bli-20210331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark one)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___ to___

Commission file number: 001-39388

Berkeley Lights, Inc.

(Exact name of registrant as specified in its charter)


Delaware			35-2415390
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

5858 Horton Street, Suite 320

Emeryville, California 94608

(Address of principal executive offices, including zip code)

(510) 858-2855

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common stock, $0.00005 par value

BLI

The Nasdaq Global Select Market

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2021, 66,724,383 shares of the registrant’s common stock, $0.00005 par value per share, were outstanding.

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BERKELEY LIGHTS, INC.

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2021

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		Page(s)

Part I.	Financial Information	1

Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1

	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	1

	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2021 and 2020	2

	Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2021 and 2020	3

	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	36

Item 4.	Controls and Procedures	37

Part II.	Other Information	38

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3.	Defaults Upon Senior Securities	38

Item 4.	Mine Safety Disclosures	38

Item 5	Other Information	38

Item 6.	Exhibits	38

	Signatures	40

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited).

Berkeley Lights, Inc.

Condensed Consolidated Balance Sheets


	March 31, 2021		December 31, 2020
(In thousands, except share and per share data)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	230,165	$	233,408
Trade accounts receivable	16,432		12,939
Inventory	10,941		11,047
Prepaid expenses and other current assets	8,240		8,175
Total current assets	265,778		265,569
Restricted cash	270		270
Property and equipment, net	17,152		14,544
Operating lease right-of-use assets	16,223		16,718
Other assets	3,528		2,557
Total assets	$	302,951	$	299,658
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable	$	6,934	$	3,491
Accrued expenses and other current liabilities	8,153		8,401
Current portion of notes payable	16,592		11,594
Deferred revenue	7,929		5,482
Total current liabilities	39,608		28,968
Notes payable, net of current portion	3,320		8,301
Deferred revenue, net of current portion	2,301		1,709
Lease liability, long-term	15,356		15,899

Total liabilities	60,585		54,877
Commitments and contingencies (Note 13)
Stockholders’ equity:
Convertible preferred stock, $0.00005 par value. Authorized 10,000,000 shares at March 31, 2021 and December 31, 2020, respectively; no shares issued and outstanding at March 31, 2021 and December 31, 2020	—		—
Common stock, $0.00005 par value. Authorized 300,000,000 shares at March 31, 2021 and December 31, 2020; issued and outstanding 66,384,736 and 64,486,246 shares at March 31, 2021 and December 31, 2020, respectively	4		3
Additional paid-in capital	449,681		436,662
Accumulated deficit	(207,319)		(191,884)
Total stockholders’ equity	242,366		244,781
Total liabilities and stockholders’ equity	$	302,951	$	299,658

See accompanying notes to these condensed consolidated financial statements.

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Berkeley Lights, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)


	Three months ended March 31,
	2021		2020
(In thousands, except share and per share data)
Revenue:
Product revenue	$	13,533	$	10,683
Service revenue	5,095		3,095
Total revenue	18,628		13,778
Cost of sales:
Product cost of sales	3,703		2,620
Service cost of sales	2,474		1,179
Total cost of sales	6,177		3,799
Gross profit	12,451		9,979
Operating expenses:
Research and development	13,027		10,976
General and administrative	8,967		3,997
Sales and marketing	5,606		3,234
Total operating expenses	27,600		18,207
Loss from operations	(15,149)		(8,228)
Other income (expense):
Interest expense	(354)		(357)
Interest income	66		151
Other income (expense), net	19		25
Loss before income taxes	(15,418)		(8,409)
Provision for income taxes	17		16
Net loss and net comprehensive loss	$	(15,435)	$	(8,425)

Net loss attributable to common stockholders per share, basic and diluted	$	(0.24)	$	(3.02)
Weighted-average shares used in calculating net loss per share, basic and diluted	65,259,398		3,047,967

See accompanying notes to these condensed consolidated financial statements.

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Berkeley Lights, Inc.

Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


	Three Months Ended March 31, 2021
	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
(In thousands, except per share data)	Shares	Amount		Shares	Amount
Balances at December 31, 2020	—	$	—	64,486,246	$	3	$	436,662	$	(191,884)	$	244,781



Shares issued in connection with:
Exercise of stock options	—	—		1,778,130	1		6,361		—		6,362
Vesting of restricted stock units	—	—		5,000	—		—		—		—
Employee stock purchase plan	—	—		115,360	—		2,157		—		2,157

Stock-based compensation	—	—		—	—		4,501		—		4,501
Net loss	—	—		—	—		—		(15,435)		(15,435)
Balances at March 31, 2021	—	$	—	66,384,736	$	4	$	449,681	$	(207,319)	$	242,366


	Three Months Ended March 31, 2020
	Convertible Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
(In thousands, except per share data)	Shares	Amount		Shares	Amount
Balances at December 31, 2019	50,462,272	$	224,769	3,073,067	$	—	$	9,314	$	(150,300)	$	83,783
Shares issued in connection with:
Exercise of stock options	—	—		8,580	—		21		—		21
Vesting of shares subject to repurchase from early exercised options	—	—		—	—		88		—		88
Stock-based compensation	—	—		—	—		1,213		—		1,213
Net loss	—	—		—	—		—		(8,425)		(8,425)
Balances at March 31, 2020	50,462,272	$	224,769	3,081,647	$	—	$	10,636	$	(158,725)	$	76,680

See accompanying notes to these condensed consolidated financial statement

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Berkeley Lights, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Three months ended March 31,
(In thousands)	2021		2020

Cash flows from operating activities:
Net loss	$	(15,435)	$	(8,425)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation	1,345		1,319
Stock-based compensation	4,494		1,179
Amortization of operating lease right-of-use assets	495		468
Non-cash interest and other (income) expense related to debt and note receivable agreements	18		17
Provision for excess and obsolete inventory	44		6
Loss on disposal and impairment of property and equipment	13		13



Changes in operating assets and liabilities:
Trade accounts receivable	(3,493)		(687)
Inventory	(2,744)		(3,469)
Prepaid expenses, other current assets and other assets	(1,036)		613
Trade accounts payable	2,690		1,160
Deferred revenue	3,039		(2,026)
Accrued expenses and other current liabilities	(429)		336
Operating lease liabilities	(361)		(492)

Net cash used in operating activities	(11,360)		(9,988)
Cash flows from investing activities:
Purchase of property and equipment	(402)		(760)


Net cash used in investing activities	(402)		(760)
Cash flows from financing activities:




Proceeds from issuance of common stock upon exercise of stock options	6,362		21
Proceeds from issuance of common stock under employee stock purchase plan	2,157		—
Net cash provided by financing activities	8,519		21
Net decrease in cash and cash equivalents and restricted cash	(3,243)		(10,727)
Cash and cash equivalents and restricted cash at beginning of period	233,678		81,303
Cash and cash equivalents and restricted cash at end of period	$	230,435	$	70,576

See accompanying notes to these condensed consolidated financial statements.

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1)The Company and Basis of Presentation

Description of Business

Berkeley Lights, Inc. (the “Company” or “Berkeley Lights”) is a leading Digital Cell Biology company focused on enabling and accelerating the rapid development and commercialization of biotherapeutics and other cell-based products. Berkeley Lights’ platform is a fully integrated, end-to-end solution, comprised of proprietary consumables, including our OptoSelect chips and reagent kits, advanced automation systems and advanced application and workflow software.

In 2017, Berkeley Lights incorporated BLI Europe International, Ltd. as a wholly-owned subsidiary in the United Kingdom to support Berkeley Lights’ planned expansion in Europe. In the third quarter of 2020, Berkeley Lights established a wholly owned foreign operating entity in China to further expand its operations. Berkeley Lights and its consolidated subsidiaries are hereinafter referred to as the “Company”. The Company’s headquarters are in Emeryville, California.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Berkeley Lights in this Quarterly Report have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation of S-X of the U.S. Securities and Exchange Commission (“the SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of Berkeley Lights’ management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial information have been included.

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in its condensed consolidated financial statements and the accompanying notes. Despite the Company’s intentions to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 or for any other period. The condensed consolidated balance sheet at December 31, 2020 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2020 included in the Annual Report on Form 10-K filed with the SEC on March 12, 2021.

Liquidity

The Company has experienced losses from its operations since its inception and has relied primarily on equity and debt financing to fund its operations to date. For the three months ended March 31, 2021, the Company had a consolidated net loss of $15.4 million and as of March 31, 2021 had an accumulated deficit of $207.3 million and unrestricted cash and cash equivalents of $230.2 million. Management expects to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term while the Company makes investments to support its anticipated growth. The Company believes that its cash and cash equivalents balance as of March 31, 2021 provides sufficient capital resources to continue its operations for at least 12 months from the issuance date of the accompanying consolidated financial statements.

Initial Public Offering

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on July 16, 2020 by the SEC, and the Company’s common stock began trading on the Nasdaq Global Select Market on July 17, 2020. On July 21, 2020, the Company closed its IPO, in which the Company sold 9,315,000 shares of common stock (which included 1,215,000 shares that were sold pursuant to the full exercise of the IPO underwriters’ option to purchase additional shares) at a price to the public of $22.00 per share. Including the option exercise, the Company received aggregate net proceeds of $187.9 million after deducting offering costs, underwriting discounts and commissions of $17.0 million.

Immediately prior to the completion of the IPO, 50,462,272 shares of convertible preferred stock then outstanding converted into an equivalent number of shares of common stock.

(2)Summary of Significant Accounting Policies

Significant accounting policies

The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and Exchange Commission and have not materially changed during the three months ended March 31, 2021.

Revenue Recognition

The Company derives revenue from two primary sources, primarily product and service revenues. Product revenues are comprised primarily of direct platform sales and product consumables revenues. Service revenues are comprised of revenue from joint development agreements, service and warranty, platform support and feasibility studies on the Company’s platforms. Revenues are recognized net of applicable taxes imposed on the related transaction.

The Company recognizes revenue when the Company satisfies the performance obligations under the terms of a contract and control of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract based on stand-alone selling price, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service.

The Company’s agreements with customers often include multiple performance obligations, which can sometimes be included in separate contracts entered into within a reasonably short period of time. The Company considers an entire customer arrangement to determine if separate contracts should be considered combined for the purposes of revenue recognition.

In order to determine the stand-alone selling price, the Company conducts a periodic analysis to determine whether various goods or services have an observable stand-alone selling price as well as to identify significant changes to current stand-alone selling prices. If the Company does not have an observable stand-alone selling price for a particular good or service, then the stand-alone selling price for that particular good or service is estimated using an approach that maximizes the use of observable inputs. The Company’s process for determining stand-alone selling price requires judgment and considers multiple factors that are reasonably available and maximizes the use of observable inputs that may vary over time depending upon the unique facts and circumstances related to each performance obligation. The Company believes that this method results in an

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

estimate that represents the price the Company would charge for the product offerings if they were sold separately.

For most of its performance obligations, the Company has established stand-alone selling price as a range rather than a single value, such range being plus or minus 15% of the weighted average of observable prices. If the contractually stated prices of all the performance obligations in a contract fall within their respective stand-alone selling price ranges, the Company will allocate the transaction price at the contractually stated amounts. In situations where the contractually stated price for one or more performance obligations in a contract fall(s) outside of their respective stand-alone selling price range, the Company will use the mid-point of the respective stand-alone selling price range for performance obligations in the contract priced outside of their respective stand-alone selling price range(s) and the contract values for performance obligations priced within their respective stand-alone selling price range(s), to allocate the transaction price on a relative stand-alone selling price basis.

Taxes, such as sales, value-add and other taxes, collected from customers concurrent with revenue generating activities and remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales.

The following describes the nature of the Company’s primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions the Company enters into with its customers.

Product revenues

Product revenues are comprised of two major revenue streams, direct platform sales and consumables. Direct platform sales revenues are comprised of advanced automation systems (including fully-paid workflow licenses) as well as Culture Station instruments. Direct platform sales also include revenue from subscription arrangements in which customers are able to subscribe to a specific workflow and pay a quarterly fee over a fixed period of time which covers the annual workflow license, the advanced automation system, as well as warranty and service. Consumables revenues are comprised of OptoSelect chips required to run the system as well as reagent kits. The Company’s standard arrangement with its customers is generally a purchase order or an executed contract. Revenue on product sales is recognized when control has transferred to the customer which typically occurs when the product has been shipped to the customer, risk of loss has transferred to the customer and the Company has a present right to payment for the system, chip or kit, as applicable. In certain limited circumstances when a product sale includes client acceptance provisions, the Company will first assess such terms to determine if the control of the good is being transferred to the customer in accordance with the agreed-upon specifications in the contract. To the extent that such acceptance provisions can be objectively determined to be aligned with the standard specifications of the arrangement, are defined and easily evaluated for completion, as well as do not afford the customer any additional rights or create additional performance obligations for the Company, such provisions would be determined perfunctory and would not preclude revenue recognition presuming all other criteria are met. If such acceptance provisions are considered to be substantive, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the Company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Payment terms are generally thirty to ninety days from the date of invoicing.

