0001349929 false --12-31 2021 Q3 false 0001349929 2021-01-01 2021-09-30 0001349929 2021-11-09 0001349929 2021-09-30 0001349929 2020-12-31 0001349929 VYNT:SeriesAConvertiblePreferredStockMember 2021-09-30 0001349929 VYNT:SeriesAConvertiblePreferredStockMember 2020-12-31 0001349929 VYNT:SeriesBConvertiblePreferredStockMember 2021-09-30 0001349929 VYNT:SeriesBConvertiblePreferredStockMember 2020-12-31 0001349929 VYNT:SeriesCConvertiblePreferredStockMember 2021-09-30 0001349929 VYNT:SeriesCConvertiblePreferredStockMember 2020-12-31 0001349929 2021-07-01 2021-09-30 0001349929 2020-07-01 2020-09-30 0001349929 2020-01-01 2020-09-30 0001349929 us-gaap:ServiceMember 2021-07-01 2021-09-30 0001349929 us-gaap:ServiceMember 2020-07-01 2020-09-30 0001349929 us-gaap:ServiceMember 2021-01-01 2021-09-30 0001349929 us-gaap:ServiceMember 2020-01-01 2020-09-30 0001349929 us-gaap:ProductMember 2021-07-01 2021-09-30 0001349929 us-gaap:ProductMember 2020-07-01 2020-09-30 0001349929 us-gaap:ProductMember 2021-01-01 2021-09-30 0001349929 us-gaap:ProductMember 2020-01-01 2020-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2021-06-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2021-06-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2021-06-30 0001349929 VYNT:TemporaryEquityMember 2021-06-30 0001349929 us-gaap:CommonStockMember 2021-06-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2021-06-30 0001349929 us-gaap:RetainedEarningsMember 2021-06-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-06-30 0001349929 2021-06-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2021-07-01 2021-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2021-07-01 2021-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2021-07-01 2021-09-30 0001349929 VYNT:TemporaryEquityMember 2021-07-01 2021-09-30 0001349929 us-gaap:CommonStockMember 2021-07-01 2021-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2021-07-01 2021-09-30 0001349929 us-gaap:RetainedEarningsMember 2021-07-01 2021-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-07-01 2021-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2021-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2021-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2021-09-30 0001349929 VYNT:TemporaryEquityMember 2021-09-30 0001349929 us-gaap:CommonStockMember 2021-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2021-09-30 0001349929 us-gaap:RetainedEarningsMember 2021-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2020-06-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-06-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2020-06-30 0001349929 VYNT:TemporaryEquityMember 2020-06-30 0001349929 us-gaap:CommonStockMember 2020-06-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2020-06-30 0001349929 us-gaap:RetainedEarningsMember 2020-06-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-06-30 0001349929 2020-06-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2020-07-01 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-07-01 2020-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2020-07-01 2020-09-30 0001349929 VYNT:TemporaryEquityMember 2020-07-01 2020-09-30 0001349929 us-gaap:CommonStockMember 2020-07-01 2020-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2020-07-01 2020-09-30 0001349929 us-gaap:RetainedEarningsMember 2020-07-01 2020-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-07-01 2020-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2020-09-30 0001349929 VYNT:TemporaryEquityMember 2020-09-30 0001349929 us-gaap:CommonStockMember 2020-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2020-09-30 0001349929 us-gaap:RetainedEarningsMember 2020-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-09-30 0001349929 2020-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2020-12-31 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-12-31 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2020-12-31 0001349929 VYNT:TemporaryEquityMember 2020-12-31 0001349929 us-gaap:CommonStockMember 2020-12-31 0001349929 us-gaap:AdditionalPaidInCapitalMember 2020-12-31 0001349929 us-gaap:RetainedEarningsMember 2020-12-31 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-12-31 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2021-01-01 2021-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2021-01-01 2021-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2021-01-01 2021-09-30 0001349929 VYNT:TemporaryEquityMember 2021-01-01 2021-09-30 0001349929 us-gaap:CommonStockMember 2021-01-01 2021-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2021-01-01 2021-09-30 0001349929 us-gaap:RetainedEarningsMember 2021-01-01 2021-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2021-01-01 2021-09-30 0001349929 us-gaap:SeriesCPreferredStockMember 2021-01-01 2021-09-30 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2019-12-31 0001349929 VYNT:TemporaryEquityMember 2019-12-31 0001349929 us-gaap:CommonStockMember 2019-12-31 0001349929 us-gaap:AdditionalPaidInCapitalMember 2019-12-31 0001349929 us-gaap:RetainedEarningsMember 2019-12-31 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2019-12-31 0001349929 2019-12-31 0001349929 us-gaap:SeriesAPreferredStockMember us-gaap:PreferredStockMember 2020-01-01 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember us-gaap:PreferredStockMember 2020-01-01 2020-09-30 0001349929 us-gaap:SeriesCPreferredStockMember us-gaap:PreferredStockMember 2020-01-01 2020-09-30 0001349929 VYNT:TemporaryEquityMember 2020-01-01 2020-09-30 0001349929 us-gaap:CommonStockMember 2020-01-01 2020-09-30 0001349929 us-gaap:AdditionalPaidInCapitalMember 2020-01-01 2020-09-30 0001349929 us-gaap:RetainedEarningsMember 2020-01-01 2020-09-30 0001349929 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2020-01-01 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember 2020-01-01 2020-09-30 0001349929 VYNT:StemoniXMember VYNT:HoldersMember VYNT:MergerAgreementMember 2020-08-20 2020-08-21 0001349929 VYNT:StemoniXMember VYNT:HoldersMember VYNT:MergerAgreementMember 2020-08-21 0001349929 VYNT:StemoniXMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2020-08-20 2020-08-21 0001349929 VYNT:StemoniXMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2020-08-21 0001349929 VYNT:StemoniXMember VYNT:MergerAgreementMember 2021-03-29 2021-03-30 0001349929 VYNT:StemoniXMember us-gaap:CommonStockMember VYNT:MergerAgreementMember 2021-03-29 2021-03-30 0001349929 VYNT:StemoniXMember VYNT:CommonStockWarrantsMember VYNT:MergerAgreementMember 2021-03-29 2021-03-30 0001349929 VYNT:StemoniXMember VYNT:CommonStockOptionsMember VYNT:MergerAgreementMember 2021-03-29 2021-03-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember VYNT:MergerAgreementMember 2021-07-01 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember VYNT:MergerAgreementMember 2021-01-01 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember VYNT:MergerAgreementMember 2020-01-01 2020-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember VYNT:MergerAgreementMember 2020-12-31 0001349929 2021-03-31 0001349929 srt:RestatementAdjustmentMember 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember us-gaap:TradeNamesMember VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember us-gaap:CustomerRelationshipsMember VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember us-gaap:TradeNamesMember VYNT:MergerAgreementMember 2021-01-01 2021-09-30 0001349929 VYNT:StemoniXAndCancerGeneticsIncMember us-gaap:CustomerRelationshipsMember VYNT:MergerAgreementMember 2021-01-01 2021-09-30 0001349929 srt:ScenarioPreviouslyReportedMember 2020-12-31 0001349929 VYNT:TwoCustomerMember us-gaap:TradeAccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:ThreeCustomerMember us-gaap:TradeAccountsReceivableMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-12-31 0001349929 VYNT:DirectorsAndOfficersMember 2021-03-30 0001349929 VYNT:FrozenCellBankMember 2021-09-30 0001349929 srt:MinimumMember 2021-01-01 2021-09-30 0001349929 us-gaap:EquipmentMember 2021-09-30 0001349929 us-gaap:EquipmentMember 2020-12-31 0001349929 us-gaap:FurnitureAndFixturesMember 2021-09-30 0001349929 us-gaap:FurnitureAndFixturesMember 2020-12-31 0001349929 us-gaap:LeaseholdImprovementsMember 2021-09-30 0001349929 us-gaap:LeaseholdImprovementsMember 2020-12-31 0001349929 us-gaap:CustomerRelationshipsMember 2021-09-30 0001349929 us-gaap:TradeNamesMember 2021-09-30 0001349929 VYNT:LaboratoryResearchAndAdministrativeOfficeMember 2021-03-31 0001349929 VYNT:LaboratoryResearchAndAdministrativeOfficeMember 2021-04-02 0001349929 VYNT:DepartmentOfEmploymentAndEconomicDevelopmentLoanMember 2021-09-30 0001349929 VYNT:DepartmentOfEmploymentAndEconomicDevelopmentLoanMember 2020-12-31 0001349929 VYNT:EconomicInjuryDisasterLoanMember 2021-09-30 0001349929 VYNT:EconomicInjuryDisasterLoanMember 2020-12-31 0001349929 VYNT:TwoThousandAndTwentyMember 2021-09-30 0001349929 VYNT:TwoThousandAndTwentyMember 2021-01-01 2021-09-30 0001349929 VYNT:ConvertibleNotesMember 2021-09-30 0001349929 VYNT:ConvertibleNotesMember 2020-12-31 0001349929 VYNT:TwoThousandAndTwentyMember 2020-01-01 2020-12-31 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2021-02-08 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:SeriesBPreferredStockMember 2021-02-07 2021-02-08 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2020-05-04 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2021-03-12 