on the market price of CGI Common Stock (except to the extent that changes in the market price of CGI
Common Stock impact the number of shares that become issuable on a net exercise basis under in-the-money CGI Warrants and in-the-money
CGI Options, and which therefore become part of the CGI Outstanding Equity (as defined in the section titled “The Merger
Agreement—Exchange Ratio” in the Form S-4, incorporated herein by reference) as of the Effective Time), so the
merger consideration at the closing may have a greater or lesser value than at the time the Merger Agreement was signed.
The
Merger Agreement has set the Exchange Ratio for the StemoniX Common Stock, and the Exchange Ratio is only adjustable upward or
downward based on increases or decreases in the number of shares of StemoniX’s issued and outstanding capital stock and
the number of shares of StemoniX capital stock issuable upon the exercise or conversion of other StemoniX securities, increases
or decreases in the number of shares of CGI’s issued and outstanding capital stock and the number of shares of CGI capital
stock issuable on a net exercise basis under in-the-money CGI Warrants and in-the-money CGI Options and if the Net Cash of either
CGI or StemoniX changes in relation to each other. Using the initial 22%/78% split specified in the Merger Agreement and the capitalization
of CGI and StemoniX as of September 15, 2020, and assuming no Net Cash Adjustment, no adjustment for fractional shares and a CGI
closing price of $4.31 per share of common stock (the closing price the CGI Common Stock on the Nasdaq Capital Market on September
15, 2020), the pre-reverse stock split Exchange Ratio is currently estimated to be 0.5541, and the post-split Exchange Ratio will
depend on the exact reverse stock split ratio that is ultimately determined by CGI. Any changes in the market price of CGI Common
Stock before the closing of the Merger will not affect the total number of shares of CGI Common Stock that StemoniX securityholders
will be entitled to receive (or will be entitled to receive upon the exercise of options to purchase CGI Common Stock issued in
exchange for StemoniX Options) pursuant to the Merger Agreement except to the extent that changes in the market price of CGI Common
Stock impact the number of shares that become issuable on a net exercise basis under in-the-money CGI Warrants and in-the-money
CGI Options, and which therefore become part of the CGI Outstanding Equity as of the Effective Time.
Therefore,
if before the closing of the Merger the market price of CGI Common Stock declines from the market price on the date of the Merger
Agreement, then StemoniX shareholders could receive merger consideration with substantially lower value. Similarly, if before
the closing of the Merger the market price of CGI Common Stock increases from the market price on the date of the Merger Agreement,
then StemoniX shareholders could receive merger consideration with substantially more value.
The
market price of the post-merger company’s common stock following the Merger may decline as a result of the Merger.
The
market price of the post-merger company’s common stock may decline as a result of the Merger for a number of reasons including
if:
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investors react negatively to the prospects of the post-merger company’s business and prospects from the Merger;
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the effect of the Merger on the post-merger company’s business and prospects is not consistent with the expectations of
financial or industry analysts; or
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the post-merger company does not achieve the perceived benefits of the Merger as rapidly or to the extent anticipated by financial
or industry analysts.
CGI
stockholders may not realize a benefit from the Merger commensurate with the ownership dilution they will experience in connection
with the Merger.
If
the post-merger company is unable to realize the full strategic and financial benefits currently anticipated from the merger,
CGI securityholders will have experienced substantial dilution of their ownership interests in CGI without receiving any commensurate
benefit, or only receiving part of the commensurate benefit to the extent the post-merger company is able to realize only part
of the strategic and financial benefits currently anticipated from the Merger.
During
the pendency of the Merger, CGI may not be able to enter into a business combination with another party at a favorable price because
of restrictions in the Merger Agreement, which could adversely affect its business.
Covenants
in the Merger Agreement impede the ability of CGI to make acquisitions, subject to certain exceptions relating to fiduciary duties,
or complete other transactions that are not in the ordinary course of business pending the closing of the Merger. As a result,
if the Merger is not completed, CGI may lose valuable business opportunities during that period. In particular, while the Merger
Agreement is in effect, CGI is generally prohibited from soliciting, initiating, encouraging, negotiating or entering into certain
extraordinary transactions, such as a merger, sale of assets or other business combination outside the ordinary course of business,
with any third-party, subject to certain exceptions. Any such transactions could be favorable to CGI’s stockholders.
Certain
provisions of the Merger Agreement may discourage third parties from submitting alternative takeover proposals, including proposals
that may be superior to the arrangements contemplated by the Merger Agreement.
The
terms of the Merger Agreement prohibit CGI from soliciting alternative takeover proposals or cooperating with persons making unsolicited
takeover proposals, except in certain circumstances where the CGI board of directors determines in good faith, after consultation
with its financial advisor and outside legal counsel, that an unsolicited alternative takeover proposal constitutes or is reasonably
likely to result in a superior takeover proposal. In addition, if CGI terminates the Merger Agreement under certain circumstances,
including terminating because of a decision of the CGI board of directors to recommend an alternative proposal, CGI would be required
to pay StemoniX an amount equal to all reasonable and documented out-of-pocket fees and expenses incurred by StemoniX in connection
with the preparation and negotiation of the Merger Agreement, due diligence efforts by StemoniX or otherwise in connection with
the Merger; provided, however, that the amount payable will in no event exceed $500,000. The expense reimbursement described above
may discourage third parties from submitting alternative takeover proposals to CGI and its stockholders, and may cause the CGI
board of directors to be less inclined to recommend an alternative proposal.
The
lack of a public market for StemoniX shares makes it difficult to determine the fair market value of the StemoniX shares, and
CGI may pay more than the fair market value of the StemoniX shares.
StemoniX
is privately held and its capital stock is not traded in any public market. The lack of a public market makes it extremely difficult
to determine StemoniX’s fair market value. Because the percentage of CGI equity to be issued to StemoniX stockholders was
determined based on negotiations between the parties, it is possible that the value of the CGI Common Stock to be received by
StemoniX shareholders will be less than the fair market value of StemoniX, or CGI may pay more than the aggregate fair market
value for StemoniX.
StemoniX’s
limited operating history may make it difficult for you to evaluate the success of its business to date and to assess its future
prospects.
StemoniX
was formed in April 2014. It remains in the development stage and is subject to all the risks inherent in a new business enterprise.
StemoniX has a limited operating history for you to consider in evaluating it and its prospects. Accordingly, you should consider
its prospects in light of the costs, uncertainties, delays and difficulties and risks frequently encountered by development-stage
companies, especially companies operating in a rapidly evolving market. These risks include the need to:
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expand
its business development and marketing activities;
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quickly
integrate newly hired personnel;
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manage
StemoniX’s rapidly developing and changing operations; and
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expand
its product offerings and to respond to changing technologies and user preferences.
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Any
predictions you make about StemoniX’s future success or viability may not be as accurate as they would be if it had a longer
operating history. StemoniX may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown
factors in achieving its business objectives.
The
issuance of shares of CGI Common Stock to StemoniX shareholders in the Merger, and pursuant to any awards under the Cancer Genetics,
Inc. 2020 Equity Incentive Plan, will dilute substantially the voting power of CGI’s stockholders, including the investors
in this offering.
If
the Merger is completed, immediately following the Effective Time, but prior to the proportionate dilution to come from the Private
Placement, the former StemoniX shareholders will hold approximately 78% of the Deemed Outstanding Shares and the stockholders
of CGI (including investors in this offering) will retain ownership of approximately 22% of the Deemed Outstanding Shares, subject
to the Net Cash Adjustment. Accordingly, the issuance of shares of CGI Common Stock to StemoniX shareholders in the Merger will
reduce substantially the voting power of each share of CGI Common Stock held by CGI’s security holders. Consequently, CGI
security holders as a group will have substantially less influence over the management and policies of the post-merger company
after the Merger, than prior thereto. In addition, the Private Placement is expected to further dilute voting power of CGI’s
stockholders, along with the StemoniX shareholders, on a proportionate basis. Further, the CGI board approved, and recommended
to the CGI stockholders in the Form S-4 to approve, the Cancer Genetics, Inc. 2020 Equity Incentive Plan (the “2020 Plan”)
and to authorize for issuance 2,000,000 shares of CGI Common Stock thereunder, which amount approximates 15% of the common stock
currently estimated to be outstanding after the closing of the Merger.
The
pendency of the Merger could have an adverse effect on the trading price of CGI Common Stock and CGI’s business, financial
condition, results of operations or business prospects.
While
there have been no significant adverse effects to date, the pendency of the Merger could disrupt CGI’s businesses in the
following ways, including:
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the
attention of CGI’s management may be directed toward the closing of the Merger and related matters and may be diverted
from the day-to-day business operations; and
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third
parties may seek to terminate or renegotiate their relationships with CGI as a result of the Merger, whether pursuant to the
terms of their existing agreements with CGI or otherwise.
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Should
they occur, any of these matters could adversely affect the trading price of CGI Common Stock or harm CGI’s financial condition,
results of operations or business prospects.
CGI’s
and StemoniX’s businesses are subject to risks arising from epidemic diseases, such as the recent global outbreak of COVID-19.
The
recent outbreak of COVID-19, which has been declared by the World Health Organization to be a pandemic, has spread across the
globe and is impacting worldwide economic activity. A pandemic, including COVID-19 or other public health epidemic, poses the
risk that CGI and StemoniX, or their employees, contractors, suppliers, courier delivery services and other partners, may be prevented
from conducting business activities for an indefinite period of time, including due to spread of the disease within these groups
or due to shutdowns that may be requested or mandated by governmental authorities. While it is not possible at this time to estimate
the impact that COVID-19 could have on CGI’s and StemoniX’s businesses, the COVID-19 pandemic and mitigation measures
have had and may continue to have an adverse impact on global economic conditions which could have an adverse effect on the post-merger
company’s business and financial condition, including impairing the ability to raise capital when needed.
The
continued spread of COVID-19 and the measures taken by the governments of countries affected could disrupt the supply chain of
material needed for CGI’s Discovery Services and could delay future projects from commencing due to COVID-19 related impacts
on the demand for CGI’s services and therefore have a material adverse effect on business, financial condition and results
of operations. In addition, CGI’s corporate and accounting functions are located in New Jersey and were previously subject
to a stay-at-home order, and are currently subject to social distancing orders and guidelines. CGI’s preclinical laboratories
located in the United States were subject to a stay-at-home order until June 2020, and are now subject to social distancing orders,
and its Australia laboratories remain subject to stay-at-home orders. Many of CGI’s customers worldwide are similarly impacted.
As a healthcare provider, CGI has been allowed to remain open in compliance with the shelter-in-place and stay-at-home mandates
and continue to provide critical services in the development of new therapies and the fight against cancer and other diseases.
CGI is still providing Discovery Services, and began to experience a slowdown in project work as a result of the COVID-19 pandemic
during the third quarter of 2020 and expects the future of many projects may be delayed. The global outbreak of COVID-19 continues
to rapidly evolve, and the extent to which COVID-19 may impact business, results of operations and financial position will depend
on future developments, which are highly uncertain and cannot be predicted with confidence, such as the ultimate geographic spread
of the disease, the duration of the outbreak, travel restrictions and social distancing in the United States and other countries,
business closures or business disruptions, and the effectiveness of actions taken in the United States and other countries to
contain and treat the disease.
While
StemoniX has implemented risk management and contingency plans and taken preventive measures and other precautions, no predictions
of specific scenarios can be made with respect to the COVID-19 pandemic and such measures may not adequately predict the impact
on its business from such events. Currently, some of StemoniX’s employees are working remotely in accordance with activating
its business continuity plans. An extended period of remote work arrangements could increase operational risk, including but not
limited to cybersecurity risks, and impair its ability to manage its business. As a healthcare provider, StemoniX has been allowed
to continue to operate throughout the pandemic, however, it has also faced challenges. StemoniX also outsources certain critical
business activities to third parties. As a result, StemoniX relies upon the successful implementation and execution of the business
continuity planning of such entities in the current environment. While StemoniX closely monitors the business continuity activities
of these third parties, successful implementation and execution of their business continuity strategies are largely outside StemoniX’s
control. If one or more of the third parties experience operational failures as a result of the impacts from the spread of COVID-19,
or claim that they cannot perform due to a force majeure, it may have a material adverse effect on the post-merger company’s
business, financial condition, results of operations, liquidity and cash flows.
CGI
does not anticipate that the post-merger company will pay any cash dividends in the foreseeable future.
The
current expectation is that the post-merger company will retain its future earnings, if any, to fund the development and growth
of the post-merger company’s business. As a result, capital appreciation, if any, of the common stock of the post-merger
company will be your sole source of gain, if any, for the foreseeable future.
