Great Basin Reports First Quarter 2016 Results

Company sees 59.4% growth in revenue; reaffirms guidance of 300-325 customers by year-end

SALT LAKE CITY--()--Great Basin Scientific, Inc. (NASDAQ:GBSN), a molecular diagnostic testing company, today reported financial results for the first quarter ended March 31, 2016.

“We are pleased to report our financial results and business progress for the first quarter”

First Quarter 2016 Financial Results and Business Highlights

  • Revenue for the first quarter was $731,422, versus $458,730 for the same period in 2015, representing a 59.4% year-over-year increase;
  • 222 revenue-generating U.S. customers as of March 31, 2016, representing 119.8% growth year over year;
  • Shiga Toxin Direct Test received 510(k) clearance by the U.S. Food & Drug Administration (FDA);
  • Staph ID/R Blood Culture Panel received 510(k) clearance by the FDA;
  • Appointed Suzette Chance, Ph.D., Senior Director of Clinical Trials to lead clinical trial strategy, beginning with the five clinical trials slated for this year.

“We are pleased to report our financial results and business progress for the first quarter,” said Ryan Ashton, Co-founder and Chief Executive Officer. “Great Basin continues to execute on our strategic initiatives for 2016, and are on track to meet our previously-stated guidance of ending the year with 300 to 325 customers, launching our two recently FDA-cleared tests and starting five clinical trials this calendar year, two of which will begin in the first half of the year. The investments we made in the first quarter facilitated the Company’s ability to make those goals a reality.”

Great Basin Scientific’s First Quarter 2016 Results

Total revenues for the first quarter of 2016 were $731,422, compared to $458,730 for the same period in 2015, representing an increase of 59.4%. 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 first quarter of 2016 with 222 U.S. customers, compared to 101 customers for the first quarter ending March 31, 2015, representing an increase of 119.8%.

Operating expenses were $6.0 million in the first quarter of 2016, as compared to $3.4 million in the first quarter of 2015. Research and development expenses increased by $0.8 million over the first quarter of 2015 to $2.3 million in the first quarter of 2016, primarily due to increased clinical and regulatory activities related to our Staph ID/R Blood Culture Panel and Shiga Toxin Direct Test and ongoing pipeline development. Selling and marketing expenses increased by $0.7 million over the first quarter of 2015 to $1.5 million in the first quarter of 2016, reflecting increases in headcount, sales commissions and other costs. General and administrative costs increased by $1.1 million over the first quarter of 2015 to $2.2 million in the first quarter of 2016, due to increased legal, accounting and consulting fees related to financing and restructuring transactions, an increase in headcount and other corporate expenses.

Loss from operations was $7.1 million for the first quarter, compared to $3.9 million for the same period of 2015.

Net loss was $33.7 million for the quarter ended March 31, 2016, compared to a net loss of $71.2 million for the same period in 2015.

Basic and diluted net loss per share was $15.26 for the quarter ended March 31, 2016, compared to basic and diluted net loss per share of $29,374.17 for the same period in 2015.

Warrant Exercises & Preferred Conversion

During the first quarter of 2016, the Company received cashless warrant exercises for 5,229,973 Series C Warrants. The Company settled 5,091,815 of the cashless warrant exercises through the issuance of 1,520,888 shares of common stock and settled 138,158 of the cashless warrant exercises with cash in the amount of $314,879.

In addition, 121,540 underwriter unit purchase options were exercised for cash proceeds of $1,335,950. Pursuant to the exercise of these options, 121,540 shares of Series E Convertible Preferred Stock were issued and immediately converted into 232 shares of common stock and 972,230 Series C Warrants were issued and immediately cashless exercised into 346,667 shares of common stock.

Also, during the first quarter of 2016, 13,967 shares of Series E Convertible Preferred Stock were converted into 27 shares of common stock.

