4 unchanged sentences
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2020.
−Removed: Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level of December 31, 2019.
−Removed: Remediation of Material Weaknesses in Internal Control over Financial Reporting
−Removed: As previously disclosed, in connection with the audit of our financial statements as of and for each of the years ended December 31, 2018 and 2017, we identified material weaknesses in our internal control over financial reporting related to a lack of (i) appropriately designed and implemented controls over the review and approval of manual journal entries and the related supporting journal entry calculations, (ii) personnel with appropriate knowledge, experience and training commensurate with accounting and reporting requirements and (iii) appropriately designed and implemented controls to evaluate variable consideration and the related constraint in accordance with ASC 606, and resulted in certain material corrections to the financial statements.
−Removed: To improve our internal control over financial reporting and address these material weaknesses, during the year ended December 31, 2019, we:
−Removed: Hired a full-time director of SEC reporting and technical accounting, a certified public accountant with an active license, with public company reporting experience to provide oversight and technical expertise with respect to
−Removed: financial reporting and technical accounting matters.
−Removed: Further, we have added an additional full-time accounting resource, also a certified public accountant with an active license, to assist with financial reporting and technical accounting activities.
−Removed: Additionally, we hired a full-time financial analyst to support our revenue accounting and related activities under ASC 606;
−Removed: Began enhancement of our information technology tools to improve the efficiency of our processes with respect to revenue recognition under ASC 606;
−Removed: Engaged a third-party consultant to assist us with formalizing our internal control documentation and implementation of enhancements to our internal control over financial reporting;
−Removed: Designed and implemented a new process control and review procedure with respect to manual journal entries.
−Removed: In connection with its review of disclosure controls and procedures as of December 31, 2019, management concluded that the previously identified material weaknesses have been remediated.
+Added: Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2020, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting
−Removed: This Annual Report on Form 10-K does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our registered public accounting firm due to a transition period established by rules of the SEC for newly public companies.
+Added: Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term as defined in Exchange Act Rule 13a-15(f).
+Added: Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
+Added: As of December 31, 2020, our management assessed the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013 Framework) .
+Added: Based on this assessment, our management concluded that, as of December 31, 2020, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Control over Financial Reporting
−Removed: Except for the changes in connection with the remediation of the previously identified material weaknesses discussed above, there have been no other changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of 2019 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
+Added: There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) that occurred during the fourth quarter of 2020 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Other Information.
Directors, Executive Officers and Corporate Governance.
−Removed: The information required by this item and not set forth below will be contained in our definitive proxy statement to be filed with the Securities and Exchange Commission in connection with our 2020 Annual Meeting of Stockholders, or the Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2019, and is incorporated herein by reference.
+Added: The information required by this item and not set forth below will be contained in our definitive proxy statement to be filed with the SEC in connection with our 2021 Annual Meeting of Stockholders, or the Proxy Statement, which is expected to be filed not later than 120 days after the end of our fiscal year ended December 31, 2020, and is incorporated herein by reference.
We have adopted a written Code of Business Conduct and Ethics, or Ethics Code, that applies to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
7 unchanged sentences
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
−Removed: Principal Accounting Fees and Services.
+Added: Principal Accountant Fees and Services.
The information required by this item will be set forth in the Proxy Statement and is incorporated herein by reference.
7 unchanged sentences
Exhibit Index
−Removed: Exhibit Number
−Removed: Description of document
+Added: Exhibit Number Description of document
3.1 Amended and Restated Certificate of Incorporation of the Registrant, incorporated by reference to Exhibit 3.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019.
3.2 Amended and Restated Bylaws of the Registrant, incorporated by reference to Exhibit 3.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on July 29, 2019.
−Removed: Description of securities registered under Section 12 of the Exchange Act.
+Added: 4.1 Description of securities registered under Section 12 of the Exchange Act, incorporated by reference to Exhibit 4.1 of the Registrant's Annual Report on Form 10-K filed with the SEC on March 10, 2020.
4.2 Form of Common Stock Certificate of the Registrant, incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement on Form S-1 (File No.
2 unchanged sentences
333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series E-1 redeemable convertible preferred stock issued to investors, incorporated by reference to Exhibit 4.3 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series E-2 redeemable convertible preferred stock issued to Silicon Valley Bank on December 31, 2014, incorporated by reference to Exhibit 4.4 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series F redeemable convertible preferred stock issued to Silicon Valley Bank on February 22, 2016, incorporated by reference to Exhibit 4.5 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series F redeemable convertible preferred stock issued to Oxford Finance LLC and Silicon Valley Bank on March 31, 2017, incorporated by reference to Exhibit 4.6 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series F redeemable convertible preferred stock issued to Oxford Finance LLC and Silicon Valley Bank on November 30, 2018, incorporated by reference to Exhibit 4.7 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Form of warrant to purchase Series F redeemable convertible preferred stock issued to investors, incorporated by reference to Exhibit 4.8 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Warrant to purchase common stock issued to SH Castle Biosciences, LLC on July 12, 2019, incorporated by reference to Exhibit 4.9 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
10.1+ Form of Indemnity Agreement by and between the Registrant and its directors and officers, incorporated by reference to Exhibit 10.1 of the Registrant’s Registration Statement on Form S-1 (File No.
3 unchanged sentences
333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Exhibit Number
−Removed: Description of document
10.3+ Forms of Stock Option Agreement, Exercise Notice and Investment Representation Statement under the 2008 Stock Plan, incorporated by reference to Exhibit 10.3 of the Registrant’s Registration Statement on Form S-1 (File No.
10 unchanged sentences
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: 10.8+ Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the 2019 Equity Incentive Plan, incorporated by reference to Exhibit 10.1 of the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on November 9, 2020.
10.9+ Castle Biosciences, Inc.
1 unchanged sentence
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: Exhibit Number Description of document
10.10+ Form of Director Agreement by and between the Registrant and certain of its directors, incorporated by reference to Exhibit 10.9 of the Registrant’s Registration Statement on Form S-1 (File No.
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: 10.11+* Non-Employee Director Compensation Policy, as amended effective January 28, 2021.
10.12+ Amended and Restated Executive Employment Agreement, dated September 20, 2012, as amended, by and between the Registrant and Derek J.
1 unchanged sentence
333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Offer Letter Agreement, dated October 9, 2015, by and between the Registrant and Federico Monzon, M.D, incorporated by reference to Exhibit 10.11 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
10.13+ Offer Letter Agreement, dated March 2, 2016, by and between the Registrant and Bernhard Spiess, incorporated by reference to Exhibit 10.12 of the Registrant’s Registration Statement on Form S-1 (File No.
2 unchanged sentences
333-232369), as amended, originally filed with the SEC on June 26, 2019.
+Added: 10.15+ Separation Agreement dated May 29, 2020, by and between the Registrant and Federico A.
+Added: Monzon, M.D., incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 2, 2020.
+Added: 10.16+ Master Services Agreement dated May 29, 2020, by and between the Registrant and Genomic Path LLC, incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed with the SEC on June 2, 2020.
10.17 Standard Office Lease, dated as of October 5, 2015, by and between the Registrant and Merced Restart Phoenix Investors II, LLC, incorporated by reference to Exhibit 10.14 of the Registrant’s Registration Statement on Form S-1 (File No.
333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: First Amendment to Lease, dated December 4, 2018, by and between the Registrant and Alturas Siete I, LLC.
+Added: 10.18 First Amendment to Lease, dated December 4, 2018, by and between the Registrant and Alturas Siete I, LLC, incorporated by reference to Exhibit 10.15 of the Registrant's Annual Report on Form 10-K, filed with the SEC on March 10, 2020.
10.19 Office Building Lease, dated as of March 11, 2015, by and between the Registrant and RMG Leasing (a/k/a Cedarwood Professional Building), as amended, incorporated by reference to Exhibit 10.15 of the Registrant’s Registration Statement on Form S-1 (File No.
3 unchanged sentences
10.22 Commercial Lease, dated December 17, 2019, by and between the Registrant and Tannos Land Holding III, LLC, incorporated by reference to Exhibit 10.3 of the Registrant’s Current Report on Form 8-K filed with the SEC on December 19, 2019.
−Removed: Loan and Security Agreement, dated November 30, 2018, by and among the Registrant, Oxford Finance LLC and Silicon Valley Bank, incorporated by reference to Exhibit 10.16 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: First Amendment to Loan and Security Agreement, dated June 13, 2019, by and among the Registrant, Oxford Finance LLC and Silicon Valley Bank, incorporated by reference to Exhibit 10.19 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Exhibit Number
−Removed: Description of document
+Added: 10.23* First Amendment to Commercial Lease, dated November 13, 2020, by and between the Registrant and Tannos Land Holdings III, LLC.
10.24# Exclusive License Agreement, dated as of November 14, 2009, by and between the Registrant and The Washington University, incorporated by reference to Exhibit 10.17 of the Registrant’s Registration Statement on Form S-1 (File No.
333-232369), as amended, originally filed with the SEC on June 26, 2019.
−Removed: Non-Employee Director Compensation Policy, incorporated by reference to Exhibit 10.18 of the Registrant’s Registration Statement on Form S-1 (File No.
−Removed: 333-232369), as amended, originally filed with the SEC on June 26, 2019.
23.1* Consent of KPMG LLP, Independent Registered Public Accounting Firm.
1 unchanged sentence
31.2* Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the Exchange Act.
−Removed: Certification of Principal Executive Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Exchange Act, and 18 U.S.C.
+Added: 32.1** Certification of Principa l Executive Officer pursuant to Rules 13a-14(b) or 15d-14(b) of the Exchange Act, and 18 U.S.C.
Section 1350.
1 unchanged sentence
Section 1350.
−Removed: XBRL Instance Document.
−Removed: XBRL Taxonomy Extension Schema Document.
−Removed: XBRL Taxonomy Extension Calculation Linkbase Document.
−Removed: XBRL Taxonomy Extension Definition Linkbase Document.
−Removed: XBRL Taxonomy Extension Label Linkbase Document.
−Removed: XBRL Taxonomy Extension Presentation Linkbase Document.
+Added: 101.INS* Inline XBRL Instance Document—the instance document does not appear in the Interactive Data File as its XBRL tags are embedded within the Inline XBRL document.
+Added: 101.SCH* Inline XBRL Taxonomy Extension Schema.
+Added: 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase.
+Added: Exhibit Number Description of document
+Added: 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase.
+Added: 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase.
+Added: 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase.
+Added: 104* Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101).
_____________________________________
4 unchanged sentences
Form 10-K Summary.
−Removed: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 10, 2020 .
+Added: Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CASTLE BIOSCIENCES, INC.
+Added: March 11, 2021 By:
President and Chief Executive Officer
1 unchanged sentence
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacity and on the dates indicated.
−Removed: President, Chief Executive Officer and Director
−Removed: March 10, 2020
−Removed: ( Principal Executive Officer )
−Removed: /s/ Frank Stokes
−Removed: Chief Financial Officer
+Added: SIGNATURE TITLE DATE
+Added: Maetzold President, Chief Executive Officer and Director March 11, 2021
+Added: Maetzold) ( Principal Executive Officer )
+Added: /s/ Frank Stokes Chief Financial Officer
March 11, 2021
−Removed: (Frank Stokes)
−Removed: ( Principal Financial and Accounting Officer )
+Added: (Frank Stokes) ( Principal Financial and Accounting Officer )
/s/ Daniel M.
−Removed: Chairman of the Board of Directors
−Removed: March 10, 2020
−Removed: /s/ Bonnie H.
−Removed: Member of the Board of Directors
−Removed: March 10, 2020
−Removed: Member of the Board of Directors
−Removed: March 10, 2020
−Removed: Member of the Board of Directors
+Added: Bradbury Chairman of the Board of Directors
March 11, 2021
+Added: Aspinall Member of the Board of Directors March 11, 2021
+Added: Bradley Cole Member of the Board of Directors March 11, 2021
Bradley Cole)
/s/ Joseph C.
−Removed: Member of the Board of Directors
−Removed: March 10, 2020
+Added: Cook III Member of the Board of Directors March 11, 2021
+Added: Harrison Member of the Board of Directors March 11, 2021
/s/ David Kabakoff, Ph.D.
−Removed: Member of the Board of Directors
−Removed: March 10, 2020
+Added: Member of the Board of Directors March 11, 2021
(David Kabakoff, Ph.D.)
2 unchanged sentences
Balance Sheets as of December 31, 2020 and 2019
−Removed: Statements of Operations and Comprehensive Income (Loss) for the Years Ended December 31, 2019 and 2018
+Added: Statements of Operations and Comprehensive (Loss) Income for the Years Ended December 31, 2020 and 2019
Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) for the Years Ended December 31, 2020 and 2019
6 unchanged sentences
We have audited the accompanying balance sheets of Castle Biosciences, Inc.
−Removed: (the Company) as of December 31, 2019 and 2018, the related statements of operations and comprehensive income (loss), convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2019, and the related notes (collectively, the financial statements).
+Added: (the Company) as of December 31, 2020 and 2019, the related statements of operations and comprehensive (loss) income, convertible preferred stock and stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2020, and the related notes (collectively, the financial statements).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2020, in conformity with U.S.
7 unchanged sentences
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.
+Added: The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
+Added: As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
+Added: Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.
11 unchanged sentences
Accounts receivable, net 12,759 14,648
+Added: Inventory 2,217 1,237
Prepaid expenses and other current assets 4,766 1,951
2 unchanged sentences
Property and equipment, net 7,102 2,060
−Removed: Intangible assets, net
Other assets – long-term 1,536 135
−Removed: LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
+Added: Total assets $ 439,328 $ 119,746
+Added: LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
1 unchanged sentence
Accrued compensation 9,108 5,779
+Added: Medicare advance payment 6,615 —
Other accrued liabilities 3,055 1,812
2 unchanged sentences
Long-term debt — 19,289
−Removed: Preferred stock warrant liability
−Removed: Deferred rent liability
+Added: Noncurrent portion of Medicare advance payment 1,735 —
+Added: Deferred rent and other liabilities 1,026 55
Total liabilities 23,637 34,633
Commitments and Contingencies (Note 10)
−Removed: Convertible Preferred Stock
−Removed: Convertible preferred stock Series C, $0.001 par value, zero and 503,056 shares authorized as of December 31, 2019 and 2018, respectively;
−Removed: zero and 503,056 shares issued and outstanding as of December 31, 2019 and 2018, respectively;
−Removed: $0 and $2,417 aggregate liquidation preference as of December 31, 2019 and 2018, respectively.
−Removed: Redeemable convertible preferred stock Series A, B, D, E-1, E-2, E-2A, E-3 and F, $0.001 par value, zero and 9,640,493 shares authorized as of December 31, 2019 and 2018, respectively;
−Removed: zero and 9,456,775 shares issued and outstanding as of December 31, 2019 and 2018, respectively;
−Removed: $0 and $57,570 aggregate liquidation preference as of December 31, 2019 and 2018, respectively.
−Removed: Stockholders’ Equity (Deficit)
−Removed: Common stock, $0.001 par value;
−Removed: 200,000,000 and 15,102,000 shares authorized as of December 31, 2019 and 2018, respectively;
−Removed: 17,130,907 and 1,916,224 shares issued and outstanding as of December 31, 2019 and 2018, respectively.
+Added: Stockholders’ Equity
Preferred stock, $ 0.001 par value;
−Removed: 10,000,000 and zero shares authorized as of December 31, 2019 and 2018, respectively;
+Added: 10,000,000 shares authorized as of December 31, 2020 and 2019;
no shares issued and outstanding as of December 31, 2020 and 2019.
+Added: Common stock, $ 0.001 par value;
+Added: 200,000,000 authorized as of December 31, 2020 and 2019, respectively;
+Added: 24,812,487 and 17,130,907 shares issued and outstanding as of December 31, 2020 and 2019, respectively.
Additional paid-in capital 478,162 137,308
Accumulated deficit ( 62,496 ) ( 52,212 )
−Removed: Total stockholders’ equity (deficit)
−Removed: Total liabilities, convertible preferred stock and stockholders’ equity (deficit)
+Added: Total stockholders’ equity 415,691 85,113
+Added: Total liabilities and stockholders’ equity $ 439,328 $ 119,746
The accompanying notes are an integral part of these financial statements.
CASTLE BIOSCIENCES, INC.
−Removed: STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
+Added: STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME
(in thousands, except per share data)
Years Ended December 31,
+Added: NET REVENUES $ 62,649 $ 51,865
COST OF SALES 9,685 7,310
−Removed: OPERATING EXPENSES
+Added: Gross margin 52,964 44,555
+Added: OPERATING EXPENSES AND OTHER OPERATING INCOME
Research and development 13,256 7,385
Selling, general and administrative 48,132 29,842
−Removed: Total operating expenses
−Removed: Operating income (loss)
+Added: Other operating income ( 1,882 ) —
+Added: Total operating expenses, net 59,506 37,227
+Added: Operating (loss) income ( 6,542 ) 7,328
Interest income 373 312
Interest expense ( 2,634 ) ( 4,571 )
−Removed: Gain on extinguishment of debt (Note 7)
+Added: (Loss) gain on extinguishments of debt ( 1,397 ) 5,213
Other expense, net — ( 2,933 )
−Removed: Income (loss) before income taxes
+Added: (Loss) income before income taxes ( 10,200 ) 5,349
Income tax expense 84 72
−Removed: Net income (loss) and comprehensive income (loss)
+Added: Net (loss) income and comprehensive (loss) income ( 10,284 ) 5,277
Convertible preferred stock cumulative dividends — 2,156
Accretion of redeemable convertible preferred stock to redemption value — 130
−Removed: Net income (loss) and comprehensive income (loss) attributable to common stockholders
−Removed: Earnings (loss) per share attributable to common stockholders:
+Added: Net (loss) income and comprehensive (loss) income attributable to common stockholders $ ( 10,284 ) $ 2,991
+Added: (Loss) earnings per share attributable to common stockholders:
+Added: Basic $ ( 0.54 ) $ 0.35
+Added: Diluted $ ( 0.54 ) $ ( 0.21 )
Weighted-average shares outstanding:
+Added: Basic 18,929 8,584
+Added: Diluted 18,929 8,658
The accompanying notes are an integral part of these financial statements.
1 unchanged sentence
STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
−Removed: (in thousands, except shares)
+Added: (in thousands, except share data)
Stock Series C
2 unchanged sentences
E-2, E-2A, E-3 and F
−Removed: Preferred Stock
+Added: Preferred Stock Common Stock Additional
+Added: Capital Accumulated
+Added: Deficit Total
Stockholders’
Equity (Deficit)
+Added: Shares Amount Shares Amount Shares Amount Shares Amount
BALANCE, JANUARY 1, 2019 503,056 $ 1,501 9,456,775 $ 44,995 — $ — 1,916,224 $ 2 $ 921 $ ( 57,489 ) $ ( 56,566 )
−Removed: Stock compensation expense
−Removed: Exercise of common stock options
−Removed: Issuance of Series F redeemable convertible preferred stock
−Removed: Accretion of redeemable convertible preferred stock to redemption value:
−Removed: Exercise of redeemable convertible preferred stock warrants:
−Removed: BALANCE, DECEMBER 31, 2018
−Removed: Stock compensation expense
+Added: Stock-based compensation expense — — — — — — — — 1,249 — 1,249
Exercise of common stock options — — — — — — 693,140 1 1,174 — 1,175
1 unchanged sentence
Accretion of redeemable convertible preferred stock to redemption value:
+Added: Series E-1 — — — 2 — — — — ( 2 ) — ( 2 )
+Added: Series E-3 — — — 7 — — — — ( 7 ) — ( 7 )
+Added: Series F — — — 121 — — — — ( 121 ) — ( 121 )
Exercise of redeemable convertible preferred stock warrants:
+Added: Series E-1 — — 12,999 107 — — — — — — —
+Added: Series F — — 1,054 10 — — — — — — —
Recognition of beneficial conversion feature on convertible promissory notes — — — — — — — — 8,378 — 8,378
Extinguishment of beneficial conversion feature on convertible promissory notes — — — — — — — — ( 15,265 ) — ( 15,265 )
+Added: Initial public offering of common stock, net of underwriting discounts, commissions and offering costs — — — — — — 4,600,000 5 65,926 — 65,931
+Added: Conversion of convertible promissory notes — — — — — — 1,661,106 1 26,576 — 26,577
+Added: Conversion of convertible preferred stock ( 503,056 ) ( 1,501 ) ( 9,470,828 ) ( 45,242 ) — — 8,181,992 8 46,735 — 46,743
+Added: Reclassification of preferred stock warrant liability and net exercise of certain warrants in connection with initial public offering — — — — — — 27,207 — 1,744 — 1,744
+Added: Net income — — — — — — — — — 5,277 5,277
+Added: BALANCE, DECEMBER 31, 2019 — $ — — $ — — $ — 17,130,907 $ 17 $ 137,308 $ ( 52,212 ) $ 85,113
+Added: Stock-based compensation expense — — — — — — — — 8,309 — 8,309
+Added: Exercise of common stock options — — — — — — 459,074 1 1,592 — 1,593
+Added: Exercise of common stock warrants — — — — — — 241,052 — — — —
CASTLE BIOSCIENCES, INC.
STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT) (Continued)
−Removed: (in thousands, except shares)
+Added: (in thousands, except share data)
Stock Series C
2 unchanged sentences
E-2, E-2A, E-3 and F
−Removed: Preferred Stock
+Added: Preferred Stock Common Stock Additional
+Added: Capital Accumulated
+Added: Deficit Total
Stockholders’
Equity (Deficit)
−Removed: Initial public offering of common stock, net of underwriting discounts, commissions and offering costs
−Removed: Conversion of convertible promissory notes
−Removed: Conversion of convertible preferred stock
−Removed: Reclassification of preferred stock warrant liability and net exercise of certain warrants in connection with initial public offering
+Added: Shares Amount Shares Amount Shares Amount Shares Amount
+Added: Public offerings of common stock, net of underwriting discounts, commissions and offering costs — — — — — — 6,900,000 7 329,657 — 329,664
+Added: Issuance of common stock under the employee stock purchase plan — — — — — — 81,454 — 1,296 — 1,296
+Added: Net loss — — — — — — — — — ( 10,284 ) ( 10,284 )
BALANCE, DECEMBER 31, 2020 — $ — — $ — — $ — 24,812,487 $ 25 $ 478,162 $ ( 62,496 ) $ 415,691
5 unchanged sentences
OPERATING ACTIVITIES
−Removed: Net income (loss)
−Removed: Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
−Removed: Stock compensation expense
+Added: Net (loss) income $ ( 10,284 ) $ 5,277
+Added: Adjustments to reconcile net (loss) income to net cash provided by operating activities:
+Added: Depreciation 472 354
+Added: Stock-based compensation expense 8,309 1,249
Amortization of intangibles — 4
1 unchanged sentence
Other non-cash interest — 442
−Removed: Gain on extinguishment of debt
+Added: Loss (gain) on extinguishments of debt 1,397 ( 5,213 )
Change in fair value of preferred stock warrant liability — 619
1 unchanged sentence
Change in fair value of convertible promissory note accounted for under the fair value option — 2,077
+Added: Other ( 16 ) —
Change in operating assets and liabilities:
1 unchanged sentence
Prepaid expenses and other current assets ( 2,815 ) ( 1,276 )
+Added: Inventory ( 980 ) ( 355 )
+Added: Other assets ( 1,401 ) ( 85 )
Accounts payable 169 557
Accrued compensation 3,329 1,208
+Added: Medicare advance payment 8,350 —
Other accrued liabilities 561 879
−Removed: Deferred rent liability
−Removed: Net cash provided by (used in) operating activities
−Removed: INVESTING ACTIVITES
+Added: Deferred rent and other liabilities 272 12
+Added: Net cash provided by operating activities 9,865 7,015
+Added: INVESTING ACTIVITIES
Purchases of property and equipment ( 4,751 ) ( 937 )
+Added: Proceeds from sale of property and equipment 3 —
Net cash used in investing activities ( 4,748 ) ( 937 )
FINANCING ACTIVITIES
−Removed: Proceeds from initial public offering of common stock, net of underwriting discounts, commissions and issuance costs
−Removed: Proceeds from issuance of preferred stock and preferred stock warrants (including exercised warrants)
−Removed: Proceeds from issuance of term debt and preferred stock warrants, net of issuance costs
−Removed: Proceeds from issuance of convertible promissory notes (including $4,756 from related parties), net of issuance costs
+Added: Proceeds from public offerings of common stock, net of underwriting discounts, commissions and offering costs 330,041 65,931
+Added: Proceeds from exercise of preferred stock warrants — 49
+Added: Proceeds from issuance of convertible promissory notes (including $ 4,756 from related parties for the year ended December 31, 2019), net of issuance costs
Proceeds from issuance of convertible promissory note and common stock warrant, net of issuance costs — 9,236
Proceeds from issuance of term debt, net of issuance costs — 1,776
−Removed: Proceeds from line of credit
+Added: Repayment of term debt ( 27,359 ) —
Repayments on line of credit — ( 1,791 )
Proceeds from exercise of common stock options 1,593 1,174
−Removed: Proceeds from contributions to the employee stock purchase plan
−Removed: Net cash provided by financing activities
−Removed: NET CHANGE IN CASH AND CASH EQUIVALENTS
−Removed: Beginning of period
−Removed: End of period
CASTLE BIOSCIENCES, INC.
2 unchanged sentences
Years Ended December 31,
+Added: Proceeds from contributions to the employee stock purchase plan 1,615 218
+Added: Net cash provided by financing activities 305,890 88,288
+Added: NET CHANGE IN CASH AND CASH EQUIVALENTS 311,007 94,366
+Added: Beginning of year 98,845 4,479
+Added: End of year $ 409,852 $ 98,845
SUPPLEMENTAL DISCLOSURE OF CASH PAID (REFUNDED) FOR:
+Added: Interest $ 1,978 $ 2,206
+Added: Income taxes $ 102 $ ( 150 )
DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
−Removed: Accrued capital expenditures
−Removed: Initial public offering costs incurred but not paid
+Added: Accrued purchases of property and equipment $ 58 $ 7
+Added: Property and equipment acquired with tenant improvement allowance $ 714 $ —
+Added: Common stock offering costs incurred but not paid $ 377 $ —
Issuance of common stock upon conversion of convertible preferred stock $ — $ 46,743
9 unchanged sentences
The Company is a commercial-stage dermatological cancer company focused on providing physicians and their patients with personalized, clinically actionable genomic information to make more accurate treatment decisions.
−Removed: The Company is based in Friendswood, Texas (a suburb of Houston, Texas) and its laboratory operations are conducted at the Company’s facility located in Phoenix, Arizona.
−Removed: On July 11, 2019, the Company effected a 1-for-1.219 reverse stock split of its common stock.
−Removed: The par value and the authorized number of shares of common stock were not affected by the reverse stock split.
−Removed: The reverse stock split resulted in an adjustment to the Series A, B, C, D, E-1, E-2, E-2A, E-3, and F preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.
−Removed: The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented.
−Removed: On July 29, 2019, the Company completed the initial public offering of its common stock (the “IPO”).
−Removed: In the IPO, the Company issued and sold 4,600,000 shares of its common stock, including 600,000 shares sold pursuant to the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $16.00 per share.
−Removed: The Company received approximately $65.9 million in net proceeds, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.
−Removed: In connection with the IPO, on July 29, 2019 all convertible preferred stock and all convertible promissory notes converted into shares of common stock and all outstanding warrants to purchase shares of convertible preferred stock became exercisable for shares of common stock.
−Removed: Liquidity and Capital Resources
−Removed: The Company has incurred significant operating losses since its inception.
−Removed: As of December 31, 2019 , the Company had an accumulated deficit of $52.2 million and cash and cash equivalents totaling $98.8 million .
−Removed: The Company also has substantial indebtedness, the terms of which require it to meet a three-month trailing revenue covenant tested quarterly (previously a six-month trailing revenue covenant and tested monthly, as described below).
