Company sees 38.7% year-over-year revenue
growth; continues strong progress toward customer acquisition,
assay placement and product development targets
Great Basin Scientific, Inc. (NASDAQ:GBSN), a molecular
diagnostic testing company, today reported financial results for
the second quarter ended June 30, 2016.
Second Quarter 2016 Financial Results and Business
Highlights
- Revenue increased 38.7% to $728,957
compared with a year ago
- Total installed customer base up 126.1%
over last year to 260
- Assay adoption rate (assays placed) up
18.2% over last year
- Product line to double in third
quarter; initial impact to revenues expected in fourth quarter
- Closed $6 million public offering of
units; secured $75 million convertible note
- Hired Mike Blitz, vice president of US
Sales, to lead expansion of sales activities including the
commercial launch of the Company’s Shiga Toxin Direct test and
Staph ID/R Blood Culture panel
“We continued to make significant strides in executing our
strategic initiatives including growing our customer base,
expanding use of assays within our customer base, and in meeting
our product development objectives,” said Ryan Ashton, Co-founder
and Chief Executive Officer. “Going forward, we’re excited about
the commercial launch of our Shiga Toxin Direct Test and Staph ID/R
Panel which will double our line of FDA-cleared products and will
aid in building our total revenue base, increasing sales per
customer figures and reducing seasonality in our revenue
stream.”
Great Basin Scientific’s Second Quarter 2016 Results
Great Basin reported total revenues for the second quarter 2016
of $728,957, an increase of 38.7% over revenues of $525,506 for the
same period in 2015. Continued growth in customer base and the
adoption of Group B Strep assay drove the year-over-year
increase.
The Company reported 260 customers in the second quarter 2016,
compared with 114 customers a year ago, representing an increase of
126.1%.
Operating expenses were $7.7 million in the second quarter 2016
compared with $4.1 million in the second quarter 2015. Research and
development expenses increased $1.6 million over the second quarter
2015 to $3.5 million, primarily due to increased clinical and
regulatory activities related to the Bordetella pertussis test and
bacteria stool pathogens panel and ongoing pipeline development.
Selling and marketing expenses increased $850,351 to $1.8 million
in the comparable quarters, reflecting increases in the Company’s
sales force, higher commissions and customer acquisition costs.
General and administrative expenses increased $1.2 million over the
second quarter 2015 to $2.5 million in the comparable quarter 2016,
primarily due to higher legal, accounting and consulting fees and
the costs associated with the hiring of additional accounting and
human resources personnel.
Loss from operations was $8.9 million for the second quarter
2016, compared with a loss of $4.9 million for the same period in
2015.
Great Basin reported a net loss for the second quarter 2016 of
$20.3 million compared to net income of $19.2 million for the
second quarter 2015. Basic and diluted net loss per share was $4.10
for the second quarter 2016, compared to basic and diluted net
income per share of $6,303.25 and $1,498.09, respectively, for the
same period in 2015.
Unit Offering and Additional Financing Secured
During the second quarter of 2016, Great Basin announced it
closed a public offering of 3.16 million units in exchange for $6.0
million of gross proceeds. The Company also secured a $68 million
funding commitment consisting of $75 million senior secured
convertible notes, where $6.0 million of gross proceeds was
immediately available, with the remaining $62 million of funds in
restricted Company accounts and becoming available, subject to
certain conditions, beginning February 2017.
Non-GAAP Financial Measure
This press release includes an Adjusted Net Loss “non-GAAP
financial measure” as defined by the U.S. Securities and Exchange
Commission (SEC). The presentation of this financial information,
which is not prepared under any comprehensive set of accounting
rules or principles, is not intended to be considered in isolation
of, or as a substitute for the financial information prepared and
presented in accordance with generally accepted accounting
principles (GAAP). For reconciliation of this non-GAAP financial
measure to the nearest comparable GAAP measure, see “Reconciliation
of Non-GAAP Financial Measure” included in this press release.
Reconciliation of Non-GAAP Financial Measure
Adjusted Net Loss
The Company excludes certain non-cash items in calculating
adjusted net loss because they are non-cash in nature and because
the Company believes that the non-GAAP financial measures excluding
these times provide meaningful supplemental information regarding
operational performance. The Company further believes this measure
is useful to investors in that it allows for greater transparency
to certain line items in its financial statements and facilitates
comparisons to peer operating results.
GREAT BASIN SCIENTIFIC, INC.
ADJUSTED NET LOSS
(Unaudited)
Three Months Ended June 30, The
calculation of adjusted net loss is as follows:
2016
2015 Net income (loss) $ (20,277,017 ) $ 19,160,684
Adjustment for amortization of debt discount in interest 5,781,069
- Adjustment for net gain on exchange and issuance of warrants
(3,374,752 ) - Adjustment for change in fair value of derivative
liability 8,620,051 (24,335,676 ) Adjusted net
loss $ (9,250,649 ) $ (5,174,992 )
Amortization of Debt Discount Included in Interest
The amortization of the debt discount that is included in
interest for the three months ended June 30, 2016 resulted in
non-cash other expense recorded in earnings in the amount of $5.8
million. This is a non-cash charge resulting from the excess of the
fair value of the conversion feature of the convertible notes
payable and the associated Series D Warrants over the face value of
the notes that was required to be recorded as a debt discount and
amortized over the life of the notes.
Net Gain on Exchange and Issuance of Warrants
The net gain on the exchange and issuance of warrants for the
three months ended June 30, 2016 resulted in a non-cash other
income recorded in earnings in the amount of $3.4 million. This
non-cash gain is the result of a gain in the amount of $4.1 million
on the exchange of Series E Warrants for common stock, which was
partially offset by a loss on the issuance of Series G Warrants in
the amount of $767,020.
Change in Fair Value of Derivative Liability
The change in fair value of the derivative liability for the
three months ended June 30, 2016 resulted in a non-cash other
expense recorded in earnings in the amount of $8.6 million. This
was the result of the increase in the fair value of the Series D
and Subordination Warrants due to an increase in the adjusted
warrant share number, partially offset by the reduction in the fair
value of the embedded conversion feature in our convertible debt
and the Series E and other warrants as a result of the decrease in
the value of the common stock during the period.
During the three months ended June 30, 2015, Great Basin
recorded a change in fair value of the derivative liability
resulting in a non-cash net gain of $24.4 million. This encompassed
a decrease in the fair value of Series C Warrants in the amount of
$22.1 million and a decrease in the fair value of all other
derivative securities in the amount of $2.3 million.
About Great Basin Scientific
Great Basin Scientific is a molecular diagnostics company that
commercializes breakthrough chip-based technologies. The Company is
dedicated to the development of simple, yet powerful,
sample-to-result technology and products that provide fast,
multiple-pathogen diagnoses of infectious diseases. The Company's
vision is to make molecular diagnostic testing so simple and
cost-effective that every patient will be tested for every serious
infection, reducing misdiagnoses and significantly limiting the
spread of infectious disease. More information can be found on the
Company's website at www.gbscience.com.
Forward-Looking Statements
This press release includes forward-looking statement regarding
events, trends and business prospects, which may affect our future
operating results and financial position, including but not limited
to statements regarding the commercial launch of the Company’s
Shiga Toxin Direct Test and Staph ID/R Panel and such commercial
launches aiding in building the Company’s total revenue base,
increasing sales per customer figures and reducing seasonality in
the Company’s revenue stream. Forward-looking statements involve
risk and uncertainties, which could cause actual results to differ
materially, and reported results should not be considered as an
indication of future performance. These risk and uncertainties
include, but are not limited to: (i) our limited operating history
and history or losses; (ii) our ability to develop and
commercialize new products and the timing of commercialization;
(iii) our ability to obtain capital when needed; and (iv) other
risks set forth in the Company's filings with the Securities and
Exchange Commission, including the risks set forth in the company's
Annual Report on Form 10-K for the year ended December 31, 2015 and
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
These forward-looking statements speak only as of the date hereof
and Great Basin Scientific specifically disclaims any obligation to
update these forward-looking statements, except as required by
law.
GREAT BASIN SCIENTIFIC, INC.
CONDENSED BALANCE SHEETS
June 30, 2016 and December 31,
2015
(Unaudited)
June 30, December 31,
2016 2015 Assets Current assets: Cash $
1,162,446 $ 4,787,759 Restricted Cash 13,168,793 13,800,000
Accounts receivable, net 360,954 411,390 Inventory 1,119,897
1,133,142 Prepaid and other current assets 1,564,284
564,910 Total current assets 17,376,374 20,697,201
Intangible assets, net 69,564 119,171 Property and equipment, net
8,645,804 7,741,991 Total assets $ 26,091,742 $
28,558,363
Liabilities and Stockholders' Deficit Current
liabilities: Accounts payable $ 3,150,335 $ 2,432,459 Accrued
expenses 3,867,630 1,313,149 Current portion of notes payable —
5,693 Current portion of convertible notes payable, net of discount
14,052,253 1,638,717 Notes payable - related party 500,000 500,000
Current portion of capital lease obligations 1,265,116 1,305,426
Current portion of derivative liability 20,602,409 —
Total current liabilities 43,437,743 7,195,444 Convertible notes
payable, net of current portion and debt discount — 525,000 Capital
lease obligations, net of current portion 279,881 851,410
Derivative liability, net of current portion 43,359,009
43,181,472 Total liabilities 87,076,633
51,753,326 Commitments and contingencies Stockholders' deficit:
Preferred stock, $.001 par value, 5,000,000 shares authorized;
74,380 and 88,347 shares issued and outstanding, respectively 74 88
Common stock, $.0001 par value: 200,000,000 shares authorized;
7,102,843 and 296,869 shares issued and outstanding, respectively
710 30 Additional paid-in capital 114,847,713 98,708,784
Accumulated deficit (175,833,388 ) (121,903,865 )
Total stockholders' deficit (60,984,891 ) (23,194,963
) Total liabilities and stockholders' deficit $ 26,091,742 $
28,558,363
GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF
OPERATIONS
For the Three and Six Months Ended June
30, 2016 and 2015
(Unaudited)
Three Months Ended Six
Months Ended June 30, June 30, 2016
2015 2016 2015 Revenues $
728,957 $ 525,506 $ 1,460,379 $ 984,236 Cost of sales
1,888,371 1,299,948 3,750,116 2,266,541 Gross
loss (1,159,414 ) (774,442 ) (2,289,737 ) (1,282,305 ) Operating
expenses: Research and development 3,457,489 1,902,296 5,755,472
3,405,854 Selling and marketing 1,770,050 919,699 3,248,828
1,725,817 General and administrative 2,490,398
1,276,555 4,699,055 2,337,207 Total operating
expenses 7,717,937 4,098,550 13,703,355
7,468,878 Loss from operations (8,877,351 )
(4,872,992 ) (15,993,092 ) (8,751,183 ) Other income
(expense): Interest expense (6,155,088 ) (309,785 ) (12,471,418 )
(615,367 ) Interest income 721 9,035 1,299 13,332 Net gain on
exchange and issuance of warrants 3,374,752 - 3,374,752 - Change in
fair value of derivative liability (8,620,051 )
24,335,676 (28,839,314 ) (42,658,473 ) Total other
income (expense) (11,399,666 ) 24,034,926
(37,934,681 ) (43,260,508 ) Income (loss) before provision
for income taxes (20,277,017 ) 19,161,934 (53,927,773 ) (52,011,691
) Provision for income taxes - (1,250 ) (1,750
) (1,250 ) Net income (loss) $ (20,277,017 ) $ 19,160,684 $
(53,929,523 ) $ (52,012,941 ) Net income (loss) per common share -
basic $ (4.10 ) $ 6,303.25 $ (15.09 ) $ (19,074.01 ) Net income
(loss) per common share - diluted $ (4.10 ) $ 1,498.09 $ (15.09 ) $
(19,074.01 ) Weighted average common shares - basic
4,941,734 3,040 3,573,483 2,727 Weighted
average common shares - diluted 4,941,734 12,790
3,573,483 2,727
GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF CASH
FLOWS
For the Six Months Ended June 30, 2016
and 2015
(Unaudited)
Six Months Ended June 30,
2016 2015 Cash flows from operating
activities: Net loss $ (53,929,523 ) $ (52,012,941 ) Adjustments to
reconcile net loss to net cash used in operating activities:
Depreciation and amortization 1,183,955 704,604 Bad debt expense
84,515 — Change in fair value of derivative liability 28,839,314
42,658,473 Net gain on exchange and issuance of warrants (3,374,752
) — Employee stock compensation 74,089 37,440 Debt discount
amortization 11,888,536 50,000 Changes in operating assets and
liabilities: Increase in accounts receivable (34,079 ) (76,544 )
(Increase) decrease in inventory 13,245 (397,364 ) (Increase)
decrease in prepaid and other assets (999,374 ) 3,004 Decrease in
accounts payable (172,812 ) (172,762 ) Increase in accrued
liabilities 996,833 322,100 Net cash used in
operating activities (15,430,053 ) (8,883,990 ) Cash
flows from investing activities: Acquisition of property and
equipment (615,886 ) (473,048 ) Construction of equipment
(992,641 ) (1,972,835 ) Net cash used in investing
activities (1,608,527 ) (2,445,883 ) Cash flows from
financing activities: Proceeds from exercise of warrants 1,335,950
3,142,964 Proceeds from follow-on offering 11,009,728 21,872,793
Proceeds from issuance of notes payable - related party — 250,000
Proceeds from release of restricted cash 2,000,000 — Payment of
cash settlement for warrant exercises (314,879 ) — Principal
payments of capital leases (611,839 ) (404,889 ) Principal payments
of notes payable (5,693 ) (24,283 ) Principal payments of notes
payable -related party — (250,000 ) Net cash provided
by financing activities 13,413,267 24,586,585 Net
increase (decrease) in cash (3,625,313 ) 13,256,712 Cash, beginning
of the period 4,787,759 2,017,823 Cash, end of the
period $ 1,162,446 $ 15,274,535 Supplemental disclosures of cash
flow information: Interest paid $ 595,782 $ 559,631 Income taxes
paid $ 1,750 $ 1,250 Supplemental schedule of non-cash investing
and financing activities: Restricted cash proceeds from convertible
note $ 1,367,648 $ — Initial public offering and follow-on offering
costs incurred but unpaid $ 649,909 $ 171,169 Property and
equipment included in accounts payable $ 429,634 $ 641,018 Cashless
exercise of warrants $ 187 $ — Change in derivative liability from
exercised and issued warrants $ 15,044,007 $ 5,247,073
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Media:ICRNirav Suchak,
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646-277-1266David.Clair@icrinc.com