NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Note 1 – Description of Company and Basis
of Presentation
We are a dedicated contract
development and manufacturing organization (“CDMO”) that provides a comprehensive range of services from process development
to Current Good Manufacturing Practices (“CGMP”) clinical and commercial manufacturing, focused on biopharmaceutical drug
substances derived from mammalian cell culture for biotechnology and pharmaceutical companies.
Effective January 5, 2018, we
changed our name to Avid Bioservices, Inc. in connection with our transition to a dedicated CDMO and the discontinuation of our research
and development activities. For the fiscal 2019 period presented, the operating results of our former research and development segment
have been excluded from continuing operations and reported as income from discontinued operations, net of tax, in the Consolidated Statements
of Operations and Comprehensive Loss. For additional information on the discontinuation of our research and development segment, refer
to Note 11, Sale of Research and Development Assets. Except where specifically noted or the context otherwise requires, references
to “Avid,” the “Company,” “we,” “us,” and “our,” in this Annual Report refer
to Avid Bioservices, Inc. and its subsidiaries.
Basis of Presentation and
Preparation
The accompanying consolidated
financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and
include the accounts of Avid Bioservices, Inc. and our subsidiaries. All intercompany accounts and transactions among the consolidated
entities have been eliminated in the consolidated financial statements.
The preparation of our consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported
in our consolidated financial statements and accompanying notes. Management’s estimates are based on historical information available
as of the date of the consolidated financial statements and on various other assumptions that are believed to be reasonable under the
circumstances. Accounting estimates and judgements are inherently uncertain and actual results could differ materially from these estimates.
Segment Reporting
Our business operates
in one operating segment. Accordingly, we reported our financial results for one reportable segment. All our identifiable assets
are in the United States.
Note 2 – Summary of Significant Accounting
Policies
Cash and Cash Equivalents
We consider all short-term investments readily
convertible to cash, without notice or penalty, with an initial maturity of 90 days or less to be cash equivalents.
Restricted Cash
Under the terms of an operating
lease related to one of our facilities (Note 4), we are required to maintain a letter of credit as collateral. Accordingly, at April 30,
2021 and 2020, restricted cash of $0.4 million was pledged as collateral under the letter of credit.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The following table provides a reconciliation
of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same amounts
shown in the Consolidated Statements of Cash Flows (in thousands):
|
|
As of April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Cash and cash equivalents
|
|
$
|
169,915
|
|
|
$
|
36,262
|
|
|
$
|
32,351
|
|
Restricted cash
|
|
|
350
|
|
|
|
350
|
|
|
|
1,150
|
|
Total cash, cash equivalents and restricted cash
|
|
$
|
170,265
|
|
|
$
|
36,612
|
|
|
$
|
33,501
|
|
Revenue Recognition
On May 1, 2018, we adopted Accounting Standards
Codification (“ASC”) No. 2014-09, Revenue from Contracts with Customers (Topic 606), and its subsequent updates (“ASC
606”), to all contracts that had not been completed as of May 1, 2018 using the modified retrospective method. The cumulative effect
of adopting ASC 606 resulted in a one-time adjustment of $2.7 million to the opening balance of accumulated deficit as of May 1, 2018
which is reflected in the Consolidated Statements of Stockholders’ Equity for the fiscal year ended April 30, 2019.
Under ASC 606, we recognize revenue when we transfer
promised goods or services to customers in an amount that reflects the consideration to which we expect to be entitled in exchange for
those goods or services. To determine revenue recognition for contracts with customers, we perform the following five steps: (i) identify
the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv)
allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy a performance
obligation.
Revenue recognized from services provided under
our customer contracts are disaggregated into manufacturing and process development revenue streams.
Manufacturing revenue
Manufacturing revenue generally represents revenue
from the manufacturing of customer products recognized over time utilizing an input method that compares the cost of cumulative work-in-process
to date to the most current estimates for the entire cost of the performance obligation. Under a manufacturing contract, a quantity of
manufacturing runs are ordered at a specified scale, where the product is manufactured according to the customer’s specifications
and typically includes only one performance obligation. Each manufacturing run represents a distinct service that is sold separately and
has stand-alone value to the customer. The products are manufactured exclusively for a specific customer and have no alternative use.
The customer retains control of its product during the entire manufacturing process and can make changes to the process or specifications
at its request. Under these agreements, we are entitled to consideration for progress to date that includes an element of profit margin.
Process development revenue
Process development revenue generally represents
revenue from services associated with the custom development of a manufacturing process and analytical methods for a customer’s
product. Process development revenue is recognized over time utilizing an input method that compares the cost of cumulative work-in-process
to date to the most current estimates for the entire cost of the performance obligation. Under a process development contract, the customer
owns the product details and process, which has no alternative use. These process development projects are customized to each customer
to meet its specifications and typically includes only one performance obligation. Each process represents a distinct service that is
sold separately and has stand-alone value to the customer. The customer also retains control of its product as the product is being created
or enhanced by our services and can make changes to its process or specifications upon request. Under these agreements, we are entitled
to consideration for progress to date that includes an element of profit margin.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The
following table summarizes our manufacturing and process development revenue streams (in thousands):
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Manufacturing revenues
|
|
$
|
83,678
|
|
|
$
|
52,046
|
|
|
$
|
43,432
|
|
Process development revenues
|
|
|
12,190
|
|
|
|
7,656
|
|
|
|
10,171
|
|
Total revenues
|
|
$
|
95,868
|
|
|
$
|
59,702
|
|
|
$
|
53,603
|
|
The timing of revenue recognition, billings and
cash collections results in billed accounts receivable, contract assets (unbilled receivables), and contract liabilities (customer deposits
and deferred revenue). Contract assets are recorded when our right to consideration is conditioned on something other than the passage
of time. Contract assets are reclassified to accounts receivable on the consolidated balance sheet when our rights become unconditional.
Contract liabilities represent customer deposits and deferred revenue billed and/or received in advance of our fulfillment of performance
obligations. Contract liabilities convert to revenue as we perform our obligations under the contract.
During the fiscal years ended April 30, 2021 and
2020, we recognized revenue of $27.3 million and $13.6 million, respectively, for which the contract liability was recorded in a prior
period.
The transaction price for services provided under
our customer contracts generally reflects our best estimates of the amount of consideration to which we are entitled in exchange for providing
goods and services to our customers. In determining the transaction price, we considered the different sources of variable consideration
including, but not limited to, discounts, credits, refunds, price concessions or other similar items. We have included in the transaction
price some or all of an amount of variable consideration, utilizing the most likely method, only to the extent that it is probable that
a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable
consideration is subsequently resolved. The actual amount of consideration ultimately received may differ.
Management may be required to exercise judgement
in estimating revenue to be recognized. Judgement is required in identifying performance obligations, estimating the transaction price,
estimating the stand-alone selling prices of identified performance obligations, and estimating the progress towards the satisfaction
of performance obligations. If actual results in the future vary from our estimates, the estimates will be adjusted, which will affect
revenues in the period that such variances become known.
Changes in estimates for variable consideration
resulted in an increase in revenues of $1.1 million for the fiscal year ended April 30, 2021 and a decrease in revenues of $1.5 million
for the fiscal year ended April 30, 2020. There were no material adjustments in estimates for variable consideration for the fiscal year
ended April 30, 2019.
We apply the practical expedient available under
ASC 606 that permits us not to disclose the value of unsatisfied performance obligations for contracts with an original expected length
of one year or less. As of April 30, 2021, we do not have any unsatisfied performance obligations for contracts greater than one year.
Accounts Receivable
Accounts receivable generally represent amounts
billed services provided under our customer contracts and are recorded at the invoiced amount net of an allowance for doubtful accounts,
if necessary. We apply judgment in assessing the ultimate realization of our receivables and we estimate an allowance for doubtful accounts
based on various factors, such as the aging of our receivables, historical experience, and the financial condition of our customers. Based
on our analysis of our accounts receivable balances as of April 30, 2021 and 2020, we determined no allowance for doubtful accounts was
necessary.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Concentrations of Credit
Risk and Customer Base
Financial instruments that potentially subject
us to a significant concentration of credit risk consist of cash and cash equivalents, accounts receivable and contract assets. We maintain
our cash balances primarily with two major commercial banks and our deposits held with each bank exceed the amount of government insurance
limits provided on our deposits. We are exposed to credit risk in the event of default by the major commercial banks holding our cash
balances to the extent of the cash amounts recorded on the accompanying Consolidated Balance Sheets exceed the amount of government insurance
limits provided on our deposits.
