Great Basin Scientific, Inc. (NASDAQ: GBSN), a molecular diagnostic testing company, today reported financial results for the fourth quarter and the full year ended December 31, 2015. For the fourth quarter of 2015, revenue was $611,870, increasing 37.4% over the fourth quarter of 2014. For the year ended December 31, 2015 revenue was $2,142,040, an increase of 33.4% compared to the 12 months ended December 31, 2014.
Fourth Quarter 2015 Financial and Business Highlights
- 186 revenue-generating customers as of December 31, 2015, increasing to 201 as of January 31, 2016.
- Continued adoption of its Group B Strep (GBS) assay, with 70 customers actively using or evaluating the test, representing 35% of its active installed base as of January 31, 2016.
- Submitted 510(k) application to the U.S. Food & Drug Administration (FDA) for its fourth assay, Shiga Toxin Direct Test. Upon FDA clearance, Great Basin will have the only stand-alone molecular test for detecting Shiga toxin-producing E. coli (STEC) and the serotype O157 directly from patient specimen.
- Continued discussion and correspondence with the FDA on its two latest 510(k) submissions, Shiga Toxin Direct Test and Staph ID/R Blood Culture Panel; expectation that the FDA will render its final response in the first quarter of 2016.
- Entered into a securities purchase agreement with institutional investors to issue $22.1 million of senior convertible notes and related warrants and fund up to $18.4 million in gross proceeds.
- On January 21st, 2016 completed the conversion of all outstanding Series C Warrants into shares of common stock.
“2015 was a year of foundation-building for Great Basin and we’re pleased with the progress we were able to make to that end,” said Ryan Ashton, co-founder and Chief Executive Officer. “Our growing menu and customer base are the key indicators of our ability to perform, and in 2015 we met or exceeded our aggressive goals for both. We surpassed our customer target of 170-180 revenue-generating accounts, ending the year with 186 sites – before adding another 15 customers in January 2016 alone. We executed to plan on our menu goals by completing two difficult clinical trials and submitting 510(k) applications for both in 2015. As we have previously stated, we expect response from FDA on our 510(k) submissions for Shiga Toxin Direct Test and Staph ID/R Blood Culture Panel by the end of the first quarter of 2016.”
Mr. Ashton continued, “In 2016 we will be building on these fundamentals of growing our customer base and expanding our menu. We plan to begin clinical trials on four to five new products this year and expect three or four of them to complete trials and be submitted to the FDA for 510(k) clearance by the end of the year. We expect that our continually-expanding menu will drive ongoing demand for our easy-to-use and cost effective system – which delivers greater cost-benefits and value to labs with every added assay – and are confident we will continue to produce strong customer growth in 2016 and solid revenue growth in 2017 and beyond.”
Great Basin Scientific’s Fourth Quarter 2015 Results
Total revenues for the fourth quarter of 2015 were $611,870, compared to $445,283 for the same period in 2014, representing an increase of 37.4%. Continued growth in Great Basin’s customer base as well as ongoing adoption of its Group B Strep assay drove the year-over-year increase.
Great Basin ended the fourth quarter with 186 U.S. customers and 31 evaluations in-progress or scheduled, compared to 143 customers and 64 evaluations during the third quarter ending September 30, 2015.
Operating expenses were $6.1 million in the fourth quarter of 2015, as compared to $2.9 million in the fourth quarter of 2014. Research and development expenses increased by $0.9 million over the fourth quarter of 2014 to $2.2 million, primarily due to increased regulatory activities related to our Staph ID/R Blood Culture and Shiga Toxin Direct assays as well as growth in our development pipeline. Selling and marketing expenses increased by $1.1 million over the fourth quarter of 2014 to $1.8 million, reflecting increases in sales commissions and other marketing costs related to growing our customer base. General and administrative costs increased by $1.2 million compared to fourth quarter of 2014 to $2.1 million, due to costs associated with increased business activities.
Loss from operations was $6.9 million for the fourth quarter, compared to $3.7 million for the same period of 2014.
Net loss was $18.9 million for the fourth quarter of 2015, compared to net income of $1.5 million for the same period in 2014.
Basic net loss per share was $5.15 for the fourth quarter of 2015, compared to basic net income per share of $19.60 for the same period in 2014. Diluted net loss per share was $5.15 for the fourth quarter of 2015, compared to diluted net income per share of $8.39 for the same period in 2014.
Great Basin Scientific’s Full Year 2015 Results
Total revenues for the year ended December 31, 2015 was $2.1 million, compared to $1.6 million for the year ended December 31 2014, representing an increase of 33.4%. Growth in Great Basin’s customer base, increased system utilization as well as adoption of its Group B Strep assay drove the year-over-year increase.
Operating expenses were $19.7 million for the year ended December 31, 2015, as compared to $9.8 million for the year ended December 31, 2014. Research and development expenses of $8.5 million increased by $3.9 million over the full year of 2014, primarily due to clinical trials and regulatory submissions for our Staph ID/R Blood Culture and Shiga Toxin Direct assays as well as increased product pipeline development. Selling and marketing expenses increased by $2.7 million over the year ended December 31, 2014 to $5.0 million, reflecting additional sales force hires, increased selling commissions and other costs as the Company grew the customer base by 121%. General and administrative costs increased by $3.3 million over the year ended December 31, 2014, to $6.2 million due to increased business activities and costs associated with operating as a public company.
Loss from operations was $22.4 million for the year ended December 31, 2015, compared to $12.2 million for the same period of 2014.
Net loss was $57.9 million for the year ended December 31, 2015, compared to a net loss of $21.7 million for the same period in 2014.
Basic and diluted net loss per share was $51.17 for the year ended December 31, 2015, compared to basic and diluted net loss per share of $1,039.41 for the same period in 2014.
Common Stock Issued and Series C Warrants
During the fourth quarter of 2015, the Company issued 7,212,367 shares of common stock as the result of: the cashless exercise of 6,532,583 Series C Warrants for 7,014,407 shares of common stock; conversion of 16,039 Series E Preferred Stock into 1,070 shares of common stock; and the cash exercise of 14,750 Unit Purchase Options with the immediate conversion of the underlying Series E Preferred Stock into 984 shares of common stock and cashless exercise of Series C Warrants for 195,906 shares of common stock.
On December 30, 2015, the Company exchanged and cancelled 1,050,000 Series C Warrants for the issuance of $2.1 million in senior secured convertible notes and associated Series D Warrants.
On January 21, 2016, the Series C Warrants expired and any remaining Series C Warrants were mandatorily converted into shares of common stock. As of that date the Company had 75.6 million shares of common stock issued and outstanding.
Non-GAAP Financial Measure
This press release includes an Adjusted Net Loss “non-GAAP financial measure” as defined by the U.S. Securities and Exchange Commission (SEC). The presentation of this financial information, which is not prepared under any comprehensive set of accounting rules or principles, is not intended to be considered in isolation of, or as a substitute for the financial information prepared and presented in accordance with generally accepted accounting principles (GAAP). For reconciliation of this non-GAAP financial measure to the nearest comparable GAAP measure, see “Reconciliation of Non-GAAP Financial Measure” included in this press release.
Reconciliation of Non-GAAP Financial Measure
Adjusted Net Loss
The Company excludes the value of components of the derivative liability in calculating adjusted net loss because it is non-cash in nature and because the Company believes that the non-GAAP financial measures excluding this item provide meaningful supplemental information regarding operational performance. The Company further believes this measure is useful to investors in that it allows for greater transparency to certain line items in its financial statements and facilitates comparisons to peer operating results.
| GREAT BASIN SCIENTIFIC, INC. | ||||||||||||||||||||||||
| ADJUSTED NET LOSS | ||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||
| Three Months Ended | Years Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| The calculation of adjusted net loss is as follows: | 2015 | 2014 | 2015 | 2014 | ||||||||||||||||||||
| Net income (loss) | $ | (18,942,587 | ) | $ | 1,503,084 | $ | (57,899,169 | ) | $ | (21,727,818 | ) | |||||||||||||
| Adjustment for derivative liability included in interest | 10,594,182 | - | 10,594,182 | - | ||||||||||||||||||||
| Adjustment for loss on extinguishment of warrants | 4,038,063 | - | 4,038,063 | - | ||||||||||||||||||||
| Adjustment for change in fair value of derivative liability | (2,926,817 | ) | (5,504,231 | ) | 19,714,808 | 8,396,169 | ||||||||||||||||||
| Adjusted net loss | $ | (7,237,159 | ) | $ | (4,001,147 | ) | $ | (23,552,116 | ) | $ | (13,331,649 | ) | ||||||||||||
Derivative Liability included in Interest
The portion of the derivative liability that is included in interest for the three months ended December 31, 2015 resulted in non-cash other expense in the amount of $10.6 million. This is a non-cash charge as the result of the excess of the fair value of the conversion feature of the convertible notes payable and the associated Series D Warrants over the face value of the notes.
Loss on Extinguishment of Warrants
The Loss on extinguishment of warrants for the three months ended December 31, 2015 resulted in a non-cash other expense in the amount of $4.0 million. This non-cash expense is the result of the exchange of 1,050,000 Series C Warrants for the issuance of $2.1 million in convertible debt and associated Series D Warrants and represents the difference between the fair value of the warrants extinguished and the fair value of the convertible debt and Series D Warrants.
Change in Fair Value of Derivative Liability
The change in fair value of our instruments recorded as derivative liabilities for the three months ended December 31, 2015 resulted in a non-cash gain of $2.9 million as a result of a decrease in the value of the common stock during the period. The value of the common stock during the fourth quarter decreased to $0.94 on December 31, 2015 from $6.12 on September 30, 2015.
The change in fair value of our instruments recorded as derivative liabilities for the three months ended December 31, 2014 resulted in non-cash gain in the amount of $5.5 million. This is the result of a decrease in the fair value of our derivative instruments due the decrease or our common stock price during the period.
The fair value of the derivative liability increased for the year ended December 31, 2015 resulting in a non-cash other expense in the amount of $19.7 million. The increase was due mainly to the follow-on offering of the sale of Units in February 2015 with the excess of the fair value of the components of the offering over the net proceeds resulting in a loss in earnings. This loss was partially offset by a gain as the result of a decrease the estimated fair value of instruments recorded as derivative liabilities during the twelve months ended December 31, 2015. This decrease was caused mainly by the decrease in the common stock price.
The change in fair value of the derivative liability for the year ended December 31, 2014 resulted in non-cash other expense in the amount of $8.4 million. This is the result of an increase of the fair value of our warrants recorded as derivative liabilities as the Company approached the IPO date offset by the decrease in fair value since the IPO of these and other derivative instruments due to decrease in our common stock price.
Forward-Looking Statements
This press release includes forward-looking statement, including but not limited to, statements regarding potential FDA clearance of the Company’s Shiga toxin-producing E. coli test, the Company having the only stand-alone molecular test for detecting Shiga toxin-producing E. coli (STEC) and the serotype O157 directly from patient specimen, expected timing for the FDA approval of the Shiga Toxin Direct Test and Staph ID/R Blood Culture Panel, the Company growing its customer base and expanding its menu, planned clinical trials on four to five new products, expected completion of trials and submissions to the FDA, the expectation that an expanded menu will drive demand for the Company’s systems, the Company delivering strong customer growth in 2016 and revenue growth in 2017 and beyond. Forward-looking statements involve risk and uncertainties, which could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risk and uncertainties include, but are not limited to: our limited operating history and history of losses; our ability to develop and commercialize new products and the timing of commercialization; our ability to obtain capital when needed; the Company not meeting all the requirements for the release of funds from its restricted accounts; the Company not being able to implement its business plan due to unexpected regulatory delays and other risks set forth in the Company’s filings with the Securities and Exchange Commission, including the risks set forth in the company’s Annual Report on Form 10-K for the year ended December 30, 2015. These forward-looking statements speak only as of the date hereof and Great Basin Scientific specifically disclaims any obligation to update these forward-looking statements, except as required by law.
| GREAT BASIN SCIENTIFIC, INC. | ||||||||
| BALANCE SHEETS | ||||||||
| December 31, | December 31, | |||||||
| 2015 | 2014 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,787,759 | $ | 2,017,823 | ||||
| Cash, Restricted | 13,800,000 | - | ||||||
| Accounts receivable, net | 411,390 | 267,485 | ||||||
| Inventory | 1,133,142 | 457,094 | ||||||
| Prepaid and other current assets | 564,910 | 376,778 | ||||||
| Total current assets | 20,697,201 | 3,119,180 | ||||||
| Intangible assets, net | 119,171 | 216,580 | ||||||
| Property and equipment, net | 7,741,991 | 4,237,467 | ||||||
| Total assets | $ | 28,558,363 | $ | 7,573,227 | ||||
| Liabilities and Stockholders' Deficit | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 2,432,459 | $ | 1,369,169 | ||||
| Accrued expenses | 1,313,149 | 612,359 | ||||||
| Current portion of notes payable | 5,693 | 49,994 | ||||||
| Current portion of convertible notes payable, net of discount | 1,638,717 | - | ||||||
| Notes payable - related party, net of discount | 500,000 | 441,667 | ||||||
| Current portion of capital lease obligations | 1,305,426 | 947,422 | ||||||
| Total current liabilities | 7,195,444 | 3,420,611 | ||||||
| Notes payable, net of current portion | - | 5,693 | ||||||
| Convertible notes payable, net of current portion | 525,000 | - | ||||||
| Capital lease obligations, net of current portion | 851,410 | 2,156,837 | ||||||
| Derivative liability | 43,181,472 | 9,998,636 | ||||||
| Total liabilities | 51,753,326 | 15,581,777 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders' deficit: | ||||||||
| Preferred stock, $.001 par value, 5,000,000 shares authorized; | ||||||||
| 88,347 and 0 shares issued and outstanding, respectively | 88 | — | ||||||
| Common stock, $.001 par value: 200,000,000 shares authorized; | ||||||||
| 10,390,408 and 84,777 shares issued and outstanding, respectively | 1,039 | 8 | ||||||
| Additional paid-in capital | 98,707,775 | 55,996,138 | ||||||
| Accumulated deficit | (121,903,865 | ) | (64,004,696 | ) | ||||
| Total stockholders' deficit | (23,194,963 | ) | (8,008,550 | ) | ||||
| Total liabilities and stockholders' deficit | $ | 28,558,363 | $ | 7,573,227 | ||||
| GREAT BASIN SCIENTIFIC, INC. | |||||||||||||||||
| STATEMENTS OF OPERATIONS | |||||||||||||||||
| Three Months Ended | Years Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| Revenues | $ | 611,870 | $ | 445,283 | $ | 2,142,040 | $ | 1,606,254 | |||||||||
| Cost of sales | 1,444,147 | 1,207,032 | 4,813,415 | 3,968,185 | |||||||||||||
| Gross loss | (832,277 | ) | (761,749 | ) | (2,671,375 | ) | (2,361,931 | ) | |||||||||
| Operating expenses: | |||||||||||||||||
| Research and development | 2,201,498 | 1,344,764 | 8,485,668 | 4,609,913 | |||||||||||||
| Selling and marketing | 1,800,363 | 654,828 | 5,007,320 | 2,301,610 | |||||||||||||
| General and administrative | 2,108,460 | 924,106 | 6,241,433 | 2,928,186 | |||||||||||||
| (Gain) loss on sale of assets | — | — | — | (8,166 | ) | ||||||||||||
| Total operating expenses | 6,110,321 | 2,923,698 | 19,734,421 | 9,831,543 | |||||||||||||
| Loss from operations | (6,942,598 | ) | (3,685,447 | ) | (22,405,796 | ) | (12,193,474 | ) | |||||||||
| Other income (expense): | |||||||||||||||||
| Interest expense | (10,888,858 | ) | (316,819 | ) | (11,757,445 | ) | (1,136,054 | ) | |||||||||
| Interest income | 115 | 1,119 | 18,193 | 3,176 | |||||||||||||
| Loss on extinguishment of warrants | (4,038,063 | ) | — | (4,038,063 | ) | — | |||||||||||
| Change in fair value of derivative liability | 2,926,817 | 5,504,231 | (19,714,808 | ) | (8,396,169 | ) | |||||||||||
| Total other income (expense) | (11,999,989 | ) | 5,188,531 | (35,492,123 | ) | (9,529,047 | ) | ||||||||||
| Income (loss) before provision for income taxes | (18,942,587 | ) | 1,503,084 | (57,897,919 | ) | (21,722,521 | ) | ||||||||||
| Provision for income taxes | - | - | (1,250 | ) | (5,297 | ) | |||||||||||
| Net income (loss) | (18,942,587 | ) | 1,503,084 | (57,899,169 | ) | (21,727,818 | ) | ||||||||||
| Net income (loss) per common share - basic | $ | (5.15 | ) | $ | 19.60 | $ | (51.17 | ) | $ | (1,039.41 | ) | ||||||
| Weighted average common shares - basic | 3,675,169 | 76,696 | 1,131,502 | 20,904 | |||||||||||||
| Net income (loss) per common share - diluted | $ | (5.15 | ) | $ | 8.39 | $ | (51.17 | ) | $ | (1,039.41 | ) | ||||||
| Weighted average common shares - diluted | 3,675,169 | 179,212 | 1,131,502 | 20,904 | |||||||||||||
| GREAT BASIN SCIENTIFIC, INC. | ||||||||
| STATEMENTS OF CASH FLOWS | ||||||||
| Years Ended December 31, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (56,427,341 | ) | (21,727,818 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 1,612,086 | 1,157,976 | ||||||
| Change in fair value of derivative liability | 32,975,740 | 8,396,169 | ||||||
| Gain on sale of assets | — | (8,166 | ) | |||||
| Interest converted to preferred stock | — | 13,129 | ||||||
| Employee stock compensation | 110,124 | 297,244 | ||||||
| Warrant issuance and modifications | 575,208 | 25,063 | ||||||
| Debt discount amortization | 58,333 | 41,667 | ||||||
| Asset disposal | — | 11,124 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in accounts receivable, net | (143,905 | ) | (83,070 | ) | ||||
| Increase in inventory | (676,048 | ) | (136,855 | ) | ||||
| Increase in prepaid and other assets | (56,797 | ) | (217,597 | ) | ||||
| Increase in accounts payable | 602,056 | 823,409 | ||||||
| Increase in accrued liabilities | 700,790 | (203,455 | ) | |||||
| Net cash used in operating activities | (20,669,754 | ) | (11,611,180 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Acquisition of property and equipment | (1,566,044 | ) | (248,133 | ) | ||||
| Construction of equipment | (3,226,943 | ) | (1,757,360 | ) | ||||
| Proceeds from sale of assets | — | 35,000 | ||||||
| Proceeds from sale leaseback | — | 1,500,000 | ||||||
| Net cash used in investing activities | (4,792,987 | ) | (470,493 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from issuance of common stock | - | 6,375,837 | ||||||
| Proceeds from exercise of warrants | 3,161,220 | 31,600 | ||||||
| Proceeds from issuance of convertible notes payable | 4,135,000 | 100,000 | ||||||
| Proceeds from issuance of convertible notes payable - related party | — | 300,000 | ||||||
| Proceeds from issuance of preferred stock | — | 6,569,886 | ||||||
| Proceeds from follow-on offering | 21,933,874 | - | ||||||
| Proceeds from issuance of notes payable - related party | 250,000 | 890,000 | ||||||
| Principal payments of capital leases | (947,423 | ) | (944,606 | ) | ||||
| Principal payments of notes payable | (49,994 | ) | (44,644 | ) | ||||
| Principal payments of notes payable -related party | (250,000 | ) | (390,000 | ) | ||||
| Net cash provided by financing activities | 28,232,677 | 12,888,073 | ||||||
| Net increase in cash | 2,769,936 | 806,400 | ||||||
| Cash, beginning of the period | 2,017,823 | 1,211,423 | ||||||
| Cash, end of the period | $ | 4,787,759 | $ | 2,017,823 | ||||
| Supplemental disclosures of cash flow information: | ||||||||
| Interest paid | $ | 1,055,255 | $ | 1,121,066 | ||||
| Income taxes paid | $ | 1,250 | $ | 6,447 | ||||
| Supplemental schedule of non-cash investing and financing activities: | ||||||||
| Conversion of preferred stock to common stock | $ | 2,651 | $ | 18,846,539 | ||||
| Issuance of preferred stock as debt discount | $ | — | $ | 100,000 | ||||
| Restricted Cash from Convertible Debt | $ | 13,800,000 | $ | — | ||||
| Conversion of note payable to preferred stock | $ | — | $ | 400,000 | ||||
| Assets acquired through capital leases | $ | — | $ | 807,272 | ||||
| Offering costs incurred but unpaid | $ | 235,020 | $ | 64,760 | ||||
| Property and equipment included in accounts payable | $ | 226,214 | $ | 393,119 | ||||
| Cashless exercise of warrants | $ | 1,011 | $ | — | ||||
| Change in derivative liability from convertible debt | $ | 15,731,315 | $ | — | ||||
| Change in derivative liability from exercised and issued warrants | $ | 39,151,949 | $ | 1,586,181 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160301006949/en/
Contacts:
ICR
Kate Ottavio Kent, 203-682-8276
Kate.Ottavio-Kent@icrinc.com
or
Investor
Relations:
ICR
David Clair, 646-277-1266
David.Clair@icrinc.com
