UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 10-Q
ý
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the
quarterly period ended June 30, 2020
OR
o
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 001-33133
YIELD10
BIOSCIENCE, INC.
|
|
|
|
|
Delaware
|
|
04-3158289
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|
(State or other jurisdiction
of
incorporation or
organization)
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|
(I.R.S. Employer
Identification
No.)
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|
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|
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19
Presidential Way
Woburn,
MA
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01801
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|
(Address of principal
executive offices)
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|
(Zip Code)
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(617)
583-1700
(Registrant’s
telephone number, including area code)
(Former name,
former address and former fiscal year, if changed since last
report.)
Securities
registered pursuant to Section 12(b) of the Act:
|
|
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Title of each
class
|
Trading
Symbol(s)
|
Name of each exchange on
which registered
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|
Common Stock
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YTEN
|
The Nasdaq Capital
Market
|
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 ý No o
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 ý No o
Indicate by check
mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, a 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.
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|
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|
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|
Large accelerated
filer
|
o
|
Accelerated
filer
|
o
|
|
Non-accelerated
filer
|
ý
|
Smaller reporting
company
|
ý
|
|
Emerging growth
company
|
o
|
|
|
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. o
Indicate by check
mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes o No ý
The number of
shares outstanding of the registrant’s common stock as of August 7,
2020 was 1,976,487.
Yield10
Bioscience, Inc.
Form 10-Q
For the
Quarter Ended June 30, 2020
Table of
Contents
PART I.
FINANCIAL INFORMATION
ITEM
1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
YIELD10
BIOSCIENCE, INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS
UNAUDITED
(in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Assets
|
|
|
|
|
Current Assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
|
3,290
|
|
|
$
|
5,417
|
|
|
Short-term
investments
|
5,211
|
|
|
5,700
|
|
|
Accounts
receivable
|
13
|
|
|
72
|
|
|
Unbilled
receivables
|
59
|
|
|
20
|
|
|
Prepaid expenses and other
current assets
|
417
|
|
|
475
|
|
|
Total current
assets
|
8,990
|
|
|
11,684
|
|
|
Restricted cash
|
254
|
|
|
332
|
|
|
Property and equipment,
net
|
978
|
|
|
1,243
|
|
|
Right-of-use
assets
|
2,879
|
|
|
3,141
|
|
|
Other assets
|
265
|
|
|
318
|
|
|
Total assets
|
$
|
13,366
|
|
|
$
|
16,718
|
|
|
|
|
|
|
|
Liabilities,
Convertible Preferred Stock and Stockholders’ Equity
(Deficit)
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts payable
|
$
|
150
|
|
|
$
|
279
|
|
|
Accrued expenses
|
882
|
|
|
1,326
|
|
|
Lease liabilities
|
430
|
|
|
602
|
|
|
Total current
liabilities
|
1,462
|
|
|
2,207
|
|
|
Lease liabilities, net of
current portion
|
3,400
|
|
|
3,619
|
|
|
Warrant liability
|
—
|
|
|
14,977
|
|
|
Other long-term
liabilities
|
17
|
|
|
—
|
|
|
Total liabilities
|
4,879
|
|
|
20,803
|
|
|
Commitments and contingencies
(Note 10)
|
|
|
|
|
Series B Convertible Preferred
Stock ($0.01 par value per share); 0 and 5,750 shares issued and
outstanding at June 30, 2020 and December 31, 2019,
respectively
|
—
|
|
|
—
|
|
|
Stockholders’ Equity
(Deficit):
|
|
|
|
|
Series A Convertible Preferred
Stock ($0.01 par value per share); 0 shares and 796 shares issued
and outstanding at June 30, 2020 and December 31, 2019,
respectively
|
—
|
|
|
—
|
|
|
Common stock ($0.01 par value
per share); 60,000,000 shares authorized at June 30, 2020 and
December 31, 2019; 1,972,798 and 933,423 shares issued and
outstanding at June 30, 2020 and December 31, 2019,
respectively
|
20
|
|
|
9
|
|
|
Additional paid-in
capital
|
378,924
|
|
|
360,926
|
|
|
Accumulated other
comprehensive loss
|
(167
|
)
|
|
(126
|
)
|
|
Accumulated
deficit
|
(370,290
|
)
|
|
(364,894
|
)
|
|
Total stockholders’ equity
(deficit)
|
8,487
|
|
|
(4,085
|
)
|
|
Total liabilities, convertible
preferred stock and stockholders’ equity (deficit)
|
$
|
13,366
|
|
|
$
|
16,718
|
|
The
accompanying notes are an integral part of these interim unaudited
condensed consolidated financial statements
YIELD10
BIOSCIENCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
(in
thousands, except share and per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June
30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Grant revenue
|
$
|
221
|
|
|
$
|
318
|
|
|
$
|
400
|
|
|
$
|
442
|
|
|
Total revenue
|
221
|
|
|
318
|
|
|
400
|
|
|
442
|
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Research and
development
|
1,179
|
|
|
1,191
|
|
|
2,639
|
|
|
2,414
|
|
|
General and
administrative
|
1,179
|
|
|
1,025
|
|
|
2,566
|
|
|
2,211
|
|
|
Total expenses
|
2,358
|
|
|
2,216
|
|
|
5,205
|
|
|
4,625
|
|
|
Loss from
operations
|
(2,137
|
)
|
|
(1,898
|
)
|
|
(4,805
|
)
|
|
(4,183
|
)
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Change in fair value of
warrants
|
—
|
|
|
—
|
|
|
(957
|
)
|
|
—
|
|
|
Loan forgiveness income (Note
9)
|
333
|
|
|
—
|
|
|
333
|
|
|
—
|
|
|
Other income (expense),
net
|
15
|
|
|
27
|
|
|
48
|
|
|
52
|
|
|
Total other income
(expense)
|
348
|
|
|
27
|
|
|
(576
|
)
|
|
52
|
|
|
Net loss before income tax
expense
|
(1,789
|
)
|
|
(1,871
|
)
|
|
(5,381
|
)
|
|
(4,131
|
)
|
|
Income tax
expense
|
(7
|
)
|
|
—
|
|
|
(15
|
)
|
|
—
|
|
|
Net loss
|
$
|
(1,796
|
)
|
|
$
|
(1,871
|
)
|
|
$
|
(5,396
|
)
|
|
$
|
(4,131
|
)
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per
share
|
$
|
(0.92
|
)
|
|
$
|
(5.99
|
)
|
|
$
|
(2.95
|
)
|
|
$
|
(14.36
|
)
|
|
|
|
|
|
|
|
|
|
|
Number of shares used in per
share calculations:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
1,957,927
|
|
|
312,342
|
|
|
1,827,526
|
|
|
287,592
|
|
The
accompanying notes are an integral part of these interim unaudited
condensed consolidated financial statements
YIELD10
BIOSCIENCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
UNAUDITED
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Net loss:
|
$
|
(1,796
|
)
|
|
$
|
(1,871
|
)
|
$
|
(5,396
|
)
|
|
$
|
(4,131
|
)
|
|
Other comprehensive
loss
|
|
|
|
|
|
|
|
Change in unrealized gain
(loss) on investments
|
(15
|
)
|
|
—
|
|
7
|
|
|
—
|
|
|
Change in foreign currency
translation adjustment
|
7
|
|
|
(3
|
)
|
(48
|
)
|
|
(8
|
)
|
|
Total other comprehensive
loss
|
(8
|
)
|
|
(3
|
)
|
(41
|
)
|
|
(8
|
)
|
|
Comprehensive
loss
|
$
|
(1,804
|
)
|
|
$
|
(1,874
|
)
|
$
|
(5,437
|
)
|
|
$
|
(4,139
|
)
|
The
accompanying notes are an integral part of these interim unaudited
condensed consolidated financial statements
YIELD10
BIOSCIENCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
|
Cash flows
from operating activities
|
|
|
|
|
Net loss
|
$
|
(5,396
|
)
|
|
$
|
(4,131
|
)
|
|
Adjustments to reconcile net
loss to cash used in operating activities:
|
|
|
|
|
Depreciation
|
91
|
|
|
100
|
|
|
Change in fair value of
warrants
|
957
|
|
|
—
|
|
|
Loss on disposal of fixed
assets
|
206
|
|
|
—
|
|
|
Charge for 401(k) company
common stock match
|
66
|
|
|
49
|
|
|
Stock-based
compensation
|
297
|
|
|
275
|
|
|
Non-cash lease
expense
|
262
|
|
|
299
|
|
|
Deferred tax
provision
|
27
|
|
|
—
|
|
|
Changes in operating assets
and liabilities:
|
|
|
|
|
Accounts
receivable
|
59
|
|
|
(54
|
)
|
|
Unbilled
receivables
|
(39
|
)
|
|
(37
|
)
|
|
Prepaid expenses and other
assets
|
84
|
|
|
(10
|
)
|
|
Accounts payable
|
(129
|
)
|
|
(62
|
)
|
|
Accrued expenses
|
(390
|
)
|
|
(102
|
)
|
|
Lease liabilities
|
(391
|
)
|
|
(404
|
)
|
|
Other liabilities
|
17
|
|
|
—
|
|
|
Net cash used for operating
activities
|
(4,279
|
)
|
|
(4,077
|
)
|
|
|
|
|
|
|
Cash flows
from investing activities
|
|
|
|
|
Purchase of property and
equipment
|
(42
|
)
|
|
(13
|
)
|
|
Proceeds from sale of property
and equipment
|
10
|
|
|
—
|
|
|
Purchase of short-term
investments
|
(503
|
)
|
|
(998
|
)
|
|
Proceeds from the sale and
maturity of short-term investments
|
999
|
|
|
2,746
|
|
|
Net cash provided by investing
activities
|
464
|
|
|
1,735
|
|
|
|
|
|
|
|
Cash flows
from financing activities
|
|
|
|
|
Proceeds from warrants
exercised (Note 12)
|
1,658
|
|
|
—
|
|
|
Proceeds from registered
direct offering, net of issuance costs
|
—
|
|
|
2,583
|
|
|
Taxes paid on employees'
behalf related to vesting of stock awards
|
—
|
|
|
(4
|
)
|
|
Net cash provided by financing
activities
|
1,658
|
|
|
2,579
|
|
|
|
|
|
|
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(48
|
)
|
|
(8
|
)
|
|
|
|
|
|
|
Net (decrease) increase in
cash, cash equivalents and restricted cash
|
(2,205
|
)
|
|
229
|
|
|
Cash, cash equivalents and
restricted cash at beginning of period
|
5,749
|
|
|
3,355
|
|
|
Cash, cash equivalents and
restricted cash at end of period
|
$
|
3,544
|
|
|
$
|
3,584
|
|
The
accompanying notes are an integral part of these interim unaudited
condensed consolidated financial statements
YIELD10
BIOSCIENCE, INC.
CONDENSED
CONSOLIDATED STATEMENTS OF SERIES B CONVERTIBLE STOCK AND
STOCKHOLDERS' (DEFICIT) EQUITY
UNAUDITED
(In
thousands, except share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2020
|
|
|
Series B
Convertible Preferred Stock
|
Series A
Convertible Preferred Stock
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par
Value
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders' Equity
|
|
Balance,
March 31, 2020
|
—
|
|
|
$
|
—
|
|
296
|
|
|
$
|
—
|
|
|
1,923,184
|
|
|
$
|
19
|
|
|
$
|
377,963
|
|
|
$
|
(159
|
)
|
|
$
|
(368,494
|
)
|
|
$
|
9,329
|
|
|
Non-cash stock-based
compensation expense
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
194
|
|
|
—
|
|
|
—
|
|
|
194
|
|
|
Issuance of common stock for
401(k) match
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
10,114
|
|
|
—
|
|
|
38
|
|
|
—
|
|
|
—
|
|
|
38
|
|
|
Issuance of common stock for
warrant exercise (Note 12)
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
2,500
|
|
|
—
|
|
|
730
|
|
|
|
|
|
|
730
|
|
|
Issuance of common stock upon
conversion of Series A Convertible Preferred Stock
|
—
|
|
|
—
|
|
(296
|
)
|
|
—
|
|
|
37,000
|
|
|
1
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Effect of foreign currency
translation and unrealized loss on investments
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
Net loss
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,796
|
)
|
|
(1,796
|
)
|
|
Balance,
June 30, 2020
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
1,972,798
|
|
|
$
|
20
|
|
|
$
|
378,924
|
|
|
$
|
(167
|
)
|
|
$
|
(370,290
|
)
|
|
$
|
8,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30, 2019
|
|
|
Series B
Convertible Preferred Stock
|
Series A
Convertible Preferred Stock
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par
Value
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
other Comprehensive Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders' Equity
|
|
Balance,
March 31, 2019
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
311,690
|
|
|
$
|
3
|
|
|
$
|
360,505
|
|
|
$
|
(115
|
)
|
|
$
|
(354,198
|
)
|
|
$
|
6,195
|
|
|
Non-cash stock-based
compensation expense
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
—
|
|
|
—
|
|
|
113
|
|
|
Issuance of common stock for
401(k) match
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
546
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
Issuance of common stock for
restricted unit release, net of 2,449 shares withheld for employee
taxes
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Effect of foreign currency
translation and unrealized loss on investments
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
Net loss
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,871
|
)
|
|
(1,871
|
)
|
|
Balance,
June 30, 2019
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
312,352
|
|
|
$
|
3
|
|
|
$
|
360,638
|
|
|
$
|
(118
|
)
|
|
$
|
(356,069
|
)
|
|
$
|
4,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30, 2020
|
|
|
Series B
Convertible Preferred Stock
|
Series A
Convertible Preferred Stock
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par
Value
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
Other Comprehensive Income (Loss)
|
|
Accumulated
Deficit
|
|
Total
Stockholders' (Deficit) Equity
|
|
Balance,
December 31, 2019
|
5,750
|
|
|
$
|
—
|
|
796
|
|
|
$
|
—
|
|
|
933,423
|
|
|
$
|
9
|
|
|
$
|
360,926
|
|
|
$
|
(126
|
)
|
|
$
|
(364,894
|
)
|
|
$
|
(4,085
|
)
|
|
Non-cash stock-based
compensation expense
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
354
|
|
|
—
|
|
|
—
|
|
|
354
|
|
|
Issuance of common stock for
401(k) match
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
13,829
|
|
|
—
|
|
|
63
|
|
|
—
|
|
|
—
|
|
|
63
|
|
|
Issuance of common stock for
warrant exercise
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
207,296
|
|
|
2
|
|
|
1,656
|
|
|
—
|
|
|
—
|
|
|
1,658
|
|
|
Issuance of common stock upon
conversion of Series A Convertible Preferred Stock
|
—
|
|
|
—
|
|
(796
|
)
|
|
—
|
|
|
99,500
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Issuance of common stock upon
conversion of Series B Convertible Preferred Stock
|
(5,750
|
)
|
|
—
|
|
—
|
|
|
—
|
|
|
718,750
|
|
|
7
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Reclassification of warrant
liability to equity
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,934
|
|
|
—
|
|
|
—
|
|
|
15,934
|
|
|
Effect of foreign currency
translation and unrealized loss on investments
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
(41
|
)
|
|
Net loss
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,396
|
)
|
|
(5,396
|
)
|
|
Balance,
June 30, 2020
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
1,972,798
|
|
|
$
|
20
|
|
|
$
|
378,924
|
|
|
$
|
(167
|
)
|
|
$
|
(370,290
|
)
|
|
$
|
8,487
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30, 2019
|
|
|
Series B
Convertible Preferred Stock
|
Series A
Convertible Preferred Stock
|
|
Common
Stock
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
Par
Value
|
Shares
|
|
Par
Value
|
|
Shares
|
|
Par
Value
|
|
Additional
Paid-In Capital
|
|
Accumulated
other Comprehensive Loss
|
|
Accumulated
Deficit
|
|
Total
Stockholders' Equity
|
|
Balance,
December 31, 2018
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
250,631
|
|
|
$
|
3
|
|
|
$
|
357,743
|
|
|
$
|
(110
|
)
|
|
$
|
(351,938
|
)
|
|
$
|
5,698
|
|
|
Non-cash stock-based
compensation expense
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
275
|
|
|
—
|
|
|
—
|
|
|
275
|
|
|
Issuance of common stock for
401(k) match
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
1,064
|
|
|
—
|
|
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
Issuance of stock for
restricted stock unit vesting, net of 2,449 shares withheld for
employee taxes
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
116
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
Issuance of common stock for
registered direct offering , net of $349 offering
costs
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
60,541
|
|
|
—
|
|
|
2,583
|
|
|
—
|
|
|
—
|
|
|
2,583
|
|
|
Effect of foreign currency
translation and unrealized loss on investments
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
|
Net loss
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,131
|
)
|
|
(4,131
|
)
|
|
Balance,
June 30, 2019
|
—
|
|
|
$
|
—
|
|
—
|
|
|
$
|
—
|
|
|
312,352
|
|
|
$
|
3
|
|
|
$
|
360,638
|
|
|
$
|
(118
|
)
|
|
$
|
(356,069
|
)
|
|
$
|
4,454
|
|
The
accompanying notes are an integral part of these interim unaudited
condensed consolidated financial statements
YIELD10
BIOSCIENCE, INC.
NOTES TO THE
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
(All dollar
amounts, except share and per share amounts, are stated in
thousands)
1. NATURE OF
BUSINESS AND BASIS OF PRESENTATION
Yield10
Bioscience, Inc. is an agricultural bioscience company that uses
its "Trait Factory" and the Camelina oilseed “Fast Field Testing”
system to develop high value seed traits for the agriculture and
food industries. The Company's goal is to efficiently develop
superior gene traits for the major crops including corn, soybean,
canola, and other crops to enable step-change increases in crop
yield of at least 10-20 percent. The “Trait Factory” encompasses
discovery of gene targets using the GRAIN (“Gene
Ranking
Artificial
Intelligence
Network”)
big data mining platform, deployment of trait gene targets in the
oilseed Camelina and generation of field performance data. The
“Trait Factory” enables two complementary commercial opportunities
with different paths to market. The first is trait licensing to the
major seed companies for corn, soybean, canola and other crops.
Data from the Company's trait field testing in Camelina has enabled
Yield10 to establish research license agreements with leading seed
companies including Bayer, Forage Genetics and Simplot. These
companies are progressing the development of Yield10 traits in
soybean, forage sorghum, and potato, respectively. The second is to
improve the performance and value of Camelina as a platform to
develop a commercial crop product business producing nutritional
oils and PHA biomaterials. Using this approach, Yield10 can
leverage the resources of the major seed companies to efficiently
develop superior gene traits for the major crops and focus internal
resources on trait gene discovery and the commercial development of
Camelina products.
The accompanying
unaudited condensed consolidated financial statements are presented
in U.S. dollars, are unaudited, and have been prepared by Yield10
in accordance with accounting principles generally accepted in the
United States of America ("GAAP") and pursuant to the
rules and regulations of the U.S. Securities and Exchange
Commission ("SEC"). Certain information and footnote disclosures
normally included in the Company’s annual consolidated financial
statements have been condensed or omitted. The year-end condensed
consolidated balance sheet data was derived from audited financial
statements but does not include all disclosures required by GAAP.
The condensed consolidated financial statements, in the opinion of
management, reflect all adjustments (consisting only of normal
recurring adjustments) necessary for fair statements of the
financial position and results of operations for the interim
periods ended June 30, 2020
and
June 30,
2019.
The results of
operations for the interim periods are not necessarily indicative
of the results of operations to be expected for any future period
or the entire fiscal year. These interim unaudited condensed
consolidated financial statements should be read in conjunction
with the audited consolidated financial statements for the year
ended December 31,
2019,
which are contained in the Company’s
Annual Report on
Form 10-K filed with the SEC on
March 25, 2020.
The accompanying
condensed consolidated financial statements have been prepared on a
basis which assumes that the Company will continue as a going
concern and which contemplates the realization of assets and
satisfaction of liabilities and commitments in the normal course of
business. Except for a single year, the Company has recorded losses
since its initial founding, including the three and six months
ended June 30,
2020.
As of
June 30,
2020, the
Company held unrestricted cash, cash equivalents and short-term
investments of $8,501. The Company follows the
guidance of Accounting Standards Codification ("ASC") Topic
205-40, Presentation
of Financial Statements-Going Concern, in order to determine whether
there is substantial doubt about its ability to continue as a going
concern for one year after the date its financial statements are
issued. Based on its current cash forecast, management expects that
the Company's present capital resources will be sufficient to fund
its planned operations and meet its obligations into the second
quarter of 2021. This forecast of cash resources is forward-looking
information that involves risks and uncertainties, and the actual
amount of expenses could vary materially and adversely as a result
of a number of factors. The Company's ability to continue
operations after its current cash resources are exhausted depends
on its ability to obtain additional financing through, among other
sources, public or private equity financing, secured or unsecured
debt financing, equity or debt bridge financing, warrant holders'
ability and willingness to exercise the Company's outstanding
warrants, additional government grants or collaborative
arrangements with third parties, as to which no assurance can be
given. Management does not know whether additional financing will
be available on terms favorable or acceptable to the Company when
needed, if at all. If adequate additional funds are not available
when required, management may be forced to curtail the Company's
research efforts, explore strategic alternatives and/or wind down
its operations and pursue options for liquidating its remaining
assets, including intellectual property. Based on its cash
forecast, management has determined that the Company's present
capital resources will not be sufficient to fund its planned
operations for the twelve months from the date that
these interim financial statements are filed, which raises
substantial doubt about the Company's ability to continue as a
going concern.