The
historical audited and unaudited pro forma condensed combined financial information may not be representative of our results after
the Merger.
The
historical audited and unaudited pro forma condensed combined financial information incorporated by reference in this prospectus
supplement has been presented for informational purposes only and is not necessarily indicative of the financial position or results
of operations that actually would have occurred had the Merger been completed as of the date indicated, nor is it indicative of
future operating results or financial position. The pro forma financial information is based, in part, on certain assumptions
that CGI and StemoniX believe are reasonable; however, there can be no assurance that these assumptions will prove to be accurate
over time.
Any
failure by us to comply with applicable regulations and related guidance could harm our reputation and operating results, and
compliance with new regulations and guidance may result in additional costs.
Any
failure on our part to comply with applicable regulations could result in the termination of ongoing research or the disqualification
of data for submission on behalf of our clients to regulatory authorities. This could harm our reputation, our prospects for future
work and our operating results. For example, the issuance of a notice of objectionable observations or a warning from the FDA
based on a finding of a material violation affecting data integrity by us for Good Laboratory Practice or current Good Manufacturing
Practice requirements could materially and adversely affect us. If our operations are found to violate any applicable law or other
governmental regulations, we might be subject to civil and criminal penalties, damages and fines. Any action against us for violation
of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses, divert our management's
attention from the operation of our business and damage our reputation.
Regulatory
monitoring authorities have increased their emphasis on the management of computerized systems to ensure data integrity. New
guidance related to the need for data integrity compliance programs have recently been released and we may require additional
efforts for validation, audit trail review and archiving activities. The FDA’s SEND (Standardization for Exchange of
Nonclinical Data) standards apply to our clients’ NDA and IND submissions after 2017 and require that electronic data be
provided in specific formats that will allow for more efficient, higher quality regulatory reviews. Accordingly, our clients expect
us to timely deliver their nonclinical data compliant with SEND. Notwithstanding, some of these standards require additional
operating and capital expenses that will impact not only us and our industry competitors, but clients in the biomedical research
community. Non-compliance with any of these expectations could lead to official action by a government authority, damage to our
reputation and a potential loss of business.
In
addition, the conduct of animal research at our facilities must be in compliance with the Animal Welfare Act (“AWA”),
which governs the care and use of warm-blooded animals used for research in the U.S. other than laboratory rats, mice and
chickens, and is enforced through periodic inspections by the USDA. The AWA establishes facility standards regarding several aspects
of animal welfare, including housing, ventilation, lighting, feeding and watering, handling, veterinary care and recordkeeping.
If the USDA determines that our equipment, facilities, laboratories or processes do not comply with applicable AWA standards,
it may issue an inspection report documenting the deficiencies and setting deadlines for any required corrective actions. For
continued noncompliance, the USDA may impose fines, suspend and/or revoke animal research licenses, or confiscate research animals.
Risks
Related to this Offering
Management
will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.
We
currently intend to use the net proceeds from this offering to fund working capital and other general corporate purposes. We have
not allocated specific amounts of the net proceeds from this offering for any specific purposes. Accordingly, our management will
have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not
improve our results of operations or enhance the value of our common stock. You will be relying on the judgment of our management
with regard to the use of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess
whether the net proceeds are being used appropriately. It is possible that the net proceeds will be invested in a way that does
not yield a favorable, or any, return for us. Our failure to apply these funds effectively could have a material adverse effect
on our business and cause the price of our common stock to decline.
If
you purchase our common stock sold in this offering you will experience immediate dilution in your investment as a result of this
offering.
Because
the price per share of common stock being offered in this offering may be higher than the net tangible book value per share of
our common stock, you will experience dilution to the extent of the difference between the public offering price per share of
common stock you pay in this offering and the net tangible book value per share of our common stock immediately after this offering.
Our net tangible book value (deficit) as of June 30, 2020, was $(670,000), or $(0.30) per share of common stock. Net tangible
book value (deficit) per share is equal to our total tangible assets minus total liabilities, all divided by the number of shares
of common stock outstanding. See “Dilution” on page S-16 for a more detailed discussion of the dilution you will
incur in this offering.
A
substantial number of shares of our common stock may be sold in this offering, which could cause the price of our common stock
to decline.
In
this offering, we are offering 1,363,637 shares of common stock, which represent approximately 35% of our outstanding
common stock as of October 27, 2020 after giving effect to the sale of the shares of common stock. In addition, the underwriter
will receive warrants to purchase up to 81,819 shares of common stock. This sale and any future sales of a substantial
number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect
the price of our common stock on the Nasdaq Capital Market. We cannot predict the effect, if any, that market sales of those shares
of common stock or the availability of those shares of common stock for sale will have on the market price of our common stock.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and the accompanying prospectus and the information incorporated by reference herein and therein contain
“forward-looking statements,” which include information relating to future events, future financial performance, strategies,
expectations, competitive environment and regulation. Words such as “may,” “should,” “could,”
“would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,”
“future,” “intends,” “plans,” “believes,” “estimates,” and similar
expressions, as well as statements in future tense, identify forward-looking statements. Forward-looking statements should not
be read as a guarantee of future performance or results and will probably not be accurate indications of when such performance
or results will be achieved. Forward-looking statements are based on information we have when those statements are made or our
management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties
that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking
statements. Important factors that could cause such differences include, but are not limited to:
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the
expected benefits of, and potential value, including synergies, created by, the merger for the stockholders of CGI and shareholders
of StemoniX
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likelihood
of the satisfaction of certain conditions to the completion of the merger, such as the Private Placement, and whether and
when the merger will be consummated
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CGI’s
ability to control and correctly estimate its operating expenses and its expenses associated with the merger
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the
Company’s ability to adapt its business for future developments in light of the global outbreak of COVID-19, which continues
to rapidly evolve;
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the
Company’s ability to achieve profitability by increasing sales of the Company’s preclinical CRO services focused
on oncology and immuno-oncology;
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the
Company’s ability to raise additional capital to meet its liquidity needs;
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the
Company’s ability to execute on its marketing and sales strategy for its preclinical research services and gain acceptance
of its services in the market;
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the
Company’s ability to keep pace with rapidly advancing market and scientific developments;
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the
Company’s ability to satisfy U.S. (including FDA) and international regulatory requirements with respect to its services;
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the
Company’s ability to maintain its present customer base and obtain new customers;
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competition
from preclinical CRO services companies, many of which are much larger than the Company in terms of employee base, revenues
and overall number of customers and related market share;
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the
Company’s ability to maintain the Company’s clinical and research collaborations and enter into new collaboration
agreements with highly regarded organizations in the field of oncology so that, among other things, the Company has access
to thought leaders in advanced preclinical and translational science;
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potential
product liability or intellectual property infringement claims;
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the
Company’s dependency on third-party manufacturers to supply it with instruments and specialized supplies;
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the
Company’s ability to attract and retain a sufficient number of scientists, clinicians, sales personnel and other key
personnel with extensive experience in oncology and immuno-oncology, who are in short supply;
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the
Company’s ability to obtain or maintain patents or other appropriate protection for the intellectual property in its
proprietary tests and services;
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the
Company’s ability to effectively manage its international businesses in Australia and Europe, including the expansion
of its customer base and volume of new contracts in these markets;
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the
Company’s dependency on the intellectual property licensed to the Company or possessed by third parties;
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the
Company’s ability to adequately support future growth; and
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other
risks and uncertainties discussed in the Company’s Form S-4 filed on October 16, 2020 and annual report on Form 10-K
for the year ended December 31, 2019, as updated in our Form 10-Q for the quarter ended March 31, 2020, Form 10-Q for the
quarter ended June 30, 2020 and other reports, as applicable, the Company files with the Securities and Exchange Commission,
which are incorporated by reference in this prospectus supplement and the accompanying prospectus.
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You
should review carefully the section entitled “Risk Factors” beginning on page S-6 of this prospectus supplement
for a discussion of these and other risks that relate to our business and investing in our securities. The forward-looking statements
contained or incorporated by reference in this prospectus supplement are expressly qualified in their entirety by this cautionary
statement. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances
after the date on which any such statement is made or to reflect the occurrence of unanticipated events.
USE
OF PROCEEDS
We estimate that the net
proceeds from the sale of the shares offered in this offering will be approximately $2,462,001, or approximately $2,876,000
if the underwriter exercises in full its option to purchase additional shares of common stock, after deducting the underwriting
discounts and commissions and estimated offering expenses payable by us.
We
intend to use the net proceeds from this offering to fund working capital and other general corporate purposes.
The
expected use of net proceeds of this offering represents our current intentions based upon our present plan and business conditions.
Investors are cautioned, however, that expenditures may vary substantially from these uses. Investors will be relying on the judgment
of our management, who will have broad discretion regarding the application of the proceeds of this offering. The amounts and
timing of our actual expenditures will depend upon numerous factors, including the amount of cash generated by our operations,
the amount of competition we face and other operational factors. We may find it necessary or advisable to use portions of the
proceeds from this offering for other purposes.
From
time to time, we evaluate these and other factors and we anticipate continuing to make such evaluations to determine if the existing
allocation of resources, including the proceeds of this offering, is being optimized. Circumstances that may give rise to a change
in the use of proceeds include:
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a
change in development plan or strategy;
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●
|
the
addition of new products or applications;
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●
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technical
delays;
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●
|
failure
to achieve sales as anticipated; and
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●
|
the
availability of other sources of cash including cash flow from operations and new bank debt financing arrangements, if any.
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Until
we use the net proceeds of this offering, we intend to hold such funds in cash or invest the funds in short-term, investment grade,
interest-bearing securities.
DIVIDEND
POLICY
In
the past, we have not declared or paid cash dividends on our common stock. We do not intend to pay cash dividends in the future,
rather, we intend to retain future earnings, if any, to fund the operation and expansion of our business and for general corporate
purposes.
DILUTION
If
you invest in our common stock, your interest will be diluted immediately to the extent of the difference between the offering
price per share you will pay in this offering and the as adjusted net tangible book value per share of our common stock after
this offering. Net tangible book value per share represents our total tangible assets less total liabilities, divided by the number
of shares of our common stock outstanding.
As of June 30, 2020, our
net tangible book value (deficit) was $(670,000), or $(0.30) per share of common stock. After giving effect to our issuance and
sale of 1,363,637 shares of common stock in this offering at the offering price of $2.20 per share, after deducting
the underwriting discounts and commissions and estimated offering expenses payable by us, the as adjusted net tangible book value
as of June 30, 2020 would have been $1,792,001, or $0.49 per share. This represents an immediate increase in as
adjusted net tangible book value to existing stockholders of $0.79 per share and an immediate dilution to new investors
purchasing securities in this offering of $1.71 per share.
The
following table illustrates this per share dilution:
|
Public offering price per share
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|
|
|
|
|
$
|
2.20
|
|
|
Net tangible book value (deficit) per share of as June 30, 2020
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|
$
|
(0.30
|
)
|
|
|
|
|
|
Increase in net tangible book value per share attributable to this offering
|
|
$
|
0.79
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|
|
|
|
|
|
|
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|
|
|
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As adjusted net tangible book value per share as of June 30, 2020, after giving effect to this offering
|
|
|
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|
$
|
0.49
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|
|
|
|
|
|
|
|
|
|
|
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Dilution per share to new investors purchasing our common stock in this offering
|
|
|
|
|
|
$
|
1.71
|
|
If the underwriter exercises
in full its option to purchase an additional 204,545 shares of common stock at the public offering price of $2.20
per share, less underwriting discounts and commissions, our as adjusted net tangible book value after this offering would be approximately
$2,206,000, or $0.58 per share, representing an increase in net tangible book value of approximately $0.88
per share to existing shareholders and immediate dilution in net tangible book value of approximately $1.62 per share to
investors purchasing our shares of common stock in this offering at the public offering price.
The
above discussion and table are based on 2,260,883 shares outstanding as of June 30, 2020, and excludes as of that date:
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●
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71,995
shares issuable upon exercise of outstanding stock options at a weighted-average exercise price of $87.50 per share;
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●
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279,289
shares issuable upon exercise of outstanding warrants at a weighted-average exercise price of $104.18 per share;
|
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●
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24,556
shares available for future grants under the 2011 Plan; and
|
|
●
|
81,819
additional shares (94,092 shares if the underwriter exercises its option to purchase additional shares in full) of common
stock issuable upon the exercise of the underwriter’s warrants, with an exercise price of $2.42 per share, to be issued
to the underwriter in connection with this offering.
|
To
the extent that outstanding options or warrants are exercised, or the Merger and the Private Placement are consummated, the investors
purchasing our common stock in this offering will experience further dilution. In addition, we may choose to raise additional
capital due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future
operating plans. To the extent that additional capital is raised through the sale of securities, the issuance of these securities
could result in further dilution to our stockholders.