Our accounts receivable from
amounts billed for services provided under customer contracts are derived from a small customer base. Most contracts require up-front
payments and installment payments during the service period. We perform periodic evaluations of the financial condition of our customers
and generally do not require collateral, but we can terminate any contract if a material default occurs. At April 30, 2021 and 2020, approximately
98% of our accounts receivable were due from six customers. Our contract assets are reclassified to accounts receivable when our rights
to consideration become unconditional. At April 30, 2021 and 2020, approximately 97% and 96%, respectively, of our contract assets were
attributable to six customers.
Our revenues are derived from
a small customer base. Historically, these customers have not entered into long-term contracts because their need for drug supply depends
on a variety of factors, including a product’s stage of development, the timing of regulatory filings and approvals, the product
needs of their collaborators, if applicable, their financial resources and the market demand with respect to a commercial product.
The table below identifies each
of our customers that accounted for 10% or more of our total revenues during any of the fiscal years ended April 30, 2021, 2020 and 2019:
Customer
|
|
Geographic Location
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Halozyme Therapeutics, Inc.
|
|
|
U.S.
|
|
|
|
51%
|
|
|
|
28%
|
|
|
|
30%
|
|
Gilead Sciences, Inc.
|
|
|
U.S.
|
|
|
|
16
|
|
|
|
24
|
|
|
|
–
|
|
IGM Biosciences, Inc.
|
|
|
U.S.
|
|
|
|
*
|
|
|
|
11
|
|
|
|
*
|
|
Acumen Pharmaceuticals, Inc.
|
|
|
U.S.
|
|
|
|
*
|
|
|
|
11
|
|
|
|
*
|
|
Coherus BioSciences, Inc.
|
|
|
U.S.
|
|
|
|
*
|
|
|
|
10
|
|
|
|
13
|
|
ADC Therapeutics America Inc.
|
|
|
U.S.
|
|
|
|
*
|
|
|
|
*
|
|
|
|
21
|
|
______________
*
Represents a percentage less than 10% of our total revenues.
We attribute revenue to the individual countries
where the customer is headquartered. Revenues derived from U.S. based customers were approximately 100%, 99% and 95% for the fiscal years
ended April 30, 2021, 2020 and 2019, respectively.
Leases
On May 1, 2019, we adopted ASU No. 2016-02, Leases
(Topic 842), and its related amendments (codified as “ASC 842”), which requires lessees to recognize right-of-use assets and
corresponding lease liabilities for all leases with a lease term greater than one year. We adopted ASC 842 using the modified retrospective
approach. Accordingly, results for reporting periods after May 1, 2019 are presented in accordance with ASC 842, while prior period amounts
are not adjusted and continue to be reported in accordance with our historical accounting under ASC 840.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
We determine if an arrangement is or contains
a lease at inception. Our operating leases with a term greater than one year are included in operating lease right-of-use (ROU) assets,
operating lease liabilities and operating lease liabilities, less current portion in our consolidated balance sheets. ROU assets represent
our right to use an underlying asset during the lease term and lease liabilities represent our obligation to make lease payments arising
from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date, based on the present value of
lease payments over the lease term. In determining the net present value of lease payments, we use our incremental borrowing rate which
represents an estimated rate of interest that we would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement
date.
Our operating leases may include options to extend
the lease which are included in the lease term when it is reasonably certain that we will exercise a renewal option. Operating lease expense
is recognized on a straight-line basis over the expected lease term. We have elected not to apply the recognition requirements of ASC
842 for short-term leases. We have also elected the practical expedient to not separate lease components from non-lease components.
Inventory
Inventory consists of raw materials
inventory and is valued at the lower of cost, determined by the first-in, first-out method, or net realizable value. We periodically review
raw materials inventory for potential impairment and adjust inventory to its net realizable value based on the estimate of future use
and reduce the carrying value of inventory as deemed necessary.
Property and Equipment
Property and equipment is recorded
at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the related asset, which are generally as follows:
Description
|
|
Estimated Useful Life
|
Leasehold improvements
|
|
Shorter of estimated useful life or lease term
|
Laboratory and manufacturing equipment
|
|
5 – 10 years
|
Computer equipment and software
|
|
3 – 5 years
|
Furniture, fixtures and office equipment
|
|
5 – 10 years
|
Construction-in-progress, which
represents direct costs related to the construction of various equipment and leasehold improvements primarily associated with our manufacturing
facilities, is not depreciated until the asset is completed and placed into service. No interest was incurred or capitalized as construction-in-progress
as of April 30, 2021 and 2020. All of our property and equipment are located in the U.S. Property and equipment consist of the following
(in thousands):
|
|
April 30,
|
|
|
|
2021
|
|
|
2020
|
|
Leasehold improvements
|
|
$
|
23,000
|
|
|
$
|
21,130
|
|
Laboratory and manufacturing equipment
|
|
|
20,793
|
|
|
|
15,033
|
|
Computer equipment and software
|
|
|
5,541
|
|
|
|
5,334
|
|
Furniture, fixtures and office equipment
|
|
|
843
|
|
|
|
685
|
|
Construction-in-progress
|
|
|
8,372
|
|
|
|
2,564
|
|
Total property and equipment, gross
|
|
|
58,549
|
|
|
|
44,746
|
|
Less: accumulated depreciation and amortization
|
|
|
(21,094
|
)
|
|
|
(17,641
|
)
|
Total property and equipment, net
|
|
$
|
37,455
|
|
|
$
|
27,105
|
|
Depreciation and amortization
expense for the fiscal years ended April 30, 2021, 2020 and 2019 was $3.5 million, $3.1 million and $2.7 million, respectively.
Capitalized Software Implementation
Costs
We capitalize certain implementation
costs incurred under a cloud computing hosting arrangement. Costs incurred during the application development stage related to the implementation
of the hosting arrangement are capitalized and included within other assets on the accompanying Consolidated Balance Sheets. Amortization
of capitalized implementation costs is recognized on a straight-line basis over the term of the associated hosting arrangement when it
is ready of its intended use. Costs related to preliminary project activities and post-implementation activities are expensed as incurred.
As of April 30, 2021, we had capitalized software implementation costs of $0.9 million. We did not have any capitalized implementation
software costs as of April 30, 2020.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Impairment
Long-lived assets are reviewed for impairment
in accordance with authoritative guidance for impairment or disposal of long-lived assets. Long-lived assets are reviewed for events or
changes in circumstances that indicate that their carrying value may not be recoverable. If such events or changes in circumstances arise,
we compare the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated by the
long-lived assets. If the long-lived assets are determined to be impaired, any excess of the carrying value of the long-lived assets over
its estimated fair value is recognized as an impairment loss. For the fiscal years ended April 30, 2021 and 2020, there were no indicators
of impairment of the value of our long-lived assets and no cumulative impairment losses were recognized as of April 30, 2021.
Fair Value of Financial Instruments
The carrying amounts in the
accompanying Consolidated Balance Sheets for cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accrued
liabilities and note payable approximate their fair values due to their short-term maturities.
Fair Value Measurements
Fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date. The guidance prioritizes the inputs used in measuring fair value into the following hierarchy:
|
·
|
Level 1 – Observable inputs, such as unadjusted quoted prices in active markets for identical assets
or liabilities.
|
|
·
|
Level 2 – Observable inputs other than quoted prices included in Level 1, such as assets or liabilities
whose values are based on quoted market prices in markets where trading occurs infrequently or whose values are based on quoted prices
of instruments with similar attributes in active markets.
|
|
·
|
Level 3 – Unobservable inputs that are supported by little or no market activity and significant
to the overall fair value measurement of the assets or liabilities; therefore requiring the company to develop its own valuation techniques
and assumptions.
|
As of April 30, 2021 and 2020,
we do not have any Level 2 or Level 3 financial assets or liabilities and our cash equivalents of $158.8 million and $27.6 million, respectively,
are invested in money market funds with two major commercial banks, are carried at fair value based on quoted market prices for identical
securities (Level 1 inputs). In addition, the outstanding principal amount of our convertible senior notes of $143.8 million approximates
its estimated fair value at April 30, 2021 given the short period of time between the issuance of such notes in March 2021 (Note 3) and
our fiscal year ended April 30, 2021. We had no convertible senior notes outstanding as of April 30, 2020.
Stock-Based Compensation
We account for stock options,
restricted stock units and other stock-based awards granted under our equity compensation plans in accordance with ASC 718, Compensation
– Stock Compensation. The estimated fair value of stock options granted to employees in exchange for services is measured at
the grant date, using a fair value based method, such as a Black-Scholes option valuation model, and is recognized as expense on a straight-line
basis over the requisite service periods. The fair value of restricted stock units is measured at the grant date based on the closing
market price of our common stock on the date of grant and is recognized as expense on a straight-line basis over the period of vesting.
Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. As of April 30, 2021 and 2020, there were
no outstanding stock-based awards with market or performance conditions.
Debt Discount and Issuance Costs
Debt discount and issuance costs related to convertible
senior notes are recorded as deductions that net against the principal value of the debt and are amortized to interest expense over the
contractual term of the debt using the effective interest method (Note 3).
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Income Taxes
We utilize the liability method of accounting
for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Under the liability method, deferred taxes are
determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using enacted
tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. A valuation allowance is
provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized (Note 7). In addition,
we recognize the impact of an uncertain tax position only when it is more likely than not the tax position will be sustained upon examination
by the tax authorities. We are required to file federal and state income tax returns in various jurisdictions. The preparation of these
returns requires us to interpret the applicable tax laws in effect in such jurisdictions, which could affect the amount paid by us.
The income tax benefit recognized in the accompanying
Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended April 30, 2019 resulted from the “Intraperiod
Tax Allocation” rules under ASC 740, which requires the allocation of an entity’s total annual income tax provision among
continuing operations and, in our case, discontinued operations. Accordingly, a tax benefit was recorded in continuing operations with
an offsetting tax expense recorded in discontinued operations (Note 11).
Comprehensive Income (Loss)
Comprehensive income (loss) is the change in equity
during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income (loss) is equal to our
net income (loss) for all periods presented.
Recently Adopted Accounting Standards
In August 2018, the Financial
Accounting Standards Board (“FASB”) issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes
to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”), which eliminates, adds and modifies certain
disclosure requirements of fair value measurements. Entities will no longer be required to disclose the amount of and reasons for transfers
between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average
used to develop significant unobservable inputs for Level 3 fair value measurements. ASU 2018-13 is effective for fiscal years, and interim
periods within those years, beginning after December 15, 2019. We adopted ASU 2018-13 on May 1, 2020 and the adoption of this standard
did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued
ASU No. 2018-15, Intangibles-Goodwill and other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation
Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). The new guidance aligns the
requirement for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirement for
capitalizing implementation costs incurred to develop or obtain internal-use-software (and hosting arrangements that include an internal-use
software license). ASU 2018-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019.
We adopted ASU 2018-15 on May 1, 2020 on a prospective basis. Accordingly, we capitalize certain implementation costs incurred in a cloud
computing arrangement that is a service contract and are included in other assets in our Consolidated Balance Sheets. Such capitalized
costs will be amortized over the term of the hosting arrangement, commencing when the capitalized asset is ready for its intended use.
Costs related to preliminary project activities and post-implementation activities are expensed as incurred.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Recently Issued Accounting
Standards Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments (“ASU 2016-13”).
The standard changes the methodology for measuring credit losses on financial instruments and the timing of when such losses are recorded.
As a smaller reporting company as defined by the SEC, ASU 2016-13 and its subsequent updates are effective for fiscal years beginning
after December 15, 2022, which will be our fiscal year 2024 beginning May 1, 2023; however, early adoption is permitted. We are currently
evaluating the timing and impact the adoption of this standard will have on our consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting
for income taxes by removing certain exceptions and improving consistent application in certain areas of Topic 740. ASU 2019-12 is effective
for fiscal years, and interim periods within those years, beginning after December 15, 2020, which will be our fiscal year 2022 beginning
May 1, 2021. Early adoption is permitted. We are currently evaluating the impact the adoption of this standard will have on our consolidated
financial statements and related disclosures.
In August 2020, the FASB issued ASU No. 2020-06,
Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic
815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). The
amendments in this ASU will eliminate the beneficial conversion and cash conversion accounting models for convertible instruments, as
well as, amend the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because
of specific settlement provisions. The ASU will also modify how particular convertible instruments and certain contracts that may be settled
in cash or shares impact the diluted earnings per share calculation. As a smaller reporting company as defined by the SEC, ASU 2020-06
is effective for fiscal years, and interim periods within those years, beginning after December 15, 2023, which will be our fiscal year
2025 beginning May 1, 2024. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020. We are currently
planning to early adopt ASU 2020-06 during the first quarter of our fiscal year 2022 using the modified retrospective method, and based
on our preliminary analysis, we expect we will reclass the carrying amount of the bifurcated equity component, or debt discount, to the
carrying amount of our convertible senior notes (Note 3). In addition, upon adoption, we expect to no longer be required to amortize debt
discount to interest expense over the contractual term of our convertible senior notes.
Note 3 – Debt
Note Payable
On April 17, 2020, we entered
into a promissory note (the “Note”) with City National Bank, the lender, evidencing an unsecured loan pursuant to the U.S.
Small Business Administration (“SBA”) Paycheck Protection Program (“PPP”) of the Coronavirus Aid, Relief, and
Economic Security Act of 2020 (the “CARES Act”) of approximately $4.4 million (the “PPP Loan”). We applied for
and received the PPP Loan pursuant to the then published PPP qualification and certification requirements.
On April 23, 2020, the SBA,
in consultation with the Department of Treasury, issued new guidance that created uncertainty regarding the qualification requirements
for a PPP Loan (the “New Guidance”). In light of the New Guidance, we determined it appropriate to pay off the entire amount
of the PPP Loan. Accordingly, on May 12, 2020, we paid off in full the principal and interest on the PPP Loan, resulting in the termination
of the Note.
Convertible Senior Notes
On March 12, 2021, Avid SPV, LLC (the “Issuer”),
a wholly-owned finance subsidiary of Avid Bioservices, Inc. (the “Company”), issued $143.8 million in aggregate principal
amount of 1.250% exchangeable senior notes due 2026 (“Convertible Notes”) in a private offering to qualified institutional
buyers pursuant to Rule 144A under the Securities Act, which aggregate principal amount included the $18.8 million issued pursuant to
the initial purchasers’ full exercise of their option to purchase additional principal amount of Convertible Notes. The net proceeds
we received from the issuance of Convertible Notes was $138.5 million, after deducting initial purchaser discounts and other debt issuance
related expenses of $5.3 million.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The Convertible Notes are governed by an indenture
dated March 12, 2021 (as subsequently amended or supplemented, the “Indenture”) between the Issuer, the Company and U.S. Bank
National Association, as trustee (the “Trustee”). On April 30, 2021, the Company and the Issuer entered into an Agreement
and Plan of Merger (the “Merger Agreement”). Pursuant to the Merger Agreement, the Issuer was merged with and into the Company
effective April 30, 2021, with the Company as the surviving corporation (the “Merger”). In connection with the Merger, on
April 30, 2021, the Company, the Issuer and the Trustee, entered into a first supplemental indenture, pursuant to which the Company agreed
to assume all obligations under the Indenture, along with the Convertible Notes issued thereunder, and was discharged from its guarantor
obligations under the guarantee set forth in the Indenture.
The Convertible Notes are senior unsecured obligations
and accrue interest at a rate of 1.250% per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning
on September 15, 2021. The Convertible Notes mature on March 15, 2026, unless earlier redeemed or repurchased by us or converted at the
option of the holders. The Convertible Notes are convertible into cash, shares of our common stock or a combination of cash and shares
of our common stock, at our election in the manner and subject to the terms and conditions provided in the Indenture.
The initial conversion rate for the Convertible
Notes is approximately 47.1403 shares of our common stock per $1,000 principal amount, which represents an initial conversion price of
approximately $21.21 per share of our common stock. The conversion rate is subject to adjustments upon the occurrence of certain events
in accordance with the terms of the Indenture. In addition, following certain corporate events that occur prior to the maturity date,
we will, in certain circumstances, increase the conversion rate for a holder who elects to convert their Convertible Notes in connection
with such a fundamental change, as defined in the Indenture.
Holders of the Convertible Notes may convert their
Convertible Notes at their option at any time prior to the close of business on the business day immediately preceding September 15, 2025,
only under the following circumstances: (1) During any fiscal quarter commencing after the fiscal quarter ending July 31, 2021, if the
last reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading
days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the
conversion price on each applicable trading day; (2) During the five business day period after any five consecutive trading day period
(the “measurement period”) in which the trading price (as defined in the Indenture) per $1,000 principal amount of the Convertible
Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of our common stock
and the exchange rate on each such trading day; (3) If we call any or all of the Convertible Notes for redemption, at any time prior to
the close of business on the second scheduled trading day immediately preceding the redemption date; and (4) Upon the occurrence of specified
corporate events as described in the Indenture.
On or after September 15, 2025 until the close
of business on the second scheduled trading day immediately preceding the maturity date, holders at their option may convert their Convertible
Notes at any time, regardless of the foregoing circumstances.
We may not redeem the Convertible Notes prior
to March 20, 2024. On or after March 20, 2024, the Convertible Notes are redeemable for cash, whole or in part, at our option, if the
last reported sale price of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days
(whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and
including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100%
of the principal amount to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
If we undergo a fundamental change (as defined
in the Indenture), holder may require us to repurchase for cash all or any portion of their Convertible Notes at a fundamental change
repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest to,
but excluding the redemption date.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The Indenture contains customary terms and covenants,
including that upon certain events of default occurring and continuing, the trustee or the holders of at least 25% in aggregate principle
amount of the outstanding Convertible Notes may declare the entire principal of all the Convertible Notes plus accrued and unpaid interest
to be immediately due and payable.
In accordance with accounting guidance for debt
with conversion and other options, we separated the Convertible Notes into debt and equity components. The carrying amount of the debt
component on the date of the issuance was $99.7 million and was determined based on a binomial lattice model, which yielded an effective
discount rate of 8.78% and was derived with the assistance of a third party valuation. The equity component was allocated a value of $44.1
million, representing the difference between the par value of the Convertible Notes and the fair value of the debt component. The equity
component is not remeasured as long as it continues to meet the conditions for equity classification, and the equity component was recorded
as additional paid-in capital within stockholders’ equity on the Consolidated Balance Sheet at April 30, 2021. The difference between
the principal amount of the Convertible Notes and the debt component, or the debt discount, is amortized to interest expense using the
effective interest method over the contractual term of the Convertible Notes. The debt component is classified as a long-term liability
as of April 30, 2021.
In accounting for the issuance costs related to
the Convertible Notes, we allocated the total amount incurred to the debt and equity components of the Convertible Notes based on their
relative values. Issuance costs attributable to the debt component were $3.7 million and are being amortized to interest expense using
the effective interest method over the contractual term of the Convertible Notes. Issuance costs attributable to the equity component
were $1.6 million and were netted with the equity component in additional paid-in capital.
The net carrying amount of the debt component
of the Convertible Notes is as follows (in thousands):
|
|
April 30, 2021
|
|
Principal
|
|
$
|
143,750
|
|
Unamortized debt discount
|
|
|
(43,189
|
)
|
Unamortized issuance costs
|
|
|
(3,612
|
)
|
Net carrying amount
|
|
$
|
96,949
|
|
The net carrying amount of the equity component
of the Convertible Notes is as follows (in thousands):
|
|
April 30, 2021
|
|
Equity component (debt discount)
|
|
$
|
44,051
|
|
Issuance costs
|
|
|
(1,620
|
)
|
Net carrying amount
|
|
$
|
42,431
|
|
Interest expense recognized related to the Convertible
Notes is as follows (in thousands):
|
|
Year Ended
April 30, 2021
|
|
Contractual interest expense
|
|
$
|
245
|
|
Amortization of debt discount
|
|
|
862
|
|
Amortization of issuance costs
|
|
|
54
|
|
Total interest expense
|
|
$
|
1,161
|
|
.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Capped Call Transactions
In connection with the issuance of the Convertible
Notes, we entered into privately negotiated capped call transactions (the “Capped Calls”) with certain financial institution
counterparties (the “Option Counterparties”). We used $12.8 million of the net proceeds from the issuance of the Convertible
Notes to pay the cost of the Capped Calls. The Capped Calls cover, subject to customary anti-dilution adjustments, the aggregate number
of shares of our common stock that initially underlie the Convertible Notes, and are generally expected to reduce the potential dilution
of our common stock upon any conversion of the Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap,
based on the cap price of the Capped Calls. The cap share price of the Capped Calls is approximately $28.02 per share, which represents
a premium of 75% over the last reported sale price of our common stock on March 9, 2021 and is subject to certain adjustments under the
terms of the Capped Calls. However, there would nevertheless be dilution upon conversion of the Convertible Notes to the extent that such
market price exceeds the capped share price as measured under the terms of the Capped Calls.
We evaluated the Capped Calls under ASC 815-10
and determined that it should be accounted for as a separate transaction from the Convertible Notes and that the Capped Calls met the
criteria for equity classification. Therefore, the cost of $12.8 million to purchase the Capped Calls were recorded as a reduction to
additional paid-in capital in the Consolidated Balance Sheet at April 30, 2021. The Capped Calls will not be subsequently remeasured as
long as the conditions for equity classification continue to be met.
Note 4 – Leases
We currently lease office, manufacturing, laboratory
and warehouse space in four buildings under three separate non-cancellable operating lease agreements. Our leased facilities are located
in close proximity in Tustin, California, have original lease terms ranging from 7 to 12 years, contain two multi-year renewal options,
and scheduled rent increases of 3% on either an annual or biennial basis. A multi-year renewal option was included in determining the
ROU asset and lease liability for two of our leases, as we considered it reasonably certain that we would exercise such renewal options.
In addition, two of our leases provide for periods of free rent, lessor improvements and tenant improvement allowances, of which certain
of these improvements have been classified as leasehold improvements and are being amortized over the shorter of the estimated useful
life of the improvements or the remaining life of the lease. The operating lease ROU assets and liabilities on our Consolidated Balance
Sheets for the fiscal years ended April 30, 2021 and 2020 primarily relate to these facility leases.
In September 2019, we terminated an operating
lease for one of our non-manufacturing facilities that was primarily utilized for warehouse space. In connection with the termination
of this lease, we removed the corresponding operating lease right-of-use asset and liability balances from our Consolidated Balance Sheet
and recognized a loss of $0.4 million, which amount is included in loss on lease termination in the Consolidated Statements of Operations
and Comprehensive Income (Loss) for the fiscal year ended April 30, 2020.
Certain of our facility leases require us to pay
property taxes, insurance and common area maintenance. While these payments are not included as part of our lease liabilities, they are
recognized as variable lease cost in the period they are incurred.
The components of lease cost for the fiscal years
ended April 30, 2021 and 2020, were as follows (in thousands):
|
|
April 30,
|
|
|
|
2021
|
|
|
2020
|
|
Operating lease cost
|
|
$
|
3,151
|
|
|
$
|
3,339
|
|
Variable lease cost
|
|
|
676
|
|
|
|
603
|
|
Short-term lease cost
|
|
|
388
|
|
|
|
171
|
|
Total lease cost
|
|
$
|
4,215
|
|
|
$
|
4,113
|
|
Operating lease expense under the prior lease standard
was $2.9 million for the fiscal year ended April 30, 2019.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Supplemental consolidated balance sheet and other
information related to our operating leases as of April 30, 2021 and 2020 were as follows (in thousands, expect weighted average data):
|
|
April 30,
|
|
|
|
2021
|
|
|
2020
|
|
Assets
|
|
|
|
|
|
|
Operating lease ROU assets
|
|
$
|
18,691
|
|
|
$
|
20,100
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current portion of operating lease liabilities
|
|
$
|
1,355
|
|
|
$
|
1,228
|
|
Operating lease liabilities, less current portion
|
|
|
19,889
|
|
|
|
21,244
|
|
Total operating lease liabilities
|
|
$
|
21,244
|
|
|
$
|
22,472
|
|
Weighted average remaining lease term
|
|
|
9.6 years
|
|
|
|
10.5 years
|
|
Weighted average discount rate
|
|
|
8.0%
|
|
|
|
8.0%
|
|
Cash paid for amounts included in the measurement
of lease liabilities for the fiscal years ended April 30, 2021 and 2020 was $3.0 million and $3.1 million, respectively, and is included
in net cash used in operating activities in our Consolidated Statements of Cash Flows.
As of April 30, 2021, the maturities of our operating
lease liabilities, which includes those derived from lease renewal options that we considered it reasonably certain that we would exercise,
were as follows (in thousands):
Fiscal Year
|
|
Total
|
|
2022
|
|
$
|
2,995
|
|
2023
|
|
|
3,010
|
|
2024
|
|
|
3,086
|
|
2025
|
|
|
3,171
|
|
2026
|
|
|
3,250
|
|
Thereafter
|
|
|
15,517
|
|
Total lease payments
|
|
|
31,029
|
|
Less: imputed interest
|
|
|
(9,785
|
)
|
Total operating lease liabilities
|
|
$
|
21,244
|
|
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Note 5 – Stockholders’ Equity
Series E Preferred Stock
Redemption and Dividends
On February 12, 2014, we filed with the Secretary
of State of the State of Delaware a Certificate of Designations of Rights and Preferences (the “Certificate of Designations”)
to designate the 10.50% Series E Convertible Preferred Stock (the “Series E Preferred Stock”). The Certificate of Designations
designated 2,000,000 shares of Series E Preferred Stock out of our 5,000,000 shares of authorized but unissued shares of preferred stock.
We classified the Series E Preferred Stock as permanent equity in accordance with FASB ASC Topic 480, Distinguishing Liabilities from
Equity.
During the fourth quarter of fiscal 2021 and prior
to the redemption discussed below, holders of our Series E Preferred Stock converted an aggregate of 28,168 shares of Series E Preferred
Stock into 33,514 shares of our common stock determined by dividing the liquidation amount of $25.00 per share by the conversion price
of $21.00 per share, rounded down to the nearest whole number.
On April 12, 2021 (the “Redemption
Date”), we redeemed all then current remaining outstanding shares of our Series E Preferred Stock at a per share price equal to
the $25.00 liquidation amount plus accrued and unpaid dividends up to, but excluding, the Redemption Date. In connection with the completed
redemption, we incurred a charge of $3.4 million related to the excess of the redemption value paid upon redemption over the carrying
value of our Series E Preferred Stock which is included in impact of preferred stock redemption in the Consolidated Statements of Operations
and Comprehensive Income (Loss) for the fiscal year ended April 30, 2021. As a result of the completed redemption, our Series E Preferred
Stock is no longer issued and outstanding.
Holders of our Series E Preferred
Stock were entitled to receive cumulative dividends at the rate of 10.50% per annum based on the liquidation preference of $25.00 per
share, or $2.625 per annum per share, and were payable quarterly in cash, on or about the first day of each January, April, July, and
October. In addition, in April 2021, accrued and unpaid dividends of $0.08021 per share was paid to holders of Series E Preferred Stock
in connection with the redemption of our Series E Preferred Stock discussed above. For the fiscal years ended April 30, 2021, 2020 and
2019, we paid aggregate cash dividends of $4.5 million, $4.3 million and $4.3 million, respectively.
Sale
of Common Stock
In December 2020, we completed
an underwritten public offering pursuant to which we sold 3,833,335 shares of our common stock at the public offering price of $9.00 per
share, including 500,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares.
The aggregate gross proceeds we received from the public offering were $34.5 million, before deducting underwriting discounts and commissions
and other offering related expenses of $2.4 million.
During the fiscal years ended
April 30, 2020 and 2019, we had no offerings of our common stock.
Warrants
As of April 30, 2021 and 2020,
we had no warrants issued or outstanding.
Shares of Common Stock Authorized and Reserved
for Future Issuance
As of April 30, 2021, 61,068,579
shares of our common stock were issued and outstanding.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Our common stock outstanding
as of April 30, 2021 excluded the following shares of common stock reserved for future issuance (in thousands):
|
|
Shares
|
|
Stock Incentive Plans
|
|
|
6,290
|
|
Employee Stock Purchase Plan
|
|
|
1,076
|
|
Conversion of Convertible Senior Notes
|
|
|
6,776
|
|
Total common stock reserved for future issuance
|
|
|
14,142
|
|
Note
6 – Equity Compensation Plans
Stock
Incentive Plans
The Avid Bioservices, Inc. 2018
Omnibus Incentive Plan (the “2018 Plan”) is a stockholder-approved plan, which provides, among other things, the ability for
us to grant stock options, restricted stock units and other forms of stock-based awards. The 2018 Plan replaced our 2009, 2010 and 2011
Stock Incentive Plans (the “Prior Plans”). However, any awards outstanding under the Prior Plans as of the 2018 Plan’s
effective date continue to remain subject to and be paid under the applicable Prior Plan, and any shares subject to outstanding awards
under the Prior Plans that subsequently expire, terminate, or are surrendered or forfeited for any reason without issuance of shares automatically
become available for issuance under the 2018 Plan.
In addition, we currently maintain
three expired stock incentive plans referred to as the 2005, 2003 and 2002 Stock Incentive Plans (collectively, the “Expired Plans”).
No future grants of stock-based awards can be issued from the Expired Plans, however, all outstanding awards granted under the Expired
Plans will remain subject to the terms of the Expired Plans until they are exercised, canceled or expired.
The 2018 Plan, the Prior Plans,
and the Expired Plans are collectively referred to as the “Stock Plans”. As of April 30, 2021, we had an aggregate of 6,289,557
shares of our common stock reserved for issuance under the Stock Plans, of which 3,689,364 shares were subject to outstanding stock options
and restricted stock units and 2,600,193 shares were available for future grants of stock-based awards.
Stock Options
Stock options granted under
our Stock Plans are granted at an exercise price not less than the fair market value of our common stock on the date of grant. Stock option
grants to employees generally vest in equal annual installments over a four-year period from the date of grant and stock option grants
to non-employee directors generally vest over a period of one to three years from the date of grant. Stock options granted under the 2018
Plan have a contractual term of seven years; however, the maximum contractual term of any stock option granted under the Stock Plans is
ten years.
The estimated fair value of
stock options is measured at the grant date, using a fair value based method, such as a Black-Scholes option valuation model, and is
amortized as stock-based compensation expense on a straight-line basis over the requisite service period of the award, which is generally
the vesting period. The use of a valuation model requires us to make certain estimates and assumptions with respect to selected model
inputs. The expected volatility is based on the daily historical volatility of our common stock covering the estimated expected term.
The expected term of options granted reflects actual historical exercise activity and assumptions regarding future exercise activity of
unexercised, outstanding options. The risk-free interest rate is based on U.S. Treasury notes with terms within the contractual life of
the option at the time of grant. The expected dividend yield assumption is based on our expectation of future dividend payouts. We have
never declared or paid any cash dividends on our common stock and currently do not anticipate paying such cash dividends.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The fair value of stock options
on the date of grant and the weighted-average assumptions used to estimate the fair value of the stock options using the Black-Scholes
option valuation model were as follows:
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Risk-free interest rate
|
|
|
0.32%
|
|
|
|
1.86%
|
|
|
|
2.81%
|
|
Expected life (in years)
|
|
|
4.69
|
|
|
|
5.06
|
|
|
|
5.57
|
|
Expected volatility
|
|
|
81.42%
|
|
|
|
77.45%
|
|
|
|
76.56%
|
|
Expected dividend yield
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
The following summarizes our stock option transaction
activity for the fiscal year ended April 30, 2021:
|
|
Stock Options
(in thousands)
|
|
|
Grant Date
Weighted
Average Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual
Life (in years)
|
|
|
Aggregate
Intrinsic
Value(1)
(in thousands)
|
|
Outstanding at May 1, 2020
|
|
|
2,896
|
|
|
$
|
6.20
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
914
|
|
|
$
|
7.68
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
(559
|
)
|
|
$
|
6.39
|
|
|
|
|
|
|
|
|
|
Canceled or expired
|
|
|
(121
|
)
|
|
$
|
7.23
|
|
|
|
|
|
|
|
|
|
Outstanding at April 30, 2021
|
|
|
3,130
|
|
|
$
|
6.56
|
|
|
|
5.41
|
|
|
$
|
46,452
|
|
Vested and expected to vest
|
|
|
3,130
|
|
|
$
|
6.56
|
|
|
|
5.41
|
|
|
$
|
46,452
|
|
Exercisable at April 30, 2021
|
|
|
1,458
|
|
|
$
|
6.46
|
|
|
|
4.75
|
|
|
$
|
21,787
|
|
______________
|
(1)
|
Aggregate intrinsic value represents the difference between the exercise price of an option and the closing
market price of our common stock on April 30, 2021, which was $21.41 per share.
|
The weighted-average grant date fair value of options
granted during the fiscal years ended April 30, 2021, 2020 and 2019 was $4.74, $3.74 and $3.30 per share, respectively.
The aggregate intrinsic value
of stock options exercised during the fiscal years ended April 30, 2021, 2020 and 2019 was $3.9 million, $0.7 million and $0.5 million,
respectively. Cash received from stock options exercised during fiscal years ended April 30, 2021, 2020 and 2019 totaled $3.6 million,
$0.9 million and $1.3 million, respectively.
We issue shares of common stock
that are reserved for issuance under the Stock Plans upon the exercise of stock options, and we do not expect to repurchase shares of
common stock from any source to satisfy our obligations under our compensation plans.
As of April 30, 2021, the total
estimated unrecognized compensation cost related to non-vested stock options was $5.5 million. This cost is expected to be recognized
over a weighted average vesting period of 2.55 years based on current assumptions.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Restricted Stock
A restricted stock unit (“RSU”)
represents the right to receive one share of our common stock upon the vesting of such unit. RSUs granted to employees generally vest
in equal annual installments over a four-year period from the date of grant and RSUs granted to non-employee directors generally vest
over a period of one to three years from the date of grant. The estimated fair value of RSUs is based on the closing market value of our
common stock on the date of grant and is amortized as stock-based compensation expense on a straight-line basis over the period of vesting.
