| 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, 2021. 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 at a specified scale, where the product is manufactured according to the customer’s specifications
and typically includes only one performance obligation. 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 includes only one performance obligation. 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):
Disaggregation of revenue
Three Months Ended July 31,
2021 2020
Manufacturing revenues $ 25,675 $ 24,063
Process development revenues 5,079 1,329
Total revenues $ 30,754 $ 25,392 The timing of revenue recognition, billings
and cash collections results in billed accounts receivable, 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 months ended July 31, 2021 and
2020, we recognized revenue of $ 17.5 16.4 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. There were no material adjustments in estimates for variable consideration during
the three months ended July 31, 2021 and 2020. 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 July 31, 2021, 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 one of our facilities (Note 4), we are required to maintain a letter of credit as collateral. Accordingly, at July 31,
2021 and April 30, 2021, restricted cash of $0.4
0.35 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 (“ROU”)
assets, current portion of operating lease liabilities and operating lease liabilities, less current portion in our consolidated balance
sheets. ROU 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 ROU 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 have elected not to apply the recognition requirements
of ASC 842 for short-term leases. We have also elected the practical expedient to not separate lease components from non-lease components. 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 asset, which are generally as follows:
Schedule of estimated useful lives of property
Description Estimated Useful Life
Leasehold improvements Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment 5 – 10 years
Computer equipment and software 3 – 5 years
Furniture, fixtures and office equipment 5 – 10 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 July 31, 2021 and April 30, 2021. All of our property and equipment are located in the
United States. Property and equipment consist of the following (in thousands):
Schedule of property and equipment
July 31, 2021 April 30, 2021
Leasehold improvements $ 23,000 $ 23,000
Laboratory and manufacturing equipment 21,303 20,793
Computer equipment and software 5,541 5,541
Furniture, fixtures and office equipment 843 843
Construction-in-progress 15,985 8,372
Total property and equipment, gross 66,672 58,549
Less: accumulated depreciation and amortization (22,103 ) (21,094 )
Total property and equipment, net $ 44,569 $ 37,455 Depreciation and amortization
expense for the three months ended July 31, 2021 and 2020 was $ 1.0 0.8 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. If such events or changes in circumstances
arise, we compare the carrying amount of the long-lived assets to the estimated future undiscounted cash flows expected to be generated
by the long-lived assets. If the long-lived assets are determined to be impaired, any excess of the carrying value of the long-lived assets
over its estimated fair value is recognized as an impairment loss. For the three months ended July 31, 2021 and 2020, there were no Stock-Based Compensation We account for stock options,
restricted stock units, performance stock units and other stock-based awards granted under our equity compensation plans in accordance
with the authoritative guidance of ASC 718, Compensation – Stock Compensation Comprehensive Income Comprehensive income is the
change in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive income is
equal to our net income 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 July
31, 2021 and April 30, 2021, we do not have any Level 2 or Level 3 financial assets and our cash equivalents of $145.0 million and $158.8
million, respectively, are invested in money market funds with two major commercial banks, are carried at fair value based on quoted
market prices for identical securities (Level 1 input). We consider the fair value of our convertible senior notes to be a Level 2 measurement
due to limited trading activity of the senior convertible notes. Refer to Note 3, Debt 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 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 We elected to early adopt ASU 2020-06 on May 1,
2021 using a modified retrospective transition method. Under this transition method, prior period financial information and disclosures
are not adjusted and continue to be reported under the accounting standards that were in effect prior to our adoption of ASU 2020-06. The adoption of ASU 2020-06 resulted in the re-combination
of the debt and equity components of our convertible senior notes (Note 3) into a single debt instrument, which resulted in a $42.4 million
decrease in additional paid-in capital from the derecognition of the bifurcated equity component, a $41.6 million increase in convertible
senior notes from the derecognition of the discount associated with the bifurcated equity component, or debt discount, and $0.8 million
decrease to the opening balance of accumulated deficit, representing the cumulative non-cash interest expense recognized related to the
amortization of the debt discount associated with the bifurcated equity component of our convertible senior notes. The adoption of this
standard will also reduce the non-cash interest expense recognized in future periods due to the derecognition of the debt discount associated
with the bifurcated equity component of our convertible senior notes. When calculating net income per share of common stock attributable
to common stockholders, we use the if-converted method as required under ASU 2020-06 to determine the dilutive effect of our convertible
senior notes. |