−Removed: At the time of issuance of the Company’s financial statements as of December 31, 2018 and 2017 and for each of the years then ended, the Company disclosed that substantial doubt was raised about the Company’s ability to continue as a going concern, because its projections indicated potential non-compliance with this covenant during the next 12 months.
−Removed: Subsequently, as discussed in Note 8, “Long-Term Debt,” on June 13, 2019, the Company entered into an amendment to its debt agreement, which among other changes, modified the revenue covenant from a trailing six-month calculation to a trailing three-month calculation with revised revenue targets tested monthly.
−Removed: In February and March 2020, the Company entered into amendments of the 2018 LSA with the Lenders that, among other things, changed the covenant from being tested monthly to quarterly testing and established revenue targets for the year ending December 31, 2020.
−Removed: Management now expects to be in compliance with the covenant during the next 12 months.
−Removed: The Company intends to fund planned operations for the next 12 months using its cash on hand, including net cash proceeds from the IPO, and collections from test report sales.
+Added: The Company is based in Friendswood, Texas (a suburb of Houston, Texas) and its laboratory operations are conducted at the Company’s facilities located in Phoenix, Arizona.
+Added: Impact of COVID-19 Pandemic
+Added: In December 2019, a novel strain of coronavirus, SARS-CoV-2, which causes coronavirus disease 2019, or COVID-19, surfaced in Wuhan, China.
+Added: On March 11, 2020, the World Health Organization declared COVID-19 a pandemic.
+Added: Since then, COVID-19 has caused significant disruptions and adverse economic impacts across multiple countries, including the United States.
+Added: To date, the Company has maintained uninterrupted business operations with normal turnaround times for its delivery of test reports.
+Added: The Company has implemented adjustments to its operations designed to keep employees safe and comply with federal, state and local guidelines, including those regarding social distancing.
+Added: During the second and fourth quarters of 2020, the Company experienced year-over-year declines in test report volume, which it believes is linked to delays and/or cancellations in patient visits in response to COVID-19, resulting in reduced diagnostic biopsies and thus reduced diagnoses of cutaneous melanoma.
+Added: The extent to which COVID-19 may further impact the Company’s business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
+Added: In response to COVID-19, the United States government has passed legislation and taken other actions to provide financial relief to companies and other organizations affected by the pandemic.
+Added: Refer to Note 2 for information on certain payments received by the Company in April 2020 as a result of these actions.
+Added: The Company intends to fund planned operations for the next 12 months using a portion of its cash and cash equivalents on hand, which totaled $ 409.9 million at December 31, 2020, and collections from test report sales.
Summary of Significant Accounting Policies
5 unchanged sentences
GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
−Removed: Significant items subject to such estimates include revenue recognition, the determination of fair value of the Company’s preferred stock warrants and convertible debt embedded derivatives, the valuation of stock options, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of property and equipment, and contingent liabilities.
+Added: Significant items subject to such estimates include revenue recognition, the valuation of stock-based compensation, assessing future tax exposure and the realization of deferred tax assets, the useful lives and recoverability of property and equipment, and contingent liabilities.
The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that the Company believes are reasonable under the circumstances, including assumptions as to future events.
1 unchanged sentence
Actual results could differ from those estimates and assumptions.
+Added: The Company has considered the potential impact of the COVID-19 pandemic on its estimates and assumptions.
+Added: The extent to which the COVID-19 pandemic may impact the Company’s estimates in future periods is uncertain and subject to change.
CASTLE BIOSCIENCES, INC.
6 unchanged sentences
Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less.
−Removed: Cash equivalents consist primarily of amounts invested in money market accounts.
−Removed: A majority of the Company’s cash and cash equivalents are deposited with a single financial institution.
−Removed: Deposits in this institution may exceed the amount of insurance provided on such deposits by the Federal Deposit Insurance Corporation for U.S.
−Removed: institutions.
−Removed: The Company has not experienced any losses on its deposits of cash and cash equivalents.
−Removed: Management believes that the Company is not exposed to significant credit risk due to the financial position of the depository institutions in which those deposits are held.
+Added: The Company’s cash equivalents consist of money market funds, which are not insured by the Federal Deposit Insurance Corporation (“FDIC”), that are primarily invested in short-term U.S.
+Added: government obligations.
+Added: Cash deposits at financial institutions may exceed the amount of insurance provided by the FDIC.
+Added: Management believes that the Company is not exposed to significant credit risk on its cash deposits due to the financial position of the institutions in which deposits are held.
+Added: The Company has not experienced any losses on its cash or cash equivalents.
Revenue Recognition
5 unchanged sentences
The Company also provides a test for uveal melanoma, DecisionDx®-UM.
+Added: The Company launched a test for patients with cutaneous squamous cell carcinoma, DecisionDx®-SCC in August 2020 and launched a test for use in patients with suspicious pigmented lesions, DecisionDx® DiffDx™-Melanoma in November 2020.
Information on the disaggregation of revenues by the Company’s significant third-party payors is included under Payor Concentration below.
The Company has determined that it has a contract with the patient when the treating clinician orders the test.
−Removed: The Company’s contracts generally contain a single performance obligation, which is the delivery of the test report, and the Company satisfies its performance obligation at a point in time upon the delivery of the test report to the treating physician, at which point the Company can bill for the report.
+Added: The Company’s contracts generally contain a single performance obligation, which is the delivery of the test report, and the Company satisfies its performance obligation at a point in time upon the delivery of the test report to the treating clinician, at which point the Company can bill for the report.
The amount of revenue recognized reflects the amount of consideration to which the Company expects to be entitled (the ‘‘transaction price’’) and considers the effects of variable consideration, which is discussed further below.
9 unchanged sentences
A successful appeal at any of these levels results in payment.
−Removed: In the absence of LCD coverage or contractually established reimbursements rates, the Company has concluded that its contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than the Company’s standard rates or not paid at all, with such differences considered implicit price concessions.
−Removed: Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method under ASC 606.
−Removed: The amounts are determined by historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of the Company’s past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the
+Added: In the absence of LCD coverage or contractually established reimbursement rates, the Company has concluded that its contracts include variable consideration because the amounts paid by Medicare or commercial health insurance carriers may be paid at less than the Company’s standard rates or not paid at all, with such differences considered implicit price concessions.
+Added: Variable consideration attributable to these price concessions is measured at the expected value using the ‘‘most likely amount’’ method
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: Company’s influence, such as the judgment and actions of third parties.
+Added: under ASC 606.
+Added: The amounts are determined by historical average collection rates by test type and payor category taking into consideration the range of possible outcomes, the predictive value of the Company’s past experiences, the time period of when uncertainties expect to be resolved and the amount of consideration that is susceptible to factors outside of the Company’s influence, such as the judgment and actions of third parties.
Such variable consideration is included in the transaction price only to the extent it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainties with respect to the amount are resolved.
Variable consideration may be constrained and excluded from the transaction price in situations where there is no contractually agreed upon reimbursement coverage or in the absence of a predictable pattern and history of collectability with a payor.
−Removed: Variable consideration for Medicare claims is deemed to be fully constrained when the payment of such claims is subject to approval by an ALJ at an appeal hearing, due to factors outside the Company’s influence (i.e., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.
+Added: Variable consideration for Medicare claims that are not covered by an LCD, including those claims subject to approval by an ALJ at an appeal hearing, is deemed to be fully constrained due to factors outside the Company’s influence (i.e., judgment or actions of third parties) and the uncertainty of the amount to be received is not expected to be resolved for a long period of time.
Variable consideration is evaluated each reporting period and adjustments are recorded as increases or decreases in revenues.
3 unchanged sentences
Any incremental costs to obtain contracts are recorded as selling, general and administrative expense as incurred due to the short duration of the Company’s contracts.
−Removed: Contract balances consisted solely of accounts receivable (both current and noncurrent) as of December 31, 2019 and 2018 .
+Added: Contract balances consisted of accounts receivable (both current and noncurrent) and the Medicare advance payment (both current and noncurrent, as discussed further below) as of December 31, 2020.
+Added: Contract balances consisted solely of accounts receivable (both current and noncurrent) as of December 31, 2019.
+Added: Medicare Advance Payment
+Added: On April 16, 2020, the Company received an advance payment of $ 8.3 million (the “Advance Payment”) from the Centers for Medicare & Medicaid Services (“CMS”) under its Accelerated and Advance Payment Program, which was expanded to provide increased cash flow to service providers during the COVID-19 pandemic.
+Added: The Company has recorded the Advance Payment as a liability, consisting of both a current and noncurrent portion, on its balance sheet as of December 31, 2020.
+Added: The Company will reduce the balance of the Advance Payment as it is applied to claims or is otherwise recouped by CMS.
+Added: Under the Continuing Appropriations Act, 2021 and Other Extensions Act, enacted on October 1, 2020, the recoupment of the Advance Payment will commence in April 2021.
+Added: For the first eleven months of recoupment, CMS will apply 25% of the Medicare payments otherwise owed to the Company against the balance of the Advance Payment.
+Added: After that eleven-month period, CMS will recoup at a rate of 50% of the Medicare payments otherwise owed to the Company for an additional six months.
+Added: If the Advance Payment is not fully recovered by CMS after this recoupment period, the Company will be required to repay any remaining balance.
+Added: The classification of Advance Payment between current and noncurrent liabilities is based on management’s estimated timing of recoupment.
+Added: As of December 31, 2020, no revenue has been recognized related to any portion of the Advance Payment.
DecisionDx-Melanoma Claims Consolidation
In June 2017, the Company submitted to the Office of Medicare Hearings and Appeals (‘‘OMHA’’) a formal request to participate in a program that OMHA developed with the intent of providing appellants a means to have large volumes of claim disputes adjudicated at an accelerated rate.
−Removed: The program consolidates outstanding claims at the ALJ level and uses a statistical-sampling approach where five ALJ’s will determine reimbursement results for a sample of claims which are then extrapolated to the universe of claims.
+Added: The program consolidates outstanding claims at the ALJ level and uses a statistical-sampling approach where five ALJs will determine reimbursement results for a sample of claims which are then extrapolated to the universe of claims.
The consolidation includes 2,698 DecisionDx-Melanoma claims dating from 2013 through spring 2017.
−Removed: The judges who will review the sample sets have been identified and the hearings were held in April 2019 with a supplemental hearing in May 2019.
−Removed: No formal ruling has been issued to date.
−Removed: In accordance with ASC 606, the Company has not recognized (fully constrained the variable consideration) any revenues attributable to these claims in its financial statements pending the outcome of this matter.
−Removed: The Company expects to recognize any revenue adjudicated by the ALJ in the periodic reporting period in which the Company is notified of the ALJ hearing outcome and it is determined that such decision will not be appealed.
+Added: Hearings were held in April 2019 with a supplemental hearing in May 2019.
+Added: On March 12, 2020, OMHA issued a decision denying payment on all claims in the consolidation.
+Added: The Company has filed an appeal to the decision, although no ruling on such appeal has been issued to date.
+Added: In accordance with ASC 606 and consistent with prior periods, the Company has not recognized (fully constrained the variable consideration) any revenues attributable to these claims in its financial statements pending the outcome of this matter.
Payor Concentration
The Company relies upon reimbursements from third-party government payors (primarily Medicare) and private-payor insurance companies to collect accounts receivable related to sales of its diagnostic tests.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
The Company’s significant third-party payors and their related revenues as a percentage of total revenues and accounts receivable balances are as follows:
−Removed: Percentage of Revenues
−Removed: Percentage of
+Added: Percentage of Revenues Percentage of
Accounts Receivable
2 unchanged sentences
(non-current)
−Removed: Year Ended December 31,
−Removed: As of December 31,
−Removed: As of December 31,
+Added: Year Ended December 31, As of December 31, As of December 31,
+Added: 2020 2019 2020 2019 2020 2019
+Added: Medicare 58 % 49 % 15 % 7 % — % — %
Medicare Advantage plans 29 % 29 % 40 % 41 % 25 % 18 %
−Removed: United Healthcare
BlueCross BlueShield plans 6 % 6 % 26 % 25 % 44 % 46 %
2 unchanged sentences
The estimated timing of payment utilized as a basis for classification as non-current is determined by analyses of historical payor-specific payment experience, adjusted for known factors that are expected to change the timing of future payments.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
The Company accrues an allowance for doubtful accounts against its accounts receivable when it is probable that an account is not collectible, based on write off history, credit risk of specific accounts, aging analysis and other information available on specific accounts.
10 unchanged sentences
Leasehold improvements are amortized using the straight-line method over the shorter of the estimated useful life of the asset or the term of the lease.
−Removed: The Company’s leasehold improvements primarily relate to its office and laboratory in Phoenix, Arizona, and are generally being amortized through the end of the lease term in July 2027.
+Added: The Company’s leasehold improvements primarily relate to its office and laboratory facilities in Phoenix, Arizona, and are generally being amortized through the end of the lease terms of July 2027 and March 2028.
Maintenance and repairs are charged to expense as incurred, and material improvements are capitalized.
−Removed: When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations and comprehensive loss in the period realized.
−Removed: Patent Rights Licenses
−Removed: The Company capitalizes the purchase of material licenses that grant interest in and to certain patent rights owned primarily by research and education institutions.
−Removed: These costs are amortized using the straight-line method over the shorter of the period of expected commercial benefit or the life of the underlying patent.
−Removed: Amortization of patent license costs is charged to research and development expense.
+Added: When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in the statements of operations and comprehensive (loss) income in the period realized.
Long-Lived Assets
3 unchanged sentences
There were no impairment charges recognized for the years ended December 31, 2020 and 2019.
+Added: Other Operating Income
+Added: On April 10, 2020, the Company received an automatic payment of $ 1.9 million from the U.S.
+Added: Department of Health and Human Services (“HHS”) pursuant to the Coronavirus Aid, Relief and Economic Security Act enacted on March 27, 2020, also known as the CARES Act, out of relief funds allocated by HHS to healthcare providers to reimburse healthcare related expenses or lost revenues attributable to COVID-19.
+Added: This automatic payment was calculated by HHS in proportion to the providers’ share of Medicare fee-for-service reimbursements in 2019 and was applicable to all facilities and providers that received Medicare fee-for-service reimbursements in 2019.
