Teknova(TKNO) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Financial Statements (Unaudited) This section presents unaudited condensed financial statements for Q1 2024, highlighting a net loss and substantial doubt about the company's going concern status Condensed Statements of Operations (Q1 2024 vs Q1 2023) | Metric | For the Three Months Ended March 31, 2024 (in thousands) | For the Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Revenue | $9,290 | $9,121 | | Gross Profit | $2,209 | $2,423 | | Loss from Operations | $(7,986) | $(8,946) | | Net Loss | $(8,097) | $(8,817) | | Net Loss Per Share | $(0.20) | $(0.31) | Condensed Balance Sheet Highlights | Metric | As of March 31, 2024 (in thousands) | As of December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $21,596 | $28,484 | | Total current assets | $38,823 | $45,660 | | Total assets | $120,817 | $128,587 | | Total liabilities | $37,439 | $38,551 | | Total stockholders' equity | $83,378 | $90,036 | - Management has substantial doubt about the Company's ability to continue as a going concern for the next twelve months due to recurring net losses of $8.1 million in Q1 2024, an accumulated deficit of $99.9 million, and the risk of not meeting debt covenants[35][36][38] - In January 2024, the company implemented a workforce reduction of approximately 35 positions, incurring $1.3 million in severance and termination benefits[40] Revenue by Product Category | Product Category | Q1 2024 Revenue (in thousands) | Q1 2023 Revenue (in thousands) | | :--- | :--- | :--- | | Lab Essentials | $7,266 | $7,257 | | Clinical Solutions | $1,718 | $1,609 | | Other | $306 | $255 | | Total Revenue | $9,290 | $9,121 | - On March 8, 2024, the company amended its credit agreement with MidCap, reducing minimum net revenue requirements for 2024 from $42.0 million to $34.0 million and increasing the minimum cash requirement from $9.0 million to $10.0 million[63][66] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial performance, noting revenue growth, declining gross profit margin, reduced operating expenses, and ongoing liquidity concerns Results of Operations Comparison | Metric | Q1 2024 (in thousands) | Q1 2023 (in thousands) | $ Change (in thousands) | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $9,290 | $9,121 | $169 | 1.9% | | Gross Profit | $2,209 | $2,423 | $(214) | (8.8)% | | Loss from Operations | $(7,986) | $(8,946) | $960 | (10.7)% | | Net Loss | $(8,097) | $(8,817) | $720 | (8.2)% | - The decrease in gross profit percentage to 23.8% from 26.6% was primarily driven by increased overhead costs, largely depreciation expense, following the completion of the new manufacturing facility[105] - Operating expenses decreased due to reduced headcount, with Research and development expenses falling by 38.4% and Sales and marketing expenses by 28.9%, while General and administrative expenses included a one-time $1.3 million charge for the workforce reduction[106][107][108] - The company's liquidity is constrained, with $21.6 million in cash and cash equivalents as of March 31, 2024, raising substantial doubt about its ability to continue as a going concern due to insufficient capital to meet obligations over the next twelve months[114][120] Net Cash Flow Summary | Cash Flow Activity | For the Three Months Ended March 31, 2024 (in thousands) | For the Three Months Ended March 31, 2023 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(6,558) | $(7,684) | | Net cash provided by (used in) investing activities | $13 | $(4,312) | | Net cash used in financing activities | $(343) | $(25) | | Net decrease in cash and cash equivalents | $(6,888) | $(12,021) | Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company is exempt from providing quantitative and qualitative disclosures about market risk - As a smaller reporting company, Teknova is exempt from providing quantitative and qualitative disclosures about market risk[134] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no material changes to internal controls - Based on an evaluation as of March 31, 2024, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[135] - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2024, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[136] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is not party to material legal proceedings but has accrued $0.3 million for a pending former employee labor claim - In August 2023, a former employee filed a claim alleging violations of California's labor, wage, and hour laws, with a mediation scheduled for June 6, 2024[88] - The company has accrued its best estimate of potential loss related to the labor claim in the amount of $0.3 million, which is included in 'Accrued liabilities'[88] Item 1A. Risk Factors Updated risk factors highlight the company's history of operating losses and potential stock price dilution from available shares - The company has a history of operating losses, including $8.1 million for Q1 2024, and may not achieve or maintain profitability in the future[142] - A significant portion of the company's total outstanding shares are available for immediate resale, which could cause the market price of its common stock to drop significantly[143] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and confirms full utilization of IPO net cash proceeds as of March 31, 2024 - There were no unregistered sales of equity securities during the quarter[147] - As of March 31, 2024, the company has used all of the net cash proceeds from its IPO[148] Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported[150] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[151] Item 5. Other Information The company reports no other information for this item - None reported[152] Item 6. Exhibits This section lists exhibits filed with the 10-Q report, including credit agreement amendments and officer certifications - The report includes a list of all exhibits filed, such as corporate governance documents, credit agreement amendments, and officer certifications[153][154]