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2021-01-01 2021-03-12 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:SeriesBPreferredStockMember 2021-01-01 2021-03-12 0001349929 VYNT:StemoniXMember VYNT:ConvertibleNotesMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2020-08-18 2020-08-21 0001349929 VYNT:StemoniXMember VYNT:ConvertibleNotesMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-02-22 2021-02-23 0001349929 VYNT:StemoniXMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-02-23 0001349929 VYNT:TwentyTwentyConvertibleNotesMember VYNT:MergerAgreementMember 2020-08-20 2020-08-21 0001349929 VYNT:TwentyTwentyConvertibleNotesMember VYNT:MergerAgreementMember 2020-08-19 2020-08-21 0001349929 2021-01-01 2021-03-31 0001349929 VYNT:TwentyTwentyConvertibleNotesMember VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:PaycheckProtectionProgramAndCARESActMember 2020-04-01 2020-04-30 0001349929 VYNT:PaycheckProtectionProgramAndCARESActMember VYNT:EconomicInjuryPlanLoanMember 2020-04-01 2020-04-30 0001349929 VYNT:PaycheckProtectionProgramAndCARESActMember VYNT:EconomicInjuryPlanLoanMember 2020-10-01 2020-12-31 0001349929 VYNT:EconomicInjuryDisasterLoanMember 2020-01-01 2020-12-31 0001349929 VYNT:SmallBusinessAdministrationMember 2020-01-01 2020-12-31 0001349929 VYNT:SmallBusinessAdministrationMember 2021-09-30 0001349929 VYNT:SmallBusinessAdministrationMember 2021-01-01 2021-09-30 0001349929 VYNT:SeriesAConvertiblePreferredStockMember 2020-01-01 2020-12-31 0001349929 VYNT:SeriesBConvertiblePreferredStockMember 2020-01-01 2020-12-31 0001349929 us-gaap:SeriesBPreferredStockMember 2021-01-01 2021-03-31 0001349929 VYNT:CancerGeneticsIncMember VYNT:SeriesCConvertiblePreferredStockMember VYNT:MergerAgreementMember 2021-03-14 2021-03-15 0001349929 VYNT:CancerGeneticsIncMember VYNT:SeriesCConvertiblePreferredStockMember VYNT:MergerAgreementMember 2021-03-29 2021-03-30 0001349929 us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-02-23 0001349929 us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-01-01 2021-03-31 0001349929 us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:MergerAgreementMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNoteMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNoteMember 2021-01-01 2021-09-30 0001349929 VYNT:TwentyTwentyOneOfferingMember 2021-09-30 0001349929 VYNT:TwentyTwentyOneOfferingMember 2021-01-01 2021-09-30 0001349929 srt:MinimumMember VYNT:AdvisoryFeesMember 2021-09-30 0001349929 srt:MaximumMember VYNT:AdvisoryFeesMember 2021-09-30 0001349929 VYNT:AdvisoryFeesMember 2021-09-30 0001349929 VYNT:AdvisoryFeesMember 2021-01-01 2021-09-30 0001349929 VYNT:DebtOneMember 2021-09-30 0001349929 VYNT:DebtOneMember 2021-01-01 2021-09-30 0001349929 VYNT:OfferingMember 2021-09-30 0001349929 VYNT:OfferingMember 2021-01-01 2021-09-30 0001349929 VYNT:DebtTwoMember 2021-09-30 0001349929 VYNT:DebtTwoMember 2021-01-01 2021-09-30 0001349929 VYNT:DebtThreeMember 2021-09-30 0001349929 VYNT:DebtThreeMember 2021-01-01 2021-09-30 0001349929 VYNT:PreferredStockWarrantsMember 2021-01-01 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:InvestorMember VYNT:MergerAgreementMember 2021-01-01 2021-03-31 0001349929 VYNT:TwentyTwentyConvertibleNotesMember VYNT:SeriesBConvertiblePreferredStockMember 2021-01-01 2021-03-12 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:MeasurementInputExercisePriceMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:MeasurementInputRiskFreeInterestRateMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:MeasurementInputPriceVolatilityMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNoteMember 2020-12-31 0001349929 VYNT:WarrantsMember 2020-12-31 0001349929 VYNT:EmbeddedDerivativeMember 2020-12-31 0001349929 VYNT:TwentyTwentyConvertibleNoteMember 2021-01-01 2021-09-30 0001349929 VYNT:WarrantsMember 2021-01-01 2021-09-30 0001349929 VYNT:EmbeddedDerivativeMember 2021-01-01 2021-09-30 0001349929 VYNT:TwentyTwentyConvertibleNoteMember 2021-09-30 0001349929 VYNT:WarrantsMember 2021-09-30 0001349929 VYNT:EmbeddedDerivativeMember 2021-09-30 0001349929 VYNT:EmbeddedDerivativeMember 2019-12-31 0001349929 VYNT:EmbeddedDerivativeMember 2020-01-01 2020-09-30 0001349929 VYNT:EmbeddedDerivativeMember 2020-09-30 0001349929 us-gaap:SeriesAPreferredStockMember 2021-07-01 2021-09-30 0001349929 us-gaap:SeriesAPreferredStockMember 2020-07-01 2020-09-30 0001349929 us-gaap:SeriesAPreferredStockMember 2021-01-01 2021-09-30 0001349929 us-gaap:SeriesAPreferredStockMember 2020-01-01 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember 2021-07-01 2021-09-30 0001349929 us-gaap:SeriesBPreferredStockMember 2020-07-01 2020-09-30 0001349929 us-gaap:SeriesBPreferredStockMember 2021-01-01 2021-09-30 0001349929 VYNT:SeriesAWarrantsMember 2021-07-01 2021-09-30 0001349929 VYNT:SeriesAWarrantsMember 2020-07-01 2020-09-30 0001349929 VYNT:SeriesAWarrantsMember 2021-01-01 2021-09-30 0001349929 VYNT:SeriesAWarrantsMember 2020-01-01 2020-09-30 0001349929 VYNT:SeriesBWarrantsMember 2021-07-01 2021-09-30 0001349929 VYNT:SeriesBWarrantsMember 2020-07-01 2020-09-30 0001349929 VYNT:SeriesBWarrantsMember 2021-01-01 2021-09-30 0001349929 VYNT:SeriesBWarrantsMember 2020-01-01 2020-09-30 0001349929 VYNT:CommonStockWarrantsMember 2021-07-01 2021-09-30 0001349929 VYNT:CommonStockWarrantsMember 2020-07-01 2020-09-30 0001349929 VYNT:CommonStockWarrantsMember 2021-01-01 2021-09-30 0001349929 VYNT:CommonStockWarrantsMember 2020-01-01 2020-09-30 0001349929 VYNT:CommonStockOptionsMember 2021-07-01 2021-09-30 0001349929 VYNT:CommonStockOptionsMember 2020-07-01 2020-09-30 0001349929 VYNT:CommonStockOptionsMember 2021-01-01 2021-09-30 0001349929 VYNT:CommonStockOptionsMember 2020-01-01 2020-09-30 0001349929 VYNT:TwoThousandTwentyConvertibleNotesMember 2021-07-01 2021-09-30 0001349929 VYNT:TwoThousandTwentyConvertibleNotesMember 2020-07-01 2020-09-30 0001349929 VYNT:TwoThousandTwentyConvertibleNotesMember 2021-01-01 2021-09-30 0001349929 VYNT:TwoThousandTwentyConvertibleNotesMember 2020-01-01 2020-09-30 0001349929 VYNT:FrozenStockOptionPlanMember 2021-01-01 2021-09-30 0001349929 VYNT:TwoThousandFifteenPlanMember 2021-09-30 0001349929 VYNT:OfficersKeyEmployeesAndNonEmployeeConsultantsMember VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-09-30 0001349929 VYNT:OfficersAndOtherEmployeesMember VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-03-29 2021-03-30 0001349929 VYNT:IndependentBoardMembersMember VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-03-29 2021-03-30 0001349929 srt:BoardOfDirectorsChairmanMember us-gaap:RestrictedStockUnitsRSUMember VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-03-29 2021-03-30 0001349929 VYNT:OfficersAndEmployeesMember VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-03-29 2021-03-30 0001349929 VYNT:TwentyTwentyOneEquityIncentivePlanMember 2021-09-30 0001349929 srt:MaximumMember 2021-01-01 2021-09-30 0001349929 VYNT:ThreeCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-07-01 2021-09-30 0001349929 VYNT:ThreeCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:ThreeCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2020-09-30 0001349929 VYNT:ThreeCustomersMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-09-30 0001349929 VYNT:OutsideOfUnitedStatesMember us-gaap:SalesRevenueNetMember us-gaap:GeographicConcentrationRiskMember 2021-07-01 2021-09-30 0001349929 VYNT:OutsideOfUnitedStatesMember us-gaap:SalesRevenueNetMember us-gaap:GeographicConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-07-01 2021-09-30 0001349929 VYNT:CustomerAMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-07-01 2021-09-30 0001349929 VYNT:CustomerBMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-07-01 2021-09-30 0001349929 VYNT:CustomerCMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2021-01-01 2021-09-30 0001349929 VYNT:CustomerDMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2020-09-30 0001349929 VYNT:CustomerDMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-09-30 0001349929 VYNT:CustomerEMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2020-09-30 0001349929 VYNT:CustomerEMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-09-30 0001349929 VYNT:CustomerFMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-07-01 2020-09-30 0001349929 VYNT:CustomerFMember us-gaap:SalesRevenueNetMember us-gaap:CustomerConcentrationRiskMember 2020-01-01 2020-09-30 0001349929 srt:OfficerMember 2020-01-01 2020-01-31 0001349929 srt:OfficerMember 2020-08-12 0001349929 srt:OfficerMember 2020-08-11 2020-08-12 0001349929 srt:OfficerMember 2020-04-01 2020-06-30 0001349929 srt:OfficerMember 2021-01-01 2021-09-30 0001349929 VYNT:FormerStemonixBoardMembersOfficerMember VYNT:SeriesBTwoPreferredStockMember 2020-01-01 2020-12-31 0001349929 VYNT:TwentyTwentyConvertibleNotesMember 2020-01-01 2020-12-31 0001349929 VYNT:TwentyTwentyConvertibleNotesMember us-gaap:SeriesBPreferredStockMember 2020-01-01 2020-12-31 0001349929 2021-01-01 2021-04-30 0001349929 2020-11-01 2020-11-30 0001349929 2021-09-29 2021-10-02 0001349929 us-gaap:SubsequentEventMember 2021-10-02 0001349929 us-gaap:SubsequentEventMember 2021-10-25 2021-10-26 0001349929 us-gaap:SubsequentEventMember us-gaap:StockOptionMember VYNT:ChiefScientificOfficerMember 2021-10-30 2021-11-02 0001349929 us-gaap:SubsequentEventMember us-gaap:StockOptionMember VYNT:ChiefScientificOfficerMember 2021-11-02 iso4217:USD xbrli:shares iso4217:USD xbrli:shares xbrli:pure

