| 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, 2024. Revenue Recognition Revenue recognized from services provided under
our customer contracts is 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 is ordered at a specified scale with prescribed dates, 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 revenue streams
(in thousands):
Schedule of revenue
Three Months Ended July 31,
2024 2023
Manufacturing revenues $ 33,971 $ 33,420
Process development revenues 6,202 4,306
Total revenues $ 40,173 $ 37,726 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 consolidated 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, 2024 and
2023, we recognized revenues of $ 20.5 16.8 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. For contracts with multiple performance obligations, we allocate transaction price to each performance
obligation identified in a contract on a relative standalone selling price basis. For contracts in which we receive noncash consideration,
such as in the form of a customer’s equity securities, we utilize the quoted market price for such noncash consideration to determine
the transaction price. We generally determine relative standalone selling prices based on the price observed in the customer contract
for each distinct performance obligation. If observable standalone selling prices are not available, we may estimate the applicable standalone
selling price based on the pricing of other comparable services or on a price that we believe the market is willing to pay for the applicable
service. In determining the transaction price, we also
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. In addition, our customer contracts generally
include provisions entitling us to a cancellation or postponement fee when a customer cancels or postpones its commitments prior to our
initiation of services, therefore not utilizing their reserved capacity. The determination of such cancellation and postponement fees
are based on the terms stated in the related customer contract but are generally considered substantive for accounting purposes and create
an enforceable right and obligation due to us when the cancellation or postponement occurs. Accordingly, we recognize such fees, subject
to variable consideration, as revenue upon the cancellation or postponement date utilizing the most likely method. 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, estimating variable consideration, 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 1.4 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, 2024, we do not have any unsatisfied performance obligations for contracts greater than one year. Costs incurred to obtain a contract are not material.
These costs are generally employee sales commissions, which are expensed as incurred and included in selling, general and administrative
expense in the consolidated statements of loss and comprehensive loss. Accounts Receivable, Net Accounts receivable is primarily comprised of
amounts owed to us for services provided under our customer contracts and are recorded at the invoiced amount net of an allowance for
doubtful accounts, if necessary. We apply judgement in assessing the ultimate realization of our receivables, that includes an assessment
of expected credit losses, and we estimate our allowance for doubtful accounts based on various factors, including our historical collection
experience, aging of our customer receivable balances, current and future economic market conditions, and the financial condition of our
customers. Based on our analysis of our accounts receivable
balance as of July 31, 2024 and April 30, 2024, we determined an allowance for doubtful accounts of $ 1.9 2.3 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
Description Estimated Useful Life
Leasehold improvements Shorter of estimated useful life or lease term
Laboratory and manufacturing equipment 5 – 15 years
Computer equipment and software 3 – 5 years
Furniture, fixtures and office equipment 5 – 10 years Costs for property and equipment
not yet placed into service have been capitalized as construction-in-progress. These costs are primarily related to equipment and leasehold
improvements associated with our manufacturing facilities and will be depreciated in accordance with the above guidelines once placed
into service. Interest costs incurred during construction of major capital projects are capitalized as construction-in-progress until
the underlying asset is ready for its intended use, at which point the interest costs are amortized as depreciation expense over the
life of the underlying asset. Interest capitalized as construction-in-progress for the three months ended July 31, 2024 and 2023 was
$ 0.8 0.1
Schedule of property and equipment
July 31, 2024 April 30, 2024
Leasehold improvements $ 103,178 $ 103,178
Laboratory and manufacturing equipment 42,476 41,497
Computer equipment and software 4,236 4,236
Furniture, fixtures and office equipment 1,730 1,730
Construction-in-progress 73,437 72,502
Total property and equipment, gross 225,057 223,143
Less: accumulated depreciation and amortization (39,440 ) (36,629 )
Total property and equipment, net $ 185,617 $ 186,514 Depreciation and amortization
expense for the three months ended July 31, 2024 and 2023 was $ 2.8 2.6 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, 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. Our finance leases with a term greater than one
year are included as assets within property and equipment, net and a lease liability equal to the present value of the minimum lease payments
is included in other current liabilities and finance lease liabilities, less current portion in our consolidated balance sheets. The present
value of the finance lease payments is calculated using the implicit interest rate in the lease. Finance lease ROU assets are amortized
on a straight-line basis over the expected useful life of the asset and the carrying amount of the lease liability is adjusted to reflect
interest, which is recorded as interest expense. Leases with an initial term
of 12 months or less are not recorded on our consolidated balance sheets and lease expense for these short-term leases is recognized on
a straight-line basis over the lease term. We have also elected the practical expedient to not separate lease components from non-lease
components. 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, 2024 and 2023, 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 Debt Issuance Costs Debt issuance costs related to convertible senior
notes are recorded as a deduction that is netted against the principal value of the debt and are amortized to interest expense using the
effective interest method over the contractual term of the debt other than when new convertible senior notes are considered a modification
of convertible senior notes for the same creditor, then the debt issuance costs are expensed as incurred (Note 3). Debt issuance costs
related to the revolving credit facility are included in prepaid expenses and other current assets in the unaudited condensed
consolidated balance sheets and are amortized to interest expense over the contractual term of the revolving credit facility (Note
3). Comprehensive Loss Comprehensive loss is the change
in equity during a period from transactions and other events and circumstances from non-owner sources. Comprehensive loss is equal to
our net 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 July 31, 2024 and April
30, 2024, our Level 1 financial assets consisted of our cash equivalents invested in money market funds of $ 30.2 27.6 3.4 4.4 We consider the fair value of
our convertible senior notes to be a Level 2 financial liability due to limited trading activity of the convertible senior notes (Note
3). We did not have any other Level 2 or Level 3 financial liabilities as of July 31, 2024 and April 30, 2024. Accounting Standards Not
Yet Adopted In November 2023, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures In December 2023, the FASB issued ASU No.
2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures |
