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, 2022

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.)

2451 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 8, 2022, the registrant had 28,090,484 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 ability to meet our publicly announced guidance or other expectations about our business;
our future financial performance, including our revenue, costs of revenue and operating expenses;
our ability to achieve and grow profitability;
our ability to expand our operations and increase capacity;
our anticipated uses of cash in the short and long terms and the sufficiency of our sources of liquidity for funding our liquidity requirements;
our ability to defend against claims and mitigate adverse results in any legal proceedings against us and the merits of any claims or suits against us;
our ability to maintain cash and cash equivalents and limit our accounts receivable and credit risk exposure;
our future investments in additional facilities to facilitate our expected growth;
our future uses of liquidity to purse potential acquisitions that further or accelerate our strategy;
our future use of equity or debt financings to execute our business strategy;
our ability to take advantage of certain exemptions from various reporting requirements generally applicable to public companies;
our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act);
the impact of recent accounting pronouncements on our financial position, results of operations or cash flows;
any failure to fully remediate material weaknesses in our internal controls over financial reporting and maintain effective internal controls in the future;
the impact of changes to our internal control over financial reporting, other than changes intended to remediate material weaknesses;
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 and our ability to actively manage our response to these types of events;
our future adoption of critical accounting policies and estimates;
our ability to increase the scale and capacity of our manufacturing processes and systems;
the impact of increased competition from additional companies entering the market and the availability of more advanced technologies in the market;
our ability to hire key personnel;
our ability to attract capital on favorable terms;
our ability to generate future revenue growth from introducing new products to support the growing cell and gene therapy market and the increasing use of messenger ribonucleic acid (mRNA) vaccines and therapies;
the impact of increased costs of future global operations;
our ability to use cash on hand to meet current and future financial obligations, including funding our operations, debt service requirements and capital expenditures;
the enforceability of our exclusive forum provisions in our amended and restated certificate of incorporation;

2


 

our customers’ sensitivity to product nonconformances, defects and errors;
the availability of exemption of our products from compliance with the U.S. Food, Drug and Cosmetic Act (FDCA);
our ability to secure and maintain a stable supply of raw materials in the future;
our ability to maintain corporate culture that contributes to our success;
the applicability of our products across a wide range of markets and the probability of success or revenue opportunity in our target markets;
the impact of the phase-out of the London Interbank Offered Rate (LIBOR), or the replacement of the LIBOR with a different reference rate, on the interests rates applicable to our financing arrangements;
regulatory developments in the United States and other foreign countries;
the impact of revenue recognition rules and other factors on our financial results;
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 ongoing 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, 2022

 

INDEX

 

 

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

Item 1.

 

Condensed Financial Statements (Unaudited)

 

5

 

 

Condensed Statements of Operations and Comprehensive Loss (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021

 

5

 

 

Condensed Balance Sheets (Unaudited) at June 30, 2022 and December 31, 2021

 

6

 

 

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders' Equity (Unaudited) for the Three and Six Months Ended June 30, 2022 and 2021

 

7

 

 

Condensed Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2022 and 2021

 

9

 

 

Notes to Unaudited Condensed Financial Statements

 

10

Item 2.

 

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

 

18

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

27

Item 4.

 

Controls and Procedures

 

27

 

PART II.

 

OTHER INFORMATION

 

28

Item 1.

 

Legal Proceedings

 

28

Item 1A.

 

Risk Factors

 

29

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

65

Item 3.

 

Defaults Upon Senior Securities

 

65

Item 4.

 

Mine Safety Disclosures

 

65

Item 5.

 

Other Information

 

66

Item 6.

 

Exhibits

 

66

 

Signatures

 

 

 

67

 

4


 

PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

 

ALPHA TEKNOVA, INC.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

 

 

 

For the Three Months Ended June 30,

 

 

For the Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

11,690

 

 

$

8,313

 

 

$

22,837

 

 

$

17,391

 

Cost of sales

 

 

6,443

 

 

 

4,959

 

 

 

12,241

 

 

 

9,012

 

Gross profit

 

 

5,247

 

 

 

3,354

 

 

 

10,596

 

 

 

8,379

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

1,929

 

 

 

851

 

 

 

3,942

 

 

 

1,548

 

Sales and marketing

 

 

2,598

 

 

 

904

 

 

 

4,195

 

 

 

1,609

 

General and administrative

 

 

7,059

 

 

 

3,838

 

 

 

14,354

 

 

 

8,002

 

Amortization of intangible assets

 

 

287

 

 

 

287

 

 

 

574

 

 

 

574

 

Total operating expenses

 

 

11,873

 

 

 

5,880

 

 

 

23,065

 

 

 

11,733

 

Loss from operations

 

 

(6,626

)

 

 

(2,526

)

 

 

(12,469

)

 

 

(3,354

)

Other income (expenses), net

 

 

 

 

 

 

 

 

 

 

 

 

Interest income (expense), net

 

 

28

 

 

 

(304

)

 

 

15

 

 

 

(296

)

Other expense, net

 

 

 

 

 

(3

)

 

 

 

 

 

(2

)

Total other income (expenses), net

 

 

28

 

 

 

(307

)

 

 

15

 

 

 

(298

)

Loss before income taxes

 

 

(6,598

)

 

 

(2,833

)

 

 

(12,454

)

 

 