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2021

 

Commission File Number 001-35817

 

VYANT BIO, INC.

(Exact name of registrant as specified in the charter)

 

Delaware   04-3462475
(State or other jurisdiction of   (I.R.S. Employer
incorporation or organization)   Identification Number)

 

2 Executive Campus

2370 State Route 70, Suite 310

Cherry Hill, NJ 08002

(Address of principal executive offices) (Zip Code)

 

Registrant’s telephone number, including area code: (201)479-8126

 

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

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.0001 Par Value   VYNT   The Nasdaq Stock Market LLC

 

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

 

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

 

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

 

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated Filer ☒ Smaller reporting company

Emerging growth company

 

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

 

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

 

There were 28,989,623 shares of common stock, par value $0.0001 of Vyant Bio, Inc. issued and outstanding as of November 9, 2021.

 

 

 

 
 

 

Vyant Bio, Inc. and Subsidiaries

 

INDEX

 

    Page No.
     
Part I Financial Information 3
Item 1: Unaudited Condensed Consolidated Financial Statements 3
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations 28
Item 3: Quantitative and Qualitative Disclosures about Market Risk 41
Item 4: Controls and Procedures 41
     
Part II Other Information 42
Item 1: Legal Proceedings 42
Item 1A: Risk Factors 42
Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 42
Item 3: Defaults Upon Senior Securities 42
Item 4: Mine Safety Disclosures 43
Item 5: Other Information 43
Item 6: Exhibits 43
     
Signatures 44

 

2
 

 

Part I Financial Information

 

Item 1 Financial Statements

 

Vyant Bio, Inc.

(Formerly Known as Cancer Genetics, Inc.)

Consolidated Balance Sheets

(unaudited)

(Shares and USD in Thousands)

 

    September 30,     December 31,  
    2021     2020  
             
Assets                
Current assets:                
Cash and cash equivalents   $ 23,203     $ 792  
Trade accounts and other receivables     1,192       357  
Inventory     480       415  
Prepaid expenses and other current assets     1,419       223  
Total current assets     26,294       1,787  
Non-current assets:                
Fixed assets, net     1,269       1,031  
Operating lease right-of-use assets, net     888       1,095  
Intangible assets, net     9,025       -  
Goodwill     22,085       -  
Long-term prepaid expenses and other assets     1,659       136  
Total non-current assets     34,926       2,262  
Total Assets   $ 61,220     $ 4,049  
                 
Liabilities, Temporary Equity and Stockholders’ Equity (Deficit)                
Current liabilities:                
Accounts payable   $ 1,073     $ 1,300  
Accrued expenses     1,329       162  
Deferred revenue     1,458       92  
Obligations under operating leases, current portion     335       486  
Obligation under finance lease, current portion     30       -  
Other current liabilities     -       9  
Current liabilities of discontinued operations     444       -  
Total current liabilities     4,669       2,049  
Obligations under operating leases, less current portion     523       627  
Obligations under finance leases, less current portion     55       -  
Share-settlement obligation derivative     -       1,690  
Accrued interest     -       277  
Long-term debt     57       6,839  
Total Liabilities     5,304       11,482  
                 
Commitments and Contingencies (Note 16)     -          
Temporary Equity                
Series A Convertible Preferred stock, $0.0001 par value; 4,700 shares authorized, 0 and 4,612 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively (liquidation value of $0 and $11,732, respectively, as of September 30, 2021 and December 31, 2020)     -       12,356  
Series B Convertible Preferred stock, $0.0001 par value; 4,700 shares authorized, 0 and 3,489 shares issued and outstanding, as of September 30, 2021 and December 31, 2020, respectively (liquidation value of $0 and $15,707, respectively, as of September 30, 2021 and December 31, 2020)     -       16,651  
Series C Convertible Preferred stock, $0.0001 par value; 2,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020 (liquidation value of $0 as of September 30, 2021 and December 31, 2020)     -       -  
Total Temporary Equity     -       29,007  
                 
Stockholders’ Equity (Deficit)                
Preferred stock, authorized 9,764 shares $ 0.0001 par value, none issued     -       -  
Common stock, authorized 100,000 shares, $0.0001 par value, 28,985 and 2,594 shares issued and outstanding as of September 30, 2021, and December 31, 2020, respectively     3       -  
Additional paid-in capital     109,864       1,514  
Accumulated comprehensive income     16       -  
Accumulated deficit     (53,967 )     (37,954 )
Total Stockholders’ Equity (Deficit)     55,916       (36,440 )
Total Liabilities and Stockholders’ Equity (Deficit)   $ 61,220     $ 4,049  

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

3
 

 

Vyant Bio, Inc.

(Formerly Known as Cancer Genetics, Inc.)

Consolidated Statements of Operations and Comprehensive Loss  

(Shares and USD in Thousands)

 

                         
    Three months ended September 30,     Nine months ended September, 30  
    2021     2020     2021     2020  
Revenues:                                
Service   $ 1,347     $ 238     $ 3,294     $ 414  
Product     159       97       381       188  
Total revenues     1,506       335       3,675       602  
                                 
Operating costs and expenses:                                
Cost of goods sold – service     1,073       130      

2,178

      300  
Cost of goods sold – product     355       247       1,096       560  
Research and development     1,211       867       2,941       2,469  
Selling, general and administrative     3,335       819       8,226       2,060  
Merger related costs     -       1,042       2,310       1,042  
Total operating costs and expenses    

5,974

      3,105       16,751       6,431  
Loss from operations     (4,468 )     (2,770 )     (13,076 )     (5,829 )
                                 
Other income (expense):                                
Change in fair value of warrant liability     -       -       214       -  
Change in fair value of share-settlement obligation derivative     -       (9 )     (250 )     (220 )
Loss on debt conversions             -       (2,518 )     -  
Other income (expense), net     4       (1 )     (21 )     -  
Interest income (expense), net     3       (210 )     (362 )     (247 )
Total other income (expense)     7       (220 )     (2,937 )     (467 )
Loss before income taxes     (4,461 )     (2,990 )     (16,013 )     (6,296 )
Income tax expense (benefit)     -       -       -       -  
Net loss   $ (4,461 )   $ (2,990 )   $ (16,013 )   $ (6,296 )
Cumulative translation adjustment    

17

   

-

     

16

   

-

 
Comprehensive loss   $

(4,444

)   $

(2,990

)   $

(15,997

)   $

(6,296

)
                                 
Net loss per common share:                                
Net loss per share attributable to common stock - Basic and Diluted   $ (0.15 )   $ (1.20 )   $ (0.78 )   $ (2.54 )
Weighted average shares outstanding:                                
Weighted average common shares outstanding - Basic and Diluted     28,986       2,500       20,466       2,476  

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

4
 

 

Vyant Bio, Inc.

(Formerly Known as Cancer Genetics, Inc.)

Consolidated Statements of Temporary Equity and Common Stockholders’ Equity (Deficit)

(unaudited)

(Shares and USD in Thousands)

 

    Shares     Amount     Shares     Amount     Shares     Amount     Equity     Shares     Amount     Capital     Deficit     Income (Loss)     (Deficit)  
Three months ended September 30, 2021 and 2020
 
    Series A     Series B     Series C     Total                 Additional           Accumulated    

Total Common

Stockholders’

 
    Preferred Stock     Preferred Stock     Preferred Stock     Temporary     Common Stock     Paid in     Accumulated     Comprehensive     Equity  
    Shares     Amount     Shares     Amount     Shares     Amount     Equity     Shares     Amount     Capital     Deficit     Income (Loss)     (Deficit)  
Balances as of June 30, 2021     -     $ -       -     $ -       -     $ -     $ -       28,985     $ 3     $ 109,567     $ (49,506 )   $ (1 )   $ 60,063  
Stock-based compensation     -       -       -       -       -       -       -       -       -       297       -       -       297  
Foreign currency translation adjustment     -       -       -       -       -       -       -       -       -       -       -       17       17  
Net loss     -       -       -       -       -       -       -       -       -       -       (4,461 )     -       (4,461 )
Balance as of September 30, 2021     -     $ -       -     $ -       -     $ -     $ -       28,985     $ 3     $ 109,864     $ (53,967 )   $ 16     $ 55,916  
                                                                                                         
Balance as of June 30, 2020     4,612     $ 12,356       3,508     $ 16,756       -     $ -     $ 29,112       2,472     $ -     $ 1,173     $ (32,610 )   $ -     $ (31,437 )
Issuance of shares for services     -       -       -       -       -       -       -       16       -       34       -       -       34  
Stock-based compensation     -       -       -       -       -       -       -       -       -       73       -       -       73  
Exercise of stock options     -       -       -       -       -       -       -       35       -       62       -       -       62  
Related party note payable exchange for stock option     -       -       -       -       -       -       -       12       -       26       -       -       26  
Executives deferred compensation settled with restricted stock     -       -       -       -       -       -       -       43       -       86       -       -       86  
Exchange of Series B Preferred Stock for 2020 Convertible Notes     -       -       (4 )     (24 )     -       -       (24 )     -       -       -       -       -       -  
Net loss     -       -       -       -       -       -       -       -       -       -       (2,990 )     -       (2,990 )
Balance as of September 30 2020     4,612     $ 12,356       3,504     $ 16,732       -     $ -     $ 29,088       2,578     $ -     $ 1,454     $ (35,600 )   $ -     $ (34,146 )

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

5
 

 

Vyant Bio, Inc.

