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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2020
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___ to___
Commission file number: 001-39388
https://cdn.kscope.io/4c259791bc937536201b55c49d536302-bli-20200630_g1.jpg
Berkeley Lights, Inc.
(Exact name of registrant as specified in its charter)
Delaware
35-2515390
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
5858 Horton Street, Suite 320
Emeryville, California 94608
(Address of principal executive offices, including zip code)
(510) 858-2855
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Common stock, $0.00005 par value
BLI
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



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Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
As of July 31, 2020, 63,736,583 shares of the registrant’s common stock, $0.00005 par value per share, were outstanding.



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BERKELEY LIGHTS, INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2020
Table of Contents
Page(s)
Item 1.
Item 3.
Item 4.



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PART 1. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited).
Berkeley Lights, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
AssetsJune 30,
2020
December 31,
2019
(unaudited)
Current assets:
Cash and cash equivalents$59,170 $81,033 
Trade accounts receivable10,236 9,334 
Inventory11,908 7,181 
Prepaid expenses and other current assets9,061 7,799 
Total current assets90,375 105,347 
Restricted cash270 270 
Property and equipment, net14,757 16,472 
Operating lease right-of-use assets13,000 7,785 
Other assets1,016 1,135 
Total assets$119,418 $131,009 
Liabilities and Stockholders’ Equity
Current liabilities:
Trade accounts payable$4,270 $3,239 
Accrued expenses and other current liabilities8,099 6,229 
Current portion of notes payable1,596 5,765 
Deferred revenue8,607 9,686 
Total current liabilities22,572 24,919 
Notes payable, net of current portion18,264 14,062 
Deferred revenue, net of current portion1,098 1,461 
Lease liability, long-term11,439 6,784 
Total liabilities53,373 47,226 
Commitments and contingencies (Note 13)
Stockholders’ equity:
Convertible preferred stock, $0.00005 par value. Authorized 101,648,657 shares at June 30, 2020 and December 31, 2019, respectively; issued and outstanding 50,462,272 shares at June 30, 2020 and December 31, 2019, respectively
224,769 224,769 
Common stock, $0.00005 par value. Authorized 130,600,000 shares at June 30, 2020 and 124,433,107 at December 31, 2019, respectively; issued and outstanding 3,288,531 and 3,073,067 shares at June 30, 2020 and December 31, 2019, respectively
  
Additional paid-in capital12,431 9,314 
Accumulated deficit(171,155)(150,300)
Total stockholders’ equity66,045 83,783 
Total liabilities and stockholders’ equity$119,418 $131,009 
See accompanying notes to these condensed consolidated financial statements.
1


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Berkeley Lights, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except share and per share data)
Three months ended June 30,Six months ended June 30,
2020201920202019
Revenue:
Product revenue$9,107 $7,795 $19,790 $17,322 
Service revenue1,462 3,968 4,557 7,082 
Total revenue10,569 11,763 24,347 24,404 
Cost of sales:
Product cost of sales2,384 1,949 5,004 4,405 
Service cost of sales1,223 242 2,402 582 
Total cost of sales3,607 2,191 7,406 4,987 
Gross profit6,962 9,572 16,941 19,417 
Operating expenses:
Research and development11,843 9,642 22,819 18,385 
General and administrative4,193 3,080 8,190 5,722 
Sales and marketing3,076 2,452 6,310 4,289 
Total operating expenses19,112 15,174 37,319 28,396 
Loss from operations(12,150)(5,602)(20,378)(8,979)
Other income (expense):
Interest expense(356)(350)(713)(704)
Interest income47 270 198 502 
Other income (expense), net37 (488)62 (1,175)
Loss before income taxes(12,422)(6,170)(20,831)(10,356)
Provision for income taxes8 15 24 34 
Net loss and net comprehensive loss$(12,430)$(6,185)$(20,855)$(10,390)
Net loss attributable to common stockholders per share, basic and diluted$(4.25)$(2.43)$(7.29)$(4.28)
Weighted-average shares used in calculating net loss per share, basic and diluted3,109,545 2,872,183 3,078,756 2,795,290 