(3,652

)

Benefit from income taxes

 

 

(395

)

 

 

(583

)

 

 

(754

)

 

 

(747

)

Net loss

 

 

(6,203

)

 

 

(2,250

)

 

 

(11,700

)

 

 

(2,905

)

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

 

 

 

 

 

-

 

 

 

 

 

 

(7

)

Comprehensive loss

 

$

(6,203

)

 

$

(2,250

)

 

$

(11,700

)

 

$

(2,912

)

Net loss per share—basic and diluted

 

$

(0.22

)

 

$

(0.52

)

 

$

(0.42

)

 

$

(0.73

)

Weighted average shares used in computing net loss per share—basic and diluted

 

 

28,057,801

 

 

 

4,328,222

 

 

 

28,044,460

 

 

 

3,965,741

 

 

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

5


 

ALPHA TEKNOVA, INC.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

 

 

 

As of
June 30, 2022

 

 

As of
December 31, 2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

64,734

 

 

$

87,518

 

Accounts receivable, net of allowance for doubtful accounts of $55 thousand and $23 thousand

 

 

5,810

 

 

 

4,666

 

Inventories, net

 

 

7,909

 

 

 

5,394

 

Income taxes receivable

 

 

117

 

 

 

1,188

 

Prepaid expenses and other current assets

 

 

1,701

 

 

 

2,438

 

Total current assets

 

 

80,271

 

 

 

101,204

 

Property, plant and equipment, net

 

 

47,258

 

 

 

29,810

 

Operating right-of-use lease assets

 

 

19,154

 

 

 

 

Goodwill

 

 

16,613

 

 

 

16,613

 

Intangible assets, net

 

 

18,130

 

 

 

18,704

 

Other non-current assets

 

 

769

 

 

 

180

 

Total assets

 

$

182,195

 

 

$

166,511

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,421

 

 

$

2,248

 

Accrued liabilities

 

 

8,250

 

 

 

5,495

 

Current portion of operating lease liabilities

 

 

2,194

 

 

 

 

Total current liabilities

 

 

11,865

 

 

 

7,743

 

Deferred tax liabilities

 

 

2,402

 

 

 

3,153

 

Other accrued liabilities

 

 

233

 

 

 

273

 

Long-term debt, net

 

 

16,818

 

 

 

11,870

 

Deferred rent

 

 

 

 

 

269

 

Long-term operating lease liabilities

 

 

17,410

 

 

 

 

Total liabilities

 

 

48,728

 

 

 

23,308

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock, $0.00001 par value, 10,000,000 shares authorized at June 30, 2022 and December 31, 2021, respectively, zero shares issued and outstanding at June 30, 2022 and December 31, 2021

 

 

 

 

 

 

Common stock, $0.00001 par value, 490,000,000 shares authorized at June 30, 2022 and December 31, 2021, 28,080,484 and 28,012,017 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

 

Additional paid-in capital

 

 

152,705

 

 

 

150,741

 

Accumulated deficit

 

 

(19,238

)

 

 

(7,538

)

Total stockholders’ equity

 

 

133,467

 

 

 

143,203

 

Total liabilities and stockholders’ equity

 

$

182,195

 

 

$

166,511

 

 

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’ Equity

(in thousands, except 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

 

Balance at April 1, 2022

 

 

 

 

$

 

 

 

 

28,042,479

 

 

$

 

 

$

151,583

 

 

$

 

 

$

(13,035

)

 

$

138,548

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

934

 

 

 

 

 

 

 

 

 

934

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

24,770

 

 

 

 

 

 

44

 

 

 

 

 

 

 

 

 

44

 

Issuance of common stock under employee stock purchase plan

 

 

 

 

 

 

 

 

 

13,235

 

 

 

 

 

 

144

 

 

 

 

 

 

 

 

 

144

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,203

)

 

 

(6,203

)

Balance at June 30, 2022

 

 

 

 

$

 

 

 

 

28,080,484

 

 

$

 

 

$

152,705

 

 

$

 

 

$

(19,238

)

 

$

133,467

 

 

 

 

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

 

Balance at April 1, 2021

 

 

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

 

 

 

 

$

 

 

 

 

28,011,917

 

 

$

 

 

$

149,675

 

 

$

 

 

$

(640

)

 

$

149,035

 

 

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’ Equity (Continued)

(in thousands, except 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

 

Balance at January 1, 2022

 

 

 

 

$

 

 

 

 

28,012,017

 

 

$

 

 

$

150,741

 

 

$

 

 

$

(7,538

)

 

$

143,203

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,721

 

 

 

 

 

 

 

 

 

1,721

 

Issuance of common stock upon exercise of stock options

 

 

 

 

 

 

 

 

 

55,232

 

 

 

 

 

 

99

 

 

 

 

 

 

 

 

 

99

 

Issuance of common stock under employee stock purchase plan

 

 

 

 

 

 

 

 

 

13,235

 

 

 

 

 

 

144

 

 

 

 

 

 

 

 

 

144

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11,700

)

 

 

(11,700

)

Balance at June 30, 2022

 

 

 

 

$

 

 

 

 

28,080,484

 

 

$

 

 

$

152,705

 

 

$

 

 

$

(19,238

)

 

$

133,467

 

 

 

 

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

 

Balance at January 1, 2021

 

 

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

)

 

 

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