yten-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, 2022

☐ 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 001-33133

YIELD10 BIOSCIENCE, INC.


Delaware						04-3158289
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

19 Presidential Way Woburn, MA						01801
(Address of principal executive offices)						(Zip Code)

(617) 583-1700

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report.)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	YTEN	The Nasdaq Capital Market

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 ý No o

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 ý No o

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	o	Accelerated filer	o
Non-accelerated filer	ý	Smaller reporting company	ý
		Emerging growth company	o

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. o

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

The number of shares outstanding of the registrant’s common stock as of May 9, 2022 was 4,901,246.

Yield10 Bioscience, Inc.

Form 10-Q

For the Quarter Ended March 31, 2022

Table of Contents


		Page
Part I. Financial Information

Item
1.	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets at March 31, 2022 and December 31, 2021	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2022 and 2021	4
	Condensed Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 and 2021	6
	Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2022 and 2021	7
	Notes to the Condensed Consolidated Financial Statements	8
2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
3.	Quantitative and Qualitative Disclosures About Market Risk	24
4.	Controls and Procedures	24

Part II. Other Information		24

Item
1.	Legal Proceedings	24
1A.	Risk Factors	24
2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
3.	Defaults Upon Senior Securities	25
4.	Mine Safety Disclosures	25
5.	Other Information	24
6.	Exhibits	26

SIGNATURES		27

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

YIELD10 BIOSCIENCE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

UNAUDITED

(in thousands, except share and per share data)


	March 31, 2022		December 31, 2021
Assets
Current Assets:
Cash and cash equivalents	$	2,128	$	5,329
Short-term investments	10,614		10,661
Accounts receivable	124		164

Unbilled receivables	58		34
Prepaid expenses and other current assets	451		436

Total current assets	13,375		16,624

Restricted cash	264		264
Property and equipment, net	945		890
Right-of-use assets	2,259		2,354
Other assets	261		283
Total assets	$	17,104	$	20,415

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	24	$	83
Accrued expenses	823		1,136
Current portion of lease liabilities	529		514
Total current liabilities	1,376		1,733
Lease liabilities, net of current portion	2,512		2,649

Other long-term liabilities	5		7
Total liabilities	3,893		4,389
Commitments and contingencies (Note 9)

Stockholders’ Equity:

Preferred stock ($0.01 par value per share); 5,000,000 shares authorized; no shares issued or outstanding	—		—
Common stock ($0.01 par value per share); 60,000,000 shares authorized at March 31, 2022 and December 31, 2021; 4,893,403 and 4,881,851 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively	49		49
Additional paid-in capital	402,817		402,283
Accumulated other comprehensive loss	(193)		(175)
Accumulated deficit	(389,462)		(386,131)
Total stockholders’ equity	13,211		16,026
Total liabilities and stockholders’ equity	$	17,104	$	20,415

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

YIELD10 BIOSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

UNAUDITED

(in thousands, except share and per share data)


	Three Months Ended March 31,
	2022		2021
Revenue:

Grant revenue	$	149	$	196


Total revenue	149		196

Expenses:

Research and development	1,763		1,316
General and administrative	1,707		1,432
Total expenses	3,470		2,748
Loss from operations	(3,321)		(2,552)

Other income (expense):

Other income (expense), net	(1)		(1)
Total other income (expense)	(1)		(1)
Loss from operations before income taxes	(3,322)		(2,553)
Income tax provision	(9)		(8)
Net loss	$	(3,331)	$	(2,561)

Basic and diluted net loss per share	$	(0.68)	$	(0.60)
Number of shares used in per share calculations:
Basic and diluted	4,888,915		4,296,129

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

YIELD10 BIOSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

UNAUDITED

(in thousands)


	Three Months Ended March 31,
	2022		2021
Net loss:	$	(3,331)	$	(2,561)
Other comprehensive loss
Change in unrealized (loss) gain on investments	(21)		1
Change in foreign currency translation adjustment, net of income tax	3		(1)

Total other comprehensive loss	(18)		—
Comprehensive loss	$	(3,349)	$	(2,561)

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

YIELD10 BIOSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

UNAUDITED

(in thousands)


	Three Months Ended March 31,
	2022		2021
Cash flows from operating activities
Net loss	$	(3,331)	$	(2,561)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	59		54



Charge for 401(k) company common stock match	45		44
Stock-based compensation	523		324
Non-cash lease expense	95		87
Deferred income tax provision	6		6
Changes in operating assets and liabilities:
Accounts receivable	40		47

Unbilled receivables	(24)		(93)
Prepaid expenses and other assets	(2)		(6)
Accounts payable	(59)		51
Accrued expenses	(330)		(480)
Lease liabilities	(122)		(109)
Other liabilities	(2)		(1)
Net cash used in operating activities	(3,102)		(2,637)