See accompanying notes to these condensed consolidated financial statements.
2


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Berkeley Lights, Inc.
Condensed Consolidated Statements of Changes in Stockholder’s Equity (Unaudited)
(In thousands, except share data)
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
Stockholders'
Equity
SharesAmountSharesAmount
Balances at December 31, 201950,462,272 $224,769 3,073,067 $ $9,314 $(150,300)$83,783 
Shares issued in connection with:
Exercise of stock options  8,580  21  21 
Vesting of shares subject to repurchase from early exercised options    88  88 
Stock-based compensation    1,213  1,213 
Net loss     (8,425)(8,425)
Balances at March 31, 202050,462,272 $224,769 3,081,647 $ $10,636 $(158,725)$76,680 
Shares issued in connection with:
Exercise of stock options  206,884  411  411 
Vesting of shares subject to repurchase from early exercised options    88  88 
Stock-based compensation    1,296  1,296 
Net loss     (12,430)(12,430)
Balances at June 30, 202050,462,272 $224,769 3,288,531 $ $12,431 $(171,155)$66,045 
Balances at December 31, 201850,462,272 $224,769 2,690,264 $ $4,860 $(131,998)$97,631 
Shares issued in connection with:
Exercise of stock options  100,631  217  217 
Stock-based compensation    814  814 
Net loss     (4,205)(4,205)
Balances at March 31, 201950,462,272 $224,769 2,790,895 $ $5,891 $(136,203)$94,457 
Shares issued in connection with:
Exercise of stock options  130,196  107  107 
Stock-based compensation    949  949 
Net loss     (6,185)(6,185)
Balances at June 30, 201950,462,272 $224,769 2,921,091 $ $6,947 $(142,388)$89,328 
See accompanying notes to these condensed consolidated financial statements.
3


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Berkeley Lights, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six months ended June 30,
20202019
Cash flows from operating activities:
Net loss$(20,855)$(10,390)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation2,619 2,342 
Stock-based compensation2,531 1,763 
Amortization of operating lease right-of-use assets944 788 
Non-cash interest and other (income) expense related to debt and note receivable agreements
34 (28)
Provision for excess and obsolete inventory79 155 
Loss on impairment of property and equipment61 689 
Change in fair value of embedded derivative 62 
Equity method losses in Optera Therapeutics Corp. 806 
Net loss on dissolution of Optera Therapeutics Corp. 236 
Changes in operating assets and liabilities:
Trade accounts receivable(902)5,169 
Inventory(4,547)(2,015)
Prepaid expenses and other current assets(1,143)(199)
Trade accounts payable1,404 1,022 
Deferred revenue(1,441)(5,477)
Accrued expenses and other current liabilities1,249 70 
Operating lease liabilities(1,012)(832)
Net cash used in operating activities(20,979)(5,839)
Cash flows from investing activities:
Purchase of property and equipment(1,316)(4,121)
Issuance of notes receivable (1,000)
Net cash used in investing activities(1,316)(5,121)
Cash flows from financing activities:
Net proceeds from issuance of preferred stock432 324 
Net cash provided by financing activities432 324 
Net decrease in cash and cash equivalents and restricted cash(21,863)(10,636)
Cash and cash equivalents and restricted cash at beginning of period81,303 99,887 
Cash and cash equivalents and restricted cash at end of period$59,440 $89,251 
See accompanying notes to these condensed consolidated financial statements.
4

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1)The Company and Basis of Presentation
Description of Business
Berkeley Lights, Inc. (the “Company” or “Berkeley Lights”), was incorporated as a Delaware corporation on April 5, 2011. Berkeley Lights is a leading Digital Cell Biology company focused on enabling and accelerating the rapid development and commercialization of biotherapeutics and other cell-based products. Berkeley Lights’ platform is a fully integrated, end-to-end solution, comprised of proprietary consumables, including our OptoSelect chips and reagent kits, advanced automation systems and advanced application and workflow software.
In 2017, Berkeley Lights incorporated BLI Europe International, Ltd. as a wholly-owned subsidiary in the United Kingdom to support Berkeley Lights’ planned expansion in Europe. Berkeley Lights also established a representative branch office in China during 2019 to support its pre-sales and marketing efforts in the region. Berkeley Lights and its consolidated subsidiary are hereinafter referred to as the “Company”. The Company’s headquarters are in Emeryville, California.
The Company commercially launched its platform in December of 2016, which included its Beacon system and the alpha version of its Opto Cell Line Development 1.0 workflow, targeted to the antibody therapeutics market. In June 2019, the Company launched its desktop Lightning system targeted for assay development and lower throughput workflows, and in early 2020 the Company launched the Culture Station instrument. The Company is expanding the platform capabilities through the commercial launch of additional workflows in its core markets of antibody therapeutics, cellular therapy and synthetic biology.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of Berkeley Lights in this Quarterly Report have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation of S-X of the Securities and Exchange Commission (“the SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of Berkeley Lights’ management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial information have been included.
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the amounts reported in its condensed consolidated financial statements and the accompanying notes. Despite the Company’s intentions to establish accurate estimates and reasonable assumptions, actual results could differ materially from such estimates and assumptions. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any other period. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019 included in our Registration Statement on Form S-1, which has been filed with the SEC on July 16, 2020.

5

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Reverse Stock Split
On July 10, 2020, the Board of Directors of the Company approved a 1-for-2 reverse stock split of its issued and outstanding common stock and convertible preferred stock, which was effected on July 14, 2020. All issued and outstanding shares of common stock and convertible preferred stock and related per share amounts contained in the accompanying consolidated financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. The par value of the authorized stock was not adjusted as a result of the reverse stock split. Other than the par value, all share and per share data shown in the accompanying condensed consolidated financial statements and related notes have been retroactively revised to reflect the reverse stock split.
Initial Public Offering
The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on July 16, 2020 by the SEC, and the Company’s common stock began trading on the NASDAQ Global Select Market on July 17, 2020. On July 21, 2020, the Company completed its IPO, in which the Company sold 9,315,000 shares of common stock (which included 1,215,000 shares that were offered and sold pursuant to the full exercise of the IPO underwriters’ option to purchase additional shares) at a price to the public of $22 per share. Including the option exercise, the Company received aggregate net proceeds of $188.0 million after deducting offering costs, underwriting discounts and commissions of $16.9 million.
Immediately prior to the completion of the IPO, 50,462,272 shares of convertible preferred stock then outstanding converted into an equivalent number of shares of common stock.
Liquidity
The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has experienced losses from its operations since its inception and has relied primarily on equity and debt financing to fund its operations to date. For the three and six months ended June 30, 2020, the Company had a consolidated net loss of $12.4 million and $20.9 million, respectively. As of June 30, 2020, the Company had cash and cash equivalents of $59.2 million and an accumulated deficit of $171.2 million. Management expects to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term while the Company makes investments to support its anticipated growth. Management believes that its cash and cash equivalents balance as of June 30, 2020, as well as the proceeds from the IPO received in July 2020, provide sufficient capital resources to continue its operation for at least 12 months from the issuance date of the accompanying condensed consolidated financial statements.
(2)Summary of Significant Accounting Policies
Cash and Cash Equivalents and Restricted Cash
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
The Company records cash and cash equivalents as restricted when it is unable to freely use such cash and cash equivalents for general operating purposes. At June 30, 2020 and December 31, 2019, restricted cash consists of cash on deposit in a financial institution that is restricted from use for the Company’s corporate credit card program.
6

