TIDMMXCT TIDMTTM
RNS Number : 6880M
MaxCyte, Inc.
18 September 2019
MaxCyte, Inc.
("MaxCyte" or the "Company")
Results for the Six Months ended 30 June 2019
3/4 Strong commercial execution and financial performance with 21%
year-over-year revenue growth
3/4 Cell therapy licenses now exceeding 80 programmes
3/4 Significant clinical progress in CARMA(TM) programme
Gaithersburg, Maryland - 18 September 2019 - MaxCyte (LSE: MXCT,
MXCS), the global cell-based therapies and life sciences company,
announces today its financial results, along with its key commercial
and clinical highlights, for the six months ended 30 June 2019.
HIGHLIGHTS (including post-period-end highlights)
Operational
* Expanded the Company's Life Sciences business to more
than 80 cell therapy programmes (including the
recently announced agreement with Kite, a Gilead
Company; CRISPR Therapeutics; and Precision
BioSciences) of which more than 45 are now licensed
for clinical use
* Aggregate potential milestone payments (excluding
sales-based payments after partners' commercial
launch) from its commercial cell therapy agreements
nearly doubled year-to-date to in excess of $450m
from five commercial licenses
* ExPERT(TM), MaxCyte's next generation family of
instruments and disposables, launched with strong H1
2019 sales as well as positive feedback and interest
from both existing and new customers
* Dosing underway in second cohort of MaxCyte's Phase I
dose-escalation clinical trial with MCY-M11, the
Company's lead, wholly-owned, non-viral mRNA-based
cell therapy candidate from its CARMA platform,
following the successful dosing of patients in
trial's first patient cohort
* Presented at American Society of Gene and Cell
Therapy (ASGCT) on the CARMA platform's unique
manufacturing process that enables faster turnaround
of autologous cell therapy to patients and its
potential for reduced adverse events
* Appointed Dr Dhana Chinnasamy as Vice President,
Non-Clinical and Translational Studies, to support
advancement of programmes from CARMA platform (July
2019)
Financial Key metrics H1 2019 H1 2018
Revenue $8.4m $6.9m
------------- -------------
Gross margin 88% 89%
------------- -------------
CARMA investment ($6.6m) ($2.6m)
------------- -------------
Total operating expenses* ($16.3m) ($10.7m)
------------- -------------
Adjusted EBITDA before
CARMA** ($1.4m) ($1.4m)
------------- -------------
Net profit (loss) before
CARMA expenses ($2.9m) ($2.2m)
------------- -------------
Total assets (as of 30
June) $24.8m $26.8m
------------- -------------
Cash, cash equivalents
and short-term investments
(as of 30 June) $14.9m $18.8m
------------- -------------
* Including CARMA expenses
** Excluding associated non-cash stock-based compensation of $0.3m
and $0.7m in H1 2018 and H1 2019, respectively.
Note: All financial amounts are in USD unless noted otherwise
* Revenue accelerated in the first half of 2019,
increasing approximately 21% over the first half of
2018 ($8.4m compared to $6.9m, respectively) and
in-line with the Company's customary first
half/second half weighting
* Revenues currently driven by high-margin recurring
annual fees from cell therapeutics business, sale of
proprietary single-use disposable processing
assemblies, expansion of products as well as sales
and marketing staff, and clinical milestones
* Management is exploring independent investment to
drive the CARMA opportunity, following recent
positive progress
Commenting on MaxCyte's half-year financial results, Doug Doerfler,
Chief Executive Officer, said: "We have seen a strong start to 2019
during which we have continued to drive substantial growth and progress
across all aspects of our business. Our revenue-generating Life Sciences
business has performed strongly during the period delivering revenue
growth of 21% and approximately 90% margins. We are also particularly
encouraged by the customer response to the recent launch of our industry
leading ExPERT platform and the extension of our relationship with
Kite through a multi-drug clinical and commercial agreement, which
built upon our existing research agreement. We continue to be very
excited for the commercial prospects of our high-growth Life Sciences
business.
"We continue to be encouraged by activity in the cell therapy sector,
including the growing market for our technology arising from the
substantial capital investment, company creation and clinical investments
in the space. We retain the premier position as the cell engineering
technology of choice, particularly in gene editing and immune-oncology.
And our successful research, clinical and commercial licensing business
in this market to date reinforces our confidence in continuing our
focused marketing and sales efforts in cell therapy.
"We are pleased with the clinical progress of our CARMA platform's
lead candidate, MCY-M11, which has advanced into the second cohort
of its Phase I study, validating our streamlined manufacturing platform
for chimeric antigen receptor (CAR) therapies in patients with solid
cancers. In the coming months we look forward to reporting further
progress in establishing CARMA as an autologous cell therapy platform
for targeted cell-based immune therapies. We anticipate this will
include the expansion into additional cancer indications, which we
believe will significantly broaden the opportunity and value for
our stakeholders, especially patients.
"CARMA continues to make positive progress, in particular with the
active ovarian cancer/mesothelioma trial with MCY-M11, the Company's
continued efforts in new product candidate development, and the recent
key hire of our vice president, non-clinical and translational studies.
Based on this progress as well as the strength and maturity of our
Life Sciences business -- and in order to build momentum and grow
the CARMA opportunity appropriately, the management team is evaluating
independent sources of financing for CARMA along with the timing
and level of clinical and pipeline investments beyond the current
trial."
Conference call for analysts
A briefing for analysts will be held at 11.00 am BST on Wednesday,
18 September 2019 at 1 Cornhill, London, EC3V 3NR. There will be
a simultaneous live conference call with Q&A, and the presentation
will be available on MaxCyte's website at http://www.maxcyte.com/
Dial-in details:
Participant dial-in: 0800 279 6547
International dial-in: +44 (0) 2071 928011
Participant code: 3859806
An audio replay file will be made available shortly afterwards via
the Company website:
http://www.maxcyte.com/
CHAIRMAN AND CHIEF EXECUTIVE OFFICER'S LETTER
We are pleased to report MaxCyte's financial and operational results
for the six months ended 30 June 2019, during which the Company had
another period of strong growth and made progress across all areas
of the business in-line with its strategic objectives.
Our industry is experiencing the emergence of exciting new modalities
for treating patients, both cellular therapy and gene editing in
particular, and MaxCyte is exceptionally well positioned to support
and benefit from the unprecedented growth of these therapeutic areas.
MaxCyte offers a highly differentiated approach to cell engineering
that is enabling leaders in the field to develop new and groundbreaking
treatments for diseases ranging from ultra-rare indications affecting
a handful of patients, to some of the most common forms of cancer.
Our team is using this core technology to power MaxCyte's own therapeutic
development programmes through CARMA - our proprietary therapeutic
platform for next-generation CAR-based cancer treatments, specifically
in solid tumours.
April 2019 saw the launch of ExPERT, MaxCyte's next generation of
instruments and disposables, delivering clinically validated, Flow
Electroporation(R) technology for complex cellular engineering. The
ExPERT range of products builds on the solid technology foundation
at the core of MaxCyte's instrument platforms, which are already
used by a broad client base, including all of the top ten biopharmaceutical
companies by revenue, who are developing increasingly sophisticated
biological and cellular-based therapeutics. MaxCyte's ExPERT instruments
and disposables allow its partners to develop therapeutics through
the continuum from research to commercial launch on a single, versatile
platform. We believe the ExPERT platform and our on-going investment
in our technology will help further solidify MaxCyte's leading position
in the cell therapy and gene editing markets.
80+ Partnered Programmes
MaxCyte's technology continues to help unlock the potential of cutting-edge
product development programmes, enabling many of the leading gene
editing companies in the field and demonstrating our leadership as
the go-to technology for cell engineering. MaxCyte has signed licenses
with partners covering more than 80 cell therapy programmes. This
includes the recently announced agreement with Kite, a Gilead Company,
an expansion of an existing research agreement signed November 2018
that allows Kite to use MaxCyte's Flow Electroporation Technology
to enable non-viral cell engineering for development of multiple
CAR-T drug candidates. Partners with clinical and commercial, multi-target
licenses also include CRISPR Therapeutics and Precision BioScience.
A further undisclosed commercial agreement was recently entered into,
taking the number of commercial licences to five.
More than 45 of our cell therapy programmes are licensed for clinical
use. In particular, MaxCyte is the industry's "go-to partner" for
the development of next-generation off-the-shelf and allogeneic CAR-T
therapies. The aggregate potential milestone payments from commercial
agreements signed to date are currently in excess of $450m.
Clinical Progress and CARMA Strategy
During the period we reported important clinical progress with MaxCyte's
lead, wholly-owned programme, MCY-M11, a non-viral mRNA-based cell
therapy candidate from its CARMA platform. MCY-M11 is a mesothelin-targeting
CAR therapy being tested in individuals with relapsed/refractory
ovarian cancer and peritoneal mesothelioma. Following successful
dosing of patients in the first cohort of a Phase I dose-escalation
clinical trial with MCY-M11 with no safety issues or serious adverse
events observed, the Company began dosing patients in the second
cohort of its trial in May 2019.
The successful completion of patient dosing in the first cohort,
and the initiation of dosing in the second higher-dose cohort, represent
important milestones for MaxCyte as we aim to establish our proprietary
CARMA autologous cell therapy platform. CARMA's offering of a streamlined,
uniquely rapid manufacturing process for autologous cell therapies
is an important differentiator from other CAR technologies. In addition,
the CARMA platform's utilization of Flow Electroporation rather than
viral vectors enables repeat dosing of patients, a feature that may
be key for the successful treatment of solid tumours with a cell
therapy. A further distinguishing feature of MaxCyte's CARMA platform
is its use of mRNA to deliver the CAR into cells rather than DNA.
The transient nature of mRNA may help alleviate some of the safety
limitations seen with other CAR treatment approaches.
Based on the positive progress of our CARMA platform and programme,
the management team is presently evaluating independent sources of
financing for CARMA, along with the timing and level of clinical
and pipeline investments beyond the current trial in order to maximise
the potential of CARMA.
Financial Review
Revenues for the period totaled $8.4m, representing a 21% increase
over the same period of 2018 ($6.9m), reflecting continued expansion
of the Company's Life Sciences customer base. Gross margins remained
strong over the period at 88%, and the Company continues to have
good visibility on future revenues due to its instrument-licensing
and consumables revenue streams.
In February 2019, the Company raised GBP10.0 million through the
placing of a total of 5,908,319 shares of New Common Stock. We thank
our new and existing investors for their support.
The Company's operating expenses for the 2019 period (including
CARMA investment) were $16.3m compared to $10.7m for the same period
in 2018, resulting principally from the $4.1m increase in CARMA investments
associated with clinical progress as well as increased investments
in sales and marketing, product development and other non-CARMA R&D
activities focused on driving and supporting MaxCyte's revenue growth.
Investment in CARMA was $6.6m in 2019 (first half 2018: $2.6m) as
the Company observed continued progress from its in-human clinical
trial of MCY-M11 as it moved into the second dose cohort.
MaxCyte's net loss before taking into consideration expenses from
the CARMA programme was $2.9m for the 2019 period compared to net
loss of $2.2m (also before taking into consideration expenses from
CARMA) for the same period of 2018. The net loss, including the CARMA
investment, was $9.5m for the 2019 period compared to $4.8m in the
same period last year.
EBITDA before CARMA investment and non-cash stock-based compensation
was a loss of $1.4m for the current period (first half 2018: $1.4m).
As of 30 June 2019, MaxCyte held cash and cash equivalents, including
short-term investments, amounting to $14.9m compared to $14.4m as
of 31 December 2018. The 30 June 2019 cash balance reflects the repayment
of the Company's $5m debt facility, which was repaid in full in February,
prior to the GBP10m equity raise. Management expects to have a $5m
debt facility in place by year end.
Outlook
MaxCyte's Board anticipates continued progress for the remainder
of the 2019 financial year and the Company is trading in line with
expectations. MaxCyte will continue investing in the expansion of
its Life Sciences instrument business, including developing new applications
for its technology and new product enhancements to support the expansion
of our customer base. We expect our ExPERT platform to continue to
drive revenue growth from our instruments business and from expanding
our cell therapy partner licenses. In addition, the Company will
continue to develop opportunities to expand its cell therapy pipeline
and is actively seeking to accelerate a number of high-value clinical
and commercial partnerships based on the Company's enabling cell-technology
business in a diverse range of fields, including immuno-oncology,
gene editing and regenerative medicine.
The Company also remains focused on creating value from the advancement
of MCY-M11 through the clinic as well as the CARMA pipeline and opportunity
in general, for the treatment of additional solid and liquid tumour
indications that will significantly broaden the opportunity for the
platform. We look forward to providing additional updates with regard
to the exciting CARMA business.
Doug Doerfler
President and Chief Executive Officer
J. Stark Thompson, Ph.D.
Non-executive Chairman
17 September 2019
About MaxCyte
MaxCyte is a clinical-stage global cell-based therapies and life
sciences company applying its proprietary cell engineering platform
to deliver the advances of cell-based medicine to patients with high
unmet medical needs. MaxCyte is developing novel CARMA therapies
for its own pipeline, with its first drug candidate in a Phase I
clinical trial. CARMA is MaxCyte's mRNA-based proprietary therapeutic
platform for autologous cell therapy for the treatment of solid cancers.
In addition, through its life sciences business, MaxCyte leverages
its Flow Electroporation(R) Technology to enable its biopharmaceutical
partners to advance the development of innovative medicines, particularly
in cell therapy. MaxCyte has placed its flow electroporation instruments
worldwide, including with all of the top ten global biopharmaceutical
companies. The Company now has more than 80 partnered programme licenses
in cell therapy with more than 45 licensed for clinical use, including,
five commercial licenses (four of which have been previously announced).
Aggregate potential pre-commercial milestones from all license deals
total more than $450m. With its robust delivery technology platform,
MaxCyte helps its partners to unlock the full potential of their
products. For more information, visit www.maxcyte.com.
This announcement contains inside information for the purposes of
Article 7 of Regulation (EU) No 596/2014 (MAR).
MaxCyte Inc.
Doug Doerfler, Chief Executive Officer
Ron Holtz, Chief Financial Officer +1 301 944 1660
Nominated Adviser and Joint Corporate
Broker
Panmure Gordon
Emma Earl
Freddy Crossley
Corporate Broking
James Stearns +44 (0)20 7886 2500
Joint Corporate Broker
Numis Securities Limited
James Black
Duncan Monteith +44 (0)20 7260 1000
Financial PR Adviser
Consilium Strategic Communications +44 (0)203 709 5700
Mary-Jane Elliott maxcyte@consilium-comms.
Chris Welsh com
Sukaina Virji
--------------------------------------------------------------
Caution regarding forward looking statements
Certain statements in this announcement, are, or may be deemed to
be, forward looking statements. Forward looking statements are identi
ed by their use of terms and phrases such as "believe", "could",
"should", "expect", "envisage", "estimate", "intend", "may",
"plan", "potentially", "will" or the negative of those, variations
or comparable expressions, including references to assumptions. These
forward-looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions regarding
the Company's future growth, results of operations, performance,
future capital and other expenditures (including the amount, nature
and sources of funding thereof), competitive advantages, business
prospects and opportunities. Such forward looking statements re ect
the Directors' current beliefs and assumptions and are based on information
currently available to the Directors.
A number of factors could cause actual results to differ materially
from the results and expectations discussed in the forward-looking
statements, many of which are beyond the control of the Company.
In particular, the outcome of clinical trials (including, but not
limited to the Company's CARMA trial) may not be favourable, potential
milestone payments associated with the Company's licensed programmes
may not be received or the ability to enter into future partnered
programmes may be limited. In addition, other factors which could
cause actual results to differ materially include risks associated
with vulnerability to general economic and business conditions, competition,
regulatory changes, actions by governmental authorities, the availability
of capital markets, reliance on key personnel, ability to attract
new talent, uninsured and underinsured losses, any future litigation
and other factors. Although any forward-looking statements contained
in this announcement are based upon what the Directors believe to
be reasonable assumptions, the Company cannot assure investors that
actual results will be consistent with such forward looking statements.
Accordingly, readers are cautioned not to place undue reliance on
forward looking statements. Subject to any continuing obligations
under applicable law or any relevant AIM Rule requirements, in providing
this information the Company does not undertake any obligation to
publicly update or revise any of the forward looking statements or
to advise of any change in events, conditions or circumstances on
which any such statement is based.
MaxCyte, Incorporated
Unaudited Condensed Financial Statements
as of 30 June 2019 and 31 December 2018
and for the six months ended
30 June 2019 and 2018
MaxCyte, Inc.
Unaudited Condensed Balance Sheets
(amounts in U.S. dollars, except share amounts)
31 December
30 June 2019 2018
----------------------------------------------- ---------------------------
Assets
Current assets:
Cash and cash equivalents $ 11,468,500 $ 11,248,000
Short-term investments,
at amortized cost 3,439,900 3,191,000
Accounts receivable, net 2,791,900 4,904,500
Inventory 3,494,500 2,242,800
Other current assets 915,700 863,700
----------------------------------------------- ---------------------------
Total current assets 22,110,500 22,450,000
Property and equipment,
net 2,370,800 1,817,900
Other assets 291,600 -
Total assets $ 24,772,900 $ 24,267,900
=============================================== ===========================
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 4,291,500 $ 4,123,300
Other current liabilities 318,900 -
----------------------------------------------- ---------------------------
Deferred revenue 3,768,100 2,449,300
----------------------------------------------- ---------------------------
Total current liabilities 8,378,500 6,572,600
Note payable, net of discount, deferred fees - 5,056,300
Other liabilities 315,100 357,300
----------------------------------------------- ---------------------------
Total liabilities 8,693,600 11,986,200
----------------------------------------------- ---------------------------
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock, $0.01 par; 200,000,000 shares authorized,
57,388,583 and 51,332,764 shares issued and outstanding
at 30 June 2019 and 31 December 2018, respectively. 573,900 513,300
Additional paid-in capital 95,490,500 82,279,300
Accumulated deficit (79,985,100) (70,510,900)
----------------------------------------------- ---------------------------
Total stockholders' equity 16,079,300 12,281,700
----------------------------------------------- ---------------------------
Liabilities and stockholders' equity $ 24,772,900 $ 24,267,900
=============================================== ===========================
See accompanying notes to the financial statements.
MaxCyte, Inc.
Unaudited Condensed Statements of Operations
For the Six Months Ended 30 June,
(amounts in U.S. dollars,
except
share amounts)
2019 2018
------------------------------------ ------------------
Revenue $ 8,373,300 $ 6,930,000
Costs of goods sold 1,043,200 753,500
------------------------------------ ------------------
Gross profit 7,330,100 6,176,500
------------------------------------ ------------------
Operating expenses:
Research and development 9,695,000 4,912,700
Sales and marketing 3,824,200 3,255,500
General and administrative 2,769,600 2,493,500
------------------------------------ ------------------
Total operating expenses 16,288,800 10,661,700
Operating loss (8,958,700) (4,485,200)
------------------------------------ ------------------
Other income (expense):
Interest expense (609,800) (308,800)
Interest and other
income 94,300 7,600
------------------------------------ ------------------
Total other income (expense) (515,500) (301,200)
------------------------------------ ------------------
Net loss $ (9,474,200) $ (4,786,400)
==================================== ==================
Basic and diluted net loss per common share $ (0.17) $ (0.09)
==================================== ==================
Weighted average common shares outstanding, basic
and diluted 55,376,683 51,077,283
==================================== ==================
See accompanying notes to the financial statements.
MaxCyte, Inc.
Unaudited Condensed Statements of Changes in Stockholders' Equity
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
Additional
Paid-in Accumulated Total Stockholders'
Common Stock Capital Deficit Equity
-------------------------------------------- --------------------- ------------------------ --------------------
Shares Amount
Balance 1
January
2018 50,896,376 $ 509,000 $80,729,400 $ (61,641,700) $ 19,596,700
Stock-based
compensation
expense - - 377,700 - 377,700
Exercise of
stock
options 375,638 3,800 161,400 - 165,200
Net loss - - - (4,786,400) (4,786,400)
--------------------- --------------------- --------------------- ------------------------ --------------------
Balance 30
June
2018 51,272,014 $ 512,800 $ 81,268,500 $ (66,428,100) $ 15,353,200
===================== ===================== ===================== ======================== ====================
Additional
Paid-in Accumulated Total Stockholders'
Common Stock Capital Deficit Equity
---------------------------------------------- ---------------------- ------------------------ --------------------
Shares Amount
Balance 1
January
2019 51,332,764 $ 513,300 $ 82,279,300 $ (70,510,900) $ 12,281,700
Issuance of
stock
in public
offering 5,908,319 59,100 12,271,200 - 12,330,300
Stock-based
compensation
expense - - 823,900 - 823,900
Exercise of
stock
options 147,500 1,500 116,100 - 117,600
Net loss - - - (9,474,200) (9,474,200)
---------------------- ---------------------- ---------------------- ------------------------ --------------------
Balance 30
June
2019 57,388,583 $ 573,900 $ 95,490,500 $ (79,985,100) $ 16,079,300
====================== ====================== ====================== ======================== ====================
See accompanying notes to the financial statements.
MaxCyte, Inc.
Unaudited Condensed Statements of Cash Flows
For the Six Months Ended 30 June,
(amounts in U.S. dollars)
2019 2018
----------------------- -----------------------
Cash flows from operating activities:
Net loss $ (9,474,200) $ (4,786,400)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 256,600 165,800
Net book value of consigned equipment
sold - 20,900
Loss on disposal of fixed assets 2,300 -
Stock-based compensation 823,900 377,700
Bad debt expense 5,000 -
Amortization of discounts on short-term
investments (12,500) (400)
Non-cash interest expense 49,200 19,200
Changes in operating assets and liabilities:
Accounts receivable 1,957,600 (567,000)
Inventory (1,521,800) (856,200)
Other current assets (52,000) (433,900)
Other assets 227,100 -
Accounts payable and accrued expenses 201,600 (1,293,800)
Deferred revenue 1,468,800 744,900
Other liabilities (284,400) 150,900
----------------------- -----------------------
Net cash used in operating activities (6,352,800) (6,458,300)
----------------------- -----------------------
Cash flows from investing activities:
Purchases of short-term investments (3,436,400) (2,732,700)
Maturities of short-term investments 3,200,000 -
Purchases of property and equipment (532,700) (290,500)
----------------------- -----------------------
Net cash used in investing activities (769,100) (3,023,200)
----------------------- -----------------------
Cash flows from financing activities:
Net proceeds from sale of common stock 12,330,300 -
Principal payments on notes payable (5,105,500) -
Proceeds from exercise of stock options 117,600 165,200
Principal payments on capital leases - (3,200)
Net cash provided by financing activities 7,342,400 162,000
----------------------- -----------------------
Net (decrease)increase in cash and cash
equivalents 220,500 (9,319,500)
Cash and cash equivalents, beginning of
period 11,248,000 25,341,700
Cash and cash equivalents, end of period $ 11,468,500 $ 16,022,200
======================= =======================
Supplemental cash flow information:
Cash paid for interest $ 650,100 $ 262,900
Supplemental non-cash information:
Property and equipment purchases included
in accounts payable $ 9,000 $ -
See accompanying notes to the financial statements.
Notes to Financial Statements
1. Organization and Description of Business
MaxCyte, Inc. (the "Company" or "MaxCyte") was incorporated on
31 July 1998, under the laws and provisions of the state of
Delaware, and commenced operations on 01 July 1999.
MaxCyte is a global life sciences company utilizing its
proprietary cell engineering technology to enable the programmes of
its biotechnology and pharmaceutical company customers who are
engaged in cell therapy, including gene editing and
immuno-oncology, and in drug discovery and development, and
biomanufacturing as well as development of CARMA, MaxCyte's
proprietary, mRNA-based immuno-oncology cell therapy platform. The
Company licenses and sells its instruments and technology and sells
its consumables to developers of cell therapies and to
pharmaceutical and biotechnology companies for use in drug
discovery and development and biomanufacturing.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States of America ("U.S. GAAP"). These unaudited interim
condensed financial statements do not include all the information
and footnotes required by U.S. GAAP for complete audited financial
statements. These unaudited interim condensed financial statements
should be read in conjunction with the audited financial statements
and accompanying notes for the year ended 31 December 2018. In the
opinion of management, the unaudited interim condensed financial
statements reflect all the adjustments (consisting of normal
recurring adjustments) necessary to state fairly the Company's
financial position as of 30 June 2019 and the results of operations
for the six months ended 30 June 2019 and 2018. The interim
condensed results of operations are not necessarily indicative of
the results that may occur for the full fiscal year. The 31
December 2018 balance sheet included herein was derived from the
audited financial statements, but do not include all disclosures
including notes required by U.S. GAAP for complete audited
financial statements.
The Company operates in a single business segment.
Use of Estimates
The preparation of financial statements in conformity with U.S.
GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and
expenses during the reporting period. In the accompanying financial
statements, estimates are used for, but not limited to, revenue
recognition, stock-based compensation, allowance for doubtful
accounts, allowance for inventory obsolescence, accruals for
contingent liabilities, deferred taxes and valuation allowance, and
the depreciable lives of fixed assets. Actual results could differ
from those estimates.
Concentration
During the six months ended 30 June 2019 and 2018, no single
customer represented more than 10% of net revenues.