Cash flows from investing activities
Purchase of property and equipment	(114)		(101)



Purchase of investments	—		(869)
Proceeds from the maturity of short-term investments	26		3,000
Net cash (used in) provided by investing activities	(88)		2,030

Cash flows from financing activities
Proceeds from warrants exercised	—		3,856


Proceeds from public offering, net of issuance costs	—		11,993

Taxes paid on employees' behalf related to vesting of stock awards	(14)		(83)
Net cash (used in) provided by financing activities	(14)		15,766

Effect of exchange rate changes on cash, cash equivalents and restricted cash	3		—

Net (decrease) increase in cash, cash equivalents and restricted cash	(3,201)		15,159
Cash, cash equivalents and restricted cash at beginning of period	5,593		3,687
Cash, cash equivalents and restricted cash at end of period	$	2,392	$	18,846

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

YIELD10 BIOSCIENCE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

UNAUDITED

(In thousands, except share amounts)


	Three Months Ended March 31, 2022
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity
	Shares	Par Value						Accumulated Deficit
Balance, December 31, 2021	4,881,851	$	49	$	402,283	$	(175)	$	(386,131)	$	16,026
Stock-based compensation expense	—	—		523		—		—		523
Issuance of common stock for 401(k) match	5,074	—		25		—		—		25

Issuance of common stock for restricted stock units	6,478	—		—		—		—		—
Taxes paid on employees' behalf related to vesting of stock awards	—	—		(14)		—		—		(14)

Effect of foreign currency translation and unrealized loss on investments	—	—		—		(18)		—		(18)
Net loss	—	—		—		—		(3,331)		(3,331)
Balance, March 31, 2022	4,893,403	$	49	$	402,817	$	(193)	$	(389,462)	$	13,211


	Three Months Ended March 31, 2021
	Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income (Loss)				Total Stockholders' Equity
	Shares	Par Value						Accumulated Deficit
Balance, December 31, 2020	3,334,048	$	33	$	384,758	$	(159)	$	(375,100)	$	9,532
Stock-based compensation expense	—	—		335		—		—		335
Issuance of common stock for 401(k) match	3,759	—		22		—		—		22
Issuance of common stock for warrant exercises	481,973	5		3,851		—		—		3,856
Issuance of common stock for restricted stock units	5,555	—		—		—		—		—
Taxes paid on employees' behalf related to vesting of stock awards	—	—		(83)		—		—		(83)
Issuance of common stock in connection with stock offering, net of offering costs	1,040,000	11		11,982		—		—		11,993
Net loss	—	—		—		—		(2,561)		(2,561)
Balance, March 31, 2021	4,865,335	$	49	$	400,865	$	(159)	$	(377,661)	$	23,094

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

YIELD10 BIOSCIENCE, INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

UNAUDITED

(All dollar amounts, except share and per share amounts, are stated in thousands)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Yield10 Bioscience, Inc. ("Yield10" or the "Company") is an agricultural bioscience company that is developing the oilseed Camelina sativa ("Camelina") as a platform crop for large scale production of low carbon sustainable seed products to address:

•petroleum replacement markets, in which the Company is developing Camelina oil for use as a biofuel feedstock and PHA Bioplastics produced in Camelina seed for use as a biodegradable bioplastic; and

•food and nutrition markets, in which the Company is developing omega-3 (DHA+EPA) oils produced in Camelina seed for aquaculture, nutraceuticals and protein meal for animal feed markets.

Yield10 also plans to license yield and seed oil traits from the Company's pipeline to large seed companies for commercialization in major food crops, including corn, soybean and canola. Yield10 is headquartered in Woburn, Massachusetts and has an Oilseed Center of Excellence in Saskatoon, Saskatchewan, Canada.

The accompanying condensed consolidated financial statements are presented in U.S. dollars, are unaudited, and have been prepared by Yield10 in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by GAAP. The condensed consolidated financial statements, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) necessary for fair statements of the financial position and results of operations for the interim periods ended March 31, 2022 and March 31, 2021.

The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for any future period or the entire fiscal year. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021, which are contained in the Company’s Annual Report on Form 10-K filed with the SEC on March 25, 2022.

The accompanying condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business. With the exception of a single year, the Company has recorded losses since its initial founding, including the three months ended March 31, 2022.

