MaxCyte, Inc. MaxCyte, Inc. - MXCR - Interim Results - Part 2
19/09/2017 07:00
- Part 2: For the preceding part double click ID:nRSS0903Ra
guidance simplifying the accounting for and
financial statement disclosure of stock-based compensation awards. Under the
guidance, all excess tax benefits and tax deficiencies related to stock-based
compensation awards are to be recognized as income tax expenses or benefits in
the income statement and excess tax benefits should be classified along with
other income tax cash flows in the operating activities section of the
statement of cash flows. Under the guidance, companies can also elect to
either estimate the number of awards that are expected to vest or account for
forfeitures as they occur. In addition, the guidance amends some of the other
stock-based compensation awards guidance to more clearly articulate the
requirements and cash flow presentation for withholding shares for
tax-withholding purposes. The guidance is effective for reporting periods
beginning after 15 December 2016 and early adoption is permitted, though all
amendments of the guidance must be adopted in the same period. The adoption of
certain amendments of the guidance must be applied prospectively, and adoption
of the remaining amendments must be applied either on a modified retrospective
basis or retrospectively to all periods presented. The Company adopted this
guidance for the year ended 31 December 2017 and elected to account for
forfeitures as they occur. The adoption of this new guidance did not have a
material impact on the Company's financial statements.
Unadopted
In May 2014, the Financial Accounting Standards Board ("FASB") issued guidance
for revenue recognition for contracts, superseding the previous revenue
recognition requirements, along with most existing industry-specific guidance.
The guidance requires an entity to review contracts in five steps: 1) identify
the contract, 2) identify performance obligations, 3) determine the
transaction price, 4) allocate the transaction price, and 5) recognize
revenue. The new standard will result in enhanced disclosures regarding the
nature, amount, timing, and uncertainty of revenue arising from contracts with
customers. In August 2015, the FASB issued guidance approving a one-year
deferral, making the standard effective for reporting periods beginning after
15 December 2017 for public business entities, with early adoption permitted
only for reporting periods beginning after 15 December 2016. In March 2016,
the FASB issued guidance to clarify the implementation guidance on principal
versus agent considerations for reporting revenue gross rather than net, with
the same deferred effective date. In April 2016, the FASB issued guidance to
clarify the identification of performance obligations and licensing
arrangements. In May 2016, the FASB issued guidance addressing the
presentation of sales and other similar taxes collected from customers,
providing clarification of the collectability criterion assessment, as well as
clarifying certain transition requirements. The Company is currently
evaluating the impact, if any, that this guidance will have on its financial
statements.
In February 2016, the FASB issued guidance for the accounting for leases. The
guidance requires lessees to recognize assets and liabilities related to
long-term leases on the balance sheet and expands disclosure requirements
regarding leasing arrangements. The guidance is effective for reporting
periods beginning after 15 December 2018 for public business entities and
early adoption is permitted. The guidance must be adopted on a modified
retrospective basis and provides for certain practical expedients. The Company
is currently evaluating the impact, if any, that this new accounting
pronouncement will have on its financial statements.
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 recognising 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 for public business entities, 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 May 2017, the FASB issued guidance clarifying when changes in the terms or
conditions of share-based payment awards should be accounted for as
modifications. This guidance is effective for fiscal years beginning after 15
December 2017 and early adoption is permitted. This guidance must be applied
prospectively to awards modified after the adoption date. The Company is
currently evaluating the impact, if any, that this new accounting
pronouncement will have on its financial statements.
In July 2017, the FASB issued guidance addressing several issues involving
financial instruments. Part I of the guidance simplifies the accounting for
certain equity-linked financial instruments and embedded features with down
round features that reduce the exercise price when the pricing of a future
round of financing is lower ("down round protection"). Current accounting
guidance provides that instruments with down round protection be classified as
derivative liabilities with changes in fair value recorded through earnings.
The updated guidance provides that instruments with down round protection are
no longer precluded from being classified as equity. This guidance is
effective for fiscal years beginning after 15 December 2018 for public
business entities and early adoption is permitted. This guidance must be
applied retrospectively. The Company is currently evaluating the impact, if
any, that this new accounting pronouncement will have on its 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. Debt
The Company entered into a credit facility in March 2014 with Midcap Financial
SBIC, LP ("MidCap") and subsequently amended the facility in 2015 and 2016;
the facility now provides up to $5,105,400 in total borrowing capacity. All
amendments have been accounted for as "debt modifications." The facility
carries a variable interest rate equal to the greater of (i) 1.50% above the
LIBOR then in effect, or (ii) 10.00%. The facility is collateralized by
substantially all tangible assets of the Company. The facility also provides
the following terms: (i) maturity date of 1 June 2021 (ii) interest only
payments through 1 July 2018 and (iii) an exit fee of 6.75%.
Deferred fees incurred in conjunction with the amendments are being amortized
using the effective interest method over the remaining term of the amended
debt. Unamortized deferred financing costs were approximately $90,100 and
$107,700 at 30 June 2017 and 31 December 2016, respectively, and are included
as reductions to the note payable balance.