During the six months ended 30 June 2019, the Company purchased
approximately 57% of its inventory from a single supplier. During
the six months ended 30 June 2018, the Company purchased
approximately 65% of its inventory from two suppliers. As of 30
June 2019 and 2018, amounts payable to these suppliers totaled 22%
and 23% of total accounts payable, respectively.
Foreign Currency
The Company's functional currency is the U.S. dollar;
transactions denominated in foreign currencies are transacted at
the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a
transaction denominated in foreign currency is consummated and the
date on which it is either settled or at the reporting date are
recognized in the Statements of Operations as general and
administrative expense. The foreign currency transaction gains
(losses) were ($21,100) and $7,200 for the six months ended 30 June
2019 and 2018, respectively.
Fair Value
Fair value is the price that would be received from the sale of
an asset or paid to transfer a liability assuming an orderly
transaction in the most advantageous market at the measurement
date. U.S. GAAP establishes a hierarchical disclosure framework
which prioritizes and ranks the level of observability of inputs
used in measuring fair value. These tiers include:
-- Level 1-Quoted prices (unadjusted) in active markets that are
accessible at the measurement date for identical assets or
liabilities. The fair value hierarchy gives the highest priority to
Level 1 inputs.
-- Level 2-Observable market-based inputs other than quoted
prices in active markets for identical assets or liabilities.
-- Level 3-Unobservable inputs are used when little or no market
data is available. The fair value hierarchy gives the lowest
priority to Level 3 inputs.
See Note 6 for additional information regarding fair value.
Cash, Cash Equivalents and Short-term Investments
Cash and cash equivalents consist of financial instruments
including money market funds and commercial paper with original
maturities of less than 90 days. Short-term investments consist of
commercial paper with original maturities greater than 90 days and
less than one year. All money market funds and commercial paper are
recorded at amortized cost unless they are deemed to be impaired on
an other-than-temporary basis, at which time they are recorded at
fair value using Level 2 inputs.
The following table summarizes the Company's investments at 30
June, 2019:
Gross unrecognized Gross unrecognized
Amortized holding holding Aggregate
Description Classification cost gains losses fair value
Money market Cash
funds equivalents $ 6,697,900 $ - $ - $ 6,697,900
Commercial Cash
Paper equivalents 2,876,700 500 - 2,877,200
Commercial Short-term
Paper investments 3,439,900 3,200 - 3,433,100
------------------- ---------------------- ----------------------- -----------------
Total Investments $ 13,014,500 $ 3,700 $ - $ 13,018,200
=================== ====================== ======================= =================
The following table summarizes the Company's investments at 31
December, 2018:
Gross unrecognized Gross unrecognized
Amortized holding holding Aggregate
Description Classification cost gains losses fair value
Money market Cash
funds equivalents $ 5,945,200 $ - $ - $ 5,945,200
Commercial Cash
Paper equivalents 3,455,700 500 - 3,456,200
Commercial Short-term
Paper investments 3,191,000 500 - 3,191,500
------------------- ---------------------- ----------------------- -----------------
Total Investments $ 12,591,900 $ 1,000 $ - $ 12,592,900
=================== ====================== ======================= =================
At times the Company's cash balances may exceed federally
insured limits and cash may also be deposited in foreign bank
accounts that are not covered by federal deposit insurance. The
Company does not believe that this results in any significant
credit risk.
Inventory
The Company sells or licenses products to customers. The Company
uses the average cost method of accounting for its inventory and
adjustments resulting from periodic physical inventory counts are
reflected in costs of goods sold in the period of the adjustment.
Inventory consisted of the following at:
30 June 31 December
2019 2018
-------------- -----------------
Raw materials inventory $ 1,711,600 $ 884,200
Finished goods inventory 1,782,900 1,358,600
Total Inventory $ 3,494,500 $ 2,242,800
============== =================
The Company determined no allowance for obsolescence was
necessary at 30 June 2019 or 31 December 2018.
Accounts Receivable
Accounts receivable are reduced by an allowance for doubtful
accounts, if needed. The allowance for doubtful accounts reflects
the best estimate of probable losses determined principally on the
basis of historical experience and specific allowances for known
troubled accounts. All accounts or portions thereof that are deemed
to be uncollectible or to require an excessive collection cost are
written off to the allowance for doubtful accounts. The Company
recorded an allowance for doubtful accounts of $84,000 and $239,000
at 30 June 2019 and 31 December 2018, respectively.
Property and Equipment
Property and equipment is stated at cost. Depreciation is
computed using the straight-line method. Office equipment
(principally computers) is depreciated over an estimated useful
life of three years. Laboratory equipment is depreciated over an
estimated useful life of five years. Furniture is depreciated over
a useful life of seven years. Leasehold improvements are amortized
over the shorter of the estimated lease term or useful life.
Instruments represent equipment held at a customer's site that is
typically leased to customers on a short-term basis and is
depreciated over an estimated useful life of five years.
Property and equipment includes capitalized costs to develop
internal-use software. Applicable costs are capitalized during the
development stage of the project and include direct internal costs,
third-party costs and allocated interest expenses as
appropriate.
Property and equipment consist of the following:
30 June 31 December
2019 2018
------------ ---------------
Furniture and equipment $1,874,200 $ 1,743,200
Instruments 982,500 735,600
Leasehold improvements 280,600 280,600
Internal-use software under
development 200,300 666,700
Purchased software 902,200 28,300
Accumulated depreciation
and amortisation (1,869,000) (1,636,500)
Property and equipment,
net $2,370,800 $ 1,817,900
============ ===============
For the six months ended 30 June 2019 and 2018, the Company
transferred $270,100 and $164,600, respectively of instruments
previously classified as inventory to property and equipment leased
to customers.
For the six months ended 30 June 2019 and 2018, the Company
incurred depreciation and amortization expense of $256,600 and
$165,800 respectively. Maintenance and repairs are charged to
expense as incurred.
Management reviews property and equipment for impairment
whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability
of the long-lived asset is measured by a comparison of the carrying
amount of the asset to future undiscounted net cash flows expected
to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds the estimated
fair value of the assets. The Company recognized no impairment in
either of the six months ended 30 June 2019 or 2018.
Revenue Recognition
The Company analyzes contracts to determine the appropriate
revenue recognition using the following steps: (i) identification
of contracts with customers, (ii) identification of distinct
performance obligations in the contract, (iii) determination of
contract transaction price, (iv) allocation of contract transaction
price to the performance obligations and (v) determination of
revenue recognition based on timing of satisfaction of the
performance obligations.
In some arrangements, product and services have been sold
together representing distinct performance obligations. In such
arrangements the Company allocates the sale price to the various
performance obligations in the arrangement on a relative selling
price basis. Under this basis, the Company determines the estimated
selling price of each performance obligation in a manner that is
consistent with that used to determine the price to sell the
deliverable on a standalone basis.
The Company recognizes revenue upon the satisfaction of its
performance obligation (generally upon transfer of control of
promised goods or services to its customers) in an amount that
reflects the consideration to which it expects to be entitled in
exchange for those goods or services.
The Company defers incremental costs of obtaining a customer
contract and amortizes the deferred costs over the period that the
goods and services are transferred to the customer. The Company had
no material incremental costs to obtain customer contracts in any
period presented.
Deferred revenue results from amounts billed in advance to
customers or cash received from customers in advance of services
being provided.
Research and Development Costs
Research and development costs consist of independent
proprietary research and development costs and the costs associated
with work performed for fees from third parties. Research and
development costs are expensed as incurred. Research costs
performed for fees from customers are included in costs of goods
sold.
Stock-Based Compensation
The Company grants stock-based awards in exchange for employee,
consultant and non-employee director services. The value of the
award is recognized as expense on a straight-line basis over the
requisite service period.
The Company utilizes the Black-Scholes option pricing model for
estimating fair value of its stock options granted. Option
valuation models, including the Black-Scholes model, require the
input of highly subjective assumptions, and changes in the
assumptions used can materially affect the grant-date fair value of
an award. These assumptions include the expected volatility,
expected dividend yield, risk-free rate of interest and the
expected life of the award. A discussion of management's
methodology for developing each of the assumptions used in the
Black-Scholes model is as follows:
Expected volatility
Volatility is a measure of the amount by which a financial
variable such as a share price has fluctuated (historical
volatility) or is expected to fluctuate (expected volatility)
during a period. The Company does not currently have sufficient
history with its common stock subsequent to its 2016 initial public
offering to determine its actual volatility. The Company has been
able to identify several public entities of similar size,
complexity and stage of development; accordingly, historical
volatility has been calculated at 49% for the six months ended 30
June 2019 and 47% for the six months ended 30 June 2018 using the
volatility of these companies.
Expected dividend yield
The Company has never declared or paid common stock dividends
and has no plans to do so in the foreseeable future.
Risk-free interest rate
This approximates the U.S. Treasury rate for the day of each
option grant during the year, having a term that closely resembles
the expected term of the option. The risk-free interest rate was
between 2.3% and 2.6% for the six months ended 30 June 2019 and
2.7% and 2.9% for the six months ended 30 June 2018.
Expected term
This is the period of time that the options granted are expected
to remain unexercised. Options granted have a maximum term of ten
years. The Company estimates the expected term of the options to be
6.25 years for options with a standard four-year vesting period,
using the simplified method. Over time, management intends to track
estimates of the expected term of the option term so that estimates
will approximate actual behavior for similar options.
Expected forfeiture rate
The Company records forfeitures as they occur.
Income Taxes
The Company uses the asset and liability method of accounting
for income taxes. Deferred tax assets and liabilities are
determined based on differences between the financial reporting and
tax basis of assets and liabilities and are measured using the
enacted tax rates and laws that are expected to be in effect when
the differences are expected to reverse. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in
the period that such tax rate changes are enacted. The measurement
of a deferred tax asset is reduced, if necessary, by a valuation
allowance if it is more-likely-than-not that all or a portion of
the deferred tax asset will not be realized.
Management uses a recognition threshold and a measurement
attribute for the financial statement recognition and measurement
of tax positions taken or expected to be taken in a tax return, as
well as guidance on derecognition, classification, interest and
penalties and financial statement reporting disclosures. For those
benefits to be recognized, a tax position must be
more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes interest and penalties accrued
on any unrecognized tax exposures as a component of income tax
expense. The Company has not identified any uncertain income tax
positions that could have a material impact to the financial
statements.
The Company is subject to taxation in various jurisdictions in
the United States and abroad and remains subject to examination by
taxing jurisdictions for 2015 and all subsequent periods. The
Company had a Federal Net Operating Loss ("NOL") carry forward of
$40.5 million as of 31 December 2018, which was generally available
as a deduction against future income for US federal corporate
income tax purposes, subject to applicable carryforward
limitations. As a result of the March 2016 initial public offering,
the Company's NOLs are limited on an annual basis, subject to
certain carryforward provisions, pursuant to Section 382 of the
Internal Revenue Code of 1986, as amended, as a result of a greater
than 50% change in ownership that occurred in the three-year period
ending at the time of the March AIM IPO. The Company has calculated
that for the period ending 31 December 2022, the cumulative
limitation amount exceeds the NOLs subject to the limitation.
Leases
In transactions where the Company is the lessee, at the
inception of a contract, the Company determines if the arrangement
is, or contains, a lease. Right-of-use ("ROU") 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. Operating lease ROU assets and liabilities
are recognized at commencement date based on the present value of
lease payments over the lease term. Rent expense is recognized on a
straight-line basis over the lease term.
The Company has made certain accounting policy elections for
leases where it is the lessee whereby the Company (i) does not
recognize ROU assets or lease liabilities for short-term leases
(those with original terms of 12-months or less) and (ii) combines
lease and non-lease elements of its operating leases. Operating
lease ROU assets are included in leased assets and operating lease
liabilities are included in other current and non-current
liabilities in the Company's consolidated balance sheets. As of 30
June, 2019, the Company did not have any finance leases. See Note 8
for further discussion.
All transactions where the Company is the lessor are short-term
(one year or less) and have been classified as operating leases.
The Company's leases to third parties generally require upfront
payments and thus, there are no material future payments expected
to be received from existing leases. See Note 3 for details over
revenue recognition related to lease agreements.
Loss Per Share
Basic loss per share is computed by dividing net loss available
to common shareholders by the weighted average number of shares of
common stock outstanding during the period.
For periods of net income, and when the effects are not
anti-dilutive, diluted earnings per share is computed by dividing
net income available to common shareholders by the weighted-average
number of shares outstanding plus the impact of all potential
dilutive common shares, consisting primarily of common stock
options and stock purchase warrants using the treasury stock
method.
For periods of net loss, diluted loss per share is calculated
similarly to basic loss per share because the impact of all
dilutive potential common shares is anti-dilutive. The number of
anti-dilutive shares, consisting of stock options and stock
purchase warrants, which has been excluded from the computation of
diluted loss per share, was 9.9 million and 7.2 million for the six
months ended 30 June 2019 and 2018, respectively.
