What changed in this filing

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Item 1. Financial Statements

2021-08-10 compared with 2021-05-07 · 278 added, 169 removed, 382 unchanged (54% of the section changed)

7 unchanged sentences

Trade accounts receivable, net of allowance for credit losses of $ 6,044 and $ 1,898

$1,898 as of March 31, 2021 and December 31, 2020, respectively

as of June 30, 2021 and December 31, 2020, respectively

Other current assets

2 unchanged sentences

Fixed assets, net

Acquisition-related intangible assets, net

Other long-term assets

8 unchanged sentences

Total current liabilities

Notes payable

Unrecognized tax benefits

4 unchanged sentences

Common stock, $ 0.0001 par value per share, 50,000 shares authorized, 29,513 and

28,178 shares issued and outstanding at March 31, 2021 and December 31, 2020,

28,178 shares issued and outstanding at June 30, 2021 and December 31, 2020,

Preferred stock, $ 0.0001 par value per share, 1,000 shares authorized, no shares issued

or outstanding at March 31, 2021 and December 31, 2020

or outstanding at June 30, 2021 and December 31, 2020

Additional paid-in capital

1 unchanged sentence

Retained earnings

Total Fulgent stockholders' equity

Noncontrolling interest

Total stockholders’ equity

4 unchanged sentences

(in thousands, except per share data)

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Cost of revenue

4 unchanged sentences

Total operating expenses

Operating income (loss)

Operating income

Interest and other income, net

Income (loss) before income taxes and equity loss in investee

Provision for income taxes

Income (loss) before equity loss in investee

Income before income taxes, gain on

equity method investment and equity loss in investee

Provision for (benefit from) income taxes

Income before gain on equity method investment

and equity loss in investee

Gain on equity method investment

Equity loss in investee

Net income (loss)

Net income (loss) per common share:

Net income from consolidated

Net loss attributable to noncontrolling

Net income attributable to Fulgent

Net income per common share attributable to Fulgent:

Weighted-average common shares:

3 unchanged sentences

(in thousands)

Three Months Ended March 31,

Net income (loss)

Other comprehensive loss:

Foreign currency translation loss

Net unrealized loss on marketable securities, net of tax

Comprehensive income (loss)

Three Months Ended June 30,

Six Months Ended June 30,

Net income from consolidated operations

Other comprehensive income (loss):

Foreign currency translation gain (loss)

Net unrealized gain (loss) on marketable securities, net of tax

Comprehensive income from consolidated operations

Net loss attributable to noncontrolling interest

Foreign currency translation gain attributable

to noncontrolling interest

Comprehensive loss attributable to noncontrolling interest

Comprehensive income attributable to Fulgent

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

2 unchanged sentences

(in thousands)

Stockholders' Equity

Fulgent Stockholders' Equity

Paid-In Capital

2 unchanged sentences

Retained Earnings

Fulgent Stockholders' Equity

Noncontrolling Interest

Balance at December 31, 2020

Equity-based compensation

Exercise of common stock options

Exercise of common stock

Restricted stock awards

Common stock withholding for

employee tax obligations

Issuance of common stock at an

average of $52.00 per share, net

Other comprehensive gain (loss)

Cumulative effect of accounting

Cumulative tax effect of accounting

Common stock withholding

for employee tax

Issuance of common stock

at an average of $ 52.00 per

Other comprehensive loss

Cumulative effect of

accounting change

Cumulative tax effect of

accounting change

Balance at March 31, 2021

Stockholders' Equity

Equity-based compensation

Exercise of common stock

Restricted stock awards

Common stock withholding

for employee tax

Issuance of common stock

at an average of $ 73.75 per

Noncontrolling interest

assumed related to

Other comprehensive

Net income (loss)

Balance at June 30, 2021

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

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

Fulgent Stockholders' Equity

Paid-In Capital

5 unchanged sentences

Restricted stock awards

Repurchases of capital stock

Other comprehensive gain (loss)

Common stock withholding

for employee tax

Other comprehensive loss

Balance at March 31, 2020

Equity-based compensation

Exercise of common stock options

Restricted stock awards

Other comprehensive gain

Balance at June 30, 2020

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

2 unchanged sentences

(in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flow from operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Net income from consolidated

Adjustments to reconcile net income to net cash provided (used in) by operating activities:

Equity-based compensation

Depreciation and amortization

Noncash lease expense

6 unchanged sentences

Equity loss in investee

Gain on equity method investment

Changes in operating assets and liabilities:

2 unchanged sentences

Accounts payable

Accrued liabilities and other liabilities

Income tax payable

Other current liabilities

Contract liabilities

1 unchanged sentence

Operating lease liabilities

Net cash provided by operating activities

Net cash provided by (used in) operating activities

Cash flow from investing activities:

2 unchanged sentences

Purchase of marketable securities

Proceeds from sale of marketable securities

Maturities of marketable securities

Acquisition of businesses, net of cash acquired

Net cash used in investing activities

1 unchanged sentence

Proceeds from (payment for) public offerings of common stock, net of issuance costs

Proceeds from noncontrolling interest

Proceeds from exercise of stock options

Repurchases of capital stock

Common stock withholding for employee tax obligations

Borrowing under margin account

10 unchanged sentences

Operating lease right-of-use assets reduced due to lease modification

Purchase of marketable securities in other current liabilities

Public offerings costs included in accounts payable

4 unchanged sentences

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or U.S.

These financial statements include the assets, liabilities, revenues and expenses of all wholly-owned subsidiaries and entities in which the Company has a controlling financial interest or is deemed to be the primary beneficiary.

These financial statements include the assets, liabilities, revenues and expenses of all subsidiaries and entities in which the Company has a controlling financial interest or is deemed to be the primary beneficiary.

In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity.

9 unchanged sentences

Since March 2020, the Company has commercially launched several tests for the detection of SARS-CoV-2, the virus that causes the novel coronavirus, or COVID-19, including NGS and reverse transcription polymerase chain reaction – based, or RT-PCR-based, tests.

The Company has received an Emergency Use Authorization, or EUA, from the U.S.

Food and Drug Administration, or the FDA, for the RT-PCR-based tests for the detection of SARS-CoV-2 using upper respiratory specimens (nasal, nasopharyngeal, and oropharyngeal swabs) and for the at-home testing service through Picture Genetics.

The Company has received an Emergency Use Authorization, or EUA, from the United States, or U.S., Food and Drug Administration, or the FDA, for the RT-PCR-based tests for the detection of SARS-CoV-2 using upper respiratory specimens (nasal, nasopharyngeal, and oropharyngeal swabs) and for the at-home testing service through Picture Genetics.

The Company’s at-home testing service for COVID-19 and RT-PCR-based test have been granted an EUA by the FDA only for the detection of nucleic acid from SARS-CoV-2, not for any other viruses or pathogens.

11 unchanged sentences

GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting periods.

These estimates, judgments and assumptions are based on historical data and experience available at the date of the accompanying condensed consolidated financial

statements, as well as various other factors management believes to be reasonable under the circumstances, including but not limited to the potential impacts arising from the recent global pandemic related to COVID-19.

These estimates, judgments and assumptions are based on historical data and experience available at the date of the accompanying condensed consolidated financial statements, as well as various other factors management believes to be reasonable under the circumstances, including but not limited to the potential impacts arising from the recent global pandemic related to COVID-19.

As the extent and duration of the impacts from COVID-19 remain unclear, the Company’s estimates and assumptions may evolve as conditions change.

1 unchanged sentence

On an on-going basis, management evaluates its estimates, primarily those related to:

(i) revenue recognition criteria, (ii) trade accounts receivable and allowances for credit losses, (iii) the useful lives of fixed assets, (iv) estimates of tax liabilities and (v) the valuation of equity method investments.

(i) revenue recognition criteria, (ii) trade accounts receivable and allowances for credit losses, (iii) the useful lives of fixed assets, (iv) estimates of tax liabilities, (v) the valuation of equity method investments, (vi) valuation of acquisition-related intangibles and goodwill, and (vii) useful lives of intangible assets and fixed assets.

Foreign Currency Translation and Foreign Currency Transactions

4 unchanged sentences

Gains and losses from these translations are recognized in foreign currency translation included in accumulated other comprehensive income (loss) in the accompanying Condensed Consolidated Statements of Stockholders’ Equity.

Gains and losses from these translations were not significant in the first quarters of 2021 and 2020.

Gains from these translations were not significant in the three and six months ended June 30, 2021 and three months ended June 30, 2020, and loss from these translations for the six months ended June 30, 2020 was not significant.

The Company and its subsidiaries that use the U.S.

dollar as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period, and inventories, property and nonmonetary assets and liabilities at historical rates.

Losses from these remeasurements were not significant for the first quarter of 2021.

Losses from these remeasurements were $85,000 in the first quarter of 2020.

Losses from these remeasurements in the three and six months ended June 30, 2021 and in the six months ended June 30, 2020 were not significant.

Gains from these remeasurements were not significant in the three months ended June 30, 2020.

The Company determines if an arrangement is a lease at inception by evaluating whether the arrangement conveys the right to use an identified asset and whether the Company obtains substantially all of the economic benefits from and has the ability to direct the use of the asset.

6 unchanged sentences

The Company leases out space in buildings it owns in El Monte, California, to third-party tenants under noncancelable operating leases and has leased out such space since the Company purchased such buildings.

The Company determines whether a lease exists at inception.

The Company recognizes lease payments as income over the lease terms on a straight-line basis and recognizes variable lease payments as income in the period in which the changes in facts and circumstances on which the variable lease payment are based occur.

The net rental income is included in the interest and other income, net, in the accompanying Condensed Consolidated Statement of Operations.

Concentration of Customers

In certain periods, a small number of customers have accounted for a significant portion of the Company’s revenue.

In the first quarter of 2021 , after aggregating customers that are under common control or are affiliates, one customer contributed 25% of the Company’s revenue.

In the first quarter of 2020 , after aggregating customers that are under common control or are affiliates, no customer contributed 10% or more of the Company’s revenue.

No customer comprised 10% or more of total trade accounts receivable as of March 31, 2021 and December 31, 2020.

In certain periods, a small number of customers has accounted for a significant portion of the Company’s revenue.

After aggregating customers that are under common control or are affiliates, two customers contributed 20% and 16% of the Company’s revenue for the three months ended June 30, 2021, respectively, and two customers contributed 24% and 11% of the Company’s revenue for the six months ended June 30, 2021, respectively.

One customer contributed 45 % of the Company’s revenue for the three months ended June 30, 2020, and one customer contributed 31 % of the Company’s revenue for the six months ended June 30, 2020.

One customer comprised 13 % of total accounts receivable as of June 30, 2021.

No customer comprised 10 % or more of total accounts receivable as of December 31, 2020.

Revenue from the U.S.

government was less than 10% of total revenue in the first quarters of 2021 and 2020.

government was less than 10% of total revenue for the three and six months ended June 30, 2021 and 2020.

Revenue from Contracts with Customers

1 unchanged sentence

The Company classifies its customers into three payor types:

(i) Insurance, (ii) Institutional, including hospitals, medical institutions, other laboratories, governmental bodies, municipalities and large corporations, or (iii) Patients who pay directly, as the Company believes this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by

economic factors .

The following table summarizes revenue from contracts with customers by payor type for the first quarters of 2021 and 2020 .

Three Months Ended March 31,

The following table summarizes revenue from contracts with customers by payor type for the three and six months ended June 30, 2021 and 2020 .

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

Contract Balances

Receivables from contracts with customers - As of March 31, 2021 and December 31, 2020, receivables from contracts with customers were approximately $216.5 million and $183.9 million, respectively, and are included within trade accounts receivable on the Condensed Consolidated Balance Sheets.

Contracts assets and liabilities - As of March 31, 2021 and December 31, 2020, contract assets from contracts with customers were $506,000 and $1.4 million, respectively, associated with contract execution and certain costs to fulfill a contract, which is included in other current assets in the accompanying Condensed Consolidated Balance Sheets.

