Washington, D.C.
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| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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11099 N. Torrey Pines Road, Suite 100 La Jolla, CA | 92037 | |||||
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CONSTELLATION ALPHA CAPITAL CORP.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
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| Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 | ||||||||
Company (“Merger Sub”), and DermTech Operations. The Company. The Business Combination. On August 29, 2019, immediately following the completion of the Business Combination, the Company changed its name from Constellation Alpha Capital Corp. pre-pandemic expectations. The Basis of Presentation Estimates Restricted Cash period realized. Nine Months Ended December 31, (g) Concentration of Credit Risk laboratory services and Smart Stickers to third-party companies through contract research agreements. Revenues are generated from providing genomic services to facilitate the development of drugs designed to treat dermatologic conditions. The exercise of outstanding warrants and 2,469,816 shares of common stock then issuable upon the exercise of stock options and release of RSUs. value of the Company’s warrant liability using the Black-Scholes-Merton valuation model: Controls and Procedures. Unregistered Sales of Equity Securities Exhibits.CONSTELLATION ALPHA CAPITAL CORP. December 31,
2017 March 31,
2017 (Unaudited) ASSETS Current Assets Cash $ 554,273 $ 25,000 Prepaid expenses 67,083 — Total Current Assets 621,356 25,000 Deferred offering costs — 169,742 Cash and marketable securities held in Trust Account 145,878,435 — Total Assets $ 146,499,791 $ 194,742 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable and accrued expenses $ 27,014 $ 4,498 Advances from related parties 11,095 168,037 Total Current Liabilities 38,109 172,535 Deferred underwriting fees 5,031,250 — Total Liabilities 5,069,359 172,535 Commitments Ordinary shares subject to possible redemption, 13,443,938 and -0- shares at redemption value as of December 31, 2017 and March 31, 2017, respectively 136,430,431 — Shareholders’ Equity Preferred shares, no par value; unlimited shares authorized; none issued and outstanding — — Ordinary shares, no par value; unlimited shares authorized; 5,086,062 and 4,312,500 shares issued and outstanding (excluding 13,443,938 and -0- shares subject to possible redemption) as of December 31, 2017 and March 31, 2017, respectively 4,536,352 25,000 Retained earnings/(Accumulated deficit) 463,649 (2,793 ) Total Shareholders’ Equity 5,000,001 22,207 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 146,499,791 $ 194,742 TheJune 30, 2022 December 31, 2021 Assets Current assets: Cash and cash equivalents $ 120,333 $ 176,882 Short-term marketable securities 53,457 48,449 Accounts receivable 5,962 3,847 Inventory 1,432 480 Prepaid expenses and other current assets 2,681 3,166 Total current assets 183,865 232,824 Property and equipment, net 4,916 4,549 Operating lease right-of-use assets 23,694 7,744 Restricted cash 3,470 3,025 Other assets 167 167 Total assets $ 216,112 $ 248,309 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 861 $ 2,880 Accrued compensation 7,818 5,120 Accrued liabilities 3,272 1,227 Short-term deferred revenue 1,310 1,380 Current portion of operating lease liabilities 1,693 1,453 Current portion of finance lease obligations 134 121 Total current liabilities 15,088 12,181 Warrant liability 24 146 Long-term finance lease obligations, less current portion 111 136 Operating lease liabilities, long-term 22,312 6,148 Total liabilities 37,535 18,611 Stockholders’ equity: Common stock, $0.0001 par value per share; 50,000,000 shares authorized as of June 30, 2022 and December 31, 2021; 30,038,447 and 29,772,922 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 3 3 Additional paid-in capital 445,491 436,183 Accumulated other comprehensive loss (865) (124) Accumulated deficit (266,052) (206,364) Total stockholders’ equity 178,577 229,698 Total liabilities and stockholders’ equity $ 216,112 $ 248,309 are an integral partto unaudited condensed consolidated financial statements.Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenues: Assay revenue $ 4,147 $ 2,910 $ 7,665 $ 5,100 Contract revenue 86 209 286 543 Total revenues 4,233 3,119 7,951 5,643 Cost of revenues: Cost of assay revenue 3,236 2,604 6,766 4,575 Cost of contract revenue 37 20 61 51 Total cost of revenues 3,273 2,624 6,827 4,626 Gross profit 960 495 1,124 1,017 Operating expenses: Sales and marketing 15,001 7,907 30,444 14,419 Research and development 6,915 3,594 13,253 5,845 General and administrative 8,878 6,301 17,452 11,473 Total operating expenses 30,794 17,802 61,149 31,737 Loss from operations (29,834) (17,307) (60,025) (30,720) Other income/(expense): Interest income, net 149 35 215 69 Change in fair value of warrant liability 105 170 122 (1,519) Total other income/(expense) 254 205 337 (1,450) Net loss $ (29,580) $ (17,102) $ (59,688) $ (32,170) Weighted average shares outstanding used in computing net loss per share, basic and diluted 29,964,849 28,979,148 29,904,972 28,070,539 Net loss per share of common stock outstanding, basic and diluted $ (0.99) $ (0.59) $ (2.00) $ (1.15) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ (29,580) $ (17,102) $ (59,688) $ (32,170) Unrealized net (loss)/gain on available-for-sale
marketable securities(171) (6) (741) 3 Comprehensive loss $ (29,751) $ (17,108) $ (60,429) $ (32,167) Common stock Additional
paid-in
capitalAccumulated
other
comprehensive
lossAccumulated
deficitTotal
stockholders’
equityShares Amount Balance, December 31, 2021 29,772,922 $ 3 $ 436,183 $ (124) $ (206,364) $ 229,698 Issuance of common stock from option exercises and RSU releases 109,275 — 40 — — 40 Issuance of common stock from warrant exercises 11,101 — 12 — — 12 Issuance of common stock from Employee Stock Purchase Plan 47,339 — 515 — — 515 Unrealized net loss on available-for-sale marketable securities — — — (570) — (570) Stock-based compensation — — 3,894 — — 3,894 Net loss — — — — (30,108) (30,108) Balance, March 31, 2022 29,940,637 $ 3 $ 440,644 $ (694) $ (236,472) $ 203,481 Issuance of common stock from RSU releases 88,591 — — — — — Issuance of common stock from warrant exercises 9,219 — 10 — — 10 Unrealized net loss on available-for-sale marketable securities — — — (171) — (171) Stock-based compensation — — 4,837 — — 4,837 Net loss — — — — (29,580) (29,580) Balance, June 30, 2022 30,038,447 $ 3 $ 445,491 $ (865) $ (266,052) $ 178,577 Common stock Additional
paid-in
capitalAccumulated
other
comprehensive
income/(loss)Accumulated
deficitTotal
stockholders’
equityShares Amount Balance, December 31, 2020 20,740,413 $ 2 $ 189,868 $ (1) $ (128,029) $ 61,840 Issuance of common stock at $29.50 per share, net of $9.1 million in issuance costs 4,872,881 1 134,581 — — 134,582 Issuance of common stock from option exercises and RSU releases 176,673 — 408 — — 408 Issuance of common stock from warrant exercises 3,089,325 — 72,081 — — 72,081 Issuance of common stock from Employee Stock Purchase Plan 39,960 — 392 — — 392 Unrealized net gain on available-for-sale marketable securities — — — 9 — 9 Stock-based compensation — — 2,172 — — 2,172 Reclassification of warrant liability due to Private SPAC Warrants not held by original holder — — 411 — — 411 Net loss — — — — (15,068) (15,068) Balance, March 31, 2021 28,919,252 $ 3 $ 399,913 $ 8 $ (143,097) $ 256,827 Issuance of common stock from option exercises and RSU releases 157,277 — 188 — — 188 Issuance of common stock at a weighted average price of $46.33 through at-the market offering, net of $0.7 million in issuance costs 530,551 — 23,836 — — 23,836 Issuance of common stock from warrant exercises 314 — 5 — — 5 Unrealized net loss on available-for-sale marketable securities — — — (6) — (6) Stock-based compensation — — 3,538 — — 3,538 Reclassification of warrant liability due to Private SPAC Warrants not held by original holder — — 23 — — 23 Net loss — — — — (17,102) $ (17,102) Balance, June 30, 2021 29,607,394 $ 3 $ 427,503 $ 2 $ (160,199) $ 267,309 Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net loss $ (59,688) $ (32,170) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation 766 401 Change in fair value of warrant liability (122) 1,519 Amortization of operating lease right-of-use assets 1,109 582 Stock-based compensation 8,731 5,710 Amortization of premiums, net of accretion of discounts on marketable securities 283 337 Loss on disposal of equipment 285 13 Changes in operating assets and liabilities: Accounts receivable (2,115) (705) Inventory (952) (393) Prepaid expenses and other current assets 483 152 Operating lease liabilities, net (654) (328) Accounts payable, accrued liabilities and deferred revenue (53) 263 Accrued compensation 2,698 1,092 Net cash used in operating activities (49,229) (23,527) Cash flows from investing activities: Purchases of marketable securities (20,171) (4,899) Maturities of marketable securities 14,139 5,450 Purchases of property and equipment (1,360) (944) Net cash used in investing activities (7,392) (393) Cash flows from financing activities: Proceeds from issuance of common stock in connection with public follow-on offering, net — 134,582 Proceeds from issuance of common stock in connection with at-the-market offering, net — 23,836 Proceeds from exercise of common stock warrants 22 69,928 Proceeds from RSU releases (par value only) and the exercise of stock options 40 596 Proceeds from contributions to the employee stock purchase plan 515 392 Principal repayments of capital lease obligations (60) (53) Net cash provided by financing activities 517 229,281 Net (decrease)/increase in cash, cash equivalents and restricted cash (56,104) 205,361 Cash, cash equivalents and restricted cash, beginning of period 179,907 24,248 Cash, cash equivalents and restricted cash, end of period $ 123,803 $ 229,609 Reconciliation of cash, cash equivalents and restricted cash, end of period: Cash and cash equivalents $ 120,333 $ 229,609 Restricted cash 3,470 — Total cash, cash equivalents and restricted cash $ 123,803 $ 229,609 Supplemental cash flow information: Cash paid for interest on finance lease obligations $ 7 $ 8 Supplemental disclosure of noncash investing and financing activities: Purchases of property and equipment recorded in accounts payable $ 11 $ 24 Reclassification of warrant liability due to Private SPAC Warrants not held by original holder $ — $ 434 Cashless exercise of common stock warrants $ — $ 2,158 Right-of-use assets obtained in exchange for lease obligations $ 17,059 $ 2,831 Property and equipment acquired under finance leases $ 48 $ — Change in net unrealized (losses)/gains on available-for-sale marketable securities $ (741) $ 3 unaudited condensed financial statements.CONSTELLATION ALPHA CAPITAL CORP.CONDENSED STATEMENTS OF OPERATIONS(Unaudited) Three Months Ended
December 31, Nine Months Ended
December 31, 2017 2016 2017 2016 Operating costs $ 97,330 $ — $ 224,493 $ 60 Loss from operations (97,330 ) — (224,493 ) (60 ) Other income (loss): Interest income 360,898 — 726,784 — Unrealized loss on marketable securities held in Trust Account (11,862 ) — (35,849 ) — Net income (loss) $ 251,706 $ — $ 466,442 $ (60 ) Weighted average shares outstanding, basic and diluted(1) 5,078,655 3,750,000 4,601,770 3,750,000 Basic and diluted net loss per ordinary share $ (0.01 ) $ 0.00 $ (0.04 ) $ (0.00 ) (1)Excludes an aggregate of up to 13,443,938 shares subject to redemption at December 31, 2017 and an aggregate of 562,500 shares held by the sponsor that were subject to forfeiture at December 31, 2016 to the extent that the underwriters’ over-allotment was not exercised in full.accompanying notes are an integral partCompany refers to this agreement, as amended by that certain First Amendment to Agreement and Plan of Merger dated as of August 1, 2019, as the Merger Agreement. Pursuant to the Merger Agreement, Merger Sub merged with and into DermTech Operations, with DermTech Operations surviving as a wholly-owned subsidiary of the unaudited condensed financial statements.CONSTELLATION ALPHA CAPITAL CORP.CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITYNINE MONTHS DECEMBER 31, 2017(Unaudited) Ordinary Shares (Accumulated Deficit)/Retained Total