UNDERWRITING
We
have entered into an underwriting agreement, dated October 28, 2020, with H.C. Wainwright & Co., LLC, as underwriter,
with respect to the common stock being offered hereby. Subject to the terms and conditions of the underwriting agreement, the
underwriter has agreed to purchase from us the number of shares of our common stock set forth opposite its name below.
|
Underwriter
|
|
Number of Shares
|
|
|
H.C. Wainwright & Co., LLC
|
|
|
1,363,637
|
|
|
Total
|
|
|
1,363,637
|
|
The
underwriting agreement provides that the obligations of the underwriter are subject to certain conditions precedent and that the
underwriter has agreed to purchase all of the shares sold under the underwriting agreement if any of these shares are purchased.
The underwriters
may offer the shares of common stock from time to time to purchasers directly or through agents, or through brokers in brokerage
transactions on the NASDAQ Capital Market, or to dealers in negotiated transactions or in a combination of such methods of sale,
or otherwise, at a fixed price or prices, which may be changed, or at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices, subject to receipt and acceptance by it and subject to its right
to reject any order in whole or in part. The difference between the price at which the underwriters purchase shares from us and
the price at which the underwriters resell such shares may be deemed underwriting compensation. If the underwriters effect such
transactions by selling shares of common stock to or through dealers, such dealers may receive compensation in the form of discounts,
concessions or commissions from the underwriter and/or purchasers of shares of common stock for whom they may act as agents or
to whom they may sell as principal.
The
underwriter is offering the shares, subject to prior sale, when, as and if issued to and accepted by it, subject to approval of
legal matters by its counsel and other conditions specified in the underwriting agreement. The underwriter reserves the right
to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.
Underwriting
Discounts and Commissions
The
following table shows the public offering price, underwriting discounts and commissions and proceeds, before expenses to us.
We
estimate that the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $328,000
and is payable by us. We have agreed to reimburse the expenses of the underwriter in the non-accountable sum of $35,000, the
other actual expenses of the underwriter, including its legal fees, up to $100,000 in connection with this offering, and $12,900
for the clearing expenses of the underwriter in connection with this offering. We have also agreed to pay the underwriter a management
fee equal to 1.0% of the aggregate gross proceeds in this offering.
|
|
|
Per Share
|
|
|
Total Without
Exercise of Option
|
|
|
Total With Full
Exercise of Option
|
|
|
Public offering price
|
|
$
|
2.200
|
|
|
$
|
3,000,001
|
|
|
$
|
3,450,000
|
|
|
Underwriting discounts and commissions (7.0%)
|
|
$
|
0.154
|
|
|
$
|
210,000
|
|
|
$
|
241,500
|
|
|
Proceeds, before expenses
|
|
$
|
2.046
|
|
|
$
|
2,790,001
|
|
|
$
|
3,208,500
|
|
The
underwriter proposes to offer the shares of common stock to the public at the public offering price set forth on the cover of
this prospectus supplement. The underwriter may offer the shares of common stock to securities dealers at the public offering
price less a concession not in excess of $0.099 per share. If all of the shares are not sold at the public offering
price, the underwriter may change the offering price and other selling terms.
In addition, we have agreed
to issue to the underwriter warrants to purchase up to 81,819 shares (94,092 shares if the underwriter exercises its
option to purchase additional shares in full) of common stock (representing 6.0% of the aggregate number of shares of common
stock sold in this offering), at an exercise price of $2.42 per share (representing 110% of the public offering price for
a share of common stock to be sold in this offering). The underwriter warrants will be exercisable immediately and for five years
from the date of commencement of sales in this offering.
We
have also granted the underwriter a twelve-month right of first refusal, commencing upon the consummation of one or more offerings
arranged by the underwriter of at least $10 million, to act as sole book-running manager, sole underwriter or sole placement agent
for each and every future public or private equity offering by us or any of our successors or subsidiaries, under certain circumstances.
Option
to Purchase Additional Shares
We
have granted to the underwriter an option, exercisable for 30 days from the date of this prospectus supplement, to purchase, from
time to time, in whole or in part, up to an aggregate of 204,545 shares of common stock from us at the public offering
price set forth on the cover page of this prospectus supplement, less underwriting discounts and commissions.
Discretionary
Accounts
The
underwriter does not intend to confirm sales of the shares to any accounts over which they have discretionary authority.
Stabilization
In
connection with this offering, the underwriter may engage in stabilizing transactions, overallotment transactions, syndicate covering
transactions and penalty bids in connection with our common stock.
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●
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Stabilizing
transactions permit bids to purchase shares of common stock so long as the stabilizing bids do not exceed a specified maximum.
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|
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●
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Overallotment
transactions involve sales by the underwriter of shares of common stock in excess of the number of shares the underwriter
is obligated to purchase. This creates a syndicate short position which may be either a covered short position or a naked
short position. In a covered short position, the number of shares over-allotted by the underwriter is not greater than the
number of shares that it may purchase in the overallotment option. In a naked short position, the number of shares involved
is greater than the number of shares in the overallotment option. The underwriter may close out any short position by exercising
its overallotment option and/or purchasing shares in the open market.
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|
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●
|
Syndicate
covering transactions involve purchases of common stock in the open market after the distribution has been completed in order
to cover syndicate short positions. Such a naked short position would be closed out by buying securities in the open market.
A naked short position is more likely to be created if the underwriter is concerned that there could be downward pressure
on the price of the securities in the open market after pricing that could adversely affect investors who purchase in the
offering.
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|
|
●
|
Penalty
bids permit the underwriter to reclaim a selling concession from a syndicate member when the securities originally sold by
the syndicate member are purchased in a stabilizing or syndicate covering transaction to cover syndicate short positions.
|
These
stabilizing transactions, over-allotment transactions, syndicate covering transactions and penalty bids may have the effect of
raising or maintaining the market price of our common stock or preventing or retarding a decline in the market price of our common
stock. As a result, the price of our common stock in the open market may be higher than it would otherwise be in the absence of
these transactions. Neither we nor the underwriter make any representation or prediction as to the effect that the transactions
described above may have on the price of our common stock. These transactions may be effected on the Nasdaq Capital Market, in
the over-the-counter market or otherwise and, if commenced, may be discontinued at any time without notice to the public.
Regulation
M
In
connection with this offering, the underwriter also may engage in passive market making transactions in our common stock in accordance
with Regulation M during a period before the commencement of offers or sales of shares of our common stock in this offering and
extending through the completion of the distribution. In general, a passive market maker must display its bid at a price not in
excess of the highest independent bid for that security. However, if all independent bids are lowered below the passive market
maker’s bid that bid must then be lowered when specific purchase limits are exceeded. Passive market making may stabilize
the market price of the securities at a level above that which might otherwise prevail in the open market and, if commenced, may
be discontinued at any time.
Lock-Up
Agreements
Each
of our directors and executive officers have entered into lock-up agreements that prevent them from selling any shares of our
common stock or any securities convertible into or exercisable or exchangeable into share of common stock, subject to certain
exceptions, for a period of 90 days after the date of this prospectus supplement. The underwriter, in its sole discretion, may
release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time.
When determining whether or not to release the common stock and other securities from lock-up agreements, the underwriter will
consider, among other factors, the holder’s reasons for requesting the release and the number of shares of common stock
or other securities for which the release is being requested.
Electronic
Offer, Sale and Distribution of Shares
A
prospectus in electronic format may be made available on the websites maintained by the underwriter or selling group members,
if any, participating in this offering and the underwriter participating in this offering may distribute prospectuses electronically.
Other than the prospectus in electronic format, the information on these websites is not part of this prospectus or the registration
statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as
underwriter, and should not be relied upon by investors.
We
have not authorized and do not authorize the making of any offer of securities through any financial intermediary on our behalf,
other than offers made by the underwriter and its respective affiliates, with a view to the final placement of the securities
as contemplated in this prospectus supplement. Accordingly, no purchaser of the shares, other than the underwriter, is authorized
to make any further offer of shares on our behalf or on behalf of the underwriter.
Other
Relationships
The
underwriter and its affiliates have provided, and may in the future provide, various other investment banking, commercial banking
and other financial services for us and our affiliates for which they have received, and may in the future receive, customary
fees. In particular, the underwriter acted as our underwriter in a public offering in January 2019 and as lead placement agent
in connection with an additional public offering in January 2019, for which it received cash and warrant compensation. In addition,
the underwriter was engaged in October 2019 to serve as our financial advisor with respect to strategic transactions, including
the Merger.
Indemnification
We
have agreed to indemnify the underwriter against specified liabilities, including liabilities under the Securities Act of 1933,
as amended (the “Securities Act”), and to contribute to payments the underwriter may be required to make in respect
thereof
NASDAQ
Capital Market Listing
Our
common stock is listed on the Nasdaq Capital Market under the symbol “CGIX.”
Offers
outside the United States
Other
than in the United States, no action has been taken by us or the underwriter that would permit a public offering of the shares
offered by this prospectus in any jurisdiction where action for that purpose is required. The shares offered by this prospectus
may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or advertisements in
connection with the offer and sale of any such shares be distributed or published in any jurisdiction, except under circumstances
that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this
prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution
of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any shares offered
by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.
LEGAL
MATTERS
The
validity of the shares of common stock offered by this prospectus supplement has been passed upon for us by Lowenstein Sandler
LLP, Roseland, New Jersey. Ellenoff Grossman & Schole LLP, New York, New York, is acting as counsel for the underwriter in
connection with the shares of common stock offered hereby.
EXPERTS
The
consolidated financial statements of Cancer Genetics, Inc. and subsidiaries as of December 31, 2019 and for the year ended December
31, 2019 have been audited by Marcum LLP, an independent registered public accounting firm, as stated in their report which is
incorporated by reference herein, (which report includes an explanatory paragraph as to the Company’s ability to continue
as a going concern and a paragraph regarding other matters including 1) the audit of the restatement for discontinued operations,
2) a reverse stock-split and 3) change in accounting principle). Such financial statements have been incorporated by reference
herein in reliance on the report of such firm, given upon their authority as experts in auditing and accounting.
The
consolidated financial statements as of December 31, 2018 and for the year then ended have been audited by RSM US LLP, an independent
registered public accounting firm, as stated in their report thereon (which report expresses an unqualified opinion on the financial
statements, except for effects of the adjustments, if any, as might have been determined to be necessary had they been engaged
to audit the Company’s restatement for discontinued operations and a reverse stock-split and emphasis of matter paragraphs
stating 1) they were not engaged to audit the restatement for discontinued operations and a reverse stock-split, 2) for substantial
doubt about the Company’s ability to continue as a going concern and 3) change in accounting principle), incorporated herein
by reference, and have been incorporated in this prospectus supplement in reliance upon such report and upon the authority of
such firm as experts in accounting and auditing.
The
financial statements of StemoniX, Inc. as of and for the years ended December 31, 2019 and December 31, 2018, incorporated by
reference herein, have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated
in their report incorporated by reference herein (which report expresses an unqualified opinion on the financial statements and
includes explanatory paragraphs referring to substantial doubt regarding StemoniX, Inc.’s ability to continue as a going
concern and a change in accounting principle related to the adoption of Accounting Standards Update 2016-02, Leases (Topic
842)). Such financial statements have been so incorporated by reference in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
WHERE
YOU CAN FIND MORE INFORMATION
We
file annual reports, quarterly reports, current reports, proxy statements and other information with the SEC. Our SEC filings
are and will become available to the public over the Internet at the SEC’s website at www.sec.gov. You can also find our
public filings on our website at www.cancergenetics.com. Our website and the information contained therein or connected thereto
are not part of this prospectus supplement or the accompanying prospectus.
We
have filed with the SEC a registration statement on Form S-3 under the Securities Act with respect to the shares of common stock
being offered by this prospectus supplement. This prospectus supplement and the accompanying prospectus are a part of that registration
statement but do not contain all of the information set forth in the registration statement or the exhibits to the registration
statement. For further information with respect to us and the shares we are offering pursuant to this prospectus supplement, you
should refer to the registration statement and its exhibits. Statements contained in this prospectus supplement as to the contents
of any contract, agreement or other document referred to are not necessarily complete, and you should refer to the copy of that
contract or other documents filed as an exhibit to the registration statement. You may read or obtain a copy of the registration
statement at the SEC’s website referred to above.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information from other documents that we file with it, which means that
we can disclose important information to you by referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus supplement and the accompanying prospectus. Information in this prospectus supplement
supersedes information incorporated by reference that we filed with the SEC prior to the date of this prospectus supplement.
