| Summary of Significant Accounting Policies | Note
2 – Summary of Significant Accounting Policies Information
regarding our significant accounting policies is contained in Note 2, “Summary of Significant Accounting Policies”,
of the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended April 30, 2020. Revenue
Recognition Revenue
recognized from services provided under our customer contracts are disaggregated into manufacturing and process development revenue
streams. Manufacturing
revenue Manufacturing
revenue generally represents revenue from the manufacturing of customer products recognized over time utilizing an input method
that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance
obligation. Under a manufacturing contract, a quantity of manufacturing runs are ordered and the product is manufactured according
to the customer’s specifications and typically only one performance obligation is included. Each manufacturing run represents
a distinct service that is sold separately and has stand-alone value to the customer. The products are manufactured exclusively
for a specific customer and have no alternative use. The customer retains control of its product during the entire manufacturing
process and can make changes to the process or specifications at its request. Under these agreements, we are entitled to consideration
for progress to date that includes an element of profit margin. Process
development revenue Process
development revenue generally represents revenue from services associated with the custom development of a manufacturing process
and analytical methods for a customer’s product. Process development revenue is recognized over time utilizing an input
method that compares the cost of cumulative work-in-process to date to the most current estimates for the entire cost of the performance
obligation. Under a process development contract, the customer owns the product details and process, which has no alternative
use. These process development projects are customized to each customer to meet its specifications and typically only one performance
obligation is included. Each process represents a distinct service that is sold separately and has stand-alone value to the customer.
The customer also retains control of its product as the product is being created or enhanced by our services and can make changes
to its process or specifications upon request. Under these agreements, we are entitled to consideration for progress to date that
includes an element of profit margin. The
following table summarizes our manufacturing and process development revenue streams (in thousands):
Three
Months Ended October
31, Six
Months Ended October
31,
2020 2019 2020 2019
Manufacturing
revenues $ 18,449 $ 15,989 $ 42,512 $ 28,897
Process
development revenues 2,615 2,324 3,944 4,670
Total
revenues $ 21,064 $ 18,313 $ 46,456 $ 33,567 The
timing of revenue recognition, billings and cash collections results in billed trade receivables, contract assets (unbilled receivables),
and contract liabilities (customer deposits and deferred revenue). Contract assets are recorded when our right to consideration
is conditioned on something other than the passage of time. Contract assets are reclassified to accounts receivable on the balance
sheet when our rights become unconditional. Contract liabilities represent customer deposits and deferred revenue billed and/or
received in advance of our fulfillment of performance obligations. Contract liabilities convert to revenue as we perform our obligations
under the contract. During
the three and six months ended October 31, 2020, we recognized revenue of $6.3 million and $22.7 million, respectively, for which
the contract liability was recorded in a prior period. During
the three and six months ended October 31, 2019, we recognized revenue of $6.4 million and $12.6 million, respectively, for which
the contract liability was recorded in a prior period. The
transaction price for services provided under our customer contracts reflects our best estimates of the amount of consideration
to which we are entitled in exchange for providing goods and services to our customers. In determining the transaction price,
we considered the different sources of variable consideration including, but not limited to, discounts, credits, refunds, price
concessions or other similar items. We have included in the transaction price some or all of an amount of variable consideration,
utilizing the most likely method, only to the extent that it is probable that a significant reversal in the amount of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. The
actual amount of consideration ultimately received may differ. Management may be required to exercise
judgement in estimating revenue to be recognized. Judgement is required in identifying performance obligations, estimating the
transaction price, estimating the stand-alone selling prices of identified performance obligations, and estimating the progress
towards the satisfaction of performance obligations. If actual results in the future vary from our estimates, the estimates will
be adjusted, which will affect revenues in the period that such variances become known. During the three and six months ended
October 31, 2020, changes in estimates for variable consideration related to the completion of certain performance obligations
during the current year periods resulted in an increase in revenues of $1.7 million and $1.1 million, respectively. There were
no material adjustments in estimates for variable consideration for the three and six months ended October 31, 2019. We
apply the practical expedient available under ASC 606 that permits us not to disclose the value of unsatisfied performance
obligations for contracts with an original expected length of one year or less. As of October 31, 2020, we do not have any
unsatisfied performance obligations for contracts greater than one year. Restricted
Cash Under
the terms of an operating lease related to our facilities (Note 4), we are required to maintain, as collateral, a letter of credit,
during the term of such lease. At October 31, 2020 and April 30, 2020, restricted cash of $0.4 million was pledged as collateral
under the letter of credit. Leases We
determine if an arrangement is or contains a lease at inception. Our operating leases with a term greater than one year are included
in operating lease right-of-use assets, operating lease liabilities and operating lease liabilities, less current portion in our
condensed consolidated balance sheets. Right-of-use assets represent our right to use an underlying asset during the lease term
and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease right-of-use assets
and liabilities are recognized at the lease commencement date, based on the present value of lease payments over the lease term.