+Added: In the second quarter of 2020, based on guidance issued by HHS at
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: the time that stated any reasonable method could be used to calculate lost revenues attributable to COVID-19, the Company concluded it would qualify to retain the relief funds and recognized the funds received as other operating income during the three months ended June 30, 2020.
+Added: On September 19, 2020, HHS issued a notice of reporting requirements that changed the methodology for determining lost revenues to be based on a patient care operating income metric, as defined by HHS.
+Added: Due to this change in methodology and uncertainty in its application, the Company determined that it was no longer reasonably assured of keeping the funds.
+Added: Therefore, in the three months ended September 30, 2020, the Company reversed the previously recognized income.
+Added: On October 22, 2020, HHS again revised the methodology for calculating lost revenues, with such changes defining lost revenues as a negative change, if any, in calendar year 2020 revenues compared to calendar year 2019 revenues.
+Added: Based on these developments, the Company issued a check to repay the funds in December 2020.
+Added: However, on December 27, 2020, the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 was signed into law, which among other things included a provision amending the provider relief funds lost revenue calculation to be consistent with HHS’s June 2020 guidance, including allowing lost revenues to be determined by comparing actual 2020 revenues to 2020 budgeted revenues, subject to certain conditions, which was incorporated into revised HHS reporting requirements issued in January 2021.
+Added: Given this development, subsequent to December 31, 2020, the Company notified HHS of its intention to keep the funds and canceled the repayment.
+Added: Based on the changes to the requirements enacted on December 27, 2020 the Company determined that it is reasonably assured of keeping the funds and therefore recognized the $ 1.9 million as other operating income during the three months ended December 31, 2020.
Fair Value of Financial Instruments
−Removed: The carrying amount of the Company’s long-term debt approximates fair value due to its variable market interest rate and management’s opinion that current rates and terms that would be available to the Company with the same maturity and security structure would be essentially equivalent to that of the Company’s long-term debt.
−Removed: This estimated fair value is a ‘‘Level 3’’ fair value measurement, as defined in Note 10.
+Added: As of December 31, 2019, the carrying amount of the Company’s long-term debt approximated fair value due to its variable market interest rate and management’s opinion that then-current rates and terms that would have been available to the Company with the same maturity and security structure would have been essentially equivalent to that of the Company’s long-term debt.
+Added: This estimated fair value was a ‘‘Level 3’’ fair value measurement as defined in Note 9.
Deferred Rent
6 unchanged sentences
Research and development costs are charged to operations as incurred.
−Removed: Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: been received rather than when the payment is made.
+Added: Advance payments for goods and services that will be used in future research and development activities are expensed when the activity has been performed or when the goods have been received rather than when the payment is made.
Upfront and milestone payments due to third parties that perform research and development services on behalf of the Company will be expensed as services are rendered or when the milestone is achieved.
6 unchanged sentences
The Company accrues for liabilities under discretionary employee and executive bonus plans.
−Removed: These estimated compensation liabilities are based on progress against corporate objectives approved by the Board of Directors, compensation levels of eligible individuals, and target bonus percentage levels.
−Removed: The Board of Directors reviews and evaluates the performance against these objectives and ultimately determines what discretionary payments are made.
+Added: These estimated compensation liabilities are based on progress against corporate objectives approved by the Company’s board of directors, compensation levels of eligible individuals, and target bonus percentage levels.
+Added: The board of directors reviews and evaluates the performance
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: against these objectives and ultimately determines what discretionary payments are made.
The Company also accrues for liabilities under employee sales incentive bonus plans with accruals based on performance achieved to date compared to established targets.
17 unchanged sentences
The fair value of employee stock options and offerings under the 2019 Employee Stock Purchase Plan (the “ESPP”) are estimated on the date of grant using the Black-Scholes option-pricing valuation model.
+Added: For restricted stock units (“RSUs”), the fair value is equal to the closing price of the Company’s common stock on the date of grant.
The Company recognizes compensation costs on a straight-line basis for all employee stock-based compensation awards over the requisite service period of the awards.
−Removed: For options, the requisite service period is generally the awards’ vesting period (typically four years ).
+Added: For options and RSUs, the requisite service period is generally the awards’ vesting period (typically four years ).
For the ESPP, the requisite service period is generally the period of time from the offering date to the purchase date.
Forfeitures are accounted for as they occur.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: Deferred Offering Costs
−Removed: Deferred offering costs consist primarily of legal and accounting fees, which are direct and incremental costs related to the IPO.
−Removed: Deferred offering costs of $2,517,000 , along with $5,152,000 in underwriting discounts and commissions, were offset against the gross IPO proceeds of $73,600,000 for the year ended December 31, 2019.
−Removed: As of December 31, 2018 , the Company had incurred $91,000 in deferred offering costs, which are reported as other assets - long-term on the balance sheet.
−Removed: Comprehensive Income (Loss)
−Removed: Comprehensive income (loss) is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.
−Removed: The Company’s comprehensive income (loss) was the same as its reported net income (loss) for all periods presented.
+Added: Comprehensive (Loss) Income
+Added: Comprehensive (loss) income is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources.
+Added: The Company’s comprehensive (loss) income was the same as its reported net (loss) for all periods presented.
+Added: CARES Act Payroll Tax Deferral
+Added: The CARES Act permits employers to defer the payment of the employer share of social security taxes due for the period beginning March 27, 2020 and ending December 31, 2020.
+Added: Of the amounts deferred, 50% are required to be paid by December 31, 2021 and the remaining 50% are required to be paid by December 31, 2022.
+Added: The Company began deferring payment of the employer share of social security taxes in May 2020.
+Added: As of December 31, 2020, the Company had deferred payment of $ 551,000 of such taxes, which are allocated between current and noncurrent liabilities on the balance sheet.
Accounting Pronouncements Yet to be Adopted
−Removed: In February 2016, the FASB issued ASU No.
−Removed: 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases (Topic 840), and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors.
+Added: In February 2016, the FASB issued Accounting Standards Update (“ASU”) No.
+Added: 2016-02, Leases (Topic 842) (“ASU 2016-02”), which supersedes FASB ASC Topic 840, Leases, and provides principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors.
The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee.
−Removed: This classification will determine whether lease expense is recognized based on an effective interest method for finance leases or on a straight-line basis over the term of the lease for operating leases.
+Added: This classification will determine whether lease expense is recognized based on an effective interest
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: method for finance leases or on a straight-line basis over the term of the lease for operating leases.
A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of classification.
4 unchanged sentences
Effective Dates (“ASU 2019-10”), which included a one-year deferral of the effective date of ASU 2016-02 for certain entities.
+Added: In June 2020, the FASB issued ASU No.
+Added: 2020-05, Revenue from Contracts with Customers (Topic 606) and Leases (Topic 842):
+Added: Effective Dates for Certain Entities, which further defers the effective date for certain entities.
As a result, the ASU is now effective for EGCs for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022.
−Removed: The Company expects to adopt the new standard in the fourth quarter of 2021 using the modified retrospective method, under which the Company will apply Topic 842 to existing and new leases as of January 1, 2021, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods.
−Removed: The Company anticipates that the adoption will not have a material impact on its statements of operations and comprehensive income (loss) or its statements of cash flows but expects to recognize right-of-use assets and liabilities for lease obligations associated with its operating leases.
+Added: If Company maintains EGC status, it will adopt the new standard in the fourth quarter of 2022 using the modified retrospective method, under which the Company will apply Topic 842 to existing and new leases as of January 1, 2022, but prior periods will not be restated and will continue to be reported under Topic 840 guidance in effect during those periods.
+Added: The Company anticipates that the adoption will not have a material impact on its statements of operations and comprehensive (loss) income or its statements of cash flows but expects to recognize right-of-use assets and liabilities for lease obligations associated with its operating leases.
In June 2016, the FASB issued ASU No.
15 unchanged sentences
The Company is currently evaluating the impact of ASU 2019-12 on its financial statements.
−Removed: Earnings (Loss) Per Share
−Removed: Basic earnings (loss) per share is computed by dividing net income (loss) attributable to common stockholders for the period by the weighted-average number of common shares outstanding during the period.
−Removed: The weighted-average number of common
+Added: If the market value of the Company’s common stock held by non-affiliates exceeds $700.0 million as of June 30, 2021, the Company will cease to be an emerging growth company effective December 31, 2021.
+Added: If that occurs, the Company will be required to apply the non-EGC effective dates in adopting accounting pronouncements that qualify for delayed adoption by EGCs, including the accounting pronouncements discussed above.
+Added: (Loss) Earnings Per Share
+Added: Basic (loss) earnings per share is computed by dividing net (loss) income attributable to common stockholders for the period by the weighted-average number of common shares outstanding during the period.
+Added: The weighted-average number of common shares outstanding includes shares associated with a warrant, issued in July 2019, to purchase 209,243 shares of common stock, which were deemed to have been issued for purposes of calculating basic and diluted (loss) earnings per share, due to the nominal exercise price.
+Added: On July 29, 2019, the Company completed the initial public offering of its common stock (“IPO”), in which it issued and sold 4,600,000 shares of common stock.
+Added: Also on that date, all of the Company’s outstanding convertible preferred stock and convertible promissory notes automatically converted into 8,181,992 and 1,661,106 shares, respectively, of common stock and certain outstanding warrants to purchase Series F convertible redeemable preferred stock were net exercised for an aggregate of 27,207 shares of common stock.
+Added: On June 29, 2020, July 2, 2020 and December 18, 2020, the Company issued and sold 2,000,000 shares, 300,000 shares and 4,600,000 , respectively, of common stock in follow-on public offerings, as discussed further in Note 12.
+Added: The foregoing shares are included in the Company’s weighted-average number of common shares outstanding starting on the respective issuance/conversion dates.
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: shares outstanding includes shares associated with the July 2019 Warrant (as defined in Note 7), which are deemed to have been issued for purposes of calculating basic and diluted earnings (loss) per share, due to the nominal exercise price.
−Removed: On July 29, 2019, the Company completed the IPO, in which it issued and sold 4,600,000 shares of common stock.
−Removed: Also on that date, all of the Company’s outstanding convertible preferred stock and convertible promissory notes automatically converted into 8,181,992 and 1,661,106 shares, respectively, of common stock and certain outstanding warrants to purchase Series F convertible redeemable preferred stock were net exercised for an aggregate of 27,207 shares of common stock.
−Removed: These shares are included in the Company’s weighted-average number of common shares outstanding starting on that date.
−Removed: Diluted earnings (loss) per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, as well as from the possible conversion of the Company’s convertible preferred stock, convertible promissory notes and exercise of outstanding warrants.
+Added: Diluted (loss) earnings per share reflects the additional dilution from potential issuances of common stock, such as stock issuable pursuant to the exercise of stock options, the vesting of RSUs or purchases under the ESPP, as well as from the assumed conversion/exercise of the Company’s convertible preferred stock, convertible promissory notes and outstanding warrants.
The treasury stock and if-converted methods are used to calculate the potential dilutive effect of these common stock equivalents.
−Removed: However, potentially dilutive shares are excluded from the computation of diluted loss per share when their effect is antidilutive.
−Removed: The following table shows the computation of basic and diluted earnings (loss) per share for the years ended December 31, 2019 and 2018 (in thousands, except per share data):
+Added: However, potentially dilutive shares are excluded from the computation of diluted (loss) earnings per share when their effect is antidilutive.
+Added: The following table shows the computation of basic and diluted (loss) earnings per share for the years ended December 31, 2020 and 2019 (in thousands, except per share data):
Years Ended December 31,
−Removed: Net income (loss) attributable to common stockholders
+Added: Net (loss) income attributable to common stockholders $ ( 10,284 ) $ 2,991
Assumed conversion of convertible promissory notes (1) :
5 unchanged sentences
Weighted-average common shares outstanding, diluted 18,929 8,658
−Removed: Earnings (loss) per share attributable to common stockholders:
−Removed: For the year ended December 31, 2019 , reflects the assumed conversion of the Q1 2019 Notes (as defined in Note 7) into shares of common stock beginning July 1, 2019, in accordance with the requirements in ASC 260, Earnings per Share , for contingently issuable shares due to the contingency not being met until the third quarter of 2019.
+Added: (Loss) earnings per share attributable to common stockholders:
+Added: Basic $ ( 0.54 ) $ 0.35
+Added: Diluted $ ( 0.54 ) $ ( 0.21 )
+Added: (1) For the year ended December 31, 2019 , this figure reflects the assumed conversion of the Q1 2019 Notes (as defined in Note 6) into shares of common stock beginning July 1, 2019, in accordance with the requirements in ASC Topic 260, Earnings per Share , for contingently issuable shares due to the contingency not being met until the third quarter of 2019.
The July 2019 Note (as defined in Note 6), was excluded from the computation of diluted earnings (loss) per share prior to its conversion on July 29, 2019 in connection with the IPO, as disclosed below.
+Added: Due to the Company reporting a net loss attributable to common stockholders for the year ended December 31, 2020, all potentially dilutive securities are antidilutive and are excluded from the computations of diluted loss per share.
For the year ended December 31, 2019, the computation of diluted loss per share excludes the assumed conversions of the convertible preferred stock, assumed conversion of the July 2019 Note (in each case, for the time prior to their actual conversions), assumed exercise of all stock options, assumed issuance of shares under the ESPP and the assumed exercise of all common stock warrants because to include them would be antidilutive.
−Removed: Due to the Company reporting a net loss attributable to common stockholders for the year ended December 31, 2018, all potentially dilutive securities are antidilutive and are excluded from the computations of diluted loss per share for those periods.
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s calculation of diluted earnings (loss) per share for the years ended December 31, 2019 and 2018 because to do so would be antidilutive (in thousands):
+Added: The table below provides the weighted-average number of potential common shares associated with outstanding securities not included in the Company’s calculation of diluted (loss) earnings per share for the years ended December 31, 2020 and 2019 because to do so would be antidilutive (in thousands):
Years Ended December 31,
1 unchanged sentence
Convertible promissory note (1)
−Removed: Stock options
+Added: Stock options and restricted stock units 2,789 1,820
Common stock warrants 35 41
1 unchanged sentence
Employee stock purchase plan 100 24
+Added: Total 2,924 6,677
(1) Associated with the July 2019 Note.
