Item 2. Management’s Discussion and Analysis
Item 2 . Management’s Discussion and Analysis of Financial Condition and Results of Operations.
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited condensed financial statements and related notes thereto included in Part I, Item I of this Quarterly Report on Form 10-Q and with our audited financial statements and related notes thereto for the year ended December 31, 2024, included in the 2024 Annual Report on Form 10-K (the 2024 Annual Report on Form 10-K) filed on March 7, 2025, with the Securities and Exchange Commission (SEC). For a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Quarterly Report on Form 10-Q, you should review the risk factors identified in Part I, Item 1A, Risk Factors, of our 2024 Annual Report on Form 10-K and in Item 1A, Risk Factors, of this Quarterly Report on Form 10-Q.
As in Item 1. of this Quarterly Report on Form 10-Q, in this Item 2, unless the context otherwise requires, the terms “Teknova,” the “Company,” “we,” “us,” and “our” refer to Alpha Teknova, Inc.
Overview
Since our founding in 1996, we have been producing critical reagents for the discovery, development, and commercialization of novel therapies, vaccines, and molecular diagnostics. Our approximately 3,000 customers span the entire continuum of the life sciences market, including leading pharmaceutical and biotechnology companies, contract development and manufacturing organizations, in vitro diagnostics franchises, and academic and government research institutions. Our Company is built around our knowledge, methods, and know-how in our proprietary manufacturing processes, which are highly adaptable and configurable. These proprietary processes enable us to manufacture and deliver high-quality, custom, made-to-order products with short turnaround times and at scale, across all stages of our customers’ product development, from early research through commercialization.
We have two primary product categories: Lab Essentials and Clinical Solutions. Our products cross all stages of development, from early research through commercialization. We offer three primary product types: (i) pre-poured media plates for cell growth and cloning; (ii) liquid cell culture media and supplements for cellular expansion; and (iii) molecular biology reagents for sample manipulation, resuspension, and purification. Our liquid cell culture media and supplements and molecular biology reagents are available in both of our two primary product categories; pre-poured media plates are available in our Lab Essentials category only.
We are ISO 13485:2016 certified, enabling us to manufacture products for use in diagnostic and therapeutic applications. Our certification allows us to offer solutions across the entire customer product development workflow, supporting our customers’ needs for materials in greater volume and that meet increasingly stringent quality requirements as they scale from research to commercialization.
We manufacture our products at our Hollister, California headquarters and stock inventory of raw materials, components, and finished goods at that campus. We rely on a limited number of suppliers for certain raw materials, and we have no long-term supply arrangements with our suppliers, as we order on a purchase order basis. We ship our products directly from our warehouse in Hollister, California, to our customers and distributors, generally pursuant to purchase orders. We typically recognize revenue when products are shipped.
We generated revenue of $10.3 million during the three months ended June 30, 2025, which represents an increase of $0.7 million compared to revenue of $9.6 million during the three months ended June 30, 2024. For the three months ended June 30, 2025 and 2024, only 5.0% and 4.0%, respectively, of our revenue was generated from customers located outside of the United States. We generated revenue of $20.1 million during the six months ended June 30, 2025, which represents an increase of $1.2 million compared to revenue of $18.9 million during the six months ended June 30, 2024. For the six months ended June 30, 2025 and 2024, only 5.1% and 4.3%, respectively, of our revenue was generated from customers located outside of the United States. Our sales outside of the United States are denominated in U.S. Dollars.
We had an operating loss of $3.4 million during the three months ended June 30, 2025, compared to an operating loss of $5.1 million during the three months ended June 30, 2024. We had an operating loss of $8.4 million during the six months ended June 30, 2025, compared to an operating loss of $13.1 million during the six months ended June 30, 2024. While our expenses may fluctuate over the short term, we expect our expenses will increase in future periods, in connection with our ongoing activities as we:
19
• attract, hire, and retain qualified personnel;
• invest in processes and infrastructure to improve operating efficiency and expand capacity at our facilities, including the ramp up of our new, state-of-the-art manufacturing, warehouse, and distribution facilities; and
• build our brand and market, and sell our products and services.
