UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 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 September 30, 2022

OR

☐ 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: 001-40538

ALPHA TEKNOVA, INC.

(Exact name of registrant as specified in its charter)

Delaware	94-3368109
( State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2451 Bert Dr. Hollister, CA	95023
(Address of principal executive offices)	(Zip Code)

(831) 637-1100

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, par value $0.00001 per share	TKNO	The Nasdaq Stock Market LLC

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 November 10, 2022, the registrant had 28,130,484 shares of common stock, $0.00001 par value per share, outstanding.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements relating to our financial condition, results of operations, plans, objectives, future performance and business, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “would,” “potential,” “likely,” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•our ability to meet our publicly announced guidance or other expectations about our business;

•our future financial performance, including our revenue, costs of revenue and operating expenses;

•our ability to achieve and grow profitability;

•our ability to expand our operations and increase capacity;

•our anticipated uses of cash in the short and long terms and the sufficiency of our sources of liquidity for funding our liquidity requirements;

•our ability to defend against claims and mitigate adverse results in any legal proceedings against us and the merits of any claims or suits against us;

•our ability to maintain cash and cash equivalents and limit our accounts receivable and credit risk exposure;

•our future investments in additional facilities to facilitate our expected growth;

•our future uses of liquidity to purse potential acquisitions that further or accelerate our strategy;

•our future use of equity or debt financings to execute our business strategy;

•our ability to take advantage of certain exemptions from various reporting requirements generally applicable to public companies;

•our expectations regarding the period during which we qualify as an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act);

•the impact of recent accounting pronouncements on our financial position, results of operations or cash flows;

•any failure to fully remediate material weaknesses in our internal controls over financial reporting and maintain effective internal controls in the future;

•the impact of changes to our internal control over financial reporting, other than changes intended to remediate material weaknesses;

•the impact the novel coronavirus (COVID-19) or any pandemic, epidemic or outbreak of infectious disease, natural disasters, geopolitical unrest, war, terrorism, public health issues or other catastrophic events may have on our business and our ability to actively manage our response to these types of events;

•our future adoption of critical accounting policies and estimates;

•our ability to increase the scale and capacity of our manufacturing processes and systems;

•the impact of increased competition from additional companies entering the market and the availability of more advanced technologies in the market;

•our ability to hire and retain key personnel;

•our ability to attract capital on favorable terms;

•our ability to generate future revenue growth from introducing new products to support the growing cell and gene therapy market and the increasing use of messenger ribonucleic acid (mRNA) vaccines and therapies;

•the impact of increased costs of future global operations;

•our ability to use cash on hand to meet current and future financial obligations, including funding our operations, debt service requirements and capital expenditures;

•the enforceability of our exclusive forum provisions in our amended and restated certificate of incorporation;

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•our customers’ sensitivity to product nonconformances, defects and errors;

•the availability of exemption of our products from compliance with the U.S. Food, Drug and Cosmetic Act (FDCA);

•our ability to secure and maintain a stable supply of raw materials in the future;

•our ability to maintain corporate culture that contributes to our success;

•the applicability of our products across a wide range of markets and the probability of success or revenue opportunity in our target markets;

•the impact of the phase-out of the London Interbank Offered Rate (LIBOR), or the replacement of the LIBOR with the Secured Overnight Financing Rate (SOFR) or a different reference rate, on the interest rates applicable to our financing arrangements;

•regulatory developments in the United States and other foreign countries;

•the impact of revenue recognition rules and other factors on our financial results;

•our ability to obtain, maintain and enforce intellectual property protection for our current and future products, including our ability to protect our trade secrets, trademarks and trade names; and

•the ongoing expenses associated with being a public company.

We caution you that the foregoing list may not contain all the forward-looking statements made in this Quarterly Report on Form 10-Q.

We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, prospects, business strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. These risks are not exhaustive. Other sections of this Quarterly Report on Form 10-Q include additional factors that could adversely impact our business and financial performance. Furthermore, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which such statements are made. We undertake no obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q or to conform such statements to actual results or revised expectations, except as required by law.

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ALPHA TEKNOVA, INC.

Form 10-Q for the Quarter Ended September 30, 2022

INDEX

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Financial Statements (Unaudited)	5
	Condensed Statements of Operations and Comprehensive Loss (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021	5
	Condensed Balance Sheets (Unaudited) at September 30, 2022 and December 31, 2021	6
	Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders' Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021	7
	Condensed Statements of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2022 and 2021	9
	Notes to Unaudited Condensed Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
Signatures		70

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PART I – FINANCIAL INFORMATION

Item 1. Condensed Financial Statements

ALPHA TEKNOVA, INC.

Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2022			2021			2022			2021
Revenue	$	10,692		$	9,392		$	33,529		$	26,783
Cost of sales		5,922			5,129			18,163			14,141
Gross profit		4,770			4,263			15,366			12,642
Operating expenses:
Research and development		1,925			1,372			5,867			2,922
Sales and marketing		2,397			885			6,592			2,494
General and administrative		6,502			5,607			20,856			13,606
Amortization of intangible assets		287			287			861			861
Goodwill impairment		16,613			—			16,613			—
Total operating expenses		27,724			8,151			50,789			19,883
Loss from operations		(22,954	)		(3,888	)		(35,423	)		(7,241	)
Other income (expenses), net
Interest income (expense), net		70			(255	)		85			(553	)
Other income (expense), net		36			—			36			(2	)
Total other income (expenses), net		106			(255	)		121			(555	)
Loss before income taxes		(22,848	)		(4,143	)		(35,302	)		(7,796	)
Benefit from income taxes		(374	)		(892	)		(1,128	)		(1,640	)
Net loss		(22,474	)		(3,251	)		(34,174	)		(6,156	)
Change in unrealized loss on available-for-sale securities, net of tax		—			—			—			(7	)
Comprehensive loss	$	(22,474	)	$	(3,251	)	$	(34,174	)	$	(6,163	)
Net loss per share—basic and diluted	$	(0.80	)	$	(0.12	)	$	(1.22	)	$	(0.51	)
Weighted average shares used in computing net loss per share—basic and diluted		28,090,267			28,011,917			28,059,897			12,069,214

The accompanying notes are an integral part of these condensed financial statements.

