Scorpius Holdings, Inc. has reported a net loss of $1.2 million for the quarter ended March 31, 2024, compared to a net loss of $0.8 million for the same period in 2023. The company’s total assets increased to $1.2 billion, while total liabilities remained stable at $1.1 billion. The company’s cash and cash equivalents decreased to $100 million from $120 million in the previous quarter. The financial report also highlights the company’s ongoing legal proceedings and risk factors, unregistered sales of equity securities, and other relevant information.
OVERVIEW
Scorpius Holdings provides services to help other companies manufacture biological products like cell and gene therapies. It started operating a new manufacturing facility in San Antonio in September 2022 to offer these services. The company plans to finance the facility’s operations in several ways, including cash on hand, grants, selling more stock shares, partnerships, and revenue from manufacturing services.
Scorpius wants the facility to use American-made equipment and supplies as much as possible. It believes this will help it compete for U.S. government contracts related to biodefense. The company hopes the facility will help it expand in the contract manufacturing market.
Recent Developments
In May 2024, Scorpius raised around $6 million by selling stock and warrants to investors. It used part of the money to repay a $750,000 loan from its CEO.
The CEO loaned Scorpius the money in May 2024. In exchange, the terms of a previous $2.25 million loan he provided were updated.
In March 2024, Scorpius raised $1.235 million by selling 10 million shares of stock to investors.
In January 2024, Scorpius sold some unused patent rights related to cancer therapies for $1 million.
Also in January 2024, the CEO purchased a $2.25 million convertible note from Scorpius that allows him to convert the loan amount into shares of Scorpius stock.
Key Accounting Policies
Scorpius recognizes revenue over time as it completes contracted work for customers. It tracks progress by measuring costs incurred compared to total expected costs for each contract.
Prices for Scorpius’ services reflect management’s best estimate of the value provided to customers. For contracts with multiple parts, prices are allocated to each part based on estimated standalone selling prices.
Scorpius only includes amounts of variable revenue in recognized revenue if it’s unlikely there will be significant reversals when uncertainties are resolved.
No significant changes were made to other accounting policies.
Financial Results
Quarter Ended March 31, 2024 vs. March 31, 2023
Category | March 31, 2024 | March 31, 2023 | Change |
---|---|---|---|
Revenue | $3.5 million | $0.8 million | +$2.7 million |
Cost of Revenue | $0.9 million | $0.6 million | +$0.3 million |
R&D Expense | $3.9 million | $6.3 million | -$2.4 million |
SG&A Expense | $5.0 million | $6.5 million | -$1.5 million |
Change in Fair Value of Contingent Earn-Out Receivable | $1.0 million | $0 | +$1.0 million |
Total Non-Operating Income | $0.7 million | $0.1 million | +$0.6 million |
Liquidity and Capital Resources
Scorpius has incurred significant losses and negative cash flow since it was founded. It has financed operations mostly by selling stock and warrants to investors.
The company will need substantial additional funding to support manufacturing facility operations and commercialization expenses. It only had around $1.7 million of cash and investments as of March 31, 2024, not including $5.3 million of net proceeds from the May 2024 stock offering.
Management has said there is doubt whether Scorpius can continue operating beyond December 2024 without raising more money or finding a strategic partner. It may be forced to delay, reduce, or terminate some or all operations if it does not obtain additional financing or engage a strategic partner in the next few months.
Scorpius’ future cash needs depend on many uncertain factors, including:
If Scorpius raises more money by issuing stock, existing shareholder ownership will be diluted.
Cash Flows
Outlook
Scorpius will need to obtain substantial additional funding to support its manufacturing facility operations and commercialization expenses. If it cannot raise new capital or find a strategic partner, the company may be forced to delay, reduce, or terminate some or all of its operations.
Management has said there is doubt about Scorpius’ ability to continue operating as a going concern within one year unless it can secure additional financing or engage a strategic partner.