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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________

Commission File Number: 001-39768

 

Berkshire Grey, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

85-2994421

( State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

140 South Road

Bedford, MA

01730

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (833) 848-9900

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

 

BGRY

 

The NASDAQ Stock Market LLC

Redeemable warrants, each whole warrant exercisable for one share of Class A common stock at an exercise price of $11.50 per share

 

BGRYW

 

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

As of May 9, 2022, the registrant had 226,986,928 shares of Class A common stock, par value $0.0001 per share, and 5,750,000 shares of Class C common stock, par value $0.0001 per share, issued and outstanding.

 

 


Table of Contents

 

 

 

Page

PART I.

FINANCIAL INFORMATION

1

Item 1.

Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations and Comprehensive Loss

2

 

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Deficit

3

 

Condensed Consolidated Statements of Cash Flows

4

 

Notes to Unaudited Condensed Consolidated Financial Statements

5

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

28

PART II.

OTHER INFORMATION

30

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

Signatures

32

 

i


 

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

 

BERKSHIRE GREY, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands, except for share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

139,581

 

 

$

171,089

 

Accounts receivable

 

 

15,253

 

 

 

13,291

 

Inventories, net

 

 

3,890

 

 

 

2,641

 

Deferred fulfillment costs (see Note 8 for related party transactions)

 

 

21,241

 

 

 

7,689

 

Prepaid expenses

 

 

4,641

 

 

 

5,138

 

Other current assets

 

 

5,504

 

 

 

5,078

 

Total current assets

 

 

190,110

 

 

 

204,926

 

Property and equipment, net

 

 

9,411

 

 

 

10,874

 

Operating lease right-of-use assets

 

 

8,154

 

 

 

 

Restricted cash

 

 

862

 

 

 

862

 

Other non-current assets

 

 

849

 

 

 

22

 

Total assets

 

$

209,386

 

 

$

216,684

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

7,184

 

 

$

6,766

 

Accrued expenses

 

 

15,132

 

 

 

15,659

 

Contract liabilities (see Note 8 for related party transactions)

 

 

35,633

 

 

 

19,216

 

Other current liabilities

 

 

838

 

 

 

146

 

Total current liabilities

 

 

58,787

 

 

 

41,787

 

Share-based compensation liability

 

 

8,482

 

 

 

15,435

 

Warrant Liabilities

 

 

6,093

 

 

 

13,277

 

Operating lease liabilities, noncurrent

 

 

9,429

 

 

 

 

Other non-current liabilities

 

 

 

 

 

1,954

 

Total liabilities

 

$

82,791

 

 

$

72,453

 

Stockholders’ equity:

 

 

 

 

 

 

Common stock – Class A shares, $0.0001 par value; 385,000,000 shares authorized as of March 31, 2022 and December 31, 2021, 226,724,602 and 225,428,187 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively; Class C shares, par value $0.0001, 5,750,000 shares issued and outstanding as of March 31, 2022 and December 31, 2021

 

 

24

 

 

 

24

 

Additional paid-in capital

 

 

455,244

 

 

 

449,307

 

Accumulated deficit

 

 

(328,650

)

 

 

(305,084

)

Accumulated other comprehensive (loss)

 

 

(23

)

 

 

(16

)

Total stockholders’ equity

 

 

126,595

 

 

 

144,231

 

Total liabilities and stockholders’ equity

 

$

209,386

 

 

$

216,684

 

 

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

 

1


 

BERKSHIRE GREY, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except for share data)

 

 

 

For the Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

Revenue (see Note 8 for related party transactions)

 

$

5,492

 

 

$

3,965

 

Cost of revenue (see Note 8 for related party transactions)

 

 

6,696

 

 

 

4,698

 

Gross loss

 

 

(1,204

)

 

 

(733

)

Operating expenses:

 

 

 

 

 

 

General and administrative expense

 

 

7,662

 

 

 

4,143

 

Sales and marketing expense

 

 

1,489

 

 

 

27,483

 

Research and development expense

 

 

20,343

 

 

 

12,310

 

Total operating expenses

 

 

29,494

 

 

 

43,936

 

Loss from operations

 

 

(30,698

)

 

 

(44,669

)

Other income (expense):

 

 

 

 

 

 

Interest income, net

 

 

7

 

 

11

 

Change in fair value of warrant liabilities

 

 

7,183

 

 

 

 

Other (expense), net

 

 

(48

)

 

 

(20

)

Net loss before income taxes

 

 

(23,556

)

 

 

(44,678

)

Income tax

 

 

10

 

 

 

5

 

Net loss

 

$

(23,566

)

 

$

(44,683

)

Other comprehensive loss:

 

 

 

 

 

 

Net foreign currency translation adjustments

 

 

(7

)

 

 

(6

)

Total comprehensive loss

 

$

(23,573

)

 

$

(44,689

)

Net loss per common share (Class A and C) – basic and diluted

 

$

(0.10

)

 

$

(2.06

)

Weighted average shares outstanding – basic and diluted

 

 

231,990,998

 

 

 

21,704,185

 

 

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

 

2


 

BERKSHIRE GREY, INC.

Condensed Consolidated Statements of Mezzanine Equity and Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share data)

 

 

 

Mezzanine equity

 

 

 

Common stock

 

 

Additional
paid-in

 

 

Accumulated

 

 

Accumulated
other
comprehensive

 

 

Total
stockholders’

 

 

 

Shares

 

 

Amount

 

 

 

Class A Shares

 

 

Amount

 

 

Class C Shares

 

 

Amount

 

 

capital

 

 

deficit

 

 

income (loss)

 

 

equity/deficit

 

Balance – December 31, 2021

 

 

 

 

$

 

 

 

 

225,428,187

 

 

$

24

 

 

 

5,750,000

 

 

$

 

 

$

449,307

 

 

$

(305,084

)

 

$

(16

)

 

$

144,231

 

Proceeds from exercise of stock
options

 

 

 

 

 

 

 

 

 

1,296,415

 

 

 

 

 

 

 

 

 

 

 

 

823

 

 

 

 

 

 

 

 

 

823

 

Reclassification of restricted stock to equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

706

 

 

 

 

 

 

 

 

 

706

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,408

 

 

 

 

 

 

 

 

 

4,408

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

(7

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,566

)

 

 

 

 

 

(23,566

)

Balance – March 31, 2022

 

 

 

 

 

 

 

 

 

226,724,602

 

 

 

24

 

 

 

5,750,000

 

 

 

 

 

 

455,244

 

 

 

(328,650

)

 

 

(23

)

 

 

126,595

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance – December 31, 2020

 

 

28,207,674

 

 

$

223,442

 

 

 

 

3,623,109

 

 

$

3

 

 

 

 

 

$

 

 

$

17,578

 

 

$

(151,704

)

 

$

1

 

 

$

(134,122

)

Retroactive application of recapitalization due to Merger (See note 3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mezzanine Equity

 

 

137,536,388

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

 

 

 

 

 

 

 

17,665,736

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance - December 31, 2020, after effect of Merger

 

 

165,744,062

 

 

 

223,442

 

 

 

 

21,288,845

 

 

 

3

 

 

 

 

 

 

 

 

 

17,578

 

 

 

(151,704

)

 

 

1

 

 

 

(134,122

)

Proceeds from exercise of stock options

 

 

 

 

 

 

 

 

 

1,347,220

 

 

 

 

 

 

 

 

 

 

 

 

278

 

 

 

 

 

 

 

 

 

278

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,165

 

 

 

 

 

 

 

 

 

1,165

 

Other comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

(6

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(44,683

)

 

 

 

 

 

(44,683

)

Balance – March 31, 2021

 

 

165,744,062

 

 

$

223,442

 

 

 

 

22,636,065

 

 

$

3

 

 

 

 

 

$

 

 

$

19,021

 

 

$

(196,387

)

 

$

(5

)

 

$

(177,368

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

3


 

BERKSHIRE GREY, INC.

Condensed Consolidated Statements of Cash Flow

(Unaudited)

(in thousands, except for share data)

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net loss

 

$

(23,566

)

 

$

(44,683

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

Depreciation and amortization

 

 

760

 

 

 

546

 

Loss on disposal of fixed assets

 

 

12

 

 

 

13

 

Gain on change in fair value of warrants

 

 

(7,183

)

 

 

 

Gain on foreign currency transactions

 

 

33

 

 

 

8

 

Stock-based compensation

 

 

(1,838

)

 

 

24,179

 

Change in operating assets and liabilities

 

 

 

 

 

 

Accounts receivable

 

 

(1,962

)

 

 

14,176

 

Inventories

 

 

(1,249

)

 

 

(221

)

Deferred fulfillment costs

 

 

(13,552

)

 

 

558

 

Prepaid expenses and other assets

 

 

129

 

 

 

(2,365

)

Accounts payable

 

 

348

 

 

 

466

 

Accrued expenses

 

 

(553

)

 

 

(3,114

)

Contract liabilities

 

 

16,417

 

 

 

(753

)

Other liabilities

 

 

(34

)

 

 

(26

)

Net cash used in operating activities

 

 

(32,238

)

 

 

(11,216

)

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

Capital expenditures

 

 

(46

)

 

 

(1,194

)

Net cash used in investing activities

 

 

(46

)

 

 

(1,194

)

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

822

 

 

 

278

 

Net cash provided by financing activities

 

 

822

 

 

 

278

 

Effect of exchange rate on cash

 

 

(46

)

 

 

(15

)

Net (decrease) in cash, cash equivalents, and restricted cash

 

 

(31,508

)

 

 

(12,147

)

Cash, cash equivalents, and restricted cash at beginning of period

 

 

171,951

 

 

 

94,978

 

Cash, cash equivalents, and restricted cash at end of period

 

$

140,443

 

 

$

82,831

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

 

 

Right of use asset

 

 

(8,154

)

 

 

 

Lease liability

 

 

10,287

 

 

 

 

Net investment in lease

 

 

884

 

 

 

 

Purchase of property and equipment included in accounts payable and accrued expenses

 

 

147

 

 

 

260

 

RECONCILIATION OF CASH AND RESTRICTED CASH WITHIN THE CONSOLIDATED BALANCE SHEETS TO THE AMOUNTS SHOWN IN THE CONSOLIDATED STATEMENTS OF CASH FLOWS ABOVE

 

 

 

 

 

 

Cash (inclusive of money market funds and cash equivalents of $129,172 and $81,239 at March 31, 2022 and 2021, respectively)

 

 

139,581

 

 

 

81,710

 

Restricted cash

 

 

862

 

 

 

1,121

 

Total cash, cash equivalents, and restricted cash

 

 

140,443

 

 

 

82,831

 

 

 

 

 

 

 

 

 

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

4


 

 

BERKSHIRE GREY, INC.

Notes to the Condensed Consolidated Financial Statements

(Unaudited)

1. NATURE OF THE BUSINESS AND BASIS OF PRESENTATION

Nature of Business

Berkshire Grey, Inc. (“Berkshire Grey,” “we,” “us,” “our,” or the “Company”) is an Intelligent Enterprise Robotics (“IER”) company pioneering and delivering transformative AI-enabled robotic solutions that automate filling ecommerce orders for consumers and businesses, filling orders to resupply retail and grocery stores, and handling packages shipped to fill those orders. The Company was founded in 2013 and is based in Bedford, MA. The Company has approximately 400 employees. The Company's IER capabilities are grounded in patented and proprietary technologies for robotic picking (each picking or unit handling), robotic movement and mobility (movement and storage of orders and goods), and system orchestration (which enables various intelligent subsystems to work together so that the right work is being done at the right time to meet our customer’s needs).

On July, 21, 2021, (the “Closing Date”) the Company consummated the transactions contemplated by the Agreement and Plan of Merger (the “Merger Agreement”), dated February 23, 2021, by and among Berkshire Grey Operating Company, Inc. (f/k/a Berkshire Grey, Inc.) (“Legacy Berkshire Grey"), the Company, (f/k/a Revolution Acceleration Acquisition Corp. (“RAAC”)), and Pickup Merger Corp, a Delaware corporation and a direct, wholly owned subsidiary of RAAC (“Merger Sub”). On the Closing Date, pursuant to the terms of the Merger Agreement, a business combination (the "Business Combination") between RAAC and Legacy Berkshire Grey was effected through the merger of Merger Sub with and into Legacy Berkshire Grey, with Legacy Berkshire Grey surviving the merger as a wholly owned subsidiary of RAAC (the "Merger"). RAAC amended and restated its second amended and restated certificate of incorporation and its bylaws such that RAAC changed its name to “Berkshire Grey, Inc.”. Unless the context otherwise requires, references herein to “Legacy Berkshire Grey” refer to Berkshire Grey, Inc. (currently known as Berkshire Grey Operating Company, Inc.), a Delaware corporation, prior to the effective time of the Merger Agreement.

 

The Business Combination is accounted for as a reverse recapitalization with Legacy Berkshire Grey, Inc. being the accounting acquirer and RAAC as the acquired company for accounting purposes. Accordingly, all historical financial information presented in the unaudited condensed consolidated financial statements represent the accounts of Legacy Berkshire Grey and its wholly owned subsidiaries. The shares and net loss per common share prior to the Merger have been retroactively restated as shares reflecting the exchange ratio established in the Merger (each outstanding share of Legacy Berkshire Grey, Inc. Class A common stock and Legacy Berkshire Grey preferred stock was exchanged for 5.87585 shares (the “Exchange Ratio”) of the Company’s Class A common stock).

 

Prior to the Merger, RAAC’s units, public shares, and public warrants were listed on The NASDAQ Stock Market LLC (the “Nasdaq”) under the symbols “RAACU,” “RAAC,” and “RAACW,” respectively. On July 22, 2021, the Company's Class A common stock and public warrants began trading on the Nasdaq, under the symbols “BGRY” and “BGRYW,” respectively. See Note 3, "Merger" for further details.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include those of Berkshire Grey and its subsidiaries, after elimination of all intercompany balances and transactions. The Company prepared the accompanying unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The information included in these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The unaudited condensed consolidated financial statements were prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting of normal recurring accruals) considered necessary to present fairly the Company's financial position, results of operations and cash flows for the periods and dates presented. Interim results are not necessarily indicative of results for the full fiscal year or any future periods.

For the Company’s subsidiaries that transact in a functional currency other than the U.S. dollar, assets and liabilities are translated into U.S. dollars at period-end foreign exchange rates. Revenues and expenses are translated into U.S. dollars at the average foreign exchange rates for the period. Translation adjustments are excluded from the determination of net income and are recorded in accumulated other comprehensive income (loss), a separate component of stockholders’ equity.

 

5


 

1. NATURE OF THE BUSINESS AND BASIS OF PRESENTATION (cont.)

 

Liquidity

The Company incurred net losses and negative cash flows from operations since inception and relied upon financing activities to fund operations. The Company has raised approximately $227.3 million, net of issuance costs, from the issuance of preferred stock and warrants as described in Note 9, "Convertible Preferred Stock". The Company also received net proceeds from the Merger of approximately $192.1 million, as described in Note 3, "Merger". Management believes the capital raised, in combination with the Merger proceeds, will be sufficient to fund its current operations, projected working capital requirements, and capital spending for a period beyond the next 12 months.

 

2. SIGNIFICANT ACCOUNTING POLICIES

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. These estimates and judgments include, but are not limited to, revenue recognition, realizability of deferred fulfillment costs, inventory, warranty cost, accounting for stock-based compensation (including performance-based assessments), and accounting for income taxes and related valuation allowances. Actual results may differ from estimates.

Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company’s cash equivalents consist of money market funds. Restricted cash represents cash on deposit with a financial institution as collateral for the Company’s corporate credit cards and an irrevocable standby letter of credit as security for the Company’s obligations under the lease for its headquarters in Massachusetts. The Company has included restricted cash as a non-current asset as of March 31, 2022 and December 31, 2021.

 

Concentration of Credit Risk and Significant Customers

Financial instruments which potentially expose the Company to concentrations of credit risk consist of accounts receivable and cash and cash equivalents.

Sales of the Company’s products are concentrated among specific customers. At March 31, 2022, and December 31, 2021, four and two customers accounted for approximately 100% of the Company’s accounts receivable balance, respectively. For the three months ended March 31, 2022, the Company generated 38%, 14%, 12%, 12% and 12% of revenues from five customers. For the three months ended March 31, 2021, the Company generated approximately 60% and 40% of revenues from two customers. The Company believes that credit risks associated with these contracts are not significant due to the customers’ financial strength.

The Company places cash and cash equivalents with high-quality financial institutions. The Company is exposed to credit risk in the event of default by these institutions to the extent the amount recorded on the condensed consolidated balance sheets exceeds federally insured limits.

6


 

2. SIGNIFICANT ACCOUNTING POLICIES (cont.)

 

 

 

Warrant Liabilities

The Company classifies Private Placement Warrants and Public Warrants (both defined and discussed in Note 16, “Common Stock and Warrants” as liabilities. At the end of each reporting period, changes in fair value during the period are recognized as change in fair value of warrants liabilities within other (expense) income, net within the condensed consolidated statements of operations and comprehensive loss. The Company will continue to adjust the warrant liability for changes in the fair value until the earlier of a) the exercise or expiration of the warrants or b) redemption of the warrants, at which time the warrants will be reclassified to additional paid-in capital.

Net Loss Per Common Share

As a result of the Merger, the Company has retroactively restated the weighted average shares outstanding prior to July 21, 2021, to give effect to the Exchange Ratio.

 

Basic earnings per share is computed by dividing the loss available to common shareholders (numerator) by the weighted average number of shares of Class A common stock and Class C common stock outstanding (denominator) during the period. Diluted income per share is calculated using the Company's weighted-average outstanding common shares including the dilutive effect of stock awards as determined under the treasury stock method and warrants using the if-converted method. Diluted earnings per share excludes all dilutive potential shares if their effect is antidilutive. See Note 13, “Net Loss Per Share Attributable to Common Shareholders” for further details.

Recently Adopted Accounting Standards

Effective January 1, 2022, the Company adopted ASU No. 2016-02, ("ASU 2016-02"). ASU 2016-02 and its related amendments (collectively referred to as ASC 842) amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for those leases classified as operating leases. To account for leases as a lessee, the Company adopted ASC 842 on January 1, 2022 using the modified retrospective method, whereby the new guidance is applied prospectively as of the date of adoption and prior periods are not to be restated. The Company elected the package of practical expedients which permits the Company to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. Additionally, the Company elected the following practical expedients: the Company has elected to not separate lease components from non-lease components in its lease contract; the Company will not apply the recognition requirements of ASC 842 to its leases with lease terms of 12 months or less but rather recognize the lease expense on a straight-line basis over the lease term. The adoption of the lease standard did not change the Company's previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. Adoption of the lease standard had a material impact on its condensed consolidated balance sheet (Note 15, "Commitments and Contingencies").

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. This accounting update removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. We prospectively adopted the accounting update on January 1, 2022. The adoption did not have a material impact on our condensed consolidated financial statements.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments. This ASU amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments. This may result in the earlier recognition of allowances for losses. The guidance is effective for the Company for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company does not expect the adoption of this ASU to have a significant impact on its condensed consolidated financial statements.

 

 

7


 

3. MERGER

On Closing Date, Berkshire Grey, Inc. received gross proceeds of $220.0 million, which included $55.0 million in proceeds from issuance of common stock upon the Merger and $165.0 million in proceeds from the PIPE Investment (as defined below). The Company recorded $27.9 million of transaction costs, which consisted of legal, accounting, and other professional services directly related to the Merger. These costs were included in additional paid-in capital on the Company’s condensed consolidated balance sheet. On Closing Date each share of Legacy Berkshire Grey preferred stock, par value $0.001 per share, and each share of Legacy Berkshire Grey common stock, par value $0.001 per share, was converted into the right to receive 5.87585 shares of the Company's Class A common stock, par value $0.0001 per share.

 

Subject to the terms and conditions of the Merger Agreement, the consideration paid in respect of each share of Legacy Berkshire Grey preferred and common stock issued and outstanding (other than (i) any such shares held in the treasury of the Company and (ii) any shares held by stockholders of the Company who had perfected and not withdrawn a demand for appraisal rights) immediately prior to the effective time of the Merger was the number of shares of newly issued Class A common stock of RAAC (with each share valued at $10.00), par value $0.0001 per share (“Class A Stock”), equal to (x) $2.25 billion divided by (y) the number of shares of Aggregate Fully Diluted Company Stock (as defined in the Merger Agreement).

At the Closing, all equity awards of Legacy Berkshire Grey were assumed by the Company and converted into comparable equity awards that are settled or exercisable for shares of the Company’s Class A common stock. As a result, each outstanding stock option was converted into an option to purchase shares of the Company’s Class A common stock based on an exchange ratio of 5.87585.

 

Each public and private warrant of RAAC that was unexercised at the time of the Merger was assumed by the Company and represents the right to purchase one share of the Company’s Class A common stock upon exercise of such warrant.

Legacy Berkshire Grey was determined to be the accounting acquirer because Legacy Berkshire Grey shareholders prior to the Merger had the greatest voting interest in the combined entity, Legacy Berkshire Grey shareholders appointed the initial directors of the Company's board upon the closing of the Merger and control future appointments, Legacy Berkshire Grey comprises all of the Company's ongoing operations, and Legacy Berkshire Grey's senior management directs operations of the combined entity. Accordingly, all historical financial information presented in these unaudited condensed consolidated financial statements represents the accounts of Legacy Berkshire Grey.

Subscription Agreements

Concurrent with the execution of the Merger Agreement, RAAC entered into subscription agreements with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors committed to purchase an aggregate amount of $165.0 million in shares of Class A Stock at a purchase price of $10.00 per share (the “PIPE Investment”). The PIPE Investment was consummated concurrent with the closing of the Merger.

 

 

4. INVENTORIES, NET

Inventories consist of the following:

 

 

 

March 31,

 

 

December 31,