SAN JOSE, California. – In public, Elizabeth Holmes was christened the next Steve Jobs on the cover of Inc. magazine. in 2015, but privately the blood testing company he founded, Theranos, was bleeding hundreds of millions of dollars.
On Tuesday, the government’s first witness in the trial against Holmes’ fraud, the former financial controller Theranos San Ho Spivey, who also passes by Danise Yam, testified in detail about the real state of the company’s financial situation.
According to Yam, Theranos had net losses of $ 16.2 million in 2010, $ 27.2 million in 2011, $ 57 million in 2012 and $ 92 million in 2013. Yam stated that the company did not obtain revenue in 2012 and 2013, and added that the company burned $ 2 million. per week in 2013 and “cash started to get a little tighter.”
Yam stated that in 2015 Theranos had accumulated losses of $ 585 million, according to tax documents. Despite this, prosecutors pointed to a document given to investors that projected revenue for 2014 of $ 140 million and revenue for 2015 of $ 990 million. Yam said he did not prepare this document.
“Have you ever provided financial projections to investors?” asked Robert Leach, an assistant attorney for the United States. “No,” Yam replied.
During cross-examination, defense attorneys pointed to a document in which Theranos was valued at $ 9.5 billion or $ 1.698 billion, depending on the methodology. Lances Wade, Holmes’ attorney, asked Spivey about other companies that suffered heavy losses during the 2009 financial crisis.
Yam stated that Holmes never sold any shares he owned or prosecuted any sale of shares.
Holmes faces a dozen allegations of cable fraud and conspiracy to commit cable fraud in connection with investors and misleading patients about Theranos technology. She has pleaded not guilty. His long-awaited criminal fraud trial began last week in San Jose. In initial statements, Holmes ’defense team portrayed her as an ambitious young woman who really wanted to revolutionize health care.
Holmes had told several investors that Theranos technology was deployed by the U.S. Department of Defense on the battlefield, in Afghanistan, and in Medevac helicopters. During his four hours at the stand, Yam stated that Theranos did not actually have any revenue-generating contract with the Department of Defense or the military.
The next government witness, Erika Cheung, quit her job as a lab associate after seven months and became a whistleblower, giving a TED talk and being interviewed for numerous news stories.
Cheung stated that he was “impacted star” by Holmes during his job interview.
“I had a charisma with her, she was very articulate,” Cheung said. “He had a strong sense of conviction in his mission.”
Cheung told the court she was excited to work at Theranos based on “very little information” they gave her. “I asked a lot of questions about the company and [Holmes] He said you’ll find out when you start working here, ”Cheung said.
Theranos had a valuation of $ 9 billion.
“At the time, she was one of the few women entrepreneurs to gain unicorn status,” Cheung recalled, adding that Holmes “could be an example for other women to get excited about science and engineering.”
Cheung stated that his guidance was directed by Holmes’ brother Christian Holmes, who instructed him not to add Theranos to his Linkedin profile. Cheung said that while in Theranos, Edison, which was used to process blood samples, only did 12 tests and the rest of the tests were done on third-party machines.
“The Edison Analyzer could only perform one type of test for a patient at a given time,” Cheung said.
Holmes arrived at the federal court holding the hand of his mother, Noel Holmes. An outside spectator applauded and got excited when Holmes walked into the courtroom and shouted, “Putting everything on one person is ridiculous.”
Earlier in the day, the judge excused a jury for financial hardship, moving an alternate jury to the main bank. He changed the composition of the jury to eight men and four women.