qtnt-10q_20180630.htm

  

 

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, 2018

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 001-36415

 

QUOTIENT LIMITED

(Exact name of registrant as specified in its charter)

 

 

Jersey, Channel Islands

 

Not Applicable

(State or other jurisdiction of
incorporation or organization)

 

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

 

 

B1, Business Park Terre Bonne,

Route de Crassier 13,

1262 Eysins, Switzerland

 

Not Applicable

(Address of principal executive offices)

 

(Zip Code)

011-41-22-716-9800

(Registrant’s telephone number, including area code)

 

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post 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.

 

Large accelerated filer

 

  

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

  (Do not check if a small reporting company)

  

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. 

Indicte 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, 2018 there were 54,122,488 Ordinary Shares, nil par value, of Quotient Limited outstanding.

 


 

 


 

TABLE OF CONTENTS

 

 

  

Page

 

PART I – FINANCIAL INFORMATION

  

 

3

 

 

Item 1. Financial Statements

  

 

3

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

  

 

20

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

  

 

29

 

 

Item 4. Controls and Procedures

  

 

31

 

 

PART II – OTHER INFORMATION

  

 

31

 

 

Item 1. Legal Proceedings

  

 

31

 

 

Item 1A. Risk Factors

  

 

31

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

  

 

31

 

 

Item 3. Defaults Upon Senior Securities

  

 

31

 

 

Item 4. Mine Safety Disclosures

  

 

32

 

 

Item 5. Other Information

  

 

32

 

 

Item 6. Exhibits

  

 

32

 

 

Signatures

 

 

33

 

 

 

 

- i -


 

Cautionary note regarding forward-looking statements

This Quarterly Report on Form 10-Q, and exhibits thereto, contains estimates, predictions, opinions, projections and other statements that may be interpreted as “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, that involve substantial risks and uncertainties. The forward-looking statements are contained principally in Part I, Item 2: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and are also contained elsewhere in this Quarterly Report. Forward-looking statements can be identified by words such as “strategy,” “objective,” “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate,” “might,” “design” and other similar expressions, although not all forward-looking statements contain these identifying words. Although we believe that we have a reasonable basis for each forward-looking statement contained in this Quarterly Report, we caution you that these statements are based on a combination of facts and factors currently known by us and our expectations of the future, about which we cannot be certain, and are subject to numerous known and unknown risks and uncertainties.

Forward-looking statements include statements about:

 

the development, regulatory approval and commercialization of MosaiQTM;

 

the design of blood grouping and disease screening capabilities of MosaiQ and the benefits of MosaiQ for both customers and patients;

 

future demand for and customer adoption of MosaiQ, the factors that we believe will drive such demand and our ability to address such demand;

 

our expected profit margins for MosaiQ;

 

the size of the market for MosaiQ;

 

the regulation of MosaiQ by the U.S. Food and Drug Administration, or the FDA, or other regulatory bodies, or any unanticipated regulatory changes or scrutiny by such regulators;

 

future plans for our conventional reagent products;

 

the status of our future relationships with customers, suppliers, and regulators relating to our conventional reagent products;

 

future demand for our conventional reagent products and our ability to meet such demand;

 

our ability to manage the risks associated with international operations;

 

anticipated changes, trends and challenges in our business and the transfusion diagnostics market;

 

the effects of competition;

 

the expected outcome or impact of litigation;

 

our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

 

our anticipated cash needs and our expected sources of funding, and our estimates regarding our capital requirements and capital expenditures; and

 

our plans for executive and director compensation for the future.

You should also refer to the various factors identified in this and other reports filed by us with the Securities and Exchange Commission, including but not limited to those discussed in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2018, for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate. Further, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us that we will achieve our objectives and plans in any specified time frame, or at all. The forward-looking statements in this Quarterly Report represent our views only as of the date of this Quarterly Report. Subsequent events and developments may cause our views to change. While we may elect to update these forward-looking statements at some point in the future, we undertake no obligation to publicly update any forward-looking statements, except as required by law. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report.

- 1 -


 

Where you can find more information

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. You can inspect, read and copy these reports, proxy statements and other information at the Securities and Exchange Commission’s Public Reference Room, which is located at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information regarding the operation of the Securities and Exchange Commission’s Public Reference Room by calling the Securities and Exchange Commission at 1-800-SEC-0330. The Securities and Exchange Commission also maintains a website at www.sec.gov that makes available reports, proxy statements and other information regarding issuers that file electronically.

We make available free of charge at www.quotientbd.com (in the “Investors” section) copies of materials we file with, or furnish to, the Securities and Exchange Commission. By referring to our corporate website, www.quotientbd.com, we do not incorporate any such website or its contents into this Quarterly Report on Form 10-Q.

 

 

- 2 -


 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data and per share data)

 

 

 

June 30,

2018

 

 

March 31,

2018

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

35,629

 

 

$

20,165

 

Short-term investments

 

 

5,695

 

 

 

5,669

 

Trade accounts receivable, net

 

 

2,879

 

 

 

2,862

 

Inventories

 

 

15,597

 

 

 

16,278

 

Prepaid expenses and other current assets

 

 

3,296

 

 

 

7,065

 

Total current assets

 

 

63,096

 

 

 

52,039

 

Cash reserve account

 

 

7,200

 

 

 

5,040

 

Property and equipment, net

 

 

54,343

 

 

 

60,156

 

Intangible assets, net

 

 

836

 

 

 

914

 

Deferred income taxes

 

 

638

 

 

 

649

 

Other non-current assets

 

 

4,753

 

 

 

5,043

 

Total assets

 

$

130,866

 

 

$

123,841

 

LIABILITIES AND SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,374

 

 

$

5,441

 

Accrued compensation and benefits

 

 

6,128

 

 

 

5,312

 

Accrued expenses and other current liabilities

 

 

7,911

 

 

 

15,340

 

Current portion of long-term debt

 

 

9,600

 

 

 

 

Current portion of deferred lease rental benefit

 

 

439

 

 

 

443

 

Current portion of capital lease obligation

 

 

493

 

 

 

515

 

Total current liabilities

 

 

29,945

 

 

 

27,051

 

Long-term debt, less current portion

 

 

110,541

 

 

 

85,063

 

Deferred lease rental benefit, less current portion

 

 

708

 

 

 

443

 

Capital lease obligation, less current portion

 

 

1,213

 

 

 

1,422

 

Defined benefit pension plan obligation

 

 

6,051

 

 

 

6,168

 

7% Cumulative redeemable preference shares

 

 

18,587

 

 

 

18,325

 

Total liabilities

 

 

167,045

 

 

 

138,472

 

Commitments and contingencies

 

 

 

 

 

 

Shareholders' equity (deficit)

 

 

 

 

 

 

 

 

Ordinary shares (nil par value) 46,064,701 and 45,646,424 issued and outstanding at

   June 30, 2018 and March 31, 2018 respectively

 

 

256,129

 

 

 

253,934

 

Additional paid in capital

 

 

25,055

 

 

 

23,708

 

Accumulated other comprehensive loss

 

 

(16,547

)

 

 

(16,634

)

Accumulated deficit

 

 

(300,816

)

 

 

(275,639

)

Total shareholders' deficit

 

 

(36,179

)

 

 

(14,631

)

Total liabilities and shareholders' deficit

 

$

130,866

 

 

$

123,841

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

- 3 -


 

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data and per share data)

 

 

 

Quarter ended

 

 

 

June 30,

 

 

 

2018

 

 

2017

 

Revenue:

 

 

 

 

 

 

 

 

Product sales

 

$

7,864

 

 

$

6,226

 

Other revenues

 

 

19

 

 

 

600

 

Total revenue

 

 

7,883

 

 

 

6,826

 

Cost of revenue

 

 

(4,065

)

 

 

(2,832

)

Gross profit

 

 

3,818

 

 

 

3,994

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

 

(2,281

)

 

 

(1,682

)

Research and development, net of government grants

 

 

(12,570

)

 

 

(12,673

)

General and administrative expense:

 

 

 

 

 

 

 

 

Compensation expense in respect of share options and

   management equity incentives

 

 

(1,347

)

 

 

(1,285

)

Other general and administrative expenses

 

 

(6,158

)

 

 

(5,260

)

Total general and administrative expense

 

 

(7,505

)

 

 

(6,545

)

Total operating expense

 

 

(22,356

)

 

 

(20,900

)

Operating loss

 

 

(18,538

)

 

 

(16,906

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(3,116

)

 

 

(4,210

)

Other, net

 

 

(3,512

)

 

 

880

 

Other expense, net

 

 

(6,628

)

 

 

(3,330

)

Loss before income taxes

 

 

(25,166

)

 

 

(20,236

)

Provision for income taxes

 

 

(11

)

 

 

 

Net loss

 

$

(25,177

)

 

$

(20,236

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

Change in fair value of effective portion of foreign currency cash flow

   hedges

 

$

(332

)

 

$

345

 

Change in unrealized gain on short-term investments

 

 

26

 

 

 

38

 

Foreign currency gain

 

 

357

 

 

 

1,815

 

Provision for pension benefit obligation

 

 

36

 

 

 

43

 

Other comprehensive income, net

 

 

87

 

 

 

2,241

 

Comprehensive loss

 

$

(25,090

)

 

$

(17,995

)

Net loss available to ordinary shareholders - basic and diluted

 

$

(25,177

)

 

$

(20,236

)

Loss per share - basic and diluted

 

$

(0.55

)

 

$

(0.55

)

Weighted-average shares outstanding - basic and diluted

 

 

45,796,533

 

 

 

36,767,544

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

 

- 4 -


 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (unaudited)

(Expressed in thousands of U.S. Dollars — except for share data)

 

 

 

Ordinary shares

 

 

Additional paid in

 

 

Accumulated

Other Comprehensive

 

 

Accumulated

 

 

Total Shareholders'

 

 

 

Shares

 

 

Amount

 

 

capital

 

 

Loss

 

 

Deficit

 

 

Equity (Deficit)

 

March 31, 2018

 

 

45,646,424

 

 

$

253,934

 

 

$

23,708

 

 

$

(16,634

)

 

$

(275,639

)

 

$

(14,631

)

Issue of shares upon exercise of warrants

 

 

375,000

 

 

 

2,175

 

 

 

 

 

 

 

 

 

 

 

 

2,175

 

Issue of shares upon exercise of incentive

   share options and vesting of RSUs

 

 

43,277

 

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

20

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(25,177

)

 

 

(25,177

)

Change in the fair value of the effective

   portion of foreign currency cash

   flow hedges

 

 

 

 

 

 

 

 

 

 

 

(332

)

 