We
incorporate by reference the documents listed below that we have previously filed with the SEC:
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●
|
our
Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on May 29, 2020;
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|
|
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|
●
|
our
Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020, filed with the SEC on June 24, 2020
(as amended on July 6, 2020) and August 13, 2020, respectively;
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|
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|
|
●
|
our
Current Reports on Form 8-K filed with the SEC on February 27, 2020, March 30, 2020,
May 14, 2020, June 12, 2020, August 24, 2020, September 3, 2020, September 15, 2020,
September 24, 2020, September 30, 2020 and October 19, 2020 (other than any portions
thereof deemed furnished and not filed);
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|
●
|
our
Registration Statement on Form S-4 (File No. 333-249513) filed with the SEC on October 16, 2020; and
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|
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|
●
|
the
description of our common stock, par value $0.0001 per share, contained in our Form 8-A filed on August 12, 2013, including
any amendment or report filed for the purpose of updating such description.
|
All
documents we file with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any portion of
any report or documents that is not deemed filed under such provisions, on or after the date of this prospectus supplement until
the termination of this offering shall be deemed incorporated by reference in this prospectus supplement and the accompanying
prospectus and to be a part of this prospectus supplement from the date of filing of those documents.
We
will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporated by reference,
including exhibits to these documents. You should direct any requests for documents to Cancer Genetics, Inc., 201 Route 17 North,
2nd Floor, Rutherford, New Jersey; Telephone: (201) 528-9200. Copies of the above reports may also be accessed from
our website at www.cancergenetics.com. The information contained on, or that may be obtained from, our website is not, and shall
not be deemed to be, a part of this prospectus supplement or the accompanying prospectus.
We
have authorized no one to provide you with any information that differs from that contained in this prospectus supplement, the
accompanying prospectus or incorporated by reference herein or therein. Accordingly, you should not rely on any information that
is not contained in this prospectus supplement or the accompanying prospectus or incorporated by reference herein or therein.
You should not assume that the information in this prospectus supplement is accurate as of any date other than the date of the
front cover of this prospectus supplement.
Any
statement contained in a document incorporated or deemed to be incorporated by reference in this prospectus supplement will be
deemed modified, superseded or replaced for purposes of this prospectus supplement to the extent that a statement contained in
this prospectus supplement or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus
supplement modifies, supersedes or replaces such statement.
PROSPECTUS
Cancer
Genetics, Inc.
$100,000,000
Common
Stock
Preferred
Stock
Warrants
Debt
Securities
Subscription
Rights
Units
We
may offer, issue and sell from time to time together or separately, in one or more offerings, any combination of (i) our common
stock, (ii) our preferred stock, which we may issue in one or more series, (iii) warrants, (iv) senior or subordinated debt securities,
(v) subscription rights and (vi) units. The debt securities may consist of debentures, notes, or other types of debt. The debt
securities, preferred stock, warrants and subscription rights may be convertible into, or exercisable or exchangeable for, common
or preferred stock or other securities of ours. The units may consist of any combination of the securities listed above.
The
aggregate public offering price of the securities that we may offer will not exceed $100,000,000. We will offer the securities
in an amount and on terms that market conditions will determine at the time of the offering. Our common stock is listed on the
Nasdaq Capital Market under the symbol “CGIX.” The last reported sale price for our common stock on June 25, 2020
as quoted on the Nasdaq Capital Market was $3.04 per share. You are urged to obtain current market quotations of our common stock.
We have no preferred stock, warrants, debt securities, subscription rights or units listed on any market. Each prospectus supplement
will indicate if the securities offered thereby will be listed on any securities exchange.
Investing
in our securities involves risk. You should carefully consider the risks that we refer you to under the section captioned “Risk
Factors” in this prospectus on page 3 before buying our securities.
Should
we offer any of the securities described in this prospectus, we will provide you with the specific terms of the particular securities
being offered in supplements to this prospectus. You should read this prospectus and any supplement, together with additional
information described under the headings “Additional Information” and “Incorporation of Certain Information
by Reference” carefully before you invest. This prospectus may not be used to sell securities unless accompanied by a prospectus
supplement.
We
may sell these securities directly to our stockholders or to other purchasers or through agents on our behalf or through underwriters
or dealers as designated from time to time. If any agents or underwriters are involved in the sale of any of these securities,
the applicable prospectus supplement will provide the names of the agents or underwriters and any applicable fees, commissions
or discounts.
The
aggregate market value of the shares of our common stock held by non-affiliates pursuant to General Instruction I.B.6 of Form
S-3 is approximately $8,680,000, which was calculated based on 2,169,880 shares of our common stock outstanding and held by non-affiliates
as of the date of this Prospectus and a price of $4.00 per share, the closing price of our common stock on the Nasdaq Capital
Market on June 8, 2020. We have not sold any securities of the types listed above pursuant to General Instruction I.B.6 of Form
S-3 during the prior 12 calendar month period that ends on, and includes the date of this Prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
The
date of this prospectus is July 21, 2020.
TABLE
OF CONTENTS
Cancer
Genetics, Inc. is referred to herein as “Cancer Genetics,” “the Company,” “we,” “us,”
and “our,” unless the context indicates otherwise.
You
may only rely on the information contained in this prospectus and the accompanying prospectus supplement or that we have referred
you to. We have not authorized anyone to provide you with different information. This prospectus and any prospectus supplement
do not constitute an offer to sell or a solicitation of an offer to buy any securities other than the securities offered by this
prospectus and the prospectus supplement. This prospectus and any prospectus supplement do not constitute an offer to sell or
a solicitation of an offer to buy any securities in any circumstances in which such offer or solicitation is unlawful. Neither
the delivery of this prospectus or any prospectus supplement nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in our affairs since the date of this prospectus or such prospectus supplement or
that the information contained by reference to this prospectus or any prospectus supplement is correct as of any time after its
date.
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the Securities and Exchange Commission, or SEC, using a “shelf”
registration process. Under this shelf registration process, we may from time to time offer and sell, in one or more offerings,
any or all of the securities described in this prospectus, separately or together, up to an aggregate offering price of $100,000,000.
This prospectus provides you with a general description of our securities being offered. When we issue the securities being offered
by this prospectus, we will provide a prospectus supplement (which term includes, as applicable, the at-the-market sale agreement
prospectus filed with the registration statement of which this prospectus forms a part) that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus.
You should read both this prospectus and any prospectus supplement together with additional information described under the heading
“Additional Information” and “Incorporation of Certain Information by Reference.”
PROSPECTUS
SUMMARY
The
following summary highlights some information from this prospectus. It is not complete and does not contain all of the information
that you should consider before making an investment decision. You should read this entire prospectus, including the “Risk
Factors” section on page 3 and the disclosures to which that section refers you, the financial statements and related notes
and the other more detailed information appearing elsewhere or incorporated by reference into this prospectus before investing
in any of the securities described in this prospectus.
Overview
Cancer
Genetics, Inc. supports the efforts of the biotechnology and pharmaceutical industries to develop innovative new drug therapies.
Until the closing of the Business Disposals (as defined below) in July 2019, the Company was an emerging leader in enabling precision
medicine in oncology by providing multi-disciplinary diagnostic and data solutions, facilitating individualized therapies through
the Company’s diagnostic tests, services and molecular markers. Following the Business Disposals, the Company currently
has an extensive set of anti-tumor referenced data based on predictive xenograft and syngeneic tumor models from the acquisition
of vivoPharm, Pty Ltd. (“vivoPharm”) in 2017, to provide Discovery Services such as contract research services, focused
primarily on unique specialized studies to guide drug discovery and development programs in the oncology and immuno-oncology fields.
The Company’s tests and techniques target a wide range of indications, covering all ten of the top cancers in prevalence
in the United States, with additional unique capabilities offered by its FDA-cleared Tissue of Origin® test for identifying
difficult to diagnose tumor types or poorly differentiated metastatic disease.
The
Company offers preclinical services such as predictive tumor models, human orthotopic xenografts and syngeneic immuno-oncology
relevant tumor models in its Hershey, PA facility, and is a leader in the field of immuno-oncology preclinical services in the
United States. This service is supplemented with GLP toxicology and extended bioanalytical services in the Company’s Australian-based
facilities in Clayton, Victoria, and Gilles Plains, South Australia.
Corporate
Information
Our
principal executive offices are located at 201 Route 17 North, 2nd Floor, Rutherford, New Jersey 07070, and our telephone
number is (201) 528-9200. Our common stock is currently traded on The NASDAQ Capital Market under the symbol “CGIX.”
We maintain a corporate website at www.cancer genetics.com. The contents of our website are not incorporated by reference
into this prospectus and should not be considered to be a part of this prospectus or relied upon in connection herewith. You should
not rely on our website or any such information in making your decision whether to purchase our securities.
We
were incorporated in the State of Delaware on April 8, 1999. On July 16, 2014 we purchased substantially all of the assets of
Gentris Corporation, a laboratory specializing in pharmacogenomics profiling for therapeutic development, companion diagnostics
and clinical trials, which previously supported our BioPharma Business. On October 9, 2015, we acquired substantially all the
assets and assumed certain liabilities of Response Genetics, Inc., which previously supported our Clinical Business. On August
15, 2017, we purchased all of the outstanding stock of vivoPharm, with its principal place of business in Victoria, Australia.
On July 8, 2019, we consummated the sale of our Clinical Business (the “Clinical Sale”), and on July 15, 2019, we
consummated the sale of our BioPharma Business (the “BioPharma Sale” and, together with the Clinical Sale, the “Business
Disposals”).
RISK
FACTORS
Before
purchasing any of the securities you should carefully consider the risk factors incorporated by reference in this prospectus from
our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 and any subsequent updates described in our Quarterly
Reports on Form 10-Q and Current Reports on Form 8-K, as well as the risks, uncertainties and additional information set forth
in our SEC reports on Forms 10-K, 10-Q and 8-K and in the other documents incorporated by reference in this prospectus. For a
description of these reports and documents, and information about where you can find them, see “Additional Information”
and “Incorporation of Certain Information By Reference.” Additional risks not presently known or that we presently
consider to be immaterial could subsequently materially and adversely affect our financial condition, results of operations, business
and prospects.
FORWARD-LOOKING
STATEMENTS
This
prospectus, including the documents that we incorporate by reference, contains forward-looking statements as that term is defined
in the federal securities laws. The events described in forward-looking statements contained in this prospectus, including the
documents that we incorporate by reference, may not occur. Generally, these statements relate to our business plans or strategies,
projected or anticipated benefits or other consequences of our plans or strategies, financing plans, projected or anticipated
benefits from acquisitions that we may make, or projections involving anticipated revenues, earnings or other aspects of our operating
results or financial position, and the outcome of any contingencies. Any such forward-looking statements are based on current
expectations, estimates and projections of management. We intend for these forward-looking statements to be covered by the safe-harbor
provisions for forward-looking statements. Words such as “may,” “expect,” “believe,” “anticipate,”
“project,” “plan,” “intend,” “estimate,” and “continue,” and their
opposites and similar expressions are intended to identify forward-looking statements. We caution you that these statements are
not guarantees of future performance or events and are subject to a number of uncertainties, risks and other influences, many
of which are beyond our control that may influence the accuracy of the statements and the projections upon which the statements
are based. Factors that may affect our results include, but are not limited to, the risks and uncertainties discussed in the “Risk
Factors” section on page 3 of this prospectus, in our Annual Report on Form 10-K for the fiscal year ended December 31,
2019 or in other reports we file with the Securities and Exchange Commission.
Any
one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking
statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially
from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any
forward-looking statements, whether from new information, future events or otherwise.
You
should rely only on the information in this prospectus. We have not authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information, you should not rely upon it.
USE
OF PROCEEDS
Unless
we inform you otherwise in the prospectus supplement relating to a particular offering of securities, we will use the net proceeds
from the sale of the securities offered by this prospectus and the exercise price from the exercise of any convertible securities,
if any, for working capital and other general corporate purposes, which may include funding acquisitions or investments in businesses,
products or technologies that are complementary to our own and reducing indebtedness.
