What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-03-23 compared with 2020-03-10 · 463 added, 315 removed, 413 unchanged (65% of the section changed)

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Report s of Independent Registered Public Accounting Fir ms

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

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Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors of Bionano Genomics, Inc.

Stockholders and Board of Directors

Bionano Genomics, Inc.

San Diego, California

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheet of Bionano Genomics, Inc.

(the “Company”) as of December 31, 2020, the related consolidated statements of operations, stockholders’ equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provide a reasonable basis for our opinion.

/s/ BDO USA, LLP

We have served as the Company’s auditor since 2020.

San Diego, California

March 23, 2021

Report of Independent Registered Public Accounting Firm

To the shareholders and the Board of Directors of Bionano Genomics, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Bionano Genomics, Inc.

and its subsidiaries (the “Company”), as of December 31, 2019 and 2018 and the related consolidated statements of operations, consolidated statements of stockholders’ equity, and consolidated statements of cash flows for each of the two years in the period ended December 31, 2019 and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Bionano Genomics, Inc and subsidiaries (the "Company") as of December 31, 2019, the related consolidated statements of operations, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the year ended December 31, 2019, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019, and the results of its operations and its cash flows for the year ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has recurring losses from operations and is not in compliance with the covenants included in its loan agreement with its lender that raise substantial doubt about its ability to continue as a going concern.

As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raises substantial doubt about its ability to continue as a going concern.

In addition, the Company is not in compliance with the covenants included in its loan agreement with its lender.

Management's plans in regard to these matters are also described in Note 1.

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federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

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We have served as the Company’s auditor since 2017.

In 2020 we became the predecessor auditor.

Bionano Genomics, Inc.

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Cash and cash equivalents $ 38,448,710 $ 17,311,373

Accounts receivable, net

Accounts receivable, net of allowance for doubtful accounts of $ 2,119,042 and $ 554,867 as of December 31, 2020 and 2019, respectively

2,775,042 6,333,963

Inventory 3,315,708 3,443,559

Prepaid expenses and other current assets 2,249,696 1,169,346

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Property and equipment, net 4,910,414 1,949,625

Intangible assets, net 1,474,667 —

Goodwill 7,172,649 —

Other long-term assets 102,640 —

Total assets $ 60,449,526 $ 30,207,866

Liabilities and stockholders’ equity

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Stockholders’ equity:

Common stock, $0.0001 par value, 200,000,000 shares authorized at December 31, 2019 and December 31, 2018;

34,274,469 and 10,055,072 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

Common stock, $ 0.0001 par value, 400,000,000 and 200,000,000 shares authorized at December 31, 2020 and 2019, respectively;

189,952,944 and 34,274,469 shares issued and outstanding at December 31, 2020 and 2019, respectively

Preferred stock, $ 0.0001 par value;

10,000,000 shares authorized;

no shares issued and outstanding as of December 31, 2019 and 2018

10,000,000 shares authorized and no shares issued or outstanding as of December 31, 2020 and 2019

Additional paid-in capital 178,747,028 106,187,789

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Consolidated Statements of Operations

Year Ended December 31,

Product revenue $ 6,229,611 $ 9,474,444

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Loss from operations ( 38,551,322 ) ( 25,874,906 )

Other income (expense)

Other expenses

Interest expense ( 2,518,893 ) ( 2,286,196 )

Change in fair value of preferred stock warrants and expirations

Loss on debt extinguishment — ( 1,333,496 )

Other expenses ( 6,943 ) ( 299,424 )

Total other income (expenses)

Total other expenses ( 2,525,836 ) ( 3,919,116 )

Loss before income taxes ( 41,077,158 ) ( 29,794,022 )

Provision for income taxes ( 29,193 ) ( 21,048 )

Net loss $ ( 41,106,351 ) $ ( 29,815,070 )

Net loss per share, basic and diluted $ ( 0.39 ) $ ( 1.99 )

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Bionano Genomics, Inc.

Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity

Consolidated Statements of Stockholders’ Equity

Capital Accumulated

Deficit Total

Stockholders' Equity

Convertible Preferred

Shares Amount

Balance at January 1, 2019 10,055,072 $ 1,004 $ 82,898,775 $ ( 72,762,428 ) $ 10,137,351

Stock-based compensation expense

Stock option exercises

IPO, net of offering costs

Conversion of preferred stock upon IPO

Conversion of convertible note upon IPO

Conversion of preferred stock warrants into common stock warrants

Issue warrants for services

Issuance of common stock for Employee Stock Purchase Plan

December 31, 2018

Issue common stock, net of issuance costs

Net loss — — — ( 29,815,070 ) ( 29,815,070 )

Issue stock, net of issuance costs 11,829,388 1,183 10,958,352 — 10,959,535

Stock-based compensation expense — — 1,346,023 — 1,346,023

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Reduce warrant exercise price for covenant waiver — — 45,787 — 45,787

Issuance of common stock for Employee Stock Purchase Plan

Issue common stock for debt

Issue stock for employee stock purchase plan 87,969 9 141,697 — 141,706

Issue stock for debt — — 201,789 — 201,789

Issue warrants for debt — — 629,830 — 629,830

Stock warrant exercises

December 31, 2019

11,678,458 1,168 9,395,568 — 9,396,736

Balance at December 31, 2019

34,274,469 $ 3,427 $ 106,187,789 $ ( 102,577,498 ) $ 3,613,718

Net loss — — — ( 41,106,351 ) ( 41,106,351 )

Issue stock, net of issuance costs 43,921,384 4,392 37,930,202 — 37,934,594

Stock-based compensation expense — — 1,554,069 — 1,554,069

Stock option exercises 1,354 — 1,359 — 1,359

Issue stock for covenant waiver 872,601 87 299,913 — 300,000

Issue stock for employee stock purchase plan 87,940 9 39,652 — 39,661

Issue stock for acquisition 6,167,510 617 4,099,282 — 4,099,899

Stock warrant exercises

104,627,686 10,463 28,634,762 — 28,645,225

Balance at December 31, 2020

189,952,944 $ 18,995 $ 178,747,028 $ ( 143,683,849 ) $ 35,082,174

See accompanying notes to the consolidated financial statements.

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Consolidated Statements of Cash Flows

Year Ended December 31,

Operating activities:

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

Net loss $ ( 41,106,351 ) $ ( 29,815,070 )

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

Depreciation and amortization expense 1,479,537 1,127,850

Change in fair value of preferred stock warrants and expirations

Non-cash interest

Non-cash interest expense 1,263,911 883,269

Stock-based compensation 1,554,069 1,346,023

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Loss on debt extinguishment — 1,333,496

(Gain) loss on disposal of fixed assets

Fair value of warrants issued for services

Changes in operating assets and liabilities:

Loss on disposal of fixed assets — 11,918

Changes in operating assets and liabilities (net of assets acquired and liabilities assumed in acquisition)

Accounts receivable 2,086,927 ( 2,374,497 )

Inventory ( 4,201,281 ) ( 3,641,017 )

Prepaid expenses and other current assets ( 999,194 ) ( 245,046 )

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Investing activities:

Lineagen acquisition, net of cash acquired ( 2,449,952 ) —

Purchases of property and equipment — ( 61,056 )

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Proceeds from issuance of debt, net of issuance costs — 19,134,424

Repayment of term-loan debt ( 5,000,000 ) ( 10,812,000 )

Proceeds from PPP Loan 1,774,600 —

Proceeds from borrowing from line of credit 760,527 5,113,072

Repayments of borrowing from line of credit ( 2,258,482 ) ( 3,615,117 )

Repayment of long-term debt

Proceeds from sale of common stock, net of offering costs

Proceeds from sale of common stock 39,933,977 19,556,464

Offering expenses on sale of common stock ( 2,000,000 ) —

Proceeds from sale of common stock under employee stock purchase plan 39,661 141,706

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Supplemental disclosure of non-cash financing and investing activity

Fair value of stock and warrants issued in conjunction with debt $ — $ 831,619

Transfer of instruments and servers from inventory into property and equipment $ 4,656,432 $ 1,266,015

Transfer of instruments and servers from property and equipment into inventory $ 432,109 $ —

Conversion of convertible note into common stock

Fair value of stock and warrants issued in conjunction with debt

Issue stock for acquisition $ 4,099,899 $ —

Issue stock for covenant waiver $ 300,000 $ 504,167

Reduce warrant exercise price for covenant waiver $ — $ 45,787

Final payment fee due in connection with the repayment of debt classified within other long-term liabilities

Conversion of preferred stock warrants into common stock and common stock warrants

Property and equipment costs incurred but not paid included in accounts payable and accrued expenses

Supplemental disclosure of cash flow information

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Bionano Genomics, Inc.

(the “Company”) was formed in January 2003.

The Company is a life sciences instrumentation company in the genome analysis space.

The Company currently develops and markets the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics.

Initial Public Offering

In August 2018, the Company completed its initial public offering (the “IPO”), in which it sold an aggregate of 3,864,000 units (each unit consisting of one share of the Company’s common stock and one warrant to purchase one share of the Company’s common stock) at a public offering price of $6.125 per unit.

The Company received cash proceeds of $19.4 million , net of offering costs of $4.3 million .

In addition, each of the following occurred in connection with the completion of the IPO:

The conversion of all outstanding shares of convertible preferred stock into an aggregate 2,850,280 shares of common stock.

The automatic adjustment of certain preferred stock warrants into common stock warrants;

the entire $84,676 balance of preferred stock warrant liability was reclassified as additional paid-in-capital.

In addition, the Company issued warrants to the IPO underwriters to purchase up to 115,920 shares of its common stock at fair value of $0.4 million .

The conversion of an aggregate of $14.9 million of outstanding convertible promissory notes and accrued interest into an aggregate of 3,239,294 shares of common stock.

Reverse Stock Splits

On July 16, 2018, the Company effected a one-for-21.4 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s redeemable convertible preferred stock, and on August 15, 2018, the Company effected an additional one-for-two reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s redeemable convertible preferred stock.

Accordingly, all share and per share amounts for all periods presented in the accompanying financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect these reverse stock splits and adjustments of the preferred stock conversion ratios.

(collectively, with its consolidated subsidiaries, the “Company”) is a life sciences instrumentation company in the genome analysis space that provides tools and services based on its Saphyr system to scientists and clinicians conducting genetic research and patient testing, and provides diagnostic testing for those with autism spectrum disorder (“ASD”) and other neurodevelopmental disabilities through newly acquired Lineagen, Inc., a wholly owned subsidiary of the Company (“Lineagen”).

The Company currently develops and markets the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that is designed to enable researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics.

The Saphyr system is comprised of an instrument, chip consumables, reagents and a suite of data analysis tools, and genome analysis services to provide access to data generated by the Saphyr system for researchers who want to evaluate Saphyr data quickly and with a low up-front investment.

Going concern

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The Company has experienced recurring net losses from operations, negative cash flows from operating activities, financial covenant breaches, and significant accumulated deficit since its inception and expects to continue to incur net losses into the foreseeable future.

The Company has an accumulated deficit of $102.6 million as of December 31, 2019 .

The Company had an accumulated deficit of $ 102.6 million as of December 31, 2019.

In 2019, the Company used $ 29.5 million cash in operations.

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Management expects operating losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to research and commercialization efforts.

Management has prepared cash flows forecasts which indicate that based on the Company’s expected operating losses and negative cash flows and current debt obligations, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements for the year ended December 31, 2019 , are issued.

The Company’s ability to continue as a going concern is dependent upon its ability to raise additional funding.

The Company has plans to raise additional capital through equity offerings or debt financings to fulfill its operating and capital requirements for at least 12 months and to maintain compliance with certain financial covenants in its loan agreement.

The Company’s plans include continuing to fund its operating losses and capital funding needs through equity or debt financings, strategic collaborations, licensing arrangements, asset sales, or other arrangements.

However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all.

Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.

If the Company raises additional funds through collaboration, licensing or other similar arrangements, it may be necessary to relinquish valuable rights to its products or proprietary technologies or grant licenses on terms that are not favorable to the Company.

If the Company does not have or is not able to obtain sufficient funds, it may have to reduce commercialization efforts or delay its development of new products.

The Company also may have to reduce marketing, customer support or other resources devoted to its products or cease operations.

As a result, the aforementioned conditions, among others, raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued.

Management had prepared cash flows forecasts which indicated that based on the Company’s expected operating losses and negative cash flows and current debt obligations, there was substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements for the year ended December 31, 2019, were issued.

The financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the outcome of this uncertainty.

On August 16, 2019, the Company received notice from the Nasdaq Stock Market LLC (“Nasdaq”) that the Company’s stockholders’ equity as reported in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 did not satisfy the Nasdaq Capital Market continued listing requirement set forth in Nasdaq Stock Market Rule 5550(b)(1), and that, as of August 13, 2019, the Company did not meet the alternative compliance standards to maintain continued listing as set forth in Nasdaq Stock Market Rule 5550(b) (the “Listing Rule”).

In September 2019, the Company submitted a plan to Nasdaq to regain compliance and on October 16, 2019, Nasdaq granted the Company until February 12, 2020 to provide evidence of compliance with the Listing Rule, subject to certain requirements.

On January 17, 2020, the Company received a letter from Nasdaq confirming that the Company had regained compliance with the Listing Rule under the alternative requirement to have a market value of listed securities of at least $35 million .

As of December 31, 2020, the Company had approximately $ 38.4 million in cash and cash equivalents, and working capital of 37.8 million.

In addition, the Company has a $ 5.0 million revolving line of credit with Innovatus Life Sciences Lending Fund I, LP (the “Innovatus LSA”), under which no borrowings were outstanding as of December 31, 2020.

This facility is scheduled to expire in March 2024.

During October through December 2020, pursuant an effective registration statement on Form S-3, we sold 27,025,384 shares of our common stock under an at-the-market facility, or the Ladenburg ATM, at an average share price of $ 0.82 , and received gross proceeds of approximately $ 22.1 million before deducting offering costs of $ 573,263 .

In January 2021, we sold an additional 6,298,152 shares of our common stock under the Ladenburg ATM at an average share price of $ 2.68 , and received gross proceeds of approximately $ 16.9 million before deducting offering costs of $ 422,034 .

On January 12, 2021, the Company completed an underwritten public offering of 33,368,851 shares of common stock, including 4,352,458 shares of common stock sold pursuant to the underwriters' exercise in full of their option to purchase additional shares.

The price to the public in the offering was $ 3.05 per share and the underwriters purchased the shares from the Company

pursuant to the underwriting agreement at a price of $ 2.867 per share.

The gross proceeds were approximately $ 101.8 million before deducting underwriting discounts and commissions and other offering expenses.

On January 25, 2021, the Company completed an underwritten public offering of 38,333,352 shares of common stock, including 5,000,002 shares of common stock sold pursuant to the underwriters' exercise in full of their option to purchase additional shares.

The price to the public in the offering was $ 6.00 per share and the underwriters purchased the shares from the Company pursuant to the underwriting agreement at a price of $ 5.64 per share.

The gross proceeds were approximately $ 230.0 million before deducting underwriting discounts and commissions and other offering expenses.

The Company expects to continue to incur net losses for the foreseeable future.

The Company plans to continue to fund its losses from operations and capital funding needs through a combination of equity offerings, debt financings or other sources, including potential collaborations, licenses and other similar arrangements.

If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, potentially harming the Company’s business.

The Company is subject to additional risks and uncertainties as a result of the continued spread of COVID-19 and uncertain market conditions, which could continue to have a material impact on the Company’s business and financial results.

The Company closely monitors and complies with various applicable guidelines and legal requirements in the jurisdictions in which it operates, which may continue to result in reduced business operations in response to new or existing stay-at-home orders, travel restrictions and other social distancing measures.

The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational reductions.

This overall reduction in activity has contributed to a decrease in sales which has negatively impacted the Company’s 2020 financial results.

The future effects of COVID-19 are unknown and the Company’s financial results may continue to be negatively affected in the future.

There may be long-term negative effects of the COVID-19 pandemic, even after it has subsided.

Specifically, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, reduction in consumer confidence, or any similar negative economic condition.

These negative effects could have a material impact on the Company’s operations, business, earnings, and liquidity.

Summary of Significant Accounting Policies

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GAAP") requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Significant estimates and assumptions by management affect the Company’s revenue recognition for multiple performance obligation arrangements, valuations, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used to evaluate the recoverability of long-lived assets, warranty reserves, certain accrued expenses, contingent liabilities, tax reserves, deferred tax rates and recoverability of the Company’s net deferred tax assets and related valuation allowances.

Significant estimates and assumptions used by management include estimates of selling prices for multiple performance obligation arrangements, expected future cash flows including growth rates, discount rates, terminal values and other assumptions and estimates used in purchase accounting and to evaluate the recoverability of long-lived assets and goodwill, warranty reserves, certain accrued expenses, contingent liabilities, tax reserves, deferred tax rates and recoverability of the Company’s net deferred tax assets and related valuation allowances.

Although the Company regularly assesses these estimates, actual results could differ materially from these estimates.

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The consolidated financial statements are prepared in accordance with U.S.

GAAP and include the accounts of the Company’s 100%-owned subsidiary.

GAAP and include the accounts of the Company’s 100%-owned subsidiaries.

All intercompany transactions and balances have been eliminated in consolidation.

Lineagen Acquisition

On August 21, 2020, Alta Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), Lineagen, a Delaware corporation, and Michael S.

Paul, Ph.D., solely in his capacity as exclusive agent and attorney-in-fact of the securityholders of Lineagen, entered into an Agreement and Plan of Merger (the “Merger Agreement”).

Pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into Lineagen (the “Merger”) whereupon the separate corporate existence of Merger Sub ceased, with Lineagen continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.

The Company accounted for its acquisition of Lineagen using the acquisition method of accounting pursuant to Accounting Standards Codification Topic 805, Business Combinations ("ASC 805").

Under ASC 805, the tangible and identifiable intangible

assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the acquisition date.

Any excess purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed is recorded to goodwill.

The Company based the estimated fair value of identifiable intangible assets acquired on independent valuations that use information and assumptions provided by the Company’s management.

Under ASC 805, acquisition-related transaction costs (such as advisory, legal, valuation, other professional fees) are expensed in the statements of operations in the periods incurred.

Cash and Cash Equivalents

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The Company believes that it is not exposed to any significant credit risk on cash and cash equivalents.

Fair Value of Financial Instruments

The carrying amounts of all cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities are reasonable estimates of their fair value because of the short-term nature of these items.

Concentrations

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The Company’s customers are located throughout the world.

The Company generally does not require collateral from its customers, but it performs credit evaluations of their financial condition.

The Company generally does not require collateral from its customers.

More information on accounts receivable is contained in the paragraph titled “Accounts Receivable” below.

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Accounts Receivable

The Company extends credit to its customers in the normal course of business based upon an evaluation of each customer’s credit history, financial condition, and other factors.

The Company extends credit to its customers in the normal course of business.

For diagnostic testing services, receivables are based on either contractual rates with third-party payors, plus the amounts expected to be collected for any patient-responsibility portion, or for non-contracted arrangements, using the amounts expected to be collected from third-party payors and/or the patient-customer based on historical collection experience.

The Company does not perform credit evaluations and therefore subsequent adjustments to the amount expected to be collected are recorded to revenue.

For OGM products and services, credit is extended based upon an evaluation of each customer’s credit history, financial condition, and other factors.

Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due, and economic and other factors.

Bad debt expense is recorded as necessary to maintain an appropriate level of allowance for doubtful accounts in selling, general and administrative expense.

A portion of the receivables are with distributors who are slow payers and the Company is pursuing collection of such receivables.

Based on ongoing dialog with these distributors, the Company expects these receivables to be fully collected.

For the years ended December 31, 2019 the Company recorded $554,867 as an allowance for doubtful accounts and nothing for the year ended December 31, 2018.

During the years ended December 31, 2020 and 2019, the Company recorded bad debt expense of $ 1.8 million and $ 554,867 , respectively, which is included in selling, general and administrative expenses.

Amounts are charged to the allowance for doubtful accounts when collection efforts have been exhausted and are deemed uncollectible.

Accounts receivable is subject to concentration risk whenever a customer has a balance that meets or exceeds 10% of the Company's total accounts receivable balance.

As of December 31, 2018, Ultravision Technology Ltd., BioStar Company, and HistoGenetics, represented 13% , 12% , and 10% , respectively, of the Company's total accounts receivable balance.

As of December 31, 2019, Gene Company Limited represented 10 % of the Company's total accounts receivable balance.

As of December 31, 2020, Illumina, and Quest Diagnostics represented 17.3 %, and 10.1 %, respectively, of the Company's total accounts receivable balance.

Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out basis.

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The components of inventories are as follows:

Materials and supplies

Raw materials $ 2,282,673 $ 950,846

Finished goods 1,033,035 2,492,713

In connection with the market launch of the Company’s next generation product, the Saphyr system, including the strategic shift towards minimal selling efforts of the Irys instruments, the Company recorded a charge of $1.3 million included in cost of revenue to write-down these instruments to net realizable value during the year ended December 31, 2018.

Property and Equipment

Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the assets (generally three to five years, or the remaining term of the lease for leasehold improvements, whichever is shorter) and

generally consist of laboratory equipment, computer and office equipment, furniture and fixtures, and leasehold improvements.

$ 3,315,708 $ 3,443,559

Long-Lived Assets (including Finite-Lived Intangible Assets)

Long-lived assets consist of property and equipment and acquired finite-lived intangible assets.

The Company records property and equipment at cost, and records acquired finite-lived intangible assets based on their fair values at the date of acquisition.

Property and equipment generally consist of laboratory equipment, computer and office equipment, furniture and fixtures, and leasehold improvements.

Property and equipment are recorded at cost and depreciated or amortized using the straight-line method over the estimated useful lives of the assets (generally three to five years , or the remaining term of the lease for leasehold improvements, whichever is shorter).

Repairs and maintenance costs are charged to expense as incurred.

Long-Lived Assets

The Company regularly reviews the carrying value and estimated lives of all of its long-lived assets, including property and equipment, to determine whether indicators of impairment may exist which warrant adjustments to carrying values or estimated useful lives.

Should an impairment exist, the impairment loss would be measured based on the excess over the carrying amount of the asset’s fair value.

During the years ended December 31, 2019 and 2018, the Company recognized no impairment loss on long-lived assets.

Intangible assets acquired in a business combination are recognized separately from goodwill and are initially recognized at their fair value at the acquisition date.

Intangible assets are amortized over the estimated useful life of the asset on a basis that approximates the pattern of economic benefit.

Intangible assets are reviewed for impairment if indicators of potential impairment exist.

There was no indication of impairment of intangible assets for any of the periods presented.

As a result of the Lineagen acquisition the Company recorded intangible assets, which consist of a trade name intangible and customer relationship intangible, which are both being amortized on a straight-line basis over their estimated useful lives of five years , Straight-line amortization was determined to be materially consistent with the pattern of expected use of the intangible assets.

If the Company identifies a change in the circumstances related to its long-lived assets, such as property and equipment and intangible assets (other than goodwill), that indicates the carrying value of any such asset may not be recoverable, the Company will perform an impairment analysis.

A long-lived asset (other than goodwill) is not recoverable when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount.

Any required impairment loss would be measured as the amount by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

During the years ended December 31, 2020 and 2019, the Company recognized no impairment losses on long-lived assets.

Substantially all of the Company's long-lived assets are located in the U.S.

Goodwill arises when the purchase price of an acquired business exceeds the fair value of the identifiable net assets acquired, with such excess recorded as goodwill on the balance sheet.

Goodwill is not subsequently amortized.

Goodwill is reviewed for impairment annually (during the fourth quarter) or more frequently if indications of impairment exist.

Goodwill is assigned to specific reporting units for purposes of impairment assessment.

The Company has determined that it has a single operating segment and a single reporting unit.

Therefore, the Company has assigned the goodwill recorded from the Lineagen acquisition to this reporting unit.

In testing goodwill for impairment, the Company will first assess qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount.

If the qualitative assessment indicates that it is more likely than not that the fair value of the reporting unit is less than its carrying value, then the Company will perform a quantitative impairment analysis by comparing the fair value of the reporting unit to the carrying value of the reporting unit, including goodwill.

An impairment charge for goodwill is recognized for the amount by which the carrying value of the reporting unit exceeds its fair value, not to exceed the total goodwill allocated to the reporting unit.

During the years ended December 31, 2020 and 2019, the Company recognized no impairment losses on goodwill.

Revenue Recognition

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Year Ended December 31,

Instrument revenue

Consumable revenue

Product revenue

Services and other revenue

Instruments $ 3,084,869 $ 6,762,463

Consumables 3,144,742 2,711,981

Total product revenue 6,229,611 9,474,444

Services and other 2,273,373 655,064

Total revenue $ 8,502,984 $ 10,129,508

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North America $ 4,489,359 53 % $ 5,030,267 50 %

The Company generates revenue from the sale of its products, primarily its Saphyr system and related consumables, and related services, which are primarily support, repairs and maintenance services on the instruments.

The Company's products are sold primarily through a direct sales force, and within international markets, there is more reliance on distributors.

EMEIA 3,162,694 37 % 3,627,602 36 %

Asia Pacific 850,931 10 % 1,471,639 14 %

Total $ 8,502,984 100 % $ 10,129,508 100 %

The Company generates revenue from the sale of its products, primarily its Saphyr system and related consumables, and related services, which are primarily support, repair and maintenance services on the instruments.

These products are sold primarily through a direct sales force, and within international markets, there is more reliance on distributors.

In addition, the Company provides the Saphyr system to certain customers under its reagent rental program, under which the Company provides Saphyr systems to customers at no cost and the customers agree to purchase minimum quantities of consumables.

The Company also generates revenue by performing diagnostic testing services, sourced from our recently acquired subsidiary, Lineagen.

Revenue is recorded net of sales tax.

The table above provides revenue from contracts with customers by business and geographic region on a disaggregated basis.

The Company provides assurance-type warranties on its Saphyr system with a term of one year, which are not material performance obligations, and also offers separately-priced extended warranties for periods after the initial year.

The tables above provide revenue from contracts with customers by source and geographic location on a disaggregated basis.

North America consists of the United States and Canada.

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As such the Company's performance obligation related to product sales is satisfied at a point in time.

Revenue from support and maintenance contracts and extended warranties are recognized over time based on the contract term, which represents a faithful depiction of the transfer of goods and services given the stand-ready nature of the performance obligations.

Service revenue related to repairs and customer sample evaluations are recognized as the services are performed based on the specific nature of the service.

Revenue from support and maintenance contracts and extended warranties is recognized over time based on the contract term, which represents a faithful depiction of the transfer of goods and services given the stand-ready nature of the performance obligations.

Service revenue related to repairs and customer sample evaluations is recognized as the services are performed based on the specific nature of the service.

For transfers of instruments and consumables to customers under the Company's rental reagent program, the Company allocates the total contract consideration between the instrument and the consumables based on estimates of stand-alone selling prices, and recognizes the instrument revenue evenly over the rental period, and the consumables revenue when the consumables are delivered.

Revenue from the completion of diagnostic testing services is recorded at the billed value less estimated contractual adjustments.

The Company performs its obligation under a contract with a customer by processing diagnostic tests and communicating

the test results, which the Company has determined is the point at which control is transferred to the customer for revenue recognition purposes.

The Company recognizes a receivable when it has an unconditional right to payment, which is generally at the time of shipment of consumables and instruments, including any extended warranties, and at the time when services are rendered.

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For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using its best estimate of the standalone selling price of each distinct good or service in the contract.

The Company determines its best estimate of standalone selling price using average selling prices over 3- to 12-month periods of data depending on the products or nature of the services coupled with current market considerations.

If the product or service does not have a history of sales or if sales volume is not sufficient, including instruments under reagent rental agreements, the Company has estimated the standalone selling price to be the incremental sales price generally charged for consumables to customers under the reagent rental agreements in relation to amounts charged to other customers.

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Cost of Revenue

Cost of revenue for products consists of the Company’s instrument cost from the manufacturer, raw material parts costs and associated freight, shipping and handling costs, contract manufacturer costs, royalties due to third parties, salaries and other personnel costs, overhead and other direct costs related to those sales recognized as product revenue in the period.

Cost of other revenue consists of salaries and other personnel costs, and facility costs associated with costs related to warranties and other costs of servicing equipment at customer sites.

Cost of revenue for products consists of the Company’s raw material parts costs and associated freight, shipping and handling costs, contract manufacturing costs, royalties due to third parties, salaries and other personnel costs, equipment depreciation, overhead and other direct costs related to those sales recognized as product revenue in the period.

Cost of service and other revenue consists of salaries and other personnel costs, and facility costs associated with costs related to warranties and other costs of servicing equipment at customer sites, and performance of diagnostics services.

Research and Development Costs

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These awards are accounted for as equity awards.

To-date, the Company has issued stock options and recognizes stock-based compensation expense net of actual forfeitures on a straight-line basis over the underlying award’s requisite service period, which is generally the contractual term, as measured using the award’s grant date fair value.

To-date, the Company has issued stock options and recognizes stock-based compensation expense net of actual forfeitures on a straight-line basis over the underlying award’s requisite service period, which is generally the vesting period, as measured using the award’s grant date fair value.

The Company accounts for income taxes under 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 included in the financial statements.

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Any accrued interest and penalties are included within the related tax liability.

Comprehensive Loss

Net loss and comprehensive loss were the same for all periods presented;

therefore, a separate statement of comprehensive loss is not included in the financial statements.

Segment Reporting

Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision-maker in making decisions regarding resource allocation and assessing performance.

The Company and its chief operating decision-maker, the Chief Executive Officer, views the Company’s operations and manages its business in one operating segment.

The Company chief operating decision-maker, the Chief Executive Officer, views the Company’s operations and manages its business as one operating segment.

Net Loss Per Share

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Pre-funded warrants from the Company's follow-on offering have been treated as if they were common shares outstanding on the date of issuance.

The Company’s potentially dilutive securities which include convertible preferred stock and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share.

The Company’s potentially dilutive securities which include outstanding warrants to purchase stock and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they

would be anti-dilutive to the net loss per share.

For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding due to the Company’s net loss position.

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Common warrants 15,174,114 24,026,550

Accounting Standards Updates Adopted

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No.

2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements and some cost guidance included in the Accounting Standards Codification (ASC).

This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

The ASU also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract.

The Company adopted the standard on January 1, 2019 using the modified retrospective method.

The Company did not have a cumulative effect of initially applying the new standard to all incomplete contracts as there were no changes in the timing of revenue recognition upon adoption.

The Company did not elect to apply any practical expedients.

In addition to being required, the adoption of this ASU is preferable as it increases comparability in accounting for economically similar transactions across companies in varying industries and provides more useful information to user of financial statements through improved disclosure requirements.

Total 20,463,615 25,769,462

Recently Issued But Not Yet Adopted Accounting Pronouncements

On April 5, 2012, the Jump-Start Our Business Startups Act (the “JOBS Act”) was signed into law.

In April 2012, the Jump-Start Our Business Startups Act (the “JOBS Act”) was signed into law.

The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for an emerging growth company.

As an emerging growth company, the Company may elect to adopt new or revised accounting standards when they become effective for non-public companies, which typically is later than when public companies must adopt the standards.

The Company has elected to take advantage of the extended transition period afforded by the JOBS Act and, as a result, will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for emerging growth companies, which are the dates included below.

In February 2015, the FASB issued ASU 2016-02, Leases (Topic 842) , which amends the FASB Accounting Standards Codification and creates Topic 842, “Leases.” The new topic supersedes Topic 840, “Leases,” and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements.

The guidance is effective for reporting periods beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020.

ASU 2016-02 mandates a modified retrospective transition method.

In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements which allows entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity and include required disclosures for prior period.

The Company anticipates implementing the standard by taking advantage of the alternative transition method and will apply the transition approach as of the beginning of the period of adoption and will not be restating comparative periods.

The Company is in the process of evaluating the impact of adoption of the ASU on the financial statements.

The Company has elected to take advantage of the extended transition period afforded by the JOBS Act and, as a result, unless the Company elects early adoption of any standards, will adopt the new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-public companies, which are the dates included below.

In February 2015, the FASB issued Accounting Standards Update ("ASU") 2016-2, Leases (Topic 842), which amends the accounting guidance for leases and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements.

