Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2023

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements and notes follow the same significant accounting policies as those described in the notes to the audited consolidated financial statements of the Company for the year ended December 31, 2022, except as described below.

Allowance for Credit Losses

The Company reviews its held-to-maturity investments for credit losses on a collective basis by major security type and in line with the Company's investment policy. As of June 30, 2023, the Company's held-to-maturity investments were in securities that are issued by the U.S. government and in corporate bonds, are highly rated, and have a history of zero credit losses. The Company reviews the credit quality of its accounts receivables by monitoring the aging of its accounts receivable, the history of write offs for uncollectible accounts, and the credit quality of its significant customers, the current economic environment/macroeconomic trends, supportable forecasts, and other relevant factors. The Company's accounts receivable are with customers that do not have a history of uncollectibility nor a history of significantly aged accounts receivables. As of June 30, 2023, the Company did not recognize a credit loss allowance for its investments or accounts receivable.

Basic and Diluted Net Income (Loss) per Share of Common Stock

The Company calculates net income (loss) per common share in accordance with ASC 260, Earnings Per Share. Basic net income (loss) per common share for the three and six months ended June 30, 2023 and 2022 was determined by dividing net income (loss) applicable to common stockholders by the weighted average number of common shares outstanding during the period. Per ASC 260, Earnings Per Share, the weighted average number of common shares outstanding utilized for determining the basic net income (loss) per common share for the three and six months ended June 30, 2023 includes the outstanding pre-funded warrants to purchase 7,516,267 and 3,200,000 shares of common stock issued in the April 2022 public offering and December 2020 public offering, respectively. The outstanding pre-funded warrants to purchase 11,666,667 and 3,200,000 shares of common stock issued in the April 2022 public offering and December 2020 public offering were included in the three and six months ended June 30, 2022, respectively. Diluted net income (loss) per common share for the three and six months ended June 30, 2023 and 2022 was determined as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
Net income (loss)	$	122,260	$	(13,345	)	$	88,384	$	(18,796	)
Dilutive effect of convertible debt		433		—			1,047		—
Net income (loss) allocated to common shares	$	122,693	$	(13,345	)	$	89,431	$	(18,796	)

Weighted average common shares outstanding – basic		47,837,393		43,285,232			47,797,731		37,647,535
Dilutive effect of convertible debt		1,138,200		—			1,138,200		—
Dilutive effect of restricted stock units		947,768		—			230,320		—
Weighted average common shares outstanding – diluted		49,923,361		43,285,232			49,166,251		37,647,535

Net income (loss) per share – diluted	$	2.46	$	(0.31	)	$	1.82	$	(0.50	)

The following potentially dilutive shares of common stock and common shares that contain certain performance contingencies have not been included in the computation of diluted net income (loss) per share for the three and six months ended June 30, 2023 and 2022, as the result would be anti-dilutive:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Outstanding stock options		1,970,536		2,129,002		1,970,536		2,129,002
Outstanding restricted stock units		400,000		1,024,929		400,000		1,024,929
Warrants to purchase common stock associated with March 2018 public offering – Series 2		—		798,810		—		798,810
Warrants to purchase common stock associated with December 2020 public offering - Series 2		6,800,000		6,800,000		6,800,000		6,800,000
Warrants to purchase common stock associated with April 2022 Public Offering		15,000,000		15,000,000		15,000,000		15,000,000
Warrants to purchase common stock associated with Loan Agreement		198,811		198,819		198,811		198,819
Common stock associated with March 2019 Notes		—		1,138,200		—		1,138,200
Warrants to purchase common stock associated with Danforth		50,000		50,000		50,000		50,000
Total		24,419,347		27,139,760		24,419,347		27,139,760

Reclassification of Prior Year Amounts

Certain prior year amounts have been reclassified for consistency with the current year presentation.

Recently Adopted Accounting Pronouncements

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The amendments in ASU 2016-13 require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. In November 2019, the FASB issued ASU No. 2019-10, Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842) (“ASU 2019-10”), which revised the effective dates for ASU 2016-13 for public business entities that meet the SEC definition of a smaller reporting company to fiscal years, and interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2016-13 during the three months ended March 31, 2023 and the adoption did not materially impact the unaudited condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options and Derivatives and Hedging—Contracts in Entity’s Own Equity: Accounting for Convertible Instruments and Contracts in and Entity’s Own Equity (“ASU 2020-06”). The amendments in ASU 2020-06 reduce the number of accounting models for convertible debt instruments and revises certain guidance relating to the derivative scope exception and earnings per share. The amendments in ASU 2020-06 are effective for public business entities that meet the definition of a SEC filer and a smaller reporting company for fiscal years beginning after December 15, 2023, and interim periods within those years. As a smaller reporting company, the Company is currently evaluating the impact ASU 2020-06 will have on its unaudited condensed consolidated financial statements.