When
particular securities are offered, the prospectus supplement relating to that offering will set forth our intended use of the
net proceeds received from the sale of those securities we sell. Pending the application of the net proceeds for these purposes,
we expect to invest the proceeds in short-term, interest-bearing instruments or other investment-grade securities.
THE
SECURITIES WE MAY OFFER
General
The
descriptions of the securities contained in this prospectus, together with the applicable prospectus supplements, summarize all
of the material terms and provisions of the various types of securities that we may offer. We will describe in the applicable
prospectus supplement relating to any securities the particular terms of the securities offered by that prospectus supplement.
If we indicate in the applicable prospectus supplement, the terms of the securities may differ from the terms we have summarized
below. We may also include in the prospectus supplement information about material United States federal income tax considerations
relating to the securities, and the securities exchange, if any, on which the securities will be listed.
We
may sell from time to time, in one or more offerings:
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common
stock;
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preferred
stock;
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debt
securities;
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subscription
rights to purchase shares of common stock, preferred stock or debt securities;
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warrants
to purchase shares of common stock or preferred stock; and
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units
consisting of any combination of the securities listed above.
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In
this prospectus, we refer to the common stock, preferred stock, debt securities, subscription rights, warrants and units collectively
as “securities.” The total dollar amount of all securities that we may sell pursuant to this prospectus will not exceed
$100,000,000.
If
we issue debt securities at a discount from their original stated principal amount, then, for purposes of calculating the total
dollar amount of all securities issued under this prospectus, we will treat the initial offering price of the debt securities
as the total original principal amount of the debt securities.
This
prospectus may not be used to consummate a sale of securities unless it is accompanied by a prospectus supplement.
DESCRIPTION
OF CAPITAL STOCK
General
Our
authorized capital stock consists of:
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100,000,000
shares of common stock, par value $0.0001 per share; and
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9,764,000
shares of preferred stock, par value $0.0001 per share, of which, as of the date of this prospectus, none of which shares
have been designated.
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As
of close of business on June 25, 2020, 2,260,883 shares of common stock were issued and outstanding and no shares of preferred
stock were issued and outstanding.
The
additional shares of our authorized capital stock available for issuance may be issued at times and under circumstances so as
to have a dilutive effect on earnings per share and on the equity ownership of the holders of our common stock. The ability of
our board of directors to issue additional shares of stock could enhance the board’s ability to negotiate on behalf of the
stockholders in a takeover situation but could also be used by the board to make a change of control more difficult, thereby denying
stockholders the potential to sell their shares at a premium and entrenching current management. The following description is
a summary of the material provisions of our capital stock. You should refer to our certificate of incorporation, as amended, and
our bylaws, both of which are on file with the SEC as exhibits to previous SEC filings, for additional information. The summary
below is qualified by provisions of applicable law.
Common
Stock
Voting.
Holders of our common stock are entitled to one vote per share in the election of directors and on all other matters on which
stockholders are entitled or permitted to vote. Holders of our common stock are not entitled to cumulative voting rights..
Dividends.
Subject to the terms of any outstanding series of preferred stock, the holders of our common stock are entitled to dividends in
the amounts and at times as may be declared by the board of directors out of funds legally available therefor.
Liquidation
Rights. Upon liquidation or dissolution, holders of our common stock are entitled to share ratably in all net assets available
for distribution to stockholders after we have paid, or provided for payment of, all of our debts and liabilities, and after payment
of any liquidation preferences to holders of our preferred stock.
Other
Matters. Holders of our common stock have no redemption, conversion or preemptive rights. There are no sinking fund provisions
applicable to our common stock. The rights, preferences and privileges of the holders of our common stock are subject to the rights
of the holders of shares of any series of preferred stock that we may issue in the future.
Transfer
Agent and Registrar
The
transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company, LLC.
Preferred
Stock
We
are authorized to issue up to 9,764,000 shares of preferred stock, all of which are undesignated. Our board of directors has the
authority to issue preferred stock in one or more classes or series and to fix the designations, powers, preferences and rights,
and the qualifications, limitations or restrictions thereof, including dividend rights, conversion right, voting rights, terms
of redemption, liquidation preferences and the number of shares constituting any class or series, without further vote or action
by the stockholders. Although we have no present plans to issue any other shares of preferred stock, the issuance of shares of
preferred stock, or the issuance of rights to purchase such shares, could decrease the amount of earnings and assets available
for distribution to the holders of common stock, could adversely affect the rights and powers, including voting rights, of the
common stock, and could have the effect of delaying, deterring or preventing a change of control of us or an unsolicited acquisition
proposal. The preferred stock may provide for an adjustment of the conversion price in the event of an issuance or deemed issuance
at a price less than the applicable conversion price, subject to certain exceptions.
If
we offer a specific series of preferred stock under this prospectus, we will describe the terms of the preferred stock in the
prospectus supplement for such offering and will file a copy of the certificate establishing the terms of the preferred stock
with the SEC. To the extent required, this description will include:
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the
title and stated value;
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the
number of shares offered, the liquidation preference per share and the purchase price;
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the
dividend rate(s), period(s) and/or payment date(s), or method(s) of calculation for such dividends;
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whether
dividends will be cumulative or non-cumulative and, if cumulative, the date from which dividends will accumulate;
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the
procedures for any auction and remarketing, if any;
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the
provisions for a sinking fund, if any;
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the
provisions for redemption, if applicable;
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any
listing of the preferred stock on any securities exchange or market;
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whether
the preferred stock will be convertible into our common stock, and, if applicable, the conversion price (or how it will be
calculated) and conversion period;
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whether
the preferred stock will be exchangeable into debt securities, and, if applicable, the exchange price (or how it will be calculated)
and exchange period;
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voting
rights, if any, of the preferred stock;
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a
discussion of any material and/or special U.S. federal income tax considerations applicable to the preferred stock;
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the
relative ranking and preferences of the preferred stock as to dividend rights and rights upon liquidation, dissolution or
winding up of our affairs; and
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any
material limitations on issuance of any class or series of preferred stock ranking senior to or on a parity with the series
of preferred stock as to dividend rights and rights upon liquidation, dissolution or winding up of our affairs.
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Transfer
Agent and Registrar for Preferred Stock
The
transfer agent and registrar for any series or class of preferred stock will be set forth in each applicable prospectus supplement.
Anti-takeover
Effects of Delaware Law and our Certificate of Incorporation, as amended
The
provisions of Delaware law, our certificate of incorporation and our bylaws described below may have the effect of delaying, deferring
or discouraging another party from acquiring control of us.
Section
203 of the Delaware General Corporation Law
We
are subject to Section 203 of the Delaware General Corporation Law, which prohibits a Delaware corporation from engaging in any
business combination with any interested stockholder for a period of three years after the date that such stockholder became an
interested stockholder, with the following exceptions:
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before
such date, the board of directors of the corporation approved either the business combination or the transaction that resulted
in the stockholder becoming an interested stockholder;
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upon
completion of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the time the transaction began, excluding for purposes
of determining the voting stock outstanding (but not the outstanding voting stock owned by the interested stockholder) those
shares owned (i) by persons who are directors and also officers and (ii) employee stock plans in which employee participants
do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or
exchange offer; or
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on
or after such date, the business combination is approved by the board of directors and authorized at an annual or special
meeting of the stockholders, and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock that is not owned by the interested stockholder.
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In
general, Section 203 defines a “business combination” to include any merger or consolidation involving the corporation
and the interested stockholder; any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation
involving the interested stockholder; subject to certain exceptions, any transaction that results in the issuance or transfer
by the corporation of any stock of the corporation to the interested stockholder; any transaction involving the corporation that
has the effect of increasing the proportionate share of the stock or any class or series of the corporation beneficially owned
by the interested stockholder; or the receipt by the interested stockholder of the benefit of any loss, advances, guarantees,
pledges or other financial benefits by or through the corporation.
Certificate
of Incorporation and Bylaws
Our
certificate of incorporation and bylaws provide that:
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the
authorized number of directors can be changed only by resolution of our board of directors;
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our
bylaws may be amended or repealed by our board of directors or our stockholders;
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no
action can be taken by stockholders except at an annual or special meeting of the stockholders called in accordance with our
bylaws, and stockholders may not act by written consent, unless the stockholders amend the certificate of incorporation to
provide otherwise;
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stockholders
may not call special meetings of the stockholders or fill vacancies on the board;
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our
board of directors will be authorized to issue, without stockholder approval, preferred stock, the rights of which will be
determined at the discretion of the board of directors and that, if issued, could operate as a “poison pill” to
dilute the stock ownership of a potential hostile acquirer to prevent an acquisition that our board of directors does not
approve;
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our
stockholders do not have cumulative voting rights, and therefore our stockholders holding a majority of the shares of common
stock outstanding will be able to elect all of our directors; and
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our
stockholders must comply with advance notice provisions to bring business before or nominate directors for election at a stockholder
meeting.
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Potential
Effects of Authorized but Unissued Stock
We
have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these
additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate
corporate acquisitions or payment as a dividend on the capital stock.
The
existence of unissued and unreserved common stock and preferred stock may enable our board of directors to issue shares to persons
friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party
attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity
of our management. In addition, the board of directors has the discretion to determine designations, rights, preferences, privileges
and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences
of each series of preferred stock, all to the fullest extent permissible under the Delaware General Corporation Law and subject
to any limitations set forth in our certificate of incorporation. The purpose of authorizing the board of directors to issue preferred
stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a
stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with
possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party
to acquire, or could discourage a third-party from acquiring, a majority of our outstanding voting stock.
DESCRIPTION
OF STOCK WARRANTS
We
summarize below some of the provisions that will apply to the warrants unless the applicable prospectus supplement provides otherwise.
This summary may not contain all information that is important to you. The complete terms of the warrants will be contained in
the applicable warrant certificate and warrant agreement. These documents have been or will be included or incorporated by reference
as exhibits to the registration statement of which this prospectus is a part. You should read the warrant certificate and the
warrant agreement. You should also read the prospectus supplement, which will contain additional information and which may update
or change some of the information below.
General
We
may issue, together with common or preferred stock as units or separately, warrants for the purchase of shares of our common or
preferred stock. The terms of each warrant will be discussed in the applicable prospectus supplement relating to the particular
series of warrants. The form(s) of certificate representing the warrants and/or the warrant agreement will be, in each case, filed
with the SEC as an exhibit to a document incorporated by reference in the registration statement of which this prospectus is a
part on or prior to the date of any prospectus supplement relating to an offering of the particular warrant. The following summary
of material provisions of the warrants and the warrant agreements are subject to, and qualified in their entirety by reference
to, all the provisions of the warrant agreement and warrant certificate applicable to a particular series of warrants.
The
prospectus supplement relating to any series of warrants that are offered by this prospectus will describe, among other things,
the following terms to the extent they are applicable to that series of warrants:
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the
procedures and conditions relating to the exercise of the warrants;
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the
number of shares of our common or preferred stock, if any, issued with the warrants;
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the
date, if any, on and after which the warrants and any related shares of our common or preferred stock will be separately transferable;
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the
offering price of the warrants, if any;
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the
number of shares of our common or preferred stock which may be purchased upon exercise of the warrants and the price or prices
at which the shares may be purchased upon exercise;
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the
date on which the right to exercise the warrants will begin and the date on which the right will expire;
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a
discussion of the material United States federal income tax considerations applicable to the exercise of the warrants;
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anti-dilution
provisions of the warrants, if any;
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call
provisions of the warrants, if any; and
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any
other material terms of the warrants.
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Each
warrant may entitle the holder to purchase for cash, or, in limited circumstances, by effecting a cashless exercise for, the number
of shares of our common or preferred stock at the exercise price that is described in the applicable prospectus supplement. Warrants
will be exercisable during the period of time described in the applicable prospectus supplement. After that period, unexercised
warrants will be void. Warrants may be exercised in the manner described in the applicable prospectus supplement.
A
holder of a warrant will not have any of the rights of a holder of our common or preferred stock before the stock is purchased
upon exercise of the warrant. Therefore, before a warrant is exercised, the holder of the warrant will not be entitled to receive
any dividend payments or exercise any voting or other rights associated with shares of our common or preferred stock which may
be purchased when the warrant is exercised.
Transfer
Agent and Registrar
The
transfer agent and registrar, if any, for any warrants will be set forth in the applicable prospectus supplement.
DESCRIPTION
OF DEBT SECURITIES
This
prospectus describes certain general terms and provisions of debt securities that we may offer. The debt securities may be issued
pursuant to, in the case of senior debt securities, a senior indenture, and in the case of subordinated debt securities, a subordinated
indenture, in each case in the forms filed as exhibits to this registration statement, which we refer to as the “indentures.”