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following table provides a reconciliation of cash and cash equivalents and restricted cash on the condensed consolidated balance sheets to the totals presented on the condensed consolidated statements of cash flows (in thousands):
June 30,
2020
December 31,
2019
Cash and cash equivalents$59,170 $81,033 
Restricted cash270 270 
Total cash and cash equivalents and restricted cash as presented on the condensed consolidated statements of cash flows$59,440 $81,303 
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its account receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s customers’ respective financial conditions, the amounts of receivables in dispute and the current receivables aging and current payment patterns. To the extent identified, account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We have not had any material write-offs or allowance for doubtful accounts in the three and six months ended June 30, 2020 and 2019.
Revenue Recognition
The Company derives revenue from two primary sources, product revenues, which are comprised primarily of direct platform sales revenues and consumables revenues, and service revenues, which are comprised of revenue from joint development agreements, service and warranty, platform support and feasibility studies on the Company’s platforms. Revenues are recognized net of applicable taxes imposed on the related transaction.
The Company recognizes revenue when the Company satisfies the performance obligations under the terms of a contract and control of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract based on stand-alone selling price, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service.
The Company’s agreements with customers often include multiple performance obligations, which can sometimes be included in separate contracts entered into within a reasonably short period of time. The Company considers an entire customer arrangement to determine if separate contracts should be considered combined for the purposes of revenue recognition.
In order to determine the stand-alone selling price, the Company conducts a periodic analysis to determine whether various goods or services have an observable stand-alone selling price as well as to identify significant changes to current stand-alone selling prices. If the Company does not have an observable stand-alone selling price for a particular good or service, then the stand-alone selling price for
7

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
that particular good or service is estimated using an approach that maximizes the use of observable inputs. The Company’s process for determining stand-alone selling price requires judgment and considers multiple factors that are reasonably available and maximizes the use of observable inputs that may vary over time depending upon the unique facts and circumstances related to each performance obligation. The Company believes that this method results in an estimate that represents the price the Company would charge for the product offerings if they were sold separately.
For most of its performance obligations, the Company has established stand-alone selling price as a range rather than a single value, such range being plus or minus 15% of the median of observable prices. If the contractually stated prices of all the performance obligations in a contract fall within their respective stand-alone selling price ranges, the Company will allocate the transaction price at the contractually stated amounts. In situations where the contractually stated price for one or more performance obligations in a contract fall(s) outside of their respective stand-alone selling price range, the Company will use the mid-point of the respective stand-alone selling price range for performance obligations in the contract priced outside of their respective stand-alone selling price range(s) and the contract values for performance obligations priced within their respective stand-alone selling price range(s), to allocate the transaction price on a relative stand- alone selling price basis.
Taxes, such as sales, value-add and other taxes, collected from customers concurrent with revenue generating activities and remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales.
The following describes the nature of the Company’s primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions the Company enters into with its customers.
Product revenues
Product revenues are comprised of two major revenue streams, direct platform sales and consumables. Direct platform sales revenues are comprised of advanced automation systems (including fully paid workflow licenses) as well as Culture Station instruments. Consumables revenues are comprised of OptoSelect chips required to run the system as well as reagent kits. The Company’s standard arrangement with its customers is generally a purchase order or an executed contract. Revenue on product sales is recognized when control has transferred to the customer which typically occurs when the product has been shipped to the customer, risk of loss has transferred to the customer and the Company has a present right to payment for the system, chip or kit, as applicable. In certain limited circumstances when a product sale includes client acceptance provisions, the Company will first assess such terms to determine if the control of the good is being transferred to the customer in accordance with the agreed-upon specifications in the contract. To the extent that such acceptance provisions can be objectively determined to be aligned with the standard specifications of the arrangement, are defined and easily evaluated for completion, as well as do not afford the customer any additional rights or create additional performance obligations for the Company, such provisions would be determined perfunctory and would not preclude revenue recognition presuming all other criteria are met. If such acceptance provisions are considered to be substantive, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the Company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Payment terms are generally thirty to ninety days from the date of invoicing.
On a limited basis, the Company also enters into fixed-term sales-type lease arrangements with certain qualified customers. Revenue from sales-type lease arrangements is generally recognized in a manner consistent with platform equipment, assuming all other revenue recognition criteria have been met.
8

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Service revenues
Service revenues primarily consist of joint development agreements, service and warranty, platform support and feasibility studies on the Company’s advanced automation systems and workflows. The Company’s services are provided primarily on a fixed fee basis; from time to time these fixed fee contracts may be invoiced at the outset of the arrangements. The Company recognizes revenue from the sale of extended warranty and enhanced service warranty arrangements over the respective period, while revenue on feasibility studies is recognized over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Revenue on platform support is recognized as the services are performed. Service contracts are typically short-term in nature. Payment terms are generally thirty to ninety days from the date of invoicing.
Joint development agreements are agreements whereby the Company provides services for the development of customized advanced automation systems and workflows to meet a specific customer’s needs. Such contracts generally include defined milestones associated with these development activities over extended periods of time, some in excess of twenty-four months. Typically, there are formal customer acceptance clauses as each milestone is completed, and an approval to proceed with the next milestone is generally required. The Company recognizes revenue over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Payment terms are generally thirty to ninety days from the achievement of each milestone.
The Company places a constraint on a variable consideration estimate that focuses on possible future downward revenue adjustments (i.e., revenue reversals) if there is uncertainty that could prevent a faithful depiction of the consideration to which the Company expects to be entitled to. The constraint estimate is reassessed at each reporting date until the uncertainty is resolved.
Contract assets and contract liabilities
Contract assets include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. The Company’s contract asset balances of $4.0 million and $5.2 million as of June 30, 2020 and December 31, 2019, respectively, are primarily from its development and feasibility study agreements. The Company does not have impairment losses associated with contracts with customers for the three and six months ended June 30, 2020 and 2019.
Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenues have not been recognized based on the Company’s revenue recognition criteria described above. Such amounts are reported as deferred revenue on the consolidated balance sheets. Deferred revenue that is expected to be recognized during the following twelve months is recorded as a current liability and the remaining portion is recorded as non-current.
Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on the condensed consolidated balance sheet based on the timing of when the Company expects to complete the related performance obligations and invoice the customers. Contract liabilities are classified as current or long-term on the condensed consolidated balance sheet based on the timing when the revenue recognition associated to the related customer payments and invoicing is expected to occur.
Costs to obtain or fulfill a contract
9

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Origination costs relate primarily to the payment of incentive bonuses that are directly related to sales transactions. Fulfillment costs generally include the direct cost of services such as platform support and feasibility studies.
Origination and fulfillment costs that are internal to the Company are generally expensed when incurred because most of those costs are incurred concurrently with the delivery of the related goods and services, which are predominantly recognized at a point in time or short-term in nature. The origination costs that are related to long-term development agreements are capitalized and amortized over the relevant service period.
The origination costs that are related to long-term development agreements are not material as of June 30, 2020 and 2019.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, as presented in the table below. Expenditures for major additions and improvements to property and equipment are capitalized and maintenance and repairs are charged to expense as incurred. Assets not yet placed in use are not depreciated.
The estimated useful lives of Company’s property and equipment are as follows:
Equipment, tooling and molds
5-7 years
Computer equipment and software
3-7 years
Furniture, fixtures and other
3-7 years
Leasehold ImprovementsShorter of lease term or estimated useful life
Other Assets
Other current assets and other assets consist primarily of prepaid rent, prepaid insurance and advance payments made to certain vendors for future delivery of goods or services and software implementation costs for cloud-based hosting arrangements that are a service contract.
The Company expenses all cloud-based hosting arrangement related costs (internal and external) that were incurred in the planning and post-implementation operation stages of such implementations and capitalizes costs related to the application development stage of such projects. The capitalized costs are amortized on a straight-line basis over the estimated useful life of five years starting on the date that the projects are placed into production and are ready for their intended use.
Deferred Offering Costs
Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to equity offerings, are capitalized and will be offset against proceeds upon the consummation of the offering within stockholders’ equity. As of December 31, 2019, there were no capitalized deferred offering costs in the condensed consolidated balance sheet and as of June 30, 2020, there were $1.7 million of deferred offering costs which are reported as prepaid and other current assets in the condensed consolidated balance sheets.
Research and Development Costs
Research and development costs primarily consist of salaries, benefits, incentive compensation, stock-based compensation, and allocated facilities costs for employees and contractors engaged in development
10