(Formerly Known as Cancer Genetics, Inc.)

Consolidated Statements of Temporary Equity and Common Stockholders’ Equity (Deficit)

(unaudited)

(Shares and USD in Thousands)

 

Nine months ended September 30, 2021 and 2020
 
   

Series A

Preferred Stock

   

Series B

Preferred Stock

   

Series C

Preferred Stock

   

Total

Temporary

    Common Stock    

Additional

Paid In

    Accumulated    

Accumulated

Comprehensive

   

Total Common

Stockholders’

Equity

 
    Shares     Amount     Shares     Amount     Shares     Amount     Equity     Shares     Amount     Capital     Deficit     Income     (Deficit)  
Balance as of December 31, 2020     4,612     $ 12,356       3,489     $ 16,651       -     $ -     $ 29,007       2,594     $ -     $ 1,514     $ (37,954 )   $ -     $ (36,440 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       1,025       -       -       1,025  
Exercise of stock options     -       -       -       -       -       -       -       -       -       4       -       -       4  
Issuance of Series C Convertible Preferred shares, net of issuance costs of $214     -       -       -       -       567       1,786       1,786       -       -       -       -       -       -  
Issuance of Common Stock for acquisition consideration     -       -       -       -       -       -       -       11,007       2       59,918       -       -       59,920  
Issuance of incremental shares to StemoniX shareholders upon Merger     -       -       -       -       -       -       -       805       -       -       -       -       -  
Conversion of Preferred Stock to Common Stock upon Merger     (4,612 )     (12,356 )     (3,489 )     (16,651 )     (567 )     (1,786 )     (30,793 )     11,197       1       30,792       -       -       30,793  
Conversion of 2020 Convertible Notes to Common Stock upon Merger     -       -       -       -       -       -       -       3,339       -       16,190       -       -       16,190  
Preferred stock warrant settled for Common Stock upon Merger     -       -       -       -       -       -       -       43       -       -       -       -       -  
Warrant liability reclassified to equity upon Merger     -       -       -       -       -       -       -       -       -       421       -       -       421  
Foreign currency translation adjustment     -       -       -       -       -       -       -       -       -       -       -       16       16  
Net loss     -       -       -       -       -       -       -       -       -       -       (16,013 )     -       (16,013 )
Balance as of September 30, 2021     -     $ -       -     $ -     -     $ -     $ -       28,985     $ 3     $ 109,864     $ (53,967 )   $ 16     $ 55,916  
                                                                                                         
Balance as of December 31, 2019     4,612     $ 12,356       3,735     $ 18,045       -     $ -     $ 30,401       2,456     $ -     $ 1,047     $ (29,304 )   $ -     $ (28,257 )
Stock-based compensation     -       -       -       -       -       -       -       -       -       170       -       -       170  
Issuance of shares for services     -       -       5       30       -       -       30       20       -       40       -       -       40  
Exercise of stock options     -       -       -       -       -       -       -       47       -       85       -       -       85  
Related party note payable exchange for stock option exercise     -       -       -       -       -       -       -       12       -       26       -       -       26  
Executives deferred compensation settled with restricted tock     -       -       -       -       -       -       -       43       -       86       -       -       86  
Issuance of Series B Convertible Preferred shares, net of issuance costs of $41     -       -       236       1,250       -       -       1,250       -       -       -       -       -       -  
Exchange of Series B Preferred Stock for 2020 Convertible Notes     -       -       (472 )     (2,593 )     -       -       (2,593 )     -       -       -       -       -       -  
Net loss     -       -       -       -       -       -       -       -       -       -       (6,296 )     -       (6,296 )
Balance as of September 30, 2020     4,612     $ 12,356       3,504     $ 16,732       -     $ -     $ 29,088       2,578     $ -     $ 1,454     $ (35,600 )   $ -     $ (34,146 )

 

See Notes to Unaudited Condensed Consolidated Financial Statements.

 

6
 

 

Vyant Bio, Inc.

(Formerly Known as Cancer Genetics, Inc.)

Consolidated Statements of Cash Flows

(unaudited)

(USD in Thousands)

 

                 
    Nine months ended September 30,  
    2021     2020  
             
Cash Flows from Operating Activities:                
Net loss   $ (16,013 )   $ (6,296 )
Reconciliation of net loss to net cash used in operating activities:                
Stock-based compensation     1,025       326  
Amortization of operating lease right-of-use assets     316       370  
Depreciation and amortization expense     912       428  
Change in fair value of share-settlement obligation derivative     250       220  
Change in fair value of warrant liability     (214 )     -  
Change in fair value of 2020 Convertible Note with fair value election     4       -  
Accretion of debt discount     173       116  
Loss on conversion of debt     2,518       -  
PPP loan forgiveness     -       (649 )
Other     (14 )     29  
Changes in operating assets and liabilities, net of impacts of business combination:                
Trade accounts and other receivables     40       (173 )
Inventory     (66 )     (18 )
Prepaid expenses and other current assets     (726 )     101  
Accounts payable     (981 )     710  
PPP loan proceeds     -       730  
Obligations under operating leases     (370 )     (375 )
Accrued expenses and other current liabilities     (844 )     135  
Net cash used in operating activities     (13,990 )     (4,346 )
                 
Cash Flows from Investing Activities:                
Purchase of equipment     (521 )     (6 )
Proceeds from patent held for sale and equipment sales     50       17  
Cash acquired from acquisition     30,163       -  
Net cash provided by investing activities     29,692       11  
                 
Cash Flows from Financing Activities:                
EIDL loan proceeds     -       67  
Issuance of Common Stock     4       85  
Issuance of Series B Convertible Preferred Stock, net of issuance costs     -       1,250  
Issuance of Series C Convertible Preferred Stock, net of issuance costs     1,786       -  
2020 Convertible Note proceeds, net of issuance costs     5,022       4,548  
Principal payments on long-term debt     (82 )     -  
Proceeds from related party notes     -       80  
Principal payments on obligations under finance leases     (21 )     (55 )
Net cash provided by financing activities     6,709       5,975  
Net increase in cash and cash equivalents     22,411       1,640  
Cash and cash equivalents, beginning of the period     792       315  
Total cash and cash equivalents, end of period   $ 23,203     $ 1,955  
Supplemental disclosure of cash flow information:                
Cash paid for interest   $ 1     $ 5  
Cash paid for income taxes     -       1  
Non-cash investing activities:                
Fair value of non-cash merger consideration   $ 59,920     $ -  
Right-of-use assets obtained in exchange for new operating lease liabilities     83       373  
Non-cash financing activities:                
Conversion of Convertible Preferred Stock to Common Stock upon Merger   $ 30,793   $ -
Conversion of 2020 Convertible Notes and accrued interest to Common Stock upon Merger     16,190       -  
Exchange of Series B Convertible Preferred Stock for 2020 Convertible Notes     -       2,593  
Related party note payable converted to 2020 Convertible Notes     -       55  
Related party note payable exchanged for stock option exercise     -       26  
Reclass warrant liability to equity upon Merger     421       -  

 

See Notes to Unaudited Consolidated Financial Statements.

 

7
 

 

Vyant Bio, Inc.

(formerly known as Cancer Genetics, Inc.)

Notes to Condensed Consolidated Financial Statements

Period Ended September 30, 2021

(Unaudited)

 

Note 1. Organization and Description of Business

 

Vyant Bio, Inc. (“Vyant Bio” or “the Company”) is an innovative biotechnology company focused on partnering with pharmaceutical and other biotechnology companies to identify novel biological targets and therapeutics through the integration of human-derived biology with data science technologies and investigational new drug (“IND”) expertise.

 

The Company has two wholly-owned operating subsidiaries StemoniX, Inc. (“StemoniX”) and vivoPharm Pty Ltd (“vivoPharm”). StemoniX develops and manufactures high-density, at-scale human induced pluripotent stem cell (“iPSC”) derived neural screening platforms for drug discovery and development. vivoPharm has an extensive set of anti-tumor referenced data based on predictive xenograft and syngeneic tumor models to provide discovery services such as contract research services, focused primarily on unique specialized studies to guide drug discovery. By combining the two companies, Vyant Bio intends to build on the historic businesses and empower the discovery of new medicines and biomarkers through the convergence of its novel human biology and software technologies.

 

In accordance with the rules and regulations of the United States (“U.S.”) Securities and Exchange Commission (“SEC”), the Company has omitted footnote disclosures that would substantially duplicate the disclosures contained in the Company’s audited consolidated financial statements. These unaudited condensed consolidated financial statements should be read together with the audited financial statements of StemoniX, Inc. for the year ended December 31, 2020, and notes thereto included in the Company’s April 5, 2021 Form 8-K report as filed with the SEC.

 

In the opinion of the Company’s management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments, consisting solely of those which are of a normal recurring nature, necessary to present fairly its financial position as of September 30, 2021 and the results of its operations, cash flows and changes in stockholders’ equity (deficit) for the three and nine months ended September 30, 2021 and 2020. The results of operations for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the entire 2021 year.

 

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (“COVID-19”) a global pandemic and recommended containment and mitigation measures worldwide. Many of the Company’s customers worldwide were impacted by COVID-19 and temporarily closed their facilities which impacted revenues in the first half of 2020 for StemoniX. While the impact of the pandemic on our business has lessened, the global outbreak of COVID-19 continues with new variants and is impacting the way we operate our business as well as in certain circumstances limiting the availability of lab supplies. The extent to which the COVID-19 pandemic may impact the Company’s future business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as, the duration of the outbreak, travel restrictions and social distancing in the U.S. and other countries, business closures or business disruptions, and the effectiveness of actions taken in the U.S. and other countries to contain and treat the disease.

