NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Nature
of Business
Interpace
Biosciences, Inc. (“Interpace” or the “Company”) enables personalized medicine, offering specialized services
along the therapeutic value chain from early diagnosis and prognostic planning to targeted therapeutic applications and pharma
services. The Company provides molecular diagnostics, bioinformatics and pathology services for evaluation of risk of cancer by
leveraging the latest technology in personalized medicine for improved patient diagnosis and management. The Company also provides
pharmacogenomics testing, genotyping, biorepository and other specialized services to the pharmaceutical and biotech industries.
The Company advances personalized medicine by partnering with pharmaceutical, academic, and technology leaders to effectively
integrate pharmacogenomics into their drug development and clinical trial programs.
Impact
of COVID-19 pandemic
We
have taken what we believe are necessary precautions to safeguard our employees from the Coronavirus (COVID-19) pandemic. We continue
to follow the Centers for Disease Control and Prevention’s (“CDC”) guidance and the recommendations and restrictions
provided by state and local authorities. The majority of our employees who do not work in a lab setting are currently on a telecommunication
work arrangement and have generally been able to successfully work remotely. Our labs require in-person staffing and we have been
able to continue to operate our labs, minimizing infection risk to lab staff through a combination of social distancing and appropriate
protective equipment. There can be no assurance, however, that key employees will not become ill or that we will able to continue
to operate our labs. While a number of employees were furloughed most have returned to work.
The
continuing impact that the COVID-19 pandemic will have on our operations, including duration, severity and scope, remains highly
uncertain and cannot be fully predicted at this time. Accordingly, we believe that the COVID-19 pandemic could continue to adversely
impact our results of operations, cash flows and financial condition in the future.
Through
the second quarter of 2020 our revenues were impacted by lower than expected clinical service volume from March through June 2020,
which we believe resulted from the pandemic related temporary reduction in non-essential testing procedures. While our pharma
services revenue increased throughout the first quarter of 2020, during the second quarter our pharma services business also softened.
Currently, our clinical services business has recovered to levels prior to the pandemic and our pharma services business is also
recovering, but more slowly.
As
our business operations continue to be impacted by the pandemic, we continue to monitor the situation and the guidance that is
being provided by relevant federal, state and local public health authorities. We may take additional actions based upon their
recommendations. However, it is possible that we may have to make further adjustments to our operating plans in reaction to developments
that are beyond our control.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
While
we do not anticipate any lab closures at this time beyond periodic, temporary work stoppages to clean and disinfect the labs,
this could change in the future based upon conditions caused by the pandemic. Further, while we have acquired additional inventories
of lab supplies, including reagents, it is possible that we could experience supply chain shortages if the pandemic continues
for a prolonged period and if one or more suppliers is unable to continue to provide us with supplies. For the foreseeable future,
however, we do not anticipate supply chain shortages of critical supplies.
We
will continue to monitor the actual and potential impact of the pandemic upon our operations. We have developed and will continue
to update our contingency plans in order to mitigate pandemic-related, adverse financial impacts upon our business.
Restatement
We
have restated herein our unaudited consolidated financial statements as of June 30, 2020 and for the three and six-months
ended June 30, 2020 and June 30, 2019. We have also restated impacted amounts within the accompanying footnotes to the
consolidated financial statements which have been noted as such.
As
a result of overall economic conditions related to the coronavirus pandemic, the impact of the coronavirus pandemic on the Company’s
financial results, and the decrease in the price of the Company’s common stock noted during the third quarter of fiscal
2020, the Company performed an internal review of its long-lived assets. Due to an extended delay in the launch of the Company’s
Barrett’s test, the Company believes there was a triggering event in Fiscal 2016. The Company applied the required procedures
under ASC 360 and assessed the estimated future cash flows related to the Barrett’s intangible asset on an undiscounted
basis. It was determined that the carrying value of the asset was in excess of the undiscounted cash flows as of December 31,
2016. As a result, the Company performed a formal valuation of the asset on a discounted basis in order to measure the related
impairment. Additionally, the Company concluded that amortization of both the Barrett’s intangible asset and its Thyroid
intangible assets should have begun at the point in which the asset was ready for use. The Company’s policy had been to
amortize such assets upon launch of the test.
On
December 7, 2020, the Company’s management conferred with the Audit Committee of the Company’s Board of Directors
and concluded that (1) a non-cash impairment charge for an intangible asset of approximately $12 million should have been recorded
during the Company’s 2016 fiscal year; (2) the Company should have initiated amortization of such intangible asset in fiscal
2014 and therefore each of fiscal years 2014, 2015, 2016, 2017, 2018, and 2019 and the first two quarters of fiscal 2020 require
adjustment to record amortization expense; (3) the consolidated financial statements contained in the Company’s Annual Reports
on Form 10-K for the years ended December 31, 2014, 2015, 2016, 2017, 2018, and 2019, as well as the consolidated financial statements
contained in the Quarterly Reports on Form 10-Q for each quarterly period within those fiscal years as well as the quarterly periods
ended March 31, 2020 and June 30, 2020, should no longer be relied upon. As a result the Company is restating its consolidated
financial statements for the three and six-months ended June 30, 2020 and June 30, 2019 in this Form 10-Q/A. The following tables’
present reconciliation from our prior periods as previously reported to the restated values for the consolidated balance sheets
and the consolidated statement of operations. A description of misstatements is listed below:
|
a)
|
Amortization expense - We recorded
amortization expense starting at the dates of acquisition for our Barrett’s and Thyroid intangible assets. The impact
of the additional amortization charge was approximately $0.1 million for the three months ended June 30, 2020 and June 30,
2019, respectively and approximately $0.2 million for the six months ended June 30, 2020 and June 30, 2019, respectively.
|
|
|
|
|
b)
|
Asset impairment - We recorded
an impairment charge on our Barrett’s intangible asset of approximately $11.6 million in the fourth quarter of 2016.
|
|
|
|
|
c)
|
Adjustments - Adjustments to correct
certain other immaterial errors, including previously unrecorded immaterial adjustments identified in audits of prior years’
financial statements.
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED BALANCE SHEET
(in
thousands, except share and per share data)
|
|
June
30, 2020
|
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$
|
15,106
|
|
|
$
|
-
|
|
|
|
|
$
|
15,106
|
|
Accounts receivable,
net of allowance for doubtful accounts of $275 and $25, respectively
|
|
|
7,239
|
|
|
|
-
|
|
|
|
|
|
7,239
|
|
Other
current assets
|
|
|
3,751
|
|
|
|
-
|
|
|
|
|
|
3,751
|
|
Total current
assets
|
|
|
26,096
|
|
|
|
-
|
|
|
|
|
|
26,096
|
|
Property and equipment, net
|
|
|
7,249
|
|
|
|
|
|
|
|
|
|
7,249
|
|
Other intangible assets, net
|
|
|
31,439
|
|
|
|
(17,820
|
)
|
|
(a) (c)
|
|
|
13,619
|
|
Goodwill
|
|
|
8,433
|
|
|
|
-
|
|
|
|
|
|
8,433
|
|
Operating lease right of use assets
|
|
|
5,172
|
|
|
|
-
|
|
|
|
|
|
5,172
|
|
Other long-term
assets
|
|
|
42
|
|
|
|
-
|
|
|
|
|
|
42
|
|
Total
assets
|
|
$
|
78,431
|
|
|
$
|
(17,820
|
)
|
|
|
|
$
|
60,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
3,348
|
|
|
$
|
-
|
|
|
|
|
$
|
3,348
|
|
Accrued salary
and bonus
|
|
|
2,247
|
|
|
|
-
|
|
|
|
|
|
2,247
|
|
Other accrued
expenses
|
|
|
9,737
|
|
|
|
-
|
|
|
|
|
|
9,737
|
|
Current
liabilities from discontinued operations
|
|
|
766
|
|
|
|
-
|
|
|
|
|
|
766
|
|
Total current
liabilities
|
|
|
19,498
|
|
|
|
-
|
|
|
|
|
|
16,098
|
|
Contingent consideration
|
|
|
2,207
|
|
|
|
-
|
|
|
|
|
|
2,207
|
|
Operating lease liabilities, net
of current portion
|
|
|
3,940
|
|
|
|
-
|
|
|
|
|
|
3,940
|
|
Line of credit
|
|
|
3,400
|
|
|
|
-
|
|
|
|
|
|
3,400
|
|
Other long-term
liabilities
|
|
|
4,557
|
|
|
|
-
|
|
|
|
|
|
4,557
|
|
Total liabilities
|
|
|
30,202
|
|
|
|
-
|
|
|
|
|
|
30,202
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note
8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, $.01 par value;
5,000,000 shares authorized, 47,000 Series B shares issued and outstanding
|
|
|
46,536
|
|
|
|
-
|
|
|
|
|
|
46,536
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, $.01 par value; 100,000,000
shares authorized; 4,055,454 and 4,036,595 shares issued and outstanding, respectively;
|
|
|
402
|
|
|
|
-
|
|
|
|
|
|
402
|
|
Additional paid-in
capital
|
|
|
182,980
|
|
|
|
-
|
|
|
|
|
|
182,980
|
|
Accumulated deficit
|
|
|
(179,919
|
)
|
|
|
(17,820
|
)
|
|
(a) (c)
|
|
|
(197,739
|
)
|
Treasury
stock, at cost (11,781 shares)
|
|
|
(1,770
|
)
|
|
|
-
|
|
|
|
|
|
(1,770
|
)
|
Total
stockholders’ equity
|
|
|
1,693
|
|
|
|
(17,820
|
)
|
|
|
|
|
(16,127
|
)
|
Total
liabilities and stockholders’ equity
|
|
$
|
31,895
|
|
|
$
|
(17,820
|
)
|
|
|
|
$
|
14,075
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities, preferred stock and stockholders’ equity
|
|
$
|
78,431
|
|
|
$
|
(17,820
|
)
|
|
|
|
$
|
60,611
|
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited,
in thousands, except for per share data)
|
|
Three
Months Ended June 30, 2020
|
|
|
Three
Months Ended June 30, 2019
|
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
5,446
|
|
|
$
|
-
|
|
|
|
|
$
|
5,446
|
|
|
$
|
6,270
|
|
|
$
|
-
|
|
|
|
|
$
|
6,270
|
|
Cost of revenue
(excluding amortization of $1,115 and $897 for the three months , respectively)
|
|
|
3,850
|
|
|
|
-
|
|
|
|
|
|
3,850
|
|
|
|
3,031
|
|
|
|
-
|
|
|
|
|
|
3,031
|
|
Gross profit
|
|
|
1,596
|
|
|
|
-
|
|
|
|
|
|
1,596
|
|
|
|
3,239
|
|
|
|
-
|
|
|
|
|
|
3,239
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
1,596
|
|
|
|
-
|
|
|
|
|
|
1,596
|
|
|
|
2,959
|
|
|
|
-
|
|
|
|
|
|
2,959
|
|
Research and
development
|
|
|
550
|
|
|
|
-
|
|
|
|
|
|
550
|
|
|
|
647
|
|
|
|
-
|
|
|
|
|
|
647
|
|
General and administrative
|
|
|
4,107
|
|
|
|
-
|
|
|
|
|
|
4,107
|
|
|
|
2,788
|
|
|
|
-
|
|
|
|
|
|
2,788
|
|
Acquisition related
expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
1,295
|
|
|
|
-
|
|
|
|
|
|
1,295
|
|
Acquisition
related amortization expense
|
|
|
1,031
|
|
|
|
84
|
|
|
(a)
|
|
|
1,115
|
|
|
|
813
|
|
|
|
84
|
|
|
(a)
|
|
|
897
|
|
Total
operating expenses
|
|
|
7,284
|
|
|
|
84
|
|
|
(a)
|
|
|
7,368
|
|
|
|
8,502
|
|
|
|
84
|
|
|
(a)
|
|
|
8,586
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(5,688
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,772
|
)
|
|
|
(5,263
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,347
|
)
|
Interest accretion
|
|
|
(167
|
)
|
|
|
-
|
|
|
|
|
|
(167
|
)
|
|
|
(91
|
)
|
|
|
-
|
|
|
|
|
|
(91
|
)
|
Other income
(expense), net
|
|
|
438
|
|
|
|
-
|
|
|
|
|
|
438
|
|
|
|
74
|
|
|
|
-
|
|
|
|
|
|
74
|
|
Loss from continuing
operations before tax
|
|
|
(5,417
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,501
|
)
|
|
|
(5,280
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,364
|
)
|
Provision
for income taxes
|
|
|
13
|
|
|
|
-
|
|
|
|
|
|
13
|
|
|
|
5
|
|
|
|
-
|
|
|
|
|
|
5
|
|
Loss from continuing
operations, net of tax
|
|
|
(5,430
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,514
|
)
|
|
|
(5,285
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,369
|
)
|
Less
adjustment for preferred stock deemed dividend
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Loss from continuing operations attributable
to common stockholders
|
|
|
(5,430
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,514
|
)
|
|
|
(5,285
|
)
|
|
|
(84
|
)
|
|
(a)
|
|
|
(5,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations,
net of tax
|
|
|
(66
|
)
|
|
|
-
|
|
|
|
|
|
(66
|
)
|
|
|
65
|
|
|
|
-
|
|
|
|
|
|
65
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to common stockholders
|
|
$
|
(5,496
|
)
|
|
$
|
(84
|
)
|
|
(a)
|
|
$
|
(5,580
|
)
|
|
$
|
(5,220
|
)
|
|
$
|
(84
|
)
|
|
(a)
|
|
$
|
(5,304
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing
operations
|
|
$
|
(1.35
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
$
|
(1.37
|
)
|
|
$
|
(1.39
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
$
|
(1.41
|
)
|
From
discontinued operations
|
|
|
(0.01
|
)
|
|
|
-
|
|
|
|
|
|
(0.01
|
)
|
|
|
0.02
|
|
|
|
-
|
|
|
|
|
|
0.02
|
|
Net
loss per basic and diluted share of common stock
|
|
$
|
(1.36
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
$
|
(1.38
|
)
|
|
$
|
(1.37
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
$
|
(1.39
|
)
|
Weighted average number of common shares and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
common share equivalents outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,033
|
|
|
|
4,033
|
|
|
|
|
|
4,033
|
|
|
|
3,813
|
|
|
|
3,813
|
|
|
|
|
|
3,813
|
|
Diluted
|
|
|
4,033
|
|
|
|
4,033
|
|
|
|
|
|
4,033
|
|
|
|
3,813
|
|
|
|
3,813
|
|
|
|
|
|
3,813
|
|
|
|
Six
Months Ended June 30, 2020
|
|
|
Six
Months Ended June 30, 2019
|
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
14,645
|
|
|
$
|
(141
|
)
|
|
(c)
|
|
$
|
14,504
|
|
|
$
|
12,280
|
|
|
$
|
-
|
|
|
|
|
$
|
12,280
|
|
Cost of revenue (excluding amortization
of $2,230 and $1,794 for the six months, respectively)
|
|
|
9,963
|
|
|
|
-
|
|
|
|
|
|
9,963
|
|
|
|
5,654
|
|
|
|
-
|
|
|
|
|
|
5,654
|
|
Gross profit
|
|
|
4,682
|
|
|
|
(141
|
)
|
|
(c)
|
|
|
4,541
|
|
|
|
6,626
|
|
|
|
-
|
|
|
|
|
|
6,626
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
4,077
|
|
|
|
-
|
|
|
|
|
|
4,077
|
|
|
|
5,369
|
|
|
|
-
|
|
|
|
|
|
5,369
|
|
Research and
development
|
|
|
1,360
|
|
|
|
-
|
|
|
|
|
|
1,360
|
|
|
|
1,175
|
|
|
|
-
|
|
|
|
|
|
1,175
|
|
General and administrative
|
|
|
8,993
|
|
|
|
6
|
|
|
(c)
|
|
|
8,999
|
|
|
|
5,299
|
|
|
|
(177
|
)
|
|
(c)
|
|
|
5,122
|
|
Acquisition related
expense
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
1,696
|
|
|
|
-
|
|
|
|
|
|
1,696
|
|
Acquisition related
amortization expense
|
|
|
2,062
|
|
|
|
168
|
|
|
(a)
|
|
|
2,230
|
|
|
|
1,626
|
|
|
|
168
|
|
|
(a)
|
|
|
1,794
|
|
Total operating
expenses
|
|
|
16,492
|
|
|
|
174
|
|
|
(a) (c)
|
|
|
16,666
|
|
|
|
15,165
|
|
|
|
(9
|
)
|
|
(a) (c)
|
|
|
15,156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
(11,810
|
)
|
|
|
(315
|
)
|
|
(a) (c)
|
|
|
(12,125
|
)
|
|
|
(8,539
|
)
|
|
|
9
|
|
|
(a) (c)
|
|
|
(8,530
|
)
|
Interest accretion
|
|
|
(276
|
)
|
|
|
-
|
|
|
|
|
|
(276
|
)
|
|
|
(220
|
)
|
|
|
-
|
|
|
|
|
|
(220
|
)
|
Other income (expense), net
|
|
|
485
|
|
|
|
-
|
|
|
|
|
|
485
|
|
|
|
123
|
|
|
|
-
|
|
|
|
|
|
123
|
|
Loss from continuing
operations before tax
|
|
|
(11,601
|
)
|
|
|
(315
|
)
|
|
(a) (c)
|
|
|
(11,916
|
)
|
|
|
(8,636
|
)
|
|
|
9
|
|
|
(a) (c)
|
|
|
(8,627
|
)
|
Provision for income taxes
|
|
|
28
|
|
|
|
-
|
|
|
|
|
|
28
|
|
|
|
10
|
|
|
|
-
|
|
|
|
|
|
10
|
|
Loss from continuing
operations, net of tax
|
|
|
(11,629
|
)
|
|
|
(315
|
)
|
|
(a) (c)
|
|
|
(11,944
|
)
|
|
|
(8,646
|
)
|
|
|
9
|
|
|
(a) (c)
|
|
|
(8,637
|
)
|
Less adjustment
for preferred stock deemed dividend
|
|
|
(3,033
|
)
|
|
|
-
|
|
|
|
|
|
(3,033
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Loss from continuing operations attributable
to common stockholders
|
|
|
(14,662
|
)
|
|
|
(315
|
)
|
|
(a) (c)
|
|
|
(14,977
|
)
|
|
|
(8,646
|
)
|
|
|
9
|
|
|
(a) (c)
|
|
|
(8,637
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from discontinued operations,
net of tax
|
|
|
(130
|
)
|
|
|
-
|
|
|
|
|
|
(130
|
)
|
|
|
7
|
|
|
|
-
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss attributable
to common stockholders
|
|
$
|
(14,792
|
)
|
|
$
|
(315
|
)
|
|
(a) (c)
|
|
$
|
(15,107
|
)
|
|
$
|
(8,639
|
)
|
|
$
|
9
|
|
|
(a) (c)
|
|
$
|
(8,630
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share
of common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From continuing
operations
|
|
$
|
(3.65
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
$
|
(3.73
|
)
|
|
$
|
(2.36
|
)
|
|
$
|
-
|
|
|
|
|
$
|
(2.36
|
)
|
From discontinued
operations
|
|
|
(0.03
|
)
|
|
|
-
|
|
|
|
|
|
(0.03
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Net loss per
basic and diluted share of common stock
|
|
$
|
(3.68
|
)
|
|
$
|
(0.08
|
)
|
|
|
|
$
|
(3.76
|
)
|
|
$
|
(2.36
|
)
|
|
$
|
-
|
|
|
|
|
$
|
(2.36
|
)
|
Weighted average number of common shares and common share
equivalents outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,018
|
|
|
|
4,018
|
|
|
|
|
|
4,018
|
|
|
|
3,665
|
|
|
|
3,665
|
|
|
|
|
|
3,665
|
|
Diluted
|
|
|
4,018
|
|
|
|
4,018
|
|
|
|
|
|
4,018
|
|
|
|
3,665
|
|
|
|
3,665
|
|
|
|
|
|
3,665
|
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(unaudited,
in thousands)
|
|
As
Previously Reported
|
|
|
|
|
|
|
|
|
As
Restated
|
|
|
|
For
The Six Months Ended
|
|
|
Restatement
|
|
|
Restatement
|
|
|
For
The Six Months Ended
|
|
|
|
June
30, 2020
|
|
|
Amount
|
|
|
Reference
|
|
|
June
30, 2020
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
3,932
|
|
|
$
|
393
|
|
|
$
|
-
|
|
|
|
|
|
|
|
3,932
|
|
|
$
|
393
|
|
Common stock
issued
|
|
|
37
|
|
|
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
37
|
|
|
|
1
|
|
Restricted stock
issued
|
|
|
6
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
6
|
|
|
|
-
|
|
Common stock
issued through market sales
|
|
|
80
|
|
|
|
8
|
|
|
|
-
|
|
|
|
|
|
|
|
80
|
|
|
|
8
|
|
Common
stock issued through offerings
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Balance at March 31
|
|
|
4,055
|
|
|
|
402
|
|
|
|
-
|
|
|
|
|
|
|
|
4,055
|
|
|
|
402
|
|
Common
stock issued
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Balance at June 30
|
|
|
4,055
|
|
|
|
402
|
|
|
|
-
|
|
|
|
|
|
|
|
4,055
|
|
|
|
402
|
|
Treasury stock:
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
12
|
|
|
|
(1,721
|
)
|
|
|
-
|
|
|
|
|
|
|
|
12
|
|
|
|
(1,721
|
)
|
Treasury
stock purchased
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Balance at March 31
|
|
|
12
|
|
|
|
(1,721
|
)
|
|
|
-
|
|
|
|
|
|
|
|
12
|
|
|
|
(1,721
|
)
|
Treasury
stock purchased
|
|
|
7
|
|
|
|
(49
|
)
|
|
|
-
|
|
|
|
|
|
|
|
7
|
|
|
|
(49
|
)
|
Balance at June 30
|
|
|
19
|
|
|
|
(1,770
|
)
|
|
|
-
|
|
|
|
|
|
|
|
19
|
|
|
|
(1,770
|
)
|
Additional paid-in
capital:
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
|
|
|
|
182,514
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
182,514
|
|
Common stock
issued through offerings, net of expenses
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Extinguishment of Series A Shares
|
|
|
|
|
|
|
(828
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
(828
|
)
|
Beneficial Conversion
Feature in connection with Series B Issuance
|
|
|
|
|
|
|
2,205
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
2,205
|
|
Amortization
of Beneficial Conversion Feature
|
|
|
|
|
|
|
(2,205
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,205
|
)
|
Common stock
issued through market sales
|
|
|
|
|
|
|
476
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
476
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
418
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
418
|
|
Balance at March 31
|
|
|
|
|
|
|
182,580
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
182,580
|
|
Common Stock
issued
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
400
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
400
|
|
Balance at June 30
|
|
|
|
|
|
|
182,980
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
182,980
|
|
Accumulated deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
|
|
|
|
(168,160
|
)
|
|
|
(17,505
|
)
|
|
|
(a)
(b) (c)
|
|
|
|
|
|
|
|
(185,665
|
)
|
Net loss
|
|
|
|
|
|
|
(6,263
|
)
|
|
|
(231
|
)
|
|
|
(a)
(c)
|
|
|
|
|
|
|
|
(6,494
|
)
|
Adoption
of ASC 842
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
|
|
Balance at March 31
|
|
|
|
|
|
|
(174,423
|
)
|
|
|
(17,736
|
)
|
|
|
|
|
|
|
|
|
|
|
(192,159
|
)
|
Net
loss
|
|
|
|
|
|
|
(5,496
|
)
|
|
|
(84
|
)
|
|
|
(a)
|
|
|
|
|
|
|
|
(5,580
|
)
|
Balance at June 30
|
|
|
|
|
|
|
(179,919
|
)
|
|
|
(17,820
|
)
|
|
|
|
|
|
|
|
|
|
|
(197,739
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
|
|
|
$
|
1,693
|
|
|
$
|
(17,820
|
)
|
|
|
|
|
|
|
|
|
|
$
|
(16,127
|
)
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(unaudited,
in thousands)
|
|
As
Previously Reported
|
|
|
|
|
|
|
|
|
As
Restated
|
|
|
|
For
The Six Months Ended
|
|
|
Restatement
|
|
|
Restatement
|
|
|
For
The Six Months Ended
|
|
|
|
June
30, 2019
|
|
|
Amount
|
|
|
Reference
|
|
|
June
30, 2019
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
Common stock:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
2,877
|
|
|
$
|
287
|
|
|
$
|
-
|
|
|
|
|
|
|
|
2,877
|
|
|
$
|
287
|
|
Common stock
issued
|
|
|
9
|
|
|
|
1
|
|
|
|
-
|
|
|
|
|
|
|
|
9
|
|
|
|
1
|
|
Common
stock issued through offerings
|
|
|
933
|
|
|
|
94
|
|
|
|
-
|
|
|
|
|
|
|
|
933
|
|
|
|
94
|
|
Balance at March 31
|
|
|
3,819
|
|
|
|
382
|
|
|
|
-
|
|
|
|
|
|
|
|
3,819
|
|
|
|
382
|
|
Common
stock issued
|
|
|
10
|
|
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
10
|
|
|
|
1
|
|
Balance at June 30
|
|
|
3,829
|
|
|
|
383
|
|
|
|
-
|
|
|
|
|
|
|
|
3,829
|
|
|
|
383
|
|
Treasury stock:
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
7
|
|
|
|
(1,680
|
)
|
|
|
-
|
|
|
|
|
|
|
|
7
|
|
|
|
(1,680
|
)
|
Treasury
stock purchased
|
|
|
3
|
|
|
|
(32
|
)
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
(32
|
)
|
Balance at March 31
|
|
|
10
|
|
|
|
(1,712
|
)
|
|
|
-
|
|
|
|
|
|
|
|
10
|
|
|
|
(1,712
|
)
|
Treasury
stock purchased
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
Balance at June 30
|
|
|
10
|
|
|
|
(1,712
|
)
|
|
|
-
|
|
|
|
|
|
|
|
10
|
|
|
|
(1,712
|
)
|
Additional paid-in
capital:
|
|
|
|
|
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
|
|
|
|
175,820
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
175,820
|
|
Common stock
issued through offerings, net of expenses
|
|
|
|
|
|
|
5,868
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
5,868
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
266
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
266
|
|
Balance at March 31
|
|
|
|
|
|
|
181,954
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
181,954
|
|
Common Stock
issued
|
|
|
|
|
|
|
72
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
72
|
|
Stock-based
compensation expense
|
|
|
|
|
|
|
205
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
205
|
|
Balance at June 30
|
|
|
|
|
|
|
182,231
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
182,231
|
|
Accumulated deficit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1
|
|
|
|
|
|
|
(141,489
|
)
|
|
|
(17,492
|
)
|
|
|
(a)
(b) (c)
|
|
|
|
|
|
|
|
(158,981
|
)
|
Net loss
|
|
|
|
|
|
|
(3,419
|
)
|
|
|
93
|
|
|
|
(a)
(c)
|
|
|
|
|
|
|
|
(3,326
|
)
|
Adoption
of ASC 842
|
|
|
|
|
|
|
55
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
55
|
|
Balance at March 31
|
|
|
|
|
|
|
(144,853
|
)
|
|
|
(17,399
|
)
|
|
|
|
|
|
|
|
|
|
|
(162,252
|
)
|
Net
loss
|
|
|
|
|
|
|
(5,220
|
)
|
|
|
(84
|
)
|
|
|
(a)
|
|
|
|
|
|
|
|
(5,304
|
)
|
Balance at June 30
|
|
|
|
|
|
|
(150,073
|
)
|
|
|
(17,483
|
)
|
|
|
|
|
|
|
|
|
|
|
(167,556
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
|
|
|
$
|
30,829
|
|
|
$
|
(17,483
|
)
|
|
|
|
|
|
|
|
|
|
$
|
13,346
|
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited,
in thousands)
|
|
For
The Six Months Ended June 30,
|
|
|
|
2020
|
|
|
|
|
|
|
|
2020
|
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(11,759
|
)
|
|
$
|
(315
|
)
|
|
(a) (c)
|
|
$
|
(12,074
|
)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
2,540
|
|
|
|
168
|
|
|
(a)
|
|
|
2,708
|
|
Interest accretion
|
|
|
276
|
|
|
|
-
|
|
|
|
|
|
276
|
|
Mark to market
on warrants
|
|
|
(49
|
)
|
|
|
-
|
|
|
|
|
|
(49
|
)
|
Stock-based compensation
|
|
|
818
|
|
|
|
-
|
|
|
|
|
|
818
|
|
Bad debt expense
|
|
|
250
|
|
|
|
-
|
|
|
|
|
|
250
|
|
Other gains and
expenses, net
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Other changes in operating assets
and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase)
in accounts receivable
|
|
|
2,708
|
|
|
|
141
|
|
|
(c)
|
|
|
2,849
|
|
(Increase) decrease
in other current assets
|
|
|
(788
|
)
|
|
|
-
|
|
|
|
|
|
(788
|
)
|
(Decrease) increase
in accounts payable
|
|
|
(1,464
|
)
|
|
|
103
|
|
|
(c)
|
|
|
(1,361
|
)
|
(Decrease) increase
in accrued salaries and bonus
|
|
|
(94
|
)
|
|
|
-
|
|
|
|
|
|
(94
|
)
|
(Decrease) increase
in accrued liabilities
|
|
|
856
|
|
|
|
(97
|
)
|
|
(c)
|
|
|
759
|
|
Increase
in long-term liabilities
|
|
|
33
|
|
|
|
-
|
|
|
|
|
|
33
|
|
Net
cash used in operating activities
|
|
|
(6,673
|
)
|
|
|
-
|
|
|
|
|
|
(6,673
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(913
|
)
|
|
|
-
|
|
|
|
|
|
(913
|
)
|
Sale
of property and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Net
cash provided by investing activity
|
|
|
(913
|
)
|
|
|
-
|
|
|
|
|
|
(913
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock, net of expenses
|
|
|
434
|
|
|
|
-
|
|
|
|
|
|
434
|
|
Borrowings on
Line of Credit, net
|
|
|
400
|
|
|
|
-
|
|
|
|
|
|
400
|
|
Issuance
of Series B preferred stock, net of expenses
|
|
|
19,537
|
|
|
|
-
|
|
|
|
|
|
19,537
|
|
Net
cash provided by financing activities
|
|
|
20,371
|
|
|
|
-
|
|
|
|
|
|
20,371
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
12,785
|
|
|
|
-
|
|
|
|
|
|
12,785
|
|
Cash and cash
equivalents – beginning
|
|
|
2,321
|
|
|
|
-
|
|
|
|
|
|
2,321
|
|
Cash and cash
equivalents – ending
|
|
$
|
15,106
|
|
|
$
|
-
|
|
|
|
|
$
|
15,106
|
|
INTERPACE
BIOSCIENCES, INC.
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited,
in thousands)
|
|
For
The Six Months Ended June 30,
|
|
|
|
2019
|
|
|
|
|
|
|
|
2019
|
|
|
|
As
Previously Reported
|
|
|
Restatement
Amount
|
|
|
Restatement
Reference
|
|
As
Restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Operating Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(8,639
|
)
|
|
$
|
9
|
|
|
(a) (c)
|
|
$
|
(8,630
|
)
|
Adjustments to reconcile net loss
to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,749
|
|
|
|
168
|
|
|
(a)
|
|
|
1,917
|
|
Interest accretion
|
|
|
220
|
|
|
|
-
|
|
|
|
|
|
220
|
|
Mark to market
on warrants
|
|
|
(45
|
)
|
|
|
-
|
|
|
|
|
|
(45
|
)
|
Stock-based compensation
|
|
|
990
|
|
|
|
-
|
|
|
|
|
|
990
|
|
Bad debt expense
|
|
|
499
|
|
|
|
-
|
|
|
|
|
|
499
|
|
Other gains and
expenses, net
|
|
|
18
|
|
|
|
-
|
|
|
|
|
|
18
|
|
Other changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease (increase)
in accounts receivable
|
|
|
(3,982
|
)
|
|
|
-
|
|
|
|
|
|
(3,982
|
)
|
(Increase) decrease
in other current assets
|
|
|
(252
|
)
|
|
|
-
|
|
|
|
|
|
(252
|
)
|
(Decrease) increase
in accounts payable
|
|
|
530
|
|
|
|
-
|
|
|
|
|
|
530
|
|
(Decrease) increase
in accrued salaries and bonus
|
|
|
(141
|
)
|
|
|
(120
|
)
|
|
(c)
|
|
|
(261
|
)
|
(Decrease) increase
in accrued liabilities
|
|
|
1,154
|
|
|
|
(57
|
)
|
|
(c)
|
|
|
1,097
|
|
Increase
in long-term liabilities
|
|
|
114
|
|
|
|
-
|
|
|
|
|
|
114
|
|
Net
cash used in operating activities
|
|
|
(7,785
|
)
|
|
|
-
|
|
|
|
|
|
(7,785
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Investing Activity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase of property
and equipment
|
|
|
(48
|
)
|
|
|
-
|
|
|
|
|
|
(48
|
)
|
Sale
of property and equipment
|
|
|
13
|
|
|
|
-
|
|
|
|
|
|
13
|
|
Net
cash provided by investing activity
|
|
|
(35
|
)
|
|
|
-
|
|
|
|
|
|
(35
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flows From
Financing Activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common
stock, net of expenses
|
|
|
5,962
|
|
|
|
-
|
|
|
|
|
|
5,962
|
|
Borrowings on
Line of Credit, net
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Issuance
of Series B preferred stock, net of expenses
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Net
cash provided by financing activities
|
|
|
5,962
|
|
|
|
-
|
|
|
|
|
|
5,962
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
(1,858
|
)
|
|
|
-
|
|
|
|
|
|
(1,858
|
)
|
Cash and cash
equivalents – beginning
|
|
|
6,068
|
|
|
|
-
|
|
|
|
|
|
6,068
|
|
Cash and cash
equivalents – ending
|
|
$
|
4,210
|
|
|
$
|
-
|
|
|
|
|
|
4,210
|
|
The
accompanying unaudited interim condensed consolidated financial statements and related notes (the “Interim Financial Statements”)
should be read in conjunction with the consolidated financial statements of the Company and its wholly-owned subsidiaries (Interpace
Diagnostics Lab Inc., Interpace Diagnostics Corporation, Interpace Pharma Solutions, Inc. and Interpace Diagnostics, LLC), and
related notes as included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with
the SEC on April 22, 2020 and as amended on May 29, 2020 and the date hereof (the “Form 10-K”).
The
condensed Interim Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles
in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial
statements. The condensed Interim Financial Statements include all normal recurring adjustments that, in the judgment of management,
are necessary for a fair presentation of such interim financial statements. Discontinued operations include the Company’s
wholly owned subsidiaries: Group DCA, LLC, or Group DCA; InServe Support Solutions; and TVG, Inc. and its Commercial Services
business unit which was sold on December 22, 2015. All significant intercompany balances and transactions have been eliminated
in consolidation. Operating results for the six-month period ended June 30, 2020 are not necessarily indicative of the results
that may be expected for the fiscal year ending December 31, 2020. All information related to common stock, stock options, restricted
stock units, warrants and earnings per share have been retroactively adjusted to give effect to the reverse stock split (1 for
10) that occurred in January 2020.
The
accompanying consolidated financial statements have been prepared on a basis that assumes that the Company will continue as a
going concern and that contemplates the continuity of operations, the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. Accordingly, the accompanying consolidated financial statements do not include
any adjustments relating to the recoverability and classification of recorded asset amounts or amounts of liabilities that might
result from the outcome of this uncertainty. As of June 30, 2020, the Company had cash and cash equivalents of $15.1 million,
net accounts receivable of $7.2 million, total current assets of $26.1 million and total current liabilities of $16.1 million.
For the six-months ended June 30, 2020, the Company had a net loss of $12.1 million and cash used in operating activities
was $6.7 million. As of September 30, 2020 we had approximately $5.2 million of cash on hand due principally to additional losses
incurred through September 2020, slower collections due to the pandemic, as well as repayment of approximately $3.4 million to
SVB under our line of credit, which we are currently unable to borrow under.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
The
Company’s cash and cash equivalents balance is decreasing and we do not expect to generate positive cash flows from operations
for the year ending December 31, 2020. We intend to meet our ongoing capital needs by using our available cash; proceeds under
the Securities Purchase and Exchange Agreement (as defined and further discussed in Note 16, Equity); borrowings under
the Revolving Line of Credit (as defined below) with Silicon Valley Bank (“SVB”), once reinstated, as well as by increasing
our line of credit limit as a result of the additional accounts receivable acquired in July 2019 as a result of our acquisition
of the Biopharma business of Cancer Genetics, Inc. (“CGI”), and presently known as our pharma services business (which
requires a modification to the bank agreement and approval by both SVB and the preferred shareholders), as well as revenue growth
and margin improvement; collection of accounts receivable; containment of costs; and the potential use of other financing options.
The Company is currently unable to borrow under its line of credit and there is no assurance the Company will be successful in
meeting its capital requirements prior to becoming cash flow positive. These liquidity factors, among others, have raised substantial
doubts about our ability to continue as a going concern.
In
September 2019, we entered into the Equity Distribution Agreement (the “Equity Distribution Agreement”) with Oppenheimer
& Co. Inc., as sales agent (the “Agent”), pursuant to which we may, from time to time, issue and sell shares of
our common stock in an aggregate offering price of up to $3.7 million through the Agent (the “ATM arrangement”). As
of June 30, 2020, approximately 178,000 shares of common stock were sold for net proceeds of approximately $0.7 million. As a
result of the preferred shares transaction mentioned below, additional shares may no longer be sold under the ATM arrangement
without a majority approval by the holders of the preferred shares. See Note 16, Equity, for more detail relative to the
ATM arrangement and related share sales. In addition, if our common stock is delisted by Nasdaq Capital Markets (“Nasdaq”)
due to our failure to meet the minimum stockholders’ equity requirement, we may no longer be able to eligible to sell under
the Agreement as well. See Note 19, Subsequent Events.
In
January 2020, we sold 20,000 Series B preferred shares to investors, led by 1315 Capital II, L.P. (“1315 Capital”),
for net proceeds of approximately $19.5 million. See Note 16, Equity, for more detail.
The
Company maintains a secured revolving line of credit facility (the “Revolving Line of Credit”), with a limit of up
to $4.0 million, available for working capital purposes, with a three-year term. The borrowing limit of the Revolving Line of
Credit is the lower of 80% of the Company’s eligible accounts receivable (as adjusted by SVB) and the aggregate amount of
cash collections with respect to accounts receivable during the three prior calendar months. Outstanding amounts incur interest
at a rate per annum equal to the Prime Rate plus 0.5%. As of June 30, 2020, $3.4 million was outstanding and there was no remaining
Revolving Line of Credit available.
As
of July 31, 2020, the Company was in violation of a financial covenant under its Loan and Security Agreement, dated November 13,
2018, as amended March 18, 2019 (as so amended, the “SVB Loan Agreement”). Additionally, due to the untimely filing
of our second quarter form 10-Q (this Report) with the SEC subsequent to the filing deadline, the Company is in violation of the
SVB Loan Agreement and during September 2020, the Company paid down the outstanding Revolving Line of Credit balance of $3.4 million
in full. Additionally during September 2020, the Company transferred $0.35 million into a restricted cash money market account
with SVB to serve as collateral for the Company’s letters of credit supporting two of its facilities. Prior to September
2020, the collateral for the letters of credit was accounted for as a reduction in the availability under the Revolving Line of
Credit.
While
the Company has received a waiver of default from SVB and is in compliance with the terms of the SVB Loan Agreement as of the
date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit.
See
Note 1, Overview, regarding the potential adverse impact of the COVID-19 pandemic on our results of operations, cash flows
and financial condition for the third quarter of fiscal 2020 and possibly beyond.
During
April 2020, the Company applied for various federal stimulus grants and advances made available under Title 1 of the Coronavirus
Aid, Relief, and Economic Security (CARES) Act. As of May 1, 2020, we received $2.1 million in advances under the Centers for
Medicare & Medicaid Services (CMS) accelerated and advance payment program, which is recorded in other accrued expenses on
the Company’s condensed consolidated balance sheet, as well as a $0.65 million grant from the Department of Health and Human
Services (HSS). The CMS advance will be offset against future Medicare billings of the Company, beginning with Medicare billings
in April 2021 and the HSS grant is subject to certain conditions regarding its use. These grants and advances require certain
certifications by the Company and impose specific limitations on the use of the proceeds. The Company applied the HHS grant in
its entirety towards qualified second quarter expenses related to laboratory equipment and supplies purchased to prevent, prepare
for, and respond to coronavirus, including development of coronavirus and serology tests, as well as revenue lost during the second
quarter as a result of the pandemic. The portion attributed to lost revenue, $0.45 million, was recorded in Other income and $0.2
million was recorded as an offset to cost of revenue expenses.
During
April and early May 2020, the Company made payments totaling $888,000 to CGI for funds withheld from the Excess Consideration
Note to satisfy certain adjustments and indemnification obligations under the Secured Creditor Asset Purchase Agreement dated
July 15, 2019, by and among the Company, CGI, Interpace Diagnostics Group, Inc. and Partners for Growth IV, L.P. (“Asset
Purchase Agreement”). The funds used to satisfy this obligation were not included in cash and cash equivalents as of December
31, 2019 and March 31, 2020. These funds and the related liability were included in Other Assets and Other Current Liabilities,
respectively, as of those period ends, and the settlement of the liability had no net impact on the Company’s operating
cash flow or liquidity.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
4.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
|
Accounting
Estimates
The
preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions
that affect the amounts of assets and liabilities reported 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. Management’s estimates
are based on historical experience, facts and circumstances available at the time, and various other assumptions that are believed
to be reasonable under the circumstances. Significant estimates include accounting for valuation allowances related to deferred
income taxes, contingent consideration, allowances for doubtful accounts, revenue recognition, unrecognized tax benefits, and
asset impairments involving other intangible assets. The Company periodically reviews these matters and reflects changes in estimates
in earnings as appropriate. Actual results could materially differ from those estimates.
Revenue
Recognition
Our
clinical services derive its revenues from the performance of its proprietary assays or tests. The Company’s performance
obligation is fulfilled upon the completion, review and release of test results to the customer. The Company subsequently bills
third-party payers or direct-bill payers for the tests performed. Under Accounting Standards Codification 606, revenue is recognized
based on the estimated transaction price or NRV, which is determined based on historical collection rates by each payer category
for each proprietary test offered by the Company. To the extent the transaction price includes variable consideration, for all
third party and direct-bill payers and proprietary tests, the Company estimates the amount of variable consideration that should
be included in the transaction price using the expected value method based on historical experience.
For
our clinical services, we regularly review the ultimate amounts received from the third-party and direct-bill payers and related
estimated reimbursement rates and adjust the NRV’s and related contractual allowances accordingly. If actual collections
and related NRV’s vary significantly from our estimates, we will adjust the estimates of contractual allowances, which affects
net revenue in the period such variances become known.
For
our pharma services, project level activities, including study setup and project management, are satisfied over the life of the
contract while performance-related obligations are satisfied at a point in time as the Company processes samples delivered by
the customer. Revenues are recognized at a point in time when the test results or other deliverables are reported to the customer.
Deferred
Revenue
For
our pharma services, project level fee revenue is recognized as deferred revenue and recorded at fair value. It represents payments
received in advance of services rendered and is recognized ratably over the life of the contract.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Financing
and Payment
For
non-Medicare claims, our payment terms vary by payer category. Payment terms for direct-payers in our clinical business are typically
thirty days and in our pharma services, up to sixty days. Commercial third-party-payers are required to respond to a claim within
a time period established by their respective state regulations, generally between thirty to sixty days. However, payment for
commercial third-party claims may be subject to a denial and appeal process, which could take up to two years in some instances
where multiple appeals are submitted. The Company generally appeals all denials from commercial third-party payers.
Costs
to Obtain or Fulfill a Customer Contract
Sales
commissions are expensed in the period in which they have been earned. These costs are recorded in sales and marketing expense
in the condensed consolidated statements of operations.
Accounts
Receivable
The
Company’s accounts receivables represent unconditional rights to consideration and are generated using its clinical services
and pharma services. The Company’s clinical services are fulfilled upon completion of the test, review and release of the
test results. In conjunction with fulfilling these services, the Company bills the third-party payer or direct-bill payer. Contractual
adjustments represent the difference between the list prices and the reimbursement rates set by third-party payers, including
Medicare, commercial payers, and amounts billed to direct-bill payers. Specific accounts may be written off after several appeals,
which in some cases may take longer than twelve months. Pharma services represent, primarily, the performance of laboratory tests
in support of clinical trials for pharma services customers. The Company bills these services directly to the customer.
Leases
The
Company determines if an arrangement contains a lease in whole or in part at the inception of the contract. Right-of-use (“ROU”)
assets represent the Company’s right to use an underlying asset for the lease term while lease liabilities represent our
obligation to make lease payments arising from the lease. All leases with terms greater than twelve months result in the recognition
of a ROU asset and a liability at the lease commencement date based on the present value of the lease payments over the lease
term. Unless a lease provides all of the information required to determine the implicit interest rate, we use our incremental
borrowing rate based on the information available at the commencement date in determining the present value of the lease payments.
We use the implicit interest rate in the lease when readily determinable.
Our
lease terms include all non-cancelable periods and may include options to extend (or to not terminate) the lease when it is reasonably
certain that we will exercise that option. Leases with terms of twelve months or less at the commencement date are expensed on
a straight-line basis over the lease term and do not result in the recognition of an asset or liability. See Note 7, Leases.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Other
Current Assets
Other
current assets consisted of the following as of June 30, 2020 and December 31, 2019:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
(unaudited)
|
|
|
|
|
Lab
supply inventory
|
|
|
2,331
|
|
|
|
1,825
|
|
Prepaid
expenses
|
|
|
728
|
|
|
|
971
|
|
Funds
in escrow
|
|
|
-
|
|
|
|
888
|
|
Due
from CGI
|
|
|
525
|
|
|
|
92
|
|
Other
|
|
|
167
|
|
|
|
75
|
|
Total
other current assets
|
|
$
|
3,751
|
|
|
$
|
3,851
|
|
Long-Lived
Assets, including Finite-Lived Intangible Assets
Finite-lived
intangible assets are stated at cost less accumulated amortization. Amortization of finite-lived acquired intangible assets is
recognized on a straight-line basis, using the estimated useful lives of the assets of approximately two years to ten years in
acquisition-related amortization expense in the condensed consolidated statements of operations.
The
Company reviews the recoverability of long-lived assets and finite-lived intangible assets whenever events or changes in circumstances
indicate that the carrying value of such assets may not be recoverable. If the sum of the expected future undiscounted cash flows
is less than the carrying amount of the asset, an impairment loss is recognized by reducing the recorded value of the asset to
its fair value measured by future discounted cash flows. This analysis requires estimates of the amount and timing of projected
cash flows and, where applicable, judgments associated with, among other factors, the appropriate discount rate. Such estimates
are critical in determining whether any impairment charge should be recorded and the amount of such charge if an impairment loss
is deemed to be necessary.
Basic
and Diluted Net Loss per Share
A
reconciliation of the number of shares of common stock, par value $0.01 per share (the “Common Stock”), used in the
calculation of basic and diluted loss per share for the three- and six-month periods ended June 30, 2020 and 2019 is as follows:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Basic
weighted average number of common shares
|
|
|
4,033
|
|
|
|
3,813
|
|
|
|
4,018
|
|
|
|
3,665
|
|
Potential
dilutive effect of stock-based awards
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Diluted
weighted average number of common shares
|
|
|
4,033
|
|
|
|
3,813
|
|
|
|
4,018
|
|
|
|
3,665
|
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
The
Company’s Preferred Stock, on an as converted basis of 7,833,334 shares for the three- and six-months ended June 30, 2020,
and the following outstanding stock-based awards and warrants, were excluded from the computation of the effect of dilutive securities
on loss per share for the following periods as they would have been anti-dilutive (rounded to thousands):
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Options
|
|
|
638
|
|
|
|
394
|
|
|
|
638
|
|
|
|
394
|
|
Stock-settled
stock appreciation rights (SARs)
|
|
|
-
|
|
|
|
2
|
|
|
|
-
|
|
|
|
2
|
|
Restricted
stock
|
|
|
6
|
|
|
|
-
|
|
|
|
6
|
|
|
|
-
|
|
Restricted
stock units (RSUs)
|
|
|
36
|
|
|
|
54
|
|
|
|
36
|
|
|
|
54
|
|
Warrants
|
|
|
1,420
|
|
|
|
1,420
|
|
|
|
1,420
|
|
|
|
1,420
|
|
|
|
|
2,100
|
|
|
|
1,870
|
|
|
|
2,100
|
|
|
|
1,870
|
|
5.
|
GOODWILL
AND OTHER INTANGIBLE ASSETS
|
Goodwill
is attributable to the acquisition of our pharma services in July 2019. The carrying value of the intangible assets acquired was
$15.6 million, with goodwill of approximately $8.3 million and identifiable intangible assets of approximately $7.3 million. The
goodwill balance at June 30, 2020 was $8.4 million. The net carrying value of the identifiable intangible assets from all acquisitions
as of June 30, 2020 and December 31, 2019 are as follows:
|
|
|
|
|
As
Restated
|
|
|
|
|
|
|
As
of June 30, 2020
|
|
|
As
of December 31, 2019
|
|
|
|
Life
|
|
|
Carrying
|
|
|
Carrying
|
|
|
|
(Years)
|
|
|
Amount
|
|
|
Amount
|
|
|
|
|
|
|
|
|
|
|
|
Asuragen acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
Thyroid
|
|
|
9
|
|
|
$
|
8,519
|
|
|
$
|
8,519
|
|
RedPath acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
Pancreas test
|
|
|
7
|
|
|
|
16,141
|
|
|
|
16,141
|
|
Barrett’s
test
|
|
|
9
|
|
|
|
6,719
|
|
|
|
6,719
|
|
BioPharma acquisition:
|
|
|
|
|
|
|
|
|
|
|
|
|
Trademarks
|
|
|
10
|
|
|
|
1,600
|
|
|
|
1,600
|
|
Customer relationships
|
|
|
8
|
|
|
|
5,700
|
|
|
|
5,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLIA Lab
|
|
|
2.3
|
|
|
$
|
609
|
|
|
$
|
609
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
$
|
39,288
|
|
|
$
|
39,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Amortization
|
|
|
|
|
|
$
|
(25,669
|
)
|
|
$
|
(23,439
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Carrying Value
|
|
|
|
|
|
$
|
13,619
|
|
|
$
|
15,849
|
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Amortization
expense was approximately $1.1 million and $0.9 million for the three-month periods ended June 30, 2020 and 2019,
respectively, and approximately $2.2 million and $1.8 million for the six-month periods ended June 30, 2020 and
2019, respectively. Estimated amortization expense for the next five years is as follows:
As
Restated
|
|
|
2020
|
|
|
|
2021
|
|
|
|
2022
|
|
|
|
2023
|
|
|
|
2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
4,871
|
|
|
$
|
4,078
|
|
|
$
|
2,156
|
|
|
$
|
1,745
|
|
|
$
|
873
|
|
The
following table displays a roll forward of the carrying amount of goodwill from December 31, 2019 to June 30, 2020:
|
|
Carrying
|
|
|
|
Amount
|
|
Balance
as of December 31, 2019
|
|
$
|
8,433
|
|
Adjustments
|
|
|
-
|
|
Balance
as of June 30, 2020
|
|
$
|
8,433
|
|
6.
|
FAIR
VALUE MEASUREMENTS
|
Cash
and cash equivalents, accounts receivable and accounts payable approximate fair value due to their relative short-term nature.
The Company’s financial liabilities reflected at fair value in the condensed consolidated financial statements include contingent
consideration and warrant liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various
methods including market, income and cost approaches. Based on these approaches, the Company often utilizes certain assumptions
that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent
in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated, or generally unobservable
inputs. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable
inputs. Based upon observable inputs used in the valuation techniques, the Company is required to provide information according
to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair
values into three broad levels as follows:
|
Level
1:
|
Valuations
for assets and liabilities traded in active markets from readily available pricing sources for market transactions involving
identical assets or liabilities.
|
|
|
|
|
Level
2:
|
Valuations
for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third-party pricing
services for identical or similar assets or liabilities.
|
|
|
|
|
Level
3:
|
Valuations
incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities.
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
In
instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy,
the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input
that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular
input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
The valuation methodologies used for the Company’s financial instruments measured on a recurring basis at fair value, including
the general classification of such instruments pursuant to the valuation hierarchy, is set forth in the tables below:
|
|
As
of June 30, 2020
|
|
|
Fair
Value Measurements
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
As
of June 30, 2020
|
|
|
|
Amount
|
|
|
Value
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Liabilities:
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
Contingent
consideration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asuragen
(1)
|
|
$
|
2,861
|
|
|
$
|
2,861
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,861
|
|
Other
long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability (2)
|
|
|
33
|
|
|
|
33
|
|
|
|
-
|
|
|
|
-
|
|
|
|
33
|
|
|
|
$
|
2,894
|
|
|
$
|
2,894
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,894
|
|
|
|
As
of December 31, 2019
|
|
|
Fair
Value Measurements
|
|
|
|
Carrying
|
|
|
Fair
|
|
|
As
of December 31, 2019
|
|
|
|
Amount
|
|
|
Value
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contingent
consideration:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asuragen
(1)
|
|
$
|
2,893
|
|
|
$
|
2,893
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,893
|
|
Other
long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
liability (2)
|
|
|
82
|
|
|
|
82
|
|
|
|
-
|
|
|
|
-
|
|
|
|
82
|
|
|
|
$
|
2,975
|
|
|
$
|
2,975
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,975
|
|
(1)(2)
See Note 9, Accrued Expenses and Long-Term Liabilities
In
connection with the acquisition of certain assets from Asuragen, Inc., the Company recorded contingent consideration related to
contingent payments and other revenue-based payments. The Company determined the fair value of the contingent consideration based
on a probability-weighted income approach derived from revenue estimates. The fair value measurement is based on significant inputs
not observable in the market and thus represents a Level 3 measurement.
A
roll forward of the carrying value of the Contingent Consideration Liability and the Underwriters’ Warrants to June 30,
2020 is as follows:
Certain
of the Company’s non-financial assets, such as other intangible assets and goodwill, are measured at fair value on a nonrecurring
basis when there is an indicator of impairment and recorded at fair value only when an impairment charge is recognized.
|
|
|
|
|
|
|
|
|
|
|
Cancellation
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
Obligation/
|
|
|
to
Fair Value/
|
|
|
|
|
|
|
December
31, 2019
|
|
|
Payments
|
|
|
Accretion
|
|
|
Conversions
Exercises
|
|
|
Mark
to Market
|
|
|
June
30, 2020
|
|
|
|
(unaudited)
|
|
Asuragen
|
|
$
|
2,893
|
|
|
$
|
(308
|
)
|
|
$
|
276
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
2,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriters
Warrants
|
|
|
82
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(49
|
)
|
|
|
33
|
|
|
|
$
|
2,975
|
|
|
$
|
(308
|
)
|
|
$
|
276
|
|
|
$
|
-
|
|
|
$
|
(49
|
)
|
|
$
|
2,894
|
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Finance
lease assets are included in fixed assets, net of accumulated depreciation.
The
table below presents the lease-related assets and liabilities recorded in the Condensed Consolidated Balance Sheet:
|
|
Classification
on the Balance Sheet
|
|
June
30, 2020
|
|
|
|
|
|
|
(unaudited)
|
|
Assets
|
|
|
|
|
|
|
Financing
lease assets
|
|
Property
and equipment, net
|
|
$
|
528
|
|
Operating
lease assets
|
|
Operating
lease right of use assets
|
|
|
5,172
|
|
Total
lease assets
|
|
|
|
$
|
5,700
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Financing
lease liabilities
|
|
Other
accrued expenses
|
|
$
|
150
|
|
Operating
lease liabilities
|
|
Other
accrued expenses
|
|
|
1,171
|
|
Total
current lease liabilities
|
|
|
|
$
|
1,321
|
|
Noncurrent
|
|
|
|
|
|
|
Financing
lease liabilities
|
|
Other
long-term liabilities
|
|
|
57
|
|
Operating
lease liabilities
|
|
Operating
lease liabilities, net of current portion
|
|
|
3,940
|
|
Total
long-term lease liabilities
|
|
|
|
|
3,997
|
|
Total
lease liabilities
|
|
|
|
$
|
5,318
|
|
The
weighted average remaining lease term for the Company’s operating leases was 7.1 years as of June 30, 2020 and the weighted
average discount rate for those leases was 6.0%. The Company’s operating lease expenses are recorded within “Cost
of revenue” and “General and administrative expenses.” With respect to the Rutherford lease, in March 2020 the
Company delivered a notice of early termination which would terminate the lease in March 2021.
In
June 2020, the Company entered into an amendment of its North Carolina lease extending it for an additional ten years, commencing
on June 1, 2020 and continuing until May 31, 2030. The minimum rent per rentable square foot pursuant to the amendment is $14.10
from June 1, 2020 to May 31, 2021, with annual increases of 3%. Pursuant to the amendment, the Company has two options to extend
the term for a period of five years each. Also pursuant to the amendment, the Company has the irrevocable right to terminate the
lease on November 30, 2025, as well as on November 30, 2027.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
The
table below reconciles the cash flows to the lease liabilities recorded on the Company’s Condensed Consolidated Balance
Sheet as of June 30, 2020:
|
|
Operating
Leases
|
|
|
Financing
Leases
|
|
2020
|
|
|
991
|
|
|
|
98
|
|
2021
|
|
|
1,235
|
|
|
|
120
|
|
2022
|
|
|
1,028
|
|
|
|
13
|
|
2023
|
|
|
629
|
|
|
|
-
|
|
2024-2030
|
|
|
2,717
|
|
|
|
|
|
Total
minimum lease payments
|
|
|
6,600
|
|
|
|
231
|
|
Less:
amount of lease payments representing effects of discounting
|
|
|
1,489
|
|
|
|
24
|
|
Present
value of future minimum lease payments
|
|
|
5,111
|
|
|
|
207
|
|
Less:
current obligations under leases
|
|
|
1,171
|
|
|
|
150
|
|
Long-term
lease obligations
|
|
$
|
3,940
|
|
|
$
|
57
|
|
As
of June 30, 2020, contractual obligations with terms exceeding one year and estimated minimum future rental payments required
by non-cancelable operating leases with initial or remaining lease terms exceeding one year were as follows:
|
|
|
|
|
Less
than
|
|
|
1
to 3
|
|
|
3
to 5
|
|
|
After
|
|
|
|
Total
|
|
|
1
Year
|
|
|
Years
|
|
|
Years
|
|
|
5
Years
|
|
Operating
lease obligations
|
|
$
|
6,600
|
|
|
$
|
991
|
|
|
$
|
2,263
|
|
|
$
|
1,020
|
|
|
$
|
2,326
|
|
Total
|
|
$
|
6,600
|
|
|
$
|
991
|
|
|
$
|
2,263
|
|
|
$
|
1,020
|
|
|
$
|
2,326
|
|
8.
|
COMMITMENTS
AND CONTINGENCIES
|
Litigation
From
time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of
business. When the Company is aware of a claim or potential claim, it assesses the likelihood of any loss or exposure. If it is
probable that a loss will result and the amount of the loss can be reasonably estimated, the Company will record a liability for
the loss. In addition to the estimated loss, the recorded liability includes probable and estimable legal costs associated with
the claim or potential claim. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters
may arise from time to time that may harm the Company’s business. There is no pending litigation involving the Company at
this time.
Due
to the nature of the businesses in which the Company is engaged, it is subject to certain risks. Such risks include, among others,
risk of liability for personal injury or death to persons using products that the Company promotes or commercializes. There can
be no assurance that substantial claims or liabilities will not arise in the future due to the nature of the Company’s business
activities and recent increases in litigation related to healthcare products. There is also the risk of employment related litigation
and other litigation in the ordinary course of business.
The
Company could also be held liable for errors and omissions of its employees in connection with the services it performs that are
outside the scope of any indemnity or insurance policy. The Company could be materially adversely affected if it were required
to pay damages or incur defense costs in connection with a claim that is outside the scope of an indemnification agreement; if
the indemnity, although applicable, is not performed in accordance with its terms; or if the Company’s liability exceeds
the amount of applicable insurance or indemnity.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
9.
|
ACCRUED
EXPENSES AND LONG-TERM LIABILITIES
|
Other
accrued expenses consisted of the following as of June 30, 2020 and December 31, 2019:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
(unaudited)
|
|
|
|
|
Accrued
royalties
|
|
$
|
2,237
|
|
|
$
|
1,934
|
|
Contingent
consideration
|
|
|
654
|
|
|
|
502
|
|
Medicare
payment advance
|
|
|
2,066
|
|
|
|
-
|
|
Operating
lease liability
|
|
|
1,171
|
|
|
|
1,321
|
|
Financing
lease liability
|
|
|
150
|
|
|
|
184
|
|
Deferred
revenue
|
|
|
209
|
|
|
|
457
|
|
Payable
to CGI
|
|
|
-
|
|
|
|
888
|
|
Accrued
sales and marketing - diagnostics
|
|
|
103
|
|
|
|
197
|
|
Accrued
lab costs - diagnostics
|
|
|
125
|
|
|
|
163
|
|
Accrued
professional fees
|
|
|
1,196
|
|
|
|
1,399
|
|
Taxes
payable
|
|
|
311
|
|
|
|
403
|
|
Unclaimed
property
|
|
|
565
|
|
|
|
565
|
|
All
others
|
|
|
950
|
|
|
|
1,463
|
|
Total
other accrued expenses
|
|
$
|
9,737
|
|
|
$
|
9,476
|
|
Long-term
liabilities consisted of the following as of June 30, 2020 and December 31, 2019:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
(unaudited)
|
|
|
|
|
Warrant
liability
|
|
$
|
33
|
|
|
$
|
82
|
|
Uncertain
tax positions
|
|
|
4,210
|
|
|
|
4,081
|
|
Deferred
revenue
|
|
|
239
|
|
|
|
269
|
|
Other
|
|
|
75
|
|
|
|
141
|
|
Total
other long-term liabilities
|
|
$
|
4,557
|
|
|
$
|
4,573
|
|
10.
|
STOCK-BASED
COMPENSATION
|
Historically,
stock options have been granted with an exercise price equal to the market value of the common stock on the date of grant, expire
10 years from the date they are granted, and generally vest over a one to three-year period for employees and members of the Board.
Upon exercise, new shares will be issued by the Company. The restricted shares and restricted stock units (“RSUs”)
granted to Board members and employees generally have a three-year graded vesting period and are subject to accelerated vesting
and forfeiture under certain circumstances. In the second quarter of 2020, the Company issued performance-based options, which
requires the Company to assess the likelihood of achieving certain performance milestones on a quarterly basis; approximately
$0.3 million in stock compensation expense is expected to be incurred over the amortization period for these options.
The
following table provides the weighted average assumptions used in determining the fair value of the stock option awards granted
during the six month periods ended June 30, 2020 and 2019.
|
|
June
30, 2020
|
|
|
June
30, 2019
|
|
|
|
(unaudited)
|
|
Risk-free
interest rate
|
|
|
1.20
|
%
|
|
|
2.51
|
%
|
Expected
life
|
|
|
5.9
years
|
|
|
|
6.0
years
|
|
Expected
volatility
|
|
|
124.16
|
%
|
|
|
127.81
|
%
|
Dividend
yield
|
|
|
-
|
|
|
|
-
|
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
The
Company recognized approximately $0.4 million and $0.5 million of stock-based compensation expense during the three-month periods
ended June 30, 2020 and 2019, respectively, and approximately $0.8 million and $1.0 million for the six-month periods ended June
30, 2020 and 2019, respectively.
Generally,
accounting standards require companies to provide for income taxes each quarter based on their estimate of the effective tax rate
for the full year. The authoritative guidance for accounting for income taxes allows use of the discrete method when it provides
a better estimate of income tax expense. Due to the Company’s valuation allowance position, it is the Company’s position
that the discrete method provides a more accurate estimate of income tax expense and therefore income tax expense for the current
quarter has been presented using the discrete method. As the year progresses, the Company refines its estimate based on the facts
and circumstances by each tax jurisdiction. The following table summarizes income tax expense on loss from continuing operations
and the effective tax rate for the three- and six-month periods ended June 30, 2020 and 2019:
|
|
Three
Months Ended
|
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income tax
|
|
$
|
13
|
|
|
$
|
5
|
|
|
$
|
28
|
|
|
$
|
10
|
|
Effective
income tax rate
|
|
|
0.2
|
%
|
|
|
0.1
|
%
|
|
|
0.2
|
%
|
|
|
0.1
|
%
|
Income
tax expense for both the three- and six-month periods ended June 30, 2020 and 2019 was primarily due to minimum state and local
taxes.
The
Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in March 2020. The CARES Act includes
several U.S. income tax provisions related to, among other things, net operating loss carrybacks, alternative minimum tax credits,
modifications to the net interest deduction limitations, and technical amendments regarding the income tax depreciation of qualified
improvement property placed in service after December 31, 2017. The CARES Act is not expected to have a material impact on the
Company’s financial results.
We
operate under one segment which is the business of developing and selling clinical and pharma services.
13.
|
DISCONTINUED
OPERATIONS
|
The
components of liabilities classified as discontinued operations consist of the following as of June 30, 2020 and December 31,
2019:
|
|
June
30, 2020
|
|
|
December
31, 2019
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Accrued
liabilities
|
|
|
766
|
|
|
|
766
|
|
Current
liabilities from discontinued operations
|
|
|
766
|
|
|
|
766
|
|
Total
liabilities
|
|
$
|
766
|
|
|
$
|
766
|
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
14.
|
REVOLVING
LINE OF CREDIT
|
On
November 13, 2018, the Company, Interpace Diagnostics Corporation, and Interpace Diagnostics, LLC entered into the SVB Loan Agreement,
which provides for up to $4.0 million of debt financing consisting of a term loan of up to $850,000 and a Revolving Line of Credit
based on its outstanding accounts receivable of up to $3.75 million. The ability to use the term loan portion of the SVB Loan
Agreement expired in 2019.
Borrowings
under the Revolving Line of Credit are typically the lower of: (i) $3.75 million or (ii) 80% of the Company’s eligible accounts
receivable (as adjusted by SVB). Revolving Line of Credit outstanding amounts incur interest at a rate per annum equal to the
Wall Street Journal Prime Rate plus 0.5%. The Company is also required to pay an unused Revolving Line of Credit facility fee
monthly in arrears in an amount equal to 0.35% per annum of the average unused but available portion of the Revolving Line of
Credit. The Revolving Line of Credit has a maturity date three years from the effective date, or November 13, 2021. As of June
30, 2020, the outstanding balance on the revolving Line of Credit was $3.4 million.
As
of July 31, 2020, the Company was in violation of a quick ratio financial covenant under the SVB Loan Agreement. Additionally,
due to the untimely filing of this Report with the SEC subsequent to the filing deadline, the Company was in violation of the
SVB Loan Agreement. While the Company has received a waiver of default from SVB and is in compliance with the terms of the SVB
Loan Agreement as of the date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit.
The
Company however expects to reinstate the Revolving Line of Credit in the near term, and is in negotiations with SVB to expand
the borrowing base from $4.0 million to $8.0 million. The expansion of the Revolving Line of Credit, however, also requires approval
of the holders of the Company’s Series B convertible preferred stock and the Company cannot provide assurance that such
expansion or approval will be successful.
During
September 2020, the Company paid down the outstanding Revolving Line of Credit balance in full. Additionally during September
2020, the Company transferred $0.35 million into a restricted cash money market account with SVB to serve as collateral for the
Company’s letters of credit supporting two of its facilities. Prior to September 2020, the collateral for the letters of
credit was accounted for as a reduction in availability under the Revolving Line of Credit.
15.
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
The
following table represents cash flows used in the Company’s discontinued operations for the six months ended June 30, 2020
and 2019:
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
Net
cash used in operating activities of discontinued operations
|
|
$
|
-
|
|
|
$
|
(30
|
)
|
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Supplemental
Disclosures of Non Cash Activities
(in
thousands)
|
|
Six
Months Ended
|
|
|
|
June
30,
|
|
|
|
2020
|
|
|
2019
|
|
|
|
(unaudited)
|
|
|
|
|
Operating
|
|
|
|
|
|
|
|
|
Adoption
of ASC 842 - right of use asset
|
|
$
|
-
|
|
|
$
|
2,190
|
|
Adoption
of ASC 842 - operating lease liability
|
|
$
|
-
|
|
|
$
|
(2,312
|
)
|
Prepaid
stock grants issued to vendors
|
|
$
|
-
|
|
|
$
|
73
|
|
Taxes
accrued for repurchase of restricted shares
|
|
$
|
49
|
|
|
$
|
-
|
|
Investing
|
|
|
|
|
|
|
|
|
Accrued
Financing costs
|
|
$
|
314
|
|
|
$
|
-
|
|
Preferred
Stock Deemed Dividend
|
|
$
|
3,033
|
|
|
$
|
-
|
|
Preferred
Stock Issuance
Securities
Purchase and Exchange Agreement
On
January 10, 2020, the Company entered into a Securities Purchase and Exchange Agreement (the “Securities Purchase and Exchange
Agreement”) with 1315 Capital and Ampersand 2018 Limited Partnership (“Ampersand” and, together with 1315 Capital,
the “Investors”) pursuant to which the Company agreed to sell to the Investors an aggregate of $20.0 million in Series
B convertible preferred stock of the Company, par value $0.01 per share (the “Series B Preferred Stock”), at an issuance
price per share of $1,000. Pursuant to the Securities Purchase and Exchange Agreement, 1315 Capital agreed to purchase 19,000
shares of Series B Preferred Stock at an aggregate purchase price of $19.0 million and Ampersand agreed to purchase 1,000 shares
of Series B Preferred Stock at an aggregate purchase price of $1.0 million.
In
addition, the Company agreed to exchange $27.0 million of the Company’s existing Series A convertible preferred stock, par
value $0.01 per share, held by Ampersand (the “Series A Preferred Stock”), represented by 270 shares of Series A Preferred
Stock with a stated value of $100,000 per share, which represents all of the Company’s issued and outstanding Series A Preferred
Stock, for 27,000 newly issued shares of Series B Preferred Stock (such shares of Series B Preferred Stock, the “Exchange
Shares” and such transaction, the “Exchange”). Following the Exchange, no shares of Series A Preferred Stock
remained designated, authorized, issued or outstanding. The Series B Preferred Stock has a conversion price of $6.00 as compared
to a conversion price of $8.00 on the Series A Preferred Stock, but did not include certain rights applicable to the Series A
Preferred Stock, including a six-percent (6%) dividend and a conversion price adjustment for any failure by the Company to achieve
a revenue target of $34.0 million in 2020 related to its clinical services or a weighted-average anti-dilution adjustment. Under
the terms of the Securities Purchase and Exchange Agreement, Ampersand also agreed to waive all dividends and weighted-average
anti-dilution adjustments accrued to date on the Series A Preferred Stock.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
A
convertible financial instrument includes a beneficial conversion feature if its conversion price is lower than the Company’s
stock price at the commitment date. The Company determined that the sale of the Series B Preferred resulted in a beneficial conversion
feature with an intrinsic value of $2.2 million, which the Company recorded as a reduction to additional paid-in capital upon
the sale of the Series B Preferred stock. The Company calculated the intrinsic value of the beneficial conversion feature as the
difference between the estimated fair value of the common stock on January 15, 2020 of $6.79 per share and the effective conversion
price per share of $6.00 multiplied by the number of shares of common stock issuable upon conversion. The Company fully amortized
the beneficial conversion feature during the three months ended March 31, 2020 in accordance with GAAP. The beneficial conversion
feature resulted in an increase in the loss attributable to common shareholders for the three months ended March 31, 2020 in the
Condensed Consolidated Statement of Operations, as it represented a deemed dividend to the preferred shareholders.
In
April 2020, the Company entered into support agreements with each of the Series B Investors, pursuant to which Ampersand and 1315
Capital, respectively, consented to, and agreed to vote (by proxy or otherwise), all shares of Series B Preferred Stock registered
in its name or beneficially owned by it and/or over which it exercises voting control as of the date of the Support Agreement
and any other shares of Series B Preferred Stock legally or beneficially held or acquired by such Series B Investor after the
date of the Support Agreement or over which it exercises voting control, in favor of any Fundamental Action desired to be taken
by the Company as determined by the Board. For purposes of each Support Agreement, “Fundamental Action” means any
action proposed to be taken by the Company and set forth in Section 4(d)(i), 4(d)(ii), 4(d)(v), 4(d)(vi), 4(d)(viii) or 4(d)(ix)
of the Certificate of Designation of Series B Preferred Stock or Section 8.5.1.1, 8.5.1.2, 8.5.1.5, 8.5.1.6, 8.5.1.8 or 8.5.1.9
of the Amended and Restated Investor Rights Agreement. See Note 19, Subsequent Events for a discussion of the termination
of the support agreement with Ampersand.
ATM
program
On
September 20, 2019, the Company entered into an Equity Distribution Agreement with Oppenheimer & Co. Inc., as sales agent
(the “Agent”), pursuant to which the Company may, from time to time, issue and sell shares of its Common Stock, at
an aggregate offering price of up to $4.8 million (the “Shares”) through the Agent. Under the terms of the Equity
Distribution Agreement, the Agent may sell the Shares at market prices by any method that is deemed to be an “at the market
offering” as defined in Rule 415 under the Securities Act of 1933, as amended.
Subject
to the terms and conditions of the Equity Distribution Agreement, the Agent will use its commercially reasonable efforts to sell
the Shares from time to time, based upon the Company’s instructions. The Company has no obligation to sell any of the Shares
and may, at any time, suspend sales under the Equity Distribution Agreement or terminate the Equity Distribution Agreement in
accordance with its terms. The Company has provided the Agent with customary indemnification rights, and the Agent will be entitled
to a fixed commission of 3.0% of the aggregate gross proceeds from the Shares sold. The Equity Distribution Agreement contains
customary representations and warranties and the Company is required to deliver customary closing documents and certificates in
connection with sales of the Shares. As of June 30, 2020, approximately 178,000 shares have been sold for net proceeds to the
Company of approximately $0.7 million.
As
a result of the January 10, 2020 Securities Purchase and Exchange Agreement, additional Shares may no longer be sold under the
ATM arrangement without a majority approval by the holders of the Series B Preferred Stock in accordance with the Amended and
Restated Investor Rights Agreement entered into on that date. In addition, if our common stock is delisted by Nasdaq due to our
failure to meet minimum stockholders’ equity requirements, we may no longer be eligible to sell under the Agreement as well.
See Note 19, Subsequent Events.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Warrants
outstanding and warrant activity for the three- and six-months ended June 30, 2020 are as follows:
Description
|
|
Classification
|
|
|
Exercise
Price
|
|
|
Expiration
Date
|
|
Warrants
Issued
|
|
|
Warrants
Exercised
|
|
|
Warrants
Cancelled/ Expired
|
|
|
Balance
December
31,
2019
|
|
|
Balance
June
30,
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private
Placement Warrants, issued January 25, 2017
|
|
|
Equity
|
|
|
$
|
46.90
|
|
|
June
2022
|
|
|
85,500
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85,500
|
|
|
|
85,500
|
|
RedPath Warrants,
issued March 22, 2017
|
|
|
Equity
|
|
|
$
|
46.90
|
|
|
September
2022
|
|
|
10,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
10,000
|
|
Underwriters
Warrants, issued June 21, 2017
|
|
|
Liability
|
|
|
$
|
13.20
|
|
|
December
2022
|
|
|
57,500
|
|
|
|
-
|
|
|
|
(4,000
|
)
|
|
|
53,500
|
|
|
|
53,500
|
|
Base
& Overallotment Warrants, issued June 21, 2017
|
|
|
Equity
|
|
|
$
|
12.50
|
|
|
June
2022
|
|
|
1,437,500
|
|
|
|
(567,286
|
)
|
|
|
-
|
|
|
|
870,214
|
|
|
|
870,214
|
|
Vendor Warrants,
issued August 6, 2017
|
|
|
Equity
|
|
|
$
|
12.50
|
|
|
August
2020
|
|
|
15,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
15,000
|
|
|
|
15,000
|
|
Warrants issued
October 12, 2017
|
|
|
Equity
|
|
|
$
|
18.00
|
|
|
April
2022
|
|
|
320,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
320,000
|
|
|
|
320,000
|
|
Underwriters
Warrants, issued January 25, 2019
|
|
|
Equity
|
|
|
$
|
9.40
|
|
|
January
2022
|
|
|
65,434
|
|
|
|
-
|
|
|
|
-
|
|
|
|
65,434
|
|
|
|
65,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,990,934
|
|
|
|
(567,286
|
)
|
|
|
(4,000
|
)
|
|
|
1,419,648
|
|
|
|
1,419,648
|
|
18.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
Standards
not yet effective
In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU
2019-12”). ASU 2019-12 will simplify the accounting for income taxes by removing certain exceptions to the general principles
in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying
and amending existing guidance. The amendment is effective for annual periods beginning after December 15, 2020. We do not expect
that the requirements of ASU 2017-04 will have a material impact on our consolidated financial statements.
INTERPACE
BIOSCIENCES, INC.
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Tabular
information in thousands, except per share amounts)
Audit
Committee Investigation
In
July 2020, the Company received letters from employees, one of whom has left the Company’s employ, concerning certain employment
and billing and compliance matters. In response, the Company informed its Audit Committee and Regulatory Compliance Committee
as well as its independent registered public accounting firm. The Audit Committee commenced an investigation of these matters
with the assistance of independent counsel and advisors thereto. The Audit Committee concluded that the allegations were not substantiated
and that there was no evidence of any illegal acts.
Untimely
SEC Filing and Nasdaq Notification
On
August 14, 2020 the Company filed Form 12b-25 with the SEC, which stated that the Company was unable to file timely its Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 2020 due to the investigation being conducted by the Company’s
Audit Committee discussed in the preceding paragraph. The Audit Committee was unable to conclude their investigation by the SEC
filing deadline. On August 18, 2020, the Company was notified by Nasdaq that it is in non-compliance with Listing Rule 5250(c)(1),
which requires the timely filing of periodic financial statements. The Company was provided 60 days to submit its plan to show
compliance with the filing requirement. Upon the filing of this Form 10-Q with the SEC, the Company believes it will have remedied
the Nasdaq non-compliance issue due to the untimely filing.
Nasdaq
Minimum Stockholders’ Equity Requirement
As
of June 30, 2020, the Company was not in compliance with the Nasdaq Listing Rule 5550(b)(1), which requires the minimum stockholders’
equity required for continued listing to be in excess of $2.5 million. While the Company notified Nasdaq in advance that it would
not be in compliance upon filing of this Report, the Company anticipates that it will receive a letter from Nasdaq notifying it
of the failure to meet this listing requirement shortly after the filing of this Report. The Company is currently working on developing
a plan to remedy this Nasdaq continued listing requirement.
Revolving
Line of Credit
As
of July 31, 2020, the Company was in violation of a financial covenant under the SVB Loan Agreement. Additionally, due to the
untimely filing of this Report with the SEC subsequent to the filing deadline, the Company was in violation of the SVB Loan Agreement.
While the Company has received a waiver of default from SVB and is in compliance with the terms of the SVB Loan Agreement as of
the date of this Report, we currently do not have the ability to drawn down on the Revolving Line of Credit.
As
of June 30, 2020, the outstanding balance on the SVB Revolving Line of Credit was $3.4 million. During September 2020, the Company
paid down the outstanding Revolving Line of Credit balance in full. Additionally during September 2020, the Company transferred
$0.35 million into a restricted cash money market account with SVB to serve as collateral for the Company’s letters of credit
supporting two of its facilities. Prior to September 2020, the collateral for the letters of credit was accounted for as a reduction
in the availability under the Revolving Line of Credit.
Ampersand
Support Agreement Termination
In
April 2020, the Company entered into a support agreement with Ampersand pursuant to which Ampersand agreed to vote the shares
of the Company owned by it in favor of certain fundamental actions, as determined by the Company’s Board of Directors, primarily
with respect to our potential application for a U.S. Small Business Administration Paycheck Protection Program of 2020 loan (“PPP
Loan”). As the Company subsequently determined that it would not apply for a PPP Loan, the support agreement between the
Company and Ampersand was terminated by mutual agreement on July 9, 2020. The support agreement entered into with 1315 Capital
remains in effect.
INTERPACE
BIOSCIENCES, INC