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
arrangements, research, regulatory affairs, and product development. The Company expenses all research and development costs in the periods in which they are incurred.
Income Taxes
The Company accounts for income taxes under an asset-and-liability approach. Deferred income taxes comprise the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.
The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company's policy for interest and penalties related to uncertain tax positions is to recognize interest and penalties, if any, as a component of the provision for income taxes in the condensed consolidated statements of operations and to include accrued interest and penalties within the related tax liability line in the condensed consolidated balance sheets.
For all periods presented, the Company has provided a valuation reserve equal to 100% of its deferred tax assets as the Company is not in a position to determine if its operating plans will be successful and result in taxable income to absorb any loss carryforwards.
Stock-Based Compensation
The Company maintains an incentive compensation plan under which incentive stock options and non-qualified stock options are granted primarily to employees and non-employee consultants.
Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. The fair value of stock-based awards is estimated using the Black-Scholes option pricing model. The Company records forfeitures as they occur.
Fair Value Measurements
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels (see Note 6 to these condensed consolidated financial statements):
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date for identical assets and liabilities.
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
11

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The Company recognizes transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer.
Product Warranties
The Company provides a one year assurance-type warranty on its platforms and chip consumables. At the time revenue is recognized, the Company establishes an accrual for estimated warranty expenses based on historical data and trends of product reliability and costs of repairing and replacing defective products. The Company exercises judgment in estimating the expected product warranty costs, using data such as the actual and projected product failure rates, estimated repair costs, freight, material, labor, and overhead costs. While management believes that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in the Company’s products could result in actual expenses that are below those currently estimated.
Leases
The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter, if modified. The lease term includes any renewal options and termination options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its incremental borrowing rate. The incremental borrowing rate is determined by using the rate of interest that the Company would pay to borrow on a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.
Lease expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expenses in the condensed consolidated statements of operations and comprehensive income.
For all leases, rent payments that are based on a fixed index or rate at the lease commencement date are included in the measurement of lease assets and lease liabilities at the lease commencement date.
The Company has elected the practical expedient to not separate lease and non-lease components. The Company’s non-lease components are primarily related to property maintenance and insurance, which varies based on future outcomes, and thus is recognized in rent expense when incurred.
The Company also acts as a lessor to provide equipment financing through sales-type lease arrangements with certain qualified customers. Revenue from sales-type leases is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business. Amounts due and receivable under these arrangements are recorded at the outset of the arrangement as a contract asset in prepaid expenses and other current assets until such time that invoices are issued in accordance with the terms of the lease, at which point they are recorded as trade accounts receivable in the condensed consolidated balance sheets.
Net Loss Attributable to Common Stockholders Per Share
12

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Net loss attributable to common stockholders per share is computed by dividing the weighted-average number of common shares outstanding for the period. Diluted net loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if their effect is anti-dilutive. In computing diluted net loss per share, the Company utilizes the treasury stock method.
The Company applies the two-class method to compute basic and diluted net loss or income per share when it has issued shares that meet the definition of participating securities. The two-class method determines net (loss) or income per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires net (loss) income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all net (loss) income for the period had been distributed. The Company’s convertible preferred stock participates in any dividends declared by the Company and are therefore considered to be participating securities. The participating securities are not required to participate in the losses of the Company, and therefore during periods of loss there is no allocation required under the two-class method.
Recently Issued and Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Credit losses (Topic 326), which sets forth a “current expected credit loss” (CECL) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The standard is effective for fiscal years beginning after December 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted Topic 326 effective January 1, 2020; such adoption did not have a material impact on its condensed consolidated financial statements.
Recently Issued But Not Yet Adopted Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions related to intra-period tax allocations and deferred tax accounting on outside basis differences in foreign subsidiaries and equity method investments. Additionally, it provides other simplifying measures for the accounting for income taxes. ASU 2019-12 is effective for the Company in the first quarter of 2021 and early adoption is permitted. The Company has not yet adopted ASU 2019-12 and is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows.
(3)Significant Risks and Uncertainties Including Business and Credit Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents and trade receivables. The Company’s cash and cash equivalents are held by large, credit worthy financial institutions. The Company invests its excess cash in money market funds. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Deposits in these banks may exceed the amounts of insurance provided on such deposits. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.
Most of the Company’s customers are located in the United States and Asia Pacific. For the three and six months ended June 30, 2020, four customers accounted for 18%, 18%, 17% and 16% of revenue and two customers accounted for 15% and 11% of revenue, respectively. For the three and six months ended
13

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 2019, five customers accounted for 16%, 15%, 15%, 15% and 14% of revenue and two customers accounted for 18% and 14% of revenue, respectively.
As of June 30, 2020, four customers comprised 19%, 18%, 17% and 17% of accounts receivable. As of December 31, 2019, four customers comprised 20%, 19%, 18% and 12%, respectively, of accounts receivable.
(4)Revenue From Contracts With Customers
Disaggregation of revenue
The following table depicts the disaggregation of revenue by type of customer or sales channel, market segment as defined by nature of workflows and activities of the end customer and timing of revenue recognition (in thousands):
Three months ended June 30,Six months ended June 30,
2020201920202019
Type of Sales Channel
Direct sales channel$8,750 $11,738 $20,731 $24,339 
Distributor channel1,819 25 3,616 65 
Net revenues$10,569 $11,763 $24,347 $24,404 
Market Segment
Antibody therapeutics$9,956 $11,445 $21,777 $23,825 
Cell therapy47 318 398 499 
Synthetic biology566  2,172 80 
Net revenues$10,569 $11,763 $24,347 $24,404 
Timing of Revenue Recognition
Goods and services transferred at a point in time$8,890 $7,736 $19,578 $17,263 
Services transferred over time1,679 4,027 4,769 7,141 
Net revenues$10,569 $11,763 $24,347 $24,404 
Revenues by geographical markets are presented in Note 17 to these condensed consolidated financial statements.
Contract Balances
The following table provides information about receivables, contract assets and deferred revenue from contracts with customers (in thousands):
June 30,
2020
December 31,
2019
Trade accounts receivable$10,236 $9,334 
Contract assets, which are included in 'Prepaid expenses and other current assets'4,047 5,234 
Deferred revenue (current)8,607 9,686 
Deferred revenue (non-current)1,098 1,461 
14

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
For each of the three and six months ended June 30, 2020 and 2019, changes in the contract assets were associated with feasibility and development agreement revenues, primarily due to the timing difference of progress made on a project and the related right to bill upon completion of a feasibility program or achievement of milestones.
(5)Balance Sheet Accounts
Inventory
The following table shows the components of inventory (in thousands):
June 30,
2020
December 31,
2019
Raw materials$6,050 $3,392 
Finished goods5,858 3,789 
Total$11,908 $7,181 
Prepaid expenses and other current assets
The following table shows the components of prepaid expenses and other current assets (in thousands):
June 30,
2020
December 31,
2019
Contract asset$4,047 $5,234 
Vendor deposits144 65 
Deferred costs2,239 554 
Other2,631 1,946 
Total$9,061 $7,799 
Accrued expenses and other current liabilities
The following table shows the components of accrued expenses and other current liabilities (in thousands):
June 30,
2020
December 31,
2019
Accrued payroll and employee related expenses$2,362 $2,134 
Lease liability, short-term2,558 2,067 
Accrued product warranty1,184 1,065 
Accrued legal expenses995 170 
Other1,000 793 
Total$8,099 $6,229 
(6)Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The carrying amounts of the Company’s cash equivalents, accounts receivable and accounts payable approximate fair value due to their relatively short maturities. The Company classifies its cash
15

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
equivalents, which are comprised primarily of money market funds, within Level 1, as it uses quoted market prices in the determination of fair value.
The following tables set forth the fair value of the Company’s financial assets and liabilities by level within the fair value hierarchy (in thousands):
June 30,
2020
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash and cash equivalents$25,129 $25,129 $ $ 
Total$25,129 $25,129 $ $ 
December 31,
2019
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets
Cash and cash equivalents$28,035 $28,035 $ $ 
Total$28,035 $28,035 $ $ 
The carrying values and fair values of the Company’s financial instruments not measured at fair value were as follows (in thousands):
June 30, 2020December 31, 2019
Carrying
Value
Fair ValueCarrying
Value
Fair Value
Long-term debt, including current maturities$19,860 $21,125 $19,827 $21,392 
The Company estimated the fair value of its long-term debt using a market-based approach that considers an average cost of debt. The Company has incorporated its own credit risk for all liability fair value measurements. Such fair value measurements are considered Level 2 under the fair value hierarchy.
The Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 for any of the periods presented.
16

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(7)Property and Equipment, net
Property and equipment, net comprised the following (in thousands):
June 30,
2020
December 31,
2019
Equipment, tooling and molds$19,817 $19,510 
Computer software and equipment2,014 1,905 
Furniture, fixtures and other1,699 1,599 
Leasehold improvements5,304 5,283 
Construction in process200 342 
Total property and equipment$29,034 $28,639 
Less: Accumulated depreciation(14,277)(12,167)
Property and equipment, net$14,757 $16,472 
Total depreciation expense for the three and six months ended June 30, 2020 was $1.3 million and $2.6 million, respectively. Total depreciation expense for the three and six months ended June 30, 2019 was $1.2 million and $2.3 million, respectively.
(8)Leases
The Company leases office and laboratory facilities in Emeryville, California under multiple operating leases. In June 2020, the Company entered into an operating lease for 34,789 square feet of additional space in Emeryville, California, as well as amended its existing lease arrangements to vacate certain existing space and extend the terms of its remaining existing space in Emeryville. The lease for additional space commences October 1, 2020 and all of the leases now expire on March 31, 2028.
In addition, the Company also leases multiple facilities in Shanghai, China under operating leases that expire at various dates, including additional office and laboratory facilities under an operating lease agreement that was entered into in July 2020. These leases expire at various dates, the latest of which is August 2023.
Certain of the Emeryville leases contain options to early terminate the lease and options to extend the lease for an additional term. However, the Company is not reasonably certain to exercise any of these options. The monthly base rental rate of the leases is subject to adjustment upon renewal based on then current market rental conditions.
17

Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The maturity of the Company’s operating lease liabilities as of June 30, 2020 is as follows (in thousands):
Operating leases
Undiscounted lease payments:
Remainder of 2020$1,087 
20212,218 
20222,002 
20232,006 
20242,075 
Thereafter7,188 
Total undiscounted lease payments16,576 
Less: implied interest(2,579)
Present value of operating lease payments13,997 
Less: current portion(2,558)
Total long-term operating lease liabilities$11,439 
Rent expense for the three and six months ended June 30, 2020 was $0.6 million and $1.2 million, respectively. Rent expense for the three and six months ended June 30, 2019 was $0.6 million and $1.1 million, respectively. Under the terms of the lease agreements, the Company is also responsible for certain variable lease payments that are not included in the measurement of the lease liability. Variable lease payments for operating leases were $0.3 million and $0.6 million for the three and six months ended June 30, 2020, including non-lease components such as common area maintenance fees. Variable lease payments for operating leases were $0.2 million and $0.5