As of March 31, 2022, the Company held unrestricted cash, cash equivalents and investments of $12,742. The Company follows the guidance of Accounting Standards Codification ("ASC") Topic 205-40, Presentation of Financial Statements-Going Concern, in order to determine whether there is substantial doubt about its ability to continue as a going concern for one year after the date its condensed consolidated financial statements are issued. The Company's ability to continue operations after its current cash resources are exhausted depends on its ability to obtain additional financing through, among other sources, public or private equity financing, secured or unsecured debt financing, equity or debt bridge financing, warrant holders' ability and willingness to exercise the Company's outstanding warrants, additional research grants or collaborative arrangements with third parties, as to which no assurance can be given. Management does not know whether additional financing will be available on terms favorable or acceptable to the Company when needed, if at all. If adequate additional funds are not available when required, management will be forced to curtail the Company's research efforts, explore strategic alternatives and/or wind down the Company's operations and pursue options for liquidating its remaining assets, including intellectual property and equipment. Based on our current cash forecast, we have determined that the Company's present capital resources will not be sufficient to fund its planned operations for at least one year from when these condensed consolidated financial statements are available to be issued, which raises substantial doubt as to the Company's ability to continue as a going concern. This forecast of cash resource is forward-looking information that involves risks and uncertainties, and the actual amount of expenses could vary materially and adversely as a result of a number of factors.

If the Company issues equity or debt securities to raise additional funds in the future, (i) the Company may incur fees associated with such issuance, (ii) its existing stockholders may experience dilution from the issuance of new equity securities, (iii) the Company may incur ongoing interest expense and be required to grant a security interest in Company assets in connection with any debt issuance, and (iv) the new equity or debt securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders. In addition, utilization of the Company’s net operating loss and research and development credit carryforwards may be subject to significant annual limitations under Section 382 of the Internal Revenue Code due to ownership changes resulting from equity financing transactions. If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its potential products or proprietary technologies or grant licenses on terms that are not favorable to the Company.

The full impact of the COVID-19 pandemic continues to evolve as of the date of this report. As such, the full magnitude that the pandemic will have on the Company's financial condition, liquidity and future results of operations is uncertain. While management currently expects the impact of COVID-19 to be temporary, there is uncertainty around the duration and its broader impact on the economy and therefore the effects it will have on Yield10's financial condition, liquidity, operations, suppliers, industry, and workforce. Given the evolving nature of the COVID-19 pandemic and the global responses to it, the Company is not able to estimate the effects of the COVID-19 pandemic on its results of operations, financial condition, or liquidity for future periods.

2. ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, including accounting standards set by the Financial Accounting Standards Board ("FASB"). The FASB sets GAAP that the Company follows to ensure its financial condition, results of operations, and cash flows are consistently reported. References to GAAP issued by the FASB in these notes to the unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codification ("ASC"). The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions were eliminated, including transactions with its subsidiaries, Metabolix Oilseeds, Inc. ("MOI") and Yield10 Bioscience Securities Corp.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with an original maturity date of ninety days or less at the date of purchase to be cash equivalents.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Company's unaudited condensed consolidated balance sheets included herein:


	March 31, 2022		December 31, 2021
Cash and cash equivalents	$	2,128	$	5,329
Restricted cash	264		264
Total cash, cash equivalents and restricted cash	$	2,392	$	5,593

Amounts included in restricted cash represent those required to be set aside by contractual agreement. Restricted cash of $264 at March 31, 2022 and December 31, 2021 consists primarily of funds held in connection with the Company's lease agreement for its Woburn, Massachusetts facility.

Investments

The Company classifies investments purchased with an original maturity date of more than ninety days at the date of purchase and a maturity date of one year or less at the balance sheet date to be short-term investments. The Company classifies investments with a maturity date of greater than one year from the balance sheet date as long-term investments.

Other-than-temporary impairments of equity investments are recognized in the Company's unaudited condensed consolidated statements of operations if the Company has experienced a credit loss and has the intent to sell the investment or if it is more likely than not that the Company will be required to sell the investment before recovery of the amortized cost basis. Realized gains and losses, dividends, interest income and declines in value judged to be other-than-temporary credit losses are

included in other income (expense). Any premium or discount arising at purchase is amortized and/or accreted to interest income.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of grant revenue and expenses during the reporting periods. Actual results could differ from those estimates.

Foreign Currency Translation

The functional currency for MOI is the Canadian dollar. Foreign denominated assets and liabilities of MOI are translated into U.S. dollars at the prevailing exchange rates in effect on the balance sheet date. Revenues and expenses are translated at average exchange rates prevailing during the period. Any resulting translation gains or losses are recorded in accumulated other comprehensive income (loss) in the unaudited condensed consolidated balance sheet. When the Company dissolves, sells all or substantially all of the assets of a consolidated foreign subsidiary, the cumulative translation gain or loss of that subsidiary is released from comprehensive income (loss) and included within its unaudited condensed consolidated statement of operations during the fiscal period when the dissolution or sale occurs.

Comprehensive Loss

Comprehensive loss is comprised of net loss and certain changes in stockholders' equity that are excluded from net loss. The Company includes unrealized gains and losses on debt securities and foreign currency translation adjustments in other comprehensive loss.

Income Taxes

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the unaudited condensed consolidated financial statements or in the Company's tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is provided to reduce deferred tax assets to a level which, more likely than not, will be realized.

The Company accounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The provision for income taxes includes the effects of any resulting tax reserves or unrecognized tax benefits that are considered appropriate as well as the related net interest and penalties, if any. The Company evaluates uncertain tax positions on a quarterly basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk primarily consist of cash, cash equivalents, restricted cash, short-term investments and accounts receivable. The Company has historically invested its cash in highly rated money market funds, corporate debt, federal agency notes and U.S. treasury notes. Investments, when purchased, are acquired in accordance with the Company’s investment policy which establishes a concentration limit per issuer.

At March 31, 2022, 100% of the Company's accounts and unbilled receivables of $182 were due from Michigan State University ("MSU") for support to a Department of Energy ("DOE") funded grant under which the Company serves as a subcontractor. The Company believes these receivables have a low risk of default. At December 31, 2021, all of the Company's accounts and unbilled receivables of $198 were due from MSU for support to the DOE grant.

Fair Value Measurements

The carrying amounts of the Company's financial instruments as of March 31, 2022 and December 31, 2021, which include cash equivalents, restricted cash, accounts receivable, unbilled receivables, accounts payable, and accrued expenses, approximate their fair values due to the short-term nature of these instruments. See Note 5 for further discussion on fair value measurements.

Segment Information

The accounting guidance for segment reporting establishes standards for reporting information on operating segments in financial statements. The Company is an agricultural bioscience company operating in one segment, which is the development of improved Camelina varieties to produce proprietary products, and to produce other high value genetic traits for the agriculture and food industries. The Company's chief operating decision-maker does not manage any part of the Company separately, and the allocation of resources and assessment of performance are based on the Company's consolidated operating results.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation and amortization. Repairs and maintenance are charged to operating expense as incurred. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets once they are placed in service as follows:


Asset Description						Estimated Useful Life (years)
Equipment						3
Furniture and fixtures						5
Software						3
Leasehold improvements						Shorter of useful life or term of lease

Lease Accounting

As a lessee, the Company follows the lease accounting guidance codified in ASC 842. A lease is classified as a finance lease if any of five criteria described in the guidance apply to the lease and any lease not classified as a finance lease is classified as an operating lease with expense recognition occurring on a straight-line basis over the term of the lease. Under ASC 842, the Company records a lease liability on the commencement date of a lease calculated as the present value of the lease payments, using the interest rate implicit in the lease, or if that rate is not readily determinable, using the Company's incremental borrowing rate. A right-of-use asset equal to the lease liability is also recorded with adjustments made, as necessary, for lease prepayments, lease accruals, initial direct costs and lessor lease incentives that may be present within the terms of the lease. The Company adopted the short-term lease exception that permits lessees to omit leases with terms of twelve months or less from the accounting requirements of ASC 842.

Impairment of Long-Lived Assets

Long-lived assets, such as property and equipment, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Accounting guidance further requires that companies recognize an impairment loss only if the carrying amount of a long-lived asset is not recoverable based on its undiscounted future cash flows and measure an impairment loss as the difference between the carrying amount and fair value of the asset.

Grant Revenue

The Company's source of continuing revenue is from its government research grants, in which it serves as either the primary contractor or as a subcontractor. These grants are considered a central operation of the Company's business. Revenue is earned as research expenses related to the grants are incurred. Revenue earned on government grants, but not yet invoiced as of the balance sheet date, are recorded as unbilled receivables in the accompanying unaudited condensed consolidated balance sheets at March 31, 2022 and December 31, 2021. Funds received from government grants in advance of work being performed, if any, are recorded as deferred revenue until earned.

Research and Development

All costs associated with internal research and development are expensed as incurred. Research and development expenses include, among others, direct costs for salaries, employee benefits, subcontractors, crop trials, regulatory activities, facility related expenses, depreciation, and stock-based compensation. Costs incurred in connection with government research grants are recorded as research and development expense.

General and Administrative Expenses

The Company's general and administrative expense includes costs for salaries, employee benefits, facilities expenses, consulting and professional service fees, travel expenses, depreciation, stock-based compensation and office related expenses incurred to support the administrative, business development and the commercial operations of the Company.

Intellectual Property Costs

The Company includes all costs associated with the prosecution and maintenance of patents within general and administrative expenses in the Company's unaudited condensed consolidated statements of operations.

Stock-Based Compensation

All share-based payments to employees, members of the Board of Directors and non-employees are recognized within operating expenses based on the straight-line recognition of their grant date fair value over the period during which the recipient is required to provide service in exchange for the award. See Note 7 for a description of the types of stock-based awards granted, the compensation expense related to such awards and detail of equity-based awards outstanding.

