What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-09 compared with 2023-05-09 · 120 added, 54 removed, 177 unchanged (50% of the section changed)

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Through our Bionano Laboratories business, we also provide diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities.

interpretation and reporting of copy number variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view.

Through our BioDiscovery business, we offer an industry-leading, platform-agnostic software solution, which integrates next-generation sequencing and microarray data designed to provide analysis, visualization, interpretation and reporting of copy number variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view.

Through our Purigen business, we offer nucleic acid extraction and purification solutions using proprietary ITP technology.

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In executing on our commercialization strategy, we expanded the utilization of our Saphyr ® system and:

• Grew our installed base to 259 as of March 31, 2023, an increase of approximately 47% from a total installed base of 176 as of March 31, 2022.

• Grew our installed base to 281 as of June 30, 2023, an increase of approximately 43% from a total installed base of 196 as of June 30, 2022.

Installed base represents the global number of Saphyr instruments installed at end-customer locations and therefore having the technology to process OGM.

• Sold 5,226 flowcells in the three-month period ended March 31, 2023, an increase of approximately 62% from 3,225 flowcells sold in the same quarter of 2022.

The Saphyr cartridge is the consumable that packages nanochannel arrays for DNA linearization.

• Sold 7,062 flowcells in the three-month period ended June 30, 2023, an increase of approximately 108% from 3,394 flowcells sold in the same quarter of 2022.

Sold 12,288 flowcells in the six-month period ended June 30, 2023, an increase of approximately 86% from 6,619 flowcells sold in the same quarter of 2022.The Saphyr cartridge is the consumable that packages nanochannel arrays for DNA linearization.

In its current form, the Saphyr cartridge has two configurations - one with two flowcells per cartridge and the other with three flowcells per cartridge.

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We closely monitor and comply with various applicable guidelines and legal requirements in the jurisdictions in which we operate.

The future effects of the COVID-19 pandemic, if any, are unknown and our financial results may be negatively affected as a result.

We may also experience long-term effects on the nature of the office environment and remote working, which may present strategy, operational, talent recruiting and retention and workplace culture challenges that may adversely affect our business.

During the three months ended March 31, 2023, we experienced supply chain challenges, which we largely attribute to the COVID-19 pandemic.

While the COVID-19 pandemic did not prevent us from operating our business during the three months ended March 31, 2023 and 2022, we experienced increased costs to secure certain component parts in our products and to produce our products at our contract manufacturers.

We expect these increased costs to remain high for the foreseeable future.

In the past, we have experienced supply chain challenges, attributable to such adverse geopolitical and macroeconomic developments including increased costs to secure certain component parts in our products and to produce our products at our contract manufacturers.

During the three and six months ended June 30, 2023, we did not experience material increases in our supply chain costs, but we may experience such increases in future fiscal periods We expect our costs to remain high for the foreseeable future.

As global economic conditions recover, business activity may not recover as quickly as anticipated, and it is not possible at this time to estimate the long-term impact that these and related events could have on our business, as the impact will depend on future developments, which are highly uncertain and cannot be predicted.

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The following table presents our revenue for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Product revenue $ 6,609,000 $ 4,795,000 $ 12,056,000 $ 9,001,000

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Asia Pacific includes China, Japan, South Korea, Singapore, India and Australia.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

$ % $ % $ % $ %

Americas $ 4,313,000 50 % $ 2,611,000 39 % $ 7,757,000 48 % $ 5,940,000 48 %

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We have incurred losses in each year since our inception.

Our net loss was $37.1 million for the three months ended March 31, 2023.

As of March 31, 2023, we had an accumulated deficit of $385.8 million.

Our net loss was $38.9 million and $76.0 million for the three and six months ended June 30, 2023.

As of June 30, 2023, we had an accumulated deficit of $424.8 million.

We expect to continue to incur significant expenses and operating losses as we:

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Accordingly, based on recurring losses from operations incurred since inception, the expectation of continued operating losses, and the need to raise additional capital to finance our future operations, we determined that there is substantial doubt about our ability to continue as a going concern within 12 months of this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, 2023 and 2022

The following table sets forth our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31, Period-to-Period Change

Comparison of the Three Months Ended June 30, 2023 and 2022

The following table sets forth our results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30, Period-to-Period Change

Product revenue $ 6,609,000 $ 4,795,000 $ 1,814,000 38 %

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Net loss $ (38,912,000) $ (32,158,000) $ (6,754,000) 21 %

We have revised the classification of our revenue between the categories in the table above for the March 31, 2022 statement of operations to present software revenue within “product revenue”.

In our March 31, 2022 statement of operations, “software” was included in “service and other revenue.”

Product revenue increased by $1.2 million, or 30%, to $5.4 million for the three months ended March 31, 2023 compared to $4.2 million for the same period in 2022.

We have revised the classification of our revenue between the categories in the table above for the June 30, 2022 statement of operations to present software revenue within “product revenue”.