Shareholders’ Shares Amount Earnings Equity Balance – April 1, 2017 4,312,500 $ 25,000 $ (2,793 ) $ 22,207 Cancellation of ordinary shares issued to initial shareholders (718,750 ) — — — Sale of 14,375,000 Units, net of underwriters discount and offering expenses 14,375,000 135,329,283 — 135,329,283 Sale of 561,250 Private Units 561,250 5,612,500 — 5,612,500 Ordinary shares subject to redemption (13,443,938 ) (136,430,431 ) — (136,430,431 ) Net income — — 466,442 466,442 Balance – December 31, 2017 5,086,062 $ 4,536,352 $ 463,649 $ 5,000,001 accompanying notes are an integral partCompany refers to this transaction as the Business Combination. In connection with and two days prior to the completion of the unaudited condensed financial statements.CONSTELLATION ALPHA CAPITAL CORP.CONDENSED STATEMENTS OF CASH FLOWS(Unaudited) Nine Months Ended December 31, 2017 2016 Cash Flows from Operating Activities: Net income (loss) $ 466,442 $ (60 ) Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: Interest earned on marketable securities held in Trust Account (726,784 ) — Unrealized loss on securities held in Trust Account 35,849 — Changes in operating assets and liabilities: Prepaid expenses (67,083 ) — Accounts payable and accrued expenses 22,516 2,254 Net cash (used in) provided by operating activities (269,060 ) 2,194 Cash Flows from Investing Activities: Investment of cash in Trust Account (145,187,500 ) — Net cash used in investing activities (145,187,500 ) — Cash Flows from Financing Activities: Proceeds from sale of Units, net of underwriting discounts paid 140,875,000 — Proceeds from sale of Private Units 5,612,500 — Advances received from related party 162,255 — Repayment of advances from related party (319,197 ) (14,631 ) Payment of offering costs (344,725 ) (4,004 ) Net cash provided by (used in) financing activities 145,985,833 (18,635 ) Net Change in Cash 529,273 (16,441 ) Cash – Beginning 25,000 16,441 Cash – Ending $ 554,273 $ — Non-Cash investing and financing activities: Offering costs charge to additional paid in capital $ 301,278 $ — Deferred underwriting fee payable $ 5,031,250 $ — Initial classification of ordinary shares subject to possible redemption $ 135,963,594 $ — Change in value of ordinary shares subject to possible redemption $ 466,837 $ — The accompanying notes are an integral partBusiness Combination, the Company domesticated from the British Virgin Islands to Delaware. DermTech Operations changed its name from DermTech, Inc. to DermTech Operations, Inc. shortly before the completion of the unaudited condensed financial statements.4 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS(the “Company”)to DermTech, Inc., and then effected a one-for-two reverse stock split of its common stock.blank checkmolecular diagnostic company incorporateddeveloping and marketing its Clinical Laboratory Improvement Amendments of 1988 (“CLIA”) laboratory services including genomic tests to facilitate the diagnosis of dermatologic conditions including melanoma. The Company has developed a proprietary, non-invasive technique for sampling the surface layers of the skin using an adhesive patch called the DermTech Smart Sticker™ (the “Smart Sticker”) to collect biological information for commercial applications in the British Virgin Islands on July 31, 2015.medical diagnostic field.was formedis considered an essential business due to the importance of early melanoma detection, which has allowed the Company’s CLIA laboratory to remain fully operational. The Company implemented additional safety measures in accordance with Centers for Disease Control and Prevention (“CDC”), Occupational Safety and Health Administration (“OSHA”) and other guidance within its CLIA laboratory operations. Additionally, and during this time, the purposeCompany transitioned administrative functions to predominantly remote work. Beginning in March 2020 and continuing through the second quarter of acquiring, engaging2022, the ongoing COVID-19 pandemic has reduced patient access to clinician offices for in-person testing and reduced access by the Company’s sales force for in-office sales calls, which has resulted in a share exchange, share reconstruction and amalgamation with, purchasing all or substantially allreduced volume of billable samples received during the assetssecond quarter of entering into contractual arrangements with, or engaging in any other similar business combination with one or more businesses or entities (“Business Combination”). Although the Company is not limited to a particular industry or geographic region for purposes of consummating a Business Combination, the Company intends to focus on healthcare services and manufacturing businesses in India.All activity through December 31, 2017 relates2022 relative to the Company’s formation, its initial public offering (“Initial Public Offering”), which is described below, and identifying a target company for a Business Combination.registration statement forCompany expects the ongoing COVID-19 pandemic to continue to adversely impact billable sample volume until patient access to in-person testing fully resumes, in-office access by the Company’s Initial Public Offering was declared effective bysales force returns to pre-pandemic levels, or telemedicine options are more widely adopted. Additionally, the Securitiesongoing COVID-19 pandemic has negatively affected and Exchange Commission (the “SEC”)may continue to negatively affect the Company’s pharmaceutical customers’ clinical trials. The extent to which the COVID-19 pandemic will affect the Company’s future revenue is uncertain and will depend on June 19, 2017. On June 23, 2017, the Company consummated the Initial Public Offering of 14,375,000 units (“Units”duration and with respect to the ordinary shares included in the Units, the “Public Shares”) at $10.00 per Unit, which includes a full exercise by the underwriters of their over-allotment option in the amount of 1,875,000 Units, generating gross proceeds of $143,750,000, which is described in Note 3. Each Unit consists of one Public Share, one right (“Public Right”) and one redeemable warrant (“Public Warrant”). Each Public Right will convert into one-tenth (1/10) of one ordinary share (see Note 7). Each Public Warrant entitles the holder to purchase one-half (½) of one ordinary share at an exercise price of $11.50 per whole share (see Note 7). The Company will not issue fractional shares.Simultaneously with the closingextent of the Initial Public Offering,effects of the Company consummatedongoing COVID-19 pandemic, including the sale of 561,250 Units (the “Private Units”) at a price of $10.00 per Unit in a private placement toeffects on the Company’s sponsor, Centripetal, LLC (the “Sponsor”), and Cowen Investments, LLC (and their designees) (“Cowen Investments”), generating gross proceeds of $5,612,500, which is described in Note 4. The Private Units are identical to the Units sold in the Initial Public Offering, except for the private warrants (“Private Warrants”), as described in Note 7.Following the closing of the Initial Public Offering on June 23, 2017, an amount of $145,187,500 ($10.10 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Units was placed in a trust account (“Trust Account”) and invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 180 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of paragraphs (d)(2), (d)(3) and (d)(4) of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the consummation of a Business Combination or (ii) the distribution of the Trust Account, as described below. Transaction costs amounted to $8,420,717, consisting of $2,875,000 of underwriting fees, $5,031,250 of deferred underwriting fees (see Note 6) and $514,467 of Initial Public Offering costs. As of December 31, 2017, $554,273 of cash was held outside of the Trust Account and was available for working capital purposes.The Company’s management has broad discretion with respect to the specific application of the net proceeds of its Initial Public Offering and Private Units, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. NASDAQ rules provide that the Company’s Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (excluding any deferred underwriting commissions and taxes payable on interest earned on the Trust Account) at the time of the signing a definitive agreement in connection with a Business Combination. However, the Company will only complete a Business Combination if the post-Business Combination company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act. There is no assurance that the Company will be able to successfully effect a Business Combination.The Company will provide its shareholders with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a shareholder meeting called to approve the Business Combination or (ii) by means of a tender offer. In connection with a proposed Business Combination, the Company may seek shareholder approval of a Business Combination at a meeting called for such purpose at which shareholders may seek to redeem their shares, regardless of whether they vote for or against a Business Combination. The shareholders will be entitled to redeem their shares for a pro rata portion of the amount then in the Trust Account ($10.10 per share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its tax obligations). The per-share amount to be distributed to shareholders who redeem their shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 7). The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks shareholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. Notwithstanding the foregoing, a public shareholder, together with any affiliate of such shareholder or any other person with whom such shareholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from seeking redemption rights with respect to 20% or more of the ordinary shares sold in the Initial Public Offering without the Company’s prior written consent. If a shareholder vote is not required and the Company does not decide to hold a shareholder vote for business or other legal reasons, the Company will, pursuant to its Memorandum and Articles of Association, offer such redemption pursuant to the tender offer rules of the SEC, and file tender offer documents containing substantially the same information as would be included in a proxy statement with the SEC prior to completing a Business Combination.5 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)The Sponsor and Cowen Investments (the “Initial Shareholders”) have agreed (a) to vote their founder shares, the ordinary shares included in the Private Units (the “Private Shares”) and any Public Shares purchased during or after the Initial Public Offering in favor of a Business Combination, (b) not to propose an amendment to the Company’s Memorandum and Articles of Association with respect to the Company’s pre-Business Combination activities prior to the consummation of a Business Combination unless the Company provides dissenting public shareholders with the opportunity to redeem their Public Shares in conjunction with any such amendment, (c) not to redeem any shares (including the founder shares and Private Shares) into the right to receive cash from the Trust Account in connection with a shareholder vote to approve a Business Combination (or to sell any shares in a tender offer in connection with a Business Combination if the Company does not seek shareholder approval in connection therewith) or a vote to amend the provisions of the Memorandum and Articles of Association relating to shareholders’ rights of pre-Business Combination activity; and (d) that the founder shares and securities underlying the Private Units shall not participate in any liquidating distributions upon winding up if a Business Combination is not consummated. However, the Initial Shareholders will be entitled to liquidating distributions from the Trust Account with respect to Public Shares they hold if the Company fails to complete its Business Combination.If the Company is unable to complete a Business Combination within 18 months from the closing of the Initial Public Offering (or 21 months from the closing of the Initial Public Offering if the Company has an executed letter of intent, agreement in principle or definitive agreement for a Business Combination within 18 months from the closing of the Initial Public Offering but has not completed the Business Combination within such 18 month period) (the “Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than five business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned (net of taxes payable and less interest to pay dissolution expenses up to $50,000), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the remaining shareholders and the Company’s board of directors, proceed to commence a voluntary liquidation and thereby a formal dissolution of the Company, subject in each case to its obligations to provide for claims of creditors and the requirements of applicable law. The underwriters have agreed to waive their rights to the deferred underwriting commission held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the funds held in the Trust Account that will be available to fund the redemption of the Company’s Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution (including Trust Account assets) will be less than $10.10 per Unit. The Sponsor has agreed that it will indemnify the Company to the extent necessary to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or claims of vendors or other entities that are owed money by the Company for services rendered or contracted for or products sold to the Company, but only if such a vendor or prospective target business does not execute such a waiver. However, the Sponsor may not be able to meet such obligation as the Company has not required its Sponsor to retain any assets to provide for its indemnification obligations, nor has the Company taken any further steps to ensure that the Sponsor will be able to satisfy any indemnification obligations that arise. Moreover, the Sponsor will not be liable to the Company’s public shareholders if it should fail to satisfy its obligations and instead will only be liable to the Company. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESpresentationaccompanyingcondensed consolidated financial statements include the accounts of DermTech, Inc. and its subsidiaries. All intercompany balances and transactions among the consolidated entity have been eliminated in consolidation. These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Securities and Exchange Commission (“SEC”), Regulation S-X of the SEC. Certain information or footnote disclosures normally included inS-X. Accordingly, these unaudited condensed consolidated financial statements prepared in accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, theyaccompanying notes do not include all the information and footnotes necessarydisclosures required by U.S. GAAP for a comprehensive presentation ofcomplete financial position, results of operations, or cash flows.statements and should be read together with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of awhich include only normal recurring nature, which areadjustments considered necessary for a fair presentation, have been included.position, operating results andstatements. As of June 30, 2022, there have been no material changes in the Company's significant accounting policies from those that were disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.periods presented. 6 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)The accompanyingsix months ended June 30, 2021 has been reclassified to conform to the current year presentation as a result of adopting Accounting Standards Update ("ASU") No. 2016-02, should be read in conjunction with the Company's Prospectus as filed with the SEC on June 21, 2017, as well as the Company’s Current Report on Form 8-K, as filed with the SEC on June 29, 2017. The interim results for the three and nine months ended December 31, 2017 are not necessarily indicative“Adoption of the results to be expected for the year ending March 31, 2018 or for any future interim periods.Emerging growth companyThe Company is an “emerging growth company,ASC 842.” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.estimates to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses reported during the reporting period.Making On an ongoing basis, management evaluates these estimates requires managementand judgments, including but not limited to exercise significant judgment. It is at least reasonably possible thatthose related to assay revenue, stock-based compensation, short-term marketable securities, accounts receivable, accrued bonus, warrant liability, right-of-use (“ROU”) assets and the estimaterealization of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actualdeferred tax assets. Actual results couldmay differ significantly from ourthose estimates.cash equivalentsshort-termhighly liquid investments with an original maturityremaining maturities of three months or less when purchased to be cash equivalents. The Company did notmaintains its cash balances at banks and financial institutions. The balances are insured up to the Federal Deposit Insurance Corporation legal limit. The Company maintains cash balances that have anyin the past and may, at times, exceed this insured limit.equivalentsconsists of cash deposited with a financial institution as collateral for the Company’s letters of credit for its facility leases. Restricted cash is classified as noncurrent based on the terms of the underlying lease arrangement.20172021. Accumulated amortization associated with finance leases was $0.1 million as of June 30, 2022 and March 31, 2017.Cash and marketable securities held in Trust AccountAt December 31, 2017, the2021. Maintenance and repairs are expensed as incurred, and material improvements are capitalized. When assets held in the Trust Account were held in cash and U.S. Treasury Bills.Ordinary shares subject to possible redemptionThe Company accounts for its ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity.” Ordinary shares subject to mandatory redemption (if any) are classified as a liability instrument and are measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that feature redemption rights that are either within the controlretired or otherwise disposed of, the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control)cost and accumulated depreciation are classified as temporary equity. At all other times, ordinary shares are classified as shareholders’ equity. The Company’s ordinary shares feature certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2017, ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders’ equity section of the Company’s balance sheet.7 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)Offering costsOffering costs consist of legal, accounting, underwriting fees and other costs incurred throughremoved from the balance sheet date that are directly related toand any resulting gain or loss is reflected in the Initial Public Offering. Offering costs amounting to $8,420,717 were charged to shareholders’ equity uponcondensed consolidated statements of operations in the completion of the Initial Public Offering.Income taxescomplies with the accounting and reporting requirementsdisposed of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed for differences between the financial statement and tax bases$0.3 million of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.ASC Topic 740 prescribes a recognition threshold and a measurement attributeequipment for the financial statement recognitionthree months ended June 30, 2022 and measurement0 equipment for the three months ended June 30, 2021tax positions taken$0.3 million and $13,000 of equipment for the six months ended June 30, 2022 and 2021, respectively. The Company assesses its long-lived assets, consisting primarily of property and equipment, for impairment when material events or expected to be takenchanges in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company’s management determinedcircumstances indicate that the British Virgin Islands is the Company’s only major tax jurisdiction. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of December 31, 2017 and March 31, 2017, therecarrying value may not be recoverable. There were no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position.The Company may be subject to potential examination by U.S. federal, U.S. states or foreign taxing authorities in the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and foreign tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months.The Company’s tax provision is zero because the Company is organized in the British Virgin Islands with no connection to any other taxable jurisdiction. As such, the Company has no deferred tax assets. The Company is considered to be an exempted British Virgin Islands Company, and is presently not subject to income taxes or income tax filing requirements in the British Virgin Islands or the United States.Net loss per ordinary shareThe Company complies with accounting and disclosure requirements of ASC Topic 260, “Earnings Per Share.” Net loss per ordinary share is computed by dividing net loss by the weighted average number of ordinary shares outstandingimpairment losses for the period. The Company applies the two-class method in calculating earnings per share. Weighted average shares as of Septemberthree or six months ended June 30, 2016 were reduced for the effect of an aggregate of 562,500 ordinary shares that are subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). Ordinary shares subject to possible redemption at December 31, 2017, which are not currently redeemable2022 and are not redeemable at fair value, have been excluded from the calculation of basic loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of (1) warrants sold in the Initial Public Offering and private placement to purchase 7,468,125 ordinary shares, and (2) rights sold in the Initial Public Offering and private placement that convert into 1,493,625 ordinary shares, in the calculation of diluted loss per share, since the exercise of the warrants and the conversion of rights into ordinary shares is contingent upon the occurrence of future events. As a result, diluted loss per share is the same as basic loss per share for the periods.Reconciliation of net loss per ordinary shareThe Company’s net income is adjusted for the portion of income that is attributable to ordinary shares subject to redemption, as these shares only participate in the income of the Trust Account and not the losses of the Company. Accordingly, basic and diluted loss per ordinary share is calculated as follows: Three Months
Ended
December 31, 2017 2017 Net income $ 251,706 $ 466,442 Less: Income attributable to ordinary shares subject to redemption (326,418 ) (646,162 ) Adjusted net loss $ (74,712 ) $ (179,720 ) Weighted average shares outstanding, basic and diluted 5,078,655 4,601,770 Basic and diluted net loss per ordinary share $ (0.01 ) $ (0.04 ) 8 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)credit riskconcentrationsignificant concentrations of credit risk consist primarily of cash accountsand cash equivalents. As of June 30, 2022, the Company maintained $87.1 million in a financial institutionsweep account, which at times may exceedmaintains cash balances throughout various interest-bearing bank accounts under the $250,000 insurance limit provided by the Federal depository insurance coverageDeposit Insurance Corporation for one federally insured financial institution. Approximately $2.5 million was held in excess of $250,000.the Federal Deposit Insurance Corporation insured limit as of June 30, 2022. The Company hadhas not experienced any losses on this accountin such accounts.management believesassay revenue. The Company accounts for revenue in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”). The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation.not exposedsubscribing to significant risksthe DermTech Connect platform to assess the suspicious lesion, and if medically necessary, order a DMT where a collection kit would be sent to the patient’s home. The DermTech Connect app and telemedicine service were initially beta tested in Florida and is currently available in most states where permitted by law and applicable standards of practice guidelines. Once the sample is collected by the patient via the telemedicine solution or by a healthcare clinician in person, it is returned to the Company’s CLIA laboratory for analysis. The patient’s ribonucleic acid (“RNA”) and deoxyribonucleic acid (“DNA”) are extracted from the Smart Sticker and analyzed using gene expression and sequencing technology to determine if the pigmented skin lesion contains certain genomic features indicative of melanoma. Upon completion of the gene expression analysis, a final report is drafted and provided to the clinician detailing the test results for the pigmented skin lesion indicating whether the sample collected is indicative of melanoma or not.such account.Fair valuevariable consideration, offset by (iii) reductions in revenue for the accrual for reimbursement claims and settlements.financial instrumentsfair valueprovision of services may include sample collection using the Company’s Smart Sticker, assay development for research partners, patient segmentation and stratification, extraction, isolation, expression, amplification and detection of RNA, DNA, protein and microbiome, including data analysis and reporting.Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Assay Revenue DermTech Melanoma Test $ 4,147 $ 2,910 $ 7,665 $ 5,100 Contract Revenue Adhesive patch kits 38 125 104 314 RNA extractions — 35 110 139 Project management fees 48 49 72 90 Total revenues $ 4,233 $ 3,119 $ 7,951 $ 5,643 Total Revenues Accounts Receivable Three Months Ended June 30, Six Months Ended June 30, As of June 30, 2022 As of December 31, 2021 2022 2021 2022 2021 Assay Revenue Payor A 47 % 36 % 39 % 34 % 21 % 23 % Payor B * * * * 15 % 15 % assets and liabilities, which qualify as financial instruments under ASC Topic 820, “Fair Value Measurements and Disclosures,” approximatestotal revenue or accounts receivable for the carrying amounts representedperiods shown in the accompanyingtable above.sheets,sheets.duerepresents upfront milestone payments, for which consideration is received prior to their short-term nature.Recently issued accounting standardsManagementwhen goods/services are completed or delivered. Upfront fees that are estimated to be recognized as revenue more than one year from the date of collection are classified as long-term deferred revenue. Short-term deferred revenue as of June 30, 2022 and December 31, 2021 was $1.3 million and $1.4 million, respectively.believedisclose the remaining performance obligations at the end of each reporting period. As of June 30, 2022, the estimated revenue expected to be recognized in future periods related to performance obligations that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effectare unsatisfied for executed agreements with an original duration of one year or more was approximately $0.1 million. The Company expects to recognize revenue on the Company’s consolidated financial statements.3. INITIAL PUBLIC OFFERINGPursuantmajority of these remaining performance obligations over the next two to three years.Initial Public Offering,nature of the Company’s assay revenue, it can take a significant amount of time to collect upon billed tests. The Company sold 14,375,000 Units at a purchase price of $10.00 per Unit, which includes the full exercise by the underwriters of their over-allotment option inprepares an analysis on reimbursement collections and data obtained for each financial reporting period to determine the amount of 1,875,000 Units at $10.00 per Unit. Each Unit consists of one ordinary share, one Public Right and one Public Warrant. Each Public Right will convert into one-tenth (1/10) of one ordinary share (see Note 7). Each Public Warrant entitlesreceivables to be recorded relating to tests performed in the holder to purchase one-half (½) of one ordinary share at an exercise price of $11.50 per whole share (see Note 7).applicable period. The Company willgenerally does not issue fractional shares.4. PRIVATE PLACEMENTSimultaneously withperform evaluations of customers’ financial condition and generally does not require collateral. Accounts receivables are written off when all efforts to collect the Initial Public Offering,balance have been exhausted. Adjustments for implicit price concessions attributable to variable consideration are incorporated into the Sponsormeasurement of the accounts receivable balances. The Company recorded $5.8 million and Cowen Investments purchased an aggregate$3.6 million of 561,250 Private Units for an aggregate purchase pricegross assay accounts receivable as of $5,612,500,June 30, 2022 and December 31, 2021, respectively. Accounts receivable as of which 425,000 Private Units were purchasedJune 30, 2022 included unbilled accounts receivable of $0.3 million.Sponsor and 136,250 Private Units were purchased by Cowen Investments. The proceeds from the Private Units were added to the net proceeds from the Initial Public Offering held in the Trust Account.The Private Units are identical to the Units sold in the Initial Public Offering, except for the Private Warrants, as described in Note 7. The holders have agreed not to transfer, assign or sell anyweighted average number of the Private Units or underlying securities (except to certain permitted transferees and provided the transferees agree to the same terms and restrictions as the permitted transfereesshares of the founder shares must agree to) until after the completion of a Business Combination.5. RELATED PARTY TRANSACTIONSFounder SharesOn August 31, 2015, the Company issued an aggregate of 1,437,500 founder shares to its initial shareholders for an aggregate purchase price of $25,000 in cash, or approximately $0.017 per share. On September 17, 2015, the Company effectuated a 2-for-1 sub-division of its ordinary shares resulting in an aggregate of 2,875,000 founder sharescommon stock outstanding and held by the initial shareholders. On March 29, 2017, the Company effectuated a 1.5-for-1 sub-division of its ordinary shares resulting in an aggregate of 4,312,500 founder shares outstanding and held by the initial shareholders. On May 17, 2017, the Sponsor surrendered and returned to the Company, for nil consideration, an aggregate of 718,750 founder shares, which were cancelled, leaving an aggregate of 3,593,750 founder shares outstanding. In connection with the Initial Public Offering, the Sponsor forfeited 136,250 founder shares, which such shares were cancelled and simultaneously issued to Cowen Investments for no additional consideration (see Note 6).The 3,593,750 founder shares included an aggregate of up to 468,750 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, so that the initial shareholders would collectively own 20% of the Company’s issued and outstanding shares after the Initial Public Offering (excluding the sale of the Private Units). As a result of the underwriters’ election to exercise their over-allotment option in full, 468,750 founder shares are no longer subject to forfeiture.The initial shareholders have agreed not to transfer, assign or sell any of the founder shares (except to certain permitted transferees) until, with respect to 50% of the founder shares, the earlier of (i) one year after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share (as such amount may be adjusted) for any 20 trading days within any 30-trading day period commencing after a Business Combination, with respect to the remaining 50% of the founder shares, upon one year after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property.9 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)Related Party AdvancesThrough December 31, 2017, the Company has received an aggregate of $347,635 in advances, of which $162,255 was received during the nine months ended December 31, 2017 from the Company’s Chairman and Chief Executive Officer and the Company’s Chief Financial Officerperiod. Because there is a net loss attributable to be used for the paymentholders of costs related to the Initial Public Offering and for working capital purposes. The advances are non-interest bearing, unsecured and due on demand. During the nine months ended December 31, 2017, the Company has repaid $319,197 of such advances. Advances amounting to $11,095 and $168,037 were outstanding as of December 31, 2017 and March 31, 2017, respectively.Administrative Services ArrangementThe Company entered into an agreement whereby, commencing on June 20, 2017 through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company pays the Sponsor a monthly fee of $10,000 for office space, utilities and administrative services. Forcommon stock during the three and ninesix months ended December 31, 2017,June 30, 2022 and 2021, the Company incurred $30,000outstanding common stock warrants, stock options, and $60,000, respectively, in fees for these services.Related Party LoansIn order to finance transaction costs in connection with a Business Combination,restricted stock units (“RSUs”) have been excluded from the Sponsor or an affiliatecalculation of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loansdiluted loss per share of common stock because their effect would be evidenced by promissory notes. The notes would either be repaid upon consummation of a Business Combination, without interest, or, atanti-dilutive. Therefore, the lender’s discretion, up to $1,500,000 of notes may be converted upon consummation of a Business Combination into additional Private Units at a price of $10.00 per Unit. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would beweighted average shares used to repaycalculate both basic and diluted loss per share are the Working Capital Loans.6. COMMITMENTS AND CONTINGENCIESRegistration RightsPursuant to a registration rights agreement entered into on June 19, 2017,same. Diluted net loss per share of common stock for the holders of the founder shares, Private Units and any Units that may be issued upon conversion of the Working Capital Loans (and underlying securities) are entitled to registration rights. The holders of 25% of these securities are entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the consummation of a Business Combination. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.Underwriting AgreementThe underwriters were paid cash underwriting discount of $2,875,000. In addition, the underwriters are entitled to a deferred fee of three and one-half percent (3.5%)sixthe gross proceeds of the Initial Public Offering, or $5,031,250 in the aggregate. Of such amount, up to approximately 0.5% per Unit, or $718,750, may be paid to third parties not participating in the Initial Public Offering that assist the Company in consummating its Business Combination. The election to make such payments to third parties will be solely at the discretion of the Company, and such third parties will be selected by the Company in its sole and absolute discretion. The deferred fee will be paid in cash upon the closing of a Business Combination from the amounts held in the Trust Account, subject to the terms of the underwriting agreement.7. SHAREHOLDERS’ EQUITYPreferred Shares — The Company is authorized to issue an unlimited number of no par value preferred shares, divided into five classes, Class A through Class E, each with such designation, rights and preferences as may be determined by a resolution of the Company’s board of directors to amend the Memorandum and Articles of Association to create such designations, rights and preferences. The Company has five classes of preferred shares to give the Company flexibility as to the terms on which each Class is issued. Allanti-dilutive equity instruments including 714,261 shares of a single class must be issued with the same rights and obligations. Accordingly, starting with five classes of preferred shares will allow the Company to issue shares at different times on different terms. At December 31, 2017 and March 31, 2017, there are no preferred shares designated, issued or outstanding.10 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)Ordinary Shares — The Company is authorized to issue an unlimited number of no par value ordinary shares. Holders of the Company’s ordinary shares are entitled to one vote for each share. At December 31, 2017, there were 5,086,062 ordinary shares issued and outstanding (excluding 13,443,938 ordinary shares subject to possible redemption). At March 31, 2017, there were 4,312,500 ordinary shares issued and outstanding, of which 562,500 were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full.The Sponsor forfeited 136,250 founder shares, which such shares were cancelled and simultaneously issued to Cowen Investments for no additional consideration (the “Cowen Shares”). The issuance of the Cowen Shares occurred simultaneously with the consummation of the Initial Public Offering. The Company accounted for the Cowen Shares as an expense of the Initial Public Offering resulting in a charge directly to shareholders’ equity. The Company estimated the fair value of the Cowen Shares to be $1,362,500 based upon the offering price of the Units of $10.00 per Unit. Cowen Investments has agreed not to transfer, assign or sell any of the Cowen Shares (except to certain permitted transferees) until, with respect to 50% of the Cowen Shares, the earlier of (i) one year after the date of the consummation of a Business Combination, or (ii) the date on which the closing price of the Company’s ordinary shares equals or exceeds $12.50 per share for any 20 trading days within any 30- trading day period commencing after a Business Combination, and with respect to the remaining 50% of the Cowen Shares, upon one year after the date of the consummation of a Business Combination, or earlier, in each case, if, subsequent to a Business Combination, the Company consummates a subsequent liquidation, merger,common stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their ordinary shares for cash, securities or other property. In addition, Cowen Investments has agreed (i) to waive its redemption rights with respect to such shares in connection with the completion of a Business Combination and (ii) to waive its rights to liquidating distributions from the Trust Account with respect to such shares if the Company fails to complete a Business Combination within the Combination Period.The Cowen Shares have been deemed compensation by FINRA and are therefore subject to a lock-up for a period of 180 days pursuant to Rule 5110(g)(1) of FINRA’s NASD Conduct Rules. Pursuant to FINRA Rule 5110(g)(1), these securities will not be the subject of any hedging, short sale, derivative, put or call transaction that would result in the economic disposition of the securities by any person for a period of 180 days immediately following the date of the Initial Public Offering, nor may they be sold, transferred, assigned, pledged or hypothecated for a period of 180 days immediately following the Initial Public Offering except to any underwriter and selected dealer participating in the Initial Public Offering and their bona fide officers or partners.Rights — Each holder of a right will receive one-tenth (1/10) of one ordinary share upon consummation of a Business Combination, even if the holder of such right redeemed all shares held by it in connection with a Business Combination. No fractional shares will be issued upon exchange of the rights. No additional consideration will be required to be paid by a holder of rights in order to receive its additional shares upon consummation of a Business Combination as the consideration related thereto has been included in the Unit purchase price paid for by investors in the Initial Public Offering. If the Company enters into a definitive agreement for a Business Combination in which the Company will not be the surviving entity, the definitive agreement will provide for the holders of rights to receive the same per share consideration the holders of the ordinary shares will receive in the transaction on an as-converted into ordinary share basis and each holder of a right will be required to affirmatively convert its rights in order to receive 1/10 share underlying each right (without paying additional consideration). The shares issuable upon exchange of the rights will be freely tradable (except to the extent held by affiliates of the Company).If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of rights will not receive any of such funds with respect to their rights, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such rights, and the rights will expire worthless. Further, there are no contractual penalties for failure to deliver securities to the holders of the rights upon consummation of a Business Combination. Additionally, in no event will the Company be required to net cash settle the rights. Accordingly, the rights may expire worthless.Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional shares will be issued upon exercise of the Public Warrants. The Public Warrants will become exercisable on the later of (a) the consummation of a Business Combination or (b) 12 months from the effective date of the registration statement relating to the Initial Public Offering. No Public Warrants will be exercisable for cash unless the Company has an effective and current registration statement covering the ordinary shares issuable upon exercise of the Public Warrants and a current prospectus relating to such ordinary shares. Notwithstanding the foregoing, if a registration statement covering the ordinary shares issuable upon the exercise of the Public Warrants is not effective within 90 days from the consummationoutstanding common stock warrants and 4,670,069 shares of a Business Combination, the holders may, until such time as there is an effective registration statement and during any period when the Company shall have failed to maintain an effective registration statement, exercise the Public Warrants on a cashless basis pursuant to an available exemption from registration under the Securities Act. If an exemption from registration is not available, holders will not be able to exercise their Public Warrants on a cashless basis. The Public Warrants will expire five years from the consummation of a Business Combination or earlier upon redemption or liquidation.11 CONSTELLATION ALPHA CAPITAL CORP.NOTES TO CONDENSED FINANCIAL STATEMENTSDECEMBER 31, 2017(Unaudited)The Private Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except the Private Warrants are exercisable for cash (even if a registration statement covering the ordinary sharescommon stock issuable upon the exercise of such Private Warrants is not effective) or on a cashless basis, atstock options and release of RSUs. Diluted net loss per share of common stock for the holder’s option,three and are be redeemable bysixCompany, in each case so long as they are still held byeffect of anti-dilutive equity instruments including 749,210 shares of common stock then issuable upon the Initial Shareholders or their affiliates.may call the warrants for redemption (excluding the Private Warrants):·in whole and not in part;·at a price of $.01 per warrant;·at any time while the Public Warrants are exercisable;·upon not less than 30 days’ prior written notice of redemption to each Public Warrant holder;·if, and only if, the reported last sale price of the ordinary shares equals or exceeds $18.00 per share, for any 20 trading days within a 30 trading day period ending on the third trading day prior to the notice of redemption to Public Warrant holders; and·if, and only if, there is a current registration statement in effect with respect to the ordinary shares underlying such warrants at the time of redemption and for the entire 30-day trading period referred to above and continuing each day thereafter until the date of redemption.If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement.The exercise price and number of ordinary shares issuable upon exercise of the warrants may be adjusted inmeasures certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of ordinary shares at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.8. FAIR VALUE MEASUREMENTS The Company follows the guidance in ASC 820 for its financial assets and liabilities that are re-measured and reported at fair value at each reporting period, and non-financial assets and liabilitieson a recurring basis. Fair value is defined as the price that are re-measured and reported at fair value at least annually. The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would havebe received in connection with the sale of the assetsto sell an asset or paid in connection with theto transfer of the liabilitiesa liability (an exit price) in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, theThe Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The followinguses a three-tier fair value hierarchy isto prioritize the inputs used in the Company’s fair value measurements. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets for identical assets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to classifydevelop its own assumptions. based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:Level 1:Quoted prices in active markets for identical assets or liabilities. An active market for an asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis.Level 2:Observable inputs other than Level 1 inputs. Examples of Level 2 inputs include quoted prices in active markets for similar assets or liabilities and quoted prices for identical assets or liabilities in markets that are not active.Level 3:Unobservable inputs based on our assessment of the assumptions that market participants would use in pricing the asset or liability.The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022 (in thousands):June 30, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 30,723 $ — $ — $ 30,723 Restricted cash 3,470 — — 3,470 Marketable securities, available for sale: Corporate debt securities — 15,092 — 15,092 Municipal debt securities — 3,641 — 3,641 U.S. government debt securities — 34,724 — 34,724 Total marketable securities, available for sale — 53,457 — 53,457 Total assets measured at fair value on a recurring basis $ 34,193 $ 53,457 $ — $ 87,650 Liabilities: Warrant liability $ — $ — $ 24 $ 24 Total liabilities measured at fair value on a recurring basis $ — $ — $ 24 $ 24 20172021 (in thousands):December 31, 2021 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 16,380 $ — $ — $ 16,380 Restricted cash 3,025 0 0 3,025 Marketable securities, available for sale: Corporate debt — 15,352 — 15,352 Municipal debt securities — 7,412 — 7,412 U.S. government debt securities — 25,685 — 25,685 Total marketable securities, available for sale — 48,449 — 48,449 Total assets measured at fair value on a recurring basis $ 19,405 $ 48,449 $ — $ 67,854 Liabilities: Warrant liability $ — $ — $ 146 $ 146 Total liabilities measured at fair value on a recurring basis $ — $ — $ 146 $ 146 March 31, 2017, and indicatesare at Level 2 of the fair value hierarchy, as these investment securities are valued based upon quoted prices for identical or similar instruments in markets that are not active. The Company has classified marketable securities with original maturities of greater than one year as short-term investments based upon the Company’s ability to use all of those marketable securities to satisfy the liquidity needs of the Company’s current operations.inputsmodel and included an unobservable input: expected volatility. Expected volatility is considered by the Company utilized to determine suchbe an unobservable input and is calculated using a weighted average of historical volatilities of a combination of the Company and peer companies, due to the lack of sufficient historical data of the Company’s own stock price. The model also incorporated several observable assumptions at each valuation date including: the price of the Company’s common stock on the date of valuation, the remaining contractual term of the warrant and the risk-free interest rate over the remaining term.value:Description Level December 31,
2017 March 31,
2017 Assets: Cash and marketable securities held in Trust Account 1 $ 145,878,435 $ — 9. SUBSEQUENT EVENTSThree Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Assumed risk-free interest rate 2.96% 0.46% 2.37% -2.96% 0.46% - 0.64% Assumed volatility 96.21% 88.28% 92.77% - 96.21% 85.85% - 88.28% Expected term 2.17 years 3.17 years 2.17 - 2.42 years 3.17 - 3.42 years Expected dividend yield — — — — Balance as of December 31, 2021 $ 146 Change in fair value of warrant liability (17) Balance as of March 31, 2022 129 Change in fair value of warrant liability (105) Balance as of June 30, 2022 $ 24 June 30, 2022 Amortized Cost Gross Unrealized
GainsGross Unrealized
LossesEstimated
Market
ValueShort-term marketable securities, available-for-sale: Corporate debt securities $ 15,361 $ — $ (269) $ 15,092 Municipal debt securities 3,666 — (25) 3,641 U.S. government debt securities 35,295 9 (580) 34,724 Total short-term marketable securities, available-for-sale $ 54,322 $ 9 $ (874) $ 53,457 December 31, 2021 Amortized Cost Gross Unrealized
GainsGross Unrealized
LossesEstimated
Market
ValueShort-term marketable securities, available-for-sale: Corporate debt securities $ 15,385 $ — $ (33) $ 15,352 Municipal debt securities 7,417 — (5) 7,412 U.S. government debt securities 25,771 1 (87) 25,685 Total short-term marketable securities, available-for-sale $ 48,573 $ 1 $ (125) $ 48,449 subsequent eventssecurities with unrealized losses to determine whether such losses, if any, are due to credit-related factors. It was determined that no credit losses existed as of June 30, 2022 or December 31, 2021, because the change in market value for those securities in an unrealized loss position has resulted from fluctuating interest rates rather than a deterioration of the credit worthiness of the issuers. Gross realized gains and transactions that occur afterlosses on the Company’s debt securities for the three and six months ended June 30, 2022 and 2021 were not significant.datedetails are as follows (in thousands):June 30,
2022December 31,
2021Prepaid expenses and other current assets: Prepaid insurance $ 806 $ 1,801 Prepaid trade shows 241 440 Prepaid software fees 907 551 Prepaid employee compensation 227 238 Other current assets 500 136 Total prepaid expenses and other current assets $ 2,681 $ 3,166 Property and equipment, gross: Laboratory equipment $ 4,856 $ 4,805 Computer equipment 396 171 Furniture and fixtures 555 124 Leasehold improvements 1,208 1,074 Construction-in-progress 139 — Total property and equipment, gross 7,154 6,174 Less accumulated depreciation (2,238) (1,625) Total property and equipment, net $ 4,916 $ 4,549 June 30,
2022December 31,
2021Accrued compensation: Accrued paid time off $ 1,689 $ 1,245 Accrued wages, bonus and other 6,129 3,875 Total accrued compensation $ 7,818 $ 5,120 Accrued liabilities: Accrued consulting services $ 2,201 $ 775 Other accrued expenses 1,071 452 Total accrued liabilities $ 3,272 $ 1,227 date thatCompany issued an aggregate of 951,792 shares of common stock pursuant to the financial statements were issued. Based upon this review,Sales Agreement at a weighted average purchase price of $20.97 resulting in aggregate gross proceeds of approximately $20.0 million, reduced by $0.9 million in issuance costs, resulting in net proceeds to the Company of approximately $19.1 million. For the six months ended June 30, 2022, the Company did not identifyissue any shares pursuant to the Sales Agreement. For the year ended December 31, 2021, the Company issued an aggregate of 530,551 shares of common stock pursuant to the Sales Agreement at a weighted average purchase price of $46.33 resulting in aggregate gross proceeds of approximately $24.6 million, reduced by $0.7 million in issuance costs, resulting in net proceeds to the Company of approximately $23.8 million.Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Assumed risk-free interest rate 2.97% 1.03% - 1.07% 2.97% 0.52% - 1.13% Assumed volatility 81.65% 77.69% 81.65% 74.88% - 77.69% Expected option term 6.08 years 6.08 years 6.08 years 6.08 years Expected dividend yield — — — — Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Assumed risk-free interest rate (1) 0.10% 0.05% - 0.22% 0.10% - 0.18% Assumed volatility (1) 69.34% 52.58% - 64.55% 68.44% - 69.34% Expected option term (1) 0.50 years 0.49 - 0.50 years 0.49 - 0.50 years Expected dividend yield (1) — — — Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Cost of revenue $ 298 $ 259 $ 633 $ 410 Sales and marketing 1,067 935 2,528 1,482 Research and development 1,330 515 1,825 829 General and administrative 2,142 1,829 3,745 2,989 Total stock-based compensation $ 4,837 $ 3,538 $ 8,731 $ 5,710 June 30,
2022December 31,
2021Warrants to purchase common stock 10 31 SPAC Warrants to purchase common stock* 704 704 Stock options issued and outstanding 1,758 1,721 RSUs issued and outstanding 2,912 983 Authorized for future equity grants 431 603 Authorized for future ESPP purchases 800 549 Total common stock reserved for future issuance 6,615 4,591 Six Months Ended June 30, 2021 Before Adoption of ASC 842 Effect of Adoption After Adoption of ASC 842 Effect on Condensed Consolidated Statements of Cash Flows Cash flows from operating activities: Adjustments to reconcile net loss to net cash used in operating activities: Amortization of operating lease right-of-use assets $ — $ 582 $ 582 Change in operating assets and liabilities: Operating lease liabilities, net — (328) (328) Other liabilities $ 254 $ (254) $ — June 30, 2022 December 31, 2021 Gross finance lease obligations $ 262 $ 274 Less imputed interest (17) (17) Present value of net minimum lease payments 245 257 Less current portion of finance lease obligations (134) (121) Total long-term finance lease obligations $ 111 $ 136 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Operating lease cost Operating lease cost $ 1,044 $ 319 $ 1,667 $ 638 303 143 492 315 Total operating lease cost $ 1,347 $ 462 $ 2,159 $ 953 Finance lease cost Amortization of leased assets $ 21 $ 17 $ 41 $ 34 Interest on lease liabilities 3 4 7 8 Total finance lease cost $ 24 — $ 21 $ 48 $ 42 Six Months Ended June 30, 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 1,179 $ 684 Operating cash flows from finance leases $ 7 $ 8 Financing cash flows from finance leases $ 60 $ 53 Right-of-use assets obtained in exchange for lease obligations: Operating leases $ 17,059 $ 2,831 Finance leases $ 48 $ — Weighted average remaining lease term in years: Operating leases 10.56 1.92 Finance leases 1.50 2.50 Weighted average discount rate: Operating leases 6.39 % 4.04 % Finance leases 5.78 % 5.54 % 2022 2023 2024 2025 2026 Thereafter Total Operating lease obligations, including interest $ 1,524 $ 2,948 $ 2,774 $ 2,853 $ 2,934 $ 20,612 $ 33,645 Finance lease obligations, including interest 72 133 19 19 15 4 262 Total future minimum lease payments $ 1,596 $ 3,081 $ 2,793 $ 2,872 $ 2,949 $ 20,616 $ 33,907 have required adjustmentrequire recognition or disclosure in the condensed consolidated financial statements.12 References in this report (the “Quarterly Report”) to of DermTech, Inc. (together with its subsidiaries, “DermTech,” “we,” “us”“us,” “our” or the “Company” refer to Constellation Alpha Capital Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Centripetal, LLC. The following discussion and analysis of the Company’s financial condition and results of operations) should be read in conjunction with the condensed consolidated financial statements and the related notes thereto containedincluded elsewhere in this Quarterly Report. Certain information containedReport on Form 10-Q and the audited condensed consolidated financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations for the fiscal year ended December 31, 2021, included in our Annual Report on Form 10-K filed with the discussionSecurities and analysis set forth below includesExchange Commission, or the SEC, on March 10, 2022. that involve risks and uncertainties.Special Note Regarding Forward-Looking StatementsThis Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that are notintended to be covered by the “safe harbor” created by those sections. All statements, other than statements of historical facts, contained in this report, including statements regarding DermTech’s or its management’s intentions, beliefs, expectations and involvestrategies for the future, are forward looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “potential” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements are made as of the date of this report, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward-looking statements. The risks and uncertainties that could cause actual results to differ materially are more fully described under the heading “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. We may disclose changes to risk factors or additional risk factors from those expected and projected. All statements, other than statementstime to time in our future filings with the SEC. We assume no obligation to update any of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements please referafter the date of this report or to conform these forward-looking statements to actual results.Risk Factors sectionDMT in this paragraph refers only to the DMT without the add-on test for TERT. In late October 2019, the American Medical Association provided us with a PLA Code. Pricing of $760 for the PLA Code was published on December 24, 2019 as part of the Company’sClinical Laboratory Fee Schedule for 2020. The final prospectusLocal Coverage Determination, or LCD, expanded the coverage proposal in the draft LCD from one to two tests per date of service and it allows clinicians to order the DMT if they have sufficient skill and experience to decide whether a pigmented lesion should be biopsied. Our local Medicare Administrative Contractor, Noridian, has issued its own Local Coverage Decision, or Noridian’s LCD, announcing coverage of the DMT. Even though the effective date of Noridian’s LCD was June 7, 2020, Noridian began reimbursing us for the DMT as of February 10, 2020. With Medicare coverage granted, we have the opportunity to approach commercial payors, and as a result, we believe that the DMT may generate significant revenues in 2022 and 2023. No LCD currently covers the optional add-on test for TERT available to those ordering the DMT.Initial Public Offering filedown enrollees or insured patients whether to cover or otherwise establish a policy to reimburse our tests, seeking payor approvals is a time-consuming and costly process. We cannot be certain that coverage for our current tests and our planned future tests will be provided in the future by additional commercial payors or that existing policy decisions or reimbursement levels will remain in place or be fulfilled under existing terms and provisions. If we cannot obtain or maintain coverage and reimbursement from private and governmental payors such as Medicare and Medicaid for our current tests, or new tests or test enhancements that we may develop in the future, our ability to generate revenues could be limited. This may have a material adverse effect on our business, financial condition, results of operation, and cash flows.SEC. The Company’s securities filings can be accessed onclosure of dermatology offices, compared to the EDGAR sectionaverage monthly billable sample volume for the two months preceding the beginning of the SEC’s website at www.sec.gov. ExceptCOVID-19 stay-at-home orders. Despite the downturn in billable samples in April 2020, we saw a stabilization of billable sample volume throughout the rest of the second quarter of 2020 and through the second quarter of 2022 as expressly requiredvarious states and dermatology offices reopened throughout the country. Despite not all dermatology practices returning to full operations, billable sample volume first exceeded pre‑pandemic levels in July 2020. Billable sample volume for the three months ended June 30, 2022 was 28% higher compared to billable sample volume for the three months ended March 31, 2022. Billable sample volume for the three months ended June 30, 2022 was 56% higher than billable sample volume for the three months ended June 30, 2021. Billable sample volumes could again be negatively impacted by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whetherongoing COVID-19 pandemic, including as a result of any resurgence of the virus or its variants.information, future events or otherwise.OverviewWe are a blank check company incorporated on July 31, 2015and unproven, especially within dermatology, and it is uncertain whether the telemedicine options for the DMT will achieve and sustain high levels of demand, consumer acceptance and market adoption, as well as face challenges in the British Virgin Islandsregulatory landscape, which is complex and formed forevolving.purpose of entering into a Business Combination with one or more target businesses. We intend to effectuate our Business Combination using cash fromextent that the proceeds of our Initial Public Offering and the sale of Private Units that occurred simultaneously with the completion of our Initial Public Offering, our securities, debt or a combination of cash, securities and debt.The issuance of additional ordinary shares or preferred stock:●may significantly dilute the equity interest of our investors who would not have pre-emption rights in respect of any such issuance;●may subordinate the rights of holders of ordinary shares if we issue preferred shares with rights senior to those afforded to our ordinary shares;●could cause a change in control if a substantial number of ordinary shares are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;●may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and●may adversely affect prevailing market prices for our securities.Similarly, if we issue debt securities, it could result in:●default and foreclosure on our assets if our operating revenues after our business combination are insufficient to repay our debt obligations;●acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;●our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;●our inability to obtain necessary additional financing if any document governing such debt contains covenants restricting our ability to obtain such financing while the debt security is outstanding;●our inability to pay dividends on our ordinary shares;●using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our ordinary shares if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;●limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;●increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and●limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a Business Combination or to raise capital will be successful.Results of OperationsWe have neither engaged in any operations nor generated any revenues to date. Our only activities prior to December 31, 2017 were organizational activities, those necessary to consummate the Initial Public Offering, described below, and identifying a target company for a Business Combination. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generate non-operating income in the form of interest income on cash and marketable securities we holdCOVID-19 pandemic continues (including as a result of clinician offices closing again due to a COVID-19 outbreak within the Initial Public Offering. There has been no material adverse change has occurred sincepractice, or patients avoiding in-person visits to the datedermatology clinic for fear of contracting COVID-19 or any of its viral variants), our revenues will depend to an extent on the willingness of clinicians and their patients to use our telemedicine option for the DMT, as well as on our ability to demonstrate the value of our audited financial statementstelemedicine option to health plans and other purchasers of healthcare for beneficiaries. The duration and extent of the effects of the ongoing COVID-19 pandemic are uncertain and have, and may again in the future, adversely affect our revenues by reducing access to clinician offices by patients for in-person testing and by our sales force for in-office sales calls.registration statementpharmaceutical customers’ clinical trials. The extent of such effect on our future revenue is uncertain and will depend on the duration and extent of the effects of the ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials.Initialthree months ended June 30, 2022 compared to $2.9 million for the three months ended June 30, 2021. Billable samples increased to approximately 18,320 for the three months ended June 30, 2022 compared to approximately 11,750 for the three months ended June 30, 2021. Sample volume is dependent on two major factors: the number of clinicians who order an assay in any given quarter and the number of assays ordered by each clinician during the period. The number of ordering clinicians and the utilization per clinician can vary based on a number of factors including patients presenting with skin cancer conditions, clinician reimbursement, office workflow, market awareness, clinician education and other factors. The ongoing COVID-19 pandemic has negatively affected and may continue to negatively affect our assay revenue by, among other things, limiting patient access to clinician offices for in-person testing and limiting access by our sales force for in-office sales calls.Offering. Offering in January 2021, which raised a total of $143.7 million in gross proceeds. We have historically financed operations through private placement and public equity offerings.incur increased expensescontinue as a result of being a public company (for legal,costs relating to ongoing R&D expenses, increased general and administrative expenses and increased sales and marketing costs for existing and planned products. These losses have had, and will continue to have, an adverse effect on our working capital. Because of the numerous risks and uncertainties associated with our commercialization and development efforts, we are unable to predict when we will become profitable, and we may never become profitable. Our inability to achieve and then maintain profitability would negatively affect our business, financial reporting, accountingcondition, results of operations and auditing compliance), as well as for due diligence expenses in pursuitcash flows.acquisition plans.For the three months ended December 31, 2017, we had net income of $251,706, consisting of interest income oncash and cash equivalents totaled approximately $120.3 million and short-term marketable securities held intotaled approximately $53.5 million. Based on our Trust Account of $360,898, offset bycurrent business operations, we believe our current cash, cash equivalents and short-term marketable securities will be sufficient to meet our anticipated cash requirements for at least the next 12 months. While we believe we have enough capital to fund anticipated operating costs for at least the next 12 months, we expect to incur significant additional operating losses over at least the next several years. We anticipate that we will raise additional capital through equity offerings, debt financings, collaborations or licensing arrangements in order to support our planned operations and to continue developing and commercializing genomic tests. We may also consider raising additional capital in the future to expand our business, to pursue strategic investments or to take advantage of $97,330financing opportunities. Our present and an unrealized lossfuture funding requirements will depend on marketable securities heldmany factors, including:Trust Accountsales force for in-office sales calls;$11,862.For the nine months ended December 31, 2017, we had net incomeeffects of $466,442, consistingthe ongoing COVID-19 pandemic on our pharmaceutical customers’ clinical trials;interest income on marketable securities held in our Trust Account of $726,784, offset by operating competing technological and market developments;$224,493 and an unrealized loss on marketable securities heldpotential delays in product development;Trust Accounttests; and$35,849.Liquidity and Capital ResourcesOn June 23, 2017, we consummatedcosts related to future international expansion.Initial Public Offeringavailability of 14,375,000 Units, at a price of $10.00 per Unit,additional financing or the terms upon which includes the full exercise by the underwriters of their over-allotment option in the amount of 1,875,000 Units at $10.00 per Unit, generating gross proceeds of $143,750,000. Simultaneously with the closing of the Initial Public Offering, we consummated the sale of 561,250 Private Units at a price of $10.00 per Unit, of which of which 425,000 Private Units were purchased by the Sponsor and 136,250 Private Units were purchased by Cowen Investments, generating gross proceeds of $5,612,500.Following the Initial Public Offering and the exercise of the over-allotment option, a total of $145,187,500 was placed in the Trust Account. We incurred $8,420,717 in Initial Public Offering related costs, including $2,875,000 of underwriting fees, $5,031,250 of deferred underwriting fees and $514,467 of Initial Public Offering costs.As of December 31, 2017, we had marketable securities held in the Trust Account of $145,878,435, substantially all of which is invested in U.S. treasury bills with a maturity of 180 days or less. Interest income earned on the balance in the Trust Accountadditional financing may be available to usus. If we are unable to payobtain sufficient funding at acceptable terms, we may be forced to significantly curtail our income tax obligations. Since inception, weoperations, and the lack of sufficient funding may have not withdrawn any interest from the Trust Account.Asa material adverse impact on our ability to continue as a going concern.amounted to $269,060, mainly resulting fromfor the six months ended June 30, 2022 totaled $49.2 million, primarily driven by the $59.7 million net incomeloss offset partially by non-cash related items, including $8.7 million in stock-based compensation, $1.1 million in amortization of $466,442operating lease right of use assets and an unrealized loss$0.8 million in depreciation and $0.3 million in amortization of premiums, net of accretion of discounts on marketable securities heldsecurities. In addition, we had a net cash inflow of $0.6 million through net changes in working capital balances driven primarily by cash inflows of $2.7 million from the Trust Accountincrease in accrued compensation and $0.5 million through the decrease of $35,849,prepaid expenses and other current assets, partially offset by interest earned oncash outflows of $1.0 million through the increase of inventory and $0.7 million through the decrease of operating lease liabilities.held inand $1.4 million from the Trust Accountpurchase of $726,784. Changes