SEC Filing | Biocept Inc.

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bioc-10q_20210630.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-36284

Biocept, Inc.

(Exact name of registrant as specified in its charter)

Delaware

80-0943522

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9955 Mesa Rim Road, San Diego, California

(Address of principal executive offices)

92121

(Zip Code)

(858) 320-8200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.0001 per share	BIOC	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 12, 2021, there were 14,722,958 shares of the Registrant’s common stock outstanding.

BIOCEPT, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

JUNE 30, 2021

INDEX

		Page

IMPORTANT NOTE REGARDING FORWARD-LOOKING STATEMENTS		3

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	4

	Condensed Balance Sheets as of December 31, 2020 and June 30, 2021 (unaudited)	4

	Condensed Statements of Operations and Comprehensive Income/(Loss) for the three and six months ended June 30, 2020 and 2021 (unaudited)	5

	Condensed Statements of Shareholders’ Equity for the three and six months ended June 30, 2020 and 2021 (unaudited)	6

	Condensed Statements of Cash Flows for the six months ended June 30, 2020 and 2021 (unaudited)	8

	Notes to Condensed Financial Statements (unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	37

Item 4.	Controls and Procedures	37

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	39

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	69

Item 3.	Defaults Upon Senior Securities	69

Item 4.	Mine Safety Disclosures	69

Item 5.	Other Information	69

Item 6.	Exhibits	69

IMPORTANT NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included or incorporated by reference in this Quarterly Report other than statements of historical fact, are forward-looking statements. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in our other filings with the Securities and Exchange Commission, or the SEC. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made except as required by law. Readers should, however, review the factors and risks we describe in the reports we file from time to time with the SEC. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date the statement is made, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Biocept, Inc.

Condensed Balance Sheets

	December 31,			June 30,
	2020			2021
				(unaudited)
Current assets:
Cash	$	14,367,942		$	19,451,189
Accounts receivable, net		14,144,911			12,595,694
Inventories, net		1,929,624			3,016,342
Prepaid expenses and other current assets		2,151,527			897,370
Total current assets		32,594,004			35,960,595
Fixed assets, net		2,317,616			2,078,464
Lease right-of-use assets - operating		9,776,349			9,275,168
Lease right-of-use assets - finance		2,337,709			2,850,277
Other non-current assets		425,908			438,776
Total assets	$	47,451,586		$	50,603,280
Current liabilities:
Accounts payable	$	8,364,858		$	5,705,805
Accrued liabilities		3,165,669			2,410,939
Current portion of lease liabilities - operating		—			53,741
Current portion of lease liabilities - finance		963,726			1,067,516
Supplier financings		—			416,471
Total current liabilities		12,494,253			9,654,472
Non-current portion of lease liabilities - operating		9,805,361			9,971,046
Non-current portion of lease liabilities - finance		1,459,550			1,625,939
Total liabilities		23,759,164			21,251,457
Commitments and contingencies (see Note 11)
Shareholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 authorized; 2,111 shares issued and outstanding at December 31, 2020 and June 30, 2021.		—			—
Common stock, $0.0001 par value, 150,000,000 authorized; 13,397,041 issued and outstanding at December 31, 2020; 14,310,606 issued and outstanding at June 30, 2021.		1,340			1,431
Additional paid-in capital		287,217,949			292,105,446
Accumulated deficit		(263,526,867	)		(262,755,054	)
Total shareholders’ equity		23,692,422			29,351,823
Total liabilities and shareholders’ equity	$	47,451,586		$	50,603,280

The accompanying notes are an integral part of these unaudited condensed financial statements.

Biocept, Inc.

Condensed Statements of Operations and Comprehensive Income/(Loss)

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2020			2021			2020			2021
Net revenues	$	917,471		$	12,047,166		$	2,364,020		$	29,803,356
Costs and expenses:
Cost of revenues		2,517,902			7,461,819			5,464,760			16,467,675
Research and development expenses		1,588,716			1,137,614			2,901,392			2,180,339
General and administrative expenses		1,911,239			3,250,859			3,815,672			6,370,663
Sales and marketing expenses		1,333,271			1,944,661			2,798,386			3,867,933
Total costs and expenses		7,351,128			13,794,953			14,980,210			28,886,610
(Loss)/income from operations		(6,433,657	)		(1,747,787	)		(12,616,190	)		916,746
Other expense:
Interest expense		(55,646	)		(79,692	)		(112,342	)		(144,933	)
Warrant inducement expense		—			—			(2,102,109	)		—
Total other expense		(55,646	)		(79,692	)		(2,214,451	)		(144,933	)
(Loss)/income before income taxes		(6,489,303	)		(1,827,479	)		(14,830,641	)		771,813
Income tax expense		—			—			—			—
Net (loss)/income and comprehensive (loss)/income	$	(6,489,303	)	$	(1,827,479	)	$	(14,830,641	)	$	771,813
Deemed dividend related to warrants down round provision		—			—			(2,774	)		—
Net (loss)/income attributable to common shareholders	$	(6,489,303	)	$	(1,827,479	)	$	(14,833,415	)	$	771,813
Weighted-average shares outstanding used in computing net (loss)/income per share attributable to common shareholders:
Basic		12,717,372			13,462,329			10,308,681			13,431,340
Diluted		12,717,372			13,462,329			10,308,681			13,646,789
Net (loss)/income per common share:
Basic	$	(0.51	)	$	(0.14	)	$	(1.44	)	$	0.06
Diluted	$	(0.51	)	$	(0.14	)	$	(1.44	)	$	0.06

The accompanying notes are an integral part of these unaudited condensed financial statements.

Biocept, Inc.

Condensed Statements of Shareholders’ Equity

(Unaudited)

	Common Stock				Series A Convertible Preferred Stock				Additional			Accumulated
	Shares		Amount		Shares		Amount		Paid-in Capital			Deficit			Total
Balance at December 31, 2019		5,473,848	$	547		2,133	$	—	$	256,917,285		$	(245,717,189	)	$	11,200,643
Stock-based compensation expense		—		—		—		—		142,964			—			142,964
Shares issued upon exercise of common stock warrants		696,141		70		—		—		2,306,638			—			2,306,708
Shares issued upon cashless exercise of common stock warrants		608,000		61		—		—		(61	)		—			—
Deemed dividends related to warrants downround provision		—		—		—		—		2,774			(2,774	)		—
Shares issued for March 2, 2020 financing transaction, net of issuance costs		2,300,000		230		—		—		8,565,270			—			8,565,500
Shares issued for March 4, 2020 financing transaction, net of issuance costs		1,600,000		160		—		—		6,093,401			—			6,093,561
Shares issued for exercise of December 2019 overallotment warrants, net of issuance costs		192,750		19		—		—		659,939			—			659,958
Warrant inducement expense		—		—		—		—		2,102,109			—			2,102,109
Net loss		—		—		—		—		—			(8,341,338	)		(8,341,338	)
Balance at March 31, 2020		10,870,739	$	1,087		2,133	$	—	$	276,790,319		$	(254,061,301	)	$	22,730,105
Stock-based compensation expense		—		—		—		—		194,236			—			194,236
Shares issued upon exercise of common stock warrants		20,584		2		—		—		72,606			—			72,608
Shares issued for April 2020 financing transaction, net of issuance costs		2,230,000		223		—		—		9,577,074			—			9,577,297
Net loss		—		—		—		—		—			(6,489,303	)		(6,489,303	)
Balance at June 30, 2020		13,121,323	$	1,312		2,133	$	—	$	286,634,235		$	(260,550,604	)	$	26,084,943

The accompanying notes are an integral part of these unaudited condensed financial statements.

Biocept, Inc.

Condensed Statements of Shareholders’ Equity

(Unaudited)

(Continued)

	Common Stock				Series A Convertible Preferred Stock				Additional		Accumulated
	Shares		Amount		Shares		Amount		Paid-in Capital		Deficit			Total
Balance at December 31, 2020		13,397,041	$	1,340		2,111	$	—	$	287,217,949	$	(263,526,867	)	$	23,692,422
Stock-based compensation expense		—		—		—		—		460,201		—			460,201
Shares issued upon exercise of common stock warrants		5,304		—		—		—		18,552		—			18,552
Shares issued upon conversion of preferred stock		23		—		—		—		—		—			—
Shares issued upon exercise of options		194		—		—		—		760		—			760
Net income		—		—		—		—		—		2,599,292			2,599,292
Balance at March 31, 2021		13,402,562	$	1,340		2,111	$	—	$	287,697,462	$	(260,927,575	)	$	26,771,227
Stock-based compensation expense		—		—		—		—		494,330		—			494,330
Shares issued for ATM transaction, net of issuance costs		908,044		91		—		—		3,913,654		—			3,913,745
Net loss		—		—		—		—		—		(1,827,479	)		(1,827,479	)
Balance at June 30, 2021		14,310,606	$	1,431		2,111	$	—	$	292,105,446	$	(262,755,054	)	$	29,351,823

The accompanying notes are an integral part of these unaudited condensed financial statements.

Biocept, Inc.

Condensed Statements of Cash Flows

(Unaudited)

	For the six months ended June 30,
	2020			2021
Cash Flows from Operating Activities
Net (loss)/income	$	(14,830,641	)	$	771,813
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Depreciation and amortization		477,396			711,099
Amortization of right-of-use assets		(96,962	)		720,607
Change in inventory reserve		54,202			(59,901	)
Stock-based compensation		337,200			954,531
Warrant inducement expense		2,102,109			—
Loss on disposal of fixed assets		459			3,941
Increase/(decrease) in cash resulting from changes in:
Accounts receivable, net		347,861			1,549,217
Inventory		(259,900	)		(1,026,817	)
Prepaid expenses and other current assets		11,232			1,876,097
Accounts payable		(4,916	)		(1,921,583	)
Accrued liabilities		(108,406	)		(754,730	)
Other non-current assets		—			(12,868	)
Net cash (used in)/provided by operating activities		(11,970,366	)		2,811,406
Cash Flows from Investing Activities:
Purchases of fixed assets		(35,457	)		(831,852	)
Net cash used in investing activities		(35,457	)		(831,852	)
Cash Flows from Financing Activities: