htgm-10q_20200930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37369

 

HTG Molecular Diagnostics, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

86-0912294

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

3430 E. Global Loop

Tucson, AZ

85706

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (877) 289-2615

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

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, $0.001 par value per share

HTGM

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 the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided 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  

As of November 6, 2020, the registrant had 71,096,029 shares of common stock, $0.001 par value per share, outstanding.

 

 


 

Table of Contents

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Condensed Consolidated Financial Statements (Unaudited)

 

1

 

 

Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019

 

1

 

 

Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019

 

2

 

 

Condensed Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019

 

3

 

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, June 30 and September 30, 2020 and 2019

 

4

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

 

7

 

 

Notes to Unaudited Condensed Consolidated Financial Statements

 

9

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Consolidated Results of Operations

 

30

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

39

Item 4.

 

Controls and Procedures

 

39

PART II.

 

OTHER INFORMATION

 

40

Item 1.

 

Legal Proceedings

 

40

Item 1A.

 

Risk Factors

 

40

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

73

Item 5.

 

Other Information

 

73

Item 6.

 

Exhibits

 

74

Signatures

 

76

 

 

 

i


 

PART I—FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements (Unaudited).

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Balance Sheets 

 

 

September 30,

 

 

December 31,

 

 

 

2020

 

 

2019

 

Assets

 

(Unaudited)

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

18,884,468

 

 

$

7,619,748

 

Short-term investments available-for-sale, at fair value

 

 

11,632,160

 

 

 

25,410,222

 

Restricted cash

 

 

 

 

 

3,270,247

 

Accounts receivable

 

 

1,370,201

 

 

 

3,164,176

 

Inventory, net of allowance of $27,770 at September 30, 2020 and $39,403 at

   December 31, 2019

 

 

1,538,553

 

 

 

1,269,667

 

Prepaid expenses and other

 

 

946,979

 

 

 

633,522

 

Total current assets

 

 

34,372,361

 

 

 

41,367,582

 

 

 

 

 

 

 

 

 

 

Operating lease right-of-use assets

 

 

746,185

 

 

 

1,209,145

 

Property and equipment, net

 

 

1,526,698

 

 

 

2,240,133

 

Other non-current assets

 

 

64,861

 

 

 

302,409

 

Total assets

 

$

36,710,105

 

 

$

45,119,269

 

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

875,236

 

 

$

1,662,583

 

Accrued liabilities

 

 

1,386,825

 

 

 

1,870,296

 

Contract liabilities - current

 

 

348,274

 

 

 

426,014

 

NuvoGen obligation - current

 

 

645,949

 

 

 

1,152,233

 

Current portion of long-term debt, net

 

 

2,266,884

 

 

 

2,987,667

 

Operating lease liabilities - current

 

 

436,663

 

 

 

758,932

 

Other current liabilities

 

 

26,620

 

 

 

41,134

 

Total current liabilities

 

 

5,986,451

 

 

 

8,898,859

 

NuvoGen obligation - non-current, net of discount

 

 

4,455,968

 

 

 

4,498,777

 

Long-term debt, net of current portion and discount and debt issuance costs

 

 

9,446,985

 

 

 

6,871,545

 

Operating lease liabilities - non-current

 

 

390,233

 

 

 

636,340

 

Other non-current liabilities

 

 

229,114

 

 

 

244,114

 

Total liabilities

 

 

20,508,751

 

 

 

21,149,635

 

Commitments and Contingencies (Note 15)

 

 

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Series A convertible preferred stock, $0.001 par value; 23,770 shares authorized at

   September 30, 2020 and no shares authorized at December 31, 2019; 23,770 shares

   issued and outstanding at September 30, 2020 and no shares issued and outstanding

   at December 31, 2019

 

 

24

 

 

 

 

Common stock, $0.001 par value; 200,000,000 shares authorized at September 30,

   2020 and December 31, 2019, 71,078,958 shares issued and outstanding at

   September 30, 2020 and 58,090,233 shares issued and outstanding at December 31, 2019

 

 

71,079

 

 

 

58,090

 

Additional paid-in-capital

 

 

203,021,404

 

 

 

194,234,151

 

Accumulated other comprehensive income (loss)

 

 

6,727

 

 

 

(4,964

)

Accumulated deficit

 

 

(186,897,880

)

 

 

(170,317,643

)

Total stockholders’ equity

 

 

16,201,354

 

 

 

23,969,634

 

Total liabilities and stockholders' equity

 

$

36,710,105

 

 

$

45,119,269

 

 

See notes to the unaudited condensed consolidated financial statements

1


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product and product-related services

 

$

1,701,068

 

 

$

4,311,043

 

 

$

5,417,731

 

 

$

11,397,916

 

Collaborative development services

 

 

76,030

 

 

 

1,093,750

 

 

 

548,135

 

 

 