The following summarizes our
RSUs transaction activity for the fiscal year ended April 30, 2021:
|
|
Shares
(in thousands)
|
|
|
Weighted Average
Grant Date
Fair Value
|
|
Outstanding at May 1, 2020
|
|
|
307
|
|
|
$
|
5.23
|
|
Granted
|
|
|
356
|
|
|
|
7.29
|
|
Vested
|
|
|
(89
|
)
|
|
|
5.27
|
|
Forfeited
|
|
|
(14
|
)
|
|
|
5.64
|
|
Outstanding at April 30, 2021
|
|
|
560
|
|
|
$
|
6.52
|
|
The weighted-average grant date
fair value of RSUs granted during the fiscal years ended April 30, 2021, 2020 and 2019 was $7.29, $5.91 and $4.28 per share, respectively.
The total fair value of RSUs
vested during the fiscal years ended April 30, 2021 and 2020 was $0.7 million and $0.3 million, respectively. No RSUs vested during the
fiscal year ended April 30, 2019.
As of April 30, 2021, the total
estimated unrecognized compensation cost related to non-vested RSUs was $2.8 million. This cost is expected to be recognized over a weighted
average vesting period of 2.64 years.
Employee
Stock Purchase Plan
The Avid Bioservices, Inc. 2010
Employee Stock Purchase Plan (the “ESPP”) is a stockholder-approved plan under which employees can purchase shares of our
common stock, based on a percentage of their compensation, subject to certain limits. The purchase price per share is equal to the lower
of 85% of the fair market value of our common stock on the first trading day of the six-month offering period or on the last trading day
of the six-month offering period. On October 9, 2019, our stockholders approved an amendment to the ESPP to extend its term for an additional
five years to October 21, 2025 and to change the commencement dates of the six-month offering periods from May 1 and November 1 of each
year to January 1 and July 1 of each year.
During the fiscal years ended
April 30, 2021, 2020 and 2019, a total of 72,409, 47,526 and 75,148 shares of our common stock were purchased, respectively, under the
ESPP at a weighted average purchase price per share of $5.84, $3.94 and $3.44, respectively. As of April 30, 2021, we had 1,076,326 shares
of our common stock reserved for issuance under the ESPP.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The fair value of the shares
purchased under the ESPP was determined using a Black-Scholes option valuation model (see explanation of valuation model inputs above
under “Stock Options”) and is recognized as expense on a straight-line basis over the requisite service period (or six-month
offering period).
The weighted average grant date fair value of purchase
rights under the ESPP during fiscal years ended April 30, 2021, 2020 and 2019 was $3.17, $1.81 and $1.49, respectively, based on the following
weighted-average Black-Scholes option valuation model inputs:
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Risk-free interest rate
|
|
|
0.14%
|
|
|
|
2.08%
|
|
|
|
2.26%
|
|
Expected life (in years)
|
|
|
0.50
|
|
|
|
0.50
|
|
|
|
0.50
|
|
Expected volatility
|
|
|
75.50%
|
|
|
|
56.71%
|
|
|
|
71.10%
|
|
Expected dividend yield
|
|
|
–
|
|
|
|
–
|
|
|
|
–
|
|
Stock-based
Compensation Expense
Stock-based compensation expense
included in our Consolidated Statements of Operations and Comprehensive Income (Loss) was comprised of the following (in thousands):
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Cost of revenues
|
|
$
|
1,404
|
|
|
$
|
922
|
|
|
$
|
474
|
|
Selling, general and administrative expense
|
|
|
2,450
|
|
|
|
1,577
|
|
|
|
1,121
|
|
Total
|
|
$
|
3,854
|
|
|
$
|
2,499
|
|
|
$
|
1,595
|
|
Due to the utilization of our
tax carryforward attributes, no tax benefits have been recognized in the Consolidated Statements of Cash Flows.
Note 7 – Income Taxes
Deferred income tax assets and
liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax
bases of assets and liabilities and are measured using enacted tax rates in effect for the year in which those temporary differences are
expected to be recovered or settled. A valuation allowance is provided for the amount of deferred tax assets that, based on available
evidence, are not expected to be realized.
At April 30, 2021, management
assessed the realizability of deferred tax assets and evaluated the need for a valuation allowance for deferred tax assets on a jurisdictional
basis. This evaluation utilizes the framework contained in ASC 740 wherein management analyzes all positive and negative evidence available
at the balance sheet date to determine whether all or some portion of our deferred tax assets will not be realized. Under this guidance,
a valuation allowance must be established for deferred tax assets when it is more-likely-than-not that the asset will not be realized.
In assessing the realization of our deferred tax assets, management considers all available evidence, both positive and negative.
In concluding on the evaluation,
management placed significant emphasis on guidance in ASC 740, which states that “a cumulative loss in recent years is a significant
piece of negative evidence that is difficult to overcome.” Based upon available evidence, it was concluded on a more-likely-than-not
basis that all deferred tax assets were not realizable as of April 30, 2021. Accordingly, a valuation allowance of $111.4 million
has been recorded to offset our deferred tax asset. The valuation allowance decreased $6.7 million and $1.4 million for the
years ended April 30, 2021 and 2020, respectively.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
We are subject to taxation in
the United States and various states jurisdictions. We have not been notified that we are under audit by the IRS or any state taxing authorities,
however, due to the presence of NOL carryforwards, all of the income tax years remain open for examination in each of these jurisdictions.
At April 30, 2021, we had federal
net operating loss carry forwards of approximately $406.7 million. The federal net operating loss carry forwards generated prior to January
1, 2018 expire in fiscal years 2022 through 2038. The federal net operating loss generated after January 1, 2018 of $19.6 million can
be carried forward indefinitely. Utilization of net operating losses generated subsequent to 2020 are limited to 80% of future taxable
income. We also have California state net operating loss carry forwards of approximately $272.1 million at April 30, 2021, which begin
to expire in fiscal year 2029. We also have other state net operating loss carry forwards of approximately $0.9 million at April 30, 2021,
which begin to expire in fiscal year 2037.
Additionally, the future utilization
of our net operating loss carry forwards to offset future taxable income may be subject to an annual limitation, pursuant to Internal
Revenue Code Section 382, as a result of ownership changes that may have occurred previously or that could occur in the future. A Section
382 analysis has been completed through April 30, 2021, which it was determined that no significant change in ownership had occurred.
However, ownership changes occurring subsequent to April 30, 2021 may impact the utilization of net operating loss carry forwards and
other tax attributes.
At April 30, 2021, we had
$5.8 million and $3.3 million of federal and California research and development credit carry forwards. The California research
credits do not expire and the federal credits begin to expire in in fiscal year 2026.