 

8
 

 

The Company is actively monitoring the impact of the COVID-19 pandemic on its business, results of operations and financial condition. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition in the future is unknown at this time and will depend on future developments that are highly unpredictable.

 

Dollar amounts in tables are stated in thousands of U.S. dollars.

 

Note 2. Cancer Genetics, Inc. Merger

 

The Company formerly known as Cancer Genetics, Inc. (“CGI”), StemoniX and CGI Acquisition, Inc. (“Merger Sub”) entered into a merger agreement on August 21, 2020, which was amended on February 8, 2021 and February 26, 2021(as amended, the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, Merger Sub was merged (the “Merger”) with and into StemoniX on March 30, 2021, with StemoniX surviving the Merger as a wholly owned subsidiary of the Company. For U.S. federal income tax purposes, the Merger qualified as a tax-free “reorganization”. Concurrent with the Merger closing, the Company changed its name to Vyant Bio, Inc. Under the terms of the Merger Agreement, upon consummation of the Merger, the Company issued (i) an aggregate of 17,977,544 shares of VYNT common stock, par value $0.0001 per share (the “Common Stock”) to the holders of StemoniX capital stock (after giving effect to the conversion of all StemoniX preferred shares and StemoniX 2020 Convertible Notes) and StemoniX warrants (which does not include a certain warrant (the “Investor Warrant”) issued to a certain StemoniX convertible note holder (the “Major Investor”)), (ii) options to purchase an aggregate of 891,780 shares of Common Stock to the holders of StemoniX options with exercise prices ranging from $0.66 to $4.61 per share and a weighted average exercise price of $1.46 per share, and (iii) a warrant (the “Major Investor Warrant”) to the Major Investor, expiring February 23, 2026 to purchase 143,890 shares of Common Stock at a price of $5.9059 per share in exchange of the Investor Warrant.

 

The Merger was accounted for as a reverse acquisition with StemoniX being the accounting acquirer of CGI using the acquisition method of accounting. Under acquisition accounting, the assets and liabilities (including executory contracts, commitments and other obligations) of CGI, as of March 30, 2021, the closing date of the Merger, were recorded at their respective fair values and added to those of StemoniX. Any excess of purchase price consideration over the fair values of the identifiable net assets is recorded as goodwill. The total consideration paid by StemoniX in the Merger amounted to $59.9 million, which represents the fair value of CGI’s 11,007,186 shares of Common Stock or $50.74 million, 2,157,686 Common Stock warrants or $9.04 million and 55,907 Common Stock options outstanding on the closing date of the Merger with a fair value of $139 thousand. In addition, at the effective time of the Merger, existing StemoniX shareholders received an additional 804,711 incremental shares in accordance with the conversion ratio set forth in the Merger Agreement.

 

StemoniX and CGI incurred $0 thousand and $2.3 million of costs associated with the Merger that have been reported on the consolidated statements of operations as Merger related costs for the three and nine months ended September 30, 2021, respectively. There were $1 million of Merger related costs on StemoniX’s statements of operations for the three and nine months ended September 30, 2020. As of September 30, 2021 and December 31, 2020, accounts payable includes $0 thousand and $1.0 million of Merger related costs.

 

The following details the preliminary allocation of the purchase price consideration recorded on March 31, 2021, with adjustments recorded in the second and third quarters of 2021, and balances as of September 30, 2021.

 

    March 31,
2021
    Adjustments     September 30,
2021
 
Assets acquired:                        
Cash and equivalents   $ 30,163     $ -     $ 30,163  
Accounts receivable     705       -       705  
Other current assets     806       193       999  
Intangible assets     9,500       -       9,500  
Fixed assets     416       (256 )     160  
Goodwill     22,164       (79 )     22,085  
Long-term prepaid expenses and other assets     1,381       -       1,381  
Total assets acquired   $ 65,135     $ (142 )   $ 64,993  
                         
Liabilities assumed:                        
Accounts payable and accrued expenses   $ 2,670     $ 476     $ 3,146  
Current liabilities of discontinued operations     588       (144 )     444  
Obligations under operating leases     198       -       198  
Obligations under finance leases     106       -       106  
Deferred revenue     1,293       (114 )     1,179  
Income taxes payable     360       (360 )     -  
Total liabilities assumed   $ 5,215     $ (142 )   $ 5,073  
                         
Net assets acquired:   $ 59,920     $ -     $ 59,920  

 

9
 

 

We have completed preliminary valuation analyses necessary to assess the fair values of the tangible and intangible assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. These fair values were based on management’s estimates and assumptions; however, the amounts shown above are preliminary in nature and are subject to adjustment, including income tax related amounts, as additional information is obtained about the facts and circumstances that existed as of the acquisition date. Accordingly, there may be adjustments to the assigned values of acquired assets and liabilities, including, but not limited to, intangible assets and their respective estimated useful lives, that may also give rise to material increases or decreases in the amounts of depreciation and amortization expense. The final determination of the fair values and related income tax impacts will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined. The Company has also not yet completed its fair value analysis for a number of items including, income taxes and discontinued operations liabilities. Of the amount of goodwill acquired in the Merger, no portion is deductible for tax purposes.

 

The Company recognized intangible assets related to the Merger, which consist of the tradename valued at $1.5 million with an estimated useful life of ten years and customer relationships valued at $8.0 million with an estimated useful life of ten years. The value of the vivoPharm tradename was determined using the relief from royalty method based on analysis of profitability and review of market royalty rates. The Company determined that a 1.0% royalty rate was appropriate given the business-to-business nature of the vivoPharm operations. The value of the vivoPharm customer relationships was determined using an excess earnings method based on projected discounted cash flows and historic customer data. Key assumptions in this analysis included an estimated 10% annual customer attrition rate based on historical vivoPharm operations, a blended U.S. federal, state and Australian income tax rate of 27.1%, a present value factor of 8.5% as well as revenue, cost of revenue and operating expense assumptions regarding the future growth, operating expenses, including corporate overhead charges, and required capital investments.

 

These intangible assets are classified as Level 3 measurements within the fair value hierarchy.

 

The following presents the unaudited pro forma combined financial information as if the Merger had occurred as of January 1, 2020:

 

                         
   

Three months ended
September, 30

    Nine months ended
September 30,
 
    2021     2020     2021     2020  
Total revenues   $ 1,506     $ 1,903     $ 5,294     $ 5,042  
Net loss     (4,461 )     (2,429 )     (10,777 )     (8,663 )
Pro forma loss per common share, basic and diluted     (0.15 )     (0.08 )     (0.37 )     (0.30 )
Pro forma weighted average number of common shares basic and diluted     28,985,924       28,891,329       28,977,601       28,848,369  


 

The pro forma combined results of operations are not necessarily indicative of the results of operations that actually would have occurred had the Merger been completed as of January 1, 2020, nor are they necessarily indicative of future consolidated results.

 

10
 

 

Note 3. Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s significant estimates include estimated transaction price, including variable consideration, of the Company’s revenue contracts; the value of intangible assets arising from the Merger, the useful lives of fixed assets; the valuation of derivatives and one 2020 Convertible Note accounted for under the fair-value election; deferred tax assets, inventory, right-of-use (“ROU”) assets and lease liabilities, stock-based compensation, income tax uncertainties, and other contingencies.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of Vyant Bio, Inc. and its wholly-owned subsidiaries. All significant intercompany account balances and transactions have been eliminated in consolidation.

 

Reclassification

 

As a result of the Merger, the Company has reclassified $92 thousand of deferred revenue as of December 31, 2020 previously included in the balance sheet caption other current liabilities to deferred revenue to conform to the post-Merger presentation.

 

Foreign currency

 

The Company translates the financial statements of its foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and average exchange rates for revenue, costs and expenses. Translation gains and losses are recorded in accumulated comprehensive income as a component of stockholders’ equity. For the three and nine months ended September 30, 2021 there were foreign currency translation gains of $17 thousand and $16 thousand, respectively. Gains and losses resulting from foreign currency transactions that are denominated in currencies other than the entity’s functional currency are included within the consolidated statements of operations. There were no foreign currency translation or transaction gains or losses for the three and nine months ended September 30, 2020 as the Merger, which includes significant foreign operations, occurred on March 30, 2021.

 

Segment Reporting

 

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance. Substantially all of the Company’s assets are maintained in the U.S. and, effective with the Merger, Australia. The Company views its operations and has managed its business as one segment.

 

Risks and Uncertainties

 

The Company operates in an industry that is subject to intense competition, government regulation and rapid technological change. The Company’s operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory, and other risks, including the potential risk of business failure.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Included in cash and cash equivalents at December 31, 2020 is $738 thousand of restricted cash related to the Company’s PPP loan. The Company was required to escrow the PPP loan proceeds plus accrued interest as the Company’s PPP loan forgiveness application had not been processed by the U.S. Small Business Administration at the time of the Merger. This amount was returned to the Company in April 2021 when the PPP loan was fully forgiven. The cash and cash equivalents balance as of September 30, 2021 includes $12 million invested in a U.S. government money market fund.