6 unchanged sentences
Furniture and fixtures 436 176
+Added: Construction-in-progress 3,590 2
+Added: Total 8,756 3,263
Less accumulated depreciation ( 1,654 ) ( 1,203 )
Property and equipment, net $ 7,102 $ 2,060
−Removed: Depreciation expense was recorded in the statements of operations and comprehensive income (loss) as follows (in thousands):
+Added: Depreciation expense was recorded in the statements of operations and comprehensive (loss) income as follows (in thousands):
Years Ended December 31,
2 unchanged sentences
Selling, general and administrative 100 70
−Removed: Intangible Assets, Net
−Removed: Intangible assets consist of capitalized license costs as follows (in thousands):
−Removed: As of December 31,
−Removed: Weighted-Average Remaining Life (Years)
−Removed: Weighted-Average Remaining Life (Years)
−Removed: Accumulated amortization
−Removed: Intangible assets, net
−Removed: Amortization expense was $4,000 and $36,000 , for the years ended December 31, 2019 and 2018 , respectively.
+Added: Total $ 472 $ 354
CASTLE BIOSCIENCES, INC.
3 unchanged sentences
As of December 31,
−Removed: Accrued state income taxes
−Removed: Accrued interest
−Removed: Accrued royalties
Accrued service fees $ 1,891 $ 1,162
Employee stock purchase plan contributions 536 218
+Added: Deferred employer payroll tax liability 276 —
+Added: Accrued royalties 151 169
+Added: Accrued state taxes 62 79
+Added: Accrued interest — 184
+Added: Total $ 3,055 $ 1,812
Convertible Promissory Notes
13 unchanged sentences
The Company determined the fair value of the embedded derivative liability at the issuance date, creating a discount to the carrying value of the Q1 2019 Notes, which was being amortized over the life of the debt using the effective interest method.
−Removed: The embedded derivative was recorded at fair value each reporting period, with changes in fair value recorded as “other expense, net” in the statements of operations and comprehensive income (loss).
+Added: The embedded derivative was recorded at fair value each reporting period, with changes in fair value recorded as “other expense, net” in the statements of operations and comprehensive (loss) income.
No hedge accounting treatment was applied.
1 unchanged sentence
The Company also assessed the optional conversion feature into Series F redeemable convertible preferred stock at maturity and determined that this feature did not meet the definition of a derivative instrument because the settlement terms involved the gross delivery of the underlying shares, which were not readily convertible to cash.
−Removed: The Company then assessed whether this feature caused the Q1 2019 Notes to be subject to ASC 470-20, Debt with Conversion and Other Options (“ASC 470-20”) , and determined that the beneficial conversion feature guidance was applicable to the Q1 2019 Notes.
−Removed: At issuance, the Company concluded that the Q1 2019 Notes had a beneficial conversion feature because the fair value of the Series F preferred stock
+Added: The Company then assessed whether this
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: exceeded the conversion price of $5.8208 per share that would have been applicable under the optional conversion at maturity, assuming no other equity securities senior to Series F preferred stock were sold.
+Added: feature caused the Q1 2019 Notes to be subject to ASC 470-20, Debt with Conversion and Other Options (“ASC 470-20”) , and determined that the beneficial conversion feature guidance was applicable to the Q1 2019 Notes.
+Added: At issuance, the Company concluded that the Q1 2019 Notes had a beneficial conversion feature because the fair value of the Series F preferred stock exceeded the conversion price of $ 5.8208 per share that would have been applicable under the optional conversion at maturity, assuming no other equity securities senior to Series F preferred stock were sold.
Under ASC 470-20, this beneficial conversion feature was measured at intrinsic value as of the issuance date of the Q1 2019 Notes and was recognized as additional paid-in capital, creating a discount to the carrying value of the Q1 2019 Notes that was being amortized over the life of the debt using the effective interest method.
19 unchanged sentences
The amounts recognized in net income for the year ended December 31, 2019 for the embedded derivative liability are as follows (in thousands) :
−Removed: Gain (Loss) Recognized in Net Income
−Removed: Statement of Operations and Comprehensive Income (Loss) Location
+Added: (Loss) Recognized in Net Income
+Added: Statement of Operations and Comprehensive (Loss) Income Location Year Ended
December 31, 2019
Derivatives Not Classified as Hedging Instruments
−Removed: Embedded derivative in convertible promissory notes
−Removed: Other expense, net
+Added: Embedded derivative in convertible promissory notes Other expense, net $ ( 237 )
July 2019 Note
1 unchanged sentence
The July 2019 Note bore simple interest at a rate of 8 % per annum and had an original maturity date of June 30, 2020.
−Removed: The IPO triggered an automatic conversion feature of the July 2019 Note under which the outstanding principal amount plus accrued interest converted into 707,032 shares of common stock in connection with the closing of the IPO on July 29, 2019, based on a price derived from a valuation calculated pursuant to the terms of the July 2019 Note.
−Removed: In connection with the July 2019 Note issuance, the Company issued the purchaser of the July 2019 Note a warrant to
+Added: The IPO triggered an automatic conversion feature of the July 2019 Note under which the outstanding principal amount plus accrued interest converted into 707,032 shares of common stock in connection with the
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: purchase up to 209,243 shares of common stock at an exercise price of approximately $0.001 per share (the “July 2019 Warrant”), as discussed further in Note 13.
+Added: closing of the IPO on July 29, 2019, based on a price derived from a valuation calculated pursuant to the terms of the July 2019 Note.
+Added: In connection with the July 2019 Note issuance, the Company issued the purchaser of the July 2019 Note a warrant to purchase up to 209,243 shares of common stock at an exercise price of approximately $ 0.001 per share (the “July 2019 Warrant”).
The Company elected to account for the July 2019 Note under the fair value option in accordance with ASC 825, Financial Instruments.
1 unchanged sentence
Given the complexity of these features and the short time period the July 2019 Note was actually outstanding, the Company elected the fair value option to simplify the accounting for the July 2019 Note.
−Removed: Under the fair value option, changes in fair value are recorded in the statements of operations and comprehensive income (loss) each period as “Other expense, net.”
+Added: Under the fair value option, changes in fair value are recorded in the statements of operations and comprehensive (loss) income each period as “Other expense, net.”
The Company received $ 10,000,000 from the purchaser and incurred $ 764,000 in issuance costs, resulting in net proceeds of $ 9,236,000 .
3 unchanged sentences
Long-Term Debt
−Removed: The Company’s long-term debt consists of term debt and a revolving line of credit and are presented in the table below (in thousands):
+Added: The Company’s long-term debt balances are presented in the table below (in thousands):
As of December 31,
−Removed: Revolving line of credit
−Removed: Total principal amount
+Added: Term debt $ — $ 26,688
Unamortized discount and issuance costs — ( 1,566 )
2 unchanged sentences
Total long-term debt, less current portion $ — $ 19,289
−Removed: Future maturities of principal amounts on long-term debt as of December 31, 2019 are as follows (in thousands):
−Removed: Years Ending December 31,
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: On November 30, 2018 (the ‘‘Closing Date’’), the Company entered into a new Loan and Security Agreement (the ‘‘2018 LSA’’) with Oxford Finance LLC (‘‘Oxford’’), as collateral agent, and Oxford and Silicon Valley Bank (‘‘SVB’’) as equal syndicated lenders (collectively, the ‘‘Lenders’’).
−Removed: The 2018 LSA replaced the Company’s previous lending arrangement and provided for a $20.0 million secured term loan credit facility (the ‘‘2018 Term Loan’’) and a credit line of up to $5.0 million (discussed in the ‘‘Revolving Line of Credit’’ section below), prior to amendment of the 2018 LSA on June 13, 2019, as discussed below.
−Removed: The Company’s obligations under the 2018 LSA are secured by substantially all of its assets, excluding intellectual property and subject to certain other exceptions and limitations.
−Removed: The Company has the right to prepay the 2018 Term Loan in whole or in part at any time, subject to a prepayment fee of 1.50% prior to November 30, 2020 and 0.75% thereafter.
−Removed: Upon prepayment, the Company is also obligated to pay a non-refundable early termination fee of $497,000 .
−Removed: Amounts prepaid or repaid under the 2018 Term Loan may not be reborrowed.
−Removed: Initially, the 2018 LSA contained a financial covenant that required the Company to achieve a monthly trailing six-month revenue target each month throughout the term of the agreement, but the covenant was amended on June 13, 2019 and changed to a monthly trailing three-month target, as discussed further below.
−Removed: As of December 31, 2019 and December 31, 2018, the Company was in compliance with this covenant.
−Removed: On June 13, 2019, the Company entered into an amendment to the 2018 LSA (the “First Amendment”), which, among other things, (i) eliminated the $5.0 million revolving line and increased the 2018 Term Loan by $5.0 million and (ii) amended the financial covenant to require the Company to achieve a monthly trailing three-month revenue target each month throughout the term of the agreement.
−Removed: The revenue targets were amended primarily to align with a more current reflection of the Company’s revenue projections after taking into account the impact of ASC 606 on the Company’s revenue recognition following the Company’s early adoption of ASC 606.
+Added: On November 30, 2018, the Company entered into a Loan and Security Agreement (the ‘‘2018 LSA’’), with Oxford Finance LLC (‘‘Oxford’’), as collateral agent, and Oxford and Silicon Valley Bank as equal syndicated lenders.
+Added: The 2018 LSA provided for a $ 20.0 million secured term loan credit facility (the ‘‘Term Loan’’) and a credit line of up to $ 5.0 million, prior to amendment of the 2018 LSA on June 13, 2019, as discussed below.
+Added: The Company’s obligations under the 2018 LSA were secured by substantially all of its assets, excluding intellectual property and subject to certain other exceptions and limitations.
+Added: In addition, the 2018 LSA contained customary conditions of borrowing, events of default and covenants.
+Added: On June 13, 2019, the Company entered into an amendment to the 2018 LSA (the “First Amendment”), which, among other things eliminated the $ 5.0 million revolving line and increased the Term Loan by $ 5.0 million and amended a financial covenant requiring the Company to achieve certain revenue targets.
The First Amendment was accounted for as a modification of the 2018 LSA, and therefore no extinguishment gain or loss was recognized.
−Removed: For each month through December 31, 2019, the trailing three-month revenue requirements were calculated as a percentage of the Company’s previously approved applicable monthly revenue projections.
−Removed: In February 2020, the Company entered into an amendment of the 2018 LSA (the “Second Amendment”) that, among other things, changed the covenant from being tested monthly to quarterly testing.
−Removed: In March 2020, the Company entered into an amendment of the 2018 LSA (the “Third Amendment”) with the Lenders to establish revenue targets for the year ending December 31, 2020.
−Removed: For quarterly periods ending after December 31, 2020, the trailing three-month revenue requirements will be determined by the Lenders upon receipt and review of the Company’s quarterly financial projections for the year, subject to certain specified criteria regarding minimum requirements.
−Removed: Revenues, if any, that the Company recognizes as a result of an ALJ appeal process from consolidated claims initiatives for DecisionDx-Melanoma do not count toward the minimum revenue requirements.
−Removed: In addition, the 2018 LSA contains customary conditions of borrowing, events of default and covenants, including covenants that restrict the Company’s ability to dispose of assets, merge with or acquire other entities, incur indebtedness and make distributions to holders of the Company’s capital stock.
−Removed: Should an event of default occur, including the occurrence of a material adverse change, the Company could be liable for immediate repayment of all obligations under the 2018 LSA.
−Removed: The Second Amendment included a waiver, by the Lenders, of an event of default of the Company attributable to maintaining a balance in a certain third-party deposit account, beyond the maximum level permitted, without obtaining a control agreement for such deposit account in favor of the collateral agent, Oxford.
−Removed: In addition to the waiver, the Second Amendment also provided a modification to increase the maximum balance permitted for this deposit account.
−Removed: The Company is currently in compliance with this provision of the 2018 LSA.
−Removed: Should the Company seek to further amend the terms of the 2018 LSA, the consent of Oxford and SVB would be required.
−Removed: The 2018 Term Loan bears interest at a floating rate equal to the greater of (1) 8.55% and (2) the 30-day U.S.
+Added: The Term Loan bore interest, payable monthly in arrears, at a floating rate equal to the greater of (1) 8.55 % and (2) the 30-day U.S.
LIBOR rate as reported in the Wall Street Journal on the last business day of the month that precedes the month in which the interest will accrue, plus 6.48 %.
−Removed: The applicable interest rate on the 2018 Term Loan was 8.55% and 8.98% at December 31, 2019 and December 31, 2018 , respectively.
−Removed: Interest on the 2018 Term Loan is payable monthly in arrears.
−Removed: The Company is permitted to make interest-only payments on the 2018 Term Loan for the 18 months following the Closing Date.
−Removed: The principal is required to be repaid in 30 equal monthly installments beginning on June 1, 2020.
−Removed: All unpaid principal and accrued and unpaid interest are due on November 1, 2022 (the “2018 Term Loan Maturity Date”).
−Removed: The Company is also obligated to make an additional final payment of 6.75% of the aggregate original principal amount, or $1,687,500 as of December 31, 2019 , upon any prepayment or on the 2018 Term Loan Maturity Date.
−Removed: The final payment amount is being amortized as additional interest expense using the effective interest method over the term of the debt.
−Removed: The 2018 Term Loan was fully funded on the Closing Date and the 2018 Revolving Line (defined and discussed below) was fully drawn upon on the Closing Date.
−Removed: Proceeds from the 2018 LSA were used to repay all outstanding obligations under the
+Added: The applicable interest rate on the Term Loan was 8.55 % at December 31, 2019.
+Added: The Company was permitted to make interest-only payments on the Term Loan for the 18 months through May 31, 2020.
+Added: As required, the Company began to repay the term loan in 30 equal monthly installments beginning on June 1, 2020.
+Added: All unpaid principal and accrued and unpaid interest were to be due on November 1, 2022 (the “Term Loan Maturity Date”).
+Added: Additionally, the Company was obligated to make an additional final payment of 6.75 % of the aggregate original principal amount, or $ 1,687,500 , upon any prepayment or on the Term Loan Maturity Date.
+Added: The final payment amount was being amortized as additional interest expense using the effective interest method over the term of the debt.
+Added: On December 21, 2020, the Company terminated the 2018 LSA and repaid in full all amounts due, which totaled $ 21.6 million, including the outstanding principal balance, the final payment amount, early termination and prepayment fees and accrued interest.
+Added: The Company recognized a loss of $ 1.4 million in connection with the extinguishment of the 2018 LSA, which was
CASTLE BIOSCIENCES, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: Company’s previous lending arrangement and to provide working capital.
−Removed: As a condition of the loan, the Company issued Series F preferred stock warrants to the Lenders with an aggregate initial fair value of $158,000 .
−Removed: In accordance with ASC 480-10, Distinguishing Liabilities from Equity (“ASC 480-10”), the warrants were liability-classified as the underlying to the warrant was a puttable security.
−Removed: The initial recognition of the warrant liability created a discount to the debt, which is being amortized over the debt term using the effective interest method.
−Removed: The 2018 LSA was accounted for as a modification of the previous lending arrangement with SVB and Oxford, and therefore no extinguishment gain or loss was recognized.
−Removed: Revolving Line of Credit
−Removed: Under the 2018 LSA, the Company had a $5.0 million revolving line of credit (the ‘‘2018 Revolving Line’’), contingent on the Company’s satisfaction of borrowing base eligibility requirements.
−Removed: The 2018 Revolving Line bore interest at a floating per annum rate equal to the greater of (1) 6.25% and (2) 5.48% above the U.S.
−Removed: The applicable interest rate on the 2018 Revolving Line December 31, 2018 was 7.98% .
−Removed: The 2018 Revolving Line was to be due in full no later than November 30, 2020, but was eliminated in connection with the First Amendment, as discussed above.
+Added: attributable to the write off of the unamortized discount and issuance costs of $ 0.7 million, the early termination fee of $ 0.5 million and prepayment fees of $ 0.2 million.
Operating Leases
−Removed: Friendswood Leases
−Removed: The Company leases its office headquarters in Friendswood, Texas (the “820 Friendswood Lease”).
−Removed: As of December 31, 2019, the Company’s commitment under the 820 Friendswood Lease extends through June 30, 2020 and the Company has a one-year renewal option thereafter.
−Removed: If this option is exercised, the term of the 820 Friendswood Lease would extend through June 30, 2021.
−Removed: In December 2019, the Company entered into an agreement to lease new office space in Friendswood, Texas (the “550 Friendswood Lease”) with the intent to replace the 820 Friendswood Lease office space.
−Removed: The 550 Friendswood Lease is expected to commence on or prior to August 1, 2020 and has a 60 -month term, with an option to renew for one additional five-year period.
−Removed: Phoenix Leases
−Removed: In April 2016, the Company took occupancy of a newly constructed office and laboratory facility located in Phoenix, Arizona (the “3737 Phoenix Lease”), replacing its previous facility.
−Removed: On December 16, 2019, the Company entered into an amendment to the 3737 Phoenix Lease and extended the term by 48 months , such that the expiration date is now July 31, 2027.
−Removed: Additionally, the amendment provides the Company with options to extend the term of the 3737 Phoenix Lease for two additional renewal periods of five years each.
−Removed: On December 16, 2019, the Company entered into a lease (the “3707 Phoenix Lease”) of certain additional office space, in Phoenix, Arizona that the Company intends to use such space for clinical and research laboratory purposes as well as general office use.
−Removed: The 3707 Phoenix Lease commenced in January 2020 and has an initial term of 91 months , or through approximately July 31, 2027.
−Removed: The 3707 Phoenix Lease provides the Company with options to extend the initial term for two additional renewal periods of five years each.
−Removed: Other leasing arrangements include office copiers and a corporate apartment.
+Added: In December 2019, the Company entered into an agreement to lease office space in Friendswood, Texas (the “Friendswood Lease”) to serve as its new headquarters.
+Added: The Friendswood Lease commenced in December 2020 and has a 60-month term, with an option to renew for one additional five-year period.
+Added: In addition, the Company leases another facility for office space in Friendswood, Texas on a month-to-month basis.
+Added: The Company leases two facilities for office and laboratory space in Phoenix, Arizona.
+Added: The Company took occupancy of the original facility in April 2016.
+Added: Pursuant to an amendment in December 2019, the lease term was extended to July 31, 2027.
+Added: Also in December 2019, the Company entered into a lease of the second facility for clinical and research laboratory purposes as well as general office use.
+Added: This lease commenced in September 2020 and extends through March 31, 2028.
+Added: Each of the leases provide the Company with an option to extend their respective term for two additional renewal periods of five years each.
+Added: Other leasing arrangements include office equipment and a corporate apartment.
All leases have been classified as operating leases.
2 unchanged sentences
Years Ending December 31,
+Added: Thereafter 1,037
Rent expense was $ 548,000 and $ 395,000 for the years ended December 31, 2020 and 2019 , respectively.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
Fair Value Measurements
9 unchanged sentences
Accordingly, the fair value estimates disclosed, or amounts recorded may not be indicative of the amount that the Company or holders of the instruments could realize in a current market exchange.
−Removed: The table below provides information (in thousands), by level within the fair value hierarchy, of the Company’s financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2018 .
−Removed: There were no financial assets and liabilities accounted for at fair value on a recurring basis as of December 31, 2019 .
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: The table below provides information (in thousands), by level within the fair value hierarchy, of the Company’s financial assets and liabilities that are accounted for at fair value on a recurring basis as of December 31, 2020 and 2019 in thousands):
As of December 31, 2020
−Removed: Quoted Prices in Active Markets for Identical Items (Level 1)
−Removed: Significant Other Observable Inputs (Level 2)
−Removed: Significant Unobservable Inputs (Level 3)
−Removed: Preferred stock warrants
−Removed: The following table discloses the summary of changes in the fair value of the Level 3 fair value measurements (in thousands):
−Removed: Preferred stock warrant liability
−Removed: Embedded derivative liability in the Q1 2019 Notes
+Added: Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs
+Added: (Level 2) Significant Unobservable Inputs
+Added: (Level 3) Total
+Added: Money market funds (1)
+Added: $ 409,480 $ — $ — $ 409,480
+Added: As of December 31, 2019
+Added: Quoted Prices in Active Markets for Identical Items (Level 1) Significant Other Observable Inputs
+Added: (Level 2) Significant Unobservable Inputs
+Added: (Level 3) Total
+Added: Money market funds (1)
+Added: $ 98,389 $ — $ — $ 98,389
+Added: (1) Classified as “Cash and cash equivalents” in the balance sheets.
+Added: There were no Level 3 fair value measurements as of December 31, 2020 and 2019.
+Added: The following table discloses the summary of changes in the fair value of the Level 3 fair value measurements during the year ended December 31, 2019 (in thousands):
+Added: Preferred stock warrant liability Embedded derivative liability in the Q1 2019 Notes The
July 2019 Note
Balance, January 1, 2019 $ 1,194 $ — $ —
−Removed: Issuance of warrants
−Removed: Change in fair value included in net loss
−Removed: Exercised warrants
−Removed: Balance, December 31, 2018
Issuance of convertible promissory notes — 2,816 9,236
3 unchanged sentences
Balance, December 31, 2019 $ — $ — $ —
−Removed: The changes in fair value of the preferred stock warrant liability, the embedded derivative liability and the July 2019 Note were recorded as ‘‘Other expense, net’’ in the statements of operations and comprehensive income (loss).
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: The fair value of the warrants to purchase shares of Series A, Series B, Series E-1, Series E-2, Series E-2A, Series E-3, and Series F redeemable convertible preferred stock was estimated by management using the Black-Scholes option pricing model with the following assumptions:
−Removed: December 31, 2018
−Removed: Average expected life (years)
−Removed: Expected stock price volatility
−Removed: Risk-free interest rate
−Removed: 2.51% - 2.69%
−Removed: Dividend yield
+Added: The changes in fair value of the preferred stock warrant liability, the embedded derivative liability and the July 2019 Note were recorded as ‘‘Other expense, net’’ in the statements of operations and comprehensive (loss) income.
+Added: The fair value of the warrants to purchase shares of redeemable convertible preferred stock was estimated by management using the Black-Scholes option pricing model.
In connection with the IPO, all outstanding preferred stock warrants became exercisable for shares of common stock.
The Company recorded a final fair value adjustment on the preferred stock warrant liability as of immediately prior to the closing of the IPO based on the IPO price of $ 16.00 per share.
−Removed: The preferred stock warrant liability was then reclassified to stockholders’ equity and is no longer recorded at fair value on a recurring basis.
+Added: The preferred stock warrant liability was then reclassified to stockholders’ equity and no additional fair value adjustments were subsequently recorded.
Certain features of the Q1 2019 Notes were determined to be an embedded derivative requiring bifurcation and separate accounting, as discussed in Note 6.
−Removed: The fair value of the embedded derivative was determined based on a probability-weighted income approach discounted at an interest rate that is consistent with the appropriate market interest rate (ranging from 8.93% to 11.40% ) considering management’s estimates of the probability of the possible settlement outcomes.
+Added: The fair value of the embedded derivative was determined based on a probability-weighted income approach discounted at an interest rate that was consistent with the appropriate market interest rate (ranging from 8.93 % to 11.40 %) considering management’s estimates of the probability of the possible settlement outcomes.
At inception of the Q1 2019 Notes, management assessed the probability of the occurrence of the Next Equity Financing at 90 %.
The final fair value adjustment was based upon the actual settlement of the Q1 2019 Notes in connection with the IPO.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
The Company elected the fair value option for the July 2019 Note, as discussed in Note 6.
5 unchanged sentences
Convertible Preferred Stock
−Removed: As discussed further below, in connection with the IPO, on July 29, 2019, all outstanding shares of convertible preferred stock automatically converted into shares of common stock at a rate of one common share for each 1.219 shares of convertible preferred stock.
+Added: In connection with the IPO, on July 29, 2019, all outstanding shares of the Company’s convertible preferred stock automatically converted into shares of common stock at a rate of one common share for each 1.219 shares of convertible preferred stock.
The Company’s convertible preferred stock was classified outside of stockholders’ equity in accordance with authoritative guidance for the classification and measurement of potentially redeemable securities.
2 unchanged sentences
Further, except for Series C preferred stock, the preferred stock was redeemable upon the majority vote of specified holders of the preferred stock.
−Removed: Information on liquidation and redemption terms applicable prior to the IPO are discussed further under Liquidation Provisions and Redemption Rights , respectively, below.
−Removed: On January 12, 2018, the Company issued 940,605 shares of Series F redeemable convertible preferred stock in exchange for $5.475 million in cash.
−Removed: In two subsequent closings on May 31, 2018 and June 8, 2018, the Company issued 783,248 and 85,711 additional shares, respectively, in exchange for $4,599,000 and $499,000 , respectively, in cash.
−Removed: The designations, rights and preferences that were associated with the Series F redeemable convertible preferred stock prior to the IPO are provided below.
−Removed: Proceeds of $94,000 from the sale of 16,127 of these shares were received in 2017 prior to issuance.
−Removed: These proceeds were initially recorded as a liability, but in in 2018 these proceeds were reclassified to convertible preferred stock when the shares were ultimately issued.
−Removed: In conjunction with the January 12, 2018 issuance of the Series F redeemable convertible preferred shares, the Company also issued warrants to purchase 67,233 additional shares of redeemable convertible preferred stock at $0.01 per share with an initial fair value of $473,000 .
As a result of a 1-for-1.219 reverse stock split effected on July 11, 2019, the conversion price for each series of preferred stock was adjusted to be the original issue price multiplied by 1.219 .
−Removed: Immediately prior to the closing of the IPO, 9,973,884 shares of
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: outstanding convertible preferred stock were automatically converted into 8,181,992 shares of common stock.
+Added: Immediately prior to the closing of the IPO, 9,973,884 shares of outstanding convertible preferred stock were automatically converted into 8,181,992 shares of common stock.
In connection with the conversion, the Company derecognized the convertible preferred stock at their carrying values and allocated such amounts to common stock and additional paid-in capital effective July 29, 2019.
−Removed: Convertible preferred stock consisted of the following (in thousands, except share and per share data):
−Removed: Convertible preferred stock
−Removed: As of December 31, 2018
−Removed: Shares Authorized
−Removed: Shares Issued and Outstanding
−Removed: Original Issue Price per Share
−Removed: Original Issue Value
−Removed: Accumulated and Undeclared Dividends
−Removed: Aggregate Liquidation Preference
−Removed: Carrying Value
−Removed: Redeemable convertible preferred stock
−Removed: As of December 31, 2018
−Removed: Shares Authorized
−Removed: Shares Issued and Outstanding
−Removed: Original Issue Price per Share
−Removed: Original Issue Value
−Removed: Accumulated and Undeclared Dividends
−Removed: Aggregate Liquidation Preference
−Removed: Carrying Value
Any discount to the original issue price was being accreted with a charge to additional paid-in capital over the period through the earliest date the redeemable convertible preferred stock could become redeemable.
−Removed: See the Redemption Rights section below for additional information.
−Removed: Unpaid cumulative accruing dividends were included in calculating the aggregate liquidation preference, but such dividends were not recorded in the financial statements since a liquidation event or a deemed liquidation did not become probable of occurring.
−Removed: See the Liquidation Provisions section below for additional information.
−Removed: The rights, preferences and privileges of the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series E-2A, Series E-3, and Series F convertible preferred stock that existed prior to the IPO are as follows:
−Removed: The holders of the outstanding shares of Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series E-2A, Series E-3, and Series F convertible preferred stock were entitled to receive, when and if declared by the Board of Directors, a cash dividend in the following order of preference and at the rates per annum noted:
−Removed: Convertible Preferred Stock Class
−Removed: Annual Dividend Rate
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: The right to receive dividends on shares of convertible preferred stock was not cumulative, and no right to such dividends accrued to holders of convertible preferred stock by reason of the fact that dividends on said shares were not declared or paid in any calendar year.
−Removed: However, refer to Liquidation Provisions below for information regarding cumulative dividends that would have been payable upon a liquidation event or a deemed liquidation event.
−Removed: Conversion Rights
−Removed: Each share of Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series E-2A, Series E-3, and Series F convertible preferred stock was, at the option of the holder, convertible at any time into that number of fully paid and non-assessable shares of common stock determined by dividing the original issue price by the conversion price.
−Removed: The conversion price for each series of convertible preferred stock was initially the original issue price of such series of convertible preferred stock and was subject to adjustment in accordance with the conversion provisions contained in the Company’s Amended and Restated Certificate of Incorporation.
−Removed: As a result of a 1-for-1.219 reverse stock split effected on July 11, 2019, the conversion price for each series of convertible preferred stock was the original issue price multiplied by 1.219 .
−Removed: Each share of convertible preferred stock could have been automatically be converted into shares of common stock based on the then effective conversion price (i) upon the affirmative election of the holders of at least a majority of the outstanding shares of Series E-1, Series E-2, Series E-2A, Series E-3, and Series F convertible preferred stock or (ii) immediately upon the closing of a firmly underwritten public offering filed under the Securities Act of 1933, as amended, covering the offer and sale of common stock for the account of the Company in which the gross cash proceeds to the Company are at least $30 million .
−Removed: The closing of the Company’s IPO satisfied the conditions for an automatic conversion of the shares of convertible preferred stock into shares of common stock.
−Removed: Liquidation Provisions
−Removed: Upon a liquidation event (any liquidation, dissolution or winding up on the Company, whether voluntary or involuntary) or a deemed liquidation event (generally, a change of control of the Company or the sale of substantially all the assets or intellectual property of the Company), the holders of Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series E-2A, Series E-3, and Series F convertible preferred stock would have been entitled to distributions based on the liquidation value of the stock, which was initially set equal to the original issue price for the series of convertible preferred stock, plus any unpaid cumulative accruing dividends, at the annual dividend rates provided above, accruing from the date of issuance of the shares of convertible preferred stock, plus any other declared and unpaid dividends.
−Removed: Regarding liquidation preferences, the holders of each successive series of preferred stock would have been entitled to receive on a pari passu basis and prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of any prior-issued preferred stock, or common stock, the liquidation preference specified for each share of preferred stock.
−Removed: Voting Rights
−Removed: Each holder of convertible preferred stock was entitled to the number of votes equal to the number of shares of common stock into which the shares of convertible preferred stock could have been converted.
−Removed: Holders of the convertible preferred stock were entitled to vote on all matters on which the holders of common stock were entitled to vote.
−Removed: Redemption Rights
−Removed: The holders of at least a majority (voting together as a single class and not as a separate series, and on an as-converted basis) of the then-outstanding shares of Series A preferred stock, Series B preferred stock, Series D preferred stock, Series E-1 preferred stock, Series E-2 preferred stock, Series E-2A preferred stock, Series E-3 preferred stock and Series F preferred stock (the “Redemption Stock”), and the holders of at least a majority (voting together as a single class and not as a separate series, and on an as-converted basis) of the then-outstanding shares of Series E-1 preferred stock, Series E-2 preferred stock, Series E-2A preferred stock, Series E-3 preferred stock and Series F preferred stock could have requested, in writing, and any time after five years from the date of first issuance of Series F preferred stock (i.e., five years from July 15, 2015), the redemption of all outstanding shares of the Redemption Stock.
−Removed: However, on July 10, 2019, the earliest redemption date was effectively changed to July 15, 2025, in connection with an amendment to the Company’s Amended and Restated Certificate of Incorporation.
−Removed: The Company, upon such written request, would have been required to redeem all outstanding shares in three equal annual installments beginning on the date specified in the redemption request, which date could not have been less than 90 days after the Company’s receipt of such request.
−Removed: The redemption price would have been the original issue price of the preferred stock plus an amount for all declared and unpaid dividends thereon.
+Added: Any unpaid cumulative accruing dividends would have been payable upon a liquidation event or a deemed liquidation event, but were not recorded in the financial statements since such events did not become probable of occurring.
Preferred Stock Warrant Liabilities
The Company previously issued warrants to purchase shares of its convertible preferred stock.
−Removed: The warrant provided the holder the option to purchase a specified number of shares of a particular series of the Company’s convertible preferred stock for a
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: specified price.
−Removed: The holder may exercise the warrant in cash or exercise pursuant to a cashless exercise whereby a calculated number of shares are withheld upon exercise to satisfy the exercise price.
−Removed: The warrants do not provide the holder any voting rights until the warrants are exercised.
+Added: The warrants provided the holder the option to purchase a specified number of shares of a particular series of the Company’s convertible preferred stock for a specified price.
+Added: The holder was permitted to exercise the warrant in cash or exercise pursuant to a cashless exercise whereby a calculated number of shares would be withheld upon exercise to satisfy the cost of the exercise.
In accordance with their terms, in connection with the IPO, all outstanding warrants to purchase shares of convertible preferred stock became exercisable for shares of common stock at a rate of one common stock warrant for every 1.219 preferred stock warrants.
1 unchanged sentence
Immediately prior to the closing of the IPO, certain outstanding warrants to purchase shares of Series F convertible redeemable preferred stock were net exercised for an aggregate of 27,207 shares of common stock.
−Removed: In accordance with ASC 480-10, the Company accounted for preferred stock warrants outstanding as a liability at fair value and adjusted the instruments to fair value at each reporting period.
−Removed: This liability was subject to re-measurement at each balance sheet date until exercised, and any change in fair value was recognized in the Company’s statements of operations and comprehensive loss as other income (expense), net.
−Removed: The fair value of the warrants issued by the Company was estimated using a Black-Scholes model at each measurement date.
−Removed: Refer to Note 10 for additional information on the fair value measurement assumptions and changes in the fair value of the preferred stock warrants recorded on the Company’s balance sheets.
−Removed: Warrants to purchase redeemable convertible preferred shares consisted of the following:
−Removed: As of December 31, 2018
−Removed: Year of First Issuance
−Removed: Exercise Price
−Removed: Year of Expiration
−Removed: Series A Preferred Stock
−Removed: Series B Preferred Stock
−Removed: Series E-1 Preferred Stock
−Removed: Series E-2 Preferred Stock
−Removed: Series E-3 Preferred Stock
−Removed: Series F Preferred Stock
−Removed: Series F Preferred Stock
+Added: In accordance with ASC 480-10, Distinguishing Liabilities from Equity, the Company accounted for preferred stock warrants outstanding as a liability at fair value and adjusted the instruments to fair value at each reporting period.
+Added: This liability was subject to re-measurement at each balance sheet date until exercised, and any change in fair value was recognized in the Company’s statements of operations and comprehensive (loss) income as other income (expense), net.
In connection with the preferred stock warrants becoming exercisable for common stock, the Company reclassified the preferred stock warrant liability balance to additional paid-in capital effective July 29, 2019 due to meeting the criteria under U.S.
GAAP for classification in stockholders’ equity.
−Removed: See Note 13 for information on outstanding common stock warrants at December 31, 2019 .
−Removed: Stockholders’ Equity (Deficit)
+Added: See Note 12 for additional information on common stock warrants.
+Added: Stockholders’ Equity
+Added: Capital Stock
The Company’s Amended and Restated Certificate of Incorporation, dated July 29, 2019, authorizes the Company to issue up to 200,000,000 shares of common stock with a par value of $ 0.001 per share.
−Removed: The holders of common stock shall have one vote for each share.
−Removed: The Company is also authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001 per share.
−Removed: The preferred stock may be issued from time to time in one or more series, with rights, preferences, limitations and restrictions as determined by the Company’s Board of Directors.
+Added: The Company is also authorized to issue up to
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: 10,000,000 shares of preferred stock with a par value of $ 0.001 per share.
No dividends were declared or paid during the years ended December 31, 2020 or 2019.
−Removed: The terms of the 2018 LSA restrict the Company’s ability to pay dividends on common stock without prior consent of the Lenders.
On July 11, 2019, the Company effected a 1-for-1.219 reverse stock split of its common stock.
The par value and the authorized number of shares of the common stock were not affected by the reverse stock split.
−Removed: The reverse stock split resulted in an adjustment to the Series A, B, C, D, E-1, E-2, E-2A, E-3, and F preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.
−Removed: The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split for all periods presented.
−Removed: In connection with the issuance of the July 2019 Note, the Company issued the purchaser of the July 2019 Note a warrant to purchase up to 209,243 shares of common stock at an exercise price of approximately $0.001 per share.
−Removed: The July 2019 Warrant, which expires on July 12, 2026, was initially exercisable for 50% of the shares subject to the warrant and became exercisable for the remaining 50% of the shares subject to the warrant upon the holder’s satisfaction of a requirement to purchase a certain amount of equity securities of the Company.
−Removed: The holder satisfied such requirement on July 29, 2019 in connection with a purchase of common stock in the IPO.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: The reverse stock split resulted in an adjustment to the preferred stock conversion prices to reflect a proportional decrease in the number of shares of common stock to be issued upon conversion.
+Added: The accompanying financial statements and notes to the financial statements give retroactive effect to the reverse stock split.
On July 29, 2019, the Company completed the initial public offering of its common stock.
1 unchanged sentence
The Company received approximately $ 65.9 million in net proceeds from the IPO, after deducting underwriting discounts and commissions and other offering expenses payable by the Company.
+Added: On June 29, 2020 and July 2, 2020, the Company issued and sold 2,000,000 and 300,000 shares, respectively, of its common stock in a follow-on public offering at a price of $ 37.00 per share.
+Added: The Company received $ 79.5 million in aggregate net proceeds, after deducting underwriting discounts and commissions and offering costs.
+Added: The shares issued and sold on July 2, 2020 reflect the underwriters’ exercise in full of their 30-day option to purchase additional shares at the public offering price, less underwriting discounts and commissions.
+Added: On December 18, 2020, the Company issued and sold 4,600,000 shares of its common stock in a follow-on public offering, including 600,000 shares associated with the full exercise of the underwriters’ option to purchase additional shares, at a price to the public of $ 58.00 per share.
+Added: The Company received $ 250.5 million in aggregate net proceeds, after deducting underwriting discounts and commissions and offering costs (excluding $ 0.4 million in offering costs that were incurred but not paid as of December 31, 2020).
Common Stock Warrants
+Added: The Company issued an aggregate of 51,238 shares, 209,238 shares and 31,814 shares of common stock on November 29, 2019, December 11, 2020 and December 29, 2020, respectively, pursuant to net exercises by the holders of common stock warrants outstanding.
+Added: In accordance with the net exercise provisions of the warrants, shares of common stock were withheld to satisfy the cost of these exercises.
+Added: There were no common stock warrants outstanding as of December 31, 2020.
Information about common stock warrants outstanding as of December 31, 2019 is presented in the table below:
As of December 31, 2019
−Removed: Expiration date
−Removed: Number of shares
−Removed: Exercise price
+Added: Expiration date Number of shares Exercise price
July 12, 2026 209,243 $ 0.001
1 unchanged sentence
November 30, 2028 8,809 $ 7.10
−Removed: The common stock warrants are classified as stockholders’ equity and no adjustments are recorded for changes in fair value.
−Removed: There were no common stock warrants outstanding as of December 31, 2018 .
+Added: Total 244,480
+Added: The common stock warrants were classified as stockholders’ equity and no adjustments were recorded for changes in fair value.
Stock Incentive Plans and Stock-Based Compensation
3 unchanged sentences
Following the adoption of the 2018 Plan, no additional stock awards were granted under the 2008 Plan and following the adoption of the 2019 Plan, no additional stock awards were granted under the 2018 Plan.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
Options under the plans may be granted as incentive stock options (“ISOs”) or non-statutory stock options (“NSOs”).
6 unchanged sentences
The Company issues new shares to satisfy option exercises.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: Activity under the Company’s stock plans for the years ended December 31, 2019 and 2018 is set forth below:
+Added: On July 11, 2019, the Company’s Board of Directors approved an increase of 144,878 in the number of shares authorized for issuance under the 2018 Plan.
+Added: On July 24, 2019, the 2019 Plan became effective.
+Added: The 2019 Plan authorized 1,931,020 new shares plus the number of shares (not to exceed 1,976,756 shares) that remained available under the 2018 Stock Plan at the time the 2019 Plan became effective and any shares underlying outstanding stock awards granted under the 2018 Plan and 2008 Stock Plan that expire or are repurchased, forfeited, cancelled or withheld.
+Added: The 2019 Plan provides for automatic annual increases in the number of shares of common stock reserved for issuance, which resulted in 856,545 additional shares becoming available effective January 1, 2020.
+Added: As of December 31, 2020, 366,452 shares remained available for grant under the 2019 Plan.
+Added: On January 1, 2021, an additional 1,240,624 shares became available under the 2019 Plan pursuant to an automatic annual increase.
+Added: Stock Options
+Added: Stock option activity under the Company’s stock plans for the years ended December 31, 2020 and 2019 is set forth below:
Weighted-Average
−Removed: Available for
Stock Options
+Added: Outstanding Exercise
+Added: Price Remaining
+Added: Term (Years) Aggregate
(in thousands)
−Removed: Balance as of December 31, 2017
−Removed: Additional options authorized
+Added: Balance as of January 1, 2019 1,659,596 $ 1.99
+Added: Granted 1,711,325 19.41
+Added: Exercised ( 693,127 ) 1.70
Forfeited/Cancelled ( 39,828 ) 6.36
Balance as of December 31, 2019 2,637,966 $ 13.30
−Removed: Additional options authorized
+Added: Granted 1,286,065 49.63
+Added: Exercised ( 460,207 ) 3.53
Forfeited/Cancelled ( 94,322 ) 27.51
1 unchanged sentence
Exercisable at December 31, 2020 (1)
+Added: 824,128 $ 10.67 7.54 $ 46,546
(1) Vested and exercisable options.
2 unchanged sentences
No such early exercises have occurred as of December 31, 2020.
−Removed: On July 11, 2019, the Company’s Board of Directors approved an increase of 144,878 in the number of shares authorized for issuance under the 2018 Plan.
−Removed: On July 24, 2019, the 2019 Plan became effective.
−Removed: The 2019 Plan authorized 1,931,020 new shares plus the number of shares (not to exceed 1,976,756 shares) that remained available under the 2018 Stock Plan at the time the 2019 Plan became effective and any shares underlying outstanding stock awards granted under the 2018 Plan and 2008 Stock Plan that expire or are repurchased, forfeited, cancelled or withheld.
−Removed: The 2019 Plan also provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 856,545 shares becoming available effective January 1, 2020.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: Restricted Stock Units
+Added: RSUs represent the right to receive shares of the Company’s common stock at a specified future date, subject to vesting.
+Added: The Company’s RSUs generally vest annually from the grant date in four equal installments subject to the holder’s continued service with the Company.
+Added: The Company issues new shares to satisfy RSUs upon vesting.
+Added: The following table summarizes the Company’s RSU activity for the year ended December 31, 2020:
+Added: Restricted Stock Units Outstanding Weighted-Average Grant Date Fair Value
+Added: Balance as of December 31, 2019 — $ —
+Added: Granted 161,477 59.16
+Added: Forfeited/Cancelled — —
+Added: Balance as of December 31, 2020 161,477 $ 59.16
Employee Stock Purchase Plan
The ESPP became effective July 24, 2019.
−Removed: Under the ESPP, 411,935 shares of common stock are reserved for future issuance.
−Removed: The ESPP also provides for certain automatic increases in the number of shares of common stock reserved for issuance, which resulted in an additional 171,309 shares becoming available under the ESPP effective January 1, 2020.
+Added: The ESPP provides for automatic annual increases in the number of shares of common stock reserved for issuance, which resulted in 171,309 additional shares becoming available effective January 1, 2020.
+Added: On February 28, 2020 and August 31, 2020 the Company issued 39,987 and 41,467 shares, respectively, of its common stock pursuant to scheduled purchases under the ESPP.
+Added: As of December 31, 2020, 501,790 shares of common stock are reserved for future issuance under the ESPP.
+Added: On January 1, 2021, an additional 248,124 shares became available under the ESPP pursuant to an automatic annual increase.
The Company commenced a series of offerings under the ESPP on October 1, 2019.
2 unchanged sentences
Eligible employees who enroll in the initial offering or any subsequent offering will be able to purchase shares of the Company’s common stock at a discount through payroll deductions, subject to certain limitations.
−Removed: The purchase price of the shares of common stock will be the lesser of (i) 85% of the fair market value of such shares on the offering date and (ii) 85% of the fair market value of such shares on the purchase date.
−Removed: Following the commencement of the initial offering, a new 24 -month offering with four six-month purchase periods will automatically begin approximately every six months thereafter over the term of the ESPP.
−Removed: Offerings will be concurrent, but in the event the fair market value of a share of common stock on the first day of any purchase period during an offering (the “New Offering”) is less than or equal to the fair market value of a share of common stock on the offering date for an ongoing offering (the “Ongoing Offering”), then the Ongoing Offering terminates immediately following the purchase of shares on the purchase date immediately preceding the New Offering and the participants in the terminated Ongoing Offering are automatically enrolled in the New Offering.
+Added: The purchase price of the shares of common stock is the lesser of (i) 85 % of the fair market value of such shares on the offering date and (ii) 85 % of the fair market value of such shares on the purchase date.
+Added: Following the commencement of the initial offering, new 24-month offerings, each with four six-month purchase periods, automatically begin approximately every six months.
+Added: Offerings are concurrent, but in the event the fair market value of a share of common stock on the first day of any purchase period during an offering (the “New Offering”) is less than or equal to the fair market value of a share of common stock on the offering date for an ongoing offering (the “Ongoing Offering”), then the Ongoing Offering terminates immediately following the purchase of shares on the purchase date immediately preceding the New Offering and the participants in the terminated Ongoing Offering are automatically enrolled in the New Offering.
+Added: In such case, the Company would account for this event as a modification of the Ongoing Offering.
Notwithstanding the above, the Company’s Board of Directors (or an authorized committee thereof) may modify the terms of or suspend any future offerings prior to their commencement.
+Added: As of December 31, 2020, there were three offerings outstanding under the ESPP.
The Company issues new shares for purchases of stock made pursuant to the ESPP.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
Determining Fair Value - Summary of Assumptions
−Removed: The Company uses the Black-Scholes option pricing model to estimate the fair value of each option grant or ESPP offering on the date of grant or any other measurement date.
+Added: The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options and purchase rights granted under the ESPP at the date of grant, start of the offering or other relevant measurement date.
Following is a description of the significant assumptions used in the option pricing model:
5 unchanged sentences
Because of the limited period of time the Company’s stock has been traded in an active market, the Company calculates volatility by using the historical stock price volatility of a group of similar companies looking back over the estimated life of the option or the ESPP purchase right and averaging the volatilities of these companies.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
• Risk-free interest rate .
12 unchanged sentences
56.74 %- 60.17 %
−Removed: 57.77% - 58.29%
Risk-free interest rate 0.28 % - 1.76 %
1.63 % - 2.47 %
−Removed: 2.77% - 3.13%
Dividend yield — % — %
2 unchanged sentences
Average expected term (years) 1.2 1.2
−Removed: Not applicable
Expected stock price volatility
56.80 % - 100.49 %
−Removed: Not applicable
+Added: 61.12 % - 68.89 %
Risk-free interest rate 0.12 % - 0.95 %
1.56 % - 1.80 %
−Removed: Not applicable
Dividend yield — % — %
−Removed: Not applicable
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: The Company uses the closing price of its common stock on the date of grant to determine the fair value of RSUs.
Stock-Based Compensation Expense
−Removed: Stock-based compensation expense related to stock options and the ESPP is included in the statements of operations and comprehensive income (loss) as follows (in thousands):
+Added: Stock-based compensation expense is included in the statements of operations and comprehensive (loss) income as follows (in thousands):
Years Ended December 31,
3 unchanged sentences
Total stock-based compensation expense $ 8,309 $ 1,249
−Removed: For the years ended December 31, 2019 and 2018, the weighted-average grant date fair value of options was $10.89 and $1.35 per option, respectively, and the weighted-average grant date fair value for the ESPP granted was $7.32 and nil , respectively.
−Removed: As of December 31, 2019 , the total unrecognized compensation cost related to stock options and the ESPP was $18,417,000 and $678,000 , respectively, which is expected to be recognized on a straight-line basis over a weighted-average period of 3.4 years and 1.6 years, respectively.
−Removed: The total unrecognized compensation costs will be adjusted for forfeitures in future periods as they occur.
−Removed: The intrinsic value of stock options exercised during the year ended December 31, 2019 was $5,151,000 and was no t material for the year ended December 31, 2018 .
−Removed: No tax benefits related to stock-based compensation were recorded in the statements of operations and comprehensive income (loss) during the years ended December 31, 2019 and 2018 due to the valuation allowance on net deferred tax assets.
+Added: For the years ended December 31, 2020 and 2019, the weighted-average grant date fair value of stock options was $ 28.95 and $ 10.89 per option, respectively, and the weighted-average grant date fair value of the purchase rights granted under the ESPP was $ 17.43 and $ 7.32 per share, respectively.
+Added: As of December 31, 2020, the total unrecognized stock-based compensation cost related to outstanding awards was $ 57,120,000 , which is expected to be recognized on a straight-line basis over a weighted-average period of 3.4 years.
+Added: The total unrecognized compensation cost will be adjusted for forfeitures in future periods as they occur.
+Added: The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020 and 2019 was $ 18,377,000 and $ 5,151,000 , respectively.
+Added: The aggregate intrinsic value of shares issued under the ESPP was $ 1,797,000
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
+Added: during the year ended December 31, 2020.
+Added: There were no shares issued under the ESPP during the year ended December 31, 2019.
+Added: No tax benefits related to stock-based compensation were recorded in the statements of operations and comprehensive (loss) income during the years ended December 31, 2020 and 2019 due to the valuation allowance on net deferred tax assets.
The components of income tax expense are as follows (in thousands):
1 unchanged sentence
Current tax expense
+Added: Federal $ — $ —
State and local 84 72
4 unchanged sentences
Total income tax expense $ 84 $ 72
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
The differences between income taxes expected at the U.S.
1 unchanged sentence
Years Ended December 31,
−Removed: Pre-tax income (loss)
+Added: Pre-tax (loss) income $ ( 10,200 ) $ 5,349
federal taxes at statutory rate ( 2,142 ) 1,123
6 unchanged sentences
Stock-based compensation ( 781 ) 65
+Added: Non-deductible officers’ compensation 963 —
Total income tax expense $ 84 $ 72
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
Significant components of deferred tax assets and liabilities are as follows (in thousands):
22 unchanged sentences
In general, under Section 382 and 383 of the IRC, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and certain tax credits, to offset future taxable income and tax.
−Removed: In general, an ownership change occurs if the aggregate stock ownership of certain stockholders changes by more than 50 percentage points
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: over such stockholders’ lowest percentage of ownership during the testing period (generally three years).
+Added: In general, an ownership change occurs if the aggregate stock ownership of certain stockholders changes by more than 50 percentage points over such stockholders’ lowest percentage of ownership during the testing period (generally three years).
The Company performed a Section 382 analysis from inception through the year ended December 31, 2020 and concluded the Company had experienced an ownership change in 2011, 2014 and 2020.
7 unchanged sentences
However, since the Company has been in an NOL position since 2008, the Company’s 2008 to 2016 federal tax returns and its 2008 to 2014 state tax returns are potentially subject to examination adjustments to the extent of those NOL carryforwards.
+Added: CASTLE BIOSCIENCES, INC.
+Added: NOTES TO FINANCIAL STATEMENTS (Continued)
Selected Quarterly Financial Data (Unaudited)
1 unchanged sentence
Year Ended December 31, 2020
−Removed: First Quarter
−Removed: Second Quarter
−Removed: Third Quarter
−Removed: Fourth Quarter
+Added: First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
+Added: Net revenues $ 17,418 $ 12,715 $ 15,217 $ 17,299 $ 62,649
+Added: Gross margin $ 15,027 $ 10,569 $ 12,742 $ 14,626 $ 52,964
Net income (loss) (1)
−Removed: Net income (loss) attributable to common shareholders (1)
+Added: $ 570 $ ( 1,376 ) $ ( 4,589 ) $ ( 4,889 ) $ ( 10,284 )
+Added: Net income (loss) attributable to common stockholders (1)
+Added: $ 570 $ ( 1,376 ) $ ( 4,589 ) $ ( 4,889 ) $ ( 10,284 )
Earnings (loss) per share (3) :
+Added: Basic $ 0.03 $ ( 0.08 ) $ ( 0.23 ) $ ( 0.23 ) $ ( 0.54 )
+Added: Diluted $ 0.03 $ ( 0.08 ) $ ( 0.23 ) $ ( 0.23 ) $ ( 0.54 )
Year Ended December 31, 2019
−Removed: First Quarter
−Removed: Second Quarter
−Removed: Third Quarter
−Removed: Fourth Quarter
+Added: First Quarter Second Quarter Third Quarter Fourth Quarter Total Year
Net revenues $ 8,717 $ 10,739 $ 14,774 $ 17,635 $ 51,865
Gross margin $ 7,119 $ 8,746 $ 13,066 $ 15,624 $ 44,555
−Removed: Net income (loss) (2)
−Removed: Net income (loss) attributable to common shareholders (2)
−Removed: Earnings (loss) per share (3) :
−Removed: (1) For the third quarter of 2019, includes gain on extinguishment of debt of (in thousands) $5,213 .
−Removed: For the fourth quarter of 2018, includes revenue recognized of (in thousands) $5,191 for tests delivered during the first three quarters of 2018 for which the requirements to release the constraint on variable consideration were not met until the fourth quarter of 2018 in connection with the issuance of the LCD for DecisionDx-Melanoma and establishment of a Medicare reimbursement rate.
−Removed: Basic and diluted earnings (loss) per share are computed independently for each quarterly and annual period presented.
−Removed: Therefore, t he sum of the quarterly basic and diluted earnings (loss) per share amounts may not equal annual basic and diluted earnings (loss) per share.
−Removed: CASTLE BIOSCIENCES, INC.
−Removed: NOTES TO FINANCIAL STATEMENTS (Continued)
−Removed: Subsequent Events
−Removed: On January 15, 2020 and February 14, 2020, the Company granted to various employees, options to purchase an aggregate of 17,500 and 135,000 shares, respectively, of our common stock at an exercise price of $31.97 and $31.80 per share, respectively.
−Removed: The option awards were granted pursuant to the 2019 Plan, have a ten -year term and vest over a four -year period (with 25% vesting after one year from the vesting start date and the remainder vesting in 36 equal monthly installments thereafter).
−Removed: On February 28, 2020, the Company issued 39,987 shares of its common stock under a scheduled purchase under the ESPP.
−Removed: The shares were purchased at a price of $15.09 and funded through employee payroll deductions.
−Removed: On February 28, 2020 and March 4, 2020, the Compa ny and the Lenders amended the 2018 LSA, as discussed in Note 8.
+Added: Net (loss) income (2)
+Added: $ ( 1,358 ) $ ( 1,269 ) $ 5,849 $ 2,055 $ 5,277
+Added: Net (loss) income attributable to common stockholders (2)
+Added: $ ( 2,342 ) $ ( 2,265 ) $ 5,543 $ 2,055 $ 2,991
+Added: (Loss) Earnings per share (3) :
+Added: Basic $ ( 1.22 ) $ ( 1.05 ) $ 0.43 $ 0.12 $ 0.35
+Added: Diluted $ ( 1.22 ) $ ( 1.05 ) $ 0.05 $ 0.11 $ ( 0.21 )
+Added: (1) For the second, third and fourth quarters of 2020, includes other operating income (loss) of $ 1.9 million, ($ 1.9 million) and $ 1.9 million, respectively, associated with CARES Act provider relief funds, as discussed in Note 2 to the financial statements.
+Added: For the fourth quarter of 2020, includes a loss on extinguishment of debt of $ 1.4 million.
+Added: (2) For the third quarter of 2019, includes a gain on extinguishment of debt of $ 5.2 million.
+Added: (3) Basic and diluted (loss) earnings per share are computed independently for each quarterly and annual period presented.
+Added: Therefore, t he sum of the quarterly basic and diluted (loss) earnings per share amounts may not equal annual basic and diluted (loss) earnings per share.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.