Recent Accounting Standards

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. During the three months ended March 31, 2022, the Company did not adopt any new accounting guidance.

The following new pronouncement is not yet effective but may impact the Company's unaudited condensed consolidated financial statements in the future.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The FASB subsequently issued amendments to ASU 2016-13, which have the same effective date and transition date as the initial pronouncement. This standard requires entities to estimate an expected lifetime credit loss on financial assets ranging from short-term trade accounts receivable to long-term financings and report credit losses using an expected losses model rather than the incurred losses model that was previously used, and establishes additional disclosures related to credit risks. For available-for-sale debt securities with unrealized losses, this standard now requires allowances to be recorded instead of reducing the amortized cost of the investment. This standard limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and requires the reversal of previously recognized credit losses if fair value increases. The guidance is effective for fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, and interim periods within those fiscal years. The Company is currently evaluating the impact this guidance will have on its unaudited condensed consolidated financial statements.

3. BASIC AND DILUTED NET LOSS PER SHARE

Basic net income loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of common shares outstanding. Diluted net loss per share is computed by dividing net loss available to common shareholders by the weighted-average number of dilutive common shares outstanding during the period. Diluted shares outstanding is calculated by adding to the weighted shares outstanding any potential (unissued) shares of common stock from outstanding stock options and warrants based on the treasury stock method, as well as weighted shares outstanding of any potential (unissued) shares of common stock from restricted stock units. In periods when a net loss is reported, all common stock equivalents are excluded from the calculation because they would have an anti-dilutive effect, meaning the loss per share would be reduced. Therefore, in periods when a loss is reported, basic and dilutive loss per share are the same. Common stock equivalents include stock options, restricted stock awards and warrants.

The following potentially dilutive securities were excluded from the calculation of diluted net loss per share due to their antidilutive effect:


	As of March 31,
		2022	2021
Options		919,108	470,440
Restricted Stock Awards		54,250	18,862


Warrants		2,361,726	2,361,726
Total		3,335,084	2,851,028

4. INVESTMENTS

Investments consist of the following at March 31, 2022 and December 31, 2021:


	Accumulated Cost at March 31, 2022		Unrealized				Market Value at March 31, 2022
			Gain		(Loss)
Short-term investments
U.S. government and agency securities	$	10,643	$	—	$	(29)	$	10,614
Total	$	10,643	$	—	$	(29)	$	10,614


	Accumulated Cost at December 31, 2021		Unrealized				Market Value at December 31, 2021
			Gain		(Loss)
Short-term investments
U.S. government and agency securities	$	10,669	$	—	$	(8)	$	10,661
Total	$	10,669	$	—	$	(8)	$	10,661

All investments are classified as available for sale as of March 31, 2022 and December 31, 2021.

5. FAIR VALUE MEASUREMENTS

The Company has certain financial assets recorded at fair value which have been classified as Level 1 and Level 2 within the fair value hierarchy as described in the accounting standards for fair value measurements. Fair value is the price that would be received from the sale of an asset or the price paid to transfer a liability in an orderly transaction between independent market participants at the measurement date. Fair values determined by Level 1 inputs utilize observable data such as quoted prices in active markets for identical instruments. Fair values determined by Level 2 inputs utilize data points other than quoted prices in active markets that are observable either directly or indirectly. Fair values determined by Level 3 inputs utilize unobservable data points in which there is little or no market data, which require the reporting entity to develop its own assumptions. The fair value hierarchy level is determined by the lowest level of significant input.

The Company’s financial assets classified as Level 2 at March 31, 2022 and December 31, 2021 were initially valued at the transaction price and subsequently valued utilizing third-party pricing services. Because the Company’s investment portfolio may include securities that do not always trade on a daily basis, the pricing services use many observable market inputs to determine value including reportable trades, benchmark yields and benchmarking of like securities. The Company validates the prices provided by the third-party pricing services by reviewing their pricing methods and obtaining market values from other pricing sources. After completing the validation procedures, the Company did not adjust or override any fair value measurements provided by these pricing services as of March 31, 2022 and December 31, 2021.

The tables below present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021 and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value.


	Fair value measurements at reporting date using
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs		Balance as of
Description	(Level 1)		(Level 2)		(Level 3)		March 31, 2022
Cash equivalents:
Money market funds	$	1,394	$	—	$	—	$	1,394

Short-term investments:
U.S. government and agency securities	—		10,614		—		10,614
Total assets	$	1,394	$	10,614	$	—	$	12,008


	Fair value measurements at reporting date using
	Quoted prices in active markets for identical assets		Significant other observable inputs		Significant unobservable inputs		Balance as of
Description	(Level 1)		(Level 2)		(Level 3)		December 31, 2021
Cash equivalents:
Money market funds	$	4,878	$	—	$	—	$	4,878

Short-term investments:
U.S. government and agency securities	—		10,661		—		10,661
Total assets	$	4,878	$	10,661	$	—	$	15,539

There were no transfers of financial assets or liabilities between category levels during the three months ended March 31, 2022 and the three months ended March 31, 2021.

