XNAS:CBMX CombiMatrix Corporation Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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Table of Contents

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-Q

 

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

 

For The Quarterly Period Ended March 31, 2012

 

OR

 

o          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 001-33523

 

COMBIMATRIX CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

 

47-0899439

(State or Other Jurisdiction of

 

(I.R.S. Employer

Incorporation or Organization)

 

Identification No.)

 

310 Goddard, Suite 150,

 

 

Irvine, CA

 

92618

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:  (949) 753-0624

 

N/A

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

 

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 filing requirements for the past 90 days.      Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).      Yes x No o

 

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

 

Large accelerated filer o

 

Accelerated filer o

 

 

 

Non-accelerated filer o

 

Smaller reporting company x

(Do not check if a smaller reporting company)

 

 

 

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

 

As of May 4, 2012, 10,704,121 shares of CombiMatrix Corporation common stock, $0.001 par value, were issued and outstanding.

 

 

 



Table of Contents

 

COMBIMATRIX CORPORATION

Table of Contents

 

Part I.  Financial Information

 

 

 

 

 

 

 

Item 1.

 

Financial Statements (Unaudited)

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011

3

 

 

 

 

 

 

 

 

Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011

4

 

 

 

 

 

 

 

 

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011

5

 

 

 

 

 

 

 

 

Notes to Consolidated Financial Statements

6

 

 

 

 

 

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

12

 

 

 

 

 

 

Item 3.

 

Quantitative and Qualitative Disclosures about Market Risk

16

 

 

 

 

 

 

Item 4.

 

Controls and Procedures

16

 

 

 

 

 

Part II.  Other Information

 

 

 

 

 

 

 

Item 1.

 

Legal Proceedings

17

 

 

 

 

 

 

Item 1A.

 

Risk Factors

17

 

 

 

 

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

17

 

 

 

 

 

 

Item 3.

 

Defaults Upon Senior Securities

17

 

 

 

 

 

 

Item 4.

 

Mine Safety Disclosures

17

 

 

 

 

 

 

Item 5.

 

Other Information

17

 

 

 

 

 

 

Item 6.

 

Exhibits

17

 

 

Signatures

18

 

 

Exhibit Index

19

 

2



Table of Contents

 

COMBIMATRIX CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

 

 

 

March 31,

 

December 31,

 

 

 

2012

 

2011

 

 

 

(unaudited)

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

4,714

 

$

6,385

 

Accounts receivable, net of allowance for doubtful accounts of $338 and $333

 

1,136

 

1,462

 

Supplies

 

432

 

476

 

Prepaid expenses and other assets

 

215

 

259

 

Total current assets

 

6,497

 

8,582

 

 

 

 

 

 

 

Property and equipment, net

 

570

 

607

 

Investments in unconsolidated subsidiaries

 

127

 

127

 

Patents and licenses, net

 

115

 

132

 

Total assets

 

$

7,309

 

$

9,448

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable, accrued expenses and other

 

$

1,070

 

$

1,004

 

Current portion, capital lease obligations

 

120

 

115

 

Total current liabilities

 

1,190

 

1,119

 

 

 

 

 

 

 

Capital lease obligations, net of current portion

 

164

 

179

 

Total liabilities

 

1,354

 

1,298

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock; $0.001 par value; 5,000,000 shares authorized; none issued and outstanding

 

 

 

Common stock; $0.001 par value; 25,000,000 shares authorized; 10,704,121 shares issued and outstanding, respectively

 

11

 

11

 

Additional paid-in capital

 

66,272

 

66,099

 

Accumulated net losses

 

(60,328

)

(57,960

)

Total shareholders’ equity

 

5,955

 

8,150

 

Total liabilities and shareholders’ equity

 

$

7,309

 

$

9,448

 

 

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

 

3



Table of Contents

 

COMBIMATRIX CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share information)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Services revenues

 

$

1,244

 

$

913

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Cost of services

 

659

 

630

 

Research and development

 

450

 

339

 

Sales and marketing

 

873

 

557

 

General and administrative

 

1,574

 

1,326

 

Patent amortization and royalties

 

51

 

40

 

Total operating expenses

 

3,607

 

2,892

 

Operating loss

 

(2,363

)

(1,979

)

 

 

 

 

 

 

Other (expense) income:

 

 

 

 

 

Interest income

 

1

 

1

 

Interest expense

 

(6

)

(5

)

Total other expense

 

(5

)

(4

)

Net loss from continuing operations

 

(2,368

)

(1,983

)

 

 

 

 

 

 

Income from discontinued operations

 

 

31

 

Net loss

 

$

(2,368

)

$

(1,952

)

 

 

 

 

 

 

Basic and diluted net loss per share from continuing operations

 

$

(0.22

)

$

(0.26

)

Basic and diluted net loss per share from discontinued operations

 

 

 

Basic and diluted net loss per share

 

$

(0.22

)

$

(0.26

)

 

 

 

 

 

 

Basic and diluted weighted average common shares outstanding

 

10,704,121

 

7,620,398

 

 

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

 

4



Table of Contents

 

COMBIMATRIX CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

Net loss

 

$

(2,368

)

$

(1,952

)

Adjustments to reconcile net loss to net cash flows from operating activities:

 

 

 

 

 

Depreciation and amortization

 

90

 

85

 

Non-cash stock compensation

 

173

 

314

 

Provision for bad debt

 

106

 

86

 

Changes in assets and liabilities:

 

 

 

 

 

Accounts receivable

 

220

 

(40

)

Supplies, prepaid expenses and other assets

 