 

 

 

 

(332

)

Unrealized gain on short-term investments

 

 

 

 

 

 

 

 

 

 

 

26

 

 

 

 

 

 

26

 

Foreign currency gain (loss) on:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term investment nature intra-

   entity balances

 

 

 

 

 

 

 

 

 

 

 

3,629

 

 

 

 

 

 

3,629

 

Retranslation of foreign entities

 

 

 

 

 

 

 

 

 

 

 

(3,272

)

 

 

 

 

 

(3,272

)

Provision for pension benefit obligation

 

 

 

 

 

 

 

 

 

 

 

36

 

 

 

 

 

 

36

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

87

 

 

 

 

 

 

87

 

Stock-based compensation

 

 

 

 

 

 

 

 

1,347

 

 

 

 

 

 

 

 

 

1,347

 

June 30, 2018

 

 

46,064,701

 

 

$

256,129

 

 

$

25,055

 

 

$

(16,547

)

 

$

(300,816

)

 

$

(36,179

)

 

The accompanying notes form an integral part of these consolidated financial statements.

 

- 5 -


 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(Expressed in thousands of U.S. Dollars)

 

 

 

Quarter ended

June 30,

 

 

 

2018

 

 

2017

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net loss

 

$

(25,177

)

 

$

(20,236

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

3,333

 

 

 

2,464

 

Share-based compensation

 

 

1,347

 

 

 

1,285

 

Amortization of deferred lease rental benefit

 

 

(108

)

 

 

(109

)

Swiss pension obligation

 

 

155

 

 

 

172

 

Amortization of deferred debt issue costs

 

 

291

 

 

 

1,446

 

Accrued preference share dividends

 

 

263

 

 

 

263

 

Deferred income taxes

 

 

11

 

 

 

 

Net change in assets and liabilities:

 

 

 

 

 

 

 

 

Trade accounts receivable, net

 

 

(141

)

 

 

(170

)

Inventories

 

 

(28

)

 

 

(608

)

Accounts payable and accrued liabilities

 

 

(5,401

)

 

 

(2,005

)

Accrued compensation and benefits

 

 

1,057

 

 

 

(837

)

Other assets

 

 

3,280

 

 

 

(811

)

Net cash used in operating activities

 

 

(21,118

)

 

 

(19,146

)

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Increase in short-term investments

 

 

 

 

 

(43,000

)

Realization of short-term investments

 

 

 

 

 

31,434

 

Purchase of property and equipment

 

 

(1,428

)

 

 

(5,436

)

Purchase of intangible assets

 

 

 

 

 

(6

)

Net cash used in investing activities

 

 

(1,428

)

 

 

(17,008

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Repayment of finance leases

 

 

(116

)

 

 

(29

)

Proceeds from drawdown of new debt

 

 

36,000

 

 

 

 

Issue costs of new debt

 

 

(1,213

)

 

 

 

Proceeds from issuance of ordinary shares and warrants

 

 

2,195

 

 

 

45,273

 

Net cash generated from financing activities

 

 

36,866

 

 

 

45,244

 

Effect of exchange rate fluctuations on cash, cash equivalents and restricted cash

 

 

3,304

 

 

 

(836

)

Change in cash, cash equivalents and restricted cash

 

 

17,624

 

 

 

8,254

 

Beginning cash, cash equivalents and restricted cash

 

 

25,205

 

 

 

9,794

 

Ending cash, cash equivalents and restricted cash

 

$

42,829

 

 

$

18,048

 

Supplemental cash flow disclosures:

 

 

 

 

 

 

 

 

Income taxes paid

 

$

 

 

$

 

Interest paid

 

$

5,069

 

 

$

5,068

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

  Cash and cash equivalents

 

$

35,629

 

 

$

13,008

 

  Restricted cash

 

 

7,200

 

 

 

5,040

 

Total cash, cash equivalents and restricted cash

 

$

42,829

 

 

$

18,048

 

 

The accompanying notes form an integral part of these consolidated financial statements.

 

- 6 -


 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in thousands of U.S. Dollars — except for share data and per share data, unless otherwise stated)

 

Note 1. Description of Business and Basis of Presentation

Description of Business

The principal activity of Quotient Limited (the “Company”) and its subsidiaries (the “Group”) is the development, manufacture and sale of products for the global transfusion diagnostics market. Products manufactured by the Group are sold to hospitals, blood banking operations and other diagnostics companies worldwide.

Basis of Presentation

The condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and are unaudited. In accordance with those rules and regulations, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States (“GAAP”) for complete financial statements.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods presented. The March 31, 2018 balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. The financial statements should be read in conjunction with the audited consolidated financial statements at and for the year ended March 31, 2018 included in the Company’s Annual Report on Form 10-K for the year then ended. The results of operations for the quarter ended June 30, 2018 are not necessarily indicative of the results of operations that may be expected for the year ending March 31, 2019 and any future period.

The Company has incurred net losses and negative cash flows from operations in each year since it commenced operations in 2007 and had an accumulated deficit of $300.8 million as of June 30, 2018. At June 30, 2018 the Company had available cash holdings and short-term investments of $41.0 million. In addition, the exercise of 8,039,683 warrants to purchase 8,039,683 of our ordinary shares in the month of July 2018 generated an additional $46.6 million of available cash. The Company has expenditure plans over the next twelve months that exceed its current cash and short-term investment balances, raising substantial doubt about its ability to continue as a going concern. The Company expects to fund its operations in the near-term, including the ongoing development of MosaiQ through successful field trial completion, achievement of required regulatory authorizations and commercialization from a combination of funding sources. These expected funding sources include the use of existing available cash and short-term investment balances and the issuance of new equity or debt. The Company expects additional financing to be available from these funding sources, and accordingly has prepared the financial statements on the going concern basis. However, there can be no assurance that the Company will be able to obtain adequate financing when necessary and the terms of any financings may not be advantageous to the Company and may result in dilution to its shareholders.

 

 

Note 2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. All cash and cash equivalents comprised readily accessible cash balances except for $7.2 million and $5.04 million at June 30, 2018 and March 31, 2018, respectively, held in a cash reserve account pursuant to the indenture governing the Company’s 12% Senior Secured Notes (“the Secured Notes”) and $308 and $320 at June 30, 2018 and March 31, 2018, respectively, held in a restricted account as security for the property rental obligations of the Company’s Swiss subsidiary.

- 7 -


 

Short-term Investments

Short-term investments represent investments in a money-market fund which is valued daily and which has no minimum notice period for withdrawals. The fund is invested in a portfolio of holdings and the creditworthiness requirement for individual investment holdings is a minimum of an A rating from a leading credit-rating agency. The Company records the value of its investment in the fund based on the quoted value of the fund at the balance sheet date. Unrealized gains or losses are recorded in accumulated other comprehensive loss and are transferred to the statement of comprehensive loss when they are realized.

Trade Accounts Receivable

Trade accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible trade receivables. Movements in the allowance for doubtful accounts are recorded in general and administrative expenses. The Company reviews its trade receivables to identify specific customers with known disputes or collectability issues. In addition, the Company maintains an allowance for all other receivables not included in the specific reserve by applying specific rates of projected uncollectible receivables to the various aging categories. In determining these percentages, the Company analyzes its historical collection experience, customer credit-worthiness, current economic trends and changes in customer payment terms.

Concentration of Credit Risks and Other Uncertainties

The carrying amounts for financial instruments consisting of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate fair value due to their short maturities. Derivative instruments, consisting of foreign exchange contracts, and short-term investments are stated at their estimated fair values, based on quoted market prices for the same or similar instruments. The counterparties to the foreign exchange contracts consist of large financial institutions of high credit standing. The short-term investments are invested in a fund which is invested in a portfolio of holdings and the creditworthiness requirement for individual investment holdings is a minimum of an A rating from a leading credit-rating agency.

The Company’s main financial institutions for banking operations hold all of the Company’s cash and cash equivalents as of June 30, 2018 and at March 31, 2018. The Company’s accounts receivable are derived from net revenue to customers and distributors located in the United States and other countries. The Company performs credit evaluations of its customers’ financial condition. The Company provides reserves for potential credit losses but has not experienced significant losses to date. There was one customer whose accounts receivable balance represented 10% or more of total accounts receivable, net, as of June 30, 2018 and March 31, 2018. This customer represented 42% and 51% of the accounts receivable balances as of June 30, 2018 and March 31, 2018, respectively.

The Company currently sells products through its direct sales force and through third-party distributors. There was one customer that accounted for 10% or more of total product sales for the quarters ended June 30, 2018 and June 30, 2017. This customer represented 59% of total product sales for the quarter ended June 30, 2018 and 65% for the quarter ended June 30, 2017.

Fair Value of Financial Instruments

The Company defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The Company’s valuation techniques used to measure fair value maximized the use of observable inputs and minimized the use of unobservable inputs. The fair value hierarchy is based on the following three levels of inputs:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

See Note 6, “Commitment and Contingencies,” for information and related disclosures regarding the Company’s fair value measurements.

- 8 -


 

Inventory

Inventory is stated at the lower of standard cost (which approximates actual cost) or market, with cost determined on the first-in-first-out method. Accordingly, allocation of fixed production overheads to conversion costs is based on normal capacity of production. Abnormal amounts of idle facility expense, freight, handling costs and spoilage are expensed as incurred and not included in overhead. No stock-based compensation cost was included in inventory as of June 30, 2018 and March 31, 2018.

Property and Equipment

Property, equipment and leasehold improvements are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization are computed on a straight-line basis over the estimated useful lives of the related assets as follows:

Plant, machinery and equipment—4 to 25 years;

Leasehold improvements—the shorter of the lease term or the estimated useful life of the asset.

Repairs and maintenance expenditures, which are not considered improvements and do not extend the useful life of property and equipment, are expensed as incurred.

Intangible Assets and Goodwill

Intangible assets related to product licenses are recorded at cost, less accumulated amortization. Intangible assets related to technology and other intangible assets acquired in acquisitions are recorded at fair value at the date of acquisition, less accumulated amortization. Intangible assets are amortized over their estimated useful lives, on a straight-line basis as follows:

Customer relationships—5 years

Brands associated with acquired cell lines—40 years

Product licenses—10 years

Other intangibles assets—7 years

The Company reviews its intangible assets for impairment and conducts an impairment review when events or circumstances indicate the carrying value of a long-lived asset may be impaired by estimating the future undiscounted cash flows to be derived from an asset to assess whether or not a potential impairment exists. No impairment losses have been recorded in either of the quarters ended June 30, 2018 or June 30, 2017.

Revenue Recognition

Revenue is recognized in accordance with ASU 2014-09, Revenue from Contracts with Customers.

Product revenue is recognized at a point in time upon transfer of control of a product to a customer, which is generally at the time of delivery at an amount based on the transaction price. Customers have no right of return except in the case of damaged goods and the Company has not experienced any significant returns of its products. Shipping and handling costs are expensed as incurred and included in cost of product sales. In those cases where the Company bills shipping and handling costs to customers, the amounts billed are classified as revenue.

Revenue is also earned from the provision of development services to a small number of original equipment manufacturer (“OEM”) customers. These development service contracts are reviewed individually to determine the nature of the performance obligations and the associated transaction prices.  In recent years, product development revenues have been commensurate with achieving milestones specified in the respective development agreements relating to those products. These milestones may include the approval of new products by the European or U.S. regulatory authorities, which are not within the Company’s control. While there can be no assurance that this will continue to be the case, the milestones have been such that they effectively represent full performance of a particular part of a development program and, as a result, the milestone-related revenues have been recognized as the contractual milestones are achieved.

Pursuant to an Umbrella Supply Agreement with Ortho-Clinical Diagnostics, Inc. (“Ortho”), in June 2013, the Company executed a product attachment relating to the development of a range of rare antisera products. This product attachment was amended in August 2016. During the year ended March 31, 2018, the Company recognized a milestone of $600 related to the receipt of FDA approval of certain rare antisera products. The Company is entitled to receive a milestone payment of $1,500 upon the updating of the FDA approvals to cover use of the products on Ortho’s automation platforms.

- 9 -


 

In January 2015, the Company entered into a supply and distribution agreement with Ortho related to the commercialization and distribution of certain MosaiQ products. Under the terms of this agreement, the Company is entitled to receive milestone payments upon CE-mark and FDA approval, as well as upon the first commercial sale of the relevant MosaiQ products by Ortho within the European Union, United States and within any country outside of these two regions. The Company has concluded that as each of these milestones require significant levels of development work to be undertaken and there was no certainty at the start of the projects that the development work would be successful, these milestones are substantive and the revenue will be recognized when the milestones are achieved.

In the quarter ended June 30, 2018, revenue recognized from performance obligations related to prior periods was not material and, at June 30, 2018, revenue expected to be recognized in future periods related to remaining performance obligations was also not material.

Research and Development

Research and development expenses consist of costs incurred for company-sponsored and collaborative research and development activities. These costs include direct and research-related overhead expenses. The Company expenses research and development costs, including the expenses for research under collaborative agreements, as such costs are incurred. Where government grants or tax credits are available, the income concerned is included as a credit against the related expense.

Stock-Based Compensation

Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Comprehensive Loss.

In determining fair value of the stock-based compensation payments, the Company uses the Black–Scholes model and a single option award approach for share options and a barrier option pricing model for multi-year performance based restricted share units (“MRSUs”), both of which require the input of subjective assumptions. These assumptions include: the fair value of the underlying share, estimating the length of time employees will retain their awards before exercising them (expected term), the estimated volatility of the Company’s ordinary shares price over the expected term (expected volatility), risk-free interest rate (interest rate), expected dividends and the number of shares subject to awards that will ultimately not complete their vesting requirements (forfeitures).

Share Warrants

As of June 30, 2018, the Company had three classes of warrants to purchase ordinary shares outstanding: (i) warrants that were issued in December 2013 and August 2015 in connection with the establishment or increase of the Company’s then existing secured term loan facility; (ii) warrants issued in October 2017 as part of the private placement of ordinary shares in October 2017, and (iii) pre-funded warrants issued in October 2017 as part of the private placement of ordinary shares in October 2017.  The exercise term for the warrants issued in October 2017 as part of the private placement of ordinary shares in October 2017 expired on July 31, 2018. None of these warrants contain or contained any obligation to transfer value and, as such, the issuance of these warrants has been recorded in additional paid in capital as part of shareholders’ equity.

Leases

At the inception of each lease, the Company reviews the terms of the lease in accordance with ASC 840 Leases in order to determine whether the lease concerned is a capital or an operating lease.  In the case of capital leases, an asset is included within property and equipment and a lease liability equal to the present value of the minimum lease payments is included in current or long-term liabilities.  Interest expense is recorded over the life of the lease at a constant rate.

Rentals relating to operating leases are expensed over the life of the lease. Rental incentives and the gain on the sale and leaseback of the manufacturing facility near Edinburgh, Scotland completed in March 2018, are included within deferred lease rental benefit in the balance sheet and amortized over the life of the related lease.

- 10 -


 

Derivative Financial Instruments

In the normal course of business, the Company’s financial position is routinely subjected to market risk associated with foreign currency exchange rate fluctuations. The Company’s policy is to mitigate the effect of these exchange rate fluctuations on certain foreign currency denominated business exposures. The Company has a policy that allows the use of derivative financial instruments to hedge foreign currency exchange rate fluctuations on forecasted revenue denominated in foreign currencies. The Company carries derivative financial instruments (derivatives) on the balance sheet at their fair values. The Company does not use derivatives for trading or speculative purposes. The Company does not believe that it is exposed to more than a nominal amount of credit risk in its foreign currency hedges, as counterparties are large, global and well-capitalized financial institutions. To hedge foreign currency risks, the Company uses foreign currency exchange forward contracts, where possible and prudent. These forward contracts are valued using standard valuation formulas with assumptions about future foreign currency exchange rates derived from existing exchange rates, interest rates, and other market factors.

The Company considers its most current forecast in determining the level of foreign currency denominated revenue to hedge as cash flow hedges. The Company combines these forecasts with historical trends to establish the portion of its expected volume to be hedged. The revenue and expenses are hedged and designated as cash flow hedges to protect the Company from exposures to fluctuations in foreign currency exchange rates. If the underlying forecasted transaction does not occur, or it becomes probable that it will not occur, the related hedge gains and losses on the cash flow hedge are reclassified from accumulated other comprehensive loss to the consolidated statement of comprehensive loss at that time.

Income Taxes

The Company accounts for income taxes using an asset and liability approach, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements, but have not been reflected in taxable income. A valuation allowance is established to reduce deferred tax assets to their estimated realizable value. Therefore, the Company provides a valuation allowance to the extent that is more likely than not that it will generate sufficient taxable income in future periods to realize the benefit of its deferred tax assets. Deferred tax assets and liabilities are classified as noncurrent on the balance sheet.

On December 22, 2017, the Tax Cuts and Jobs Act of 2017, or the TCJA, was enacted. This tax reform legislation made significant changes in U.S. tax law including a reduction in the corporate tax rates, changes to net operating loss carryforwards and carrybacks, and a repeal of the corporate alternative minimum tax. The legislation reduced the U.S. corporate tax rate from the rate of 34% to 21% effective on January 1, 2018. As a result, the Company revalued its U.S. deferred tax assets and liabilities at the 21% rate with effect from January 1, 2018.  This revaluation and also the other provisions of the TCJA did not have a material impact on the Company’s consolidated financial statements.

Debt Issuance Costs and Royalty Rights

The Company follows the requirements of Accounting Standards Update 2015-03, Interest — Imputation of Interest (Subtopic 835-30) — Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset.

The royalty rights agreements entered into with subscribers to the two issuances of the Secured Notes are treated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The future cash outflows under the royalty rights agreements have been combined with the issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interest expense in the consolidated statement of comprehensive loss using the effective interest rate method over the term of the Secured Notes and royalty rights agreements.

Pension Obligation

The Company maintains a pension plan covering employees in Switzerland pursuant to the requirements of Swiss pension law. Certain aspects of the plan require that it be accounted for as a defined benefit plan pursuant to Accounting Standards Codification Topic, 715 Compensation – Retirement Benefits (“ASC 715”). The Company recognizes an asset for the plan’s overfunded status or a liability for the plan’s underfunded status in its Consolidated Balance Sheets. Additionally, the Company measures the plan’s assets and obligations that determine its funded status as of the end of the year and recognizes the change in the funded status within ‘‘Accumulated other comprehensive loss’’. The service cost component of the net periodic benefit cost is disclosed in the same line item as other employee compensation costs arising from services rendered during the period, and the other components are reported separately from the line item that includes the service cost and within interest expense, net in the consolidated statements of comprehensive loss.

- 11 -


 

The Company uses an actuarial valuation to determine its pension benefit costs and credits. The amounts calculated depend on a variety of key assumptions, including discount rates and expected return on plan assets. Details of the assumptions used to determine the net funded status are set out in the notes to the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018. The Company’s pension plan assets are assigned to their respective levels in the fair value hierarchy in accordance with the valuation principles described in the ‘‘Fair Value of Financial Instruments’’ section above.

Adoption of New Accounting Standards

In May 2014, the FASB issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers, or ASU 2014-09. Under ASU 2014-09, a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 requires certain additional disclosures around the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The FASB has issued several amendments to the standard, including clarification on accounting for licenses of intellectual property, identifying performance obligations and other technical corrections. The Company adopted ASU 2014-09 on April 1, 2018, using the modified retrospective approach. The adoption of ASU 2014-09 did not have a material impact on the Company’s financial position, results of operations, equity or cash flows as of the adoption date or for the three months ended June 30, 2018.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows: Restricted Cash, or ASU 2016-18. ASU 2016-18 requires amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows. ASU 2016-18 is effective for fiscal years beginning after December 15, 2017 (including interim periods within) using a retrospective transition method to each period presented. The Company adopted ASU 2016-18 retrospectively as of April 1, 2018. The adoption of ASU 2016-18 has not had a material impact on the Company’s consolidated statement of cash flows.

In March 2017, the FASB issued Accounting Standards Update 2017-07 (ASU 2017-07) Compensation-Retirement Benefits, in order to improve the presentation of net periodic pension cost and net periodic postretirement benefit cost in the statements of operations. Under ASU 2017-07, the service cost component of the net periodic benefit cost is disclosed in the same income statement line item as other employee compensation costs arising from services rendered during the period, and the other components are reported separately from the line item that includes the service cost and outside of any subtotal of operating income. ASU 2017-07 is effective for annual periods beginning after December 15, 2017 (including interim periods within) using a retrospective transition method to each period presented. The Company adopted the provisions of ASU 2017-07 on April 1, 2018 and applied the change retrospectively in its consolidated statements of comprehensive loss using the practical expedient. The adoption of ASU 2017-07 has not had a material impact on the Company’s consolidated statements of comprehensive loss.

 

Note 3. Intangible Assets

 

 

 

June 30, 2018

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

 

Weighted

Average

Remaining

Useful Life

 

Customer relationships

 

$

2,599

 

 

$

(2,599

)

 

$

 

 

 

 

Brands associated with acquired cell lines

 

 

536

 

 

 

(145

)

 

 

391

 

 

29.2 years

 

Product licenses

 

 

900

 

 

 

(455

)

 

 

445

 

 

4.9 years

 

Other intangibles

 

 

169

 

 

 

(169

)

 

 

 

 

 

 

Total

 

$

4,204

 

 

$

(3,368

)

 

$

836

 

 

16.3 years

 

 

 

 

March 31, 2018

 

 

 

Gross

Carrying

Amount

 

 

Accumulated

Amortization

 

 

Net Carrying

Amount

 

 

Weighted

Average

Remaining

Useful Life

 

Customer relationships

 

$

2,758

 

 

$

(2,758

)

 

$

 

 

 

 

Brands associated with acquired cell lines

 

 

569

 

 

 

(150

)

 

 

419

 

 

29.5 years

 

Product licenses

 

 

954

 

 

 

(459

)

 

 

495

 

 

5.2 years

 

Other intangibles

 

 

179

 

 

 

(179

)

 

 

 

 

 

 

Total

 

$

4,460

 

 

$

(3,546

)

 

$

914

 

 

16.3 years

 

 

- 12 -


 

 

Note 4. Debt

Long-term debt comprises:

 

 

June 30,

2018

 

 

March 31,

2018

 

Total debt

 

$

120,000

 

 

$

84,000

 

Less current portion

 

 

(9,600

)

 

 

 

Long-term debt

 

$

110,400

 

 

$

84,000

 

Deferred debt costs and royalty liability, net of amortization

 

 

141

 

 

 

1,063

 

 

 

$

110,541

 

 

$

85,063

 

 

 

The Company’s debt at June 30, 2018 comprises the Secured Notes. On October 14, 2016, the Company completed the private placement of up to $120 million aggregate principal amount of the Secured Notes and entered into an indenture governing the Secured Notes with the guarantors party thereto and U.S. Bank National Association, a national banking association, as trustee and collateral agent. In connection with this private placement, the Company issued $84 million aggregate principal amount of the Secured Notes on October 14, 2016 and an additional $36 million aggregate principal amount of the Secured Notes on June 29, 2018. The obligations of the Company under the indenture and the Secured Notes are unconditionally guaranteed on a secured basis by the guarantors, which include all the Company’s subsidiaries, and the indenture governing the Secured Notes contains customary events of default. The Company and its subsidiaries must also comply with certain customary affirmative and negative covenants, including a requirement to maintain six-months of interest in a cash reserve account maintained with the collateral agent. Upon the occurrence of a Change of Control, subject to certain conditions, or certain Asset Sales (each, as defined in the indenture), holders of the Secured Notes may require the Company to repurchase for cash all or part of their Secured Notes at a repurchase price equal to 101% or 100%, respectively, of the principal amount of the Secured Notes to be repurchased, plus accrued and unpaid interest to the date of repurchase.

The Company paid $7.2 million of the total proceeds the two issuances into the cash reserve account maintained with the collateral agent under the terms of the indenture, $2.2 million of which related to the second issuance on June 29, 2018.

Interest on the Secured Notes accrues at a rate of 12% per annum and is payable semi-annually on April 15 and October 15 of each year commencing on April 15, 2017. Commencing on April 15, 2019, the Company will also pay an installment of principal of the Secured Notes on each April 15 and October 15 until October 15, 2023 pursuant to a fixed amortization schedule.

In connection with the initial issuance on October 14, 2016, and the additional issuance on June 29, 2018, the Company entered into royalty rights agreements, pursuant to which the Company sold to the note purchasers in the issuances, the rights to receive a payment equal to 1.4% and 0.6% respectively, of the aggregate net sales of MosaiQ instruments and consumables made in the donor testing market in the United States and the European Union. The royalties will be payable beginning on the date that the Company or its affiliates enters into a contract for the sale of MosaiQ instruments or consumables in the donor testing market in the European Union or the United States and will end on the last day of the calendar quarter in which the eighth anniversary of the first contract date occurs. The royalty rights agreements are treated as sales of future revenues that meet the requirements of Accounting Standards Codification Topic 470 “Debt” to be treated as debt. The estimated future cash outflows under the royalty rights agreements have been combined with the Secured Notes issuance costs and interest payable to calculate the effective interest rate of the Secured Notes and will be expensed through interest expenses using the effective interest rate method over the term of the Secured Notes and royalty rights agreements. Estimating the future cash outflows under the royalty rights agreements requires the Company to make certain estimates and assumptions about future sales of MosaiQ products. These estimates of the magnitude and timing of MosaiQ sales are subject to significant variability due to the current status of development of MosaiQ products, and thus are subject to significant uncertainty. Therefore, the estimates are likely to change as the Company gains experience of marketing MosaiQ, which may result in future adjustments to the accretion of the interest expense and amortized cost based carrying value of the Secured Notes.

At June 30, 2018, the outstanding debt was repayable as follows:

 

Within 1 year

 

$

9,600

 

Between 1 and 2 years

 

 

19,200

 

Between 2 and 3 years

 

 

22,800

 

Between 3 and 4 years

 

 

25,200

 

Between 4 and 5 years

 

 

27,600

 

After 5 years

 

 

15,600

 

Total debt

 

$

120,000

 

- 13 -


 

 

 

Note 5. Consolidated Balance Sheet Detail

Inventory

The following table summarizes inventory by category for the dates presented:

 

 

June 30,

2018

 

 

March 31,

2018

 

Raw materials

 

$

9,788

 

 

$

10,024

 

Work in progress

 

 

4,321

 

 

 

4,226

 

Finished goods

 

 

1,488

 

 

 

2,028

 

Total inventories

 

$

15,597

 

 

$

16,278

 

 

Inventory at June 30, 2018 included $8,152 of raw materials, $1,466 of work in progress and $264 of finished goods related to the MosaiQ project. Inventory at March 31, 2018, included $8,441 of raw materials and $1,528 of work in progress and $389 of finished goods related to the MosaiQ project.

Property and equipment

The following table summarizes property and equipment by categories for the dates presented:

 

 

June 30,

2018

 

 

March 31,

2018

 

Plant and equipment

 

$

49,684

 

 

$

51,912

 

Leasehold improvements

 

 

32,386

 

 

 

34,611

 

Total property and equipment

 

 

82,070

 

 

 

86,523

 

Less: accumulated depreciation

 

 

(27,727

)

 

 

(26,367

)

Total property and equipment, net

 

$

54,343

 

 

$

60,156

 

  

Depreciation expenses were $3,306 and $2,443 in the quarters ended June 30, 2018 and June 30, 2017, respectively. 

Accrued compensation and benefits

Accrued compensation and benefits consist of the following:

 

 

June 30,

2018

 

 

March 31,

2018

 

Salary and related benefits

 

$

747

 

 

$

455

 

Accrued vacation

 

 

511

 

 

 

504

 

Accrued payroll taxes

 

 

1,332

 

 

 

1,353

 

Accrued incentive payments

 

 

3,538

 

 

 

3,000

 

Total accrued compensation and benefits

 

$

6,128

 

 

$

5,312

 

 

Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following:

 

 

June 30,

2018

 

 

March 31,

2018

 

Accrued legal and professional fees

 

$

559

 

 

$

280

 

Accrued interest

 

 

2,085

 

 

 

4,612

 

Goods received not invoiced

 

 

2,187

 

 

 

1,272

 

Accrued capital expenditure

 

 

905

 

 

 

3,309

 

Other accrued expenses

 

 

2,175

 

 

 

5,867

 

Total accrued expenses and other current liabilities

 

$

7,911

 

 

$

15,340

 

 

At March 31, 2018, other accrued expenses included a value added tax liability of $2,905 related to the completion of the sale of the Company’s new conventional reagents manufacturing facility (the “Biocampus facility”) in March 2018. There was an offsetting value added tax recoverable balance within prepaid expenses and other current assets at March 31, 2018. There were no equivalent amounts at June 30, 2018.

 

- 14 -


 

 

Note 6. Commitments and Contingencies

Government grant

In 2008, the Company was awarded research and development grant funding from Scottish Enterprise amounting to £1,791, for the development of MosaiQ. The total grant claimed to June 30, 2018 is £1,790. The Company updates Scottish Enterprise periodically with the status of the project and, while the terms of the grant award provide for full repayment of the grant in certain circumstances, the Company does not consider that any repayment is likely.

Hedging arrangements

The Company’s subsidiary in the United Kingdom (“UK”) has entered into six contracts to sell $500 in each calendar month from July 2018 through December 2018 at £1:$1.4315, three contracts to sell $500 and purchase pounds sterling at £1:$1.4140 in each calendar month from January 2019 through March 2019, and three contracts to sell $500 and purchase pounds sterling at £1:$1.3520 in each calendar month from April 2019 through June 2019 as hedges of its U.S. dollar denominated revenues.

Fair value measurements

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a recurring basis, by level, within the fair value hierarchy:

 

 

 

June 30, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan assets(1)

 

$

 

 

$

9,539

 

 

$

 

 

$

9,539

 

Short-term investments(2)

 

 

5,695

 

 

 

 

 

 

 

 

 

5,695

 

Total assets measured at fair value

 

$

5,695

 

 

$

9,539

 

 

$

 

 

$

15,234

 

 

 

 

June 30, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts(3)

 

$

 

 

$

279

 

 

$

 

 

$

279

 

Total liabilities measured at fair value

 

$

 

 

$

279

 

 

$

 

 

$

279

 

 

 

 

March 31, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension plan assets(1)

 

$

 

 

$

9,616

 

 

$

 

 

$

9,616

 

Short-term investments(2)

 

 

5,669

 

 

 

 

 

 

 

 

 

5,669

 

Foreign currency forward contracts(3)

 

 

 

 

 

118

 

 

 

 

 

 

118

 

Total assets measured at fair value

 

$

5,669

 

 

$

9,734

 

 

$

 

 

$

15,403

 

 

 

 

March 31, 2018

 

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Total

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency forward contracts(3)

 

$

 

 

$

64

 

 

$

 

 

$

64

 

Total liabilities measured at fair value

 

$

 

 

$

64

 

 

$

 

 

$

64

 

 

(1)

The fair value of pension plan assets has been determined as the surrender value of the portfolio of active insured employees held within the Swiss Life collective investment fund. See Note 10, “Defined Benefit Pension Plans”.

(2)

The fair value of short-term investments has been determined based on the quoted value of the units held in the money market fund at the balance sheet date.  See Note 2, “Summary of Significant Accounting Policies – Short-term Investments”.