Impact of Broader Economic Trends on Our Business
We are closely monitoring economic uncertainty in the U.S. and abroad. General inflation in the U.S. rose in recent years to levels not experienced in recent decades. While the rate of inflation moderated in 2024, general inflation, including rising prices for our raw materials and other inputs, as well as rising salaries and other expenses, can negatively impact our business by increasing our cost of sales and operating expenses. In addition, during early 2024, the U.S. Federal Reserve raised interest rates in response to concerns about inflation, and although the U.S. Federal Reserve lowered interest rates in late 2024, the direction and timing of future interest rate changes remains uncertain. Inflation, together with increased interest rates, may cause our customers to reduce, delay, or cancel orders for our goods and services, thereby causing a decrease in or change in timing of sales of our products and services. We cannot predict the impact of future inflation and interest rate changes on the results of our operations. Furthermore, changes to tariff and related international trade policy in the first half of 2025 create uncertainty about the broader economy and our business. For further information regarding the impact of these economic factors on the Company, please see the risk factors identified in Part I, Item 1A, Risk Factors, of our 2024 Annual Report on Form 10-K.
Results of Operations
Comparison of the Three Months Ended June 30, 2025, and Three Months Ended June 30, 2024
The following tables set forth our results of operations for the three months ended June 30, 2025 and 2024 (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Revenue
$
10,287
$
9,614
$
673
7.0
%
Cost of sales
6,303
6,810
(507
)
(7.4
)%
Gross profit
3,984
2,804
1,180
42.1
%
Operating expenses:
Research and development
581
678
(97
)
(14.3
)%
Sales and marketing
1,573
1,456
117
8.0
%
General and administrative
4,929
5,483
(554
)
(10.1
)%
Amortization of intangible assets
287
287
—
—
Total operating expenses
7,370
7,904
(534
)
(6.8
)%
Loss from operations
(3,386
)
(5,100
)
1,714
(33.6
)%
Other income (expenses), net
Interest expense, net
(165
)
(272
)
107
(39.3
)%
Total other income (expenses), net
(165
)
(272
)
107
(39.3
)%
Loss before income taxes
(3,551
)
(5,372
)
1,821
(33.9
)%
Provision for (benefit from) income taxes
19
(8
)
27
(337.5
)%
Net loss
$
(3,570
)
$
(5,364
)
$
1,794
(33.4
)%
Revenue
Our revenue disaggregated by product category for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Lab Essentials
$
7,792
$
7,638
$
154
2.0
%
Clinical Solutions
2,060
1,565
495
31.6
%
Other
435
411
24
5.8
%
Total revenue
$
10,287
$
9,614
$
673
7.0
%
Total revenue was $10.3 million and $9.6 million for the three months ended June 30, 2025 and 2024, respectively.
20
Lab Essentials revenue was $7.8 million for the three months ended June 30, 2025, an increase of $0.2 million, or 2.0%, compared to $7.6 million for the three months ended June 30, 2024. The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by slightly lower average revenue per customer.
Clinical Solutions revenue was $2.1 million for the three months ended June 30, 2025, an increase of $0 .5 million, or 31 .6 %, compared to $1.6 million for the three months ended June 30, 2024. The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.
Our revenue disaggregated by geographic region, for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
United States
$
9,777
$
9,228
$
549
5.9
%
International
510
386
124
32.1
%
Total revenue
$
10,287
$
9,614
$
673
7.0
%
Revenue from U.S. sales was $9.8 million and $9.2 million for the three months ended June 30, 2025 and 2024, respectively. Revenue from U.S. sales as a percentage of our total revenue was consistent period over period, representing 95.0% and 96.0% of our total revenue during the three months ended June 30, 2025 and 2024, respectively.
Revenue from international sales was $0.5 million and $0.4 million for the three months ended June 30, 2025 and 2024, respectively. Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 5.0% and 4.0% of our total revenue during the three months ended June 30, 2025 and 2024, respectively.
Gross profit
Our gross profit for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Cost of sales
$
6,303
$
6,810
$
(507
)
(7.4
)%
Gross profit
3,984
2,804
1,180
42.1
%
Gross profit %
38.7
%
29.2
%
Gross profit percentage was 38.7% and 29.2% for the three months ended June 30, 2025 and 2024, respectively. The increase in gross profit was driven by manufacturing efficiency gains and higher revenue.
Operating expenses
Our operating expenses for the three months ended June 30, 2025 and 2024, were as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Research and development
$
581
$
678
$
(97
)
(14.3
)%
Sales and marketing
1,573
1,456
117
8.0
%
General and administrative
4,929
5,483
(554
)
(10.1
)%
Amortization of intangible assets
287
287
—
—
Total operating expenses
$
7,370
$
7,904
$
(534
)
(6.8
)%
Research and development expenses were consistent at $0.6 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively.
Sales and marketing expenses were consistent at $1.6 million and $1.5 million for the three months ended June 30, 2025 and 2024, respectively.
General and administrative expenses were $4.9 million and $5.5 million for the three months ended June 30, 2025 and 2024, respectively. Excluding the one-time, non-recurring charge of $0.1 million related to the increase of our loss contingency for the three months ended June 30, 2024, general and administrative expenses decreased $0.5 million. The decrease was driven by reduced spending, primarily on insurance and facility costs.
21
Amortization of intangible assets was consistent at $0.3 million for each of the three months ended June 30, 2025 and 2024.
Other expenses, net
Our other expenses, net for the three months ended June 30, 2025 and 2024, were as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Interest expense, net
$
(165
)
$
(272
)
$
107
(39.3
)%
Total other expenses, net
$
(165
)
$
(272
)
$
107
(39.3
)%
Total other expenses, net was $0.2 million for the three months ended June 30, 2025, compared to total other expenses, net of $0.3 million for the three months ended June 30, 2024. The decrease in total other expense, net was primarily attributable to lower interest expense.
Provision for (benefit from) income taxes
Our provision for and (benefit from) income taxes for the three months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Three Months Ended June 30,
2025
2024
$ Change
% Change
Provision for (benefit from) income taxes
$
19
$
(8
)
$
27
(337.5
)%
Effective tax rate
(0.5
)%
0.1
%
Our income taxes were not significant for either the three months ended June 30, 2025 or 2024. The effective tax rates for the three months ended June 30, 2025 and 2024 were (0.5%) and 0.1%, respectively. The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.
Comparison of the Six Months Ended June 30, 2025, and Six Months Ended June 30, 2024
The following tables set forth our results of operations for the six months ended June 30, 2025 and 2024 (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Revenue
$
20,082
$
18,904
$
1,178
6.2
%
Cost of sales
13,091
13,891
(800
)
(5.8
)%
Gross profit
6,991
5,013
1,978
39.5
%
Operating expenses:
Research and development
1,133
1,538
(405
)
(26.3
)%
Sales and marketing
3,213
3,123
90
2.9
%
General and administrative
10,421
12,864
(2,443
)
(19.0
)%
Amortization of intangible assets
574
574
—
—
Total operating expenses
15,341
18,099
(2,758
)
(15.2
)%
Loss from operations
(8,350
)
(13,086
)
4,736
(36.2
)%
Other income (expenses), net
Interest expense, net
(309
)
(417
)
108
(25.9
)%
Other adjustment to loan exit fee
485
—
485
100.0
%
Total other income (expenses), net
176
(417
)
593
(142.2
)%
Loss before income taxes
(8,174
)
(13,503
)
5,329
(39.5
)%
Provision for (benefit from) income taxes
41
(42
)
83
(197.6
)%
Net loss
$
(8,215
)
$
(13,461
)
$
5,246
(39.0
)%
22
Revenue
Our revenue disaggregated by product category for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Lab Essentials
$
15,909
$
14,904
$
1,005
6.7
%
Clinical Solutions
3,222
3,283
(61
)
(1.9
)%
Other
951
717
234
32.6
%
Total revenue
$
20,082
$
18,904
$
1,178
6.2
%
Total revenue was $20.1 million and $18.9 million for the six months ended June 30, 2025 and 2024, respectively.
Lab Essentials revenue was $15.9 million for the six months ended June 30, 2025, an increase of $1.0 million, or 6.7%, compared to $14.9 million for the six months ended June 30, 2024. The increase in Lab Essentials revenue was attributable to an increased number of customers, partially offset by slightly lower average revenue per customer.
Clinical Solutions revenue was $3.2 million for the six months ended June 30, 2025, a decrease of $0 .1 million, or 1 .9 %, compared to $3.3 million for the six months ended June 30, 2024. The decrease in Clinical Solutions revenue was attributable to lower average revenue per customer, partially offset by an increased number of customers.
Our revenue disaggregated by geographic region, for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
United States
$
19,049
$
18,098
$
951
5.3
%
International
1,033
806
227
28.2
%
Total revenue
$
20,082
$
18,904
$
1,178
6.2
%
Revenue from U.S. sales was $19.0 million and $18.1 million for the six months ended June 30, 2025 and 2024, respectively. Revenue from U.S. sales as a percentage of our total revenue was consistent period over period, representing 94.9% and 95.7% of our total revenue during the six months ended June 30, 2025 and 2024, respectively.
Revenue from international sales was $1.0 million and $0.8 million for the six months ended June 30, 2025 and 2024, respectively. Revenue from international sales as a percentage of our total revenue was also consistent period over period, representing 5.1% and 4.3% of our total revenue during the six months ended June 30, 2025 and 2024, respectively.
Gross profit
Our gross profit for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Cost of sales
$
13,091
$
13,891
$
(800
)
(5.8
)%
Gross profit
6,991
5,013
1,978
39.5
%
Gross profit %
34.8
%
26.5
%
Gross profit percentage was 34.8% and 26.5% for the six months ended June 30, 2025 and 2024, respectively. The increase in gross profit was driven by manufacturing efficiency gains and higher revenue.
23
Operating expenses
Our operating expenses for the six months ended June 30, 2025 and 2024, were as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Research and development
$
1,133
$
1,538
$
(405
)
(26.3
)%
Sales and marketing
3,213
3,123
90
2.9
%
General and administrative
10,421
12,864
(2,443
)
(19.0
)%
Amortization of intangible assets
574
574
—
—
Total operating expenses
$
15,341
$
18,099
$
(2,758
)
(15.2
)%
Research and development expenses were $1.1 million and $1.5 million for the six months ended June 30, 2025 and 2024, respectively. The decrease was primarily driven by lower salaries and wages resulting from the reduction in workforce that was completed early during the three months ended March 31, 2024.
Sales and marketing expenses were consistent at $3.2 million and $3.1 million for the six months ended June 30, 2025 and 2024, respectively. Lower salaries and wages resulting from the reduction in workforce that occurred during the three months ended March 31, 2024, were largely offset by increased marketing costs during the six months ended June 30, 2025.
General and administrative expenses were $10.4 million and $12.9 million for the six months ended June 30, 2025 and 2024, respectively. Excluding the one-time, non-recurring charges related to the reduction in workforce of $1.3 million and $0.1 million related to the increase of our loss contingency for the six months ended June 30, 2024, general and administrative expenses decreased $1.1 million. The decrease was driven by reduced spend, primarily on facility costs and insurance as well as lower stock-based compensation expense due to one-time costs incurred in connection with the repricing that occurred during the three months ended March 31, 2024. See “Notes to Financial Statements—Note 13. Stock-Based Compensation” for a more detailed discussion of the stock option repricing.
Amortization of intangible assets was consistent at $0.6 million for each of the six months ended June 30, 2025 and 2024.
Other income (expenses), net
Our other income (expenses), net for the six months ended June 30, 2025 and 2024, were as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Interest expense, net
$
(309
)
$
(417
)
$
108
(25.9
)%
Other adjustment to loan exit fee
485
—
485
100.0
%
Total other income (expenses), net
$
176
$
(417
)
$
593
(142.2
)%
Total other income, net was $0.2 million for the six months ended June 30, 2025, compared to total other expenses, net of $0.4 million for the six months ended June 30, 2024. The decrease in total other expense, net was primarily attributable to a $0.5 million adjustment recognized on the exit fee concurrent with the refinancing of our credit agreement during the three months ended March 31, 2025 coupled with lower interest expense.
Provision for (benefit from) income taxes
Our provision for and (benefit from) income taxes for the six months ended June 30, 2025 and 2024, was as follows (dollars in thousands):
For the Six Months Ended June 30,
2025
2024
$ Change
% Change
Provision for (benefit from) income taxes
$
41
$
(42
)
$
83
(197.6
)%
Effective tax rate
(0.5
)%
0.3
%
Our income taxes were not significant for either the six months ended June 30, 2025 or 2024. The effective tax rates for the six months ended June 30, 2025 and 2024 were (0.5)% and 0.3% respectively. The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.
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Liquidity and Capital Resources
The primary sources of financing for our operations are our (i) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million of the Term Loan , and (ii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses of $0.2 million.
Our principal liquidity requirements are to fund our operations and capital expenditures. As of June 30, 2025, we had $31.6 million in net working capital, which included $24.0 million in cash and cash equivalents and short-term investments. Our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities at June 30, 2025. See “Notes to Financial Statements—Note 9. Leases,” for a discussion of our lease obligations reflected on our balance sheet.
In addition to our existing cash and cash equivalents and short-term investments, our principal source of liquidity is our credit facility. On March 3, 2025, we entered into the Second Amended and Restated Credit Agreement with MidCap Financial (Midcap) Trust which provides for loan commitments in an aggregate amount of up to $28.245 million consisting of a $23.245 million senior secured term loan (Term Loan) and a $5.0 million working capital facility (Revolver). The Amended Term Loan consists of the $12.135 million balance outstanding under the previous term loan, plus an additional $1.110 million related to the exit fee that would otherwise have been due upon closing of the Second and Amended Restated Term Loan Credit Agreement, as well as an additional tranche of $10.0 million that may become available for use in an acquisition, with MidCap’s consent. The Second Amended and Restated Credit Agreement includes minimum net revenue requirements that are measured on a trailing twelve-month basis and a minimum cash requirement which is constant throughout the term of the agreement. For example, our minimum net revenue requirement for the twelve months ending December 31, 2025, is $39.0 million. The minimum cash requirement is $8.0 million, which includes cash and cash equivalents as well as short-term investments in U.S. Treasuries. See “Notes to Financial Statements—Note 12. Long-term Debt, Net” for a more detailed discussion of the material terms of our Second Amended and Restated Credit Agreement.
The following table sets forth, for the periods indicated, net cash flows used in operating activities, used in investing activities, and used in financing activities (in thousands):
For the Six Months Ended June 30,
2025
2024
Net cash used in operating activities
$
(6,204
)
$
(9,396
)
Net cash provided by (used in) investing activities
5,852
(102
)
Net cash used in financing activities
(80
)
(390
)
Net decrease in cash and cash equivalents
$
(432
)
$
(9,888
)
Operating Activities
Net cash used in operating activities consists primarily of net loss adjusted for certain non-cash items (including depreciation and amortization, bad debt expense, deferred taxes, loss on disposal of property, plant, and equipment, inventory reserve, amortization of debt issuance costs, and stock-based compensation expense), and the effect of changes in working capital and other activities.
Net cash used in operating activities was $6.2 million for the six months ended June 30, 2025, which primarily consisted of net loss of $8.2 million plus net adjustments for non-cash charges of $5.4 million, offset by net changes in operating assets and liabilities of $3.4 million. The primary non-cash adjustments to net loss included $3.2 million of depreciation and amortization, $1.8 million of stock-based compensation, and $0.9 million provision for inventory, partially offset an adjustment to the loan exit fee of $0.5 million, and amortization of the discount on short-term investments of $0.4 million. The main drivers of the changes in operating assets and liabilities were a $1.7 million increase in inventories, a $1.2 million decrease in accrued liabilities, and a $0.9 million increase in accounts receivable, partially offset by a $0.4 million increase in accounts payable.
Net cash used in operating activities was $9.4 million for the six months ended June 30, 2024, which primarily consisted of net loss of $13.5 million plus net adjustments for non-cash charges of $6.6 million, offset by net changes in operating assets and liabilities of $2.6 million. The primary non-cash adjustments to net loss included $3.3 million of depreciation and amortization, $2.1 million of stock-based compensation, and $0.9 million provision for inventory. The main drivers of the changes in operating assets and liabilities were a $1.8 million decrease in accrued liabilities, a $0.7 million increase in accounts receivable, a $0.4 million decrease in accounts payable, and a $0.3 million increase in inventories, partially offset by a $0.4 million decrease in prepaid expenses and other current assets and a $0.2 million decrease other non-current assets.
25
Investing Activities
Net cash provided by investing activities was $5.9 million for the six months ended June 30, 2025, which consisted of maturities of short-term investments of $16.0 million, partially offset by purchases of short-term investments of $9.7 million and purchases of property, plant, and equipment of $0.4 million.
Net cash used in investing activities was $0.1 million for the six months ended June 30, 2024, which consisted of purchases of property, plant, and equipment of $0.2 million, partially offset by proceeds from the sale of certain long-lived assets of $0.1 million.
Financing Activities
Net cash used in financing activities was $0.1 million for the six months ended June 30, 2025, which was primarily attributable to payment of exit fee costs of $1.1 million, payment of debt issuance costs of $0.1 million, and repayment of financed insurance premiums of $0.1 million, largely offset by proceeds from long-term debt of $1.1 million and proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.
Net cash used in financing activities was $0.4 million for the six months ended June 30, 2024, which was primarily attributable to repayments of financed insurance premiums of $0.4 million, partially offset by proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.
Critical Accounting Policies and Estimates
For a discussion of our critical accounting estimates, refer to "Management ’ s Discussion and Analysis of Results of Operations and Financial Condition" in Part II, Item 7 and the notes to our financial statements in Part II, Item 8 of our 2024 Annual Report on Form 10-K. See also Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to our condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes to our critical accounting estimates since our 2024 Annual Report on Form 10-K.
Emerging Growth Company and Smaller Reporting Company
We qualify as an “emerging growth company” as defined in the JOBS Act. As long as we qualify as an emerging growth company, we may take advantage of certain exemptions from various reporting requirements and other burdens that are otherwise applicable generally to public companies. These provisions include, but are not limited to:
• reduced obligations with respect to financial data, including presenting only two years of audited financial statements;
• an exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;
• reduced disclosure about our executive compensation arrangements in our periodic reports, proxy statements, and registration statements; and
• exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements.
In addition, under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have elected to avail ourselves of this exemption from adopting new or revised accounting standards, and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies or that have opted out of using such extended transition period, which may make comparison of our financial statements with those of other public companies more difficult. We may take advantage of these reporting exemptions until we no longer qualify as an emerging growth company, or, with respect to adoption of certain new or revised accounting standards, until we irrevocably elect to opt out of using the extended transition period.
Under the JOBS Act, we will remain an emerging growth company until the earliest to occur of:
• the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more;
• the last day of our fiscal year following the fifth anniversary of the date of the closing of our initial public offering, which we completed in June 2021 (IPO);
• the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; and
• the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended (the Exchange Act) (i.e., the first day of the fiscal year after we have (i) more than $700.0 million in
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outstanding common equity held by our non-affiliates, measured each year on the last business day of our most recently completed second fiscal quarter, and (ii) been public for at least 12 months).
We are also a “smaller reporting company” as defined in Rule 12b-2 under the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that (i) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $250.0 million measured on the last business day of our most recently completed second fiscal quarter, and our annual revenues are more than $100.0 million during the most recently completed fiscal year or (ii) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of our most recently completed second fiscal quarter.
Recent Accounting Pronouncements
A description of recent accounting pronouncements that may potentially impact our financial position, results of operations, or cash flows is disclosed in Note 2, Basis of Presentation and Summary of Significant Accounting Policies, to our condensed financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Item 3 . Quantitative and Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined in Rule 12b-2 under the Exchange Act for this reporting period and are not required to provide the information required under this item.
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.