3,006,022

 

Total revenue

 

 

1,777,098

 

 

 

5,404,793

 

 

 

5,965,866

 

 

 

14,403,938

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of product and product-related services revenue

 

 

940,892

 

 

 

2,939,007

 

 

 

2,931,026

 

 

 

7,492,905

 

Selling, general and administrative

 

 

4,752,321

 

 

 

4,516,341

 

 

 

13,683,069

 

 

 

13,657,917

 

Research and development

 

 

1,255,416

 

 

 

2,570,355

 

 

 

4,914,467

 

 

 

7,898,742

 

Total operating expenses

 

 

6,948,629

 

 

 

10,025,703

 

 

 

21,528,562

 

 

 

29,049,564

 

Operating loss

 

 

(5,171,531

)

 

 

(4,620,910

)

 

 

(15,562,696

)

 

 

(14,645,626

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(273,312

)

 

 

(241,860

)

 

 

(749,401

)

 

 

(714,623

)

Interest income

 

 

34,636

 

 

 

118,860

 

 

 

244,534

 

 

 

455,071

 

Other income

 

 

 

 

 

 

 

 

22,268

 

 

 

 

Loss on extinguishment of MidCap Credit Facility and

     QNAH Convertible Note

 

 

 

 

 

 

 

 

(522,394

)

 

 

 

Total other expense

 

 

(238,676

)

 

 

(123,000

)

 

 

(1,004,993

)

 

 

(259,552

)

Net loss before income taxes

 

 

(5,410,207

)

 

 

(4,743,910

)

 

 

(16,567,689

)

 

 

(14,905,178

)

Benefit from (provision for) income taxes

 

 

(1,581

)

 

 

3,678

 

 

 

(12,548

)

 

 

(3,170

)

Net loss

 

$

(5,411,788

)

 

$

(4,740,232

)

 

$

(16,580,237

)

 

$

(14,908,348

)

Net loss per share, basic and diluted

 

$

(0.07

)

 

$

(0.15

)

 

$

(0.25

)

 

$

(0.50

)

Shares used in computing net loss per share, basic and diluted

 

 

72,323,436

 

 

 

31,367,044

 

 

 

67,567,031

 

 

 

29,551,836

 

 

See notes to the unaudited condensed consolidated financial statements.

 

2


 

HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

 

$

(5,411,788

)

 

$

(4,740,232

)

 

$

(16,580,237

)

 

$

(14,908,348

)

Other comprehensive income (loss), net of tax effect:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on short-term investments

 

 

(17,501

)

 

 

(1,864

)

 

 

4,060

 

 

 

2,308

 

Foreign currency translation adjustment

 

 

1,225

 

 

 

37,575

 

 

 

7,631

 

 

 

34,820

 

Total other comprehensive income (loss)

 

 

(16,276

)

 

 

35,711

 

 

 

11,691

 

 

 

37,128

 

Comprehensive loss

 

$

(5,428,064

)

 

$

(4,704,521

)

 

$

(16,568,546

)

 

$

(14,871,220

)

 

See notes to the unaudited condensed consolidated financial statements.

 

 

 

3


HTG Molecular Diagnostics, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

 

 

September 30, 2020

 

 

 

Series A Convertible Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

 

-

 

 

$

-

 

 

 

58,090,233

 

 

$

58,090

 

 

$

194,234,151

 

 

$

(4,964

)

 

$

(170,317,643

)

 

$

23,969,634

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

415,256

 

 

 

 

 

 

 

 

 

415,256

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

35,942

 

 

 

36

 

 

 

 

 

 

 

 

 

 

 

 

36

 

Net share settlement of restricted stock award

 

 

 

 

 

 

 

 

(11,266

)

 

 

(11

)

 

 

(7,041

)

 

 

 

 

 

 

 

 

(7,052

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,379

 

 

 

 

 

 

 

 

 

5,379

 

Issuance of common stock from ATM offering, net of commissions and issuance costs of $174,000

 

 

 

 

 

 

 

 

4,399,062

 

 

 

4,399

 

 

 

2,431,513

 

 

 

 

 

 

 

 

 

2,435,912

 

Issuance of Series A convertible preferred stock in private placement, net of issuance costs of $37,075

 

 

10,170

 

 

 

10

 

 

 

 

 

 

 

 

 

562,945

 

 

 

 

 

 

 

 

 

562,955

 

Issuance of Series A convertible preferred stock in exchange for outstanding common stock

 

 

41,100

 

 

 

41

 

 

 

 

 

 

 

 

 

2,424,859

 

 

 

 

 

 

 

 

 

2,424,900

 

Cancellation of common stock received in exchange for Series A convertible preferred stock

 

 

 

 

 

 

 

 

(4,110,000

)

 

 

(4,110

)

 

 

(2,420,790

)

 

 

 

 

 

 

 

 

(2,424,900

)

Exercise of pre-funded warrants

 

 

 

 

 

 

 

 

3,176,762

 

 

 

3,177

 

 

 

28,591

 

 

 

 

 

 

 

 

 

31,768

 

Issuance of common stock in connection with LP Purchase Agreement

 

 

 

 

 

 

 

 

615,384

 

 

 

615

 

 

 

(615

)

 

 

 

 

 

 

 

 

 

Transaction costs incurred in connection with LP Purchase Agreement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(96,000

)

 

 

 

 

 

 

 

 

(96,000

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,457,898

)

 

 

(5,457,898

)

Unrealized gain on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

47,697

 

 

 

 

 

 

47,697

 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,497

 

 

 

 

 

 

5,497

 

Balance at March 31, 2020

 

 

51,270

 

 

$

51

 

 

 

62,196,117

 

 

$

62,196

 

 

$

197,578,248

 

 

$

48,230

 

 

$

(175,775,541

)

 

$

21,913,184

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

361,477

 

 

 

 

 

 

 

 

 

361,477

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

23,751

 

 

 

24

 

 

 

 

 

 

 

 

 

 

 

 

 

24

 

Net share settlement of restricted stock award

 

 

 

 

 

 

 

 

(6,389

)

 

 

(7

)

 

 

(2,101

)

 

 

 

 

 

 

 

 

(2,108

)

Stock issued under employee stock purchase plan

 

 

 

 

 

 

 

 

45,490

 

 

 

45

 

 

 

30,467

 

 

 

 

 

 

 

 

 

30,512

 

Issuance of common stock from ATM offering, net of commissions costs of $43,000

 

 

 

 

 

 

 

 

2,084,714

 

 

 

2,085

 

 

 

1,392,973

 

 

 

 

 

 

 

 

 

1,395,058

 

Conversion of Series A convertible preferred stock for common stock

 

 

(27,500

)

 

 

(27

)

 

 

2,750,000

 

 

 

2,750

 

 

 

(2,723

)

 

 

 

 

 

 

 

 

 

Adjustment in connection with LP Purchase Agreement commitment fee and transaction costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

301,538

 

 

 

 

 

 

 

 

 

301,538

 

Issuance of common stock warrants in connection with SVB Term Loan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

420,000

 

 

 

 

 

 

 

 

 

420,000

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,710,551

)

 

 

(5,710,551

)

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,136

)

 

 

 

 

 

(26,136

)

4


 

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

909

 

 

 

 

 

 

909

 

Balance at June 30, 2020

 

 

23,770

 

 

$

24

 

 

 

67,093,683

 

 

$

67,093

 

 

$

200,079,879

 

 

$

23,003

 

 

$

(181,486,092

)

 

$

18,683,907

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

386,911

 

 

 

 

 

 

 

 

 

386,911

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

38,126

 

 

 

38

 

 

 

 

 

 

 

 

 

 

 

 

38

 

Net share settlement of restricted stock award

 

 

 

 

 

 

 

 

(5,091

)

 

 

(4

)

 

 

(3,660

)

 

 

 

 

 

 

 

 

(3,664

)

Employee stock purchase plan expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,214

 

 

 

 

 

 

 

 

 

5,214

 

Issuance of common stock from ATM offering, net of commissions costs of $79,000

 

 

 

 

 

 

 

 

3,952,240

 

 

 

3,952

 

 

 

2,553,060

 

 

 

 

 

 

 

 

 

2,557,012

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,411,788

)

 

 

(5,411,788

)

Unrealized loss on short-term investments

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(17,501

)

 

 

 

 

 

(17,501

)

Foreign currency translation adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,225

 

 

 

 

 

 

1,225

 

Balance at September 30, 2020

 

 

23,770

 

 

$

24

 

 

 

71,078,958

 

 

$

71,079

 

 

$

203,021,404

 

 

$

6,727

 

 

$

(186,897,880

)

 

$

16,201,354

 

 

5


 

 

 

September 30, 2019

 

 

 

Series A Convertible Preferred Stock

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

Total

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Income (Loss)

 

 

Deficit

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

 

-

 

 

$

-

 

 

 

28,585,449

 

 

$

28,585

 

 

$

172,086,909

 

 

$

(3,453

)

 

$

(151,019,979

)

 

$

21,092,062

 

Exercise of stock options

 

 

 

 

 

 

 

 

21,871

 

 

 

22

 

 

 

51,548

 

 

 

 

 

 

 

 

 

51,570

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

241,233

 

 

 

 

 

 

 

 

 

241,233

 

Release of restricted stock awards

 

 

 

 

 

 

 

 

13,126

 

 

 

13

 

 

 

 

 

 

 

 

 

 

 

 

13

 

Net share settlement of restricted stock award

 

 

 

 

 

 

 

 

(3,813