10-Q
--12-31 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

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

For the quarterly period ended June 30, 2021

OR

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

For the transition period from to

Commission File Number: 001-40538

 

ALPHA TEKNOVA, INC.

(Exact name of registrant as specified in its charter)

 

 

Delaware

94-3368109

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

2290 Bert Dr.

Hollister, CA

95023

(Address of principal executive offices)

(Zip Code)

(831) 637-1100

Registrant’s telephone number, including area code

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.00001 per share

 

TKNO

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☐    No  ☒ 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

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

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

As of August 11, 2021, the registrant had 28,011,917 shares of common stock, $0.00001 par value per share, outstanding.

 

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements relating to our financial condition, results of operations, plans, objectives, future performance and business, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “would,” “potential,” “likely,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

our future financial performance, including our revenue, costs of revenue and operating expenses;
our ability to achieve and grow profitability;
our ability to consistently deliver high-quality, custom, made-to-order products meeting our customers’ expectations and
quality requirements, including as they increase the scale of their demand over time;
the continued adaptability and versatility of our proprietary manufacturing processes;
the longevity of our customer relationships and the likelihood that our customers substitute our products with alternatives;
the promising nature of cell and gene therapy research, the size and growth of our potential markets and our ability to
capture market share;
the impact the novel coronavirus (“COVID-19”) or any pandemic, epidemic or outbreak of infectious disease, natural
disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events may have on our business;
the ability of our products and services to perform as expected and the reliability of the technology on which our products
and services are based;
the suitability of our products to meet customers’ growing needs and our ability to collaborate with our customers to meet
their demands;
the increasing use of messenger ribonucleic acid (“mRNA”) vaccines and therapies and the resulting demand for more
customized, Good Manufacturing Practices bacterial cell culture media and associated formulations over the short- and
long-terms;
our ability to make the investments required to maintain our operational excellence, including through extending our rapid
custom production capabilities;
our ability to continue to expand our total manufacturing capabilities;
our future investments to strengthen our marketing, sales, research and development (“R&D”) and technical support
organizations;
our ability to onboard new gene therapy and mRNA therapeutic customers and migrate our current customer base from
research to GMP-grade products;
our ongoing ability to hire and retain skilled personnel;
the accuracy of our estimates of market opportunity and forecasts of market growth, including our estimated total
addressable market;
regulatory developments in the United States and other foreign countries;
the impact of revenue recognition rules and other factors on our financial results;
our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012;

2

 


 

our ability to obtain, maintain and enforce intellectual property protection for our current and future products, including our ability to protect our trade secrets, trademarks and trade names; and
the increased expenses associated with being a public company.

 

We caution you that the foregoing list may not contain all the forward-looking statements made in this Quarterly Report on Form 10-Q.

 

We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could adversely impact our business and financial performance. Furthermore, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

 

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.

 

3

 


 

 

ALPHA TEKNOVA, INC.

 

Form 10-Q for the Quarter Ended June 30, 2021

 

INDEX

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Condensed Financial Statements (Unaudited)

 

5

 

 

Condensed Balance Sheets (Unaudited) at June 30, 2021 and December 31, 2020

 

5

 

 

Condensed Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the Three and Six Months Ended June 30, 2021 and 2020

 

6

 

 

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders' Equity (Deficit) (Unaudited) for the Three and Six Months Ended June 30, 2021 and 2020

 

7

 

 

Condensed Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2021 and 2020

 

9

 

 

Notes to Unaudited Condensed Financial Statements

 

10

Item 2.

 

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

 

24

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

34

Item 4.

 

Controls and Procedures

 

34

 

PART II.

 

OTHER INFORMATION

 

36

Item 1.

 

Legal Proceedings

 

36

Item 1A.

 

Risk Factors

 

37

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

71

Item 3.

 

Default Upon Senior Securities

 

71

Item 4.

 

Mine Safety Disclosures

 

71

Item 5.

 

Other Information

 

71

Item 6.

 

Exhibits

 

72

 

Signatures

 

 

 

73

 

4

 


 

PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

 

ALPHA TEKNOVA, INC.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

As of
June 30, 2021

 

 

As of
December 31, 2020

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

108,022

 

 

$

3,315

 

Short-term investments - marketable securities

 

 

 

 

 

1,811

 

Accounts receivable, net of allowance for doubtful accounts of $20 thousand and $23 thousand

 

 

4,058

 

 

 

4,623

 

Inventories

 

 

3,880

 

 

 

3,582

 

Income taxes receivable

 

 

1,638

 

 

 

1,417

 

Prepaid expenses and other current assets

 

 

719

 

 

 

1,666

 

Total current assets

 

 

118,317

 

 

 

16,414

 

Property, plant and equipment, net

 

 

18,326

 

 

 

10,008

 

Goodwill

 

 

16,613

 

 

 

16,613

 

Intangible assets, net

 

 

19,278

 

 

 

19,852

 

Other non-current assets

 

 

31

 

 

 

24

 

Total assets

 

$

172,565

 

 

$

62,911

 

LIABILITIES, CONVERTIBLE AND REDEEMABLE PREFERRED STOCK
   AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

2,640

 

 

$

1,635

 

Accrued liabilities

 

 

3,301

 

 

 

2,327

 

Total current liabilities

 

 

5,941

 

 

 

3,962

 

Deferred tax liabilities

 

 

5,242

 

 

 

5,990

 

Other accrued liabilities

 

 

312

 

 

 

350

 

Long term debt

 

 

11,782

 

 

 

 

Deferred rent

 

 

253

 

 

 

204

 

Total liabilities

 

 

23,530

 

 

 

10,506

 

Commitments and contingencies (See “Note 15—Commitments and Contingencies”)

 

 

 

 

 

 

Series A convertible and redeemable preferred stock, $0.00001 par value, zero
and
9,600,000 shares authorized as of June 30, 2021 and
December 31, 2020, respectively;
zero and 9,342,092 shares issued and
outstanding as of June 30, 2021 and December 31, 2020,
respectively; aggregate liquidation preference of $
0 and $41,586 thousand as
of June 30, 2021 and December 31, 2020, respectively.

 

 

 

 

 

35,638

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 10,000,000 and zero shares authorized at June 30, 2021 and December 31, 2020, respectively, zero shares issued and outstanding at June 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.00001 par value, 490,000,000 and 30,000,000 shares authorized at June 30, 2021 and December 31, 2020, respectively, 28,011,917 and 3,599,232 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

149,675

 

 

 

14,495

 

(Accumulated deficit) retained earnings

 

 

(640

)

 

 

2,265

 

Accumulated other comprehensive income

 

 

 

 

 

7

 

Total stockholders’ equity

 

 

149,035

 

 

 

16,767

 

Total liabilities, convertible and redeemable preferred stock and stockholders’ equity

 

$

172,565

 

 

$

62,911

 

 

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

5


 

ALPHA TEKNOVA, INC.

Condensed Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended
June 30,

 

 

For the Six Months Ended
June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

8,313

 

 

$

6,044

 

 

$

17,391

 

 

$

12,156

 

Cost of sales

 

 

4,959

 

 

 

2,575

 

 

 

9,012

 

 

 

5,058

 

Gross profit

 

 

3,354

 

 

 

3,469

 

 

 

8,379

 

 

 

7,098

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

851

 

 

 

341

 

 

 

1,548

 

 

 

667

 

Sales and marketing

 

 

904

 

 

 

481

 

 

 

1,609

 

 

 

831

 

General and administrative

 

 

3,838

 

 

 

1,656

 

 

 

8,002

 

 

 

3,310

 

Amortization of intangible assets

 

 

287

 

 

 

287

 

 

 

574

 

 

 

574

 

Total operating expenses

 

 

5,880

 

 

 

2,765

 

 

 

11,733

 

 

 

5,382

 

(Loss) income from operations

 

 

(2,526

)

 

 

704

 

 

 

(3,354

)

 

 

1,716

 

Other income (expenses), net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

(304

)

 

 

23

 

 

 

(296

)

 

 

55

 

Other expense, net

 

 

(3

)

 

 

(4

)

 

 

(2

)

 

 

(25

)

Total other income (expenses), net

 

 

(307

)

 

 

19

 

 

 

(298

)

 

 

30

 

(Loss) income before income taxes

 

 

(2,833

)

 

 

723

 

 

 

(3,652

)

 

 

1,746

 

(Benefit from) provision for income taxes

 

 

(583

)

 

 

211

 

 

 

(747

)

 

 

286

 

Net (loss) income

 

 

(2,250

)

 

 

512

 

 

 

(2,905

)

 

 

1,460

 

Change in unrealized loss on available-for-sale securities, net of tax

 

 

 

 

 

43

 

 

 

(7

)

 

 

9

 

Comprehensive (loss) income

 

$

(2,250

)

 

$

555

 

 

$

(2,912

)

 

$

1,469

 

Net (loss) income available to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income

 

 

(2,250

)

 

 

512

 

 

 

(2,905

)

 

 

1,460

 

Less: undistributed income attributable to preferred stockholders

 

 

 

 

 

(425

)

 

 

 

 

 

(1,211

)

Net (loss) income attributable to common stockholders

 

$

(2,250

)

 

$

87

 

 

$

(2,905

)

 

$

249

 

Net (loss) income per share attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.52

)

 

$

0.02

 

 

$

(0.73

)

 

$

0.07

 

Diluted

 

$

(0.52

)

 

$

0.02

 

 

$

(0.73

)

 

$

0.07

 

Weighted average shares used in computing net (loss) income per share
   attributable to common stockholders

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

4,328,222

 

 

 

3,599,232

 

 

 

3,965,741

 

 

 

3,599,232

 

Diluted

 

 

4,328,222

 

 

 

3,636,724

 

 

 

3,965,741

 

 

 

3,636,724

 

 

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

6


 

ALPHA TEKNOVA, INC.

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders’ (Deficit) Equity

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Convertible and
Redeemable Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained
Earnings
(Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

income (loss)

 

 

 Deficit)

 

 

Equity (Deficit)

 

Balance at March 31, 2021 (unaudited)

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,678

 

 

$

 

 

$

1,610

 

 

$

16,288

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

302

 

 

 

 

 

 

 

 

 

302

 

Accretion of convertible and redeemable
   preferred stock to redemption value

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

 

(300

)

 

 

 

 

 

 

 

 

(300

)

Conversion of convertible and redeemable
   preferred stock

 

 

(9,342,092

)

 

 

(35,938

)

 

 

 

17,512,685

 

 

 

 

 

 

35,938

 

 

 

 

 

 

 

 

 

35,938

 

Issuance of common stock upon initial public
   offering, net of issuance costs and underwriting
   discounts

 

 

 

 

 

 

 

 

 

6,900,000

 

 

 

 

 

 

99,057

 

 

 

 

 

 

 

 

 

99,057

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,250

)

 

 

(2,250

)

Balance at June 30, 2021 (unaudited)

 

 

 

 

$

 

 

 

 

28,011,917

 

 

$

 

 

$

149,675

 

 

$

 

 

$

(640

)

 

$

149,035

 

 

 

 

Convertible and
Redeemable Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained
Earnings
(Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 Capital

 

 

 income (loss)

 

 

 Deficit)

 

 

Equity (Deficit)

 

Balance at March 31, 2020 (unaudited)

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,195

 

 

$

(14

)

 

$

(357

)

 

$

13,824

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

43

 

 

 

 

 

 

43

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

512

 

 

 

512

 

Balance at June 30, 2020 (unaudited)

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,195

 

 

$

29

 

 

$

155

 

 

$

14,379

 

 

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

7

 


 

ALPHA TEKNOVA, INC.

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders’ (Deficit) Equity (Continued)

(in thousands, except share and per share data)

(Unaudited)

 

 

 

Convertible and
Redeemable Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained
Earnings
(Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 Capital

 

 

 income (loss)

 

 

 Deficit)

 

 

 Equity (Deficit)

 

Balance at December 31, 2020

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,495

 

 

$

7

 

 

$

2,265

 

 

$

16,767

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

485

 

 

 

 

 

 

 

 

 

485

 

Unrealized loss on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(7

)

Accretion of convertible and redeemable
   preferred stock to redemption value

 

 

 

 

 

300

 

 

 

 

 

 

 

 

 

 

(300

)

 

 

 

 

 

 

 

 

(300

)

Conversion of convertible and redeemable
   preferred stock

 

 

(9,342,092

)

 

 

(35,938

)

 

 

 

17,512,685

 

 

 

 

 

 

35,938

 

 

 

 

 

 

 

 

 

35,938

 

Issuance of common stock upon initial public
   offering, net of issuance costs and underwriting
   discounts

 

 

 

 

 

 

 

 

 

6,900,000

 

 

 

 

 

 

99,057

 

 

 

 

 

 

 

 

 

99,057

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,905

)

 

 

(2,905

)

Balance at June 30, 2021 (unaudited)

 

 

 

 

$

 

 

 

 

28,011,917

 

 

$

 

 

$

149,675

 

 

$

 

 

$

(640

)

 

$

149,035

 

 

 

 

Convertible and
Redeemable Preferred Stock

 

 

 

Common Stock

 

 

Additional
Paid-in

 

 

Accumulated
other
comprehensive

 

 

Retained
Earnings
(Accumulated

 

 

Stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 Capital

 

 

 income (loss)

 

 

 Deficit)

 

 

 Equity (Deficit)

 

Balance at December 31, 2019

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,195

 

 

$

20

 

 

$

(1,305

)

 

$

12,910

 

Unrealized gain on available-for-sale securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

9

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,460

 

 

 

1,460

 

Balance at June 30, 2020 (unaudited)

 

 

9,342,092

 

 

$

35,638

 

 

 

 

3,599,232

 

 

$

 

 

$

14,195

 

 

$

29

 

 

$

155

 

 

$

14,379

 

 

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

8

 


 

ALPHA TEKNOVA, INC.

Condensed Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

 

Six months ended June 30,

 

 

 

2021

 

 

2020

 

Operating activities:

 

 

 

 

 

 

Net (loss) income

 

$

(2,905

)

 

$

1,460

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

 

 

 

Bad debt expense

 

 

231

 

 

 

(1

)

Depreciation and amortization

 

 

1,352

 

 

 

931

 

Stock-based compensation

 

 

485

 

 

 

 

Inventory reserve

 

 

699

 

 

 

1

 

Realized loss (gain) on marketable securities

 

 

(1

)

 

 

16

 

Amortization of (discount) premium on marketable securities

 

 

(9

)

 

 

11

 

Deferred taxes

 

 

(747

)

 

 

1,386

 

Amortization of debt issuance costs

 

 

46

 

 

 

 

Loss on disposal of property, plant and equipment

 

 

4

 

 

 

10

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

334

 

 

 

(542

)

Inventories

 

 

(997

)

 

 

(525

)

Prepaid expenses and other assets

 

 

175

 

 

 

(1,370

)

Accounts payable, accrued liabilities, and other current and non-current liabilities

 

 

134