88

 

36

 

Accounts payable, accrued expenses and other

 

66

 

(151

)

Net cash flows from operating activities

 

(1,625

)

(1,622

)

Investing activities:

 

 

 

 

 

Purchase of property and equipment

 

(17

)

(24

)

Net cash flows from investing activities

 

(17

)

(24

)

Financing activities:

 

 

 

 

 

Repayment of capital lease obligations

 

(29

)

(17

)

Net cash flows from financing activities

 

(29

)

(17

)

 

 

 

 

 

 

Change in cash and cash equivalents

 

(1,671

)

(1,663

)

Cash and cash equivalents, beginning

 

6,385

 

6,556

 

Cash and cash equivalents, ending

 

$

4,714

 

$

4,893

 

 

 

 

 

 

 

Non-cash financing activities:

 

 

 

 

 

Property and equipment purchased on capital leases

 

$

19

 

$

 

 

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

 

5


 


Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

1.              OVERVIEW AND BACKGROUND

 

CombiMatrix Corporation (the “Company,” “we,” “us” and “our”) was originally incorporated in October 1995 as a California corporation and later reincorporated as a Delaware corporation in September 2000.  In December 2002, we merged with and became a wholly owned subsidiary of Acacia Research Corporation (“Acacia”).  In December 2006, we filed a registration statement with the U.S. Securities and Exchange Commission (“SEC”) in order to register our common stock as part of a plan to split-off from Acacia (the “Split-Off”).  On August 15, 2007 (the “Split-Off Date”), the Split-Off was effected and our common stock became publicly traded on the Nasdaq Stock Market (symbol: “CBMX”).  As of the Split-Off Date, we ceased to be a subsidiary of, or affiliated with, Acacia.

 

Description of the Company

 

We are a molecular diagnostics company that operates primarily in the field of genetic analysis and molecular diagnostics through our wholly owned subsidiary, CombiMatrix Molecular Diagnostics, Inc. (“CMDX”), located in Irvine, California.  CMDX operates as a diagnostics reference laboratory providing DNA-based clinical diagnostic testing services to physicians, hospitals, clinics and other laboratories in two primary areas: (i) prenatal and postnatal developmental disorders; and (ii) hematology/oncology genomics.  CMDX provides its services primarily through the use of array-comparative genomic hybridization (“aCGH”), which enables the analysis of genetic anomalies, as well as through other test offerings including fluorescent in-situ hybridization (“FISH”) and G-Band Chromosome analysis.  Our mission is to empower physicians to positively impact patient care through the delivery of innovative molecular diagnostics services.

 

On April 19, 2010, we announced a strategic and operational restructuring plan (the “Restructuring Plan”) intended to significantly reduce operating costs, increase the focus on the Company’s diagnostic services business and transition senior management.  As part of the Restructuring Plan, we closed our Mukilteo, Washington facility, which had been focused primarily on research, development and commercialization of the Company’s oligonucleotide microarray technologies, also known as our “CustomArray” business.

 

Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, certain information and footnotes required by generally accepted accounting principles in annual financial statements have been omitted or condensed.  These interim consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 2011, as reported by us in our Annual Report on Form 10-K filed with the SEC on March 16, 2012.  The year-end consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.  The consolidated financial statements include all adjustments of a normal recurring nature which, in the opinion of management, are necessary for a fair statement of our financial position as of March 31, 2012, and results of operations and cash flows for the interim periods presented.  The results of operations for the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the entire year.

 

As a result of executing the Restructuring Plan, the financial results of our CustomArray business have been classified as discontinued operations in the consolidated statements of operations for all periods presented.  Unless otherwise noted, amounts and disclosures throughout the notes to our consolidated financial statements relate to our continuing operations.

 

Liquidity and Risks

 

We have a history of incurring net losses and net operating cash flow deficits.  We are also deploying new technologies and continue to develop commercial tests and products.

 

At March 31, 2012, we had cash and cash equivalents of $4.7 million and anticipate that our cash and cash equivalent balances will be sufficient to meet our cash requirements into the fourth quarter of 2012.  The uncertainty regarding our ability to execute our business plans beyond this point raises substantial doubt about our ability to continue as a going concern.

 

6



Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

In order for us to continue as a going concern beyond 2012 and ultimately to achieve profitability, we may be required to obtain capital from external sources, increase revenues and reduce operating costs.  However, there can be no assurance that our operations will become profitable or that external sources of financing, including the issuance of debt and/or equity securities, will be available at times and at terms acceptable to us, or at all.  The issuance of additional equity or convertible debt securities would cause dilution to our shareholders.  If external financing sources are not available or are inadequate to fund our operations, we will be required to reduce operating costs, including but not limited to personnel across all operational functions, which could jeopardize our future strategic initiatives and business plans.

 

Our business operations are also subject to certain risks and uncertainties, including:

 

·                  market acceptance of our products and services;

 

·                  technological advances that may make our products and services obsolete or less competitive;

 

·                  increases in operating costs, including costs for supplies, personnel and equipment;

 

·                  the availability and cost of capital; and

 

·                  government regulation that may restrict our business.

 

Our services are concentrated in a highly competitive market that is characterized by rapid technological advances, frequent changes in customer requirements and evolving regulatory requirements and industry standards.  Failure to anticipate or respond adequately to technological advances, changes in customer requirements, changes in regulatory requirements or industry standards, or any significant delays in the development or introduction of planned products or services, could have a material adverse effect on our business and operating results.  The accompanying consolidated financial statements have been prepared assuming that the Company continues as a going concern.  The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the matters discussed herein.

 

2.              SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates.  The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Principles of Consolidation.  The accompanying consolidated financial statements include the accounts of the Company and our wholly owned and majority-owned subsidiaries.  Investments for which we possess the power to direct or cause the direction of the management and policies, either through majority ownership or other means, are accounted for under the consolidation method.  Material intercompany transactions and balances have been eliminated in consolidation.  Investments in companies in which we maintain an ownership interest of 20% to 50% or exercise significant influence over operating and financial policies are accounted for under the equity method.  The cost method is used where we maintain ownership interests of less than 20% and do not exercise significant influence over the investee.

 

Revenue Recognition. We recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery has occurred or services have been performed, (iii) amounts are fixed or determinable and (iv) collectability of amounts is reasonably assured.

 

7



Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

Service revenues from providing diagnostic tests are recognized when the testing process is complete and test results are reported to the ordering physician or clinic.  These diagnostic services are billed to various payors, including commercial insurance companies, healthcare institutions, government payors including Medicare and Medicaid, and individuals.  We report revenues from contracted payors based on a contractual rate, or in the case of Medicare and Medicaid, published fee schedules for our tests.  We report revenues from non-contracted payors based on the amount expected to be collected.  The difference between the amount billed and the amount expected to be collected from non-contracted payors is recorded as a contractual allowance to arrive at net recognized revenues.  The expected revenues from non-contracted payors are based on the historical collection experience of each payor or payor group, as appropriate.  In each reporting period, we review our historical collection experience for non-contracted payors and adjust our expected revenues for current and subsequent periods accordingly.  Because a substantial portion of our revenues is from non-contracted third-party payors, it is likely that we will be required to make positive or negative adjustments to accounting estimates with respect to contractual allowances in the future, which may positively or adversely affect our results of operations.

 

Cash and Cash Equivalents.  We consider all highly liquid, short-term investments with original maturities of three months or less when purchased to be cash equivalents.

 

Fair Value Measurements.  We measure fair value as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.  As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or liability.  We utilize a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 

·

Level 1:

Observable market inputs such as quoted prices in active markets;

 

 

 

·

Level 2:

Observable market inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and

 

 

 

·

Level 3:

Unobservable inputs where there is little or no market data, which require the reporting entity to develop its own assumptions.

 

Concentration of Credit Risks.  Cash equivalents are invested in deposits with certain financial institutions and may, at times, exceed federally insured limits.  We have not experienced any significant losses on our deposits of cash and cash equivalents.

 

Accounts Receivable and Allowance for Doubtful Accounts.  Accounts receivable are stated at principal amounts and are primarily comprised of amounts contractually due from customers for services.  An allowance for doubtful accounts is recorded for estimated uncollectible amounts due from various payor groups such as commercial insurance companies, healthcare institutions, government payors and individuals.  The process for estimating the allowance for doubtful accounts involves significant assumptions and judgments.  Specifically, the allowance for doubtful accounts is adjusted periodically and is principally based upon specific identification of past due or disputed accounts.  We also review the age of receivables by payor class to assess our allowance at each period end.  The payment realization cycle for certain governmental and commercial insurance payors can be lengthy, involving denial, appeal and adjudication processes, and is subject to periodic adjustments that may be significant.  Accounts receivable are periodically written off when identified as uncollectible and deducted from the allowance for doubtful accounts after appropriate collection efforts have been exhausted. Additions to the allowance for doubtful accounts are charged to bad debt expense as a component of general and administrative expenses in the consolidated statements of operations.  Collection of governmental, private health insurer, and client receivables are generally a function of providing complete and correct billing information to the insurers and clients within the filing deadlines required by each payor.  Collection of receivables due from patients and clients is generally subject to increased credit risk due to credit-worthiness or inability to pay.

 

Stock-Based CompensationThe compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award, and is recognized as an expense, on a straight-line basis, over the employee’s requisite service period (generally the vesting period of the equity award) which is generally three years.  The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model.  Stock-based compensation expense is recognized only for those awards that are expected to vest using an estimated forfeiture rate.  We estimate pre-vesting option forfeitures at the time of grant and reflect the impact of estimated pre-vesting option forfeitures in compensation expense recognized.  Stock-based compensation expense for all periods presented attributable to our functional expense categories were as follows (in thousands):

 

8



Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Cost of services

 

$

3

 

$

16

 

Research and development

 

4

 

20

 

Sales and marketing

 

11

 

17

 

General and administrative

 

155

 

288

 

Discontinued operations

 

 

(27

)

Total non-cash stock compensation

 

$

173

 

$

314

 

 

Net Loss Per Share. Basic and diluted net loss per share has been computed by dividing the net loss by the weighted average number of common shares issued and outstanding during the periods presented. Options and warrants to purchase CombiMatrix common stock are anti-dilutive and therefore are not included in the determination of the diluted net loss per share. The following table presents a reconciliation of basic and diluted net loss per share from continuing operations for all periods presented (in thousands, except share and per share data):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2012

 

2011

 

Numerator:

 

 

 

 

 

Net loss from continuing operations applicable to common shareholders

 

$

(2,368

)

$

(1,983

)

Denominator:

 

 

 

 

 

Weighted-average common shares outstanding

 

10,704,121

 

7,620,398

 

Basic and diluted net loss per share

 

$

(0.22

)

$

(0.26

)

 

 

 

 

 

 

Common stock options

 

2,091,737

 

2,279,642

 

Common stock warrants

 

3,766,634

 

3,683,998

 

Excluded dilutive securities

 

5,858,371

 

5,963,640

 

 

Segments.  We have determined that we operate in one segment for financial reporting purposes.

 

Reclassifications.  Certain prior period amounts have been reclassified to conform with the current period presentation.

 

Discontinued Operations.  We reclassify, from continuing operations to discontinued operations, for all periods presented, the results of operations for any component either held for sale or disposed of.  We define a component as being distinguishable from the rest of our Company because it has its own operations and cash flows.  A component may be a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group.  Such reclassifications had no effect on our net loss or shareholders’ equity.

 

Recent and Adopted Accounting Pronouncements.  In July 2011, the Financial Accounting Standards Board (“FASB”) issued an amendment to the accounting standards related to the revenue recognition practices of health care entities that recognize significant amounts of patient service revenues at the time services are rendered even though the entity does not assess the patient’s ability to pay for those services.  The amendment requires such entities to classify its provision for bad debts related to such revenues as a reduction from patient service revenues rather than as an operating expense as well as enhanced disclosures about an entity’s policy for recognizing revenue and bad debt expense for patient service transactions along with quantitative information about the effects of changes in the assessment of collectability of patient service revenue.  This amendment was effective for us beginning January 1, 2012.  Given that we do not recognize significant amounts of patient service revenues from individual payments but primarily from contracted and non-contracted third-party payors, we do not believe this standard is applicable to us and therefore its adoption did not result in a material impact on our consolidated financial position, results of operations or cash flows.

 

9



Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

In June 2011, the FASB issued an amendment to the accounting standards related to the presentation of comprehensive income.  This standard revises the manner in which entities present comprehensive income in their financial statements and removes the option to present items of other comprehensive income in the statement of changes in shareholders’ equity.  This standard requires an entity to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements of net income and other comprehensive income.  The adoption of this standard did not result in a material impact on our consolidated financial position, results of operations or cash flows.

 

3.              FAIR VALUE MEASUREMENTS

 

The following table summarizes, for each major category of financial assets or liabilities measured on a recurring basis, the respective fair value at March 31, 2012 and December 31, 2011, and the classification by level of input within the fair value hierarchy defined above (in thousands):

 

 

 

 

 

Fair Value Measurements at

 

March 31, 2012

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

4,071

 

$

4,071

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Value Measurements at

 

December 31, 2011

 

Total

 

Level 1

 

Level 2

 

Level 3

 

Assets:

 

 

 

 

 

 

 

 

 

Cash equivalents

 

$

5,771

 

$

5,771

 

$

 

$

 

 

4.              SHAREHOLDERS’ EQUITY

 

Outstanding warrants to purchase CombiMatrix stock are as follows:

 

 

 

Shares of Common Stock
Issuable from Warrants
Outstanding as of

 

 

 

 

 

 

March 31,

 

December 31,

 

Exercise

 

 

Date of Issue

 

2012

 

2011

 

Price

 

Expiration

 

 

 

 

 

 

 

 

 

April 2011

 

1,310,572

 

1,310,572

 

$2.14

 

April 2016

October 2009

 

30,000

 

30,000

 

$7.78

 

October 2014

May 2009

 

29,688

 

29,688

 

$7.50 - $9.00

 

May 2014 - June 2014

May 2009

 

1,100,000

 

1,100,000

 

$9.00

 

May 2014

July 2008

 

336,984

 

336,984

 

$11.87 - $13.65

 

July 2013

May 2007

 

959,390

 

959,390

 

$5.50

 

May 2012

Total

 

3,766,634

 

3,766,634

 

 

 

 

 

10



Table of Contents

 

COMBIMATRIX CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(Unaudited)

 

5.              COMMITMENTS AND CONTINGENCIES

 

Human Resources

 

We provide certain severance benefits such that if an executive officer of CombiMatrix Corporation is terminated for other than cause, death or disability, the executive will receive payments equal to three months’ base salary plus medical and dental benefits.  In addition, we have implemented a Restated Executive Change of Control Severance Plan (the “Severance Plan”) that affects certain of our senior management-level employees who are classified as “Section 16 Officers” of CombiMatrix Corporation.  Pursuant to the Severance Plan, if a participating employee is involuntarily terminated (other than for death, disability or for cause) or resigns for “good reason” (as defined in the Severance Plan) during the two-year period following a “change of control” (as defined in the Severance Plan) of the Company, then, subject to execution of a release of claims against the Company, the employee will be entitled to receive: (i) one-half times annual base salary; (ii) immediate vesting of outstanding compensatory equity awards; and (iii) payment of COBRA premiums for the participating employee and eligible dependants for a pre-determined period of time.  Payment of benefits under the Severance Plan will be limited by provisions contained in Section 409A of the U.S. Internal Revenue Code.  The Severance Plan is administered by a plan administrator, which initially is the Compensation Committee of the Board of Directors.  In order to participate in the Severance Plan, an eligible employee must waive any prior retention or severance agreements.

 

Litigation

 

In 2002, we entered into a settlement agreement with Nanogen, Inc. (“Nanogen”) to settle all pending litigation between the parties.  Pursuant to the terms of the settlement agreement, we agreed to make quarterly payments to Nanogen equal to 12.5% of total sales of products developed by us and our affiliates based on the patents that had been in dispute in the litigation, up to an annual maximum amount of $1.5 million.  The minimum quarterly payments under the settlement agreement are $25,000 per quarter until the patents expire in 2018.  Royalty expenses recognized under the agreement were $25,000 and $25,000, for the three months ended March 31, 2012 and 2011, respectively, and are included in patent amortization and royalties in the accompanying consolidated statements of operations.

 

On February 14, 2011, Relator Michael Strathmann (“Strathmann”) served us with a complaint (“the Complaint”) filed in the Superior Court of the State of California for the County of Orange.  The Complaint alleged that we submitted false and fraudulent insurance claims to National Union Fire Insurance Company of Pittsburgh, PA in connection with a prior lawsuit that was settled with Nanogen, Inc., thereby allegedly violating the California Insurance Fraud Prevention Act, and sought penalties and unspecified treble damages.  On May 4, 2011, the Superior Court dismissed the Complaint by ordering that it be stricken for violation of the California Anti-SLAPP statute, which prevents plaintiffs from filing abusive lawsuits against public policy.  On June 15, 2011, Strathmann filed a Notice of Appeal with the California Court of Appeals, appealing the granting of the Motion to Strike.  Subsequently, Strathmann filed a Notice of Appeal of the award of attorneys’ fees against him, which appeals have now been consolidated and are in the briefing stage.  Strathmann filed his Opening Brief on January 18, 2012, and we filed our Respondents’ Brief on May 3, 2012.  We believe that this litigation is frivolous and intend to vigorously defend against the appeal, but there can be no assurance that we will ultimately be successful in defending against it.

 

From time to time, we are subject to other claims and legal actions that arise in the ordinary course of business.  We believe that the ultimate liability with respect to these claims and legal actions, if any, will not have a material effect on our financial position, results of operations or cash flows.  Based on a distribution agreement executed between us and Acacia, it is expected that such claims and legal actions attributable to CombiMatrix Corporation prior to the Split-Off Date will remain with us subsequent to the Split-Off Date.  As of the date of this report and prior to such date, we are not aware of the existence of any such claims or legal actions.

 

11



Table of Contents

 

Item 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Statement

 

You should read the following discussion and analysis in conjunction with the consolidated financial statements and related notes thereto contained in Part I, Item 1 of this report.  The information contained in this Quarterly Report on Form 10-Q is not a complete description of our businesses or the risks associated with an investment in our common stock.  We urge you to carefully review and consider the various disclosures made by us in this report and in our other reports filed with the U.S. Securities and Exchange Commission, or “SEC,” including our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on March 16, 2012.

 

This report contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact included in this report, are forward-looking statements. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “should,” “would,” “could,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “plan,” “predict,” “seek,” “potential,” “continue,” “focus,” “ongoing,” or similar terms, variations of such terms or the negative of such terms, and include, but are not limited to, statements regarding projected results of operations, capital expenditures, earnings, management’s future strategic plans, product development, litigation, regulatory matters, market acceptance and performance of our products and services, the success and effectiveness of our technologies, planned clinical trials by our minority-owned subsidiary, our ability to retain and hire key personnel, the competitive nature of and anticipated growth in our markets, market position of our products and services, marketing efforts and partnerships, liquidity and capital resources, our accounting estimates, and our assumptions and judgments.  Such statements are based on management’s current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by us, all of which are subject to change. These forward looking statements are not guarantees of future results and are subject to a number of risks, uncertainties and assumptions that are difficult to predict and that could cause actual results to differ materially and adversely from those described in the forward-looking statements.  The risks and uncertainties referred to above include, but are not limited to, our ability to obtain additional financing for working capital on acceptable terms and in a timely manner; our ability to successfully increase the volume of our existing tests, expand the number of tests offered by our laboratory, increase the number of customers and partners and improve reimbursement for our testing; our ability to continue as a going concern; changes in consumer demand; our ability to attract and retain a qualified sales force and key technical personnel; our ability to successfully develop products; our ability to successfully introduce new technologies and services; rapid technological change in our markets; supply availability; the outcome of existing litigation; our ability to bill and obtain reimbursement for highly specialized tests; our ability to comply with regulations to which our business is subject; legislative, regulatory and competitive developments in markets in which we and our subsidiaries operate; our limited market capitalization; future economic conditions; other circumstances affecting anticipated revenues and costs; and other factors as more fully disclosed in our discussion of risk factors in Item 1A of Part II of this report and in the “Risk Factors” described in our Annual Report on Form 10-K for the year ended December 31, 2011 filed with the SEC on March 16, 2012.  Additional factors that could cause such results to differ materially from those described in the forward-looking statements are set forth in connection with the forward-looking statements.  These forward-looking statements speak only as of the date of this report and we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

 

General

 

We are a molecular diagnostics company that operates primarily in the field of genetic analysis and molecular diagnostics through our wholly owned subsidiary, CombiMatrix Molecular Diagnostics, Inc. (“CMDX”), located in Irvine, California.  CMDX operates as a diagnostics reference laboratory providing DNA-based clinical diagnostic testing services to physicians, hospitals, clinics and other laboratories in two primary areas: (i) prenatal and postnatal developmental disorders; and (ii) hematology/oncology genomics.  CMDX provides its services primarily through the use of array-comparative genomic hybridization (“aCGH”), which enables the analysis of genetic anomalies, as well as through other test offerings including fluorescent in-situ hybridization (“FISH”) and G-Band Chromosome analysis.   Our mission is to empower physicians to positively impact patient care through the delivery of innovative molecular diagnostics services.

 

12



Table of Contents

 

Prior to 2010, we were primarily focused on developing proprietary DNA array-based tools and instruments for the genetic research community, under the brand formerly known as “CustomArray,” as well as providing molecular diagnostics services through CMDX.  On April 19, 2010, we announced a strategic and operational restructuring plan (the “Restructuring Plan”) intended to significantly reduce operating costs, increase the focus on our diagnostic services business and transition senior management.  As part of the Restructuring Plan, we closed our CustomArray business and facilities located in Mukilteo, Washington and relocated our corporate headquarters to Irvine, California.  Since the restructuring, our primary focus has been on our diagnostics services business.  Our goals include increasing utilization of our existing tests, expanding our diagnostic test menu, increasing and diversifying our client base, and improving reimbursement for our testing services.

 

As a result of executing the Restructuring Plan, the financial results of our CustomArray business have been classified as discontinued operations in the consolidated statements of operations for all periods presented.  Unless otherwise noted, amounts and disclosures throughout this report relate to our continuing operations.

 

We also own a one-third minority interest in Leuchemix, Inc. (“Leuchemix”), a private drug development company focused on developing a series of compounds to address a number of oncology-related diseases.

 

Overview

 

For the three months ended March 31, 2012, our operating activities included the recognition of $1.2 million in diagnostic test services revenues, which increased from the comparable period in 2011 due primarily to increased volumes of tests performed as well as an overall increase in our customer base as a result of increased sales and marketing efforts.  Our net loss from continuing operations also increased over the comparable periods due to increased operating expenses, partially from increased costs of services due to increased volumes but also from increased sales and marketing expenses from expansion of our sales force as well as from increased general and administrative expenses due primarily to increased headcount and from increased litigation costs.

 

Also for the three months ended March 31, 2012, our activities included adding Richard Ding, Chief Executive Officer of bioTheranostics Inc., and Joseph M. Limber, President and Chief Executive Officer of Prometheus Laboratories Inc., to our Board of Directors.  Subsequent to March 31, 2012, we announced the hiring of Richard Hockett, MD as our Chief Medical Officer, who joined us on April 30, 2012.  Dr. Hockett was formerly the Chief Medical Officer of Affymetrix, Inc.

 

Critical Accounting Estimates

 

Our unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America.  Preparation of these statements requires management to make judgments and estimates.  Some accounting policies have a significant impact on amounts reported in these financial statements.  A summary of significant accounting policies and a description of accounting policies that are considered critical may be found in our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on March 16, 2012, in the Notes to the Consolidated Financial Statements and the Critical Accounting Estimates sections.  In addition, refer to Note 2 to the consolidated interim financial statements included in Part I, Item 1 of this report.

 

Comparison of the Results of Operations for the Three Months Ended March 31, 2012 and 2011

 

Revenues and Cost of Revenues (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

Change

 

 

 

2012

 

2011

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Services

 

$

1,244

 

$

913

 

$

331

 

36%

 

Cost of services

 

(659

)

(630

)

(29

)

(5%)

 

 

13



Table of Contents

 

Services revenues are generated from providing DNA-based genomic testing services primarily in the areas of prenatal and postnatal development disorders in children and, to a lesser extent, in oncology.  Services revenues increased primarily due to volume increases of our genomic tests.  Billable test volumes were 1,377 and 958 for the three months ended March 31, 2012 and 2011, respectively.  The increase in volumes was due primarily to expansion of our sales force and from increased focus on sales and marketing efforts during late 2011 and 2012 compared to the first quarter of 2011.  Our average revenue per test decreased slightly from $953 in 2011 to $903 in 2012.  This decrease was due primarily to a change in mix of tests performed for customers with governmental third-party insurance coverage including Medicare and various state Medicaid programs, which tend to have lower reimbursement per test than do commercial insurance or direct-bill customers, as well as from the introduction of additional cytogenetic tests, primarily FISH and chromosome analysis, that are priced and reimbursed at lower rates than our array-based test offerings.    Services revenues also includes adjustments relating to our revenue recognition policy of periodically adjusting our estimate for contractual allowances for revenues from non-contracted payors as well as from receiving cash payments in excess of amounts previously recognized for services revenues.  For the three months ended March 31, 2012 and 2011, net positive revenue adjustments were $221,000 and $31,000, respectively.

 

Cost of services include direct materials such as array and laboratory costs, direct laboratory labor (wages and benefits), allocation of overhead and stock-compensation expenses.   These costs increased in 2012 as compared to 2011 due primarily to volume increases.  Due primarily to favorable pricing obtained on certain of our direct materials used in providing our services, the percentage increase from 2011 to 2012 is not proportional to the increase in revenues during the same period. Cost of services also includes $3,000 and $16,000 of non-cash stock compensation expense for the three months ended March 31, 2012 and 2011, respectively.  See Note 2 to our interim consolidated financial statements included elsewhere in this report for a detailed description of the amounts of non-cash stock compensation expense recognized for the periods presented.

 

Operating Expenses (dollars in thousands):

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

Change

 

 

 

2012

 

2011

 

$

 

%

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

$

450

 

$

339

 

$

111

 

33%

 

Sales and marketing

 

873

 

557

 

316

 

57%

 

General and administrative

 

1,574

 

1,326

 

248

 

19%

 

 

Research and Development.  These expenses include labor and laboratory supply costs associated with investigating and launching new tests as well as development costs required to maintain and improve our existing suite of diagnostic tests offered.  Prior to launching a new test or modifying an existing test, appropriate clinical trials and extensive laboratory validations, consistent with the various regulations that govern our industry, must be performed.  These costs are classified as research and development for all periods presented.  The increase in research and development expenses was due primarily to additional labor and materials costs from test validations of new cytogenetics tests that were launched during the first quarter of 2012.  Research and development expenses also include $4,000 and $20,000 of non-cash stock compensation expense for the three months ended March 31, 2012 and 2011, respectively.  See Note 2 to our consolidated interim financial statements included elsewhere in this report for a detailed description of the amounts of non-cash stock compensation expense recognized for the periods presented.

 

Sales and Marketing.  These expenses include salaries and wages associated with our sales force and marketing resources, sales commissions and other expenses associated with promotional and advertising efforts.  The increase in sales and marketing expenses was due to greater emphasis during 2012 on our sales and marketing efforts, hiring of additional sales representatives and increased marketing costs in order to expand and increase market awareness and penetration of our suite of molecular diagnostic tests.   Sales and marketing expenses also include $11,000 and $17,000 of non-cash stock compensation expense for the three months ended March 31, 2012 and 2011, respectively.  See Note 2 to our consolidated interim financial statements included elsewhere in this report for a detailed description of the amounts of non-cash stock compensation expense recognized for the periods presented.

 

14



Table of Contents

 

General and Administrative.  These expenses include compensation and benefit costs of our administrative staff, information technology, executive management, human resources and accounting personnel, as well as facilities-related costs, insurance, legal, audit and other professional services.  Exclusive of stock compensation charges, general and administrative expenses increased for the three months ended March 31, 2012 by $381,000 as compared to the first quarter of 2011 primarily due to increased headcount in Billing and Information Technology departments, recruitment expenses associated with new board members and executive management and from increased litigation defense costs as compared to 2011.  Also included in general and administrative expenses are non-cash stock-based compensation expenses, which were $155,000 and $288,000 for the three months ended March 31, 2012 and 2011, respectively.  The decrease in stock compensation charges was due primarily to prior stock option awards to our employees which became fully vested late in 2011.  See Note 2 to our consolidated financial statements included elsewhere in this report for a detailed description of the amounts of non-cash stock compensation expense recognized for the periods presented.

 

Inflation

 

Inflation has not had a significant impact on our business, results of operations or financial condition.

 

Liquidity and Capital Resources

 

At March 31, 2012, cash and cash equivalents totaled $4.7 million, compared to $6.4 million at December 31, 2011.  Cash is held primarily in general checking accounts as well as in money market mutual funds backed by U.S. government securities.  Working capital at March 31, 2012 was $5.3 million, compared to $7.5 million at December 31, 2011.  The change in working capital was due primarily to the impact of net cash flow activities as discussed below.  The net change in cash and cash equivalents for the periods presented was comprised of the following (in thousands):

 

 

 

Three Months Ended

 

 

 

 

 

March 31,

 

 

 

 

 

2012

 

2011

 

Change

 

Net cash used in:

 

 

 

 

 

 

 

Operating activities

 

$

(1,625

)

$

(1,622

)

$

(3

)

Investing activities

 

(17

)

(24

)

7

 

Financing activities

 

(29

)

(17

)

(12

)

Decrease in cash and cash equivalents

 

$

(1,671

)

$

(1,663

)

$

(8

)

 

Operating Activities.  Higher cash reimbursement from increased sales, billing and collection efforts experienced during the first quarter of 2012 were offset by increased operating expenses described above, resulting in an insignificant change from the first quarter of 2011.

 

Investing Activities.  The increase in net cash flows from investing activities was due to a decrease in capital expenditures.

 

Financing Activities.  The decrease in net cash flows from financing activities was due primarily to higher principal payments from additional capital lease obligations.

 

Future Liquidity.  We have a history of incurring net losses and net operating cash flow deficits.  We are also deploying new technologies and continue to develop commercial services.  We believe that our cash and cash equivalent balances, anticipated cash flows from operations and anticipated operating cash savings from our Restructuring Plan will be sufficient to meet our cash requirements into the fourth quarter of 2012.  In order for us to continue as a going concern beyond this point and ultimately to achieve profitability, we may be required to obtain capital from external sources, increase revenues and reduce operating costs.  However, there can be no assurance that our operations will become profitable or that external sources of financing, including the issuance of debt and/or equity securities, will be available at times and at terms acceptable to us, or at all.  The issuance of additional equity or convertible debt securities would also cause dilution to our shareholders.  If external financing sources are not available or are inadequate to fund our operations, we will be required to reduce operating costs, including but not limited to reducing personnel across all operational functions, which could jeopardize our future strategic initiatives and business plans.  See Note 1 to the consolidated interim financial statements included elsewhere in this report for additional discussion of these matters.

 

15



Table of Contents

 

Capital Requirements.  We may also encounter unforeseen difficulties that may deplete our capital resources more rapidly than anticipated.  As a result, we may be required to seek additional funding through equity, debt or other external financing, and there can be no assurance that additional funding will be available on favorable terms, in a timely fashion or at all.  At this time, we have no significant commitments for capital expenditures in 2012 or beyond.  However, our long-term capital requirements could be substantial and the adequacy of available funds will depend upon many factors, including:

 

·                  the costs of commercialization activities, including sales and marketing costs and capital equipment;

 

·                  competing technological developments;

 

·                  the creation and formation of strategic partnerships;

 

·                  the costs associated with leasing and improving our Irvine, California facility; and

 

·                  other factors that may not be within our control.

 

Off-Balance Sheet Arrangements

 

As of March 31, 2012, we did not have any significant off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated by the SEC.  However, we have entered into an operating lease for our laboratory space and corporate offices, totaling approximately 12,200 square feet.  We have no significant commitments for capital expenditures in 2012 or beyond.  We have executed nine capital leases totaling $477,000 for certain laboratory equipment.

 

Recent Accounting Pronouncements

 

Refer to Note 2 to our consolidated interim financial statements included in Part I, Item 1 of this report.

 

Item 3.                       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for smaller reporting companies.

 

Item 4.                       CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such terms is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  Based on this evaluation, our principal executive officer and our principal financial officer concluded that as of March 31, 2012, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods prescribed by the SEC and (ii) accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during our last fiscal quarter (the quarter ended March 31, 2012) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

16



Table of Contents

 

PART II—OTHER INFORMATION

 

Item 1.  LEGAL PROCEEDINGS

 

On February 14, 2011, Relator Michael Strathmann (“Strathmann”) served us with a complaint (“the Complaint”) filed in the Superior Court of the State of California for the County of Orange.  The Complaint alleged that we submitted false and fraudulent insurance claims to National Union Fire Insurance Company of Pittsburgh, PA in connection with a prior lawsuit that was settled with Nanogen, Inc., thereby allegedly violating the California Insurance Fraud Prevention Act, and sought penalties and unspecified treble damages.  On May 4, 2011, the Superior Court dismissed the Complaint by ordering that it be stricken for violation of the California Anti-SLAPP statute, which prevents plaintiffs from filing abusive lawsuits against public policy.  On June 15, 2011, Strathmann filed a Notice of Appeal with the California Court of Appeals, appealing the granting of the Motion to Strike.  Subsequently, Strathmann filed a Notice of Appeal of the award of attorneys’ fees against him, which appeals have now been consolidated and are in the briefing stage.  Strathmann filed his Opening Brief on January 18, 2012, and we filed our Respondents’ Brief on May 3, 2012.  We believe that this litigation is frivolous and intend to vigorously defend against the appeal, but there can be no assurance that we will ultimately be successful in defending against it.

 

From time to time, we are involved in other litigation arising in the normal course of business.  Management believes that resolution of these matters will not result in any payment that, in the aggregate, would be material to our financial position or results of operations.

 

Item 1A.  RISK FACTORS

 

The following risk factors include any and all material changes to, and should be read in conjunction with, the risk factors contained in Part 1, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on March 16, 2012.

 

We may not be able to meet our cash requirements beyond 2012 without obtaining additional capital from external sources, and if we are unable to do so, we may not be able to continue as a going concern.

 

We anticipate that our cash and cash equivalents of $4.7 million as of March 31, 2012 will meet our cash requirements into the fourth quarter of 2012. However, in order for us to continue as a going concern beyond that point, we may be required to obtain capital from external sources. If external financing sources are not available in a timely manner or at all, or are inadequate to fund our operations, it could result in reduced revenues and cash flows from the sales of our diagnostic services and/or could jeopardize our ability to launch, market and sell additional products and services necessary to grow and sustain our operations, and we will be required to reduce operating costs, including but not limited to reducing personnel across all operational functions, which could jeopardize our future strategic initiatives and business plans.

 

Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

Item 3.  DEFAULTS UPON SENIOR SECURITIES

 

None.

 

Item 4.  MINE SAFETY DISCLOSURES

 

Not applicable.

 

Item 5.  OTHER INFORMATION

 

None.

 

Item 6.  EXHIBITS

 

An index of exhibits is found on page 19 of this report.

 

17



Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

COMBIMATRIX CORPORATION

 

 

 

 

 

By:

/s/ R. JUDD JESSUP

 

 

R. Judd Jessup

 

 

Chief Executive Officer

 

 

(Principal Executive Officer)

 

 

 

 

 

 

 

By:

/s/ SCOTT R. BURELL

 

 

Scott R. Burell

 

 

Chief Financial Officer

 

 

(Principal Financial and Accounting Officer)

 

 

 

Date:   May 11, 2012

 

 

 

18



Table of Contents

 

EXHIBIT INDEX

 

Exhibit
Number

 

Description

 

 

 

 

3.1

 

 

Amended and Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-1 (SEC File No. 333-139679) filed with the SEC on December 26, 2006.

3.2

 

 

Certificate of Amendment to Amended and Restated Certificate of Incorporation. Incorporated by reference to Exhibit 3.1A to the Company’s Quarterly Report on Form 10-Q (File No. 001-33523) filed with the SEC on August 14, 2008.

3.3

 

 

Second Amended and Restated Bylaws. Incorporated by reference to Exhibit 3.2 to the Company’s Annual Report on Form 10-K (File No. 001-33523) filed with the SEC on March 18, 2010.

10.1

 

 

Employment Agreement for Richard Hockett, M.D.(*)

10.2

 

 

CombiMatrix Corporation 2006 Stock Incentive Plan, as amended. Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 001-33523) filed with the SEC on March 1, 2012.

31.1

 

 

Certification of Chief Executive Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 (*)

31.2

 

 

Certification of Chief Financial Officer pursuant to section 302 of the Sarbanes-Oxley Act of 2002 (*)

32.1

 

 

Certification of Chief Executive Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

32.2

 

 

Certification of Chief Financial Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)

101.0

 

 

The following materials from CombiMatrix Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of March 31, 2012 and December 31, 2011; (ii) Consolidated Statements of Operations for the three months ended March 31, 2012 and 2011; (iii) Consolidated Statements of Cash Flows for the three months ended March 31, 2012 and 2011; and (iv) Notes to Consolidated Financial Statements (**).

 


(*)  Included herewith.

(**)  Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101.0 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

 

19


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