The indentures will be entered into between us and a trustee to be named prior to the issuance of any debt securities, which we
refer to as the “trustee.” The indentures will not limit the amount of debt securities that can be issued thereunder
and will provide that the debt securities may be issued from time to time in one or more series pursuant to the terms of one or
more securities resolutions or supplemental indentures creating such series.
We
have summarized below the material provisions of the indentures and the debt securities or indicated which material provisions
will be described in the related prospectus supplement for any offering of debt securities. These descriptions are only summaries,
and you should refer to the relevant indenture for the particular offering of debt securities itself which will describe completely
the terms and definitions of the offered debt securities and contain additional information about the debt securities.
Terms
When
we offer to sell a particular series of debt securities, we will describe the specific terms of the securities in a prospectus
supplement. The prospectus supplement will set forth the following terms, as applicable, of the debt securities offered thereby:
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the
designation, aggregate principal amount, currency or composite currency and denominations;
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the
price at which such debt securities will be issued and, if an index formula or other method is used, the method for determining
amounts of principal or interest;
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the
maturity date and other dates, if any, on which principal will be payable;
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whether
or not the debt securities will be secured or unsecured, and the terms of any secured debt;
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whether
the debt securities rank as senior debt, senior subordinated debt, subordinated debt or any combination thereof, and the terms
of any subordination;
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the
interest rate (which may be fixed or variable), if any;
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the
date or dates from which interest will accrue and on which interest will be payable, and the record dates for the payment
of interest;
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the
manner of paying principal and interest;
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the
place or places where principal and interest will be payable;
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the
terms of any mandatory or optional redemption by us or any third party including any sinking fund;
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the
terms of any conversion or exchange;
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the
terms of any redemption at the option of holders or put by the holders;
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any
tax indemnity provisions;
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if
the debt securities provide that payments of principal or interest may be made in a currency other than that in which the
debt securities are denominated, the manner for determining such payments;
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the
portion of principal payable upon acceleration of a Discounted Debt Security (as defined below);
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whether
and upon what terms debt securities may be defeased;
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any
events of default or covenants in addition to or in lieu of those set forth in the indentures;
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provisions
for electronic issuance of debt securities or for the issuance of debt securities in uncertificated form; and
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any
additional provisions or other special terms not inconsistent with the provisions of the indentures, including any terms that
may be required or advisable under United States or other applicable laws or regulations, or advisable in connection with
the marketing of the debt securities.
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Debt
securities of any series may be issued as registered debt securities or uncertificated debt securities, in such denominations
as specified in the terms of the series.
Securities
may be issued under the indentures as Discounted Debt Securities to be offered and sold at a substantial discount from the principal
amount thereof. Special United States federal income tax and other considerations applicable thereto will be described in the
prospectus supplement relating to such Discounted Debt Securities. “Discounted Debt Security” means a security where
the amount of principal due upon acceleration is less than the stated principal amount.
We
are not obligated to issue all debt securities of one series at the same time and, unless otherwise provided in the prospectus
supplement, we may reopen a series, without the consent of the holders of the debt securities of that series, for the issuance
of additional debt securities of that series. Additional debt securities of a particular series will have the same terms and conditions
as outstanding debt securities of such series, except for the date of original issuance and the offering price, and will be consolidated
with, and form a single series with, such outstanding debt securities.
Ranking
The
senior debt securities will rank equally with all of our other senior and unsubordinated debt. Our secured debt, if any, will
be effectively senior to the senior debt securities to the extent of the value of the assets securing such debt. The subordinated
debt securities will be subordinate and junior in right of payment to all of our present and future senior indebtedness to the
extent and in the manner described in the prospectus supplement and as set forth in the board resolution, officer’s certificate
or supplemental indenture relating to such offering.
We
have only a stockholder’s claim on the assets of our subsidiaries. This stockholder’s claim is junior to the claims
that creditors of our subsidiaries have against our subsidiaries. Holders of our debt securities will be our creditors and not
creditors of any of our subsidiaries. As a result, all the existing and future liabilities of our subsidiaries, including any
claims of their creditors, will effectively be senior to the debt securities with respect to the assets of our subsidiaries. In
addition, to the extent that we issue any secured debt, the debt securities will be effectively subordinated to such secured debt
to the extent of the value of the assets securing such secured debt.
The
debt securities will be obligations exclusively of Cancer Genetics, Inc. To the extent that our ability to service our debt, including
the debt securities, may be dependent upon the earnings of our subsidiaries, our ability to do so will be dependent on the ability
of our subsidiaries to distribute those earnings to us as dividends, loans or other payments.
Certain
Covenants
Any
covenants that may apply to a particular series of debt securities will be described in the prospectus supplement relating thereto.
Successor
Obligor
The
indentures will provide that, unless otherwise specified in the securities resolution or supplemental indenture establishing a
series of debt securities, we shall not consolidate with or merge into, or transfer all or substantially all of our assets to,
any person in any transaction in which we are not the survivor, unless:
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the
person is organized under the laws of the United States or a jurisdiction within the United States;
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the
person assumes by supplemental indenture all of our obligations under the relevant indenture, the debt securities and any
coupons;
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immediately
after the transaction no Default (as defined below) exists; and
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we
deliver to the trustee an officers’ certificate and opinion of counsel stating that the transaction complies with the
foregoing requirements and that all conditions precedent provided for in the indenture relating to the transaction have been
complied with.
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In
such event, the successor will be substituted for us, and thereafter all of our obligations under the relevant indenture, the
debt securities and any coupons will terminate.
The
indentures will provide that these limitations shall not apply if our board of directors makes a good faith determination that
the principal purpose of the transaction is to change our state of incorporation.
Exchange
of Debt Securities
Registered
debt securities may be exchanged for an equal aggregate principal amount of registered debt securities of the same series and
date of maturity in such authorized denominations as may be requested upon surrender of the registered debt securities at an agency
of the Company maintained for such purpose and upon fulfillment of all other requirements of such agent.
Default
and Remedies
Unless
the securities resolution or supplemental indenture establishing the series otherwise provides (in which event the prospectus
supplement will so state), an “Event of Default” with respect to a series of debt securities will occur if:
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(1)
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we
default in any payment of interest on any debt securities of such series when the same becomes due and payable and the default
continues for a period of 30 days;
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(2)
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we
default in the payment of all or any part of the principal and premium, if any, of any debt securities of such series when
the same becomes due and payable at maturity or upon redemption, acceleration or otherwise and such default shall continue
for five or more days;
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(3)
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we
default in the performance of any of our other agreements applicable to the series and the default continues for 30 days after
the notice specified below;
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(4)
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a
court of competent jurisdiction enters an order or decree under any Bankruptcy Law (as defined below) that:
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(A)
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is
for relief against us in an involuntary case,
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(B)
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appoints
a Custodian (as defined below) for us or for any substantial part of our property, or
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(C)
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orders
the winding up or liquidation of us, and the order or decree remains unstayed and in effect for 90 days;
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(5)
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we,
pursuant to or within the meaning of any Bankruptcy Law:
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(A)
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commence
a voluntary case,
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(B)
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consent
to the entry of an order for relief against us in an involuntary case,
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(C)
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consent
to the appointment of a Custodian for us or for any substantial part of our property, or
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(D)
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make
a general assignment for the benefit of our creditors; or
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(6)
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there
occurs any other Event of Default provided for in such series.
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The
term “Bankruptcy Law” means Title 11 of the United States Code or any similar Federal or State law for the relief
of debtors. The term “Custodian” means any receiver, trustee, assignee, liquidator or a similar official under any
Bankruptcy Law.
“Default”
means any event which is, or after notice or passage of time would be, an Event of Default. A Default under subparagraph (3) above
is not an Event of Default until the trustee or the holders of at least 25% in principal amount of the series notify us of the
Default and we do not cure the Default within the time specified after receipt of the notice.
The
trustee may require indemnity satisfactory to it before it enforces the indentures or the debt securities of the series. Subject
to certain limitations, holders of a majority in principal amount of the debt securities of the series may direct the trustee
in its exercise of any trust or power with respect to such series. Except in the case of Default in payment on a series, the trustee
may withhold from securityholders of such series notice of any continuing Default if the trustee determines that withholding notice
is in the interest of such securityholders. We are required to furnish the trustee annually a brief certificate as to our compliance
with all conditions and covenants under the indentures.
The
indentures will not have cross-default provisions. Thus, a default by us on any other debt, including any other series of debt
securities, would not constitute an Event of Default.
Amendments
and Waivers
The
indentures and the debt securities or any coupons of the series may be amended, and any Default may be waived as follows:
Unless
the securities resolution or supplemental indenture otherwise provides (in which event the applicable prospectus supplement will
so state), the debt securities and the indentures may be amended with the consent of the holders of a majority in principal amount
of the debt securities of all series affected voting as one class. Unless the securities resolution or supplemental indenture
otherwise provides (in which event the applicable prospectus supplement will so state), a Default other than a Default in payment
on a particular series may be waived with the consent of the holders of a majority in principal amount of the debt securities
of the series. However, without the consent of each securityholder affected, no amendment or waiver may:
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change
the fixed maturity of or the time for payment of interest on any debt security;
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reduce
the principal, premium or interest payable with respect to any debt security;
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change
the place of payment of a debt security or the currency in which the principal or interest on a debt security is payable;
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change
the provisions for calculating any redemption or repurchase price with respect to any debt security;
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adversely
affect any holder’s right to receive payment of principal and interest or to institute suit for the enforcement of any
such payment;
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reduce
the amount of debt securities whose holders must consent to an amendment or waiver;
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make
any change that materially adversely affects the right to convert any debt security;
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waive
any Default in payment of principal of or interest on a debt security; or
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adversely
affect any holder’s rights with respect to redemption or repurchase of a debt security.
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Without
the consent of any securityholder, the indentures or the debt securities may be amended to:
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provide
for assumption of our obligations to securityholders in the event of a merger or consolidation requiring such assumption;
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cure
any ambiguity, omission, defect or inconsistency;
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conform
the terms of the debt securities to the description thereof in the prospectus and prospectus supplement offering such debt
securities;
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create
a series and establish its terms;
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provide
for the acceptance of appointment by a successor trustee or to facilitate the administration of the trusts by more than one
trustee;
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provide
for uncertificated or unregistered securities;
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make
any change that does not adversely affect the rights of any securityholder;
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add
to our covenants; or
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make
any other change to the indentures so long as no debt securities are outstanding.
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Conversion
Rights
Any
securities resolution or supplemental indenture establishing a series of debt securities may provide that the debt securities
of such series will be convertible at the option of the holders thereof into or for our common stock or other equity or debt instruments.
The securities resolution or supplemental indenture may establish, among other things, (1) the number or amount of shares of common
stock or other equity or debt instruments for which $1,000 aggregate principal amount of the debt securities of the series is
convertible, as may be adjusted pursuant to the terms of the relevant indenture and the securities resolution; and (2) provisions
for adjustments to the conversion rate and limitations upon exercise of the conversion right. The indentures provide that we will
not be required to make an adjustment in the conversion rate unless the adjustment would require a cumulative change of at least
1% in the conversion rate. However, we will carry forward any adjustments that are less than 1% of the conversion rate and take
them into account in any subsequent adjustment of the conversion rate.
Legal
Defeasance and Covenant Defeasance
Debt
securities of a series may be defeased in accordance with their terms and, unless the securities resolution or supplemental indenture
establishing the terms of the series otherwise provides, as set forth below. We at any time may terminate as to a series all of
our obligations (except for certain obligations, including obligations with respect to the defeasance trust and obligations to
register the transfer or exchange of a debt security, to replace destroyed, lost or stolen debt securities and coupons and to
maintain paying agencies in respect of the debt securities) with respect to the debt securities of the series and any related
coupons and the relevant indenture, which we refer to as legal defeasance. We at any time may terminate as to a series our obligations
with respect to any restrictive covenants which may be applicable to a particular series, which we refer to as covenant defeasance.
We
may exercise our legal defeasance option notwithstanding our prior exercise of our covenant defeasance option. If we exercise
our legal defeasance option, a series may not be accelerated because of an Event of Default. If we exercise our covenant defeasance
option, a series may not be accelerated by reference to any covenant which may be applicable to a series.
To
exercise either defeasance option as to a series, we must (1) irrevocably deposit in trust with the trustee (or another trustee)
money or U.S. Government Obligations (as defined below), deliver a certificate from a nationally recognized firm of independent
accountants expressing their opinion that the payments of principal and interest when due on the deposited U.S. Government Obligations,
without reinvestment, plus any deposited money without investment will provide cash at such times and in such amounts as will
be sufficient to pay the principal and interest when due on all debt securities of such series to maturity or redemption, as the
case may be; and (2) comply with certain other conditions. In particular, we must obtain an opinion of tax counsel that the defeasance
will not result in recognition of any gain or loss to holders for federal income tax purposes.
“U.S.
Government Obligations” means direct obligations of the United States or any agency or instrumentality of the United States,
the payment of which is unconditionally guaranteed by the United States, which, in either case, have the full faith and credit
of the United States pledged for payment and which are not callable at the issuer’s option, or certificates representing
an ownership interest in such obligations.
Regarding
the Trustee
Unless
otherwise indicated in a prospectus supplement, the trustee will also act as depository of funds, transfer agent, paying agent
and conversion agent, as applicable, with respect to the debt securities. In certain circumstances, we or the securityholders
may remove the trustee as the trustee under a given indenture. The indenture trustee may also provide additional unrelated services
to us as a depository of funds, registrar, trustee and similar services.
Governing
Law
The
indentures and the debt securities will be governed by New York law, except to the extent that the Trust Indenture Act of 1939
is applicable.
DESCRIPTION
OF SUBSCRIPTION RIGHTS
We
may issue subscription rights to purchase our common stock or debt securities. These subscription rights may be offered independently
or together with any other security offered hereby and may or may not be transferable by the stockholder receiving the subscription
rights in such offering. In connection with any offering of subscription rights, we may enter into a standby arrangement with
one or more underwriters or other purchasers pursuant to which the underwriters or other purchasers may be required to purchase
any securities remaining unsubscribed for after such offering.
The
prospectus supplement relating to any subscription rights we offer, if any, will, to the extent applicable, include specific terms
relating to the offering, including some or all of the following:
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the
price, if any, for the subscription rights;
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the
exercise price payable for our common stock or debt securities upon the exercise of the subscription rights;
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the
number of subscription rights to be issued to each stockholder;
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the
number and terms of our common stock or debt securities which may be purchased per each subscription right;
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the
extent to which the subscription rights are transferable;
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any
other terms of the subscription rights, including the terms, procedures and limitations relating to the exchange and exercise
of the subscription rights;
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the
date on which the right to exercise the subscription rights shall commence, and the date on which the subscription rights
shall expire;
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the
extent to which the subscription rights may include an over-subscription privilege with respect to unsubscribed securities
or an over-allotment privilege to the extent the securities are fully subscribed; and
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if
applicable, the material terms of any standby underwriting or purchase arrangement which may be entered into by us in connection
with the offering of subscription rights.
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DESCRIPTION
OF UNITS
We
may issue units comprised of one or more of the other securities described in this prospectus in any combination. Each unit will
be issued so that the holder of the unit is also the holder of each security included in the unit. Thus, the holder of a unit
will have the rights and obligations of a holder of each included security (but, to the extent convertible securities are included
in the units, the holder of the units will be deemed the holder of the convertible securities and not the holder of the underlying
securities). The unit agreement under which a unit is issued, if any, may provide that the securities included in the unit may
not be held or transferred separately, at any time or at any time before a specified date. The applicable prospectus supplement
may describe:
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the
designation and terms of the units and of the securities comprising the units, including whether and under what circumstances
those securities may be held or transferred separately;
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any
provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units;
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the
terms of the unit agreement governing the units;
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United
States federal income tax considerations relevant to the units; and
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whether
the units will be issued in fully registered global form.
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This
summary of certain general terms of units and any summary description of units in the applicable prospectus supplement do not
purport to be complete and are qualified in their entirety by reference to all provisions of the applicable unit agreement and,
if applicable, collateral arrangements and depositary arrangements relating to such units. The forms of the unit agreements and
other documents relating to a particular issue of units will be filed with the SEC each time we issue units, and you should read
those documents for provisions that may be important to you.
FORMS
OF SECURITIES
Each
debt security and, to the extent applicable, warrant, subscription right and unit, will be represented either by a certificate
issued in definitive form to a particular investor or by one or more global securities representing the entire issuance of securities.
Certificated securities in definitive form and global securities will be issued in registered form. Definitive securities name
you or your nominee as the owner of the security, and in order to transfer or exchange these securities or to receive payments
other than interest or other interim payments, you or your nominee must physically deliver the securities to the trustee, registrar,
paying agent or other agent, as applicable. Global securities name a depositary or its nominee as the owner of the debt securities
or warrants represented by these global securities. The depositary maintains a computerized system that will reflect each investor’s
beneficial ownership of the securities through an account maintained by the investor with its broker/dealer, bank, trust company
or other representative, as we explain more fully below.
Global
Securities
Registered
Global Securities. We may issue the registered debt securities and, to the extent applicable, warrants, subscription rights
and units, in the form of one or more fully registered global securities that will be deposited with a depositary or its nominee
identified in the applicable prospectus supplement and registered in the name of that depositary or nominee. In those cases, one
or more registered global securities will be issued in a denomination or aggregate denominations equal to the portion of the aggregate
principal or face amount of the securities to be represented by registered global securities. Unless and until it is exchanged
in whole for securities in definitive registered form, a registered global security may not be transferred except as a whole by
and among the depositary for the registered global security, the nominees of the depositary or any successors of the depositary
or those nominees.
If
not described below, any specific terms of the depositary arrangement with respect to any securities to be represented by a registered
global security will be described in the prospectus supplement relating to those securities. We anticipate that the following
provisions will apply to all depositary arrangements.
Ownership
of beneficial interests in a registered global security will be limited to persons, called participants, that have accounts with
the depositary or persons that may hold interests through participants. Upon the issuance of a registered global security, the
depositary will credit, on its book-entry registration and transfer system, the participants’ accounts with the respective
principal or face amounts of the securities beneficially owned by the participants. Any dealers, underwriters or agents participating
in the distribution of the securities will designate the accounts to be credited. Ownership of beneficial interests in a registered
global security will be shown on, and the transfer of ownership interests will be effected only through, records maintained by
the depositary, with respect to interests of participants, and on the records of participants, with respect to interests of persons
holding through participants. The laws of some states may require that some purchasers of securities take physical delivery of
these securities in definitive form. These laws may impair your ability to own, transfer or pledge beneficial interests in registered
global securities.
So
long as the depositary, or its nominee, is the registered owner of a registered global security, that depositary or its nominee,
as the case may be, will be considered the sole owner or holder of the securities represented by the registered global security
for all purposes under the applicable indenture or warrant agreement. Except as described below, owners of beneficial interests
in a registered global security will not be entitled to have the securities represented by the registered global security registered
in their names, will not receive or be entitled to receive physical delivery of the securities in definitive form and will not
be considered the owners or holders of the securities under the applicable indenture or warrant agreement. Accordingly, each person
owning a beneficial interest in a registered global security must rely on the procedures of the depositary for that registered
global security and, if that person is not a participant, on the procedures of the participant through which the person owns its
interest, to exercise any rights of a holder under the applicable indenture or warrant agreement. We understand that under existing
industry practices, if we request any action of holders or if an owner of a beneficial interest in a registered global security
desires to give or take any action that a holder is entitled to give or take under the applicable indenture or warrant agreement,
the depositary for the registered global security would authorize the participants holding the relevant beneficial interests to
give or take that action, and the participants would authorize beneficial owners owning through them to give or take that action
or would otherwise act upon the instructions of beneficial owners holding through them.
Principal,
premium, if any, interest payments on debt securities and any payments to holders with respect to warrants represented by a registered
global security registered in the name of a depositary or its nominee will be made to the depositary or its nominee, as the case
may be, as the registered owner of the registered global security. None of the Company, the trustees, the warrant agents or any
other agent of the Company, the trustees or the warrant agents will have any responsibility or liability for any aspect of the
records relating to payments made on account of beneficial ownership interests in the registered global security or for maintaining,
supervising or reviewing any records relating to those beneficial ownership interests.
We
expect that the depositary for any of the securities represented by a registered global security, upon receipt of any payment
of principal, premium, interest or other distribution of underlying securities or other property to holders on that registered
global security, will immediately credit participants’ accounts in amounts proportionate to their respective beneficial
interests in that registered global security as shown on the records of the depositary. We also expect that payments by participants
to owners of beneficial interests in a registered global security held through participants will be governed by standing customer
instructions and customary practices, as is now the case with the securities held for the accounts of customers in bearer form
or registered in “street name,” and will be the responsibility of those participants.
If
the depositary for any of these securities represented by a registered global security is at any time unwilling or unable to continue
as depositary or ceases to be a clearing agency registered under the Securities Exchange Act of 1934, as amended, or the Exchange
Act, and a successor depositary registered as a clearing agency under the Exchange Act is not appointed by us within 90 days,
we will issue securities in definitive form in exchange for the registered global security that had been held by the depositary.
Any securities issued in definitive form in exchange for a registered global security will be registered in the name or names
that the depositary gives to the relevant trustee or warrant agent or other relevant agent of ours or theirs. It is expected that
the depositary’s instructions will be based upon directions received by the depositary from participants with respect to
ownership of beneficial interests in the registered global security that had been held by the depositary.
PLAN
OF DISTRIBUTION
Initial
Offering and Sale of Securities
Unless
otherwise set forth in a prospectus supplement accompanying this prospectus, we may sell the securities being offered hereby,
from time to time, by one or more of the following methods:
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to
or through underwriting syndicates represented by managing underwriters;
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through
one or more underwriters without a syndicate for them to offer and sell to the public;
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through
dealers or agents; and
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to
investors directly in negotiated sales or in competitively bid transactions.
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Offerings
of securities covered by this prospectus also may be made into an existing trading market for those securities in transactions
at other than a fixed price, either:
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on
or through the facilities of the Nasdaq Capital Market or any other securities exchange or quotation or trading service on
which those securities may be listed, quoted, or traded at the time of sale; and/or
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to
or through a market maker other than on the securities exchanges or quotation or trading services set forth above.
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Those
at-the-market offerings, if any, will be conducted by underwriters acting as principal or agent of the Company, who may also be
third-party sellers of securities as described above. The prospectus supplement with respect to the offered securities will set
forth the terms of the offering of the offered securities, including:
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the
name or names of any underwriters, dealers or agents;
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the
purchase price of the offered securities and the proceeds to us from such sale;
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any
underwriting discounts and commissions or agency fees and other items constituting underwriters’ or agents’ compensation;
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any
initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers;
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any
securities exchange on which such offered securities may be listed; and
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any
underwriter, agent or dealer involved in the offer and sale of any series of the securities.
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The
distribution of the securities may be effected from time to time in one or more transactions:
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at
fixed prices, which may be changed;
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at
market prices prevailing at the time of the sale;
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at
varying prices determined at the time of sale; or
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at
negotiated prices.
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Each
prospectus supplement will set forth the manner and terms of an offering of securities including:
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whether
that offering is being made to underwriters, through agents or directly to the public;
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the
rules and procedures for any auction or bidding process, if used;
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the
securities’ purchase price or initial public offering price; and
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the
proceeds we anticipate from the sale of the securities, if any.
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In
addition, we may enter into derivative or hedging transactions with third parties, or sell securities not covered by this prospectus
to third parties in privately negotiated transactions. The applicable prospectus supplement may indicate, in connection with such
a transaction, that the third parties may sell securities covered by and pursuant to this prospectus and an applicable prospectus
supplement. If so, the third party may use securities pledged by us or borrowed from us or others to settle such sales and may
use securities received from us to close out any related short positions. We may also loan or pledge securities covered by this
prospectus and an applicable prospectus supplement to third parties, who may sell the loaned securities or, in an event of default
in the case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable prospectus supplement.
Sales
Through Underwriters
If
underwriters are used in the sale of some or all of the securities covered by this prospectus, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities, either directly to the public or to securities dealers,
at various times in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying
prices determined at the time of sale. The obligations of the underwriters to purchase the securities will be subject to certain
conditions. Unless indicated otherwise in a prospectus supplement, the underwriters will be obligated to purchase all the securities
of the series offered if any of the securities are purchased.
Any
initial public offering price and any concessions allowed or reallowed to dealers may be changed intermittently.
Sales
Through Agents
Unless
otherwise indicated in the applicable prospectus supplement, when securities are sold through an agent, the designated agent will
agree, for the period of its appointment as agent, to use specified efforts to sell the securities for our account and will receive
commissions from us as will be set forth in the applicable prospectus supplement.