If the Company
issues equity or debt securities to raise additional funds, (i) the
Company may incur fees associated with such issuance, (ii) its
existing stockholders may experience dilution from the issuance of
new equity securities, (iii) the
Company may incur
ongoing interest expense and be required to grant a security
interest in Company assets in connection with any debt issuance,
and (iv) the new equity or debt securities may have rights,
preferences and privileges senior to those of the Company’s
existing stockholders. In addition, utilization of the Company’s
net operating loss and research and development credit
carryforwards may be subject to significant annual limitations
under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Internal Revenue Code") due to ownership changes resulting
from equity financing transactions. If the Company raises
additional funds through collaboration, licensing or other similar
arrangements, it may be necessary to relinquish valuable rights to
its potential products or proprietary technologies or grant
licenses on terms that are not favorable to the
Company.
2.
ACCOUNTING POLICIES
Principles
of Consolidation
The Company's
unaudited condensed consolidated financial statements are prepared
in accordance with accounting principles generally accepted in the
United States of America. The unaudited condensed consolidated
financial statements include the accounts of the Company and its
wholly owned subsidiaries. All intercompany transactions were
eliminated, including transactions with its Canadian subsidiary,
Metabolix Oilseeds, Inc.
Reverse
Stock Split
On January 15,
2020, the Company effected a 1-for-40 reverse stock split of its
common stock. Unless otherwise indicated, all share amounts, per
share data, share prices, and conversion rates set forth in these
notes and the accompanying financial statements have, where
applicable, been adjusted retroactively to reflect this reverse
stock split.
Cash, Cash
Equivalents and Restricted Cash
The Company
considers all highly liquid investments purchased with an original
maturity date of ninety days or less at the date of purchase to be
cash equivalents.
The following
table provides a reconciliation of cash, cash equivalents and
restricted cash reported within the Company's Unaudited Condensed
Consolidated Balance Sheets included herein:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Cash and cash
equivalents
|
$
|
3,290
|
|
|
$
|
5,417
|
|
|
Restricted cash
|
254
|
|
|
332
|
|
|
Total cash, cash equivalents
and restricted cash
|
$
|
3,544
|
|
|
$
|
5,749
|
|
Amounts included
in restricted cash represent those required to be set aside by
contractual agreement. Restricted cash of $254
at
June 30,
2020 and $332 at December 31, 2019
consists
primarily of funds held in connection with the Company's lease
agreement for its Woburn, Massachusetts facility.
Investments
The Company
considers all investments purchased with an original maturity date
of more than ninety days at the date of purchase and a maturity
date of one year or less at the balance sheet date to be short-term
investments. All other investments are classified as
long-term.
Other-than-temporary
impairments of equity investments are recognized in the Company's
statements of operations if the Company has experienced a credit
loss and has the intent to sell the investment or if it is more
likely than not that the Company will be required to sell the
investment before recovery of the amortized cost basis. Realized
gains and losses, dividends, interest income and declines in value
judged to be other-than-temporary credit losses are included in
other income (expense). Any premium or discount arising at purchase
is amortized and/or accreted to interest income.
Use of
Estimates
The preparation
of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts
of assets and liabilities and the disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of grant revenue and expenses during the reporting
periods. Actual results could differ from those
estimates.
Foreign
Currency Translation
Foreign
denominated assets and liabilities of the Company's wholly owned
foreign subsidiaries are translated into U.S. dollars at the
prevailing exchange rates in effect on the balance sheet date.
Revenues and expenses are translated at average exchange rates
prevailing during the period. Any resulting translation gains or
losses are recorded in accumulated other comprehensive income
(loss) in the consolidated balance sheet. When the Company
dissolves, sells or substantially sells all of the assets of a
consolidated foreign subsidiary, the cumulative translation gain or
loss of that subsidiary is released from comprehensive income
(loss) and included within its consolidated statement of operations
during the fiscal period when the dissolution or sale
occurs.
Comprehensive
Income (Loss)
Comprehensive
income (loss) is comprised of net income (loss) and certain changes
in stockholders' equity that are excluded from net income (loss).
The Company includes unrealized gains and losses on debt securities
and foreign currency translation adjustments in other comprehensive
income (loss).
Income
Taxes
The Company
accounts for income taxes using the asset and liability method,
which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that
have been recognized in the consolidated financial statements or in
the Company's tax returns. Under this method, deferred tax assets
and liabilities are determined based on the difference between the
financial statement and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences
are expected to reverse. A valuation allowance is provided to
reduce the deferred tax asset to a level which, more likely than
not, will be realized.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations
of credit risk primarily consist of cash, cash equivalents and
investments. The Company has historically invested its cash in
highly rated money market funds, corporate debt, federal agency
notes and U.S. treasury notes. Investments, when purchased, are
acquired in accordance with the Company’s investment policy which
establishes a concentration limit per issuer.
At
June 30,
2020, 100% of the Company's total
accounts and unbilled receivables are due from U.S. and Canadian
government grants.
Fair Value
Measurements
The carrying
amounts of the Company's financial instruments as of
June 30,
2020 and December 31,
2019,
which include cash equivalents, accounts receivable, unbilled
receivables, accounts payable, and accrued expenses, approximate
their fair values due to the short-term nature of these
instruments. See Note 5 for further discussion on fair value
measurements.
Segment
Information
The accounting
guidance for segment reporting establishes standards for reporting
information on operating segments in financial statements. The
Company is an agricultural bioscience company operating in
one
segment, which is
the development of new technologies to enable step-change increases
in crop yield to enhance global food security and production of
specialty oils and niche crops. The Company's chief operating
decision-maker does not manage any part of the Company separately,
and the allocation of resources and assessment of performance are
based on the Company's consolidated operating results.
Property and
Equipment
Property and
equipment are stated at cost less accumulated depreciation. Repairs
and maintenance are charged to operating expense as incurred.
Depreciation is computed using the straight-line method over the
estimated useful lives of the assets once they are placed in
service as follows:
|
|
|
|
|
Asset Description
|
|
Estimated
Useful Life (years)
|
|
Equipment
|
|
3
|
|
Furniture and
fixtures
|
|
5
|
|
Software
|
|
3
|
|
Leasehold
improvements
|
|
Shorter of useful life or
term of lease
|
Right-of-Use
Assets
The Company’s
right-of-use assets consist of leased assets recognized in
accordance with ASC 842, Leases,
("ASC
842") which requires lessees
to recognize a lease liability and a corresponding lease asset for
long-term lease contracts. Right-of-use assets represent the
Company’s right to use an underlying asset for the lease term and
lease liabilities represent its obligation to make lease payments
arising from the lease, both of which are recognized based on the
present value of the future minimum lease payments over the lease
term at the commencement date. The Company uses its incremental
borrowing rate in calculating the present value of future lease
payments when interest rates are not implicit in the lease. Leases
with terms of 12 months or less at inception are expensed as costs
are incurred and not capitalized under ASC 842.
Impairment
of Long-Lived Assets
Long-lived
assets, such as property and equipment, are reviewed for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Accounting
guidance further requires that companies recognize an impairment
loss only if the carrying amount of a long-lived asset is not
recoverable based on its undiscounted future cash flows and measure
an impairment loss as the difference between the carrying amount
and fair value of the asset.
Grant
Revenue
The Company's
source of continuing revenue is from its government research
grants, in which it serves as either the primary contractor or as a
subcontractor. These grants are considered an ongoing major and
central operation of the Company's business. Revenue is earned as
research expenses related to the grants are incurred. Revenue
earned on government grants, but not yet invoiced as of the balance
sheet date, are recorded as unbilled receivables in the
accompanying consolidated balance sheets at June 30, 2020
and
December 31,
2019.
Funds received from government grants in advance of work being
performed, if any, are recorded as deferred revenue until
earned.
Research and
Development
All costs
associated with internal research and development are expensed as
incurred. Research and development expenses include, among others,
direct costs for salaries, employee benefits, subcontractors,
product trials, facility related expenses, depreciation, and
stock-based compensation. Costs incurred in connection with
government research grants are recorded as research and development
expenses.
General and
Administrative Expenses
The Company's
general and administrative expense includes costs for salaries,
employee benefits, facilities expenses, consulting and professional
service fees, travel expenses, depreciation expenses and office
related expenses incurred to support the administrative operations
of the Company.
Intellectual
Property Costs
The Company
includes all costs associated with the prosecution and maintenance
of patents within general and administrative expenses in the
consolidated statement of operations.
Stock-Based
Compensation
All share-based
payments to employees, members of the Board of Directors and
non-employees are recognized within operating expense based on the
straight-line recognition of their grant date fair value over the
period during which the recipient is required to provide service in
exchange for the award. See Note 7 for a description of the
types of stock-based awards granted, the compensation expense
related to such awards and detail of equity-based awards
outstanding.
Recent
Accounting Standards
From time to
time, new accounting pronouncements are issued by the Financial
Accounting Standards Board ("FASB") or other standard setting
bodies that the Company adopts as of the specified effective date.
During the six months ended June 30,
2020, the
Company adopted the following new accounting guidance.
In August 2018,
the FASB issued ASU No. 2018-13, Fair Value
Measurement (Topic 820): Disclosure Framework - Changes to the
Disclosure Requirements for Fair Value
Measurement. This standard modifies
certain disclosure requirements on fair value measurements.
This standard
became effective for the Company on January 1, 2020 and did not
have a material impact on its disclosures.
In November 2018,
the FASB issued ASU No. 2018-18, Collaborative
Arrangements (Topic 808): Clarifying the Interaction between Topic
808 and Topic 606. This standard makes
targeted improvements for collaborative arrangements as
follows:
|
|
|
•
|
Clarifies that
certain transactions between collaborative arrangement participants
should be accounted for as revenue under ASC 606,
Revenue
from Contracts with Customers, when the collaborative
arrangement participant is a customer in the context of a unit of
account. In those situations, the guidance in ASC 606 should be
applied, including recognition, measurement, presentation and
disclosure requirements;
|
|
|
|
•
|
Adds
unit-of-account guidance to ASC 808, Collaborative
Arrangements, to align with the guidance
in ASC 606 (that is, a distinct good or service) when an entity is
assessing whether the collaborative arrangement or a part of the
arrangement is within the scope of ASC 606; and
|
|
|
|
•
|
Precludes a
company from presenting transactions with collaborative arrangement
participants that are not directly related to sales to third
parties with revenue recognized under ASC 606 if the collaborative
arrangement participant is not a customer.
|
This standard
became effective on January 1, 2020. However, since the Company is
not currently participating in any collaborative arrangements, the
new standard does not impact its financial statements.
The following new
pronouncement is not yet effective but may impact the Company's
financial statements in the future.
In
June 2016, the FASB issued ASU No.
2016-13, Financial
Instruments-Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments, which
requires the measurement and recognition of expected credit losses
for financial assets held at amortized cost. It also
eliminates the concept of other-than-temporary impairment and
requires credit losses related to available-for-sale debt
securities to be recorded through an allowance for credit losses
rather than as a reduction in the amortized cost basis of the
securities. These changes will result in more timely recognition of
credit losses. The guidance is effective for fiscal years beginning
after December 15, 2022 for
SEC filers that are eligible to be smaller reporting companies
under the SEC’s definition, and interim
periods within those fiscal years. The Company is currently
evaluating the impact this guidance will have on the Company’s
condensed consolidated financial statements.
3. BASIC AND
DILUTED NET INCOME (LOSS) PER SHARE
Basic net income
(loss) per share is computed by dividing net income (loss) by the
weighted-average number of common shares outstanding. Diluted net
income (loss) per share is computed by dividing net income (loss)
by the weighted-average number of dilutive common shares
outstanding during the period. Diluted shares outstanding is
calculated by adding to the weighted shares outstanding any
potential (unissued) shares of common stock from outstanding stock
options and warrants based on the treasury stock method, as well as
weighted shares outstanding of any potential (unissued) shares of
common stock from restricted stock units. In periods when a net
loss is reported, all common stock equivalents are excluded from
the calculation because they would have an anti-dilutive effect,
meaning the loss per share would be reduced. Therefore, in periods
when a loss is reported, basic and dilutive loss per share are the
same. Common stock equivalents include stock options, restricted
stock awards and warrants.
The number of
shares of potentially dilutive common stock presented on a weighted
average basis, related to options, restricted stock units and
warrants (prior to consideration of the treasury stock method) that
were excluded from the calculation of dilutive shares since the
inclusion of such shares would be anti-dilutive for the
three and
six months
ended June 30, 2020
and
June 30,
2019,
respectively, are shown below. Issued and outstanding warrants
shown in the table below are described in greater detail in Note
12, contained herein.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
2020
|
|
2019
|
|
Options
|
162,822
|
|
|
50,707
|
|
115,427
|
|
|
46,883
|
|
|
Restricted Stock
Awards
|
17,000
|
|
|
—
|
|
13,170
|
|
|
85
|
|
|
Series A Convertible
Preferred Stock
|
12,166
|
|
|
—
|
|
25,613
|
|
|
—
|
|
|
Series B Convertible
Preferred Stock
|
—
|
|
|
—
|
|
63,187
|
|
|
—
|
|
|
Warrants
|
2,843,699
|
|
|
175,995
|
|
2,843,699
|
|
|
175,995
|
|
|
Total
|
3,035,687
|
|
|
226,702
|
|
3,061,096
|
|
|
222,963
|
|
4.
INVESTMENTS
Investments
consist of the following at June 30, 2020
and
December 31,
2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Cost at June 30, 2020
|
|
Unrealized
|
|
Market Value
at June 30, 2020
|
|
|
|
Gain
|
|
(Loss)
|
|
|
Short-term
investments
|
|
|
|
|
|
|
|
|
Government
securities
|
$
|
5,204
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
5,211
|
|
|
Total
|
$
|
5,204
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
5,211
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
Cost at December 31, 2019
|
|
Unrealized
|
|
Market Value
at December 31, 2019
|
|
|
|
Gain
|
|
(Loss)
|
|
|
Short-term
investments
|
|
|
|
|
|
|
|
|
Government
securities
|
$
|
5,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,700
|
|
|
Total
|
$
|
5,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,700
|
|
All short-term
investments are classified as available for sale as of
June 30,
2020 and December 31,
2019. The
Company held no long-term investments
at June 30,
2020,
and December 31,
2019.
5. FAIR
VALUE MEASUREMENTS
The Company has
certain financial assets recorded at fair value which have been
classified as Level 1 and Level 2 within the fair value
hierarchy as described in the accounting standards for fair value
measurements. In addition, during November 2019, the Company issued
Series A Warrants and Series B Warrants in two concurrent
securities offerings. At the time of issuance, the Company
determined that all of the Series A Warrants and Series B Warrants
should be classified as a warrant liability in accordance with ASC
480, Distinguishing
Liabilities from Equity, and recognized at fair
value due to the insufficiency of common shares available to permit
their exercise. At December 31,
2019, the
warrant liability met Level 3 classification criteria for
classification within the fair value hierarchy. Fair value is the
price that would be received from the sale of an asset or the price
paid to transfer a liability in an orderly transaction between
independent market participants at the measurement date. Fair
values determined by Level 1 inputs utilize observable data
such as quoted prices in active markets for identical instruments.
Fair values determined by Level 2 inputs utilize data points
other than quoted prices in active markets that are observable
either directly or indirectly. Fair values determined by
Level 3 inputs utilize unobservable data points in which there
is little or no market data, which require the reporting entity to
develop its own assumptions. The fair value hierarchy level is
determined by the lowest level of significant input.
The Company’s
financial assets classified as Level 2 at June 30, 2020
and
December 31,
2019 were
initially valued at the transaction price and subsequently valued
utilizing third-party pricing services. Because the Company’s
investment
portfolio may
include securities that do not always trade daily, the pricing
services use many observable market inputs to determine value
including reportable trades, benchmark yields and benchmarking of
like securities. The Company validates the prices provided by the
third-party pricing services by reviewing their pricing methods and
obtaining market values from other pricing sources. After
completing the validation procedures, the Company did not adjust or
override any fair value measurements provided by these pricing
services as of June 30, 2020
and
December 31,
2019.
The
$14,977
fair value of the
Series A and Series B Warrant liability at December 31, 2019
was determined
using the Black-Scholes valuation model. The expected volatility
and the risk free discount rate used in the Black-Scholes model
were determined based on the Company's historical market price
published on the Nasdaq Capital Market and from published U.S.
Treasury yield curves, respectively, for a period matched to the
contractual term of each warrant series.
|
|
|
|
|
|
At December
31, 2019
|
Series A
Warrants
|
|
Series B
Warrants
|
|
Fair market value of common
stock (per share)
|
$6.86
|
|
$6.86
|
|
Expected term
(years)
|
2.3
|
|
7.3
|
|
Risk free rate
|
1.62%
|
|
1.83%
|
|
Volatility
|
127%
|
|
115%
|
On January 15,
2020, the Company filed an amendment to its Certificate of
Incorporation with the State of Delaware to effect a 1-for-40
reverse stock split. As a result of the reverse stock split, the
Company's number of authorized but unissued shares of Common Stock
increased significantly and the Series A Warrants and Series B
Warrants issued under the offerings completed in November 2019
became eligible for exercise. Prior to reclassification as equity,
the Company adjusted the warrant liability to its
$15,934
fair value using
the assumptions below, recording a loss on the adjustment to fair
value of $957 during the six months
ended June 30,
2020.
|
|
|
|
|
|
At January
15, 2020
|
Series A
Warrants
|
|
Series B
Warrants
|
|
Fair market value of common
stock (per share)
|
$3.77
|
|
$3.77
|
|
Expected term
(years)
|
2.3
|
|
7.3
|
|
Risk free rate
|
1.62%
|
|
1.83%
|
|
Volatility
|
127%
|
|
115%
|
The tables below
present information about the Company’s assets and liabilities that
are measured at fair value on a recurring basis as of
June 30,
2020 and December 31, 2019
and indicate the
fair value hierarchy of the valuation techniques utilized to
determine such fair value.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements at reporting date using
|
|
|
|
|
Quoted prices
in active markets for identical
assets
|
|
Significant other
observable
inputs
|
|
Significant
unobservable
inputs
|
|
Balance as of
|
|
Description
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
June 30,
2020
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash
equivalents:
|
|
|
|
|
|
|
|
|
Money market
funds
|
$
|
2,438
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,438
|
|
|
Short-term
investments:
|
|
|
|
|
|
|
|
|
U.S. government
and agency securities
|
—
|
|
|
5,211
|
|
|
—
|
|
|
5,211
|
|
|
Total assets
|
$
|
2,438
|
|
|
$
|
5,211
|
|
|
$
|
—
|
|
|
$
|
7,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements at reporting date using
|
|
|
|
|
Quoted prices
in active markets for identical
assets
|
|
Significant other
observable inputs
|
|
Significant
unobservable
inputs
|
|
Balance as of
|
|
Description
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
|
December 31,
2019
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash
equivalents:
|
|
|
|
|
|
|
|
|
Money market
funds
|
$
|
2,622
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,622
|
|
|
U.S. government
and agency securities
|
—
|
|
|
1,750
|
|
|
—
|
|
|
1,750
|
|
|
Short-term
investments:
|
|
|
|
|
|
|
|
|
U.S. government
and agency securities
|
—
|
|
|
5,700
|
|
|
—
|
|
|
5,700
|
|
|
Total assets
|
$
|
2,622
|
|
|
$
|
7,450
|
|
|
$
|
—
|
|
|
$
|
10,072
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Warrant
liability
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,977
|
|
|
$
|
14,977
|
|
|
Total
liabilities
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,977
|
|
|
$
|
14,977
|
|
There were no
transfers of financial assets or liabilities between category
levels for the three and six months ended June 30, 2020
and the three and
six months ended June 30,
2019.
The Company
owns 648,149 shares of Series A Redeemable
Convertible Preferred Stock of Tepha, Inc. ("Tepha"), a privately
held medical device company located in Lexington, Massachusetts,
that is engaged in the development of medical device products that
restore, maintain, or improve tissue function. The Company received
the preferred shares from Tepha during 2002 in connection with a
technology sublicense agreement that was later terminated during
2016. The preferred shares owned by the Company represent less
than one
percent of
Tepha's current outstanding common shares on a fully diluted basis
and were fully written off through an impairment charge during 2005
prior to Tepha initiating commercial product sales.
6. ACCRUED
EXPENSES
Accrued expenses
consisted of the following at:
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Employee compensation and
benefits
|
$
|
517
|
|
|
$
|
669
|
|
|
Leased
facilities
|
54
|
|
|
51
|
|
|
Professional
services
|
151
|
|
|
327
|
|
|
Other
|
160
|
|
|
279
|
|
|
Total accrued
expenses
|
$
|
882
|
|
|
$
|
1,326
|
|
7.
STOCK-BASED COMPENSATION
Expense Information for Employee and Non-Employee Stock
Awards
The Company
recognized stock-based compensation expense related to stock
awards, including awards to non-employees and members of the Board
of Directors of $160 and $297 for the three and six
months
ended June 30, 2020
and
$113
and
$275
for the three and
six months ended June 30,
2019,
respectively. At June 30,
2020,
there was approximately $2,356 of pre-tax stock-based
compensation expense related to unvested awards not yet
recognized.
The compensation
expense related to unvested stock options is expected to be
recognized over a remaining weighted average period of
3.62
years.
Stock Options
A summary of
option activity for the six months ended
June 30,
2020 is as
follows:
|
|
|
|
|
|
|
|
|
|
Number of
Shares
|
|
Weighted Average
Exercise Price
|
|
Outstanding at
December 31, 2019
|
62,065
|
|
|
$
|
178.95
|
|
|
Granted
|
261,992
|
|
|
$
|
5.91
|
|
|
Exercised
|
—
|
|
|
$
|
—
|
|
|
Forfeited
|
(721
|
)
|
|
$
|
48.40
|
|
|
Expired
|
(615
|
)
|
|
$
|
2,318.91
|
|
|
Outstanding at June 30,
2020
|
322,721
|
|
|
$
|
34.68
|
|
|
|
|
|
|
|
Vested and expected to vest
at June 30, 2020
|
322,721
|
|
|
$
|
34.68
|
|
|
Options exercisable at
June 30, 2020
|
46,233
|
|
|
$
|
183.33
|
|
Restricted Stock Units
The Company
records stock compensation expense for restricted stock units
("RSUs") on a straight-line basis over their requisite service
period, which approximates the vesting period, based on each RSU's
award date market value. As RSUs vest, the Company withholds a
number of shares from its employees with an aggregate fair market
value equal to the minimum tax withholding amount (unless the
employee makes other arrangements for payment of the tax
withholding) from the common stock issuable at the vest date. The
Company then pays the minimum required income tax for the
employees. During the six months ended June 30, 2020
and
June 30,
2019, the
Company paid $0 and $4 for income tax withholdings
associated with RSUs.
A summary of RSU
activity for the six months ended
June 30,
2020 is as
follows:
|
|
|
|
|
|
|
Number of
RSUs
|
Weighted
Average Remaining Contractual Life (years)
|
|
Outstanding at December 31,
2019
|
—
|
|
|
|
Awarded
|
17,000
|
|
|
|
Common stock issued upon
vesting
|
—
|
|
|
|
Forfeited
|
—
|
|
|
|
Outstanding at June 30,
2020
|
17,000
|
|
0.62
|
8.
LEASES
Lease
Accounting
The Company
follows the lease accounting guidance codified in ASC 842. Under
ASC 842, a lease is classified as a finance lease if any of five
criteria described in the guidance apply to the lease. Any lease
not classified as a finance lease is classified as an operating
lease with expense recognition occurring on a straight-line basis
over the term of the lease. The Company's existing lease
arrangements meet the standards for operating lease
classification.
Under ASC 842, a
lease liability is recorded on the commencement date of a lease and
is calculated as the present value of the remaining lease payments,
using the interest rate implicit in the lease, or if that rate is
not readily determinable, using the lessee's incremental borrowing
rate. A right-of-use asset equal to the lease liability is also
recorded with adjustments made, as necessary, for lease
prepayments, lease accruals, initial direct costs and lessor lease
incentives that may be present within the terms of the lease. The
Company has adopted the short-term lease exception that permits
lessees to omit leases with terms of twelve months or less from the
accounting requirements of ASC 842.
Maturity
Analysis of Lease Liabilities
At
June 30,
2020, the
Company's lease liabilities will mature as follows:
|
|
|
|
|
|
Year ended
December 31,
|
Undiscounted
Cash Flows
|
|
2020 (July to
December)
|
$
|
346
|
|
|
2021
|
704
|
|
|
2022
|
726
|
|
|
2023
|
749
|
|
|
2024
|
771
|
|
|
Thereafter
|
1,540
|
|
|
Total undiscounted future
lease payments
|
4,836
|
|
|
Discount
|
(1,006
|
)
|
|
Total lease
liabilities
|
$
|
3,830
|
|
|
Short-term
lease liability
|
$
|
430
|
|
|
Long-term
lease liability
|
$
|
3,400
|
|
At
June 30,
2020, the
Woburn, Massachusetts facility is the only remaining lease included
in the Company's right-of-use assets and corresponding lease
liabilities.
Quantitative
Disclosure of Lease Costs (unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Lease
cost:
|
|
|
|
|
|
|
|
|
Operating lease
cost
|
$
|
183
|
|
|
$
|
257
|
|
|
$
|
386
|
|
|
$
|
516
|
|
|
Short-term lease
cost
|
123
|
|
|
108
|
|
|
306
|
|
|
254
|
|
|
Sublease income
|
(142
|
)
|
|
(134
|
)
|
|
(279
|
)
|
|
(258
|
)
|
|
Total lease cost,
net
|
$
|
164
|
|
|
$
|
231
|
|
|
$
|
413
|
|
|
$
|
512
|
|
|
|
|
|
|
|
|
|
|
|
Other
information as of:
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Weighted-average remaining
lease term (years)
|
|
|
|
|
6.4
|
|
6.7
|
|
Weighted-average discount
rate
|
|
|
|
|
7.25%
|
|
7.24%
|
Real Estate
Leases
During 2016, the
Company entered into a lease agreement for its headquarters,
pursuant to which the Company leased approximately
29,622
square feet of
office and research and development space located at 19
Presidential Way, Woburn, Massachusetts. The lease began on June 1,
2016 and will end on November 30, 2026. The lease agreement does
not include any options for an early termination or for an
extension of the lease. Pursuant to the lease, the Company is
required to pay certain taxes and operating costs associated with
the premises throughout the term of the lease. During the buildout
of the rented space, the landlord paid $889 for tenant improvements to
the facility and an additional $444 for tenant improvements that
result in increased rental payments by the Company. Upon adopting
ASC 842 these improvements were recorded as a reduction in the
valuation of the right-of-use asset.
In November 2019,
the Company entered into a modification agreement to the Woburn
lease in which Yield10 returned 7,409 square feet of underutilized
space to the landlord for the remaining term of the lease. In
exchange for returning the space, the landlord agreed to fund
modifications and upgrades to the office space retained by the
Company. The modifications were completed in February 2020, and
after that point the Company has no further financial obligations
for the vacated space, including lease rental charges, utilities,
maintenance and real estate tax charges. The Company's security
deposit was also reduced from $307 to $229. During the six months
ending June 30,
2020, the
Company wrote off $206 in leasehold improvements and
office furniture, net of proceeds, associated with the returned
space.
In October 2016,
the Company entered into a sublease agreement with a subsidiary of
CJ CheilJedang Corporation ("CJ") with respect to CJ's sublease of
approximately 9,874 square feet of its leased
facility located in Woburn, Massachusetts. The sublease space was
determined to be in excess of the Company's needs. The CJ sublease
is unaffected by the Company's recent lease modification with the
landlord and it remains coterminous with the Company's master
lease. CJ will pay pro rata rent and operating expenses equal to
the amounts payable to the landlord by the Company, as adjusted
from time to time in accordance with the terms of the master lease.
Future CJ sublease payments have not been presented as an offset to
total undiscounted future lease payments of $4,836 shown in the lease maturity
analysis table above. CJ provided the Company with a security
deposit of $103 in the form of an irrevocable
letter of credit.
Through May 2020,
the Company leased approximately 13,702 square feet of unused
office and laboratory space in Lowell, Massachusetts. The lease
terminated in accordance with the terms of the lease agreement and
the facility has been returned to the landlord. No further expenses
are anticipated under this lease.
The Company's
wholly-owned subsidiary, Metabolix Oilseeds, Inc. ("MOI"),
located in Saskatoon, Saskatchewan, Canada, leases
approximately 6,900 square feet of office,
laboratory and greenhouse space located within Innovation Place at
410 Downey Road and within the research facility of National
Research Council Canada located at 110 Gymnasium Place. None of the
leases contain renewal or early termination options. MOI's leases
for these facilities expire on various dates through May
2021.
9. CARES ACT
LOAN
The Coronavirus
Aid, Relief, and Economic Security Act (“CARES Act”) was enacted on
March 27, 2020 and subsequently amended by the Paycheck Protection
Program Flexibility Act (the "Flexibility Act") on June 5, 2020, in
order to provide relief from the economic impacts of COVID-19.
During April 2020, the Company received $333 in loan proceeds from the
Paycheck Protection Program (the “PPP”), established pursuant to
the CARES Act and administered by the U.S. Small Business
Administration. The unsecured loan (the “PPP Loan”) is evidenced by
a promissory note of the Company dated April 19, 2020 in the
principal amount of $333, issued to a third-party
lender (the "lender"). The PPP Loan was amended as a result of the
changes made by the Flexibility Act.
Under the CARES
Act and the PPP, the Company may apply for and be granted
forgiveness for all or part of the PPP Loan. The amount of loan
proceeds eligible for forgiveness is based on a formula that takes
into account a number of factors, including the amount of loan
proceeds used by the Company during the twenty-four-week period
after the loan origination for certain purposes including payroll
costs, rent payments on certain leases, and certain qualified
utility payments. At least 60% of the loan amount must be used for
eligible payroll costs; maintaining or rehiring employees and
maintaining salaries at certain levels; and other
factors.
Under the terms
of the PPP Loan, as amended, interest will accrue on the
outstanding principal at the rate of 1.0% per annum. The term of
the PPP Loan is two years from the date the loan proceeds were
received, though it may be payable sooner in connection with an
event of default under the terms of the PPP Loan. To the extent the
loan amount is not forgiven under the PPP, the Company is obligated
to make equal monthly payments of principal and interest, beginning
ten months from the date of the PPP Loan, until the maturity
date.
The PPP Loan may
be prepaid in part or in full, at any time, without penalty. The
PPP Loan provides for certain customary events of default,
including, but not limited to, failing to make a payment when due
under the loan, failure to take actions required by the loan, the
Company defaulting under certain agreements in favor of any third
party, making false statements, the Company’s insolvency, and the
commencement of creditor or forfeiture proceedings against the
Company. Upon the occurrence of an event of default, the lender has
customary remedies and may, among other things, require immediate
payment of all amounts owed under the PPP Loan, collect all amounts
owed from the Company, and file suit and obtain judgment against
the Company.
During the three
months ended June 30,
2020,
Yield10 utilized the entire PPP Loan amount for qualifying expenses
and management of the Company considers it reasonably certain that
it will meet the conditions for loan forgiveness. As such, the
Company has recorded the full amount of the loan, or
$333, within other income
(expense) in its condensed consolidated statement of operations for
the three months ended June 30,
2020.
10.
COMMITMENTS AND CONTINGENCIES
Litigation
From time to
time, the Company may be subject to legal proceedings and claims in
the ordinary course of business. The Company is not currently aware
of any such proceedings or claims that it believes will have,
individually or in the aggregate, a material adverse effect on its
business, financial condition or results of
operations.
Guarantees
As of
June 30,
2020,
and December 31,
2019, the
Company did not have significant liabilities recorded for
guarantees.
The Company
enters into indemnification provisions under various agreements
with other companies in the ordinary course of business, typically
with business partners and contractors. Under these provisions, the
Company generally indemnifies and holds harmless the indemnified
party for losses suffered or incurred by the indemnified party as a
result of its activities. These indemnification provisions
generally survive termination of the underlying agreement. The
maximum potential amount of future payments the Company could be
required to make under these indemnification provisions is
unlimited. However, to date Yield10 Bioscience has not incurred
material costs to defend lawsuits or settle claims related to these
indemnification provisions. As a result, the estimated fair value
of the indemnifications under these agreements is believed to be
minimal. Accordingly, the Company has no liabilities recorded for
these agreements as of June 30, 2020
and
December 31,
2019.
11.
GEOGRAPHIC INFORMATION
The geographic
distribution of the Company’s grant revenues and long-lived assets
are summarized in the tables below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Canada
|
|
Eliminations
|
|
Total
|
|
Three Months Ended June 30,
2020:
|
|
|
|
|
|
|
|
|
Grant revenue from external
customers
|
$
|
154
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
221
|
|
|
Inter-geographic
revenues
|
—
|
|
|
373
|
|
|
(373
|
)
|
|
—
|
|
|
Revenues
|
$
|
154
|
|
|
$
|
440
|
|
|
$
|
(373
|
)
|
|
$
|
221
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
2019:
|
|
|
|
|
|
|
|
|
Grant revenue from external
customers
|
$
|
318
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
318
|
|
|
Inter-geographic
revenues
|
—
|
|
|
499
|
|
|
(499
|
)
|
|
—
|
|
|
Revenues
|
$
|
318
|
|
|
$
|
499
|
|
|
$
|
(499
|
)
|
|
$
|
318
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
2020:
|
|
|
|
|
|
|
|
|
Net revenues from external
customers
|
$
|
333
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
400
|
|
|
Inter-geographic
revenues
|
—
|
|
|
777
|
|
|
(777
|
)
|
|
—
|
|
|
Net revenues
|
$
|
333
|
|
|
$
|
844
|
|
|
$
|
(777
|
)
|
|
$
|
400
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
2019:
|
|
|
|
|
|
|
|
|
Net revenues from external
customers
|
$
|
442
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
442
|
|
|
Inter-geographic
revenues
|
—
|
|
|
836
|
|
|
(836
|
)
|
|
—
|
|
|
Net revenues
|
$
|
442
|
|
|
$
|
836
|
|
|
$
|
(836
|
)
|
|
$
|
442
|
|
Foreign revenue
is based on the country in which the Company’s subsidiary that
earned the revenue is domiciled. During the three and six
months
ended June 30,
2020,
revenue earned from the Company's Michigan State University
sub-award represented 69.7% and 83.3%, respectively, of total
government grant revenue for each period.
The geographic
distribution of the Company’s long-lived assets is summarized as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
Canada
|
|
Eliminations
|
|
Total
|
|
June 30, 2020
|
$
|
932
|
|
|
$
|
46
|
|
|
$
|
—
|
|
|
$
|
978
|
|
|
December 31,
2019
|
$
|
1,186
|
|
|
$
|
57
|
|
|
$
|
—
|
|
|
$
|
1,243
|
|
12.
CAPITAL
STOCK AND WARRANTS
Common
Stock
Shelf
Registration
On April 1, 2020,
the Company filed a shelf registration statement on Form S-3 (File
No. 333-237539) with the SEC, which was declared effective on April
10, 2020 (the “Shelf Registration Statement”). The Shelf
Registration Statement contained a prospectus which covers the
offering, issuance and sale by the Company of up to a maximum
aggregate offering price of $25.0 million
of the Company's
common stock, preferred stock, warrants and subscription rights,
which securities may be sold either individually or in
units.
Reverse
Stock Split
On January 15,
2020, the Company completed a 1-for-40 reverse stock split
("Reverse Stock Split") of its common stock by filing a certificate
of amendment (the "Charter Amendment") with the State of Delaware
to amend its certificate of incorporation. The ratio for the
Reverse Stock Split was determined by the Company's board of
directors following approval by stockholders at the Company's
special meeting held on January 9, 2020. The Reverse Stock Split
had the effect of increasing the Company's common shares available
for issuance by reducing issued and outstanding common shares by a
divisible factor of 40 while its authorized shares remained at the
current 60
million shares. Proportional
adjustments were made to the Company's outstanding stock options
and to the number of shares issued and issuable under the Company's
equity compensation plans.
November
2019 Concurrent Securities Offerings
On November 19,
2019, the Company closed on concurrent public and private
securities offerings, receiving combined gross cash proceeds
of $11,500, before issuance costs
of $1,254.
The public
portion of the offering included sales of Class A Units and Class B
Units as follows:
|
|
|
•
|
405,750
Class A Units
priced at a public offering price of $8.00 per unit, with each unit
consisting of one share of common stock, par
value $0.01 per share, Series A Warrants
to purchase one share of common stock at an
exercise price of $8.00 per share, expiring
two and
one-half-years from the closing date of the
offering, and Series B Warrants to purchase one share of common stock at an
exercise price of $8.00 per share, expiring
seven and
one-half-years from the closing date of the
offering. The 405,750 Class A Units sold include
the full exercise of the underwriter's over-allotment option
of 93,750 Class A Units.
|
|
|
|
•
|
2,504
Class B Units,
priced at a public offering price of $1,000 per unit, with each unit
consisting of one share of Series A Convertible
Preferred Stock, par value $0.01 per share, convertible at any
time at the holder's option into 125 shares of common stock, par
value $0.01 per share, Series A Warrants
to purchase 125 shares of common stock at an
exercise price of $8.00 per share, expiring
two and
one-half-years from the closing date of the
offering, and Series B Warrants to purchase 125 shares of common stock at an
exercise price of $8.00 per share, expiring
seven and
one-half-years from the closing date of the
offering. The Series A Convertible Preferred Stock was convertible
into shares of common stock at any time using a conversion ratio
of $8.00 per share. As of
June 30,
2020, all
of the shares of the Series A Convertible Preferred Stock had
converted to 313,000 shares of the Company's
common stock.
|
|
|
|
•
|
Gross proceeds
from the sale of Class A Units and Class B Units totaled
$5,750.
|
In the concurrent
private placement, certain existing shareholders purchased the
following securities:
|
|
|
•
|
5,750
Units, priced
at $1,000 per unit, each unit
consisting of one share of the Company's Series
B Convertible Preferred Stock, par value $0.01 per share, contingently
convertible into 125 shares of common stock at an
exercise price of $8.00, Series A Warrants to
purchase 125 shares of common stock, par
value $0.01 per share, at an exercise
price of $8.00 per share, expiring
two and
one-half-years from the closing date of the
offering, and Series B Warrants to purchase 125 shares of common stock at an
exercise price of $8.00 per share, expiring
seven and
one-half-years from the closing date of the
offering.
|
|
|
|
•
|
Gross proceeds
from the private placement also totaled $5,750.
|
As of the
November 19, 2019 closing date of the two offerings, the Company
did not have sufficient authorized and available shares of common
stock to permit conversion of the Series B Convertible Preferred
Stock sold in the private placement or to permit the exercise of
the 2,875,000 combined Series A Warrants
and Series B Warrants issued under both the public and the private
offerings. The Series B Convertible Preferred Shares and the Series
A Warrants and Series B Warrants were not convertible or
exercisable until more shares of common stock became available for
issuance through the Company's filing of the Charter Amendment for
the Reverse Stock Split. Upon the filing of the Charter Amendment
on January 15, 2020, all of the Series B Convertible Preferred
Stock sold in the private placement automatically converted
into 718,750 shares of common stock and
the Series A Warrants and Series B Warrants issued under both
offerings became eligible for exercise.
Until their
conversion to common stock, the Company recorded the Series A
Convertible Preferred Stock as permanent equity within the
Company's balance sheet. The contingent redemption rights of the
Series B Convertible Preferred stockholders were judged to be
outside of the Company's control and resulted in their
classification as temporary equity within the Company's balance
sheet until their automatic conversion to common shares in January
2020.
The Series A and
Series B Warrants are free standing financial instruments, legally
detachable and separately exercisable from the common and preferred
shares issued in the concurrent offerings. At the time of their
issuance, the Company determined that all of the warrants should be
classified as a warrant liability and recorded at an inception date
fair value of $24,518 due to the insufficiency of
common shares available to permit their exercise. As the proceeds
from the offerings were less than the fair value of their
respective warrants, the warrants were recorded at their full fair
value and the difference between the fair value and the cash
proceeds of $13,018 was recorded to other income
(expense) in the Company's consolidated statement of operations
during the year ended December 31,
2019. No
residual offering proceeds remained to be allocated to the common
and preferred shares sold in the offerings.
The Company
re-measured the fair value of the warrants on December 31, 2019
and again on
January 15, 2020 (the date of filing the Charter Amendment to
increase available shares of common stock), resulting in,
respectively, the recognition of a gain of $9,541 followed by a loss of
$957, due to the change in fair
value at each valuation date. By filing the Charter Amendment and
enacting the 1-for-40 Reverse Stock Split, the Company's
outstanding common shares were reduced by a divisible factor of 40
while authorized common shares remained at the current
60 million
shares. As a
result of this corporate action, sufficient shares of authorized,
but unissued shares of common stock became available for Series A
and Series B warrant holders to exercise their warrants resulting
in their reclassification from warrant liability to equity in the
Company's consolidated balance sheet.
At closing, the
proceeds of the combined offerings were allocated solely to the
liability classified warrants, and as a consequence, the offering
costs of $1,254 were immediately expensed to
other income (expense) in the consolidated statement of operations
for the year ended December 31, 2019
in accordance
with accounting guidance.