ASU 2016-2 initially mandated a modified retrospective transition method, however, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842):

Targeted Improvements, which amends ASU 2016-2, permitting entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity in the year of adoption and include required disclosures for prior periods but will not restate prior periods.

The Company anticipates implementing the accounting guidance for leases using the alternative method beginning with the annual reporting period ending December 31, 2022 and interim reporting periods in 2023.

The Company is currently evaluating impact that adoption of this standard will have on its consolidated financial statements and related disclosures.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses:

Measurement of credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities.

The standard is effective for the company beginning in the first quarter of 2023, with early adoption permitted.

The Company is currently evaluating impact that adoption of this standard will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No.

2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity's Own Equity ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current U.S.

ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas.

The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years beginning after December 15, 2021.

For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and adoption must be as of the beginning of the Company's annual fiscal year.

The Company is currently evaluating the impact that adoption of this standard will have on its consolidated financial statements and related disclosures.

Fair Value Measurements

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As a basis for considering such assumptions, the accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

As of December 31, 2019, cash and cash equivalents are valued using level 1.

Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

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supported by little or no market activity).

Financial instruments that are not re-measured at fair value include cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, and debt.

The carrying values of these financial instruments approximate their fair values.

The Company estimates the fair value of any cash equivalents using level 1 inputs.

The Company estimates the fair value of all other financial instruments using Level 2 inputs.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

2020 December 31,

Prepayment to supplier $ 1,145,705 $ 409,851

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Other current assets 461,503 457,062

Total $ 2,249,696 $ 1,169,346

Property and Equipment, Net

Property and equipment, net consist of the following:

2020 December 31,

Computer and office equipment $ 492,436 $ 476,402

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Leasehold improvements 1,888,873 1,875,647

12,366,542 8,223,091

Less accumulated depreciation and amortization ( 7,456,128 ) ( 6,273,466 )

The Company recorded depreciation expense for property and equipment of $1,127,850 and $1,320,521 for the years ended December 31, 2019 and 2018 , respectively, in operating expenses.

The cost of product revenue includes $41,118 for the year ended December 31, 2019 and $0 for the year ended December 31, 2018.

$ 4,910,414 $ 1,949,625

For the years ended December 31, 2020 and 2019 the Company recorded depreciation expense of $ 1,369,433 and $ 1,127,850 , respectively, which includes an allocation to cost of revenue of $ 544,176 and $ 41,118 , respectively.

Intangible Assets, Net

Intangible assets, net, consist of the following:

December 31, 2020 Customer Relationships Trade Name Total

Gross balance $ 950,000 $ 630,000 $ 1,580,000

Accumulated amortization ( 63,333 ) ( 42,000 ) ( 105,333 )

Intangibles, net $ 886,667 $ 588,000 $ 1,474,667

The Company recorded amortization expense for intangible assets of $ 105,333 for the year ended December 31, 2020, in selling, general and administrative expenses.

The customer relationships and trade name intangibles are both being amortized on a straight-line basis over their estimated useful lives of five years , and have remaining amortization periods of 4.7 years.

Future amortization expense of intangible assets is as follows:

2025 and thereafter 210,667

Total $ 1,474,667

Accrued Expenses

Accrued expenses consist of the following:

2020 December 31,

Compensation expenses $ 3,250,709 $ 1,805,357

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Goods received not invoiced 567,092 191,721

Taxes payable 562,149 268,129

Insurance 357,618 —

Professional fees and royalties 247,222 213,514

Employee expense reimbursements

Interest 98,152 125,743

Other 515,868 354,685

Total $ 5,598,810 $ 3,225,431

Long-Term Debt

Western Alliance LSA

In March 2016, the Company entered into a new term Loan and Security Agreement with the Western Alliance Bank (the “Western Alliance LSA”) for $7.0 million .

The loan proceeds were used to repay the outstanding $5.0 million loan with Square 1 Bank, as required by the twelfth amendment to that certain Loan and Security Agreement with Square 1 Bank.

Additionally, in conjunction with the entry into Western Alliance LSA, the Company issued to Western Alliance Bank a warrant to purchase 510,417 shares of Series D convertible preferred stock at an exercise price of $0.48 per share.

The Company valued the warrant to purchase Series D convertible preferred stock using the Black-Scholes-Merton model, and the initial fair value of the warrant to purchase Series D convertible preferred stock of $65,384 was recorded as a debt discount and was being amortized to interest expense over the term of the loan.

Upon the closing of the IPO in August 2018, the warrants exercisable for shares of Series D convertible preferred stock were adjusted to warrants exercisable for 11,925 shares of common stock for $20.56 per share.

The warrants expire in March 2026.

In December 2016, the Western Alliance LSA was amended, and in conjunction with this amendment, the Company issued to Western Alliance Bank a warrant to purchase 291,667 shares of Series D-1 convertible preferred stock.

The Company valued the warrant to purchase Series D-1 convertible preferred stock using the Black-Scholes-Merton model, and the initial fair value of the warrant to purchase Series D-1 convertible preferred stock of $34,300 was recorded as a debt discount and was being amortized to interest expense over the term of the loan.

Upon the closing of the IPO in August 2018, the warrants exercisable for shares of Series D-1 convertible preferred stock were adjusted to warrants exercisable for 6,814 shares of common stock for $20.56 per share.

The warrants expire in December 2026.

In February 2018, the Western Alliance LSA was amended, requiring the Company to secure $21.0 million in funding prior to June 30, 2018.

As part of the amendment, Western Alliance Bank agreed to forbear from exercising any of its default remedies set forth in the Western Alliance LSA as a result of the Company’s previous loan default as of December 31, 2017.

In June 2018, the Western Alliance LSA was amended, replacing previously amended funding requirements and requiring the Company to secure $5.0 million in funding prior to August 3, 2018.

Additionally, the amendment restricted the Company’s use of all cash collected from customers, received on and after amendment date, until the Company collected a total of $2.5 million .

As part of this amendment, Western Alliance Bank waived the existing default.

In June 2018, the Company repaid the Western Alliance LSA in connection with the MidCap Financial CSA (as defined below).

In November 2018, the Company entered into an Amendment Agreement with Western Alliance Bank to amend (i) that certain Warrant to Purchase Stock, dated March 8, 2016, (ii) that certain Warrant to Purchase Stock, dated December 9, 2016 ((i) and (ii) collectively, the “Bank Warrants”) and (iii) the Western Alliance LSA.

Pursuant to Section 2.6(g) of the Western Alliance LSA, the Company was obligated to pay Western Alliance Bank a success fee of $210,000 in connection with the IPO.

As part of the Amendment Agreement, this success fee was decreased from $210,000 to $160,000 and the exercise price of the Bank Warrants was decreased to $6.99 per share.

MidCap Financial CSA

In June 2018, the Company entered into a Credit and Security Agreement with MidCap Financial Trust (the “MidCap Financial CSA”) which provided a $15.0 million term loan facility available in a first tranche of $10 million (“Tranche 1”), a second tranche of $2.5 million and a third tranche of $2.5 million .

The Company borrowed $10.0 million from Tranche 1 immediately upon execution of the MidCap Financial CSA.

Proceeds from the loan were used to repay the outstanding $7.0 million due to Western Alliance LSA.

In March 2019, the Company repaid the MidCap Financial CSA in connection with the Innovatus LSA (as defined below).

The MidCap Financial CSA bore interest at an annual rate of one month LIBOR plus 7.5% , subject to a LIBOR floor of 1.5% .

The loan had a 60 -month term, with interest only for the first 18 months and straight-line amortization of principal and interest for the remaining 42 months .

The MidCap Financial CSA was secured by substantially all of the assets of the Company and was scheduled to mature in July 2023.

The Company paid issuance fees of approximately $0.3 million at the inception of the loan, which was recorded as a debt discount and was recognized as additional interest expense over the term of the loan.

Subject to certain limited exceptions, amounts prepaid in relation to the MidCap Financial CSA are subject to a prepayment fee determined by multiplying the amount being prepaid by 4% in the first year of the term, 3% in year two, and 2% thereafter.

When the Company paid-off the MidCap Financial CSA, it incurred a prepayment fee of $0.4 million .

The prepayment fee is recognized as loss on debt extinguishment during the year ended December 31, 2019.

In addition, upon repayment of the total amounts borrowed, the Company was required to pay an end of term charge equal to 4% of the total amount borrowed.

Accordingly, an end of term charge of $0.4 million was included in other long-term liabilities on the balance sheet as of December 31, 2018.

The end of term charge was being recognized as additional interest expense over the term of the loan.

The unamortized portion of the end of term charge was written-off as loss on debt extinguishment during the year ended December 31, 2019 in conjunction with the Company's repayment of the MidCap Financial CSA.

In conjunction with entering into the MidCap Financial CSA, the Company issued to MidCap a warrant to purchase 625,000 shares of Series D-1 convertible preferred stock at an exercise price of $0.48 per share that was immediately exercisable.

The Company valued the warrant to purchase Series D convertible preferred stock using the Black-Scholes-Merton model, and the initial fair value of the warrant to purchase Series D-1 convertible preferred stock of $0.2 million was recorded as a debt discount and was being amortized to interest expense over the term of the loan.

The assumptions used in the model were:

the fair value of the Series D-1 convertible preferred stock, which was determined using an OPM analysis, an expected life of 10 years, a risk-free interest rate of 2.83% and an expected volatility of 59% .

Upon the closing of the IPO in August 2018, the warrant was adjusted from being exercisable for shares of Series D convertible preferred stock to exercisable for 14,602 shares of common stock for $20.56 .

The warrant expires on June 29, 2028 .

In addition, MidCap invested $1.0 million in the convertible note offering at terms identical to other investors described in the Convertible Notes section below.

Paycheck Protection Program

On April 17, 2020, the Company received loan proceeds of approximately $ 1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (“the PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S.

Small Business Administration (the “SBA”).

The PPP Loan accrued interest at a rate of 1.00% per annum, and was subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.

In February 2021, the Company applied for forgiveness of the PPP Loan, and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of such loan granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”).

Pursuant to the Paycheck Protection Program Flexibility Act (the “PPPFA”), enacted on June 5, 2020, the Company was permitted to use loan proceeds on Eligible Costs through October 2, 2020, or the date that was 24 weeks from the PPP Loan origination date (the “Covered Period”).

In order to apply for the PPP Loan, the Company was required to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support the Company’s ongoing operations.

This certification further required the Company to take into account the maintenance of its workforce, the Company’s need for additional funding to continue operations, and the Company’s ability to access alternative forms of capital in the current market environment to offset the effects of the COVID-19 pandemic.

Innovatus LSA

In March 2019, the Company entered into a Loan and Security Agreement (the “Innovatus LSA”) by and among Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent and the lenders listed on Schedule 1.1 thereto, including East West Bank (the “Bank”, and together with the lenders, the “Lenders”).