 

11
 

 

Trade Accounts Receivable

 

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company records an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to consider current market conditions and the Company’s customers’ financial condition, the amount of receivables in dispute, and the current receivables aging and current payment patterns. The Company reviews its allowance for doubtful accounts monthly. No allowances were recorded as of September 30, 2021 or December 31, 2020. Write-offs for the three and nine months ended September 30, 2021 and 2020 were not significant. The Company does not have any off-balance-sheet credit exposure related to its customers.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade receivables. The Company places cash and cash equivalents in various financial institutions with high credit rating and limits the amount of credit exposure to any one financial institution. Trade receivables are primarily from clients in the pharmaceutical and biotechnology industries, as well as academic and government institutions. Concentrations of credit risk with respect to trade receivables, which are typically unsecured, are limited due to the wide variety of customers using the Company’s products and services as well as their dispersion across many geographic areas. As of September 30, 2021 and December 31, 2020, one and three customers, respectively, represented 10% or more of the Company’s total trade accounts receivable, and in the aggregate, these customers represented 28% and 73% respectively, of the Company’s total trade accounts receivable.

 

Inventory

 

Inventory is stated at the lower of cost or net realizable value, with cost being determined on a first-in first-out basis. Cost includes materials, labor and manufacturing overhead related to the purchase and production of inventory. Costs associated with the underutilization of capacity are expensed to Cost of goods sold - product as incurred. Inventory is adjusted for excess and obsolete amounts. Evaluation of excess inventory includes items such as inventory levels, anticipated usage, and customer demand, among others.

 

Prepaid Assets and Other Assets

 

In connection with the Merger on March 30, 2021 a number of Director and Officer insurance contracts were in place, including tail policies accounted for as acquired assets in connection with the Merger. Aggregate premiums of $2.65 million are being expensed over the term of each respective policy. As of September 30, 2021, $1.1 million has been classified in the consolidated balance sheet as non-current prepaid assets related to amounts that will be expensed more than one year after September 30, 2021.

 

For certain cells used by the Company in the vivoPharm services business, the Company acquires cells and then creates an inventory of cells for future use (the “Cell Bank”). This process produces larger batches of established products than current sales requirements due to economies of scale through a highly controlled manufacturing process. Accordingly, the manufacturing process for these products has and will continue to produce quantities in excess of forecasted usage. The Company forecasts usage for its products based on several factors including historical demand, current market dynamics, and technological advances. The Company forecasts product usage on an individual product level for a period that is consistent with our ability to reasonably forecast inventory usage for that product. There have been no material changes to the Company’s estimates of the net realizable value for excess and obsolete inventory or other types of inventory reserves and inventory cost adjustments since the Merger. Additionally, current and historical reserves recorded to reduce the cost of inventory to its net realizable value become part of the new cost basis for the inventory. Given the long-term utilization period of the frozen Cell Bank, this asset is included in the consolidated balance sheets as non-current other assets. The carrying value of the Cell Bank was $376 thousand as of September 30, 2021.

 

Revenue Recognition

 

The Company recognizes revenue when it satisfies performance obligations under the terms of its contracts, and transfers control of the product to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products. This process involves identifying the customer contract, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it (a) provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and (b) is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a product to a customer, which is generally upon shipment as the customer has the ability to direct the use and obtain the benefit of the product.

 

Prior to the Merger, the Company’s primary sources of revenue are product sales from the sale of microOrgan® plates and the performance of preclinical drug testing services using the microOrgan technology. Subsequent to the Merger, the Company’s revenues include vivoPharm’s discovery services, consisting of contract research services focused primarily on unique specialized studies to guide the determination of efficacy and safety in drug discovery. The Company does not act as an agent in any of its revenue arrangements.

 

For product contracts, revenue is recognized at a point-in-time upon delivery to the customer. Product contracts with customers generally state the terms of the sale, including the quantity and price of each product purchased. Payment terms and conditions may vary by contract, although terms generally include a requirement of payment within a range of 30 to 90 days after the performance obligation has been satisfied. As a result, the contracts do not include a significant financing component. In addition, contacts typically do not contain variable consideration as the contracts include stated prices. The Company provides assurance-type warranties on all of its products, which are not separate performance obligations.

 

12
 

 

For service contracts, revenue is recognized over time and is generally defined pursuant to an enforceable right to payment for performance completed on service projects for which the Company has no alternative use as customer furnished compounds are added to Company plates for testing. The Company does not obtain control of the customer furnished compounds as the Company does not have the ability to direct their use. Revenue is measured by the costs incurred to date relative to the estimated total direct costs to fulfill each contract (cost-to-cost method). Incurred costs represent work performed, which corresponds with, and thereby best depicts, the transfer of control to the customer. Contract costs include labor, materials and overhead.

 

Some contracts offer price discounts after a specified volume has been purchased. The Company evaluates these options to determine whether they provide a material right to the customer, representing a separate performance obligation. If the option provides a material right to the customer, revenue is allocated to these rights and deferred; subsequently the revenue is recognized when those future goods or services are transferred, or when the option expires.

 

Contracts are often modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new, or changes existing, enforceable rights and obligations. Generally, when contract modifications create new performance obligations, the modification is considered to be a separate contract and revenue is recognized prospectively. When contract modifications change existing performance obligations, the impact on the existing transaction price and measure of progress for the performance obligation to which it relates is generally recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

 

Contract assets primarily represent revenue earnings over time that are not yet billable based on the terms of the contracts. Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated performance obligations have not been satisfied and revenue has not been recognized based on the Company’s revenue recognition criteria described above.

 

The Company records all amounts collected for shipping as revenue. Amounts collected from customers for sales tax are recorded in sales net of amounts paid to related taxing authorities.

 

The Company may include subcontractor or third-party vendors in certain integrated services arrangements. In these arrangements, revenue from sales of third-party vendor services is generally recorded gross as revenues and cost of goods sold – service, as the Company is the principal for the transaction. When the Company is acting as an agent between a customer and the vendor services, the Company does not record revenue and vendor costs are recorded net within cost of goods sold - service. To determine whether the Company is an agent or principal, the Company considers whether it obtains control of services before they are transferred to the customer. In making this evaluation, several factors are considered, most notably whether the Company has primary responsibility for fulfillment to the client, as well as fiscal risk and pricing discretion.

 

Contract assets were $84 thousand and $32 thousand as of September 30, 2021 and December 31, 2020, respectively. Contract liabilities related to unfulfilled performance obligations were $1.5 million and $92 thousand as of September 30, 2021 and December 31, 2020, respectively, and are recorded in deferred revenue. Remaining performance obligations as of September 30, 2021 are expected to be recognized as revenue in the next twelve months.

 

Derivative Instruments

 

The Company recognizes all derivative instruments as either assets or liabilities in the consolidated balance sheet at their respective fair values. The Company evaluates its debt and equity issuances to determine if those contracts or embedded components of those contracts qualify as derivatives requiring separate recognition in the Company’s financial statements. The result of this accounting treatment is that the fair value of the embedded derivative is revalued as of each reporting date and recorded as a liability, and the change in fair value during the reporting period is recorded in other income (expense) in the consolidated statements of operations. In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Derivative instrument liabilities are classified in the consolidated balance sheets as current or non-current based on whether or not net-cash settlement of the derivative instrument is expected within twelve months of the consolidated balance sheet date.

 

Warrants

 

Except as noted in the next paragraph, the Company accounts for its preferred stock warrants issued to non-employees in equity as issuance costs, as the warrants were issued as vested share-based payment compensation to non-employees.

 

The Company issued a warrant during first quarter of 2021 that contained an indexation feature not indexed to the Company’s stock resulting in this warrant being accounted for as a derivative. Derivative warrants are recorded as liabilities in the accompanying consolidated balance sheets. These common stock purchase warrants do not trade in an active securities market, and as such, the Company estimated the fair value of these warrants using the Black-Scholes valuation pricing model with the assumptions as follows: the risk-free interest rate for periods within the contractual life of the warrant is based on the U.S. Treasury yield curve. The expected life of the warrants is based upon the contractual life of the warrants. The Company uses the historical volatility of its common stock and the closing price of its shares on the NASDAQ Capital Market. As further described in Note 10 to the consolidated financial statements, as a result of the Merger, the terms of this warrant were finalized through the conversion to a Vyant Bio warrant resulting in the Vyant Bio warrant being equity classified.

 

13
 

 

Net Loss Per Share

 

Basic loss per share is computed by dividing loss available to common shareholders by the weighted-average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing loss available to common shareholders by the weighted-average number of shares of common shares outstanding during the period increased to include the number of additional common shares that would have been outstanding if the potentially dilutive securities had been issued, using the treasury-stock method. As the Company incurred losses for all periods presented, potentially dilutive securities have been excluded from fully diluted loss per share as their impact is anti-dilutive and would reduce the loss per share.

 

Convertible Notes

 

The Company accounts for convertible notes using an amortized cost model. Debt issuance costs and the initial fair value of bifurcated compound derivatives reduce the initial carrying amount of the convertible notes. The carrying value is accreted to the stated principal amount at contractual maturity using the effective-interest method with a corresponding charge to interest expense. Debt discounts are presented on the consolidated balance sheets as a direct deduction from the carrying amount of that related debt.

 

Fair Value Option

 

The Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with changes in fair value reported in earnings. The Company elected to account for the convertible note issued to the Major Investor in February 2021 under the fair value option. See Note 11 to the consolidated financial statements.

 

Intangible Assets

 

Intangible assets consist of Vyant Bio’s customer relationships and tradename that were acquired in the Merger, which are being amortized using the straight-line method over the estimated useful lives of the assets of ten years. Amortization expense for these intangible assets aggregated $238 thousand and $475 thousand for the three and nine months ended September 30, 2021.

 

Fixed Assets

 

The Company’s purchased fixed assets are stated at cost. Fixed assets under finance leases are stated at the present value of minimum lease payments.

 

Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. The estimated useful life of equipment is two to five years. Leasehold improvements are depreciated over the shorter of useful life or the lease term. Repair and maintenance costs are expensed as incurred.

 

Long-lived assets, such as fixed assets subject to depreciation, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying amount. If the carrying amount of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. As of September 30, 2021 and December 31, 2020, the Company determined that there were no indicators of impairment and did not recognize any fixed asset impairment. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and appraisals, as considered necessary.

 

Goodwill

 

Goodwill represents the excess of the purchase price over the fair value of net tangible and identified intangible assets acquired in a business combination. Goodwill is not amortized but is evaluated at least annually for impairment or when a change in facts and circumstances indicate that the fair value of the goodwill may be below the carrying value. No impairment losses were recognized during the three and nine months ended September 30, 2021 and 2020.

 

14
 

 

Leases

 

The Company leases office space, laboratory facilities, and equipment. The Company determines if an arrangement is or contains a lease at contract inception and recognizes a ROU asset and a lease liability at the lease commencement date.

 

For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. For finance leases, the lease liability is initially measured in the same manner and date as for operating leases and is subsequently measured at amortized cost using the effective-interest method. The Company has elected the practical expedient to account for lease and non-lease components as a single lease component. Therefore, the lease payments used to measure the lease liability includes all of the fixed consideration in the contract.

 

Key estimates and judgments include how the Company determines (1) the discount rate it uses to discount the unpaid lease payments to present value, (2) lease term and (3) lease payments. The Company discounts its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. Generally, the Company cannot determine the interest rate implicit in the lease because it does not have access to the lessor’s estimated residual value or the amount of the lessor’s deferred initial direct costs. Therefore, the Company generally uses its incremental borrowing rate as the discount rate for the lease. The Company’s incremental borrowing rate for a lease is the rate of interest it would have to pay on a collateralized basis to borrow an amount equal to the lease payments under similar terms. Because the Company does not generally borrow on a collateralized basis, it uses the interest rate it pays on its non-collateralized borrowings as an input to deriving an appropriate incremental borrowing rate, adjusted for the lease payments, the lease term and the effect on that rate of designating specific collateral with a value equal to the unpaid lease payments for that lease.

 

The lease term for all of the Company’s leases includes the noncancellable period of the lease plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

 

Research and Development

 

Research and development are expensed as incurred. Research and development costs primarily consist of personnel costs, including salaries and benefits, lab materials and supplies, and overhead allocation consisting of various support and facility related costs. Research and development costs were $1.2 million and $2.9 million for the three and nine months ended September 30, 2021, respectively. Research and development costs were $867 thousand and $2.5 million for the three and nine months ended September 30, 2020, respectively.

 

Advertising Costs

 

Advertising costs are expensed as incurred. Advertising costs were $16 thousand and $33 thousand for the three and nine months ended September 30, 2021. Advertising costs were $15 thousand and $31 thousand for the three and nine months ended September 30, 2020, respectively.

 

Stock-Based Compensation

 

The Company recognizes all employee stock-based compensation as a cost in the consolidated financial statements. Equity-classified awards are measured at the grant date fair value of the award. The Company estimates grant date fair value using the Black-Scholes-Merton option-pricing model and accounts for forfeitures as they occur. Excess tax benefits of awards related to stock option exercises are recognized as an income tax benefit in the consolidated statements of operations and reflected in operating activities in the consolidated statements of cash flows.

 

Commitments and Contingencies

 

Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

 

Fair Value Measurements

 

The Company uses valuation approaches that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

 

 

Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
   
Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
   
Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

 

15
 

 

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

 

Discontinued Operations

 

Prior to the Merger, Cancer Genetics, Inc. (“CGI”) entered into asset purchase agreements whereby CGI sold all assets related to its BioPharma and Clinical businesses. CGI classified the disposals as discontinuing operations. As of September 30, 2021, $444 thousand of liabilities relating to these businesses are classified as other current liabilities – discontinued operations on the Company’s consolidated balance sheets.

 

Valuation of Business Combination

 

The Company allocates the consideration of a business acquisition to the assets acquired and liabilities assumed based on their fair values at the date of acquisition, including identifiable intangible assets which either arise from a contractual or legal right or are separable from goodwill. The Company bases the fair value of identifiable intangible assets acquired in a business combination on detailed valuations that use information and assumptions provided by management, which consider management’s best estimates of inputs and assumptions that a market participant would use. The Company allocates to goodwill any excess purchase price over the fair value of the net tangible and identifiable intangible assets acquired. Transaction costs associated with a business combination are expensed as incurred and recorded as merger related costs.

 

Recently Issued Accounting Standards

 

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The amended guidance also clarifies and simplifies other aspects of the accounting for income taxes under ASC Topic 740, Income Taxes. The Company adopted this guidance effective January 1, 2021, prospectively, and the adoption of this standard did not have a material impact to the consolidated financial statements and related disclosures.

 

In January 2020, the FASB issued ASU No. 2020-01, Investments - Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815), which clarified that before applying or upon discontinuing the equity method of accounting for an investment in equity securities, an entity should consider observable transactions that require it to apply or discontinue the equity method of accounting for the purposes of applying the fair value measurement alternative. The amended guidance will become effective for the Company on January 1, 2022. Early adoption is permitted. The Company does not believe this standard will have a material impact on its financial statements.

 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional guidance to ease the potential burden of accounting for reference rate reform due to the cessation of the London Interbank Offered Rate, commonly referred to as “LIBOR.” The temporary guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, relationships, and transactions affected by reference rate reform if certain criteria are met. The provisions of the temporary optional guidance are only available until December 31, 2022, when the reference rate reform activity is expected to be substantially complete. When adopted, entities may apply the provisions as of the beginning of the reporting period when the election is made. The Company does not believe this standard will have a material impact on its financial statements and has yet to elect an adoption date.

 

16
 

 

Note 4. Inventory

 

The Company’s inventory consists of the following:

 

             
    September 30, 2021    

December 31,

2020

 
Finished goods   $ 20     $ 40  
Work in process     126       121  
Raw materials     334       254  
Total inventory   $ 480     $ 415  

 

Note 5. Fixed Assets

 

Presented in the table below are the major classes of fixed assets by category:

 

    September 30, 2021     December 31, 2020  
Equipment   $ 2,875     $ 2,212  
Furniture and fixtures     6       -  
Leasehold improvements     240       240  
Fixed assets, gross     3,121       2,452  
Less accumulated depreciation     1,852       1,421  
Fixed assets, net   $ 1,269     $ 1,031  


 

Depreciation expense recognized during the three months ended September 30, 2021 and 2020 was $124 thousand and $142 thousand, respectively, and for the nine months ended September 30, 2021 and 2020, was $437 thousand and $428 thousand, respectively.

 

17
 

 

Note 6. Intangible Assets

 

Intangible assets consisted of the following at September 30, 2021:

Schedule of Intangible Assets 

    2021  
Intangible Assets:        
Customer relationships   $ 8,000  
Trade name     1,500  
Intangible assets gross     9,500  
Less accumulated amortization     (475 )
Intangible assets, net   $ 9,025  

 

Amortization expense for intangible assets aggregated $238 thousand and $475 thousand for the three and nine months ended September 30, 2021.

 

       
Remainder of 2021   $ 238  
2022     950  
2023     950  
2024     950  
2025     950  
2026     950  
Thereafter     4,037  
Total amortization expense   $ 9,025  

 

Note 7. Leases

 

The Company leases its laboratory, research and administrative office spaces under various operating leases. In March 2021, the Company recorded $198 thousand of ROU assets and liabilities upon consummation of the Merger. As of April 1, 2021 the Company commenced a new lease for its corporate headquarters. The Company recorded a ROU asset and operating lease obligation of $83 thousand related to this lease.

 

Amounts reported in the consolidated balance sheet as of September 30, 2021 and December 31, 2020 are as follows:

 

    2021     2020  
Operating leases:                
Operating lease ROU assets, net   $ 888     $ 1,095  
Operating lease current liabilities   $ 335     $ 486  
Operating lease long-term liabilities     523       627  
Total operating lease liabilities   $ 858     $ 1,113  
Finance leases:                
Equipment   $ 171     $ 289  
Accumulated depreciation     36       289  
Finance leases, net   $ 135     $ -  
Current installment obligations under finance leases   $ 30     $ -  
Long-term portion of obligations under finance leases     55       -  
Total finance lease liabilities   $ 85     $ -  

 

Equipment subject to finance leases are classified within fixed assets, net, on the accompanying consolidated balance sheets.

 

18
 

 

Annual payments of lease liabilities under noncancelable leases as of September 30, 2021 are as follows:

    Operating leases  
Remainder of 2021   $ 213  
2022     259  
2023     158  
2024     136  
2025     131  
2026     134  
Thereafter     79  
Total undiscounted lease payments     1,110  
Less: Imputed interest     252  
Total lease liabilities   $ 858  

 

Note 8. Income Taxes

 

The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets include, among others, capitalized research and development costs, net operating loss carryforwards and research and development tax credit carryforwards. Deferred tax assets are partially offset by deferred tax liabilities arising from intangibles, fixed assets and lease assets. Realization of net deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain based on the Company’s history of losses. Accordingly, the Company’s net deferred tax assets have been fully offset by a valuation allowance. Utilization of net operating loss and credit carryforwards may be subject to substantial annual limitation due to ownership change provisions of Section 382 of the Internal Revenue Code, as amended and similar state provisions. The annual limitation may result in the expiration of net operating losses and credits before utilization.

 

As of both September 30, 2021 and December 31, 2020, the Company’s liability for gross unrecognized tax benefits (excluding interest and penalties) totaled $0 thousand and $0 thousand, respectively. The Company had accrued interest and penalties relating to unrecognized tax benefits of $0 thousand and $0 thousand on a gross basis as of September 30, 2021 and December 31, 2020, respectively. The Company does not currently expect significant changes in the amount of unrecognized tax benefits during the next twelve months.

