INTERIM FINANCIAL STATEMENTS |
9 Months Ended | ||||||||
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Sep. 30, 2016 | |||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||
| INTERIM FINANCIAL STATEMENTS |
INTERIM FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Venaxis, Inc. (the "Company," "we," or "Venaxis") have been prepared in accordance with the instructions to quarterly reports on Form 10-Q. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in financial position at September 30, 2016 and for all periods presented have been made. Certain information and footnote data necessary for fair presentation of financial position and results of operations in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted. It is therefore suggested that these consolidated financial statements be read in conjunction with the summary of significant accounting policies and notes to financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for the period ended September 30, 2016 are not necessarily an indication of operating results for the full year.
Management's plans and basis of presentation:
The Company has experienced recurring losses and negative cash flows from operations. At September 30, 2016, the Company had approximate balances of cash and liquid investments of $14,863,000, working capital of $14,441,000, total stockholders' equity of $17,030,000 and an accumulated deficit of $107,569,000. To date, the Company has in large part relied on equity financing to fund its operations. The Company expects to continue to incur losses from operations for the near-term and these losses could be significant as we incur increased costs and expenses associated with the BiOptix operations (see below), and continue to incur public company and administrative related expenses. The Company believes that its current working capital position will be sufficient to meet its estimated cash needs into 2017. The Company is closely monitoring its cash balances, cash needs and expense levels.
As of January 26, 2016, Venaxis publicly disclosed that it had entered into a series of agreements, including a Master Agreement, for a combination transaction (the "Strand transaction") with Strand Life Sciences Private Limited and its shareholders ("Strand"). Strand is privately-held, and operates clinical reference labs in the U.S. and in India, providing testing and lab services in India and other world-wide markets. Strand has commercialized a next generation sequencing (NGS) based, targeted, multi-gene, pan-cancer diagnostic panel in select international markets and has engaged in initial commercialization activities in the United States. On March 11, 2016, Venaxis and Strand entered into a Mutual Termination Agreement to terminate the series of agreements. Pursuant to the Mutual Termination Agreement, each of the parties was relieved of any obligations or responsibilities under the Master Agreement and other transaction agreements. Each party remains responsible for its respective transaction-related expenses. Following the termination of the Strand transaction, the Company began evaluating potential strategic alternatives.
Based upon the primary criteria established as part of the strategic evaluation process, as of September 12, 2016, the Company completed the strategic acquisition of BiOptix Diagnostics, Inc. ("BiOptix"), a privately-held entity. As a result, the Company now owns more than 98% of the outstanding voting stock of BiOptix, and BiOptix has become a majority-owned subsidiary of the Company. Under the terms of a Stock Purchase Agreement, dated September 12, 2016, among the Company and the holders of all of the BiOptix preferred stock (the "Purchase Agreement"), the consideration consisted of an aggregate of 627,010 shares of the Company's common stock valued at approximately $2,577,000.
BiOptix, located in Boulder, Colorado, has developed an Enhanced Surface Plasmon Resonance ("SPR") instrument designed to increase the flexibility and reliability of SPR, in order to address the increasing demand for instruments suitable for a broader range of applications, while offering far greater performance per dollar than other instruments commercially available.
Management's strategic plans include the following:
As part of the Company's process to identify possible strategic partners, several targets were identified that the Company assessed as possibly having a business model that could be interested in discussions with Venaxis for potentially acquiring or licensing the appendicitis assets. Venaxis has made initial contact with several of these parties to gauge their interest level, which initially is more focused on the APPY2 development assets. Management believes that the estimated potential market for an appendicitis test continues to be significant. If Venaxis is unable to locate a new strategic target, a partner or other third-party interested in advancing development and commercial activities of the Venaxis appendicitis portfolio, the capitalized costs on the Company's balance sheet, totaling approximately $335,000, as of September 30, 2016 for the acute appendicitis patents may be deemed impaired.
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