March 2019
Registered Direct Offering
On March 18,
2019, the Company completed a registered direct offering of its
common stock. Proceeds from the transaction were
$2,932
before issuance
costs of $349. Investors participating in
the transaction purchased a total of 60,541 shares of common stock at a
price of $48.40 per share.
Preferred
Stock
The Company's
Certificate of Incorporation authorizes it to issue up to
5,000,000
shares of
$0.01
par value
preferred stock.
Description
of Series A Convertible Preferred Stock
The November 2019
concurrent offerings of the Company's securities included the
issuance of 2,504 shares of Series A
Convertible Preferred Stock. Each Series A Convertible Preferred
Share was convertible into 125 shares of common stock at a
conversion price of $8.00 per share. As of
June 30,
2020,
all 2,504 shares of the Series A
Convertible Preferred Stock had converted to 313,000 shares of common
stock.
Description
of Series B Convertible Preferred Stock
The November 2019
concurrent offerings of the Company's securities included the
issuance of 5,750 shares of Series B
Convertible Preferred Stock. Each share of Series B Convertible
Preferred Stock was convertible into 125 shares of common stock at a
conversion price of $8.00 per share. All of the Series
B Convertible Preferred Stock automatically converted to
718,750
shares of common
stock on January 15, 2020, upon the Company's filing of a Charter
Amendment for the reverse stock split described above.
When converted,
the shares of Series A and B Convertible Preferred Stock were
restored to the status of authorized but unissued shares of
preferred stock, subject to reissuance by the Company's board of
directors.
Warrants
The following
table summarizes information regarding outstanding warrants to
purchase common stock as of June 30,
2020:
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
Number of
Shares Issuable Upon Exercise of Outstanding Warrants
|
|
Exercise
Price Per Share of Common Stock
|
|
Expiration
Date
|
|
November
2019 Public Offering - Series A
|
|
580,727
|
|
|
$
|
8.00
|
|
|
May 19,
2022
|
|
November
2019 Public Offering - Series B
|
|
649,477
|
|
|
$
|
8.00
|
|
|
May 19,
2027
|
|
November
2019 Private Placement - Series A
|
|
718,750
|
|
|
$
|
8.00
|
|
|
May 19,
2022
|
|
November
2019 Private Placement - Series B
|
|
718,750
|
|
|
$
|
8.00
|
|
|
May 19,
2027
|
|
December
2017 Public Offering - Series A
|
|
160,975
|
|
|
$
|
90.00
|
|
|
December 21,
2022
|
|
July 2017
Registered Direct Offering
|
|
14,270
|
|
|
$
|
201.60
|
|
|
January 7,
2024
|
|
Consultant
|
|
750
|
|
|
$
|
116.00
|
|
|
September 11,
2024
|
|
Total
|
|
2,843,699
|
|
|
|
|
|
February
2020 Warrant Exercises
In connection
with the Company’s public securities offering that closed on
November 19, 2019, the Company issued Series A Warrants and Series
B Warrants to purchase shares of the Company’s common stock. The
warrants were issued, and are held, in book-entry form through The
Depository Trust & Clearing Corporation (“DTCC”). During the
six months ended June 30,
2020,
warrants equal to a total of 207,296 shares of the Company's
common stock were exercised, generating cash proceeds of
$1,658. In May 2020, Yield10 was
informed by DTCC and its warrant agent that the exercise price of
each warrant issued in the November 2019 public securities offering
had been proportionately adjusted in accordance with the Company's
1-for-40 reverse stock split completed in January 2020, but that
the number of shares issuable upon the exercise of each warrant had
not been proportionately adjusted following the stock split within
the records of DTCC. Based on DTCC's notification, the Company
believed that up to 88,762 shares of common stock may
have been incorrectly issued and up to $710 in proceeds may have been
incorrectly collected for certain warrants exercised during
February 2020. Following a thorough review with the warrant agent,
DTCC and brokers for certain warrant holders who exercised these
warrants, the Company determined that the number of shares of
common stock issued and the amount of cash collected from the
exercises were in fact correct, but that DTCC’s records did not
accurately reflect the number of warrants remaining in the affected
warrant holders’ accounts following their exercises. As of
June 30,
2020, the
issue has been resolved by adjusting the DTCC accounts of the
warrant holders. Accordingly, the Company will not be required to
return cash proceeds and the warrant holders will not be required
to return any of the common shares issued from the exercises.
In its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2020, the Company recorded $710 within accrued expenses for
the cash proceeds from the February 2020 warrant exercises that the
Company previously expected to be returned to warrant holders. That
accrual was relieved and reclassified to equity during the quarter
ending June 30,
2020.
Reserved
Shares
The following
shares of common stock were reserved for future issuance upon
exercise of stock options, vesting of RSUs and conversion of
warrants:
|
|
|
|
|
|
|
|
|
June 30,
2020
|
|
December 31,
2019
|
|
Stock Options
|
322,721
|
|
|
62,065
|
|
|
RSUs
|
17,000
|
|
|
—
|
|
|
Series A Convertible
Preferred Stock - November 2019 Public Offering
|
—
|
|
|
99,500
|
|
|
Warrants
|
2,843,699
|
|
|
175,995
|
|
|
Total number of common shares
reserved for future issuance
|
3,183,420
|
|
|
337,560
|
|
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
(All dollar
amounts are stated in thousands)
Forward-Looking
Statements
This Quarterly
Report on Form 10-Q contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act"), and Section 21E of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
These statements relate to our future plans, objectives,
expectations and intentions and may be identified by words such as
“may,” “will,” “should,” “expects,” “plans,” “anticipate,”
“intends,” “target,” “projects,” “contemplates,” “believe,”
“estimates,” “predicts,” “potential,” and “continue,” or similar
words.
Although we
believe that our expectations are based on reasonable assumptions
within the limits of our knowledge of our business and operations,
these forward-looking statements contained in this document are
neither promises nor guarantees. Our business is subject to
significant risk and uncertainties and there can be no assurance
that our actual results will not differ materially from our
expectations. These forward looking statements include, but are not
limited to, statements concerning our business plans and
strategies; expected future financial results and cash
requirements; statements related to the coronavirus pandemic and
its potential adverse impacts; plans for obtaining additional
funding; plans and expectations that depend on our ability to
continue as a going concern; and plans for development and
commercialization of our Yield10 technologies. Such forward-looking
statements are subject to a number of risks and uncertainties that
could cause actual results to differ materially from those
anticipated including, without limitation, risks related to our
limited cash resources, uncertainty about our ability to secure
additional funding, risks related to the execution of our business
plans and strategies, risks associated with the protection and
enforcement of our intellectual property rights, as well as other
risks and uncertainties set forth under the caption "Risk Factors"
in Part I, Item 1A, of the Company's
Annual Report on
Form 10-K for the year ended December
31, 2019 and in our other filings with the SEC, including in Part
II, Item 1A of this Report on Form 10-Q.
The
forward-looking statements and risk factors presented in this
document are made only as of the date hereof and we do not intend
to update any of these risk factors or to publicly announce the
results of any revisions to any of our forward-looking statements
other than as required under the federal securities
laws.
Unless the
context otherwise requires, all references in this Quarterly Report
on Form 10-Q to "Yield10 Bioscience," "Yield10," "we," "our," "us,"
"our company" or "the company" refer to Yield10 Bioscience, Inc., a
Delaware corporation, and its subsidiaries.
Overview
Yield10
Bioscience, Inc. is an agricultural bioscience company that uses
its "Trait Factory" and the Camelina oilseed “Fast Field Testing”
system to develop high value seed traits for the agriculture and
food industries. Our goal is to efficiently develop superior gene
traits for the major crops including corn, soybean, canola, and
other crops to enable step-change increases in crop yield of at
least 10-20 percent. Our “Trait Factory” encompasses discovery of
gene targets using our Gene
Ranking
Artificial
Intelligence
Network
("GRAIN") big data mining platform, deployment of trait gene
targets in the oilseed Camelina and generation of field performance
data. The “Trait Factory” enables two complementary commercial
opportunities with different paths to market. The first is trait
licensing to the major seed companies for corn, soybean, canola and
other crops. Data from our trait field testing in Camelina has
enabled Yield10 to establish research license agreements with
leading seed companies. These companies are progressing the
development of Yield10 traits in soybean, forage sorghum, and
potato, respectively. The second commercial opportunity is to
improve the performance and value of Camelina as a platform to
develop a commercial crop product business producing nutritional
oils and PHA biomaterials. Using this approach, Yield10 can
leverage the resources of the major seed companies to efficiently
develop superior gene traits for the major crops and focus internal
resources on trait gene discovery and the commercial development of
Camelina products. Yield10 Bioscience is headquartered in Woburn,
Massachusetts and has an Oilseed Center of Excellence in Saskatoon,
Saskatchewan, Canada.
As of
June 30,
2020, we
held unrestricted cash, cash equivalents and short-term investments
of $8,501. We follow the guidance of
ASC Topic 205-40, Presentation
of Financial Statements-Going Concern, in order to determine whether
there is substantial doubt about our ability to continue as a going
concern for one year after the date our financial statements are
issued. Based on our current cash forecast, we expect that our
present capital resources will be sufficient to fund our planned
operations and meet our obligations into the second quarter of
2021. Our ability to continue operations after our current cash
resources are exhausted depends on our ability to obtain additional
financing through, among other sources, public or private equity
financing, secured or unsecured debt financing, equity or debt
bridge financing, additional government research grants or
collaborative arrangements with third parties, as to which no
assurances can be given. We do not know whether
additional
financing will be
available on terms favorable or acceptable to us when needed, if at
all. If adequate additional funds are not available when required,
we may be forced to curtail our research efforts, explore strategic
alternatives and/or wind down our operations and pursue options for
liquidating our remaining assets, including intellectual property
and equipment. We have determined, based on our cash forecast, that
our present capital resources will not be sufficient to fund our
planned operations for the twelve months from the date that
these interim financial statements are filed, which raises
substantial doubt about our ability to continue as a going
concern.
If we issue
equity or debt securities to raise additional funds in the future,
(i) we may incur fees associated with such issuances, (ii) our
existing stockholders may experience dilution from the issuance of
new equity securities, (iii) we may incur ongoing interest expense
and be required to grant a security interest in our assets in
connection with any debt issuance, and (iv) the new equity or debt
securities may have rights, preferences and privileges senior to
those of our existing stockholders. In addition, utilization of our
net operating loss and research and development credit
carryforwards may be subject to significant annual limitations
under Section 382 of the Internal Revenue Code due to ownership
changes resulting from equity financing transactions. If we raise
additional funds through collaboration, licensing or other similar
arrangements, it may be necessary to relinquish valuable rights to
our potential products or proprietary technologies or grant
licenses on terms that are not favorable to us.