Recent Accounting Pronouncements
Recently Adopted
On 1 January, 2019, the Company adopted new guidance addressing
the accounting for leases. The Company adopted this guidance using
a modified retrospective method. The Company elected certain
practical expedients including retaining the original lease
classification and historical accounting for initial direct costs
for leases existing prior to the adoption date. Additionally, the
Company made ongoing accounting policy elections whereby the
Company does not recognize ROU assets or lease liabilities for
short-term leases (those with original terms of 12-months or less)
and combines lease and non-lease elements of its operating leases.
As a result of the adoption, the Company recognized ROU assets of
$518,700 and lease liabilities of $565,500. The adoption did not
have any effect on the Company's equipment leases where it is the
lessor.
On 1 January, 2019, the Company adopted new guidance simplifying
the accounting for nonemployee stock-based compensation awards. The
guidance aligned the measurement and classification for employee
stock-based compensation awards to nonemployee stock-based
compensation awards. Under the guidance, nonemployee awards will be
measured at their grant date fair value. Upon transition, the
existing nonemployee awards were measured at fair value as of the
adoption date. The adoption did not have a material effect on the
Company's financial statements.
Unadopted
In June 2016, the FASB issued guidance with respect to measuring
credit losses on financial instruments, including trade
receivables. The guidance eliminates the probable initial
recognition threshold that was previously required prior to
recognizing a credit loss on financial instruments. The credit loss
estimate can now reflect an entity's current estimate of all future
expected credit losses. Under the previous guidance, an entity only
considered past events and current conditions.
The guidance is effective for fiscal years beginning after 15
December 2020, including interim periods within those fiscal years.
Early adoption is permitted for fiscal years beginning after 15
December 2018, including interim periods within those fiscal years.
The adoption of certain amendments of this guidance must be applied
on a modified retrospective basis and the adoption of the remaining
amendments must be applied on a prospective basis. The Company is
currently evaluating the impact, if any, that this new accounting
pronouncement will have on its financial statements.
In August 2018, the FASB issued guidance addressing the
accounting for implementation, setup and other upfront costs paid
by a customer in a cloud computing or hosting arrangement. The
guidance aligns the accounting treatment of these costs incurred in
a hosting arrangement treated as a service contract with the
requirements for capitalization and amortization costs to develop
or obtain internal-use software. The guidance is effective for
fiscal years beginning after December 15, 2019. The guidance can be
adopted either retrospectively or prospectively. Early adoption is
permitted. The Company is currently evaluating the impact, if any,
that this guidance will have on the financial statements.
In August 2018, the FASB issued guidance addressing the
disclosure requirements for fair value measurements. The guidance
intends to improve the effectiveness of the disclosures relating to
recurring and nonrecurring fair value measurements. The guidance is
effective for fiscal years beginning after December 15, 2019.
Portions of the guidance are to be adopted prospectively while
other portions are to be adopted retrospectively. Early adoption is
permitted. The Company is currently evaluating the impact, if any,
that this guidance will have on the financial statements.
The Company has evaluated all other issued and unadopted
Accounting Standards Updates and believes the adoption of these
standards will not have a material impact on its results of
operations, financial position, or cash flows.
3. Revenue
Revenue is principally from the sale or lease of instruments and
processing assemblies, as well as from extended warranties. In some
arrangements, product and services have been sold together
representing distinct performance obligations. In such arrangements
the Company allocates the sale price to the various performance
obligations in the arrangement on a relative selling price basis.
Under this basis, the Company determines the estimated selling
price of each performance obligation in a manner that is consistent
with that used to determine the price to sell the deliverable on a
standalone basis.
Revenue is recognized at the time control is transferred to the
customer and the performance obligation is satisfied. Revenue from
the sale of instruments and processing assemblies is generally
recognized at the time of shipment to the customer, provided no
significant vendor obligations remain and collectability is
reasonably assured. Revenue from equipment leases are recognized
ratably over the contractual term of the lease agreement. Licensing
fee revenue is recognized ratably over the license period. Revenue
from fees for research services is recognized when services have
been provided.
Disaggregated revenue for the six months ended 30 June 2019 is
as follows:
Revenue Revenue
(ASC 606 (Non- ASC
Revenue) 606 Revenue) Total Revenue
--------------------
Product Sales $ 4,828,900 $ - $ 4,828,900
Leased Equipment - 2,702,300 2,702,300
Other 163,500 678,600 842,100
Total $ 4,992,400 $ 3,380,900 $ 8,373,300
==================== ============== ================
Disaggregated revenue for the six months ended 30 June 2018 is
as follows:
Revenue Revenue
(ASC 606 (Non- ASC
Revenue) 606 Revenue) Total Revenue
-------------------
Product Sales $ 4,239,100 $ - $ 4,239,100
Leased Equipment - 2,361,200 2,361,200
Other 118,100 211,600 329,700
Total $ 4,357,200 $ 2,572,800 $ 6,930,000
=================== ============== ===============
Additional disclosures relating to Revenue from Contracts with
Customers (ASC 606)
Changes in short and long term deferred revenue for the six
months ended 30 June 2019 were as follows:
Balance at 1 January 2019 $2,770,100
Revenue recognized in the current period
from
amounts included in the beginning
balance 1,849,400
Current period deferrals, net of amounts
recognized in the current period 3,162,600
Balance at 30
June 2019 $4,083,300
============
Changes in short- and long-term deferred revenue for the six
months ended 30 June 2018 were as follows:
Balance at 1 January 2018 $2,223,000
Revenue recognized in the current period
from
amounts included in the beginning balance 1,655,300
Current period deferrals, net of amounts
recognized in the current period 2,493,600
Balance at 30
June 2018 $3,061,300
============
Remaining contract consideration for which revenue has not been
recognized due to unsatisfied performance obligations with a
duration greater than one year was approximately $424,400 at 30
June 2019, the majority of which the Company expects to recognize
over the next four years.
In the six months ended 30 June 2019, the Company did not incur,
and therefore did not defer, any material incremental costs to
obtain contracts or costs to fulfill contracts.
4. Debt
The Company originally entered into a credit facility with
Midcap Financial SBIC, LP ("MidCap") in March 2014. The Company
amended the MidCap facility multiple times through August 2018 to,
among other things, (i) revise certain covenants, (ii) extend the
maturity date to 1 June 2023, (iii) extend the interest only period
to 1 July 2020 and change the exit fee to 4.75% and (iv) increase
the principal amount to $5,105,400.
In February 2019, the Company paid off the MidCap credit
facility in full in accordance with its terms and conditions. As a
result of the payoff the Company recognized a loss of $515,000
included as interest expense in its statement of operations.
In the six months ended 30 June 2019 and 2018, the Company
capitalized approximately $9,800 and $3,700 of interest expense
related to capitalized software development projects.
5. Stockholders' Equity
Common Stock
In March 2019, the Company completed an equity capital raise
issuing approximately 5.9 million shares of Common Stock at a price
of LIR1.70 (or approximately $2.25). The transaction generated
gross proceeds of approximately LIR10 million (or approximately
$13.3 million). In conjunction with the transaction, the Company
incurred costs of approximately $1.0 million which resulted in the
Company receiving net proceeds of approximately $12.3 million.
During the year ended 31 December 2018, the Company issued
436,388 shares of Common Stock as a result of stock option
exercises, receiving gross proceeds of $230,000. During the six
months ended 30 June 2019, the Company issued 147,500 shares of
Common Stock as a result of stock option exercises, receiving gross
proceeds of $117,600.
Stock Options
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan
(the "Plan") in January of 2016 to amend and restate the MaxCyte
2000 Long-Term Incentive Plan to provide for the awarding of (i)
stock options, (ii) restricted stock, (iii) incentive shares, and
(iv) performance awards to employees, officers, and directors of
the Company and to other individuals as determined by the Board of
Directors. Under the Plan, the maximum number of shares of Common
Stock of the Company that the Company may issue is (a) 6,264,682
shares plus (b) ten percent (10%) of the shares that are issued and
outstanding at the time awards are made under the Plan.
On 21 February 2018, the Company's Board resolved to increase
the number of stock options under the Plan by 2,000,000 to provide
sufficient shares to allow competitive equity compensation in its
primary markets for staff and consistent with practices of
comparable companies.
The Company has not issued any restricted stock, incentive
shares, or performance awards under the Plan. Stock options granted
under the Plan may be either incentive stock options as defined by
the Internal Revenue Code or non-qualified stock options. The Board
of Directors determines who will receive options under the Plan and
determines the vesting period. The options can have a maximum term
of no more than 10 years. The exercise price of options granted
under the Plan is determined by the Board of Directors and must be
at least equal to the fair market value of the Common Stock of the
Company on the date of grant.
In the six months ended 30 June 2019, the Company granted
1,993,500 stock options with a weighted-average exercise price of
$2.34 per share. The weighted-average fair value of the options
granted during the six months ended 30 June 2019 and 2018 was
estimated to be $1.17 and $1.68, respectively.
At 30 June 2019, there were 9,924,508 stock options outstanding
with a weighted-average exercise price of $1.65 per share. As of 30
June 2019, total unrecognized compensation expense was $5,202,000
which will be recognized over the next 3.0 years.
Stock-based compensation expense for the six months ended 30
June was as follows:
2019 2018
-----------
General and administrative $ 385,800 $174,200
Sales and marketing 146,300 74,300
Research and development 291,800 129,200
Total $ 823,900 $377,700
=========== ===========
6. Fair Value
The Company's Balance Sheets include various financial
instruments (primarily cash and cash equivalents, short-term
investments, accounts receivable and accounts payable) that are
carried at cost, which approximates fair value due to the
short-term nature of the instruments. Notes payable and capital
lease obligations are reflective of fair value based on market
comparable instruments with similar terms.
Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has no financial assets or liabilities measured at
fair value on a recurring basis.
Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
Money market funds and commercial paper classified as
held-to-maturity are measured at fair value on a non-recurring
basis when they are deemed to be impaired on an
other-than-temporary basis. No such fair value impairment was
recognized during the six months ended 30 June, 2019 or 2018.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Recurring Basis
The Company has no non-financial assets and liabilities that are
measured at fair value on a recurring basis.
Non-Financial Assets and Liabilities Measured at Fair Value on a
Non-Recurring Basis
The Company measures its long-lived assets, including property
and equipment, at fair value on a non-recurring basis. These assets
are recognized at fair value when they are deemed to be impaired.
No such fair value impairment was recognized during the six months
ended 30 June, 2019 or 2018.
7. Retirement Plan
The Company sponsors a defined-contribution 401(k) retirement
plan covering eligible employees. Participating employees may
voluntarily contribute up to limits provided by the Internal
Revenue Code. The Company matches employee contributions equal to
50% of the salary deferral contributions, with a maximum Company
contribution of 3% of the employees' eligible compensation. In the
six months ended 30 June, 2019 and 2018, Company matching
contributions amounted to $111,400 and $104,200, respectively.
8. Commitments and Contingencies
The Company entered into a five-year non-cancelable operating
lease agreement for office and laboratory space in February 2009
with an initial expiration of 31 January 2014 which was
subsequently extended to January 2020. In April 2017, the Company
entered into leases for additional office and laboratory space. A
member of the Company's Board of Directors is the CEO and Board
member of the lessor in the April 2017 lease. Rent payments under
the April 2017 lease totaled $157,900 and $153,500 in the six
months ended 30 June 2019 and 2018, respectively.
All the Company's office and laboratory leases expire in January
2020 and provide for annual 3% increases to the base rent. The
current monthly base lease payment for all leases is approximately
$258,400. In addition to base rent, the Company pays a pro-rated
share of common area maintenance ("CAM") costs for the entire
building, which is adjusted annually based on actual expenses
incurred. Two of the Company's office leases each contain a one
5-year renewal option, none of which have been assumed to be
certain of being exercised.
As of 30 June 2019, all the Company's existing leases are
classified as operating leases. The Company used a discount rate of
10% in calculating its lease liability under its operating
leases.
Total rent expense, including base rent and CAM for the six
months ended 30 June, 2019 and 2018, was $341,900 and $344,700,
respectively. Rent expense is recognized on a straight-line basis
in the accompanying financial statements.
Lease costs for the six months ended 30 June 2019, consisted of
the following:
Operating lease
cost $ 268,500
Variable lease costs 99,000
Total $ 367,500
=============
Estimated future minimum payments, all due within 12 months,
under the operating leases are as follows:
Total $ 330,100
Discount factor (11,200)
Lease liability 318,900
Current lease liability (318,900)
Non-current lease
liability $ -
9. Subsequent Events
In preparing these financial statements, the Company has
evaluated events and transactions for potential recognition or
disclosure through 16 September 2019, the date the financial
statements were available to be issued.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GGUBCBUPBPUM
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September 18, 2019 02:01 ET (06:01 GMT)
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