Under the Innovatus LSA, Innovatus agreed, among other things, to make a first term loan of $17.5 million to the Company (the “Term A-1 Loan”), a second term loan of $2.5 million to the Company (the “Term A-2 Loan”) and a third term loan of $5.0 million to the Company (the “Term B Loan”), each upon satisfaction of certain funding conditions.

In addition, the Bank has agreed to make available to the Company a revolving line of credit in an amount not to exceed $5.0 million (the “Revolver”).

Under the Innovatus LSA, interest is payable, at the Company’s option (i) in cash at a rate of 10.25% per annum or (ii) at a discounted rate of 7.25% in cash, with 3.0% of the 10.25% per annum rate (the “PIK Loan”) added to the principal of the loan and subject to accruing interest through the end of the interest only payment period.

Interest only payments are due on the first of each month through March 2022.

Beginning in April 2022, the Company will make equal monthly payments of principal and interest over 24 months.

At maturity in March 2024 (or earlier prepayment), the Company is also required to make a final payment equal to 3.75% of the original principal amount borrowed.

In March 2019, the Company entered into a Loan and Security Agreement (the “LSA”) by and among Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent and the lenders listed on Schedule 1.1 thereto, including East West Bank.

The LSA provided a first term loan of $ 17.5 million, a second term loan of $ 2.5 million and a third term loan of $ 5.0 million (collectively, “Term Loans”) if the Company satisfied certain funding conditions.

Interest on the Term Loans is due on the first of each month at a rate of 10.25 % per annum in cash or a discounted rate of 7.25 % in cash with 3.0 % of the 10.25 %

per annum rate added to the principal of the loan and subject to accruing interest through the end of the interest only payment period, which ends March 1, 2022.

At inception, the Company elected to pay interest in cash at a rate of 7.25 % per annum and have 3.0 % per annum of the interest added back to the outstanding principal.

The Innovatus LSA provides for prepayment fees of 3.0% of the outstanding balance of the loan if the loan is repaid on or prior to March 14, 2020, 2.0% of the amount prepaid if the prepayment occurs after March 14, 2020 but prior to March 14, 2021, 1.0% of the amount prepaid after March 14, 2021 but prior to March 14, 2022 and 0% of the amount prepaid if the prepayment occurs thereafter.

In addition, upon repayment of the total amounts borrowed, the Company is required to pay an end of term charge of $0.8 million .

This end of term charge is being recognized as additional interest expense over the term of the Innovatus LSA.

The Innovatus LSA is collateralized by substantially all of the Company’s assets, including the Company's intellectual property.

The Innovatus LSA requires the Company to comply with various affirmative and negative covenants, including:

(1) a liquidity covenant requiring the Company to maintain a minimum cash balance at all times in a collateral account;

(2) a revenue covenant requiring the Company to meet certain minimum revenue targets measured at the end of each calendar quarter.

The Innovatus LSA also includes standard events of default, including a provision that Innovatus could declare an event of default upon non-compliance with covenants or the occurrence of any event that it interprets as having a material adverse change in the Company's business, operations, or condition, a material impairment on the Company's ability to pay the secured obligations under the Innovatus LSA, or upon a material adverse effect on the collateral under the agreement, thereby requiring the Company to repay the loan immediately, together with a prepayment fee and other applicable fees.

Additionally, in connection with the Innovatus LSA, in March 2019, the Company entered into a Common Stock Purchase Agreement (the “Innovatus Purchase Agreement”) with certain entities affiliated with Innovatus (the “Innovatus Investors”), pursuant to which the Company agreed to issue and sell 406,504 shares of common stock at $3.69 per share for proceeds of $1.5 million .

Upon execution of the Innovatus Purchase Agreement, the Company sold all of such shares to the Innovatus Investors.

Because the shares were issued at a discount to the fair market value of the Company’s common stock on the issuance date, the Company recorded the difference of $0.2 million between the issuance price and fair value which was allocated to the debt on a relative fair value basis.

In March 2019, in connection with the receipt of $20.0 million in funding with respect to the Term A-1 Loan and Term A-2 Loan, the Company issued to Innovatus a warrant to purchase up to 161,987 shares of common stock at an exercise price of $4.63 per share, which has a term of 10 years.

As of December 31, 2020, the effective interest rate, including debt issuance costs, for Term Loans was 16.7 %.

Beginning in April 2022, the Company must make 24 equal monthly payments of principal and interest with a final maturity date in March 2024, which may be earlier due to an event of default if not cured within time specified.

The LSA provides for prepayment fees of 3.0 % of the outstanding balance of the loan if the loan is repaid on or prior to March 14, 2020, 2.0 % of the amount prepaid if the prepayment occurs after March 14, 2020 but prior to March 14, 2021, 1.0 % of the amount prepaid after March 14, 2021 but prior to March 14, 2022 and 0 % of the amount prepaid if the prepayment occurs thereafter.

In addition, upon the final repayment of the total amounts borrowed, the Company is required to pay an end of term fee of $ 0.8 million.

This end of term fee is being recognized as interest expense over the term of the LSA.

The LSA also provides for a revolving line of credit in an amount not to exceed $ 5.0 million (the “Revolver”).

The Company may repay and reborrow amounts under the Revolver at any time prior to the March 1, 2024 maturity date without penalty or premium.

The outstanding balance of amounts borrowed under the Revolver bears interest at a rate equal to 2.0 % above the prime rate, per annum, as specified in the terms of the Revolver.

The LSA allows the Company to borrow and repay amounts at any time prior to the maturity date in 2024.

The LSA is collateralized by substantially all of the Company’s assets, including its intellectual property.

The LSA requires the Company to comply with various affirmative and negative covenants, including:

(1) a liquidity covenant requiring the Company to maintain a minimum cash balance at all times in a collateral account and (2) a revenue covenant requiring the Company to meet certain minimum revenue targets measured at the end of each calendar quarter.

The LSA also includes certain standard events of default, and a provision that Innovatus could declare an event of default upon the occurrence of any event that it interprets as having a material adverse impact to the Company's business, operations, or condition, a material impairment on the Company's ability to pay the secured obligations under the LSA, or upon a material adverse effect on the collateral under the agreement, thereby requiring the Company to repay the loans immediately, together with a prepayment fee and other applicable fees.

As of December 31, 2020, the Company believes there have been no events or changes in conditions that could require immediate repayment of amounts due to Innovatus.

In March 2019, in connection with the receipt of $ 20.0 million in proceeds from the Term Loans, the Company issued to Innovatus a warrant to purchase up to 161,987 shares of its common stock at an exercise price of $ 4.63 per share, which has a term of 10 years.

The Company applied the Black-Scholes option pricing model to estimate the fair value of the warrants, with the following assumptions:

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b) expected volatility of 66.93 %;

c) no dividend would be payable;

c) no dividend expected to be paid;

and d) expected life of 10 years.

Based on this model, the aggregate relative fair value of the warrants was determined to be $0.6 million .

Subject to the terms of the Innovatus LSA, the warrant to be issued in connection with funding of the Term B Loan will entitle the Lender to purchase up to 40,496 shares of the Company’s common stock and will have an exercise price of $4.63 per share.

The Company paid issuance fees of approximately $0.8 million which was recorded as part of the debt discount.

The issuance fees are amortized as additional interest expense over the life of the debt using the effective interest method.

The Company recognized the fair value of the warrants and the discount of the common stock as a debt discount and along with the issuance costs will amortize these amounts using the effective interest rate method over the life of the applicable term loan.

The effective interest rate as of December 31, 2019 was 13.7% .

In May 2019, the Company began to draw down on its $5.0 million revolving line of credit (the Revolver).

Through December 31, 2019, the Company had borrowed $5.1 million and had repaid $3.6 million under the Revolver.

The Company may repay and borrow amounts under the Revolver at any time prior to the March 1, 2024 maturity date without penalty or premium, at which time such amounts will become immediately due and payable.

The Company’s obligation to repay amounts borrowed under the Revolver is subject to acceleration upon the occurrence of certain specified events, including an event of default and a permitted prepayment of the term loans borrowed under the Loan Agreement.

The outstanding balance of amounts borrowed under the Revolver bear interest at a rate equal to 2.0% above the variable rate of interest, per annum, most recently announced by the Bank as its “prime rate,” whether or not such announced rate is the lowest rate available from the Bank.

In June 2019, the Innovatus LSA was amended to among other things:

Based on this model, the relative fair value of the warrant was determined to be $ 0.6 million, which was recorded as a debt discount and is being amortized as interest expense using the effective-interest method over the term of the LSA.

Pursuant to the LSA, if the Company borrows the third term loan of $ 5.0 million, Innovatus will be entitled to purchase up to an additional 40,496 shares of the Company’s common stock at an exercise price of $ 4.63 per share.

In addition, in connection with entry into the LSA, the Company paid fees to third parties of approximately $ 0.8 million which were recorded as a deduction of the debt liability and are being amortized as interest expense using the effective-interest method over the term of the LSA.

In June 2019, the LSA was amended to among other things:

(i) extend the deadline for the Company to maintain its domestic depository and operating accounts with the Bank, subject to a control agreement in favor of Innovatus, to July 31, 2019 and (ii) permit the Company to incur credit card indebtedness in an amount not to exceed $ 150,000 .

As of September 30, 2019 , the Company did not achieve a certain trailing twelve month revenue covenant under the Innovatus LSA.

In October 2019, the Company obtained a waiver letter (the “Waiver Letter”) from Innovatus, with respect to certain financial covenants under the Innovatus LSA.

Pursuant to the Waiver Letter, Innovatus agreed to allow the Company to cure its noncompliance with a revenue covenant as of September 30, 2019 so long as the Company (i) raised at least $10 million in gross proceeds from the sale of its securities in an underwritten public offering by October 31, 2019 and (ii) amended that certain Warrant to Purchase Stock, issued by the Company to Innovatus in March 2019 (the "Innovatus Warrant"), to decrease the exercise price of the Innovatus Warrant from $4.63 per share to $0.48 per share (the “Warrant Amendment”).

Also pursuant to the Waiver Letter, as consideration for the prospective waiver of a liquidity covenant, the Company agreed to issue to Innovatus 572,917 shares of the Company's common stock.

As a result of the amendment and shares issued, the Company recognized $549,955 in incremental debt issuance cost which is being amortized to interest expense over the remaining term.

In October 2019, the Company completed (i) its follow-on public offering, which resulted in gross proceeds to the Company, before deducting underwriting discounts and commissions and other offering expenses, of approximately $18.0 million and (ii) the Warrant Amendment.

In November 2019, the Company entered into a Common Stock Issuance Agreement (the “Innovatus Issuance Agreement”) with Innovatus, pursuant to which it issued Innovatus 572,917 shares of the Company’s common stock in accordance with the terms of

Also on November 8, 2019, the Company amended the Innovatus Registration Rights Agreement to include such shares of common stock as Registrable Securities as defined in such agreement.

As of September 30, 2019, the Company did not achieve the revenue covenant under the Innovatus LSA.

As a result, in October 2019, the Company obtained a waiver letter from Innovatus.

Pursuant to the waiver letter, Innovatus agreed to allow the Company to cure its noncompliance with the revenue covenant as of September 30, 2019 so long as the Company (i) raised at least $ 10 million in gross proceeds from the sale of its securities in an underwritten public offering by October 31, 2019 and (ii) amended the warrant to purchase stock, issued by the Company to Innovatus in March 2019 to decrease the exercise price of the warrant from $ 4.63 per share to $ 0.48 per share.

Also pursuant to the waiver letter, as consideration for the prospective breach of a liquidity covenant, the Company agreed to issue to Innovatus 572,917 shares of the Company's common stock.

As a result of the amendment and shares issued, the Company recognized $ 549,955 as a debt discount, which is being amortized as interest expense over the remaining term of the LSA.

As of December 31, 2019, the Company did not achieve certain financial covenants under the Innovatus LSA.

Subsequent to December 31, 2019, in March 2020, the Company and Innovatus entered into an amendment to the Innovatus LSA to, among other things, waive the events of default from not achieving the specific financial covenants for the December 31, 2019 measurement date, require an immediate partial repayment of $2,100,000 and an additional payment of $2,900,000 on the earlier of completion of an equity raise, as defined in the amendment, or April 30, 2020.

In addition, the amendment modified the liquidity covenant that requires the Company to maintain a minimum cash balance, which varies depending on borrowing capacity under the Revolver and operating cash flows but no less than $2 million , as well as modified the events of default.

Furthermore, the amendment provides for a cure period for the minimum revenue financial covenants as long as the Company submits updated management plans and financial projections, which are subject to Innovatus approval, and completes an additional equity raise, as defined in the amendment, within 45 days of the breach.

The amendment also included a reduction in the minimum revenue covenant amounts.

In connection with the March 2020 amendment, the Company is obligated to pay Innovatus a waiver fee in the amount of $200,000 and a prepayment fee of $100,000, payable in cash or Company stock at the Company's election, no later than following completion of the additional equity raise.

As of December 31, 2019, the Company has classified all borrowings from Innovatus as current debt as the Company has not yet met the requirements of the cure described above.

Convertible Notes

In February 2018, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with various investors, which included related parties (the “Investors”), pursuant to which the Company agreed to sell to the Investors convertible promissory notes (the “Convertible Notes”) in the original principal amount of up to $16.0 million .

In April 2018, the Company amended the Note Purchase Agreement to, among other things, increase the principal amount available for issuance under the Note Purchase Agreement to $18.4 million .

In June 2018, the Note Purchase Agreement was amended to increase the principal amount available for issuance from $18.4 million to $19.4 million .

In August 2018, the outstanding convertible promissory notes of $14.9 million of principal and interest were converted into 3,239,294 shares of common stock upon completion of the IPO.

As of December 31, 2019 and 2018, there are no convertible notes outstanding.

The Convertible Notes had a maturity date of September 30, 2018 and were convertible either into the Company’s common stock or convertible preferred stock, dependent on the conversion events.

As a result, in March 2020, the Company and Innovatus entered into an amendment to the Innovatus LSA (the “Second Amendment”) to, among other things:

(i) waive the events of default from not achieving the specific financial covenants for the December 31, 2019 measurement date, (ii) require an immediate partial repayment of $ 2.1 million, (iii) require an additional partial repayment of $ 2.9 million on the earlier of completion of an Equity Event (as defined in the Second Amendment), or April 30, 2020, (iv) modify the liquidity covenant, such that the Company’s minimum cash balance shall vary based on outstanding borrowing capacity under the Revolver (provided, however, that the Company shall maintain a minimum cash balance of $ 2 million at any given time), (v) reduce the dollar amount of certain minimum revenue covenants measured as of the end of each calendar quarter (each, a “Revenue Covenant”) and (vi) modify the terms of certain events of default.

For example, the Second Amendment provides for a cure

period in connection with the breach of certain minimum revenue financial covenants, as long as the Company submits an updated management plan and financial projections, which are subject to Innovatus approval, and completes a Qualified Financing Event (as defined in the Second Amendment) within 45 days of such breach.

In connection with the Second Amendment, the Company was obligated to pay Innovatus a waiver fee in the amount of $ 200,000 and a prepayment fee of $ 100,000 , payable in cash or in shares of the Company’s common stock at the Company's election, no later than following completion of the Equity Event, as defined in the Second Amendment.

As described in Note 9 below, the Company completed a follow-on public offering in April 2020 that constituted an Equity Event under the Second Amendment.

A portion of the proceeds from the follow-on offering were used to pay-down $ 2.9 million of principal balance outstanding under the Term Loans in accordance with the Second Amendment.

In addition, the Company issued 872,601 shares of its common stock to Innovatus to satisfy the $ 200,000 waiver fee and the $ 100,000 prepayment fee due under the Second Amendment.

As a result of the amendment and shares issued, the Company recognized $ 300,000 as a debt discount, which is being amortized as interest expense over the remaining term of the LSA.

Also pursuant to the Second Amendment, the Company subsequently registered such shares for resale on a registration statement on Form S-3 (the “Registration Statement”) filed with the Securities and Exchange Commission on June 22, 2020 and declared effective on July 7, 2020.

The Company has not and will not receive any of the proceeds from the offering described in the Registration Statement.

In connection with the Merger, the Company and Lineagen entered into a Third Amendment (the “Third Amendment”) to the Innovatus LSA.

Among other things, the Third Amendment adds Lineagen as a “Borrower” under the Innovatus LSA and updates certain financial covenants in light of Lineagen becoming a wholly owned subsidiary of the Company.

On December 31, 2020, the Company obtained a waiver from Innovatus of its previously disclosed noncompliance, as of September 30, 2020, with the revenue covenant contained in the LSA.

As of December 31, 2020, the Company was in compliance with the covenants under the Innovatus LSA.

Summary of Debt Obligations

Debt obligations consist of the following:

Innovatus LSA

MidCap Financial CSA

The carrying value of the Company's debt for the periods presented was as follows:

2020 December 31,

Term Loans 15,980,814 $ 20,473,436

Revolver — 1,497,955

PPP Loan 1,774,600 —

Total principal 17,755,414 21,971,391

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Total carrying value of debt $ 16,325,501 $ 20,084,945

Future minimum scheduled principal payments, including the impact of the March 2020 amendment discussed above, for the term loan obligation as of December 31, 2019 are as follows:

The Company's Revolver allows the Company to borrow and repay amounts at any time prior to the maturity date in 2024.

As of December 31, 2020, future minimum scheduled principal payments for the Term Loans are as follows:

2022 7,811,845

2023 8,049,660

2024 1,893,909

2025 and thereafter —

Total $ 17,755,414

These future minimum scheduled principal payments include scheduled principal payments on the PPP Loan as of December 31, 2020.

However, as discussed above, In March 2021, the Company received forgiveness of the full principal amount and accrued interest under PPP Loan.

Stockholders’ Equity

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Upon execution of the Aspire Purchase Agreement, the Company sold 272,479 shares of the Company’s common stock to Aspire Capital at $ 3.67 per share for net proceeds of approximately $ 1.0 million.

Aspire Capital is committed to purchase up to $9.0 million of additional shares of common stock, subject to beneficial ownership limitations, solely at the Company’s request from time to time during a 30 month period beginning in April 2019 and at a per share purchase price equal to the lesser of:

Aspire Capital was committed to purchase up to $ 9.0 million of additional shares of common stock, subject to beneficial ownership limitations, solely at the Company’s request from time to time during a 30 month period beginning in April 2019 and at a per share purchase price equal to the lesser of:

• the lowest sale price of the Company’s common stock on the purchase date;

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As of December 31, 2020, due to beneficial ownership limitations, the Company cannot sell additional shares of its common stock to Aspire Capital.

Follow-on Public Offering

Follow-on Public Offerings

In October 2019, the Company completed an underwritten public offering of 10,013,600 shares of its common stock and, to certain investors, pre-funded warrants to purchase 10,923,958 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 20,937,558 shares of its common stock.

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The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance.

The gross proceeds to the Company, before deducting offering costs of $2.0 million, were approximately $18.0 million .

Convertible Preferred Stock

Prior to the IPO, there were 121,992,497 shares of convertible preferred stock outstanding.

As a result of the IPO, each 42.8 shares of the Company's convertible preferred stock was converted into one share of common stock at a conversion price of $1.3995 for each share of Series A, B and B-1 convertible preferred stock, $1.4043 for each share of Series C convertible preferred stock and $0.48 for each share of Series D and D-1 convertible preferred stock.

As of December 31, 2019, there are no shares of the Company's convertible preferred stock outstanding.

Convertible Preferred Stock Warrants

In March 2016, in conjunction with the Western Alliance LSA, the Company issued a warrant to purchase 510,417 shares of Series D convertible preferred stock to Western Alliance Bank at an exercise price of $0.48 per share.

Additionally, in conjunction with the first amendment to the Western Alliance LSA, on December 9, 2016, the Company issued a warrant to purchase 291,667 shares of Series D-1 convertible preferred stock to Western Alliance Bank at an exercise price of $0.48 per share.

Both of these warrants expire in 2026.

In June 2018, in conjunction with the MidCap Financial CSA, the Company issued a warrant to purchase 625,000 shares of Series D-1 convertible preferred stock to MidCap Financial at an exercise price of $0.48 per share.

This warrant expires in 2028.

There were no warrants exercisable for the Company’s convertible preferred stock following the closing of the IPO.

Of the 37.2 million warrants previously exercisable for preferred stock, 35.7 million warrants expired on the effective date of the IPO.

The remaining 1.5 million warrants previously exercisable for preferred stock were adjusted to become exercisable for common stock.

Prior to the IPO, the Company estimated fair value of the convertible preferred stock warrants at the time of issuance and subsequent re-measurement using the Black-Scholes-Merton model at each reporting date.

On the date of the IPO and going forward, all outstanding warrants are accounted for as equity and are not subject to re-measurement.

The gross proceeds to the Company, before deducting offering costs of $ 2.0 million, were $ 18.0 million.

In April 2020, the Company completed an underwritten public offering of 16,896,000 shares of its common stock and, to certain investors, pre-funded warrants to purchase 37,650,000 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 54,546,000 shares of its common stock.

Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock.

The public offering price of each share of common stock and accompanying common warrant was $ 0.33 and $ 0.329 for each pre-funded warrant.

The pre-funded warrants are immediately exercisable at a price of $ 0.001 per share of common stock.

The common warrants are immediately exercisable at a price of $ 0.33 per share of common stock and will expire five years from the date of issuance.

The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance.

The gross proceeds to the Company, before deducting offering costs of $ 1.6 million, were $ 18.0 million.

The price to the public in the offering was $ 3.05 per share and the underwriters purchased the shares from the Company pursuant to the underwriting agreement at a price of $ 2.867 per share.

The gross proceeds were approximately $ 101.8 million before deducting underwriting discounts and commissions and other offering expenses.

The price to the public in the offering was $ 6.00 per share and the underwriters purchased the shares from the Company

pursuant to the underwriting agreement at a price of $ 5.64 per share.

The gross proceeds to us were approximately $ 230.0 million before deducting underwriting discounts and commissions and other offering expenses.

Shelf Registration Statement and Ladenburg At-the-Market Facility

In August 2020, the Company filed a shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $ 125.0 million of the Company’s securities, including up to $ 40.0 million of common stock pursuant to an at-the-market facility, or the Ladenburg ATM, with Ladenburg Thalmann & Co.

acting as sales agent.

During October through December 2020, the Company sold 27,025,384 shares of common stock under the Ladenburg ATM at an average share price of $ 0.82 , and received gross proceeds of approximately $ 22.1 million before deducting offering costs of $ 573,263 .

In January 2021, the Company sold an additional 6,298,152 shares of common stock under the ATM at an average share price of $ 2.68 , and received gross proceeds of approximately $ 16.9 million before deducting offering costs of $ 422,034 .

Common Stock Warrants

In November 2018, the Company issued to LifeSci Capital, LLC, a warrant to purchase 44,183 shares of its common stock, and to Russell Creative Group, a warrant to purchase 3,311 shares of its common stock (together, the “Service Provider Warrants”), each having an exercise price of $8.25 per share of the Company's common stock and a term of five years.

The Service Provider Warrants were issued in full satisfaction of the Company's obligations to pay to LifeSci Capital, LLC an aggregate of $150,000 for capital advisory and investor relations services and to Russell Creative Group an aggregate of $15,000 for branding and marketing services.

The Company valued these warrants using the Black-Scholes-Merton model.

The assumptions used in the model were:

the fair value of the Company's common stock, an expected life of 10 years, a risk-free interest rate of 2.93% , and an expected volatility of 62.28% .

In November 2018, the Company entered into an amendment agreement with Western Alliance Bank in order to amend the previously issued warrants to purchase preferred stock, dated March 8, 2016 and December 9, 2016, respectively, which, in connection with the IPO, were adjusted to warrants exercisable for shares of common stock.

Pursuant to the Amendment Agreement, the exercise price of the Bank Warrants was decreased from $20.56 per share to $6.99 per share.

All other terms of the Bank Warrants remain in full force and effect.

A summary of the Company’s warrant activity for the year ended December 31, 2020 was as follows:

Shares of Stock under Warrants

Shares of Stock under Warrants Weighted-

Price Weighted-

Term Aggregate

Outstanding at January 1, 2019 4,062,507 $ 6.32 4.67

32,023,503 $ 0.57 4.84

( 11,678,458 ) $ 0.07 $ 10,457,345

( 1,502 ) $ 59.90

Outstanding at December 31, 2019 24,406,050 $ 1.76 4.82 $ 7,932,689

95,396,000 $ 0.22 4.28

( 104,627,695 ) $ 0.28 $ 56,779,739

( 241 ) $ 59.90

Outstanding at December 31, 2020

15,174,114 $ 2.34 3.76 $ 26,840,636

During the year ended December 31, 2019, the Company recognized debt issuance costs of $ 675,617 for warrants issued in 2019.

During the year ended December 31, 2018, the Company recognized debt issuance costs of $176,813 , IPO offering costs of $361,149 and expensed $165,000 for warrants issued in 2018.

Subsequent to December 31, 2019, on March 2, 2020, the Company entered into a Warrants Amendment and Agreement with certain holders of warrants that were exercisable of 3,200,000 shares of common stock.

The agreement reduced the exercise price of existing warrants from $.86 per share to $0.75 per share, which were exercised following the amendment, in addition to issuing 3,200,000 new warrants at an exercise price per share of $1.06 that are exercisable six months from the date of issuance and have a contractual term of five years, six months.

In March 2020, the Company entered into a Warrants Amendment and Agreement with certain holders of warrants that were exercisable for 3,200,000 shares of common stock.

The agreement reduced the exercise price of existing warrants from $ .86 per share to $ 0.75 per share, which were exercised following the amendment, in addition to issuing 3,200,000 new warrants at an exercise price per share of $ 1.06 that were exercisable beginning six months from the date of issuance and have a contractual term of five years, six months .

2018 Equity Incentive Plan

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Stock Options

A summary of the Company’s stock option activity under the 2018 Plan and 2006 Plan is as follows:

Shares of Stock under Stock Options

A summary of the Company’s stock option activity is as follows:

Shares of Stock under Stock Options Weighted-

Outstanding at January 1, 2019 1,282,847 $ 6.90 9.2

Granted 716,960 $ 3.78

Exercised ( 50,665 ) $ 1.30 $ 151,819

Canceled ( 206,230 ) $ 7.20

Outstanding at December 31, 2019 1,742,912 $ 5.73 8.2 $ 4,356

Granted 4,385,666 $ 0.67

Exercised ( 3,290 ) $ 1.10 $ 7,261

Canceled ( 835,787 ) $ 3.37

Outstanding at December 31, 2020 5,289,501 $ 1.91 8.7 $ 10,177,942

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The Company recognized stock-based compensation expense for the years ended December 31, 2020 and 2019 was as follows:

Year Ended December 31,

Research and development $ 375,471 $ 240,692

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The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its equity shares have been publicly traded.

As a result, the Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission.

As a result, the Company uses the

simplified method for estimating the expected term as provided by the Securities and Exchange Commission.

The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the options.

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The Company reduces stock-based compensation expense for actual forfeitures during the period.

As of December 31, 2019 , the unrecognized compensation cost related to outstanding stock options was $2,512,964 and is expected to be recognized as expense over approximately 2.2 years.

As of December 31, 2020, the unrecognized compensation cost related to outstanding stock options was $ 2,834,598 and is expected to be recognized as expense over a weighted-average period of 2.55 years.

Employee Stock Purchase Plan

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Commitments and Contingencies

The Company leases certain office and lab space in San Diego, California under a non-cancelable operating lease, which has been amended from-time-to-time to expand the space and extend the term, which is currently through December 2025.

In November 2018, the Company entered into a sublease agreement (the “Sublease”) whereby a subtenant agreed to lease a portion of the office and lab space from the Company through December 2020.

We lease approximately 35,823 square feet of office, laboratory, and manufacturing space at our headquarters in San Diego, California, with the lease expiring December 31, 2025.

From November 2018 to December 31, 2020, sublet one of our two leased facilities in San Diego.

In December 2019, we amended the lease of one our two San Diego facilities to add 2,695 square footage and extend the lease through December 2025.

In February 2021, we amended the lease of our other San Diego facilities to extend the term from through December 2025.

We also lease 9,710 square feet of office space in a Salt Lake City, Utah under a non-cancelable operation lease with a term ending September 30, 2021.

The Company has the ability to enter into renewal negotiations, prior to the lease end date, with no specific terms.

Rent expense was $ 239,886 and $ 171,796 for the years ended December 31, 2020 and 2019, respectively, including the offsets for amortization of the leasehold incentive obligation of $ 225,052 for each of the years ended December 31, 2020 and 2019 and sublease rental income of $ 422,116 and $ 422,116 for the years ended December 31, 2020 and 2019, respectively.

The future minimum lease payments required under non-cancelable leases as of December 31, 2020, are summarized as follows:

Year Ending December 31,

Gross Payments

Scheduled Sublease Payments

Year Ending December 31, Total Payments

2025 and thereafter 728,671

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The Company has a contractual commitment with a supplier to purchase $ 165,000 of products every three months for an initial term of two years beginning in March 2019.

The contract can be terminated on 90 days written notice by either party.

The Company is subject to potential liabilities under various claims and legal actions that are pending or may be asserted.

The contract can be terminated with 90 days written notice by either party.

As of February 28, 2021, the Company was negotiating with the supplier to extend the agreement.

From time to time, the Company may be subject to potential liabilities under various claims and legal actions that are pending or may be asserted.

These matters arise in the ordinary course and conduct of the business.

The Company intends to continue to defend itself vigorously in such matters.

The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the financial statements.

An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated.

Based on the Company’s assessment, it currently does not have any amount accrued as it is not a defendant in any claims or legal actions.

Significant components of the Company’s deferred tax assets at December 31, 2019 and 2018 are shown below.

Deferred tax assets:

Net operating loss carryforwards

Research and development credits

valuation allowance

Deferred tax assets, net of valuation allowance

Based on the Company’s assessment, it currently does not have any material loss exposure as it is not a defendant in any claims or legal actions.

The domestic and foreign components of income (loss) from continuing operations are as follows:

Years Ended December 31,

Domestic $ ( 41,191,343 ) $ ( 29,851,428 )

Foreign 114,185 57,406

Loss before provision for income taxes $ ( 41,077,158 ) $ ( 29,794,022 )

The provision for domestic and foreign income taxes is as follows:

Years Ended December 31,

Foreign $ 24,158 $ 19,492

State and local 5,035 1,556

Income tax provision $ 29,193 $ 21,048

The domestic and foreign components of income (loss) from continuing operations are as follows:

Years Ended December 31,

Loss before provision for income taxes

A reconciliation of the income tax computed at the federal statutory tax rate to the expense for income taxes are as follows:

Reconciliations of the income tax computed at the federal statutory tax rate to the expense for income taxes are as follows:

Income taxes at statutory rate $ ( 8,626,202 ) $ ( 6,256,953 )

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Research credits ( 568,126 ) ( 429,596 )

Change in fair value of warrants

Other ( 3,740 ) —

Income tax expense $ 29,193 $ 21,048

Significant components of the Company’s deferred tax assets at December 31, 2020 and 2019 are as follows:

Deferred tax assets:

Net operating loss carryforwards $ 62,353,368 $ 41,780,806

Research and development credits 5,670,225 5,007,178

Other 2,249,177 1,406,893

Total 70,272,770 48,194,877

valuation allowance ( 70,272,770 ) ( 48,194,877 )

Deferred tax assets, net of valuation allowance $ — $ —

As of December 31, 2020, the Company has federal and state tax net operating loss carryforwards of $ 266.7 million and $ 114.0 million, respectively.

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The remaining federal tax loss carryforwards of $ 164.2 million and state tax loss carryforwards begin to expire in 2027 and 2023, respectively, unless previously utilized.

As of December 31, 2019, the Company also has federal and California research credit carryforwards of $4.9 million and $4.4 million, respectively.

As of December 31, 2020, the Company also has federal and California research credit carryforwards of $ 5.5 million and $ 5.0 million,

respectively.

The federal research credit carryforwards begin to expire in 2027 unless previously utilized.

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The Company has experienced net losses since inception, and the revenue and income potential of the Company’s business and market are unproven.

Due to the Company’s continuing research and development activities, the Company expects to continue to incur net losses into the foreseeable future.

Due to the Company’s continuing research and development ("R&D") activities, the Company expects to continue to incur net losses into the foreseeable future.

As such, the Company cannot conclude that it is more likely than not that its deferred tax assets will be realized.

In addition, utilization of net operating losses and research and development (“R&D”) credit carryforwards may be subject to limitations due to ownership changes that have occurred or that could occur in the future in accordance with applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), as well as similar state and foreign provisions.

In 2013, the Company completed its analysis for the period from inception through December 31, 2012, and determined the ownership changes had not resulted in any limitations on the existing net operating losses and R&D credits.

A valuation allowance of $ 70.3 million and $ 48.2 million as of December 31, 2020 and 2019, respectively, has been established to offset the deferred tax assets.

Utilization of the net operating losses and research and development ("R&D") credit carryforwards may be subject to annual limitations due to ownership changes that have occurred or that could occur in the future, as required by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the "Code"), as well as similar state and foreign provisions.

These ownership changes may limit the amount of net operating losses and R&D credit carryforwards that can be utilized annually to offset future taxable income and tax, respectively.

In general, an "ownership change" as defined by Section 382 of the Code results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of outstanding stock of a company by certain stockholders.

Due to the existence of the valuation allowance, limitations created by past or future ownership changes, if any, will not impact its effective tax rate.

During 2013, the Company completed a Section 382/383 analysis, from inception through December 31, 2012, regarding the limitation of the net operating losses and R&D credits.

Based upon the analysis, the Company determined that no ownership changes occurred during that period.

However, there may have been ownership changes subsequent to December 31, 2012, that could limit the Company's ability to utilize the net operating loss and R&D credit carryforwards.

Given the Company's ongoing net operating losses, the Company does not expect to utilize any of the net operating loss and R&D credit carryforwards in the near-term but will complete an updated assessment prior to using any in the future.

A reconciliation of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, are as follows:

The Company plans to complete an analysis prior to using any of the net operating losses and R&D credits.

Reconciliations of the beginning and ending amount of unrecognized tax benefits, excluding interest and penalties, are as follows:

Balance at beginning of the year $ 3,708,162 $ 3,389,136

Additions/(reductions) for tax positions - prior year 52,268 —

Increase related to current year positions 440,121 319,026

Balance at the end of the year $ 4,200,551 $ 3,708,162

The Company recognizes the benefit of uncertain tax positions at the largest amount that is more likely than not to be sustained upon audit by the relevant taxing authority.

An uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained.

Due to the valuation allowance position, none of the unrecognized tax benefits, if recognized, will impact the Company`s effective tax rate.

1 unchanged sentence

The Company’s practice is to recognize interest and penalties related to income tax matters in income tax expense.

The Company had no accrual of interest and penalties on the Company’s balance sheets and has not recognized interest and penalties in the statements of operations for the years ended December 31, 2019 and 2018.

The Company had no accrual of interest and penalties on the Company’s balance sheets and has not recognized any interest and penalties in the statements of operations for the years ended December 31, 2020 and 2019.

The Company is subject to taxation in the United States and the United Kingdom.

The Company is subject to examination by the United States and state authorities due to the carry forward of unutilized net operating losses and R&D credits.

The Company's tax years from 2007 (inception) are subject to examination by the United States and state authorities due to the carry forward of unutilized net operating losses and R&D credits.

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief and Economic Security Act (CARES Act).

The CARES Act is an emergency economic stimulus package that includes spending and tax breaks to strengthen the United States economy and fund a nationwide effort to curtail the effect of COVID-19.

While the CARES Act provides sweeping tax changes in response to the COVID-19 pandemic, some of the more significant provisions are the extension of the carryback period of certain losses to five years, and the suspension of the 80 percent limitation imposed by the TCJA on utilization of NOLs generated in 2018, 2019 and 2020 to offset taxable income generated in tax years prior to 2021.

The CARES Act also increased the ability to deduct interest expense from 30 percent, as imposed by the TCJA, to 50 percent of modified taxable income.

The CARES Act also provides for a credit against employee wages, the opportunity to defer payment of a portion of federal payroll taxes to December 2021 and December 2022, and enhanced small business loans to assist businesses impacted by the pandemic.

The Company's tax provision and financial position was not materially impacted by the CARES Act.

On December 27, 2020, the United States enacted the Consolidated Appropriations Act which extended and modified many of the tax related provisions of the CARES Act.

The Company does not anticipate a material impact of the Consolidated Appropriations Act on its tax provision or financial position.

Employee Benefits

3 unchanged sentences

The Company expensed matching contributions of $ 459,364 and $ 381,670 for the years ended December 31, 2020 and 2019, respectively.

Quarterly Financial Data (unaudited)

The unaudited quarterly financial information should be read in conjunction with the financial statements and related notes included elsewhere in this report.

The Company believes that the following unaudited information reflects all normal recurring adjustments necessary for a fair presentation of the information for the periods presented.

The operating results for any quarter are not necessarily indicative of results for any future period.

The following table contains selected unaudited financial data for each of the indicated periods:

Three months ended

September 30,

Cost of Revenue

Operating Expenses

Cost of Revenue

Operating Expenses

Acquisition of Lineagen

In August 2020, the Company, Merger Sub, Lineagen, and Michael S.

Paul, Ph.D., solely in his capacity as exclusive agent and attorney-in-fact of the security-holders of Lineagen, entered into the Merger Agreement.

Pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into Lineagen whereupon the separate corporate existence of Merger Sub ceased, with Lineagen continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company.

Lineagen’s expertise in development, commercialization and reimbursement of laboratory-developed tests provides a platform for accelerating sales growth for the Company’s Saphyr system.

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the shares of capital stock of Lineagen and all options of Lineagen that were issued and outstanding immediately prior to the Effective Time were automatically cancelled and extinguished without any payment with respect thereto.

Certain holders of convertible notes and other indebtedness of Lineagen at the closing of the Merger (the “Closing”) received common stock of the Company.

The total number of shares of the Company’s common stock issued or reserved for issuance as consideration for the Merger is 6,167,510 shares, subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen (the “Merger Shares”).

925,126 of the Merger Shares (the “Escrowed Shares”) will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Merger Agreement.

Also as consideration for the Merger, pursuant to the Merger Agreement, the Company paid approximately $ 1.9 million in cash to certain creditors and assumed certain liabilities of Lineagen totaling approximately $ 2.9 million, reflective of the Company's preliminary estimate of the post-closing purchase price adjustment (which adjustment is subject to finalization pursuant to the terms of the Merger Agreement).

In addition, on August 21, 2020, concurrent with the Closing, the Company paid approximately $ 1.1 million to satisfy all outstanding principal and accrued interest amounts due pursuant to that certain Promissory Note, dated April 22, 2020, by and between Lineagen and Silicon Valley Bank (the “Lineagen PPP Loan”), issued pursuant to the CARES Act administered by the SBA.

The Lineagen PPP Loan was repaid by the Company prior to maturity without penalty.

The Company accounted for its acquisition of Lineagen using the acquisition method of accounting pursuant to ASC 805.

The tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date, and the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed was recorded to goodwill.

Goodwill relates to the expected synergies from combining the operations of the companies.

The acquisition was structured as a stock sale and therefore goodwill is non tax deductible.

The purchase price allocation for the acquisition of Lineagen is preliminary and subject to revision as additional information about the fair value of assets and liabilities becomes available.

As permitted under ASC 805, the Company is allowed a measurement period, which may not exceed one year, in which to complete its accounting for the acquisition.

The Company has recognized provisional amounts for tax assets and liabilities, and subsequent adjustments during the measurement period to any of these items may affect the amount of goodwill recognized.

During the fourth quarter of 2020, the Company recorded a $ 232,000 adjustment to the original purchase price allocation to reduce the estimated fair value of accounts receivable, with the offsetting amount recorded to goodwill.

As discussed above, the purchase price for the acquisition of Lineagen is subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen.

The following is the estimated purchase price for the acquisition of Lineagen:

Cash (a) $ 1,939,977

Cash transferred for repayment of Lineage PPP Loan (b) $ 1,104,508

Shares common stock issued as consideration (c) 6,167,510

Estimated shares of common stock to be returned to the Company (c) ( 138,247 )

Stock price per share on closing date $ 0.68

Value of estimated common stock consideration (c) $ 4,099,899

Total estimated purchase price (c) $ 7,144,384

(a) The Company paid approximately $ 1.9 million in cash to certain creditors of Lineagen.

(b) The Company paid approximately $ 1.1 million to satisfy all outstanding principal and accrued interest amounts due pursuant to the Lineagen PPP Loan.

(c) The total number of shares of the Company’s common stock issued or reserved for issuance as consideration for the Merger was 6,167,510 shares.

925,126 of the Merger Shares will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Merger Agreement.

The total number of Merger Shares is subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen.

The value of the estimated common stock consideration and the total estimated purchase price incorporate the return of an estimated 138,247 Escrowed Shares to the Company based on a preliminary estimate of this adjustment.

The total estimated purchase price was allocated to Lineagen’s tangible and identifiable intangible assets acquired and liabilities assumed on based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill, as follows:

Cash and cash equivalents $ 596,276

Accounts receivable 336,996

Other assets 209,429

Property and equipment 110,670

Intangible assets 1,580,000

Goodwill 7,172,649

Accounts payable and other accrued liabilities ( 2,861,636 )

Net assets acquired $ 7,144,384

The acquisition date fair values of identifiable intangible assets acquired are as following:

Customer relationships $ 950,000

Trade name 630,000

Fair value of identifiable intangible assets $ 1,580,000

The customer relationships and trade name intangibles are both being amortized on a straight-line basis over their estimated useful lives of five years .

Straight-line amortization was determined to be materially consistent with the pattern of expected use of the intangible assets.

The Company recognized approximately $ 1.5 million of acquisition-related costs, including financial advisor fees, legal expenses and accounting fees during the year ended December 31, 2020.

These costs are included in the consolidated statement of operations in selling, general and administrative expense.

Also, the Company reported approximately $ 1.5 million of service revenue generated by Lineagen in its consolidated statement of operations from the date of acquisition through December 31, 2020.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Lineagen as if the companies had been combined as of January 1, 2019.

The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2019.

Years Ended December 31,

Revenue $ 11,938,353 $ 17,664,410

Net loss ( 42,317,665 ) ( 36,655,467 )

Basic and diluted net loss per share

$ ( 0.39 ) $ ( 1.74 )

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Lineagen to reflect (i) additional amortization that would have been charged based upon the fair value of the acquired intangible assets of $ 235,060 and $ 308,240 for the year ended December 31, 2020 and 2019, respectively;

(ii) the removal of interest expense related to the historical debt of Lineagen which was not acquired of $ 742,135 and $ 3.8 million for the year ended December 31, 2020 and 2019, respectively, and (iii) the removal of acquisition costs incurred by the companies of $ 2.1 million for the year ended December 31, 2020.

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data