Government
Grants
On May 20, 2020,
Metabolix Oilseeds, Inc. (“MOI”), the Company’s wholly-owned
Canadian research subsidiary, received a research grant through the
Industrial Research Assistance Program administered by National
Research Council Canada ("NRC"). The objective of the grant is to
provide financial research assistance to innovative, early-stage
small and medium-sized enterprises. Under the terms of the
agreement, NRC agreed to contribute up to a maximum of
$67
for payroll costs
incurred by MOI during the period April 1, 2020 - June 24, 2020.
During the three months ended June 30,
2020, MOI
submitted claims for eligible payroll costs and recognized revenue
for the full amount of the award.
During 2018, we
entered into a sub-award with Michigan State University ("MSU") to
support a Department of Energy ("DOE") funded grant entitled
"A Systems
Approach to Increasing Carbon Flux to Seed Oil." Our participation under
this projected five-year grant will be awarded on an annual basis
with the first year commencing September 15, 2017. Although our
funding under this sub-award has been appropriated through
September 2020 for $1,698, we anticipate that each
additional option year will be awarded annually to Yield10 through
September 14, 2022 for total sub-award funding of
$2,957, provided the U.S. Congress
continues to appropriate funds for the program, we are able to make
progress towards meeting grant objectives and we remain in
compliance with other terms and conditions of the
sub-award.
As of
June 30,
2020,
proceeds of $140 remain to be recognized
through the end of the third year under our MSU sub-award as shown
in the table below. This includes amounts for reimbursement to our
subcontractors, as well as reimbursement for our employees’ time,
benefits and other expenses related to future
performance.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Program Title
|
|
Funding
Agency
|
|
Total
Government Funded Appropriations
|
|
Total revenue
recognized through June 30, 2020
|
|
Remaining
amount to be recognized as of June 30, 2020
|
|
Contract/Grant
Expiration
|
| |
| |
Subcontract from Michigan
State University project funded by DOE entitled "A Systems Approach
to Increasing Carbon Flux to Seed Oil"
|
|
Department of
Energy
|
|
$
|
1,698
|
|
|
$
|
1,558
|
|
|
$
|
140
|
|
|
September 2020
|
| |
Funding from National Research
Council Canada through its Industrial Research Assistance Program
(NRC-IRAP) entitled "Innovation Assistance Program"
|
|
National Research Council
Canada
|
|
67
|
|
|
67
|
|
|
—
|
|
|
June 2020
|
| |
Total
|
|
|
|
$
|
1,765
|
|
|
$
|
1,625
|
|
|
$
|
140
|
|
|
|
Critical
Accounting Estimates and Judgments
The discussion
and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have
been prepared in accordance with GAAP for interim financial
information. The preparation of these financial statements requires
us to make estimates and judgments that affect the reported amounts
of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing
basis, we evaluate our estimates, including those related to
revenue recognition, stock-based and performance-based
compensation, measurement of right-of-use assets and lease
liabilities, the recognition of lease expense and income taxes. We
base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the
circumstances, the results of which form the basis for making
judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may
differ from these estimates. The critical accounting policies and
the significant judgments and estimates used in the preparation of
our condensed consolidated financial statements for the
three and
six months
ended June 30,
2020, are
consistent with those discussed in our
Annual Report on
Form 10-K for the year ended
December 31,
2019, in
the section captioned “Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Critical Accounting
Estimates and Judgments.”
Results of
Operations
Comparison
of the Three Months Ended June 30,
2020 and
2019
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Grant revenue
|
$
|
221
|
|
|
$
|
318
|
|
|
$
|
(97
|
)
|
Grant revenue
was $221 and $318 for the three months
ended June 30, 2020
and
June 30,
2019,
respectively. Grant revenue recorded during each of these
periods was derived primarily from the Company's sub-award with
MSU. During the three months ended June 30,
2020, we
also recognized the full $67 awarded by NRC to MOI for
general research support.
We anticipate
that MSU grant revenue will fluctuate over the next twelve months
as a result of varying annual budget appropriations awarded under
the MSU sub-award. Our forecast related to grant revenue is subject
to change, should we receive new grants or if our ability to earn
revenue from our existing grant is negatively impacted by the
COVID-19 pandemic.
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Research and development
expenses
|
$
|
1,179
|
|
|
$
|
1,191
|
|
|
$
|
(12
|
)
|
|
General and administrative
expenses
|
1,179
|
|
|
1,025
|
|
|
154
|
|
|
Total expenses
|
$
|
2,358
|
|
|
$
|
2,216
|
|
|
$
|
142
|
|
Research and Development Expenses
Total research
and development expenses remained consistent at $1,179 and $1,191 during the three months
ended June 30, 2020
and
June 30,
2019,
respectively. However, compensation and benefits increased
by $92 from $642 during the three months
ended June 30, 2019
to
$733
during the three
months ended June 30,
2020,
primarily as a result of annual merit increases that became
effective on January 1, 2020, and the Company's pro rata accrual
for 2020 estimated performance bonuses expected to be paid in early
2021. We did not accrue for 2019 employee bonuses during the three
months ended June 30,
2019.
Facilities related expenses decreased by $82 during the three months
ended June 30, 2020
compared to the
three months ended June 30,
2019. In
November 2019, we amended our Woburn lease and returned 7,409
square feet of underutilized space to the landlord for the
remaining term of the lease.
Based on our
current financial forecast, we expect research and development
expenses will continue to remain consistent during the remainder of
2020. Due to the COVID-19 pandemic, we have delayed a small number
of planned 2020 increases in research personnel. Our forecasts
related to research and development expense are subject to change
due to the
potential impact
of the COVID-19 pandemic, or as new collaborative opportunities
arise that alter our business plans.
General and Administrative Expenses
General and
administrative expenses for the three months ended
June 30,
2020 and June 30, 2019
increased
by $154 from $1,025 to $1,179. The 15 percent increase is
primarily due to an increase in compensation and benefits of
$83
and an increase
in professional fees of $70. Compensation and benefits
increased as a result of 2020 annual merit increases and the
recording of pro rata estimated 2020 bonus expenses and
professional fees increased due to legal and accounting work
performed in connection with the Company's securities registration
filings with the SEC. We did not accrue for 2019 employee bonuses
during the three months ended June 30,
2019.
We expect our
general and administrative expenses for the year ended December 31,
2020, will remain at a level consistent with 2019. Note, however,
that our forecasts related to general and administrative expense
are subject to change due to the potential impact of the COVID-19
pandemic, or as new collaborative opportunities arise that alter
our business plans.
Other Income
(Expense), Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Loan forgiveness
income
|
$
|
333
|
|
|
$
|
—
|
|
|
$
|
333
|
|
|
Other income (expense),
net
|
15
|
|
|
27
|
|
|
(12
|
)
|
|
Total other income (expense),
net
|
$
|
348
|
|
|
$
|
27
|
|
|
$
|
321
|
|
Loan
Forgiveness Income
During April
2020, we received $333 in loan proceeds from the Paycheck
Protection Program (the “PPP”), established pursuant to the CARES
Act. Under the CARES Act and the PPP, we may apply for and be
granted forgiveness for all or part of the PPP loan. Subject to
certain requirements and limitations on loan forgiveness, only loan
proceeds spent on payroll and other eligible costs during a
twenty-four-week period will qualify for forgiveness. During the
three months ended June 30, 2020, we utilized the entire PPP
loan amount for qualifying expenses and consider it reasonably
certain that we will meet the conditions for loan forgiveness. As
such, we have recorded the full amount of the loan, or
$333, within other income
(expense) in our condensed consolidated statement of operations for
the three months ended June 30,
2020. See
Note 9.
Other
Income (Expense), net
Other income
(expense) for the three months ended June 30, 2020
and
June 30,
2019 was
derived primarily from investment income earned from the Company's
cash equivalents and short-term investments.
Comparison
of the Six Months Ended June 30,
2020 and
2019
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Grant revenue
|
$
|
400
|
|
|
$
|
442
|
|
|
$
|
(42
|
)
|
Grant revenue
was $400 and $442 for the six months
ended June 30, 2020
and
June 30,
2019,
respectively. Grant revenue for each of these periods was
derived primarily from the Company's sub-award with MSU. During the
six months ended June 30,
2020, we
also recognized the full $67 awarded by NRC to MOI for
general research support.
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
Change
|
|
Research and development
expenses
|
$
|
2,639
|
|
|
$
|
2,414
|
|
|
$
|
225
|
|
|
General and administrative
expenses
|
2,566
|
|
|
2,211
|
|
|
355
|
|
|
Total expenses
|
$
|
5,205
|
|
|
$
|
4,625
|
|
|
$
|
580
|
|
Research and Development Expenses
Research and
development expenses during the six months ended
June 30,
2020 and June 30, 2019
were
$2,639
and
$2,414, respectively. The
$225, or 9 percent, increase is
primarily due to a $192 increase in compensation and
benefits and our recording a loss on disposal of fixed assets.
Compensation and benefits increased from $1,323 during the six months
ended June 30, 2019
to
$1,515
during the six
months ended June 30,
2020, as a
result of annual merit increases that became effective on January
1, 2020, and as a result of the Company's pro rata six-month
accrual for 2020 estimated performance bonuses expected to be paid
in early 2021. We did not accrue for 2019 employee bonuses during
the six months ended June 30,
2019. In
November 2019, we entered into a modification agreement to our
Woburn lease in which we returned 7,409 square feet of
underutilized space to the landlord for the remaining term of the
lease. As a result of this lease modification, during the six
months ended June 30, 2020
we wrote off $141
in leasehold improvements and office furniture previously utilized
in our research and development activities. Our facilities expenses
decreased by $70 during the six months
ended June 30,
2020,
compared to the six months ended June 30,
2019, as a
result of returning the underutilized space in our Woburn facility
to the landlord.
General and Administrative Expenses
General and
administrative expenses for the six months ended
June 30,
2020 and June 30, 2019
increased
by $355 from $2,211 to $2,566. The 16 percent increase is
due to an increase in compensation and benefits of
$140
as a result of
2020 annual merit increases and recording estimated bonus expenses.
We did not accrue for 2019 employee bonuses during the six months
ended June 30,
2019.
Professional fees also increased by $210 from $372 during the six months
ended June 30, 2019
to
$581
during the six
months ended June 30, 2020
and is primarily
related to legal and accounting work performed in connection with
our securities registration filings with the SEC.
Other Income
(Expense), Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended June 30,
|