The Company believes that its existing cash and cash equivalents will be sufficient to fund its operations into the fourth quarter of 2014. The Company is forecasting increases in revenues from the higher reimbursement levels described above and engaging additional laboratory providers, as well as further reduction in operating expenses. If forecasted revenue increases are not realized in the near term, the Company would take measures to realign its costs with its revenues to preserve its cash resources. Such efforts to preserve its business may limit future revenue growth and the ability to develop new diagnostic tests.
In addition to its cash and cash equivalents, the Company also has a Common Stock Purchase Agreement pursuant to which it may require Aspire Capital Fund, LLC to purchase up to $12 million of the Company’s common stock (Note 6), subject to the conditions and limitations contained therein. At September 30, 2013, the Company’s closing stock price was below the floor price of $1.00 per share required by the agreement; as a result, there was no availability under this facility at September 30, 2013. However, if in the future, the Company’s closing stock price equals or exceeds the floor price in the agreement, the Company would have access to this facility. The Company has not yet sold any shares under the agreement, which expires in May 2015.
Common Stock Purchase Agreement
On January 24, 2013, the Company entered into a Common Stock Purchase Agreement, or the Purchase Agreement, with Aspire Capital Fund, LLC, or Aspire, to purchase, at the Company’s option, up to an aggregate of $12.0 million of shares of its common stock over a two-year term, which expires in May 2015. Under the Purchase Agreement, the Company initially issued 132,743 shares of its common stock as a commitment fee. The Company’s sales to Aspire will be made subject to market conditions, in light of its capital needs and under various limitations contained in the Purchase Agreement. At September 30, 2013, the Company’s closing stock price was below the floor price of $1.00 per share required by the Purchase Agreement; as a result, there was no availability under this facility at September 30, 2013. The Company has not yet sold any shares under the Purchase Agreement.
Over the term of the Purchase Agreement, assuming the Company’s common stock is trading above the $1.00 minimum floor price that is required to use the facility, the Company has two ways to elect to sell common stock to Aspire on any business day the Company selects: (1) through a regular purchase of up to 100,000 shares at prices based on the market price of the Company’s common stock prior to the time of each sale, and (2) through a volume weighted average price, or VWAP, purchase of a number of shares up to 30% of the volume traded on the purchase date at a price equal to the lesser of the closing sale price or 95% of the VWAP for such purchase date.
The Company also entered into a Registration Rights Agreement with Aspire, which requires, among other things, that the Company maintains the effectiveness of the Company’s registration statement that registered the shares issued and issuable to Aspire under the Purchase Agreement.
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