In connection with this facility, in March 2014 and December 2014, the Company
issued stock purchase warrants to MidCap to purchase shares of its series D
perpetual preferred stock at an exercise price of $1.00 per share. The
warrants were recorded as a liability with an offsetting debt discount at
their estimated fair value and such discount was being amortized as interest
expense over the term of the debt using the effective interest method (see
Note 5). The warrants were exercised in whole in March 2016 in conjunction
with the Company's AIM IPO (see Note 4).
The total balance of the MidCap credit facility at both 30 June 2017 and 31
December 2016 was $5,105,400, with an interest rate of 10%; the balance of the
unamortized debt discount at 30 June 2017 and 31 December 2016 was $7,200 and
$8,700, respectively. Future minimum principal payments under the MidCap
credit facility are expected to be approximately $850,000 in 2018,
approximately $1,702,000 in 2019 and 2020, and approximately $851,000 in
2021.
4. Stockholders' Equity
Common Stock
On 29 March 2016, the Company completed its initial public offering ("IPO") of
its Common Stock on the AIM sub-market of the London Stock Exchange. The
Company issued approximately 14.3 million shares of its Common Stock at an
initial price of ₤0.70 per share (or approximately $1.01 per share),
generating gross proceeds of approximately ₤10 million (or approximately $14.4
million). In conjunction with the transaction the Company incurred costs of
approximately $3.1 million which resulted in the Company receiving net
proceeds of approximately $11.3 million.
In conjunction with the AIM IPO and in accordance with the Plan of
Recapitalization, the Company issued 27,151,531 shares of Common Stock upon
the conversion of all of its outstanding shares of preferred stock. The
Company also issued 85,914 shares of Common Stock upon the exchange of all
outstanding stock purchase warrants.
On 21 April 2017, the Company completed an equity capital raise issuing
7,275,000 shares of Common Stock to new and existing investors at a price of
₤2.75 per share (or approximately $3.51 per share). The transaction generated
gross proceeds of approximately ₤20 million (or approximately $25.5 million).
In conjunction with the transaction the Company incurred costs of
approximately $1.6 million which resulted in the Company receiving net
proceeds of approximately $23.9 million.
During the first six months of 2017, the Company issued 22,435 shares of
Common Stock as a result of stock option exercises, receiving gross proceeds
of approximately $4,000.
Stock Options
The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan (the "Plan") in
January 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.
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 2017, the Company awarded 140,000 stock
options with an average exercise price of $3.17 per share and a weighted
average grant date fair value of $1.51 per share.
At 30 June 2017, there were 5,873,297 stock options outstanding with an
average exercise price of $0.46 per share. As of 30 June 2017, total
unrecognized compensation expense was $742,300, which will be recognized over
the next 3.5 years.
Stock-based compensation expense for the six months ended 30 June was as
follows:
2017 2016
US$ US$
General and administrative $ 45,700 $ 1,000
Sales and marketing 32,700 63,800
Research and development 42,200 700
Total $ 120,600 $ 65,500
Stock Purchase Warrants
Immediately prior to the Company's AIM IPO and pursuant to the Plan of
Recapitalization, on 29 March 2016 all stock purchase warrants were exchanged
for 85,914 shares of Common Stock. Prior to such exercise, the warrants were
classified as liabilities. At 30 June 2017, the Company had no outstanding
stock purchase warrants.
5. Fair Value
The Company's Balance Sheets include various financial instruments (primarily
cash and cash equivalents, accounts receivable and accounts payable and
accrued expenses) 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
After the adoption of the Plan of Conditional Recapitalization and prior to
their exercise in March 2016, the Company's stock purchase warrants were
exchangeable into Series D Preferred which could have been required to be
settled by issuance of a variable number of shares; as such, the warrants were
classified as liabilities, measured at fair value and marked to market each
reporting period until settlement. The fair value of the warrants was
measured using Level 3 inputs and was determined based on the value of the
warrants relative to the value of the Company's other equity securities
assuming an AIM IPO and effectiveness of the Plan of Conditional
Recapitalization. The primary Level 3 unobservable inputs included various
assumptions about the potential AIM IPO. The warrants were exchanged for
85,914 shares of Common Stock on 29 March 2016.
The Company had no financial assets or liabilities measured at fair value on a
recurring basis at 30 June 2017 or 31 December 2016. The following table
presents a summary of changes in the fair value of Level 3 warrant liabilities
measured at fair value on a recurring basis for the six months ended 30 June
2016:
Description Balance at 1 January 2016 Exchanged for Common Stock in 2016 Change in fair value in 2016 Balance at 30 June 2016
Warrant liabilities $ 85,400 $ (85,400) $ - $ -
Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring
Basis
The Company has no financial assets and liabilities that are measured at fair
value on a non-recurring basis.
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 in the six months ended 30 June 2017 or 2016.
6. 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 in 2013. In April 2017, the
Company entered into leases for additional office and laboratory space. All
of the Company's office and laboratory leases expire in January 2020 and
provide for annual 3% increases to the based rent. The current monthly base
lease payment for all leases is approximately $41,000. 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.
Total rent expense, including base rent and CAM for the six months ended 30
June 2017 and 2016, was $222,600, and $166,600, respectively. Rent expense is
recognized on a straight-line basis in the accompanying financial statements.
7. Subsequent Events
In preparing these financial statements, the Company has evaluated events and
transactions for potential recognition or disclosure through 18 September 2017
the date the financial statements were available to be issued.
This information is provided by RNS
The company news service from the London Stock Exchange
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