in our operating assets and liabilities used cashequipment offset by the inflow from the maturity of $44,567.We intend to use substantially allmarketable securities of the net proceeds of the Initial Public Offering and the sale of the Private Units, including the funds held in the Trust Account (excluding deferred underwriting commissions and taxes payable on interest earned on the Trust Account), to acquire a target business or businesses and to pay our expenses relating thereto. To the extent that our shares are used in whole or in part as consideration to effect our initial Business Combination, the remaining proceeds held in the Trust Account as well as any other net proceeds not expended$14.1 million. Additional laboratory equipment investment will be used as working capital. Such working capital funds could be usedneeded to install complex automation systems and other genomic testing equipment needed to expand testing capacity.a variety of ways including continuing or expanding the target business’ operations, for strategic acquisitions and for marketing, research and development of existing or new products. Such funds could also be used to repay any operating expenses or finders’ fees which we had incurred priorproceeds from contributions to the completionemployee stock purchase plan.our initial Business Combination if the funds available to us outside of the Trust Account were insufficient to cover such expenses.We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.In order to finance transaction costs in connection with a Business Combination, our Sponsor or an affiliate of the Sponsor, or our officers and directors may, but are not obligated to, loan us funds as may be required. IfJune 30, 2022, we complete a Business Combination, we would repay such loaned amounts out of the proceeds of the Trust Account released to us. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used to repay such loaned amounts. Up to $1,500,000 of such loans may be converted into Private Units of the post Business Combination entity at a price of $10.00 per Private Unit at the option of the lender. The terms of such loans, if any, have not been determined and no written agreements exist with respect to such loans.We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amounts necessary to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to consummate our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. We cannot provide any assurance that financing will be available to us on commercially acceptable terms, if at all. If we are unable to complete our Business Combination because we dodid not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.Off-balance sheet financing arrangementsWe have no obligations, assets or liabilities which would be consideredany off-balance sheet arrangements, as such term is defined inunder Item 303(a)(4)(ii)303 of Regulation S-K. We do not participateS-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in transactionsfinancial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that create relationships with unconsolidated entitiesis material to investors.financial partnerships, often referred to as variable interest entities, which wouldusing different assumptions. There have been establishedno material changes to the critical accounting estimates previously disclosed in the Company’s Annual Report on Form 10-K for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets.Contractual obligationsWe do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay the Sponsor a monthly fee of $10,000 for office space, utilitiesfiscal year ended December 31, 2021, and administrative support provided to the Company. We began incurring these fees on June 20, 2017 and will continue to incur these fees monthly until the earlierdisclosed in Note 1(h) of the completioncondensed consolidated financial statements herein.Business Combination and the Company’s liquidation.Critical Accounting PoliciesThe preparation ofcondensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. The Company has not identified any critical accounting policies.ITEMQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKAll activityQuantitative and Qualitative Disclosures About Market Risk.December 31, 2017 relatesour regular operating and financing activities.formation and the preparation for our Initial Public Offering and identifying a target companyinvestment policy allows for a Business Combination. We didportfolio of cash equivalents and investments in a variety of securities, including money market funds, U.S. government debt and corporate debt securities. Due to the short-term and conservative nature of our investments, we do not believe that we have a material exposure to interest rate risk. A 100 basis point change in interest rates would not have any financial instruments that were exposed to market risks at December 31, 2017.a significant impact on the total value of our portfolio.ITEMCONTROLS AND PROCEDURESare controlsenable us to record, process, summarize and other procedures that are designed to ensure thatreport information required to be disclosedincluded in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reportedfilings within the required time periods specified in the SEC’s rules and forms. Disclosureperiod. Our disclosure controls and procedures include without limitation, controls and procedures designed to ensure that information required to be disclosed by us in ourthe periodic reports filed or submitted underwith the Securities and Exchange ActCommission is accumulated and communicated to our management, including our Chief Executive Officerprincipal executive, financial and Chief Financial Officer,accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.As required by Rules 13a-1515d-15 underour principal financial officer, evaluated the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, as defined in Rule 13a-15(e) and 15d-15(e) promulgated under the Exchange Act. Based upon that evaluation, our principal executive officer and our principal financial officer concluded that, as of December 31, 2017. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our2021, the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) underwere not effective, due to the Exchange Act) were effective.15 Changes in Internal Control Over Financial ReportingDuring the most recently completed fiscal quarter, there has been no changematerial weakness in our internal control over financial reporting discussed in Part I, Item 9A—Controls and Procedures in our Annual Report on Form 10-K for the year ended December 31, 2021.II - II—OTHER INFORMATIONITEMLEGAL PROCEEDINGS.None.ITEMRISK FACTORS.Factors that could cause our actual results to differ materially from those in this Quarterly Report areRisk Factors. of the risks described in our final prospectus dated June 19, 2017 filed with the SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our final prospectus dated June 19, 2017 filed withAnnual Report on Form 10-K for the SEC.year ended December 31, 2021.ITEMUNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.Simultaneously with the consummation and Use of the Initial Public Offering,Proceeds.consummated a private placement ofissued an aggregate of 561,250 units (inclusive20,320 shares of 56,250 units soldcommon stock pursuant to the underwriters exercising their over-allotment option) at aexercise of management warrants that were issued by DermTech Operations and assumed by us in connection with the Business Combination. These warrants had an exercise price of $10.00$1.08 per unit,share and were exercised for an aggregate exercise price of which 425,000 units$21,946.solddeemed to our Sponsor and 136,250 units were sold to Cowen Investments, generating total proceeds of $5,612,500. Such securities were issued pursuant to the exemptionbe exempt from registration containedunder the Securities Act in reliance on Section 4(a)(2) of the Securities Act. Each purchaser was an accredited investorThe recipients of the shares represented their intention to acquire the securities for purposes of Rule 501 of Regulation D.Use of ProceedsOn June 23, 2017, we consummated our Initial Public Offering of 14,375,000 units (inclusive of 1,875,000 units sold pursuantinvestment only and not with a view to, or for sale in connection with, any distribution thereof, and appropriate legends were affixed to the underwriters exercising their over-allotment option), with each unit consisting of one ordinary share, one warrant, each whole warrant entitling the holder to purchase one-half (1/2) of one ordinary share at a price of $11.50 and one right to receive one-tenth (1/10) of one ordinary share upon the consummation of an initial business combination. No fractional shares will be issued upon exercise of the warrants. Each warrant will become exercisable on the later of the completion of our Business Combination or 12 months from the closing of the Initial Public Offering. The warrants will expire at 5:00 p.m., New York City time, five years after the completion of our initial Business Combination or earlier upon redemption or liquidation.The units in the Initial Public Offering were sold at an offering price of $10.00 per unit, generating total gross proceeds of $143,750,000. Cowen Investments acted as the sole book running manager and I-Bankers Securities, Inc. acted as co-manager of the offering. The securities sold in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-218093). The SEC declared the registration statements effective on June 19, 2017.We paid a total of $2,875,000 in underwriting discounts and commissions and approximately $514,467 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $5,031,250 in underwriting discounts and commissions, and up to this amount will be payable upon consummation of the Business Combination. After deducting the underwriting discounts and commissions (excluding the deferred portion of $5,031,250 in underwriting discounts and commissions, which will be released from the Trust Account upon consummation of the Business Combination, if consummated) and the estimated offering expenses, the total net proceeds from our Initial Public Offering and the private placement was $145,973,033, of which $145,187,500 (or $10.10 per unit sold in the Initial Public Offering) was placed in the Trust Account.ITEM 3. DEFAULTS UPON SENIOR SECURITIES.None.ITEM 4. MINE SAFETY DISCLOSURES.Not applicable.ITEMOTHER INFORMATION.None.ITEMEXHIBITS.exhibitsdocuments are filed as part of or incorporated by reference into, this Quarterly Report on Form 10-Q.No.Description of Exhibit31.1*Exhibit
No.Description Filed
HerewithForm Incorporated
by Reference
File No.Date Filed 3.1 10-Q 001-38118 11/10/20 3.2 10-K 001-38118 3/11/20 10.1 X 10.2 X 10.3 X 31.1 X 31.2*31.2X 32.1* *32.2**Certification ofand Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adoptedAdopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 20022002.X 101.INS*101.INS Inline XBRL Instance Document X 101.CAL*101.SCHInline XBRL Taxonomy Extension Schema Document X 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document X 101.SCH*101.DEFXBRL Taxonomy Extension Schema Document101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB*101.LABInline XBRL Taxonomy Extension LabelsLabel Linkbase DocumentX 101.PRE*101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document X 104 The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 has been formatted in Inline XBRL. X * This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. 1350, and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless of any general incorporation by reference language in such filing. * Filed herewith.** Furnished herewith. CONSTELLATION ALPHA CAPTIAL CORP.DermTech, Inc. Date: February 13, 2018August 8, 2022By: /s/ Rajiv ShuklaJohn DobakName:Rajiv ShuklaJohn Dobak, M.D.Title:Date: February 13, 2018August 8, 2022By: /s/ Craig PollakKevin SunName:Craig PollakKevin SunTitle: