Filed pursuant to Rule 424(b)(3)

Registration Statement No. 333-258991

Prospectus Supplement No. 1

(To Prospectus dated April 5, 2022)

 

img28558978_0.jpg 

 

Berkshire Grey, Inc.

220,207,460 Shares of Class A Common Stock

5,166,667 Warrants to Purchase Class A Common Stock

 

_____________________

This prospectus supplement is being filed to update and supplement the information contained in the prospectus dated April 5, 2022 (the “Prospectus”), related to the resale, from time to time, by the selling securityholders (including their pledgees, donees, transferees or other successors-in-interest) identified in the Prospectus of (i) up to 205,457,460 shares of our Class A common stock and (ii) up to 5,166,667 Private Placement Warrants (as defined therein) and the issuance by us of up to 14,750,000 shares of Class A common stock upon the exercise of outstanding warrants, with the information contained in our Quarterly Report on Form 10-Q, filed with the Securities and Exchange Commission (“SEC”) on May 12, 2022 (the “Quarterly Report”). Accordingly, we have attached the Quarterly Report to this prospectus supplement.

This prospectus supplement updates and supplements the information in the Prospectus and is not complete without, and may not be delivered or utilized except in combination with, the Prospectus, including any amendments or supplements thereto. This prospectus supplement should be read in conjunction with the Prospectus and if there is any inconsistency between the information in the Prospectus and this prospectus supplement, you should rely on the information in this prospectus supplement.

Our Class A common stock is listed on The Nasdaq Stock Market LLC (“Nasdaq”) under the symbol “BGRY” and our warrants are listed on the Nasdaq under the symbol “BGRYW.” On May 10, 2022, the closing sale price of our Class A common stock as reported on the Nasdaq was $1.98, and the closing sale price of our warrants as reported on the Nasdaq was $0.27.

_____________________

Our business and investment in our Class A common stock and warrants involve significant risks. See the section entitled “Risk Factors” beginning on page 6 of the Prospectus and in any applicable prospectus supplement to read about factors you should consider before buying our securities.

The date of this prospectus supplement is May 12, 2022

 


 

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,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Work in progress

 

$

82

 

 

$

538

 

Finished goods

 

 

3,808

 

 

 

2,103

 

Inventory, net

 

$

3,890

 

 

$

2,641

 

 

 

 

8


 

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Leasehold improvements

 

$

6,535

 

 

$

6,512

 

Machinery and equipment

 

 

38

 

 

 

922

 

Furniture and fixtures

 

 

968

 

 

 

983

 

Research and development equipment

 

 

4,750

 

 

 

4,712

 

Computer hardware and software

 

 

1,733

 

 

 

1,708

 

Construction in progress

 

 

473

 

 

 

382

 

Subtotal

 

 

14,497

 

 

 

15,219

 

Less: Accumulated depreciation

 

 

5,086

 

 

 

4,345

 

Property and equipment, net

 

$

9,411

 

 

$

10,874

 

 

Depreciation expense for the three months ended March 31, 2022 and 2021, was approximately $0.8 million and $0.5 million, respectively.

 

6. ACCRUED EXPENSES

Accrued expenses consist of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Accrued compensation

 

$

2,458

 

 

$

8,562

 

Accrued sales taxes payable

 

 

937

 

 

 

372

 

Accrued professional services

 

 

1,149

 

 

 

1,742

 

Accrued materials

 

 

8,174

 

 

 

3,094

 

Accrued other

 

 

2,034

 

 

 

1,437

 

Accrued warranty

 

 

380

 

 

 

452

 

Accrued expenses

 

$

15,132

 

 

$

15,659

 

 

Accrued Warranty

The Company provides a limited warranty generally for one year. Estimated warranty obligations are recorded as an expense upon customer acceptance of related products. Factors that affect the estimated warranty liability include number of products accepted, historical and anticipated rates of warranty claims, cost per claim, and vendor-supported warranty programs. The Company periodically assesses the adequacy of our recorded warranty liabilities and adjusts the amounts as necessary. The amount of liability recorded is equal to the estimated costs to repair or otherwise satisfy claims made by customers.

 

Changes in our product warranty consist of the following:

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Beginning balance

 

$

452

 

 

$

41

 

Accrual (reversal) for warranty expense

 

 

(94

)

 

 

(58

)

Warranty costs incurred during period

 

 

22

 

 

 

469

 

Ending balance

 

$

380

 

 

$

452

 

 

9


 

7. REVENUE

The Company primarily derives its revenue from selling robotic fulfillment systems, which consist of a network of automated machinery installed at the customer location and configured to meet specified performance requirements, such as accuracy, throughput, and up-time. Revenue is recognized when control of the promised products is transferred to the customer, or when services are satisfied under the contract, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services (the transaction price). Revenue is recognized only to the extent that it is probable that a significant reversal of revenue will not occur. Taxes collected from customers, which are subsequently remitted to governmental authorities, are excluded from revenue.

The Company’s contracts typically have multiple performance obligations that may include system delivery, installation, testing, and training. Judgment is required to determine whether performance obligations specified in these contracts are distinct and should be accounted for as separate revenue transactions for recognition purposes. The Company also provides assurance-based warranties that are not considered a distinct performance obligation. The Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation. The Company uses a cost-plus margin approach to determine the stand-alone selling price for separate performance obligations.

Each customer contract is evaluated individually to determine the appropriate pattern of revenue recognition. Contracts that are recognized over time meet the criteria that the Company is creating or enhancing an asset that the customer controls. The system is delivered to the customer and control is transferred, after which point the Company performs installation and implementation services to fully integrate the system at the customer’s location. As such, revenue recognition generally begins upon delivery, continues throughout the installation and implementation period, and concludes upon customer acceptance. Revenue from customer contracts is generally expected to be recognized over a period of three to six months. There historically have been, and potentially will be in the future, customer contracts that contain obligations and timelines that result in revenue being recognized over extended periods, which may include periods greater than 12 months. For those performance obligations where revenue is recognized over time, the Company recognizes revenue as costs are incurred or as labor hours are incurred, depending on the type of contract (i.e., an input method). Installation and training services are evaluated together with the delivery of robotic fulfillment or material handling systems as a singular performance obligation. Provisions for losses on uncompleted contracts are made in the period in which such losses are determined to be probable and the amount can be reasonably estimated. The loss is computed on the basis of the total estimated costs to complete the contract, including the contract costs incurred to date plus the estimated cost to complete. As of December 31, 2021, it was estimated that the gross loss on current contracts would be $12.1 million, which was included in cost of revenue for the year then ended. The Company recorded $8.5 million as a provision for the remaining losses on contracts which is included within contract liabilities as of December 31, 2021 and March 31, 2022.

Other performance obligations recognized at a point in time include the sale and delivery of spare parts and pilot agreements. Pilot agreements are typically short-term contracts designed to demonstrate the Company’s technology and ability to serve the customer. Due to the exploratory nature of pilot agreements, revenue is recognized at a point in time once the evaluation activities are complete.

Other performance obligations recognized over time include, but are not limited to, maintenance, extended support, and research services. Maintenance and extended support services are recognized ratably on a straight-line-basis as the Company assumes an even distribution of performance over the service period. Research services are recognized based on the ratio of labor hours to date and the total estimated labor hours at the completion of the performance obligation.

Shipping and handling activities that occur after control of a product has transferred to the customer are accounted for as fulfillment activities rather than performance obligations, as allowed under a practical expedient provided by ASC 606. Shipping and handling fees charged to customers are recognized as revenue and the related costs are included in cost of revenue at the point in time when ownership of the product is transferred to the customer.

Incremental costs of obtaining a contract with a customer and other costs to fulfill a contract are required to be capitalized unless the Company elects to expense contract costs with periods less than a year. The Company has elected to expense these costs of obtaining a contract as incurred when the related contract period is less than one year. The Company does not pay upfront sales commissions on contracts when the related contract period is greater than one year, thus has not capitalized any amounts as of March 31, 2022.

The following table disaggregates revenue by timing of transfer of goods or services:

 

 

 

Three Months Ended March 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Transferred over time

 

$

5,317

 

 

$

3,936

 

Transferred at a point in time

 

 

175

 

 

 

29

 

Total revenue

 

$

5,492

 

 

$

3,965

 

 

10


 

7. REVENUE (cont.)

 

Payment terms offered to customers are defined in contracts and do not include a significant financing component. Payment milestones typically exist throughout the course of a contract and generally occur upon signing of an agreement, delivery of a system, start and completion of installation and testing, and upon acceptance of the system. The nature of the Company’s contracts may give rise to variable consideration, typically related to fees charged for shipping and handling. The Company generally estimates such variable consideration at the most likely amount. In addition, the Company includes the estimated variable consideration in the transaction price to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved. These estimates are based on historical experience and the Company’s best judgment at the time. To the extent there is certainty in estimating these amounts, they are included in the transaction price of the Company’s contracts and the associated remaining performance obligations. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected duration of one year or less.

Contracts may be modified to account for changes in contract specifications and requirements. Contract modifications exist when the modification either creates new or changes the existing enforceable rights and obligations. Most of the Company’s contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effects of a contract modification on the transaction price, and the measure of progress for the performance obligation to which it relates, are recognized as an adjustment to revenue on a cumulative catch-up basis.

Measure of Progress

In accordance with its policy, the Company reviews the measure of progress used to faithfully depict transfer of control of our goods and services to our customers. This review indicated the circumstances of the Company's systems delivery and installation for certain sales have changed over time and that the transfer of control to our customers would be more faithfully depicted over time as cost is incurred, beginning upon delivery, and continuing through the installation process (“cost-to-cost method”) rather than based on the ratio of labor hours incurred to total estimated labor hours at the completion of the performance obligation. The Company’s assessment of control transfer considered when legal title to machinery passes to the customer, when the customer first gains beneficial use, and other indicators control has transferred. As a result, effective January 1, 2022, the Company began using a cost-to-cost methodology for some projects that commenced during the current fiscal year. Under both the cost-to-cost and labor hours input methods the Company expects revenue to be recognized over a period of three to six months.