On a limited basis, the Company also enters into fixed-term sales-type lease arrangements with certain qualified customers. Revenue from sales-type lease arrangements is generally recognized in a manner consistent with platform systems, assuming all other revenue recognition criteria have been met.

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Service revenues

Service revenues primarily consist of joint development agreements, service and warranty, training and installation services, platform support and feasibility studies on the Company’s advanced automation systems and workflows. The Company’s services are provided primarily on a fixed fee basis; from time to time these fixed fee contracts may be invoiced at the outset of the arrangements. The Company recognizes revenue from the sale of extended warranty and enhanced service warranty arrangements over the respective period, while revenue on feasibility studies is recognized over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Revenue on platform support is recognized as the services are performed. Service contracts are typically short-term in nature. Payment terms are generally thirty to ninety days from the date of invoicing.

Joint development agreements are agreements whereby the Company provides services for the development of customized advanced automation systems, workflows or for customized workflows and consumables to meet a specific customer’s needs. Such contracts can be executed on a time-and-materials basis as well as include defined milestones associated with these development activities over extended periods of time, some in excess of twenty-four months. Typically, there are formal customer acceptance clauses as each milestone is completed, and an approval to proceed with the next milestone is generally required. The Company recognizes revenue over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Payment terms are generally thirty to ninety days from the achievement of each milestone.

The Company places a constraint on a variable consideration estimate that focuses on possible future downward revenue adjustments (i.e., revenue reversals) if there is uncertainty that could prevent a faithful depiction of the consideration to which the Company expects to be entitled to. The constraint estimate is reassessed at each reporting date until the uncertainty is resolved.

Contract assets and contract liabilities

Contract assets include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. The Company’s contract asset balances of $3.8 million and $2.7 million as of March 31, 2021 and December 31, 2020, respectively, are primarily from its sales-type lease arrangements as well as its development and feasibility study agreements. The Company does not have impairment losses associated with contracts with customers for the three months ended March 31, 2021 and 2020.

Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenues have not been recognized based on the Company’s revenue recognition criteria described above. Such amounts are reported as deferred revenue on the condensed consolidated balance sheets. Deferred revenue that is expected to be recognized during the following twelve months is recorded as a current liability and the remaining portion is recorded as non-current.

Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on the condensed consolidated balance sheet based on the timing of when the Company expects to complete the related performance obligations and invoice the customers. Contract liabilities are classified as current or long-term on the condensed consolidated balance sheet based on the timing when the revenue recognition associated with the related customer payments and invoicing is expected to occur.

Costs to obtain or fulfill a contract

Origination costs relate primarily to the payment of incentive bonuses that are directly related to sales transactions. Fulfillment costs generally include the direct cost of services such as platform support and feasibility studies.

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Origination and fulfillment costs that are internal to the Company are generally expensed when incurred because most of those costs are incurred concurrently with the delivery of the related goods and services, which are predominantly recognized at a point in time or are short-term in nature. The origination costs that are related to long-term development agreements are capitalized and amortized over the relevant service period.

The origination costs that are related to long-term development agreements are not material as of March 31, 2021 and 2020.

Stock-Based Compensation

The Company maintains an incentive compensation plan under which incentive stock options, nonqualified stock options and restricted stock units (“RSUs”) are granted primarily to employees and non-employee consultants. Stock-based compensation expense for stock-based awards is based on the grant date fair value. The Company determines the fair value of RSUs based on the closing value of its stock price listed on Nasdaq at the date of the grant.