Securities
bought in accordance with a redemption or repayment under their terms also may be offered and sold, if so indicated in the applicable
prospectus supplement, in connection with a remarketing by one or more firms acting as principals for their own accounts or as
agents for us. Any remarketing firm will be identified and the terms of its agreement, if any, with us and its compensation will
be described in the prospectus supplement. Remarketing firms may be deemed to be underwriters in connection with the securities
remarketed by them.
If
so indicated in the applicable prospectus supplement, we may authorize agents, underwriters or dealers to solicit offers by certain
specified institutions to purchase securities at a price set forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a future date specified in the prospectus supplement. These contracts will be subject only
to those conditions set forth in the applicable prospectus supplement, and the prospectus supplement will set forth the commissions
payable for solicitation of these contracts.
Direct
Sales
We
may also sell offered securities directly to institutional investors or others. In this case, no underwriters or agents would
be involved. The terms of such sales will be described in the applicable prospectus supplement.
General
Information
Broker-dealers,
agents or underwriters may receive compensation in the form of discounts, concessions or commissions from us and/or the purchasers
of securities for whom such broker-dealers, agents or underwriters may act as agents or to whom they sell as principal, or both.
This compensation to a particular broker-dealer might be in excess of customary commissions.
Underwriters,
dealers and agents that participate in any distribution of the offered securities may be deemed “underwriters” within
the meaning of the Securities Act of 1933, as amended, or the Securities Act, so any discounts or commissions they receive in
connection with the distribution may be deemed to be underwriting compensation. Those underwriters and agents may be entitled,
under their agreements with us, to indemnification by us against certain civil liabilities, including liabilities under the Securities
Act, or to contribution by us to payments that they may be required to make in respect of those civil liabilities. Certain of
those underwriters or agents may be customers of, engage in transactions with, or perform services for, us or our affiliates in
the ordinary course of business. We will identify any underwriters or agents, and describe their compensation, in a prospectus
supplement. Any institutional investors or others that purchase offered securities directly, and then resell the securities, may
be deemed to be underwriters, and any discounts or commissions received by them from us and any profit on the resale of the securities
by them may be deemed to be underwriting discounts and commissions under the Securities Act.
We
will file a supplement to this prospectus, if required, pursuant to Rule 424(b) under the Securities Act, if we enter into any
material arrangement with a broker, dealer, agent or underwriter for the sale of securities through a block trade, special offering,
exchange distribution or secondary distribution or a purchase by a broker or dealer. Such prospectus supplement will disclose:
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the
name of any participating broker, dealer, agent or underwriter;
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the
number and type of securities involved;
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the
price at which such securities were sold;
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any
securities exchanges on which such securities may be listed;
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the
commissions paid or discounts or concessions allowed to any such broker, dealer, agent or underwriter, where applicable; and
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other
facts material to the transaction.
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In
order to facilitate the offering of certain securities under this prospectus or an applicable prospectus supplement, certain persons
participating in the offering of those securities may engage in transactions that stabilize, maintain or otherwise affect the
price of those securities during and after the offering of those securities. Specifically, if the applicable prospectus supplement
permits, the underwriters of those securities may over-allot or otherwise create a short position in those securities for their
own account by selling more of those securities than have been sold to them by us and may elect to cover any such short position
by purchasing those securities in the open market.
In
addition, the underwriters may stabilize or maintain the price of those securities by bidding for or purchasing those securities
in the open market and may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers
participating in the offering are reclaimed if securities previously distributed in the offering are repurchased in connection
with stabilization transactions or otherwise. The effect of these transactions may be to stabilize or maintain the market price
of the securities at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may
also affect the price of securities to the extent that it discourages resales of the securities. No representation is made as
to the magnitude or effect of any such stabilization or other transactions. Such transactions, if commenced, may be discontinued
at any time.
In
order to comply with the securities laws of certain states, if applicable, the securities must be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain states the securities may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement
is available and is complied with.
Rule
15c6-1 under the Exchange Act generally requires that trades in the secondary market settle in two business days, unless the parties
to any such trade expressly agree otherwise. Your prospectus supplement may provide that the original issue date for your securities
may be more than two scheduled business days after the trade date for your securities. Accordingly, in such a case, if you wish
to trade securities on any date prior to the second business day before the original issue date for your securities, you will
be required, by virtue of the fact that your securities initially are expected to settle in more than two scheduled business days
after the trade date for your securities, to make alternative settlement arrangements to prevent a failed settlement.
This
prospectus, any applicable prospectus supplement and any applicable pricing supplement in electronic format may be made available
on the Internet sites of, or through other online services maintained by, us and/or one or more of the agents and/or dealers participating
in an offering of securities, or by their affiliates. In those cases, prospective investors may be able to view offering terms
online and, depending upon the particular agent or dealer, prospective investors may be allowed to place orders online.
Other
than this prospectus, any applicable prospectus supplement and any applicable pricing supplement in electronic format, the information
on our website or the website of any agent or dealer, and any information contained in any other website maintained by any agent
or dealer:
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is
not part of this prospectus, any applicable prospectus supplement or any applicable pricing supplement or the registration
statement of which they form a part;
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has
not been approved or endorsed by us or by any agent or dealer in its capacity as an agent or dealer, except, in each case,
with respect to the respective website maintained by such entity; and
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should
not be relied upon by investors.
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There
can be no assurance that we will sell all or any of the securities offered by this prospectus.
This
prospectus may also be used in connection with any issuance of common stock or preferred stock upon exercise of a warrant if such
issuance is not exempt from the registration requirements of the Securities Act.
In
addition, we may issue the securities as a dividend or distribution or in a subscription rights offering to our existing securityholders.
In some cases, we or dealers acting with us or on our behalf may also purchase securities and reoffer them to the public by one
or more of the methods described above. This prospectus may be used in connection with any offering of our securities through
any of these methods or other methods described in the applicable prospectus supplement.
LEGAL
MATTERS
Unless
otherwise indicated in the applicable prospectus supplement, the validity of the securities offered hereby will be passed upon
for us by Lowenstein Sandler LLP, Roseland, New Jersey. If the validity of the securities offered hereby in connection with offerings
made pursuant to this prospectus are passed upon by counsel for the underwriters, dealers or agents, if any, such counsel will
be named in the prospectus supplement relating to such offering.
EXPERTS
The
consolidated financial statements of Cancer Genetics, Inc. and subsidiaries as of December 31, 2019 and for the year ended December
31, 2019 have been audited by Marcum LLP, an independent registered public accounting firm, as stated in their report which is
incorporated by reference herein, (which report includes an explanatory paragraph as to the Company’s ability to continue
as a going concern and a paragraph regarding other matters including 1) the audit of the restatement for discontinued operations,
2) a reverse stock-split and 3) change in accounting principle). Such financial statements have been incorporated by reference
herein in reliance on the report of such firm, given upon their authority as experts in auditing and accounting.
The
consolidated financial statements as of December 31, 2018 and for the year then ended have been audited by RSM US LLP, an independent
registered public accounting firm, as stated in their report thereon (which report expresses an unqualified opinion on the financial
statements, except for effects of the adjustments, if any, as might have been determined to be necessary had they been engaged
to audit the Company’s restatement for discontinued operations and a reverse stock-split and emphasis of matter paragraphs
stating 1) they were not engaged to audit the restatement for discontinued operations and a reverse stock-split, 2) for substantial
doubt about the Company’s ability to continue as a going concern and 3) change in accounting principle), incorporated herein
by reference, and have been incorporated in this Registration Statement in reliance upon such report and upon the authority of
such firm as experts in accounting and auditing.
DISCLOSURE
OF COMMISSION POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Section
145 of the DGCL provides that we may indemnify any person who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal or investigative (other than an action by us or in our
right) by reason of the fact that he is or was our director, officer, employee or agent, or is or was serving at our request as
a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by
him or her in connection with such action, suit or proceeding if he acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to our best interests, and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his or her conduct was unlawful. Section 145 further provides that we similarly may indemnify any such person serving
in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action
or suit by is or in our right to procure judgment in our favor, against expenses actually and reasonably incurred in connection
with the defense or settlement of such action or suit if he or she acted in good faith and in a manner he reasonably believed
to be in or not opposed to our best interests and except that no indemnification shall be made in respect of any claim, issue
or matter as to which such person shall have been adjudged to be liable to us unless and only to the extent that the Delaware
Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled
to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.
Our
certificate of incorporation, as amended, limits the liability of our directors to the fullest extent permitted by Delaware law.
In addition, we have entered into indemnification agreements with certain of our directors and officers whereby we have agreed
to indemnify those directors and officers to the fullest extent permitted by law, including indemnification against expenses and
liabilities incurred in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason
of the fact that such director or officer is or was a director, officer, employee or agent of the Company, provided that such
director or officer acted in good faith and in a manner that the director or officer reasonably believed to be in, or not opposed
to, the best interests of the Company.
We
have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their
services to us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that
we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors of
our company, is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, related
to their board role with the company.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification
is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter
has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification
by us is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
ADDITIONAL
INFORMATION
This
prospectus is part of a Registration Statement on Form S-3 that we have filed with the SEC relating to the shares of our securities
being offered hereby. This prospectus does not contain all of the information in the Registration Statement and its exhibits.
The Registration Statement, its exhibits and the documents incorporated by reference in this prospectus and their exhibits, all
contain information that is material to the offering of the securities hereby. Whenever a reference is made in this prospectus
to any of our contracts or other documents, the reference may not be complete. You should refer to the exhibits that are a part
of the Registration Statement in order to review a copy of the contract or documents. The Registration Statement and the exhibits
are available at the SEC’s Public Reference Room or through its website.
We
file annual, quarterly and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet
site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, such
as us, that file electronically with the SEC. Additionally, you may access our filings with the SEC through our website at http://www.cancergenetics.com.
We have included our website address as an inactive textual reference only and our website and the information contained on, or
that can be accessed through, our website will not be deemed to be incorporated by reference in, and are not considered part of,
this prospectus.
We
will provide you without charge, upon your oral or written request, with an electronic or paper copy of any or all reports, proxy
statements and other documents we file with the SEC, as well as any or all of the documents incorporated by reference in this
prospectus (other than exhibits to such documents unless such exhibits are specifically incorporated by reference into such documents).
Requests for such copies should be directed to:
Cancer
Genetics, Inc.
201
Routh 17 North, 2nd Floor
Rutherford,
NJ 07070
Telephone
number: (201) 528-9200
You
should rely only on the information in this prospectus and the additional information described above and under the heading “Incorporation
of Certain Information by Reference” below. We have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should not rely upon it. We are not making an offer to
sell these securities in any jurisdiction where such offer or sale is not permitted. You should assume that the information in
this prospectus was accurate on the date of the front cover of this prospectus only. Our business, financial condition, results
of operations and prospects may have changed since that date.
INCORPORATION
OF CERTAIN INFORMATION BY REFERENCE
The
SEC allows us to “incorporate by reference” information that we file with it into this prospectus, which means that
we can disclose important information to you by referring you to those documents. The information incorporated by reference is
an important part of this prospectus. The information incorporated by reference is considered to be a part of this prospectus,
and information that we file later with the SEC will automatically update and supersede information contained in this prospectus
and any accompanying prospectus supplement.
We
incorporate by reference the documents listed below that we have previously filed with the SEC:
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our
Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on May 29, 2020;
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our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, filed with the SEC on June 24, 2020;
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our
Current Reports on Form 8-K filed with the SEC on February 27, 2020, March 30, 2020,
May 14, 2020 and June 12, 2020 (other than any portions thereof deemed furnished and
not filed); and
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the
description of our common stock, par value $0.0001 per share, contained in our Form 8-A filed on August 12, 2013, including
any amendment or report filed for the purpose of updating such description.
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All
reports and other documents that we file with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of the initial registration statement and prior to effectiveness of the registration statement, and after the date of this prospectus
but before the termination of the offering of the securities hereunder will also be considered to be incorporated by reference
into this prospectus from the date of the filing of these reports and documents, and will supersede the information herein; provided,
however, that all reports, exhibits and other information that we “furnish” to the SEC will not be considered incorporated
by reference into this prospectus. We undertake to provide without charge to each person (including any beneficial owner) who
receives a copy of this prospectus, upon written or oral request, a copy of all of the preceding documents that are incorporated
by reference (other than exhibits, unless the exhibits are specifically incorporated by reference into these documents). You may
request a copy of these materials in the manner set forth under the heading “Additional Information,” above.
1,363,637 Shares
Common
Stock
H.C.
Wainwright & Co.
October
28, 2020
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