Lessor Revenue

To account for leases as a lessor, the Company adopted ASC 842 on January 1, 2022 and applied it prospectively to its first lease agreement which commenced on January 3, 2022. The company may enter into leases as an alternative means of realizing value from systems that it would otherwise sell. Lease payments due to the Company are typically fixed and paid in equal installments over the lease term. The Company’s payment terms for leases are typically unconditional. Therefore, in an instance when the client requests to terminate the lease prior to the end of the lease term, the client would typically be required to pay the remaining lease payments in full. When lease arrangements include multiple performance obligations, the Company allocates the consideration in the contract between the lease components and the non-lease components on a relative standalone selling price basis. The lease was accounted for as a sales-type lease. For a sales-type lease, the carrying amount of the asset is derecognized from inventory and a net investment in the lease is recorded. The net investment in the lease is measured at commencement date as the sum of the lease receivable and the estimated residual value of the equipment less unearned income and allowance for credit losses. Any selling profit or loss arising from a sales-type lease is recorded at lease commencement. Selling profit or loss 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, whereas in transactions where the company enters into a lease for the purpose of generating revenue by providing financing, the selling profit or loss is presented on a net basis. Over the term of the lease, the company recognizes finance income on the net investment in the lease and any variable lease payments, which are not included in the net investment in the lease.

As of March 31, 2022, the Company is party to one sales-type lessor agreement which is for a five year term with fixed quarterly payments. The net investment in the lease is $0.8 million which is included within other non-current assets in the condensed consolidated balance sheets. The unguaranteed residual value of the leased asset is $0.3 million. Sales-type lease revenue for the three months ended March 31, 2022, was $0.8 million with no profit or loss recognized at commencement. The Company is not party to any direct financing or operating lessor agreements.

Deferred Fulfillment Costs and Contract Liability Balances

As of March 31, 2022 and December 31, 2021, the Company incurred $21.2 million and $7.7 million of net deferred fulfillment costs, respectively.

11


 

Changes in the contract liability balance during the three months ended March 31, 2022, were due to the Company receiving additional advanced cash payments from customer contracts and the Company recognizing revenue as performance obligations were met. The following table summarizes changes in contract liabilities during the three months ended March 31, 2022:

 

 

 

Contract Liabilities

 

 

 

(in thousands)

 

Contract liabilities at December 31, 2021

 

$

19,216

 

Additions to contract liabilities during the period

 

 

19,871

 

Revenue recognized in the period from:

 

 

 

Amounts included in contract liabilities at the beginning of the period

 

 

(674

)

Amounts added to contract liabilities during the period

 

 

(2,780

)

Contract liabilities at March 31, 2022

 

$

35,633

 

 

There were no significant contract asset balances for all periods presented.

 

 

 

 

8. RELATED PARTY TRANSACTIONS

In June 2019, the Company entered into two customer contracts with an affiliate of one of its primary investors. Related to these contracts, as of March 31, 2022 and December 31, 2021, the Company recorded less than $0.1 million in net deferred fulfillment costs and contract liabilities. For the three months ended March 31, 2022 and 2021, the Company recognized approximately $0.7 million and $1.6 million in revenue and less than $0.1 million and $0.8 million in cost of revenue related to these customer contracts, respectively.

In October 2019, the Company issued a Partial Recourse Secured Promissory Note (the “Promissory Note”) to an executive officer for approximately $9.9 million with an interest rate of 1.86% per annum compounded annually. Under the terms of the Promissory Note, the officer was be personally liable for 51% of the unpaid balance of the principal and any accrued interest. The entire principal amount was used to purchase 7,003,261 shares (as converted for the effect of the Merger) of restricted stock. The Promissory Note was collateralized by the restricted common stock. The Company determined that the entire Promissory Note must be treated as non-recourse; as such, the balance of the note and related accrued interest were not presented on the condensed consolidated balance sheet. Refer to Note 10, "Stock-Based Compensation", for further information on the treatment of stock-based compensation related to these purchased shares.

On February 23, 2021, the Company entered into a Stock Repurchase Agreement with the executive officer. In the Stock Repurchase Agreement, the Company’s Board of Directors authorized the repurchase of a sufficient number of vested shares of common stock from the executive officer, at an aggregate price sufficient to repay the Promissory Note. At the Closing Date on July 21, 2021, all outstanding principal and accrued interest under the Promissory Note was repaid and the note was retired.

 

9. CONVERTIBLE PREFERRED STOCK

 

The Company has cumulatively raised $227.3 million, net of issuance costs, in venture financing through the sale and issuance of Preferred Stock and warrants. The following table summarizes details of Convertible Preferred Stock authorized, issued and outstanding, and liquidation preference:

 

 

 

Convertible preferred stock

 

 

 

Authorized
shares

 

 

Shares issued
and
outstanding

 

 

Liquidation
preference

 

 

 

 

 

 

 

 

 

 

 

Series A

 

 

12,999,666

 

 

 

12,999,666

 

 

$

500

 

Series A-1

 

 

14,124,639