 

19
 

 

Note 9. Long-Term Debt

 

Long-term debt consists of the following:

 

    September 30,
2021
    December 31,
2020
 
Department of Employment and Economic Development loan   $ -     $ 83  
Economic Injury Disaster Loan     57       57  
8% 2020 Convertible Notes, $7,651 face amount, due July 2022     -       7,651  
Total long-term debt before debt issuance costs and debt discount     57       7,791  
Less: current portion of long-term debt     -       -  
Less: debt discount (net of accretion of $0 and $235, respectively)     -       (952 )
Total long-term debt   $ 57     $ 6,839  

 

Future annual principal repayments due on the long-term debt as of September 30, 2021 are as follows:

 

    Amount  
Remainder of 2021   $ -  
2022     -  
2023     1  
2024     1  
2025     1  
2026     1  
Thereafter     53  
Total   $ 57  

 

20
 

 

2020 Convertible Notes

 

Effective February 8, 2021 the Company’s shareholders and 2020 Convertible Note holders approved amendments to the 2020 Convertible Notes to allow for the issuance of up to $10.0 million in 2020 Convertible Notes for cash (plus up to approximately $3.9 million of 2020 Convertible Notes in exchange for the cancellation of Series B Preferred stock) as well as modifications to the financing’s terms for any 2020 Convertible Noteholder that invested at least $3.0 million of cash since May 4, 2020 in the offering (a “Major Investor”). As of March 12, 2021, the Company completed the $10.0 million 2020 Convertible Note offering. The Company raised approximately $5.0 million from the sale of 2020 Convertible Notes from January 1, 2021 through March 12, 2021 of which approximately $3.9 million were to related parties, including former StemoniX Board members as well as a more than 5% owner of Series B Preferred stock. For any Major Investor, the modified terms provide for a fixed conversion discount on the 2020 Convertible Notes of 20% and a common stock warrant equal to 20% of the amount invested in all 2020 Convertible Notes by such Major Investor divided by the weighted average share price of the Common Stock over the five trading days prior to the closing of the Merger. One 2020 Convertible Note holder that had previously invested $1.25 million in the offering invested an additional $3.0 million on February 23, 2021 and upon the Merger received a warrant to purchase 143,890 shares of the Company’s common stock at an exercise price of $5.9059 per share (the “Major Investor Warrant”). At the time of the Merger, the outstanding principal of the 2020 Convertible Notes of approximately $12.7 million plus accrued interest of $468 thousand were exchanged for 3,338,944 shares of the Company’s common stock. In connection with this exchange, the Company recorded a debt extinguishment loss of $2.5 million in the first quarter of 2021. The weighted average interest rate on the 2020 notes during the nine-month period ended September 30, 2021 was 18.22%.

 

Paycheck Protection Program Loan

 

In April 2020, the Company applied for and received a $730 thousand loan under the Paycheck Protection Program (“PPP”) as part of the Coronavirus Aid, Relief, and Economic Security Act’s (“CARES Act”). Under the PPP, the Company was able to receive funds for two and a half months of payroll, rent, utilities, and interest cost. The Company has determined that the entire PPP loan will be forgiven resulting in no repayment, including the $10 thousand EIDL grant. The $730 thousand of PPP loan forgiveness was recorded as a reduction of operating costs during the second and fourth quarters of 2020. Therefore, the PPP loan is not reflected as a liability as of December 31, 2020. In April 2021 the SBA fully forgave the PPP loan.

 

Economic Injury Disaster Loan

 

In 2020 the Company received a $57 thousand Economic Injury Disaster Loan (“EIDL”) loan and a $10 thousand grant from the Small Business Administration in connection with the COVID-19 impact on the Company’s business. This loan bears interest at 3.75% and is repayable in monthly installments starting in June 2022 with a final balance due on June 21, 2050

 

Note 10. Stockholders’ Equity

 

Common Stock

 

Holders of common stock are entitled to one vote per share, to receive dividends if and when declared, and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to the preferred stock with respect to dividend rights and rights upon liquidation, winding up and dissolution of the Company.

 

Preferred Stock

 

Series A and B Preferred Stock

 

As of December 31, 2020, the Company had 4,611,587 shares of Series A Preferred Stock (the “Series A Preferred”) 3,489,470 shares of Series B Preferred Stock (the “Series B Preferred”) issued and outstanding (collectively, the “Preferred Stock”). The Company had classified the Preferred Stock as temporary equity in the consolidated balance sheets as the Preferred Shareholders control a Deemed Liquidation Event, as defined below, under the terms of the Series A and Series B Preferred Stock as described below. Effective with the Merger, all the Series A Preferred and the Series B Preferred shares were exchanged for 5,973,509 and 4,524,171 shares of common stock, respectively, and the related carrying value was reclassified to common stock and additional paid-in capital.

 

During the three months ended March 31, 2020, the Company sold 235,877 shares of Series B Preferred stock for net proceeds of $1.25 million.

 

21
 

 

Series C Preferred Stock

 

Effective March 15, 2021, the Company’s shareholders approved the Merger with Cancer Genetics and the authorization of $2.0 million of the Company’s Series C Preferred Stock (“Series C Preferred”). Effective with the Merger on March 30, 2021, the Series C Preferred shares were exchanged for 699,395 shares of Vyant Bio common stock and the related carrying value was reclassified to common stock and additional paid-in capital.

 

Warrants

 

Common Stock Warrant

 

The Company issued the Investor Warrant on February 23, 2021. Effective with the Merger, the Investor Warrant was exchanged for a warrant to purchase 143,890 shares of the Company’s common stock at an exercise price of $5.9059. Prior to this exchange, the Investor Warrant was classified a liability and the Company recognized a $214 thousand gain in the first quarter of 2021 related to fair value adjustments. The fair value of the Investor Warrant was $421 thousand at the time of the Merger and reclassified to additional paid in capital.

 

In connection with the Merger, the Company assumed 2,157,686 common stock warrants issued in prior financings. A summary of all common stock warrants outstanding as of September 30, 2021 is as follows:

 

Issuance Related to:   Exercise Price     Outstanding Warrants     Expiration
Dates
 
2020 Convertible Note   $ 5.91       143,890       Feb 23, 2026  
2021 Offering   $ 3.50       1,624,140       Feb 10, 2026 - Aug 3, 2026  
Advisory Fees   $ 2.42 - $7.59         492,894       Jan 9, 2024 - Oct 28, 2025  
Debt   $ 27.60       14,775       Mar 22, 2024  
Offering   $ 67.50       8,580       Nov 25, 2021 - Mar 14, 2022  
Debt   $ 450.00       9,185       Oct 17, 2022 - Dec 7, 2022  
Debt   $ 300.00       8,112       Oct 17, 2022  
Total             2,301,576        

 

Preferred Stock Warrants

 

In connection with the issuance of the Series A Convertible Preferred and Series B Convertible Preferred, the Company issued warrants (the “Series A Warrants” and “Series B Warrants”, respectively, and collectively, the “Preferred Warrants”) as compensation to non-employee placement agents. The Series A Warrants and Series B Warrants were issued on April 28, 2017 and May 18, 2019, respectively. The Company determined the Preferred Warrants should be classified as equity as they were issued as vested share-based payment compensation to nonemployees. The Preferred Warrants were recorded in stockholders’ equity at fair value upon issuance with no subsequent remeasurement. In accordance with the Preferred Warrants’ terms, upon the consummation of the Merger, the Preferred Warrants were converted and settled for a total of 43,107 shares of the Company’s common stock.

 

22
 

 

Note 11. Fair Value Measurements

 

During the first quarter of 2021, the Company elected to account for the $3.0 million investment in the 2020 Convertible Notes issued to the Major Investor using the fair value method. Further, the Major Investor Warrant was deemed to be a liability classified instrument due its variable settlement features. Both of these instruments were classified as Level 3 measurements within the fair value hierarchy.

 

The fair value of the Company’s 2020 Convertible Note issued to the Major Investor is measured as the sum of the instrument’s parts, being the underlying debt instrument and the conversion feature. The conversion feature was valued using the probability weighted conversion price discount. The instrument provides the holder the right to convert the instrument into shares of Series B Preferred Stock at a 20% discount. Given the timing of the issuance of the instrument near the Merger date, management determined that there was a 99.5% probability of the holders converting the instrument to Company shares at a 20% discount.

 

The Company valued the warrants issued with the 2020 Convertible Notes using a Black-Scholes-Merton model using the value of the underlying stock and exercise price of $2.01, along with a risk-free interest rate of 0.59% and volatility of 86%. The Company estimated the term of the warrant to be 5 years.

 

The Company’s 2020 Convertible Notes contain a share settled redemption feature (“Embedded Derivative”) that requires conversion at the lesser of specified discounts from qualified financing price per share or the fair value of the common stock at the time of conversion. The discount changes based on the passage of time between issuance of the convertible note and the conversion event. This feature is considered a derivative that requires bifurcation because it provides a specified premium to the holder of the note upon conversion. The Company measures the share-settlement obligation derivative at fair value based on significant inputs that are not observable in the market. This results in the liability classified as a Level 3 measurement within the fair value hierarchy.

 

Upon the Merger, all of the Level 3 instruments were exchanged for Vyant Bio equity classified instruments. Prior to their exchange, all of these instruments were marked to their fair markets with corresponding changes recorded in the statement of operations in the first quarter of 2021. Therefore, there were no level 3 fair value instruments outstanding as of September 30, 2021.

 

The following tables present changes in fair value of level 3 valued instruments for the nine months ended September 30, 2021:

 

    2020 Convertible Note     Warrant     Embedded Derivative  
Balance – January 1   $ -     $ -     $ 1,690  
Additions     3,746       635       325  
Measurement adjustments     4       (214 )     250  
Settlement     (3,750 )     (421 )     (2,265 )
Balance – September 30, 2021   $ -     $ -     $ -  

 

The following tables present changes in fair value of level 3 valued instruments for the nine months ended September 30, 2020:

 

    Embedded Derivative