Great Basin Scientific, Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE - November 16, 2015

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8-K - Great Basin Scientific, Inc.gb8k_111615.htm

Exhibit 99.1



Great Basin Reports Third Quarter 2015 Results

Salt Lake City, November 16, 2015 – Great Basin Scientific, Inc. (NASDAQ: GBSN), a molecular diagnostic testing company, today reported financial results for the third quarter ended September 30, 2015.

Third Quarter 2015 Financial and Business Highlights
 
·
Revenue for the third quarter was $545,934, representing a 33.4% year-over-year increase
 
·
143 revenue-generating U.S. customers as of September 30, 2015
 
·
Continued adoption of its Group B Strep (GBS) assay, with over 87 customers  using or evaluating the test, representing 57% of its installed base
 
·
On September 1, 2015 submitted 510(k) application to the FDA for Staph ID/R Blood Culture, its first multiplex panel, capable of detecting Staph aureus, Staphylococcus lugdunensis and Staphylococcus epidermidis as well as the presence of the mecA gene, a drug resistance marker that enables resistance to methicillin and creates the superbug MRSA
 
·
On October 8, 2015 submitted 510(k) application to the FDA for its fourth test, Shiga Toxin Direct. Upon Shiga Toxin Direct FDA approval, 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

“We are pleased to report our financial results and business progress for the third quarter,” said Ryan Ashton, President and Chief Executive Officer. “Great Basin continues to execute on our strategic initiatives, as evidenced by the 510(k) submissions for our Staph ID/R Blood Culture panel and Shiga Toxin Direct test and our 24% increase in customer acquisition during the third quarter.”


 
 
 
 
Great Basin Scientific’s Third Quarter 2015 Results

Total revenues for the third quarter of 2015 were $545,934, compared to $409,390 for the same period in 2014, representing an increase of 33.4%. Continued growth in Great Basin’s customer base as well as adoption of its Group B Strep assay drove the year-over-year increase.

Great Basin ended the third quarter with 143 U.S. customers and 64 evaluations either in-progress or scheduled, compared to 115 customers and 46 evaluations during the second quarter ending June 30, 2015, representing an increase of 24% and 39%, respectively.

Operating expenses were $6.2 million in the third quarter of 2015, as compared to $2.5 million in the third quarter of 2014. Research and development expenses increased by $1.5 million over the third quarter of 2014 to $2.9 million in the third quarter of 2015, primarily due to increased clinical and regulatory activities related to their Staph ID/R Blood Culture and Shiga Toxin Direct tests and ongoing pipeline development.  Selling and marketing expenses increased by $1.0 million over the third quarter of 2014 to $1.5 million in the third quarter of 2015, reflecting increases in sales commissions and other costs. General and administrative costs increased by $1.2 million over the third quarter of 2014 to $1.8 million in the third quarter of 2015, due to increased business activities and costs of operating as a public company.

Loss from operations was $6.7 million for the third quarter, compared to $3.0 million for the same period of 2014.   Net income was $13.1 million for the third quarter of 2015, compared to a net loss of $17.2 million for the same period in 2014. In the third quarter of 2015, there was a non-cash gain on the change in fair value of the derivative liability in the amount of $20.0 million as compared to a loss on the change in the fair value of the derivative liability in the amount of $13.9 million in the third quarter of 2014. Excluding the non-cash derivative liability other income, adjusted net loss for the third quarter 2015 was $7.0 million.  Excluding the non-cash derivative liability other expense, adjusted net loss for the third quarter 2014 was $3.3 million.


 
 
 


Basic net income per share was $0.35 for the third quarter of 2015, compared to basic net loss per share of $117.59 for the same period in 2014. Diluted net income per share was $0.26 for the third quarter of 2015, compared to diluted net loss per share of $117.59 for the same period in 2014.

Warrant Exercises & Preferred Conversion
During the third quarter of 2015, the company received 10,650 Series A warrant exercises for proceeds of $23,430. The company also received cashless warrant exercises for 8,595,444 Series C warrants issuing 173,103,797 shares of common stock.  Also, during the third quarter of 2015, 2,574,114 shares of Series E Convertible Preferred Stock were converted into 10,296,456 shares of common stock at a conversion ratio of 1 to 4.