The provision for income taxes
on our income (loss) from continuing operations for the fiscal years ended April 30, 2021, 2020 and 2019 is comprised of the following
(in thousands):
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Federal income taxes at statutory rate
|
|
$
|
2,355
|
|
|
$
|
(2,197
|
)
|
|
$
|
(1,120
|
)
|
State income taxes, net of valuation allowance
|
|
|
–
|
|
|
|
–
|
|
|
|
(48
|
)
|
Expiration and adjustments of deferred tax assets
|
|
|
451
|
|
|
|
2,588
|
|
|
|
2,507
|
|
Change in federal valuation allowance
|
|
|
2,450
|
|
|
|
(1,664
|
)
|
|
|
(2,480
|
)
|
Stock-based compensation
|
|
|
(240
|
)
|
|
|
1,138
|
|
|
|
1,309
|
|
Research and development credits
|
|
|
(4,958
|
)
|
|
|
–
|
|
|
|
–
|
|
Other, net
|
|
|
(58
|
)
|
|
|
135
|
|
|
|
(452
|
)
|
Income tax expense (benefit)
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
(284
|
)
|
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Deferred income taxes reflect the net effects
of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts for income
tax purposes. Significant components of our deferred tax assets and deferred tax liabilities at April 30, 2021 and 2020 are as follows
(in thousands):
|
|
2021
|
|
|
2020
|
|
Net operating losses
|
|
$
|
109,663
|
|
|
$
|
114,105
|
|
Research and development credits
|
|
|
7,566
|
|
|
|
–
|
|
Stock-based compensation
|
|
|
2,776
|
|
|
|
2,573
|
|
Deferred revenue
|
|
|
1,086
|
|
|
|
810
|
|
Lease liabilities
|
|
|
6,260
|
|
|
|
6,324
|
|
Debt issuance costs
|
|
|
470
|
|
|
|
–
|
|
Accrued liabilities and other
|
|
|
942
|
|
|
|
1,197
|
|
Accrued compensation
|
|
|
2,263
|
|
|
|
–
|
|
Total deferred tax assets
|
|
|
131,026
|
|
|
|
125,009
|
|
Less valuation allowance
|
|
|
(111,388
|
)
|
|
|
(118,137
|
)
|
Total deferred tax assets, net of valuation allowance
|
|
|
19,638
|
|
|
|
6,872
|
|
|
|
|
|
|
|
|
|
|
Deferred tax liabilities:
|
|
|
|
|
|
|
|
|
Fixed assets
|
|
|
(1,404
|
)
|
|
|
(1,216
|
)
|
ROU assets
|
|
|
(5,508
|
)
|
|
|
(5,656
|
)
|
Beneficial conversion feature
|
|
|
(12,726
|
)
|
|
|
–
|
|
Total deferred tax liabilities
|
|
|
(19,638
|
)
|
|
|
(6,872
|
)
|
Net deferred tax assets
|
|
$
|
–
|
|
|
$
|
–
|
|
In accordance with ASC 740, we are required to
recognize the impact of an uncertain tax position in the consolidated financial statements when it is more likely than not the position
will be sustained upon examination by the tax authorities. An uncertain tax position will not be recognized if it has less than a 50%
likelihood of being sustained upon examination by the tax authorities. Unrecognized tax positions at April 30, 2021 and 2020 are as follows
(in thousands):
|
|
2021
|
|
|
2020
|
|
Unrecognized tax positions, beginning of year
|
|
$
|
–
|
|
|
$
|
–
|
|
Gross increase – prior period tax positions
|
|
|
1,600
|
|
|
|
–
|
|
Unrecognized tax positions, end of year
|
|
$
|
1,600
|
|
|
$
|
–
|
|
It is our policy, in accordance with authoritative
guidance, to recognize interest and penalties related to income tax matters in interest expense and interest and other income, net, respectively,
in our consolidated statements of operations and comprehensive income (loss) for the fiscal years ended April 30, 2021 and 2020. If recognized,
none of the unrecognized tax positions would impact our income tax benefit or effective tax rate as long as our net deferred tax assets
remain subject to a full valuation allowance. We do not expect any significant increases or decreases to our unrecognized tax positions
within the next 12 months.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
On March 27, 2020, the Coronavirus Aid, Relief,
and Economic Security Act (“CARES Act”) was signed into law. The CARES Act provides numerous tax provisions and other stimulus
measures, including temporary changes regarding the prior and future utilization of net operating losses, temporary changes to the prior
and future limitations on interest deductions, temporary suspension of certain payment requirements for the employer portion of Social
Security taxes, the creation of certain refundable employee retention credits, and technical corrections from prior tax legislation for
tax depreciation of certain qualified improvement property. The CARES Act did not have a material impact on our income tax provision for
the years ended April 30, 2021, or 2020.
On June 29, 2020, the state of California enacted
Assembly Bill No. 85 (AB 85) suspending California net operating loss utilization and imposing a cap on the amount of business incentive
tax credits companies can utilize, effective for tax years 2020, 2021 and 2022. This bill is not anticipated to materially impact our
income tax provision.
Note 8 – Net Income
(Loss) Per Common Share
Basic net income (loss) per
common share is computed by dividing our net income (loss) attributable to common stockholders by the weighted average number of shares
of common stock outstanding during the period. Diluted net income (loss) per common share is computed by dividing our net income (loss)
attributable to common stockholders by the sum of the weighted average number of shares of common stock outstanding during the period
plus the potential dilutive effects of stock options, unvested RSUs, shares of common stock expected to be issued under our ESPP, warrants,
Series E Preferred Stock, and Convertible Notes outstanding during the period.
Net income attributable to common
stockholders represents our net income less Series E Preferred Stock accumulated dividends and impact of Series E Preferred Stock redemption.
Net loss attributable to common stockholders represents our net loss plus Series E Preferred Stock accumulated dividends. Series E Preferred
Stock accumulated dividends include dividends declared for the period (regardless of whether or not the dividends have been paid) and
dividends accumulated for the period (regardless of whether or not the dividends have been declared).
The potential dilutive effect
of stock options, unvested RSUs, shares of common stock expected to be issued under our ESPP, and warrants outstanding during the period
are calculated in accordance with the treasury stock method, but are excluded if their effect is anti-dilutive. The potential dilutive
effect of our Series E Preferred Stock and Convertible Notes outstanding during the period are calculated using the if-converted method
assuming the conversion of Series E Preferred Stock and Convertible Notes as of the earliest period reported or at the date of issuance,
if later, but are excluded if their effect is anti-dilutive. A reconciliation of the numerators and the denominators of the basic and
dilutive net income (loss) per common share computations are as follows (in thousands, expect per share amounts):
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Numerator
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
11,212
|
|
|
$
|
(10,466
|
)
|
|
$
|
(4,215
|
)
|
Series E preferred stock accumulated dividends
|
|
|
(4,455
|
)
|
|
|
(4,686
|
)
|
|
|
(4,686
|
)
|
Impact of Series E preferred stock redemption
|
|
|
(3,439
|
)
|
|
|
–
|
|
|
|
–
|
|
Net income (loss) attributable to common stockholders
|
|
$
|
3,318
|
|
|
$
|
(15,152
|
)
|
|
$
|
(8,901
|
)
|
Denominator
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic
|
|
|
58,222
|
|
|
|
56,326
|
|
|
|
55,981
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
909
|
|
|
|
–
|
|
|
|
–
|
|
RSUs
|
|
|
272
|
|
|
|
–
|
|
|
|
–
|
|
ESPP
|
|
|
23
|
|
|
|
–
|
|
|
|
–
|
|
Weighted average common shares outstanding, dilutive
|
|
|
59,426
|
|
|
|
56,326
|
|
|
|
55,981
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share, basic:
|
|
$
|
0.06
|
|
|
$
|
(0.27
|
)
|
|
$
|
(0.16
|
)
|
Net income (loss) per share, dilutive
|
|
$
|
0.06
|
|
|
$
|
(0.27
|
)
|
|
$
|
(0.16
|
)
|
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
The following table presents
the potential dilutive securities excluded from the calculation of diluted net income (loss) per share for the periods presented as the
effect of their inclusion would have been anti-dilutive (in thousands):
|
|
Fiscal Year Ended April 30,
|
|
|
|
2021
|
|
|
2020
|
|
|
2019
|
|
Stock options
|
|
|
829
|
|
|
|
2,795
|
|
|
|
2,851
|
|
RSUs
|
|
|
–
|
|
|
|
83
|
|
|
|
68
|
|
ESPP
|
|
|
–
|
|
|
|
7
|
|
|
|
11
|
|
Warrants
|
|
|
–
|
|
|
|
–
|
|
|
|
13
|
|
Series E Preferred Stock
|
|
|
1,864
|
|
|
|
1,979
|
|
|
|
1,979
|
|
Convertible senior notes
|
|
|
928
|
|
|
|
–
|
|
|
|
–
|
|
Total
|
|
|
3,621
|
|
|
|
4,864
|
|
|
|
4,922
|
|
Note 9 – Employee Benefit Plan
We maintain a 401(k) Plan pursuant to section
401(k) of the Internal Revenue Code that allows participating employees to defer a portion of their compensation on a tax deferred basis
up to the maximum amount permitted by the Internal Revenue Code. We match 50% of employee contributions of up to 6% of their annual eligible
compensation. Total expense recognized by us for matching contributions to the 401(k) Plan for the fiscal years ended April 30, 2021,
2020 and 2019 was $0.5 million, $0.5 million and $0.4 million, respectively.
Note 10 – Commitments and Contingencies
In the ordinary course of business,
we are at times subject to various legal proceedings and disputes. We make provisions for liabilities when it is both probable that a
liability has been incurred and the amount of the loss can be reasonably estimated. Such provisions, if any, are reviewed at least
quarterly and adjusted to reflect the impact of any settlement negotiations, judicial and administrative rulings, advice of legal counsel,
and other information and events pertaining to a particular case. We currently are not a party to any legal proceedings, the adverse
outcome of which, in management’s opinion, individually or in the aggregate, would have a material adverse effect on our consolidated
financial condition or results of operations.
In March 2020, the World Health
Organization declared the novel coronavirus disease (“COVID-19”) outbreak a global pandemic and recommended containment and
mitigation measures worldwide. Since the announcement we have been monitoring this closely, and although the COVID-19 pandemic has not
had a significant impact on our operations to date, the ultimate duration and severity of the outbreak and its impact on the economic
environment and our business is highly uncertain. Accordingly, we cannot provide any assurance that the COVID-19 pandemic will not have
a material adverse impact on our operations or future results. The extent to which the COVID-19 pandemic may impact our future business,
strategic initiatives, results of operations and financial condition will depend on future developments, which are highly uncertain and
cannot be predicted, including, but not limited to the duration, spread, severity and resurgence of the COVID-19 pandemic, the effects
of the COVID-19 pandemic on our workforce, customers and vendors and the remedial actions and stimulus measures adopted by local and federal
governments, and the extent to which normal economic and operating conditions can resume.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Note 11 – Sale of
Research and Development Assets
In February 2018, we entered into an Asset Assignment
and Purchase Agreement (the “February 2018 Purchase Agreement”) with OncXerna Therapeutics, Inc. (“OncXerna”)
(formerly known Oncologie, Inc.), pursuant to which we sold to Oncologie the majority of our research and development assets, which included
the assignment of certain exclusive licenses related to our former phosphatidylserine (“PS”)-targeting program, as well as
certain other licenses and assets useful and/or necessary for the potential commercialization of bavituximab.
Pursuant to the February 2018
Purchase Agreement, we received an aggregate of $8.0 million from OncXerna, of which $3.0 million was received in fiscal year 2018 and
$5.0 million was received in fiscal year 2019. We are also eligible to receive up to an additional $95.0 million in the event that OncXerna
achieves certain development, regulatory and commercialization milestones with respect to bavituximab. In addition, we are eligible to
receive royalties on net sales that are upward tiering into the mid-teens in the event that OncXerna commercializes and sells products
utilizing bavituximab or the other transferred assets. As of April 30, 2021, no development, regulatory or commercialization milestones
have been achieved by OncXerna under the February 2018 Purchase Agreement. OncXerna is responsible for all future research, development
and commercialization of bavituximab, including all related intellectual property costs and all other future liabilities and obligations
arising out of the ownership of the transferred assets.
In September 2018, we entered
into a separate Asset Assignment and Purchase Agreement (the “September 2018 Purchase Agreement”) with OncXerna, pursuant
to which we sold to OncXerna our r84 technology, which included the assignment of certain licenses, patents and other assets useful and/or
necessary for the potential commercialization of the r84 technology.
Pursuant to the September 2018
Purchase Agreement, we received $1.0 million from OncXerna, which amount was paid in fiscal year 2019. We are also eligible to receive
up to an additional $21.0 million in the event that OncXerna achieves certain development, regulatory and commercialization milestones
with respect to r84. In addition, we are eligible to receive royalties on net sales ranging from the low to mid-single digits in the event
that OncXerna commercializes and sells products utilizing the r84 technology. As of April 30, 2021, no development, regulatory or commercialization
milestones have been achieved by OncXerna under the September 2018 Purchase Agreement. OncXerna is responsible for all future research,
development and commercialization of r84, including all related intellectual property costs and all other future liabilities and obligations
arising out of the ownership of the transferred assets.
Discontinued Operations
As a result of the sale of our PS-targeting and
r84 technologies, the abandonment of our remaining research and development assets, and the strategic shift in our corporate direction
to focus solely on our CDMO business, the operating results from our former research and development segment have been excluded from continuing
operations and presented as discontinued operations in the accompanying consolidated financial statements for all periods presented. During
the fiscal year ended April 30, 2019, we recorded a gain of $1.0 million upon the completion of the February 2018 Purchase Agreement,
which amount is included in income from discontinued operations, net of tax, in the accompanying Consolidated Statements of Operations
and Comprehensive Income (Loss) for the fiscal year ended April 30, 2019. The results of operations from discontinued operations presented
below include certain allocations that management believes fairly reflect the utilization of services provided to the former research
and development segment. The allocations do not include amounts related to general corporate administrative expenses or interest expense.
Therefore, these results of operations do not necessarily reflect what the results of operations would have been had the former research
and development segment operated as a stand-alone segment.
avid bioservices, inc.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
There were no operating results from discontinued
operations for the fiscal years ended April 30, 2021 and 2020.
The following table summarizes the results of
discontinued operations for the fiscal year ended April 30, 2019 (in thousands):
Other income
|
|
$
|
125
|
|
Gain on sale of research and development assets before income taxes
|
|
|
1,000
|
|
Income tax expense
|
|
|
284
|
|
Income from discontinued operations, net of tax
|
|
$
|
841
|
|
Note 12 – Selected Quarterly Financial Data
(Unaudited)
The following is a summary of
our unaudited quarterly results for each of the two most recent fiscal years (in thousands, except per share amounts):
|
|
Fiscal Year Ended April 30, 2021
|
|
|
|
|
First
Quarter
|
|
|
|
Second
Quarter
|
|
|
|
Third
Quarter
|
|
|
|
Fourth
Quarter
|
|
Revenues
|
|
$
|
25,392
|
|
|
$
|
21,064
|
|
|
$
|
21,806
|
|
|
$
|
27,606
|
|
Gross profit
|
|
$
|
8,544
|
|
|
$
|
6,418
|
|
|
$
|
6,202
|
|
|
$
|
8,143
|
|
Total operating expenses
|
|
$
|
3,825
|
|
|
$
|
4,166
|
|
|
$
|
4,018
|
|
|
$
|
5,055
|
|
Interest and other income (expense), net (1)
|
|
$
|
11
|
|
|
$
|
32
|
|
|
$
|
23
|
|
|
$
|
(1,097
|
)
|
Net income
|
|
$
|
4,730
|
|
|
$
|
2,284
|
|
|
$
|
2,207
|
|
|
$
|
1,991
|
|
Series E preferred stock accumulated dividends
|
|
$
|
(1,442
|
)
|
|
$
|
(1,442
|
)
|
|
$
|
(1,442
|
)
|
|
$
|
(1,211
|
)
|
Impact of Series E preferred stock redemption (2)
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
–
|
|
|
$
|
(3,439
|
)
|
Net income (loss) attributable to common stockholders
|
|
$
|
3,288
|
|
|
$
|
842
|
|
|
$
|
765
|
|
|
$
|
(2,659
|
)
|
Basic and diluted net income (loss) per common share attributable to common stockholders (3)
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
|
$
|
0.01
|
|
|
$
|
(0.04
|
)
|
|
|
Fiscal Year Ended April 30, 2020
|
|
|
|
|
First
Quarter
|
|
|
|
Second
Quarter
|
|
|
|
Third
Quarter
|
|
|
|
Fourth
Quarter
|
|
Revenues
|
|
$
|
15,254
|
|
|
$
|
18,313
|
|
|
$
|
13,585
|
|
|
$
|
12,550
|
|
Gross profit (loss)
|
|
$
|
1,086
|
|
|
$
|
3,360
|
|
|
$
|
785
|
|
|
$
|
(1,299
|
)
|
Total operating expenses (4)
|
|
$
|
4,459
|
|
|
$
|
3,889
|
|
|
$
|
2,996
|
|
|
$
|
3,528
|
|
Net loss
|
|
$
|
(3,164
|
)
|
|
$
|
(430
|
)
|
|
$
|
(2,104
|
)
|
|
$
|
(4,768
|
)
|
Series E preferred stock accumulated dividends
|
|
$
|
(1,442
|
)
|
|
$
|
(1,442
|
)
|
|
$
|
(1,442
|
)
|
|
$
|
(1,442
|
)
|
Net loss attributable to common stockholders
|
|
$
|
(4,606
|
)
|
|
$
|
(1,872
|
)
|
|
$
|
(3,546
|
)
|
|
$
|
(6,210
|
)
|
Basic and diluted net loss per common share attributable to common stockholders (3)
|
|
$
|
(0.08
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.06
|
)
|
|
$
|
(0.11
|
)
|
________________
|
(1)
|
Interest
and other income (expense), net, for the fourth quarter ended April 30, 2021 includes aggregate
interest expense of $1.2 million related to our Convertible Notes issued in March 2021 (Note
3).
|
|
(2)
|
On April 12, 2021 we redeemed our outstanding
shares of Series E Preferred Stock at a per share price equal to the $25.00 liquidation amount plus accrued
and unpaid dividends up to, but excluding, the redemption date (Note 5). In connection with the completed
redemption, we incurred a charge of $3.4 million related to the excess of the redemption value paid upon redemption
over the carrying value of our Series E Preferred Stock.
|
|
(3)
|
Basic
and diluted net income (loss) per common share attributable to common stockholders was the
same for all periods presented.
|
|
(4)
|
Total
operating expenses for the second quarter of fiscal year ended April 30, 2020 includes a
loss on lease termination of $0.4 million (Note 4).
|