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 amortization of the convertible note debt discount as well as the change in fair value of the derivative liability in calculating adjusted net loss because they are non-cash in nature and because the Company believes that the non-GAAP financial measures excluding these items 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
March 31,
The calculation of adjusted net loss is as follows: 2016   2015
Net loss $ (33,652,506) $ (71,173,625)
Adjustment for amortization of debt discount included in interest 6,107,467 -
Adjustment for change in fair value of derivative liability   20,219,263   66,994,149
Adjusted net loss $ (7,325,776) $ (4,179,476)
 

Amortization of Debt Discount included in Interest

The amortization of the debt discount that is included in interest for the three months ended March 31, 2016 resulted in non-cash other expense in the amount of $6.1 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 that was required to be recorded as a debt discount and amortized over the life of the notes.

Change in Fair Value of Derivative Liability

The change in fair value of our instruments recorded as derivative liabilities for the three months ended March 31, 2016 resulted in a non-cash expense of $20.2 million as a result of a net increase in the fair value of our derivative instruments during the period. The issuance of Series E Warrants and the increase in the fair value of the conversion feature of the convertible notes was partially offset by a decrease in the fair value of our Series D Warrants and other derivative securities.

The change in fair value of our instruments recorded as derivative liabilities for the three months ended March 31, 2015 resulted in non-cash expense in the amount of $67.0 million. This is the result of the issuance of our Series C Warrants and the increase in fair value of our other derivative instruments due to the increase of our common stock price during the period.

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 statements regarding events, trends and business prospects, which may affect our future operating results and financial position. Such statements include, but are not limited to, statements regarding projected customer growth, anticipated number and timing of future clinical trials, the launching and prospective success of new products and other similar statements. Forward-looking statements involve risk and uncertainties, which could cause actual results to differ materially, and reported results should not be considered as an indication of future performance. These risk and uncertainties include, but are not limited to: (i) our limited operating history and history or losses; (ii) our ability to develop and commercialize new products and the timing of commercialization; (iii) our ability to obtain capital when needed; and (iv) other risks set forth in the Company's filings with the Securities and Exchange Commission, including the risks set forth in the Company's Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2016. These forward-looking statements speak only as of the date hereof and Great Basin Scientific specifically disclaims any obligation to update these forward-looking statements, except as required by law.

   
FINANCIAL TABLES FOLLOW
 
 
 
GREAT BASIN SCIENTIFIC, INC.
CONDENSED BALANCE SHEETS
March 31, 2016 and December 31, 2015
(Unaudited)
 
March 31 December 31,
2016 2015
Assets
Current assets:
Cash $ 2,307,191 $ 4,787,759
Restricted Cash 13,800,478 13,800,000
Accounts receivable, net 348,534 411,390
Inventory 1,156,012 1,133,142
Prepaid and other current assets   1,571,608   564,910
Total current assets 19,183,823 20,697,201
 
Intangible assets, net 93,465 119,171
Property and equipment, net   8,315,185   7,741,991
Total assets $ 27,592,473 $ 28,558,363
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 2,503,422 $ 2,432,459
Accrued expenses 1,754,966 1,313,149
Current portion of notes payable

-

5,693
Current portion of convertible notes payable, net of discount 8,271,184 1,638,717
Notes payable - related party, net of discount 500,000 500,000
Current portion of capital lease obligations 1,376,049 1,305,426
Current portion of derivative liability   35,096,383  

-

Total current liabilities 49,502,004 7,195,444
Notes payable, net of current portion

-

-

Convertible notes payable, net of current portion and debt discount

-

525,000
Capital lease obligations, net of current portion 483,681 851,410
Derivative liability, net of current portion   21,011,177   43,181,472
Total liabilities   70,996,862   51,753,326
Commitments and contingencies
Stockholders' deficit:

Preferred stock, $.001 par value, 5,000,000 shares authorized; 74,380 and 88,347 shares issued and outstanding, respectively

74 88

Common stock, $.0001 par value: 200,000,000 shares authorized; 3,292,683 and 296,869 shares issued and outstanding, respectively

329 30
Additional paid-in capital 112,151,579 98,708,784
Accumulated deficit   (155,556,371 )   (121,903,865 )
Total stockholders' deficit   (43,404,389 )   (23,194,963 )
Total liabilities and stockholders' deficit $ 27,592,473 $ 28,558,363
 
 
GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
 
Three Months Ended
March 31,
2016   2015
 
Revenues $ 731,422 $ 458,730
Cost of sales   1,861,745   966,593
Gross loss (1,130,323 ) (507,863 )
Operating expenses:
Research and development 2,297,983 1,503,558
Selling and marketing 1,478,778 806,118
General and administrative   2,208,657   1,060,652
Total operating expenses   5,985,418   3,370,328
Loss from operations   (7,115,741 )   (3,878,191 )
Other income (expense):
Interest expense (6,316,330 ) (305,582 )
Interest income 578 4,297
Change in fair value of derivative liability   (20,219,263 )   (66,994,149 )
Total other income (expense)   (26,535,015 )   (67,295,434 )
Loss before provision for income taxes (33,650,756 ) (71,173,625 )
Provision for income taxes   (1,750 )  
Net loss $ (33,652,506 ) $ (71,173,625 )
Net loss per common share - basic and diluted $ (15.26 ) $ (29,374.17 )
Weighted average common shares - basic and diluted   2,205,230   2,423
 
 
GREAT BASIN SCIENTIFIC, INC.
CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2016 and 2015
(Unaudited)
 
Three Months Ended
March 31,
2016   2015
Cash flows from operating activities:
Net loss $ (33,652,506 ) $ (71,173,625 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 563,322 339,593
Bad debt expense 86,273

-

Change in fair value of derivative liability 20,219,263 66,994,149
Employee stock compensation 37,045 18,720
Debt discount amortization 6,107,467 25,000
Changes in operating assets and liabilities:
Increase in accounts receivable (23,417 ) (23,024 )
Increase in inventory (22,870 ) (47,602 )
Increase in prepaid and other assets (1,006,698 ) (181,741 )
Decrease in accounts payable (899,776 ) (37,237 )
Increase in accrued liabilities   441,817   495,060
Net cash used in operating activities   (8,150,080 )   (3,590,707 )
Cash flows from investing activities:
Acquisition of property and equipment (216,230 ) (83,566 )
Construction of equipment   (408,271 )   (77,769 )
Net cash used in investing activities   (624,501 )   (161,335 )
Cash flows from financing activities:
Proceeds from exercise of warrants 1,335,950 88,000
Proceeds from follow-on offering 5,575,741 22,154,639
Proceeds from issuance of notes payable - related party

-

250,000
Payment of cash settlement for warrant exercises (314,879 )

-

Principal payments of capital leases (297,106 ) (158,090 )
Principal payments of notes payable   (5,693 )   (11,969 )
Net cash provided by financing activities   6,294,013   22,322,580
Net increase (decrease) in cash (2,480,568 ) 18,570,538
Cash, beginning of the period   4,787,759   2,017,823
Cash, end of the period $ 2,307,191 $ 20,588,361
Supplemental disclosures of cash flow information:
Interest paid $ 215,199 $ 241,228
Income taxes paid $ 1,750 $

-

Supplemental schedule of non-cash investing and financing activities:
Initial public offering and follow-on offering costs incurred but unpaid $ 483,952 $ 453,015
Property and equipment included in accounts payable $ 486,309 $ 419,693
Cashless exercise of warrants $ 187 $

-

Change in derivative liability from exercised and issued warrants $ 12,384,852 $

-

 

Contacts

Media:
ICR
Kate Ottavio Kent, 203-682-8276
Kate.Ottavio-Kent@icrinc.com
or
Investor Relations:
CorProminence
Scott Gordon, 516-222-2560
gbinfo@corprominence.com
or
ICR
David Clair, 646-277-1266
David.Clair@icrinc.com

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