Filing identity and period
Important: The supplied filing is Venaxis, Inc.’s Form 10-Q for the quarter ended March 31, 2014—not a Riot Platforms, Inc. filing. The summary below reflects Venaxis only; verify the issuer and filing before relying on it.
The financial statements are unaudited and cover the three months ended March 31, 2014, with comparison to the three months ended March 31, 2013.
Financial results and liquidity
| Metric | Q1 2014 | Q1 2013 / prior balance |
|---|---|---|
| Product sales | $51,728 | $0 |
| Other fee revenue | $23,175 | $18,655 |
| Gross profit | $19,821 | $0 |
| Operating expenses | $2,946,740 | $2,839,928 |
| Operating loss | $(2,903,744) | $(2,821,273) |
| Net loss | $(2,947,649) | $(2,802,169) |
| Basic and diluted loss per share | $(0.14) | $(0.28) |
| Cash used in operating activities | $(2,837,457) | $(2,471,847) |
At March 31, 2014, cash and cash equivalents were $3.99 million and short-term investments were $8.87 million, totaling approximately $12.86 million in cash and liquid investments. Working capital was approximately $11.59 million; total assets were $17.12 million and stockholders’ equity was $11.98 million. Total notes and other obligations were $2.33 million, including $217,892 current. No operating margin was reported; product sales were new and limited. Gross profit on sales was $19,821.
Cash fell by $1.67 million during the quarter. Investing activities used $276,000, while financing activities provided $1.44 million, primarily from warrant exercises. The company reported a $89.33 million accumulated deficit. It completed an April 2, 2014 stock offering of 8.335 million shares at $2.40 each, for approximately $20 million gross proceeds; fees and expenses were approximately $1.64 million.
Changes versus the prior period
- Q1 2014 included $51,728 of APPY 1 sales in the European Union; there were no product sales in Q1 2013. Two European customers accounted for all quarterly product sales.
- SG&A rose 33% to $1.89 million, including higher commercialization and marketing costs and an incentive bonus accrual.
- Research and development expense fell 25% to $1.05 million, mainly because clinical trial activities were completed.
- Net loss increased approximately $145,000, while loss per share decreased from $0.28 to $0.14; weighted-average shares increased from approximately 9.95 million to 21.64 million.
- Operating cash use increased approximately $366,000. The 2013 comparison included substantially greater investment purchases, contributing to higher investing cash use in that period.
Outlook, risks, and contingencies
Venaxis completed its pivotal APPY 1 clinical trial in January 2014 and submitted a 510(k) clearance application to the FDA in March. Management expected continuing near-term losses and said working capital, including proceeds from the April offering, should fund estimated cash needs into 2015. This is management’s estimate, not a guarantee. The company said failure to obtain FDA clearance could require changes to its development plans or strategic focus, or could lead to cessation of operations; it also noted that inadequate revenue or financing could impair its ability to continue.
Management’s stated priorities were APPY 1 commercialization, pursuing financing and partnering opportunities, and cost control. The company had CE marking and distribution agreements covering Spain and the Benelux territories. It continued to depend substantially on equity financing and said additional financing might not be available on acceptable terms. Other exposures include customer concentration, investment-value and liquidity risks, contract-manufacturing commitments, and the mortgage secured by its property; the commercial-bank portion has a five-year balloon maturity.
The filing describes a securities class-action appeal and a related shareholder derivative action that was administratively closed pending developments in the appeal. Management stated it believed the allegations were without merit. The filing reports no material changes to the risk factors in the 2013 Form 10-K. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts to verify
- Confirm issuer identity: this filing names Venaxis, Inc., not Riot Platforms, Inc.
- Verify that the intended reporting period is Q1 2014 and that this is the correct filing.
- Check the status and outcome of the FDA 510(k) application and APPY 1 commercialization plans.
- Review subsequent financing, cash runway assumptions, and the company’s ability to raise further capital.
- Check developments in the disclosed litigation and the terms and maturity requirements of the mortgage.