Receivables from contracts with customers —As of June 30, 2021 and December 31, 2020, receivables from contracts with customers were approximately $ 148.6 million and $ 183.9 million, respectively, and are included within trade accounts receivable on the Condensed Consolidated Balance Sheets.

Contracts assets and liabilities —As of June 30, 2021 and December 31, 2020, contract assets from contracts with customers were $ 324,000 and $ 1.4 million, respectively, associated with contract execution and certain costs to fulfill a contract, and included in other current assets in the accompanying Condensed Consolidated Balance Sheets.

Contract liabilities are recorded when the Company receives payment or bills prior to completing its obligation to transfer goods or services to a customer.

The Company had $14.0 million and $26.6 million of contract liabilities as of March 31, 2021 and December 31, 2020, respectively.

Revenues of $18.8 million and $242,000 for the first quarters of 2021 and 2020, respectively, related to contract liabilities at the beginning of the respective periods were recognized.

The Company had $ 6.9 million and $ 26.6 million of contract liabilities as of June 30, 2021 and December 31, 2020, respectively.

Revenues of $ 1.7 million and $ 196,000 for the three months and $ 25.5 million and $ 246,000 for the six months were recognized for the periods ended June 30, 2021 and 2020, respectively, related to contract liabilities at the beginning of the respective periods.

Transaction Price Allocated to Future Performance Obligations

3 unchanged sentences

Cost is determined using actual costs on a first-in, first-out basis.

The reagents and supplies was $25.7 million and $16.5 million as of March 31, 2021 and December 31, 2020, respectively, and was included in other current assets in the accompanying Condensed Consolidated Balance Sheets.

While the Company has not experienced significant disruption in its supply chain and the Company does not yet know the full impact COVID-19 will have on its supply chain, the Company has increased its reagents and supplies on hand to respond to potential future disruptions that may occur.

The reagents and supplies were $ 25.4 million and $ 16.5 million as of June 30, 2021 and December 31, 2020, respectively, and was included in other current assets in the accompanying Condensed Consolidated Balance Sheets.

Customer Deposit

Customer deposit in the accompanying Condensed Consolidated Balance Sheets consists primarily of payments received from customers in excess of their outstanding trade accounts receivable balances.

Customer deposit in the accompanying Condensed Consolidated Balance Sheets consists primarily of payments received from customers in excess of their outstanding trade accounts receivable balances, and the excess payments will be refunded to the customers or offset against future testing receivables.

Trade Accounts Receivable and Allowance for Credit Losses

6 unchanged sentences

The Company looks at qualitative factors such as general economic conditions in determining expected credit losses.

During the first quarter of 2021, the Company recorded $1.1 million provision for credit losses for trade accounts receivable.

During the three and six months ended June 30, 2021, the Company recorded $ 2.2 million and $ 3.3 million of provision for credit losses for trade accounts receivable, respectively.

The provision was not significant for the three and six months ended June 30, 2020.

Marketable Securities

All marketable debt securities, which consist of corporate debt securities, U.S.

All marketable debt securities, which consist of corporate debt securities, municipal bonds, U.S.

government agency debt securities, and Yankee debt securities issued by foreign governments or entities and denominated in U.S.

6 unchanged sentences

In accordance with the Company’s investment policy, management invests to diversify credit risk and only invests in securities with high credit quality, including U.S.

government securities, and the maximum final maturity from the date of purchase is three years.

government securities, and the final maturity is tailored to the Company’s current liquidity needs with a maximum final maturity from the date of purchase of three years .

The Company’s investments in marketable equity securities are measured at fair value with the related gains and losses, realized and unrealized, recognized in interest and other income, net, in the accompanying Condensed Consolidated Statements of Operations.

The cost of any marketable equity securities sold is based on the specific-identification method.

The Company will recognize an allowance for credit losses on available-for-sale debt securities on an individual basis, and no longer consider other-than-temporary impairment or immediately reduce the cost basis of the investment provided that it is more likely than not that the security will be held to recovery or maturity.

Further, the Company will recognize any improvements in estimated credit losses on available-for-sale debt securities immediately in earnings and reduce the existing allowance for credit losses.

Previously, a recovery of an impairment loss on an available-for-sale debt security was recognized prospectively as interest income.

The Company will disaggregate its available-for-sale debt securities into the following categories:

corporate debt, government and agency securities and money market funds.

The Company’s corporate bonds are comprised of predominantly high-grade corporate bonds while its government and agency securities are U.S.

treasury bonds, and U.S.

agency bonds.

The Company has analyzed both corporate bonds and government and agency securities and identified that both types of securities have similar risk characteristics in that they are traded infrequently and have contractual interest rates and maturity dates.

Money market funds are actively traded and short-term, and as such, the risk for these securities is not as high as for the other two security types.

In determining the impairment, the Company reviews and assesses its available-for-sale debt securities.

Management reviews credit rating changes, securities trends, interest rate movements and unrealized loss at the security level.

If any of these give rise to a potential credit concern, the Company performs a discounted cash flow analysis to determine the credit portion of the impairment.

The discounted cash flow analysis will be performed either internally or through the assistance of a third party.

Once the credit component of the impairment is determined, the Company will record the impaired amount as an allowance to the available-for-sale debt securities balance and as a charge to interest and other income, net, in the accompanying Condensed Consolidated Statements of Operations, not to exceed the amount of the unrealized loss.

The Company assesses expected credit losses at the end of each reporting period and adjusts the allowance through interest and other income, net.

For available for sale debt securities, in an unrealized loss, the company determines whether a credit loss exists.

The credit loss is estimated by considering available information relevant to the collectability of the security and information about past events, current conditions, and reasonable and supportable forecasts.

Any credit loss is recorded as a charge to interest and other income, net, not to exceed the amount of the unrealized loss.

If the Company has an intent to sell, or if it is more likely than not that the Company will be required to sell a debt security in an unrealized loss position before recovery of its amortized cost basis, the Company will write down the security to its fair value and record the corresponding charge as a component of interest and other income, net.

Business Combination

The Company uses the acquisition method of accounting and allocates the fair value of purchase consideration to the assets acquired and liabilities assumed from an acquiree based on their respective fair values as of the acquisition date.

The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill.

When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets.

Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, expected cost and time to develop in-process research and development, brand awareness and discount rates.

Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability.

Goodwill is not amortized but is subject to impairment tests on an annual basis, or more frequently if indicators of potential impairment exist, and goodwill is written down when it is determined to be impaired.

The Company will perform an annual impairment review in the fourth quarter of each fiscal year and compare the fair value of the reporting unit in which the goodwill resides to its carrying value.

Recent Accounting Pronouncements

The Company evaluates all Accounting Standards Updates, or ASUs, issued by the Financial Accounting Standards Board, or FASB, for consideration of their applicability.

ASUs not included in the Company’s disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s condensed consolidated financial statements.

Recently Adopted Accounting Pronouncements

1 unchanged sentence

2016-13, Financial Instruments-Credit Losses:

Measurement of Credit Losses on Financial Instruments, or ASU No.

2016-13 replaces the incurred loss impairment methodology in current U.S.

Measurement of Credit Losses on Financial Instruments, or ASU 2016-13.

ASU 2016-13 replaces the incurred loss impairment methodology in current U.S.

GAAP with a methodology that reflects expected credit losses.

9 unchanged sentences

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes (Topic 740) , which is intended to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users.

The amendment in this ASU simplifies the accounting for income taxes by removing some exceptions including the incremental approach for intraperiod tax allocation, t he requirement to recognize a deferred tax liability for equity method investments, the ability not to recognize a deferred tax liability for a foreign subsidiary, and the general methodology for calculating income taxes in an interim period.

2019-12, Simplifying the Accounting for Income Taxes (Topic 740), or ASU 2019-12, which is intended to reduce the complexity of accounting standards while maintaining or enhancing the helpfulness of information provided to financial statement users.

The amendment in this ASU simplifies the accounting for income taxes by removing some exceptions including the incremental approach for intraperiod tax allocation, the requirement to recognize a deferred tax liability for equity method investments, the ability not to recognize a deferred tax liability for a foreign subsidiary, and the general methodology for calculating income taxes in an interim period.

Other changes include requiring entities to recognize franchise tax that is partially based on income as an income-based tax and account for any incremental amount incurred as a non-income-based tax, evaluate tax basis step-up in goodwill obtained in a transaction that is not a business combination, and reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date, making minor codification improvements for income taxes related to employee stock ownership plans and investments in qualified affordable housing projects accounted for using the equity method, and specifying that an entity is not required to allocate the consolidated current and deferred tax expense to a legal entity that is not subject to tax in its separate financial statements.

3 unchanged sentences

The Company’s marketable securities consisted of the following:

March 31, 2021

June 30, 2021

(in thousands)

3 unchanged sentences

Available-for-sale debt securities

Money market accounts

Corporate debt securities

Money market accounts

Municipal bonds

Cash equivalents

Total short-term marketable securities

After 1 year through 5 years

Corporate debt securities

Municipal bonds

Yankee debt securities

Total long-term marketable securities

government agency debt securities

Total marketable securities due after 1 year through 5 years

After 5 years through 10 years

Municipal bonds

Total marketable securities due after 5 years through 10 years

Total marketable securities

9 unchanged sentences

Total short-term marketable securities

After 1 year through 5 years

Corporate debt securities

1 unchanged sentence

Yankee debt securities

Total long-term marketable securities

Total marketable securities due after 1 year through 5 years

Total marketable securities

Gross unrealized losses on the Company’s marketable securities were $1.3 million as of March 31, 2021.

Gross unrealized losses on the Company’s marketable securities were $ 1.3 million as of June 30, 2021.

Gross unrealized losses on the Company’s marketable securities were $ 298,000 as of December 31, 2020.

The Company currently does not intend to sell these securities prior to maturity.

During the first quarter of 2021, the Company did not recognize credit losses.

During the three and six months ended June 30, 2021, the Company did no t recognize credit losses.

The Company’s securities of $ 420.4 million are used as collateral for an outstanding margin account borrowing.

As of March 31, 2021, the Company had an outstanding borrowing of $15.0 million under its margin account.

As of June 30, 2021, the Company had an outstanding borrowing of $ 15.1 million under its margin account.

Margin account borrowings were used for the purchase of real property located in El Monte, California in 2020.

10 unchanged sentences

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis, based on the three-tier fair value hierarchy:

March 31, 2021

June 30, 2021

(in thousands)

2 unchanged sentences

Corporate debt securities

Municipal bonds

Yankee debt securities

government agency debt securities

Money market accounts

11 unchanged sentences

Level 2 assets consist of U.S.

government agency debt securities, corporate debt securities and Yankee debt securities.

Level 2 securities are valued based upon observable inputs that include reported trades, broker/dealer quotes, bids and offers.

As of March 31, 2021, the Company had no investments that were measured using unobservable (Level 3) inputs.

There were no transfers between fair value measurement levels during the first quarter of 2021.

government agency debt securities, municipal bonds, corporate debt securities and Yankee debt securities.

Level 2 securities are valued based upon observable inputs that include reported trades, broker/dealer

quotes, bids and offers.

As of June 30 , 202 1 , the Company had no investments that were measured using unobservable (Level 3) inputs.

There were no transfers between fair value measurement levels during the three and six months ended June 30, 2021.

Major classes of fixed assets consisted of the following:

13 unchanged sentences

Accumulated depreciation

Property and equipment, net

Depreciation expense on fixed assets totaled $1.9 million and $569,000 for the first quarters of 2021 and 2020, respectively.

Other Current Assets

Fixed assets, net

Depreciation expense on fixed assets totaled $ 2.3 million and $ 549,000 for the three months and $ 4.2 million and $ 1.1 million for the six months ended June 30, 2021 and 2020, respectively.

Other Significant Balance Sheet Accounts

Other current assets consisted of the following:

3 unchanged sentences

Marketable securities interest receivable

Other receivable

Contract assets

Prepaid income taxes

Other receivable

Reagents and supplies includes reagents and consumables used for COVID-19 testing and genetics testing and collection kits for COVID-19 testing.

Other receivable primarily consists of proceeds to be received from public offerings of the Company’s common stock as of December 31, 2020.

Reagents and supplies include reagents and consumables used for COVID-19 testing and genetics testing and collection kits for COVID-19 testing.

Other receivable as of December 31, 2020 primarily consists of proceeds to be received from public offerings of the Company’s common stock, which were all collected during the six months ended June 30, 2021.

Other current liabilities consisted of the following:

(in thousands)

Payroll liabilities

Sales tax payable and other

Operating lease liabilities

Due to related parties

Reporting Segment and Geographic Information

The Company views its operations and manages its business in one reporting segment.

Long-lived assets were primarily located in the United States, or U.S., as of March 31, 2021 and December 31, 2020 with an insignificant amount located in Canada .

Revenue by region was as follows:

Three Months Ended March 31,

Long-lived assets were primarily located in the United States as of June 30, 2021 and December 31, 2020 with an insignificant amount located in China and Canada.

Revenue by region during the three and six months ended June 30, 2021 and 2020 were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

1 unchanged sentence

Debt, Commitments and Contingencies

As of March 31, 2021, the Company had an outstanding borrowing of $15.0 million under its margin account with the custodian of the Company’s marketable debt security investment account, Pershing Advisor Solutions, LLC, a BNY Mellon Company .

As of June 30, 2021, the Company had an outstanding borrowing of $ 15.1 million under its margin account with the custodian of the Company’s marketable debt security investment account, Pershing Advisor Solutions, LLC, a BNY Mellon Company.

Margin account borrowings were used for the purchase of real property located in El Monte, California in 2020.

1 unchanged sentence

The custodian can issue a margin call at any time.

The interest rate on the margin loan was the effective federal funds rate, or EFFR, plus a spread, and the EFFR and/or the spread can be changed by Bank of New York at any time.

The interest was 1% at the time of withdrawal of $15.0 million from the margin account, and the interest rate at March 31, 2021 was less than 1%.

The interest rate on the margin loan was the effective federal funds rate, or EFFR, plus a spread, and the EFFR and/or the spread can be changed by BNY Mellon at any time.

The interest was 1 % at the time of withdrawal of $ 15.0 million from the margin account, and the interest rate at June 30, 2021 was less than 1.0 %.

The Company did not make any other withdrawals from the margin account, and the outstanding balance of $ 15.1 million is included in the accompanying Condensed Consolidated Balance Sheets.

The related interest expenses for the first quarter of 2021 were $29,000.

The related interest expenses for the three and six months ended June 30, 2021 were $ 29,000 and $ 58,000 , respectively.

The related interest expenses were none for the three and six months ended June 30, 2020.

Notes payable as of June 30, 2021 consisted of $ 5.9 million of notes payable to Xilong Scientific Co., Ltd., or Xilong Scientific, by Fujian Fujun Gene Biotech Co., Ltd., or FF Gene Biotech, as defined in Note 14, Business Combination.

The loan is payable on December 31, 2022 and interest rate on the loan is 4.97 %.

Operating Leases

See Note 9, Leases, for further information.

FF Gene Biotech

See Note 14, Equity Method Investments, for a description of the Company’s commitments related to its joint venture, FF Gene Biotech, as defined in Note 13, Related Parties.

Purchase Obligations

As of March 31, 2021, the Company had non-cancelable purchase obligations of $25.4 million, of which, $22.8 million for reagents and other supplies and $1.4 million for medical lab equipment are payable within twelve months, and $1.2 million for reagents is payable within the next twenty-four months.

As of June 30, 2021, the Company had non-cancelable purchase obligations of $ 7.6 million, of which, $ 4.9 million for reagents and other supplies, $ 2.3 million for medical lab equipment, and $ 372,000 for medical lab furniture are payable within twelve months.

Contingencies

1 unchanged sentence

In the opinion of management, the outcome of these matters would not have a material effect on the Company’s condensed consolidated financial position, results of operations or cash flows.

The Company is party as a lessee to various non-cancelable operating leases with varying terms through October 2025 primarily for office space and equipment.

The Company is party as a lessee to various non-cancelable operating leases with varying terms through February 2026 primarily for laboratory and office space and equipment.

The Company has an option to renew one of these leases for one year after its expiration.

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The Company’s headquarters are located in Temple City, California, which is comprised of various corporate offices and a laboratory certified under the Clinical Laboratory Improvement Amendments of 1988, or CLIA, accredited by the College of American Pathologists, or CAP, and licensed by the State of California Department of Public Health.

A nother CLIA-certified laboratory is located in Houston, Texas.

Another CLIA-certified laboratory is located in Houston, Texas.

Additional offices are located in Atlanta, Georgia and are used for certain report generation functions.

During the first quarter of 2021, the Company entered into one long-term operating lease.

Upon entering into this lease, the Company recorded lease ROU assets of $368,000 and short-term and long-term lease liabilities of $125,000 and $243,000, respectively.

The Company extended the lease for its headquarters for another two years to January 31, 2023.

The Company also entered into various short-term operating leases for additional office, laboratory, parking and storage space during the first quarter of 2021 and elected short-term lease recognition exemption for these leases.

The operating lease right-of-use asset, short-term lease liabilities, and long-term lease liabilities as of March 31, 2021 and December 31, 2020 were as follows:

In February 2021, the Company extended the lease for its headquarters located in Temple City, California, to January 31, 2023 .

In March 2021, the Company entered into a new lease for its 12,000 square foot CLIA-certified laboratory in Houston, Texas, and the lease will expire in November 2023 .

The operating lease right-of-use asset, short-term lease liabilities, and long-term lease liabilities as of June 30, 2021 and December 31, 2020 were as follows:

(in thousands)

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The following was operating lease expense:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

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Supplemental information related to leases was the following:

March 31, 2021

June 30, 2021

Weighted average remaining lease term - operating leases

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The Company leases out space in buildings it owns to third-party tenants under noncancelable operating leases and has leased out such space since the Company purchased such buildings in October 2020.

As of March 31, 2021, the remaining lease terms left range from 1 month to 3 years and 9 months including renewal options and may include rent escalation clauses.

As of June 30, 2021, the remaining lease terms left range from 17 months to 42 months including renewal options and may include rent escalation clauses.

Lease income primarily represents fixed lease payments from tenants recognized on a straight-line basis over the application lease term.

Variable lease income represents tenant payments for real estate taxes, insurance and maintenance.

The lease income was $157,000 for the three months ended March 31, 2021, which was included in interest and other income, net, in the accompanying Condensed Consolidated Statements of Operations.

The lease income was $ 85,000 and $ 242,000 for the three and six months ended June 30, 2021, respectively, which was included in interest and other income, net, in the accompanying Condensed Consolidated Statements of Operations.

Total lease income was as follows:

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

(in thousands)

1 unchanged sentence

Total lease income

Future fixed lease payments from tenants for all noncancelable operating leases as of March 31, 2021 are as follows:

Future fixed lease payments from tenants for all noncancelable operating leases as of June 30, 2021 are as follows:

Lease Payments

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The Company has included equity-based compensation expense as part of cost of revenue and operating expenses in the accompanying Condensed Consolidated Statements of Operations as follows:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

3 unchanged sentences

General and administrative

Provision for Income Taxes

Provision for (Benefit from) Income Taxes

The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur.

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As such, there can be significant volatility in interim tax provisions.

The Company recorded consolidated provision for income taxes of $66.5 million and $34,000 during the first quarters of 2021 and 2020, respectively, or 25% of earnings before income taxes for the first quarter of 2021, compared to -2% of loss before income taxes and equity loss in investee for the first quarter of 2020.

The change in effective tax rate for the first quarter of 2021, relative to 2020, was primarily attributable to a significant increase in income for the first quarter of 2021, partially offset by increased windfall tax deductions related to stock-based compensation.

The Company recorded consolidated provision for (benefit from) income taxes of $ 23.6 million and $ 90.1 million for the three and six months ended June 30, 2021, respectively, compared with $( 599,000 ) and $( 565,000 ) for the three and six months ended June 30, 2020, respectively.

The Company’s effective tax rates were 24 % and 25 % for the three and six months ended June 30, 2021, respectively, compared with - 21 % and - 45 % or the three and six months ended June 30, 2020, respectively.

The change in the effective tax rate for the three-month and six-month periods of 2021, relative to 2020, was primarily attributable to a significant increase in income for the first quarter of 2021, and, to a lesser extent, an increase in income for the second quarter of 2021, partially offset by increased windfall tax deductions related to stock-based compensation.

The Company is not currently under examination by any major income tax jurisdiction.

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The Company does not believe the federal or state statute lapses or any other event will significantly impact the balance of unrecognized tax benefits in the next twelve months.

The net balance of unrecognized tax benefits was not material to the interim financial statements for the three months ended March 31, 2021 and 2020.

Income (Loss) per Share

The following table presents the calculation of basic and diluted income (loss) per share for the first quarters of 2021 and 2020:

Three Months Ended March 31,

The net balance of unrecognized tax benefits was not material to the interim financial statements for the three and six months ended June 30, 2021 and 2020.

Income per Share

The following table presents the calculation of basic and diluted income per share for the three and six months ended June 30, 2021 and 2020:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands, except per share data)

Net income (loss)

Net income attributable to Fulgent

Weighted-average common shares—outstanding, basic

Weighted-average common shares—outstanding, diluted

Net income (loss) per common share, basic

Net income (loss) per common share, diluted

The following securities have been excluded from the calculation of diluted income (loss) per share because their effect would have been anti-dilutive:

Three Months Ended March 31,

Net income per common share, basic

Net income per common share, diluted

The following securities have been excluded from the calculation of diluted income per share because their effect would have been anti-dilutive:

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

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The anti-dilutive shares described above were calculated using the treasury stock method.

Due to the Company’s net loss position during the first quarter of 2020, all outstanding stock options and restricted stock units were excluded from the weighted-average share calculation.

Related Parties

Linda Marsh, who is a member of the Company’s board of directors, is currently the Senior Executive Vice President of AHMC Healthcare Inc.

The Company performs genetic testing and other testing services, on an arms-length basis, for AHMC, and the Company recognized $1.1 million in revenue in the first quarter of 2021.

As of March 31, 2021, and December 31, 2020, $1.8 million was owed to the Company by AHMC, which is included in trade accounts receivable, net, in the accompanying Condensed Consolidated Balance Sheets, in connection with this relationship.

As more fully described in Note 14, Equity Method Investments, in April 2017, the Company, through an affiliated company formed for the purpose of the relationship, entered into a cooperation agreement, or JV Agreement, with Xilong Scientific Co., Ltd., or Xilong Scientific, and Fuzhou Jinqiang Investment Partnership (LP), or FJIP, to form a joint venture under the laws of the People’s Republic of China, or PRC, called Fujian Fujun Gene Biotech Co., Ltd., or FF Gene Biotech.

Xilong Scientific is an affiliate of Xi Long USA, Inc., a company which at one point owned greater than 10% of the Company’s common stock.

XiLong USA, Inc.

has since reported beneficial ownership of 4.92% of the Company’s common stock in a Schedule 13G filed with the SEC on June 12, 2020.

FJIP was owned by key management of FF Gene Biotech, including Dr.

Han Lin Gao, the Chief Scientific Officer and a large stockholder of the Company and the owner of approximately 25% of FJIP.

The Company performs genetic testing and other testing services, on an arms-length basis, for AHMC, and the Company recognized $ 738,000 and $ 1.9 million in revenue in the three and six months ended June 30, 2021, respectively.

The Company did not perform any services for AHMC and did no t recognize any revenue in the three and six months ended June 30, 2020.

As of June 30, 2021 and December 31, 2020, $ 793,000 and $ 1.8 million was owed to the Company by AHMC, which is included in trade accounts receivable, net, in the accompanying Condensed Consolidated Balance Sheets, in connection with this relationship.

The Company and Fulgent Pharma LLC, the Company’s former subsidiary, are party to shared services arrangements where research and development and administrative services and office space and equipment are provided between the companies, on an arms-length basis.

Ming Hsieh is the Manager and a member of Fulgent Pharma LLC.

During the first quarter of 2021, the cost of research development services rendered by Fulgent Pharma LLC for the Company was $108,000.

Amounts for services performed by the Company for Fulgent Pharma LLC were not significant during the first quarters of 2021 and 2020.

As of March 31, 2021, and December 31, 2020, $494,000 and $409,000, respectively, were owed to Fulgent Pharma LLC by the Company, which are included in accrued liabilities in the accompanying Condensed Consolidated Balance Sheets, in connection with these relationships.

Equity Method Investments

During the three and six months ended June 30, 2021, the cost of research development services rendered by Fulgent Pharma LLC for the Company was $ 97,000 and $ 205,000 , respectively.

The cost of research development services rendered by Fulgent Pharma LLC for the Company was no t significant during the three and six months ended June 30, 2020.

Amounts for services performed by the Company for Fulgent Pharma LLC were no t significant during the three and six months ended June 31, 2021 and 2020.

As of June 30, 2021, and December 31, 2020, $ 574,000 and $ 409,000 , respectively, were owed to Fulgent Pharma LLC by the Company, which are included in due to related parties as a component in other current liabilities in the accompanying Condensed Consolidated Balance Sheets, in connection with these relationships.

Business Combination

FF Gene Biotech

April 2017, the Company, through an affiliated company formed for the purpose of the relationship, entered into the JV Agreement with Xilong Scientific and FJIP to form FF Gene Biotech, a joint venture formed under the laws of China to offer genetic testing services to customers in China.

Pursuant to the terms of the JV Agreement, the Company has agreed to contribute to FF Gene Biotech genetic sequencing and other equipment with a total cost of 60.0 million renminbi, or RMB, over a five-year period for a 30% ownership interest in FF Gene Biotech, previously three-year per original agreement and amended in April 2019, Xilong Scientific has agreed to contribute to FF Gene Biotech 102.0 million RMB over a five-year period for a 51% ownership interest in the FF Gene Biotech, previously three-year per original agreement and amended in April 2019, and FJIP has agreed to contribute to FF Gene Biotech 19.0 million RMB over a ten-year period for a 19% ownership interest in FF Gene Biotech, previously five-year per original agreement and amended in April 2019 .

The Company’s maximum exposure to fund losses of FF Gene Biotech as a result of its minority ownership of this entity is equal to its contribution obligation under the JV Agreement as described above.

As of March 31, 2021, 29.7 million RMB (or approximately $4.5 million U.S.

dollars) remained to be contributed to FF Gene Biotech by the Company under the terms of the JV Agreement.

To date, the Company has purchased and contributed equipment with an aggregate fair value of $4.5 million pursuant to its contribution commitment under the JV Agreement.

The Company accounted for this contribution in accordance with ASC 845, Nonmonetary Transactions, and recorded an investment based on the fair value of the contributed equipment, which is the same as carryover basis.

In April 2017, the Company acquired a 30 % equity interest in FF Gene Biotech , a newly formed a joint venture with Xilong Scientific, and Fuzhou Jinqiang Investment Partnership (LP), or FJIP.

The joint venture was formed under the laws of China to offer genetic testing services to customers in China.

In May 2021, the Company entered into a restructuring agreement with Xilong Scientific and FJIP, resulting in the Company indirectly acquiring a 72 % controlling financial interest in FF Gene Biotech.

As a result of the acquisition of FF Gene Biotech, or the FF Gene Biotech Acquisition , the Company will be more strategically aligned with it geographic expansion strategy.

It also expects to reduce costs through economies of scale.

The goodwill of $ 23.1 million arising from the FF Gene Biotech Acquisition is attributed to the expected synergies and other benefits that will be potentially generated from the combination of the Company and FF Gene Biotech.

The goodwill recognized is not deductible for tax purposes .

The Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities assumed based on estimated fair values.

As additional information becomes available, such as the finalization of the estimated fair value of tax-related items, the Company may further update the preliminary purchase price allocation during the remainder of the measurement period (up to one year from the FF Gene Biotech Acquisition date).

The following table summarizes the consideration paid and the amounts of the assets acquired and liabilities assumed recognized at the FF Gene Biotech Acquisition date, as well as the fair value of the noncontrolling interest at the FF Gene Biotech Acquisition date.

(in thousands)

Considerations

Fair value of the Company’s 30% equity interest held before the business combination

Recognized amounts of identifiable assets acquired and liabilities assumed

Financial assets

Reagents and supplies

Other tangible assets

Identifiable intangible assets

Other current liabilities

Notes payable

Recognized amounts of identifiable assets acquired and liabilities assumed, net

Noncontrolling interest

The Company incurred $ 329,000 acquisition related costs, which was recorded as general and administrative expenses in its condensed consolidated statements of operations.

The fair value of the noncontrolling interest, or NCI, in FF Gene Biotech, a private entity, $ 8.1 million, was estimated by applying the income approach and market approach.

The fair value measurement was based on significant inputs that are not observable in the market and thus represents a fair value categorized within Level 3 of the three-tier fair value hierarchy .

The NCI represents a minority interest of 28 % in the post-restructuring FF Gene Biotech.

Since the NCI is the result of the restructuring, the implied value was utilized to value the NCI based on the 42 % effective investment.

After determining the implied value, a discount for lack of marketability was applied to the 28 % interest representing lack of marketability related to the holding period to monetize the NCI in a future initial public offering, or IPO, or sale, and marketability related to market participant acquisition premiums implied in the value of the $ 19.0 million purchase price for a 42 % interest.