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ALPHA TEKNOVA, INC.

Condensed Balance Sheets

(Unaudited)

(in thousands, except share and per share data)

	As of September 30, 2022			As of December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	49,855		$	87,518
Accounts receivable, net of allowance for doubtful accounts of $57 thousand and $23 thousand		5,581			4,666
Contract assets		667			—
Inventories, net		10,323			5,394
Income taxes receivable		120			1,188
Prepaid expenses and other current assets		3,521			2,438
Total current assets		70,067			101,204
Property, plant and equipment, net		52,628			29,810
Operating right-of-use lease assets		18,558			—
Goodwill		—			16,613
Intangible assets, net		17,843			18,704
Other non-current assets		1,176			180
Total assets	$	160,272		$	166,511
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,485		$	2,248
Accrued liabilities		6,590			5,495
Current portion of operating lease liabilities		2,253			—
Total current liabilities		12,328			7,743
Deferred tax liabilities		2,028			3,153
Other accrued liabilities		212			273
Long-term debt, net		16,878			11,870
Deferred rent		—			269
Long-term operating lease liabilities		16,830			—
Total liabilities		48,276			23,308
Stockholders’ equity:
Preferred stock, $0.00001 par value, 10,000,000 shares authorized at September 30, 2022 and December 31, 2021, respectively, zero shares issued and outstanding at September 30, 2022 and December 31, 2021		—			—
Common stock, $0.00001 par value, 490,000,000 shares authorized at September 30, 2022 and December 31, 2021, 28,130,484 and 28,012,017 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively		—			—
Additional paid-in capital		153,708			150,741
Accumulated deficit		(41,712	)		(7,538	)
Total stockholders’ equity		111,996			143,203
Total liabilities and stockholders’ equity	$	160,272		$	166,511

The accompanying notes are an integral part of these condensed financial statements.

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ALPHA TEKNOVA, INC.

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders’ Equity

(in thousands, except share data)

(Unaudited)

	Convertible and Redeemable Preferred Stock				Common Stock				Additional Paid-in		Accumulated other comprehensive		Retained Earnings (Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		income (loss)		Deficit)			Equity
Balance at July 1, 2022		—	$	—		28,080,484	$	—	$	152,705	$	—	$	(19,238	)	$	133,467
Stock-based compensation		—		—		—		—		968		—		—			968
Issuance of common stock upon exercise of stock options		—		—		50,000		—		35		—		—			35
Net loss		—		—		—		—		—		—		(22,474	)		(22,474	)
Balance at September 30, 2022		—	$	—		28,130,484	$	—	$	153,708	$	—	$	(41,712	)	$	111,996

	Convertible and Redeemable Preferred Stock				Common Stock				Additional Paid-in		Accumulated other comprehensive		Retained Earnings (Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		income (loss)		Deficit)			Equity
Balance at July 1, 2021		—	$	—		28,011,917	$	—	$	149,675	$	—	$	(640	)	$	149,035
Stock-based compensation		—		—		—		—		442		—		—			442
Net loss		—		—		—		—		—		—		(3,251	)		(3,251	)
Balance at September 30, 2021		—	$	—		28,011,917	$	—	$	150,117	$	—	$	(3,891	)	$	146,226

The accompanying notes are an integral part of these condensed financial statements.

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ALPHA TEKNOVA, INC.

Condensed Statements of Convertible and Redeemable Preferred Stock and Stockholders’ Equity (Continued)

(in thousands, except share data)

(Unaudited)

	Convertible and Redeemable Preferred Stock				Common Stock				Additional Paid-in		Accumulated other comprehensive		Retained Earnings (Accumulated			Stockholders’
	Shares		Amount		Shares		Amount		Capital		income (loss)		Deficit)			Equity
Balance at January 1, 2022		—	$	—		28,012,017	$	—	$	150,741	$	—	$	(7,538	)	$	143,203
Stock-based compensation		—		—		—		—		2,689		—		—			2,689
Issuance of common stock upon exercise of stock options		—		—		105,232		—		134		—		—			134
Issuance of common stock under employee stock purchase plan		—		—		13,235		—		144		—		—			144
Net loss		—		—		—		—		—		—		(34,174	)		(34,174	)
Balance at September 30, 2022		—	$	—		28,130,484	$	—	$	153,708	$	—	$	(41,712	)	$	111,996

	Convertible and Redeemable Preferred Stock						Common Stock				Additional Paid-in			Accumulated other comprehensive			Retained Earnings (Accumulated		Stockholders’
	Shares			Amount			Shares		Amount		Capital			income (loss)			Deficit)		Equity
Balance at January 1, 2021		9,342,092		$	35,638			3,599,232	$	—	$	14,495		$	7		$	2,265	$	16,767
Stock-based compensation		—			—			—		—		927			—			—		927
Unrealized loss on available-for-sale securities		—			—			—		—		—			(7	)		—		(7	)
Accretion of convertible and redeemable preferred stock to redemption value		—			300			—		—		(300	)		—			—		(300	)
Conversion of convertible and redeemable preferred stock		(9,342,092	)		(35,938	)		17,512,685		—		35,938			—			—		35,938
Issuance of common stock upon initial public offering, net of issuance costs and underwriting discounts		—			—			6,900,000