6. ACCRUED EXPENSES

Accrued expenses consisted of the following at:


	March 31, 2022		December 31, 2021
Employee compensation and benefits	$	304	$	452
Leased facilities	61		71
Professional services	185		264
Field trials and related expenses	73		97
Other	200		252
Total accrued expenses	$	823	$	1,136

7. STOCK-BASED COMPENSATION

Expense Information for Employee and Non-Employee Stock Awards

The Company recognized stock-based compensation expense related to stock awards, including awards to non-employees and members of the Board of Directors of $523 for the three months ended March 31, 2022 and $324 for the three months ended March 31, 2021. At March 31, 2022, there was approximately $4,422 of unvested awards not yet recognized as compensation expense.

The compensation expense related to unvested stock awards is expected to be recognized over a remaining weighted average period of 2.98 years.

Stock Options

A summary of option activity for the three months ended March 31, 2022 is as follows:


	Number of Shares	Weighted Average Exercise Price
Outstanding at December 31, 2021	722,765	$	19.22
Granted	196,410	$	4.04


Expired	(67)	$	6,398.33
Outstanding at March 31, 2022	919,108	$	15.51

Options exercisable at March 31, 2022	258,180	$	35.84

In accordance with the terms of the Company's 2018 Stock Option and Incentive Plan ("2018 Stock Plan"), effective January 1, 2022 and January 1, 2021, Yield10's Board of Directors approved the addition of 244,092 shares and 166,702 shares, respectively, to the 2018 Stock Plan, which represented 5% of the Company's outstanding common stock on the day prior to the increase. At its annual meeting of stockholders on May 24, 2021, stockholders approved an amendment to the 2018 Stock Plan to add 300,000 more shares to the plan. As of March 31, 2022, 60,778 shares remain available to be awarded from the 2018 Stock Plan.

Restricted Stock Units

The Company records stock compensation expense for restricted stock units ("RSUs") on a straight-line basis over their requisite service period, which approximates the vesting period, based on each RSU's award date fair market value. As RSUs vest, the Company withholds a number of shares from its employees with an aggregate fair market value equal to the minimum tax withholding amount from the common stock issuable at the vest date. During the three months ended March 31, 2022, 9,430 employee RSUs vested, of which 2,952 common shares with a total market value of $13 were withheld to pay employee tax withholding.

A summary of RSU activity for the three months ended March 31, 2022 is as follows:


	Number of RSUs	Weighted Average Remaining Contractual Life (years)
Outstanding at December 31, 2021	9,430
Awarded	54,250
Released	(9,430)

Outstanding at March 31, 2022	54,250	0.61

8. LEASES

Lease Accounting

As a lessee, the Company follows the lease accounting guidance codified in ASC 842. Under ASC 842, a lease is classified as a finance lease if any of five criteria described in the guidance apply to the lease. Any lease not classified as a finance lease is classified as an operating lease with expense recognition occurring on a straight-line basis over the term of the lease. The Company's existing lease subject to ASC 842 meets the standards for operating lease classification.

Under ASC 842, a lease liability is recorded on the commencement date of a lease and is calculated as the present value of the remaining lease payments, using the interest rate implicit in the lease, or if that rate is not readily determinable, using the lessee's incremental borrowing rate. A right-of-use asset equal to the lease liability is also recorded with adjustments made, as necessary, for lease prepayments, lease accruals, initial direct costs and lessor lease incentives that may be present within the terms of the lease. The Company adopted the short-term lease exception that permits lessees to omit leases with terms of twelve months or less from the accounting requirements of ASC 842.

Maturity Analysis of Lease Liabilities

The Company's Woburn, Massachusetts facility is the only lease included in the Company's right-of-use assets and corresponding lease liabilities. No other active real estate or equipment leases fall within the scope of ASC 842. At March 31, 2022, the Company's lease liability related to its Woburn facility will mature as follows:



Year ended December 31,	Undiscounted Cash Flows
2022 (April to December)	$	547
2023	749
2024	771
2025	793
2026	747
Total undiscounted future lease payments	3,607
Amount of lease payments representing interest	(566)
Total lease liabilities	$	3,041
Short-term lease liability	$	529
Long-term lease liability	$	2,512

Quantitative Disclosure of Lease Costs


	Three Months Ended March 31,
	2022		2021
Lease cost:
Operating lease cost	$	151	$	151
Short-term lease cost	150		156
Sublease income	(142)		(173)
Total lease cost, net	$	159	$	134


Other information as of:	March 31, 2022	December 31, 2021


Weighted-average remaining lease term (years)	4.7	4.9
Weighted-average discount rate	7.25%	7.25%