The resultant total discount applied was 35 %, which is supported both by the put option analyses related to the potential holding period, and a 10 % discount owed to a market participant acquisition premium.

The Company recognized a gain of $ 3.7 million as a result of remeasuring to fair value its 30 % equity interest held before the FF Gene Biotech Acquisition .

The fair value of the preexisting equity interest was determined based on the characteristics before consummating the FF Gene Biotech Acquisition and estimated by applying income approach and utilized the discounted cash flow method.

The Company did not apply the market approach based on its characteristics before consummating the restructuring.

The gain on the equity method investment is included in the Company’s Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2021.

The amounts of FF Gene Biotech’s revenue and net losses included in the Company’s Condensed Consolidated Statements of Operations for the periods ended June 30, 2021 and the revenue and net losses of the combined entity had the acquisition date been January 1, 2021 are not material to the Company.

The identified intangible assets acquired in the FF Gene Biotech Acquisition consisted of a $ 5.7 million royalty-free technology with an estimated amortization life of 10 years and a $ 1.2 million customer relationships with an estimated amortization life of 5 years.

The value of these assets were based upon the preliminary fair values as of the closing date of the FF Gene Biotech Acquisition.

The Company concluded FF Gene Biotech is a variable interest entity as FF Gene Biotech lacks sufficient capital to operate independently.

The Company concluded that it alone does not have the power to direct the most significant activities of FF Gene Biotech and therefore is not the primary beneficiary of the entity.

The Company concluded that it alone has the power to direct the most significant activities of FF Gene Biotech and therefore is the primary beneficiary of the entity post the FF Gene Biotech Acquisition.

Judgment regarding the level of influence over FF Gene Biotech includes consideration of key factors such as the Company's ownership interest, representation on the board of directors or other management body and participation in policy-making decisions.

The Company accounts for its 30 % interest in FF Gene Biotech using the equity method of accounting .

The Company recorded an impairment loss to bring down the carrying value to zero in 2020 as the decline in the fair value of the investment compared to the pro forma carrying value is more than the carrying value as of December 31, 2020, and the Company believes the decline is other-than-temporary.

BostonMolecules, Inc.

In September 2020, the Company entered into a Series A Preferred Stock Purchase Agreement with BostonMolecules, Inc., or BostonMolecules, a Delaware corporation, pursuant to which the Company purchased 333 shares of Series A Preferred Stock of BostonMolecules, $0.0001 par value per share, or the BostonMolecules Shares, at a purchase price of $7,500 per share and an aggregate purchase price of $2.5 million.

The BostonMolecules Shares represent an approximate 25% ownership interest in BostonMolecules.

The Company initially accounted for its 25% interest in BostonMolecules using the equity method of accounting and subsequently recorded an impairment loss to bring down the carrying value to zero in 2020.

Equity method investments as of March 31, 2021 and December 31, 2020, consisted of 30% ownership interest in FF Gene Biotech and 25% ownership interest in BostonMolecules, and the carrying value of both investments was zero due to impairment losses recorded in 2020.

Post the FF Gene Biotech Acquisition , the financial results for FF Gene Biotech are included in the Company’s condensed financial statements.

Prior to the FF Gene Biotech Acquisition , the financial results for FF Gene Biotech were not significant for pro forma financial information.

Equity Distribution Agreement

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Piper may receive a commission of up to 3 % of the gross proceeds received by the Company for sales pursuant to the November 2020 Equity Distribution Agreement.

During the first quarter of 2021, the Company sold approximately 583,000 shares of its common stock pursuant to the November 2020 Equity Distribution Agreement at a weighted-average net selling price of $52.00.

During the three months ended June 30, 2021, the Company sold approximately 378,000 shares of its common stock pursuant to the November 2020 Equity Distribution Agreement at a weighted-average net selling price of $ 73.75 .

During the six months ended June 30, 2021, the Company sold approximately 961,000 shares of its common stock pursuant to the November 2020 Equity Distribution Agreement at a weighted-average net selling price of $ 60.56 .

Goodwill and Acquisition-Related Intangibles

Summaries of goodwill and acquisitions-related intangibles balances as of June 30, 2021 and December 30, 2020 were as follows:

Weighted-Average Amortization Period

(in thousands)

Royalty-free technology

accumulated amortization

Royalty-free technology, net

Customer relationships

accumulated amortization

Customer relationships, net

Total acquisition-related intangibles, net

During the three months ended June 30, 2021, the Company recorded $ 23.1 million of goodwill and $ 7.0 million of intangibles attributable to the FF Gene Biotech Acquisition.

See Note 14, Business Combination, to the Company's condensed consolidated financial statements.

Based on the carrying value of acquisition-related intangibles recorded as of June 30, 2021, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for acquisition-related intangibles is expected to be as follows:

(in thousands)

2021 (remaining 6 months)

Subsequent Events

In July 2021, the Company invested $ 20.0 million in Laboratory for Advanced Medicine, Inc., or Helio Health, incorporated in Cayman Islands, and, in connection with the investment in Helio Health, the Company obtained a minority shareholder interest.

Helio Heath is an AI-driven healthcare company developing early testing capabilities for cancer.

Through this partnership, the Company seeks to have access to an emerging liquid biopsy testing technology in the U.S.

and China and exclusive commercial rights to Helio Health’s liquid biopsy tests in the U.S.

In August 2021, the Company completed an acquisition of Cytometry Specialists, Inc., or CSI, a Georgia corporation, through the acquisition of all of the issued and outstanding common stock of CSI in exchange for $ 50.0 million in cash and up to $ 10.0 million in potential future milestone payments.

Through the acquisition of CSI, the Company seeks to expand the Company’s presence and capabilities in somatic molecular diagnostics and cancer testing .

The Company plans to leverage its established technology platform, NGS expertise, lab operations, and sales infrastructure in conjunction with CSI’s extensive cancer testing menu to establish a differentiated foothold in oncologic testing in the United States.

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.

What changed 10-Q

Item 1. Financial Statements