In determining the net present value of lease payments, we use our incremental borrowing rate which represents an estimated rate
of interest that we would have to pay to borrow equivalent funds on a collateralized basis at the lease commencement date. Our
operating leases may include options to extend the lease which are included in the lease term when it is reasonably certain that
we will exercise a renewal option. Operating lease expense is recognized on a straight-line basis over the expected lease term. We
elected the post-transition practical expedient to not separate lease components from non-lease components for all existing leases.
We also elected a policy to not apply the recognition requirements of ASC 842 for short-term leases. Inventory Inventory
consists of raw materials inventory and is valued at the lower of cost, determined by the first-in, first-out method, or net realizable
value. We periodically review raw materials inventory for potential impairment and adjust inventory to its net realizable value
based on the estimate of future use and reduce the carrying value of inventory as deemed necessary. Property
and Equipment Property
and equipment is recorded at cost, less accumulated depreciation and amortization. Depreciation and amortization are computed
using the straight-line method over the estimated useful lives of the related assets, which are generally as follows:
Description Estimated
Useful Life
Leasehold improvements Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment 5 – 10 years
Furniture, fixtures and office equipment 5 – 10 years
Computer equipment and software 3 – 5 years Construction-in-progress,
which represents direct costs related to the construction of various equipment and leasehold improvements primarily associated
with our manufacturing facilities, is not depreciated until the asset is completed and placed into service. No interest was incurred
or capitalized as construction-in-progress as of October 31, 2020 and April 30, 2020. All of our property and equipment are located
in the U.S. Property and equipment consist of the following (in thousands):
October 31, 2020 April 30, 2020
Leasehold
improvements $ 21,175 $ 21,130
Laboratory and manufacturing
equipment 15,980 15,033
Computer equipment
and software 5,541 5,334
Furniture, fixtures
and office equipment 715 685
Construction-in-progress 6,147 2,564
Total
property and equipment, gross $ 49,558 $ 44,746
Less:
accumulated depreciation and amortization (19,326 ) (17,641 )
Total
property and equipment, net $ 30,232 $ 27,105 Depreciation
and amortization expense for the three and six months ended October 31, 2020 was $0.9 million and $1.7 million, respectively. Depreciation
and amortization expense for the three and six months ended October 31, 2019 was $0.7 million and $1.3 million, respectively. Impairment Long-lived
assets are reviewed for impairment in accordance with authoritative guidance for impairment or disposal of long-lived assets.
Long-lived assets are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable.
Long-lived assets are reported at the lower of carrying amount or fair value less cost to sell if impairment indicators exist.
For the six months ended October 31, 2020 and 2019, there were no indicators of impairment of the value of our long-lived assets
and no cumulative impairment losses were recognized as of October 31, 2020. Stock-Based
Compensation We
account for stock options, restricted stock units and other stock-based awards granted under our equity compensation plans in
accordance with the authoritative guidance for stock-based compensation. The estimated fair value of stock options granted to
employees in exchange for services is measured at the grant date, using a fair value based method, such as a Black-Scholes option
valuation model, and is recognized as expense on a straight-line basis over the requisite service periods. The fair value of restricted
stock units is measured at the grant date based on the closing market price of our common stock on the date of grant, and is recognized
as expense on a straight-line basis over the period of vesting. Forfeitures are recognized as a reduction of stock-based compensation
expense as they occur. As of October 31, 2020 and April 30, 2020, there were no outstanding stock-based awards with market or
performance conditions. Comprehensive
Income (Loss) Comprehensive
income (loss) is the change in equity during a period from transactions and other events and circumstances from non-owner sources.
Comprehensive income (loss) is equal to our net income (loss) for all periods presented. Fair
Value Measurements Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The guidance prioritizes the inputs used in measuring fair value into the
following hierarchy:
· Level 1 – Observable inputs, such as unadjusted
quoted prices in active markets for identical assets or liabilities.
· Level 2 –
Observable inputs other than quoted prices included in Level 1, such as assets or liabilities whose values are based on quoted
market prices in markets where trading occurs infrequently or whose values are based on quoted prices of instruments with
similar attributes in active markets.
· Level 3 –
Unobservable inputs that are supported by little or no market activity and significant to the overall fair value measurement
of the assets or liabilities; therefore, requiring the company to develop its own valuation techniques and assumptions. As
of October 31, 2020 and April 30, 2020, we do not have any Level 2 or Level 3 financial assets or liabilities and our cash equivalents,
which are primarily invested in money market funds with one major commercial bank, are carried at fair value based on quoted market
prices for identical securities (Level 1 input). Recent
Accounting Pronouncements In
June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments –
Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments 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 In June 2018, the FASB issued ASU No.
2018-15, Intangibles-Goodwill and other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation
Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract In
December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes In
August 2020, the FASB issued ASU No. 2020-06, Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging
– Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an
Entity’s Own Equity |