Real Estate Leases

During 2016, the Company entered into a lease agreement, as amended, for its headquarters pursuant to which the Company leases 22,213 square feet of office and research and development space located at 19 Presidential Way, Woburn, Massachusetts. The lease agreement will terminate on November 30, 2026 and does not include options for an early termination or for an extension of the lease. Pursuant to the lease, the Company is required to pay certain pro rata taxes and operating costs associated with the premises throughout the term of the lease. During the initial buildout of the rented space, the landlord paid for certain tenant improvements that resulted in increased rental payments by the Company. As required by ASC 842, these improvements were recorded as a reduction in the valuation of the associated right-of-use asset. The Company has provided the landlord with a security deposit of $229.

In October 2016, the Company entered into a sublease agreement with a subsidiary of CJ CheilJedang Corporation ("CJ") with respect to CJ's sublease of approximately 9,874 square feet of its leased facility located in Woburn, Massachusetts. The CJ sublease is coterminous with the Company's master lease and CJ will pay rent and operating expenses proportionate to the amounts payable to the landlord by the Company, as adjusted from time to time in accordance with the terms of the master lease. Future CJ sublease payments have not been presented as an offset to total undiscounted future lease payments of $3,607 shown in the lease maturity analysis table above. CJ provided the Company with a security deposit of $103 in the form of an irrevocable letter of credit.

The Company's wholly-owned subsidiary, MOI, located in Saskatoon, Saskatchewan, Canada, leases approximately 7,800 square feet of office, laboratory and greenhouse space located within Innovation Place at 410 Downey Road and within

the research facility of National Research Council Canada located at 110 Gymnasium Place. None of the leases contain renewal or early termination options. MOI's leases for these facilities expire on various dates through September 2022.

9. COMMITMENTS AND CONTINGENCIES

Contractual Commitments

Exclusive Collaboration Agreement with Rothamsted Research ("Rothamsted")

In November 2020, the Company signed an exclusive collaboration agreement with UK-based Rothamsted to support Rothamsted’s program to develop omega-3 oils in Camelina sativa. Under the agreement, Yield10 is providing Rothamsted with financial support for ongoing research including further DHA+EPA trait improvement, field testing and nutritional studies. The Company will pay Rothamsted quarterly research funding and option fees of $31 for two years totaling $250, of which $94 remains outstanding as of March 31, 2022. As part of the agreement, the Company has an exclusive two-year option to sign a global, exclusive or non-exclusive license agreement to the technology. The current agreement terminates automatically on its second anniversary unless terminated earlier in accordance with the terms of the agreement.

License Agreement with the University of Massachusetts ("UMASS")

Pursuant to a license agreement with UMASS dated as of June 30, 2015 and subsequently amended on April 13, 2021, the Company has an exclusive, worldwide license under certain patents and patent applications, including issued patents covering the Company's yield trait gene C3003, relating to the manufacture of plants with enhanced photosynthesis. The Company subsequently determined that the licensed technology has not adequately demonstrated value to date and therefore is no longer on a path to commercialization. As a result, UMASS and the Company amended the agreement effective May 2, 2022, to reduce future annual royalty payments to a minimum amount for the remaining term of the agreement while the Company continues to conduct basic research with the UMASS technology.

License Agreement with the University of Missouri ("UM")

Pursuant to a license agreement with UM dated as of May 17, 2018, Yield10 has an exclusive, worldwide license to two novel gene technologies to boost oil content in crops. Both technologies are based on significant new discoveries around the function and regulation of ACCase, a key rate-limiting enzyme involved in oil production. The UM license was expanded during May 2019 to include an exclusive worldwide license to a third gene in the ACCase complex, that the Company has designated C3012, that may complement the activity of C3007 to boost oil content in crops.

Pursuant to the UM license agreement, the Company is required to use diligent efforts to develop licensed products throughout the licensed field and to introduce licensed products into the commercial market. The Company's failure to achieve any milestone provided for under the license agreement would give UM the right to terminate the license agreement or render it nonexclusive, unless the Company is able to reach agreement with UM as to the potential adjustment of the applicable milestone.

The Company is obligated to pay UM a license execution payment, milestone payments relating to any regulatory filings and approvals covered by the license agreement, royalties on any sales of licensed products following regulatory approval, as well as a percentage of any sublicense royalties, if any, related to the licensed products. The Company or UM may terminate the license agreement in accordance with the terms of the agreement.

Facility Leases

The Company leases facilities under non-cancelable leases expiring at various dates through November 30, 2026. See Note 8.

Litigation

From time to time, the Company may be subject to legal proceedings and claims in the ordinary course of business. The Company is not currently aware of any such proceedings or claims that it believes will have, individually or in the aggregate, a material adverse effect on its business, financial condition or results of operations.

Guarantees

As of March 31, 2022 and December 31, 2021, the Company did not have significant liabilities recorded for guarantees.

The Company enters into indemnification provisions under various agreements with other companies in the ordinary course of business, typically with business partners, contractors, and customers. Under these provisions, the Company generally indemnifies and holds harmless the indemnified party for losses suffered or incurred by the indemnified party as a result of its activities. These indemnification provisions generally survive termination of the underlying agreement. The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is unlimited. However, to date the Company has not incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated fair value of these agreements is minimal. Accordingly, the Company has no liabilities recorded for these agreements as of March 31, 2022 and December 31, 2021.

10. GEOGRAPHIC INFORMATION

The geographic distribution of the Company’s grant revenues and long-lived assets are summarized in the tables below. Foreign revenue is based on the country in which the Company’s subsidiary that earned the revenue is domiciled.


	U.S.		Canada		Total
Three Months Ended March 31, 2022
Revenue	$	149	$	—	$	149
Identifiable long-lived assets	$	779	$	166	$	945

Three Months Ended March 31, 2021
Revenue	$	157	$	39	$	196
Identifiable long-lived assets	$	920	$	48	$	968

11. CAPITAL STOCK AND WARRANTS

Common Stock

Registered Public Offerings

On February 3, 2021, the Company completed a public offering of 1,040,000 shares of its common stock at a public offering price of $12.25 per share for total gross proceeds of $12,740 before issuance costs of $747.

Preferred Stock

The Company's Certificate of Incorporation authorizes the Company to issue up to 5,000,000 shares of $0.01 par value preferred stock.

Warrants

The following table summarizes information regarding outstanding warrants to purchase common stock as of March 31, 2022:


Issuance	Number of Shares Issuable Upon Exercise of Outstanding Warrants	Exercise Price Per Share of Common Stock		Expiration Date
November 2019 Public Offering - Series A	352,703	$	8.00	May 19, 2022
November 2019 Public Offering - Series B	395,528	$	8.00	May 19, 2027
November 2019 Private Placement - Series A	718,750	$	8.00	May 19, 2022
November 2019 Private Placement - Series B	718,750	$	8.00	May 19, 2027
December 2017 Public Offering - Series A	160,975	$	90.00	December 21, 2022
July 2017 Registered Direct Offering	14,270	$	201.60	January 7, 2024
Consultant	750	$	116.00	September 11, 2024
Total	2,361,726

During the three months ended March 31, 2021, a combined total of 481,973 Series A and Series B warrants issued in the Company's November 2019 securities offering were exercised by warrant holders, providing $3,856 in cash proceeds. During the three months ended March 31, 2022, no warrants were exercised by warrant holders.

Reserved Shares

The following shares of common stock were reserved for future issuance upon exercise of stock options, vesting of RSUs and conversion of warrants:


	March 31, 2022	December 31, 2021
Stock Options	919,108	722,765
RSUs	54,250	9,430

Warrants	2,361,726	2,361,726
Total number of common shares reserved for future issuance	3,335,084	3,093,921

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

(All dollar amounts are stated in thousands)

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipate,” “intends,” “target,” “projects,” “contemplates,” “believe,” “estimates,” “predicts,” “potential,” and “continue,” or similar words.

Although we believe that our expectations are based on reasonable assumptions within the limits of our knowledge of our business and operations, these forward-looking statements contained in this document are neither promises nor guarantees. Our business is subject to significant risk and uncertainties and there can be no assurance that our actual results will not differ materially from our expectations. These forward-looking statements include, but are not limited to, statements concerning our business plans and strategies; expected future financial results and cash requirements; statements related to the coronavirus pandemic and its potential adverse impacts; the impact from the war in Ukraine and the resulting economic and other sanctions imposed on Russia; plans for obtaining additional funding; plans and expectations that depend on our ability to continue as a going concern; and plans for development and commercialization of our Yield10 technologies. Such forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those anticipated including, without limitation, risks related to our limited cash resources, uncertainty about our ability to secure additional funding, risks related to the execution of our business plans and strategies, risks associated with the protection and enforcement of our intellectual property rights, as well as other risks and uncertainties set forth under the caption "Risk Factors"

in Part I, Item 1A, of the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and in our other filings with the SEC.

The forward-looking statements and risk factors presented in this document are made only as of the date hereof and we do not intend to update any of these risk factors or to publicly announce the results of any revisions to any of our forward-looking statements other than as required under the federal securities laws.

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to "Yield10 Bioscience," "Yield10," "we," "our," "us," "our company" or "the company" refer to Yield10 Bioscience, Inc., a Delaware corporation, and its subsidiaries.

Overview

Yie

SEC Form 10-Q filed by Yield10 Bioscience Inc.