The Company estimates the fair value of stock option awards on the grant date using the Black-Scholes option-pricing model. The fair value of stock option awards is recognized as compensation expense on a straight-line basis over the requisite service period in which the awards are expected to vest and forfeitures are recognized as they occur. Stock option awards that include a service condition and a performance condition are considered expected to vest when the performance condition is probable of being met. Compensation expense associated with performance awards that are determined to be probable of achievement is recognized over the requisite service period, provided the grantee remains an employee or consultant of the Company through each applicable vesting date. The Company records a cumulative adjustment to compensation expense for performance-based awards if there is a change in determination of whether it is probable that the performance condition will be achieved. If the performance goals are not achieved, no compensation expense is recognized and any previously recognized compensation expense is reversed. The Company records forfeitures as they occur.

Product Warranties

The Company provides a 13-month assurance-type warranty on its platforms and chip consumables. Upon shipment, the Company establishes an accrual for estimated warranty expenses based on historical data and trends of product reliability and costs of repairing and replacing defective products. The Company exercises judgment in estimating the expected product warranty costs, using data such as the actual and projected product failure rates, estimated repair costs, freight, material, labor, and overhead costs. While management believes that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in the Company’s products could result in actual expenses that are below those currently estimated.

Leases

The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter, if modified. The lease term includes any renewal options and termination options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.

Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations and comprehensive loss.

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

For all leases, rent payments that are based on a fixed index or rate at the lease commencement date are included in the measurement of lease assets and lease liabilities at the lease commencement date.

The Company has elected the practical expedient to not separate lease and non-lease components. The Company’s non-lease components are primarily related to property maintenance and insurance, which varies based on future outcomes, and thus is recognized in rent expense when incurred.

The Company also acts as a lessor to provide equipment financing through sales-type lease arrangements with certain qualified customers. Revenue from sales-type leases is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business. Amounts due and receivable under these arrangements are recorded at the outset of the arrangement as a contract asset in prepaid expenses and other current assets and other assets until such time that invoices are issued in accordance with the terms of the lease, at which point they are recorded as trade accounts receivable in the condensed consolidated balance sheets.

Net Loss Attributable to Common Stockholders Per Share

Net loss attributable to common stockholders per share is computed by dividing the weighted-average number of common shares outstanding for the period. Diluted net loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if their effect is anti-dilutive. In computing diluted net loss per share, the Company utilizes the treasury stock method.

The Company applies the two-class method to compute basic and diluted net loss or income per share when it has issued shares that meet the definition of participating securities. The two-class method determines net (loss) or income per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires net (loss) income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all net (loss) income for the period had been distributed. The Company’s convertible preferred stock participates in any dividends declared by the Company and are therefore considered to be participating securities. The participating securities are not required to participate in the losses of the Company, and therefore during periods of loss there is no allocation required under the two-class method.

Recently Issued and Adopted Accounting Standards

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to the accounting for income taxes. The Company adopted ASU 2019-12 effective January 1, 2021; such adoption did not have a material impact on the Company’s condensed consolidated financial statements and related disclosures.

(3)Significant Risks and Uncertainties Including Business and Credit Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company’s cash and cash equivalents are held by large, credit worthy financial institutions. The Company invests its excess cash in money market funds. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Deposits in these banks may exceed the amounts of insurance provided on such deposits. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.

The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Accounts receivable are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is based

Berkeley Lights, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

on management’s assessment of the collectability of specific customer accounts and the aging of the related invoices and represents the Company’s best estimate of probable credit losses in its existing trade accounts receivable. At each of March 31, 2021 and 2020, the Company had not recorded any material allowance for doubtful accounts.

Most of the Company’s customers are located in the United States and Asia Pacific. For the three months ended March 31, 2021, two customers accounted for 11% and 10% of revenue. For the three months ended March 31, 2020, six customers accounted for 17%, 14%, 13%, 13%, 12% and 12% of revenue.

As of March 31, 2021, five customers comprised 25%, 22%, 12%, 11% and 11% of accounts receivable. As of December 31, 2020, three customers accounted for 42%, 21% and 15% of accounts receivable.

(4)Revenue From Contracts With Customers

Disaggregation of revenue

The following table depicts the disaggregation of revenue by type of customer or sales channel, market segment as defined by nature of workflows and activities of the end customer and timing of revenue recognition (in thousands):


	Three months ended March 31,
	2021		2020
Type of Sales Channel
Direct sales channel	$	10,439	$

SEC Form 10-Q filed by Berkeley Lights, Inc.