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 change in fair value 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
  
   
September 30,
  
The calculation of adjusted net loss is as follows:
  
2015
    
2014
  
Net income (loss)
   $ 13,056,359     $ (17,248,524 )
Adjustment for change in fair value of derivative liability
     (20,016,848 )     13,900,400  
Adjusted net loss
   $ (6,960,489 )   $ (3,348,124 )

Change in Fair Value of Derivative Liability
The change in fair value of the derivative liability for the three months ended September 30, 2015 resulted in non-cash other income in the amount of $20.0 million.  This is the result of the decrease in the fair value of Series A, Series B, Series C, Class A, Class B and certain other common stock warrants and options as a result of the decrease in the value of their common stock during the period.  The value of the common stock during the third quarter decreased to $0.10 on September 30, 2015 from $2.96 on June 30, 2015.

The change in fair value of the derivative liability for the three months ended September 30, 2014 resulted in non-cash other expense in the amount of $13.9 million. This is the result of an increase of the fair value of Class A and Class B warrants due to the increase in value of their common stock as the Company approached their IPO date.

About Great Basin Scientific
Great Basin Scientific is a molecular diagnostics company that commercializes breakthrough chip-based technologies. The Company is dedicated to the development of simple, yet powerful, sample-to-result technology and products that provide fast, multiple-pathogen diagnoses of infectious diseases. The Company's vision is to make molecular diagnostic testing so simple and cost-effective that every patient will be tested for every serious infection, reducing misdiagnoses and significantly limiting the spread of infectious disease. More information can be found on the Company's website at www.gbscience.com.   

 
 
 


Forward-Looking Statements
This press release includes forward-looking statement regarding events, trends and business prospects, which may affect our future operating results and financial position. Forward-looking statements involve risk and uncertainties, which could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risk and uncertainties include, but are not limited to: (i) our limited operating history and history or losses; (ii) our ability to develop and commercialize new products and the timing of commercialization; (iii) our ability to obtain capital when needed; and (iv) other risks set forth in the Company's filings with the Securities and Exchange Commission, including the risks set forth in the company's Quarterly Report on Form 10-Q for the quarter ended September 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.

FINANCIAL TABLES FOLLOW



 
 
 

GREAT BASIN SCIENTIFIC, INC.
CONDENSED BALANCE SHEETS
September 30, 2015 and December 31, 2014
(Unaudited)

 
 
September 30,
 
 
December 31,
 
 
 
2015
 
 
2014
 
Assets
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
 
 
Cash
 
$
7,303,711
 
 
$
2,017,823
 
Accounts receivable, net
 
 
345,444
 
 
 
267,485
 
Inventory
 
 
1,033,966
 
 
 
457,094
 
Prepaid and other current assets
 
 
574,048
 
 
 
376,778
 
Total current assets
 
 
9,257,169
 
 
 
3,119,180
 
Intangible assets, net
 
 
143,072
 
 
 
216,580
 
Property and equipment, net
 
 
7,486,384
 
 
 
4,237,467
 
Total assets
 
$
16,886,625
 
 
$
7,573,227
 
Liabilities and Stockholders' Deficit
 
 
 
 
 
 
 
 
Current liabilities:
 
 
 
 
 
 
 
 
Accounts payable
 
$
2,107,777
 
 
$
1,369,169
 
Accrued expenses
 
 
1,164,634
 
 
 
612,359
 
Current portion of notes payable
 
 
18,732
 
 
 
49,994
 
Notes payable - related party, net of discount
 
 
500,000
 
 
 
441,667
 
Current portion of capital lease obligations
 
 
1,229,566
 
 
 
947,422
 
Total current liabilities
 
 
5,020,709
 
 
 
3,420,611
 
Notes payable, net of current portion
 
 
—
 
 
 
5,693
 
Capital lease obligations, net of current portion
 
 
1,207,063
 
 
 
2,156,837
 
Derivative liability
 
 
29,938,937
 
 
 
9,998,636
 
Total liabilities
 
 
36,166,709
 
 
 
15,581,777
 
Commitments and contingencies
 
 
 
 
 
 
 
 
Stockholders' deficit:
 
 
 
 
 
 
 
 
Preferred stock, $.001 par value, 5,000,000 shares authorized;
 
 
 
 
 
 
 
 
   104,386 and 0 shares issued and outstanding, respectively
 
 
104
 
 
 
—
 
Common stock, $.001 par value: 200,000,000 shares authorized;
 
 
 
 
 
 
 
 
   190,679,941 and 5,086,458 shares issued and outstanding, respectively
 
 
190,680
 
 
 
5,086
 
Additional paid-in capital
 
 
83,490,410
 
 
 
55,991,060
 
Accumulated deficit
 
 
(102,961,278
)
 
 
(64,004,696
)
Total stockholders' deficit
 
 
(19,280,084
)
 
 
(8,008,550
)
Total liabilities and stockholders' deficit
 
$
16,886,625
 
 
$
7,573,227
 



 
 
 


GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2015 and 2014
(Unaudited)
 
 
   
Three Months Ended
    
Nine Months Ended
  
   
September 30,
    
September 30,
  
   
2015
    
2014
    
2015
    
2014
  
                                 
Revenues
  
$
545,934
    
$
409,390
    
$
1,530,170
    
$
1,160,971
  
Cost of sales
 
 
1,102,727
 
 
 
942,334
 
 
 
3,369,268
 
 
 
2,761,153
 
Gross loss
 
 
(556,793
)
 
 
(532,944
)
 
 
(1,839,098
)
 
 
(1,600,182
)
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Research and development
 
 
2,878,316
 
 
 
1,424,877
 
 
 
6,284,170
 
 
 
3,265,149
 
Selling and marketing
 
 
1,481,140
 
 
 
479,499
 
 
 
3,206,957
 
 
 
1,646,782
 
General and administrative
 
 
1,795,766
 
 
 
597,795
 
 
 
4,132,973
 
 
 
2,004,080
 
(Gain) loss on sale of assets
 
 
—
 
 
 
—
 
 
 
—
 
 
 
(8,166
)
Total operating expenses
 
 
6,155,222
 
 
 
2,502,171
 
 
 
13,624,100
 
 
 
6,907,845
 
Loss from operations
 
 
(6,712,015
)
 
 
(3,035,115
)
 
 
(15,463,198
)
 
 
(8,508,027
)
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
 
(253,220
)
 
 
(314,450
)
 
 
(868,587
)
 
 
(819,235
)
Interest income
 
 
4,746
 
 
 
619
 
 
 
18,078
 
 
 
2,057
 
Change in fair value of derivative liability
 
 
20,016,848
 
 
 
(13,900,400
)
 
 
(22,641,625
)
 
 
(13,900,400
)
Total other income (expense)
 
 
19,768,374
 
 
 
(14,214,231
)
 
 
(23,492,134
)
 
 
(14,717,578
)
Income (loss) before provision for income taxes
 
 
13,056,359
 
 
 
(17,249,346
)
 
 
(38,955,332
)
 
 
(23,225,605
)
Provision for income taxes
 
 
—
 
 
 
822
 
 
 
(1,250
)
 
 
(5,297
)
Net income (loss)
 
 
13,056,359
 
 
 
(17,248,524
)
 
 
(38,956,582
)
 
 
(23,230,902
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per common share - basic
 
$
0.35
 
 
$
(117.59
)
 
$
(2.37
)
 
$
(184.35
)
Net income (loss) per common share - diluted
 
$
0.26
 
 
$
(117.59
)
 
$
(2.37
)
 
$
(184.35
)
Weighted average common shares - basic
 
 
37,542,838
 
 
 
146,678
 
 
 
16,456,668
 
 
 
126,014
 
Weighted average common shares - diluted
 
 
45,135,892
 
 
 
146,678
 
 
 
16,456,668
 
 
 
126,014
 


 
 
 
 
GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30, 2015 and 2014
(Unaudited)
   
Nine Months Ended
  
   
September 30,
  
   
2015
    
2014
  
Cash flows from operating activities:
                
Net loss
  
$
(38,956,582
)
  
$
(23,230,902
)
Adjustments to reconcile net loss to net cash used in operating activities:
                
Depreciation and amortization
 
 
1,130,826
 
 
 
855,484
 
Change in fair value of derivative liability
 
 
22,641,625
 
 
 
13,900,400
 
Gain on sale of assets
 
 
—
 
 
 
(8,166
)
Interest converted to preferred stock
 
 
—
 
 
 
13,129
 
Employee stock compensation
 
 
66,391
 
 
 
242,696
 
Warrant issuance and modifications
 
 
54,489
 
 
 
25,063
 
Debt discount amortization
 
 
58,333
 
 
 
16,667
 
Asset disposal
 
 
—
 
 
 
11,124
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
Increase in accounts receivable, net
 
 
(77,959
)
 
 
(49,011
)
Increase in inventory
 
 
(576,872
)
 
 
(61,713
)
Increase in prepaid and other assets
 
 
(197,270
)
 
 
(269,459
)
Increase in accounts payable
 
 
457,250
 
 
 
360,882
 
Increase in accrued liabilities
 
 
552,275
 
 
 
42,598
 
Net cash used in operating activities
 
 
(14,847,494
)
 
 
(8,151,208
)
Cash flows from investing activities:
 
 
 
 
 
 
 
 
Acquisition of property and equipment
 
 
(842,225
)
 
 
(222,584
)
Construction of equipment
 
 
(3,223,827
)
 
 
(479,196
)
Proceeds from sale of assets
 
 
—
 
 
 
35,000
 
Proceeds from sale leaseback
 
 
—
 
 
 
1,500,000
 
Net cash provided by (used in) investing activities
 
 
(4,066,052
)
 
 
833,220
 
Cash flows from financing activities:
 
 
 
 
 
 
 
 
Proceeds from exercise of warrants
 
 
3,166,394
 
 
 
—
 
Proceeds from issuance of convertible notes payable
 
 
—
 
 
 
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
 
 
21,737,625
 
 
 
—
 
Proceeds from issuance of notes payable - related party
 
 
250,000
 
 
 
890,000
 
Principal payments of capital leases
 
 
(667,630
)
 
 
(653,837
)
Principal payments of notes payable
 
 
(36,955
)
 
 
(390,000
)
Principal payments of notes payable -related party
 
 
(250,000
)
 
 
(33,013
)
Net cash provided by financing activities
 
 
24,199,434
 
 
 
6,783,036
 
Net increase (decrease) in cash
 
 
5,285,888
 
 
 
(534,952
)
Cash, beginning of the period
 
 
2,017,823
 
 
 
1,211,423
 
Cash, end of the period
 
$
7,303,711
 
 
$
676,471
 
Supplemental disclosures of cash flow information:
 
 
 
 
 
 
 
 
Interest paid
 
$
818,378
 
 
$
775,666
 
Income taxes paid
 
$
1,250
 
 
$
6,447
 
Supplemental schedule of non-cash investing and financing activities:
 
 
 
 
 
 
 
 
Conversion of preferred stock to common stock
 
$
10,478
 
 
$
1,480,000
 
Issuance of preferred stock as debt discount
 
$
—
 
 
$
100,000
 
Conversion of note payable to preferred stock
 
$
—
 
 
$
400,000
 
Assets acquired through capital leases
 
$
—
 
 
$
807,272
 
Initial public offering and follow-on offering costs incurred but unpaid
 
$
41,175
 
 
$
531,280
 
Property and equipment included in accounts payable
 
$
240,183
 
 
$
70,784
 
Cashless exercise of warrants
 
$
173,657
 
 
$
—
 
Change in derivative liability from exercised and issued warrants
 
$
24,400,224
 
 
$
—
 
 
 
 
 
 
Media Contact:
Kate Ottavio Kent
ICR
203.682.8276
Kate.Ottavio-Kent@icrinc.com

Investor Relations Contact:
David Clair
ICR
646.277.1266 
David.Clair@icrinc.com

 
 
 

Great Basin Scientific, Inc. Reports