In our June 30, 2022 statement of operations, “software” was included in “service and other revenue.”

Product revenue increased by $1.8 million, or 38%, to $6.6 million for the three months ended June 30, 2023 compared to $4.8 million for the same period in 2022.

The increase in product revenue was driven by increased demand for our Saphyr OGM solutions, including an increase in instrument installed base (43%) when compared to the same period last year.

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We expect revenue to increase as market awareness and published data of OGM utility increases, along with continued efficiencies gained in the OGM workflow through research and development, and the acquisitions of BioDiscovery and Purigen.

Service and other revenue increased by $0.5 million, or 32%, to $2.0 million for the three months ended March 31, 2023 compared to $1.5 million for the same period in 2022.

The increase in service and other revenue was primarily driven by increased volume through the Bionano Laboratories sample analysis business.

Service and other revenue increased by $0.2 million, or 9%, to $2.1 million for the three months ended June 30, 2023 compared to $1.9 million for the same period in 2022.

The increase in service and other revenue was primarily driven by an increase in subscription-based clinical software revenue.

Cost of Revenue, Gross Profit, and Gross Margin

Three Months Ended March 31, Period-to-Period Change Period-to-Period Percentage Change

Three Months Ended June 30, Period-to-Period Change Period-to-Period Percentage Change

Gross profit (loss):

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Total gross margin 27 % 22 %

Cost of product revenue increased by $0.3 million, or 8%, to $3.9 million for the three months ended March 31, 2023, compared to $3.6 million for the three months ended March 31, 2022.

Cost of product revenue increased by $0.8 million, or 20%, to $4.8 million for the three months ended June 30, 2023, compared to $4.0 million for the three months ended June 30, 2022.

The increase in cost of product revenue was due to higher sales of instruments and consumables.

We anticipate similar increases in future periods as sales of our instruments and consumables grow.

Cost of service and other revenue increased $0.2 million, or 18%, to $1.5 million for the three months ended March 31, 2023, compared to $1.3 million for the three months ended March 31, 2022.

Cost of service and other revenue increased $0.4 million, or 31%, to $1.6 million for the three months ended June 30, 2023, compared to $1.2 million for the three months ended June 30, 2022.

The increase in cost of service and other revenue is primarily due to increased service costs on our growing installed base as well as increased costs to support the service offerings from Bionano Laboratories.

We anticipate similar increases in future periods as our installed base and the number of Bionano Laboratories services grow.

Product gross profit increased $1.0 million, or 152%, to $1.6 million for the three months ended March 31, 2023, compared to $0.6 million for the three months ended March 31, 2022.

Product gross profit increased $1.0 million, or 126%, to $1.9 million for the three months ended June 30, 2023, compared to $0.8 million for the three months ended June 30, 2022.

The increase in gross profit was primarily due to higher sales of instruments and consumables, improvements in chip yield, and reduced scrap and quality control costs.

Service and other gross profit increased by $0.3 million, or 108%, to $0.5 million for the three months ended March 31, 2023, compared to $0.2 million for the three months ended March 31, 2022.

The increase in service and other gross profit is primarily due to increased sales of services – primarily those offered by Bionano Laboratories – offset by increased costs incurred to maintain our growing installed base.

Service and other gross profit decreased by $0.2 million, or 31%, to $0.5 million for the three months ended June 30, 2023, compared to $0.6 million for the three months ended June 30, 2022.

The decrease in service and other gross profit is primarily due to increased processing costs on our service line.

Research and Development Expenses

Research and development (“R&D”) expenses increased by $3.4 million, or 32%, to $13.9 million for the three months ended March 31, 2023 compared to $10.5 million for the same period in 2022.

Research and development (“R&D”) expenses increased by $2.8 million, or 24%, to $14.6 million for the three months ended June 30, 2023 compared to $11.8 million for the same period in 2022.

The increase is primarily due to an increase of $0.7 million in product development costs, an increase of $0.5 million in professional services related to research activities, and $0.7 million in software and information technology costs.

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Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased by $5.7 million, or 28%, to $26.0 million for the three months ended March 31, 2023 compared to $20.3 million for the same period in 2022.

Selling, general and administrative (“SG&A”) expenses increased by $5.2 million, or 24%, to $26.9 million for the three months ended June 30, 2023 compared to $21.8 million for the same period in 2022.

The increase is primarily due to a $2.0 million increase in compensation expenses, of which $0.1 million relates to stock-based compensation, a $0.3 million increase in amortization of intangibles related to the acquisition of Purigen, a $1.5 million increase in professional services, a $0.6 million increase in marketing expenses, and a $1.4 million increase in the estimated fair value of the contingent consideration liabilities primarily related to the acquisition of Purigen, which rolls into SG&A expense.

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Interest Income

Interest income was $0.7 million for the three months ended March 31, 2023, as compared to $0.1 million for the same period in 2022 resulting from positive returns on investments due to higher interest rates in 2023.

Our total available for sale securities balance was $91.7 million as of March 31, 2023.

Interest income was $0.7 million for the three months ended June 30, 2023, as compared to $0.2 million for the same period in 2022 resulting from positive returns on investments due to higher interest rates in 2023.

Our total available for sale securities balance was $62.2 million as of June 30, 2023.

Comparison of the Six Months Ended June 30, 2023 and 2022

The following table sets forth our results of operations for the six months ended June 30, 2023 and 2022:

Six Months Ended June 30, Period-to-Period Change

Product revenue $ 12,056,000 $ 9,001,000 $ 3,055,000 34 %

Service and other revenue 4,021,000 3,365,000 656,000 19 %

Total revenue 16,077,000 12,366,000 3,711,000 30 %

Cost of revenue:

Cost of product revenue 8,610,000 7,549,000 1,061,000 14 %

Cost of service and other revenue 3,090,000 2,485,000 605,000 24 %

Total cost of revenue 11,700,000 10,034,000 1,666,000 17 %

Operating expenses:

Research and development 28,547,000 22,296,000 6,251,000 28 %

Selling, general and administrative 52,913,000 42,060,000 10,853,000 26 %

Total operating expenses 81,460,000 64,356,000 17,104,000 27 %

Loss from operations (77,083,000) (62,024,000) (15,059,000) 24 %

Other income (expenses):

Interest income 1,392,000 301,000 1,091,000 362 %

Interest expense (149,000) (151,000) 2,000 (1) %

Other income (expenses) (139,000) (188,000) 49,000 (26) %

Total other income (expenses) 1,104,000 (38,000) 1,142,000 (3,005) %

Loss before income taxes (75,979,000) (62,062,000) (13,917,000) 22 %

Provision for income taxes (59,000) (50,000) (9,000) 18 %

Net loss $ (76,038,000) $ (62,112,000) $ (13,926,000) 22 %

We have revised the classification of our revenue between the categories in the table above for the June 30, 2022 statement of operations to present software revenue within “product revenue”.

In our June 30, 2022 statement of operations, “software” was included in “service and other revenue.”

Product revenue increased by $3.1 million, or 34%, to $12.1 million for the six months ended June 30, 2023 compared to $9.0 million for the same period in 2022.

The increase in product revenue was driven by increased demand for our Saphyr OGM solutions, including an increase in instrument installed base (43%) when compared to the same period last year.

The increased demand for our reagent rental program continues to drive a significant portion of the increase in consumable sales.

We believe increased demand for our OGM systems was primarily driven by increased market awareness and additional published data demonstrating the utility of OGM.

Service and other revenue increased by $0.7 million, or 19%, to $4.0 million for the six months ended June 30, 2023 compared to $3.4 million for the same period in 2022.

The increase in service and other revenue was driven by higher volume of service samples processed through the Bionano Laboratories business and an increase in subscription-based clinical software revenue.

Cost of Revenue, Gross Profit, and Gross Margin

Six Months Ended June 30, Period-to-Period Change Period-to-Period Percentage Change

Gross profit (loss):

Product $ 3,446,000 $ 1,452,000 $ 1,994,000 137%

Service and other 931,000 880,000 51,000 6%

Total gross profit $ 4,377,000 $ 2,332,000 $ 2,045,000 88%

Gross margin:

Product 29 % 16 %

Service and other 23 % 26 %

Total gross margin 27 % 19 %

Cost of product revenue increased by $1.1 million, or 14%, to $8.6 million for the six months ended June 30, 2023, compared to $7.5 million for the six months ended June 30, 2022.

The increase in cost of product revenue was due to higher sales of instruments and consumables.

We anticipate similar increases in future periods as sales of our instruments and consumables grow.

Cost of service and other revenue increased $0.6 million, or 24%, to $3.1 million for the six months ended June 30, 2023, compared to $2.5 million for the six months ended June 30, 2022.

We anticipate similar increases in future periods as our installed base and the number of Bionano Laboratories services grow.

Product gross profit increased $2.0 million, or 137%, to $3.4 million for the six months ended June 30, 2023, compared to $1.5 million for the six months ended June 30, 2022.

The increase in gross profit was primarily due to higher sales of instruments and consumables, improvements in chip yield, and reduced scrap and quality control costs.

Research and Development Expenses

Research and development (“R&D”) expenses increased by $6.3 million, or 28%, to $28.5 million for the six months ended June 30, 2023 compared to $22.3 million for the same period in 2022.

The increase is primarily due to an increase of $2.2 million in product development costs, an increase of $1.3 million in professional services related to research activities, and $1.3 million in software and information technology costs.

Compensation costs tied to headcount, excluding stock-based compensation, increased by $5.4 million.

Stock-based compensation expense decreased by $4.1 million due to the vesting of stock issued as consideration in the BioDiscovery acquisition in 2022, which primarily rolled up into R&D expense and vested in full in 2022.

We anticipate that our previously planned R&D expenses will decrease for the remainder of 2023 as we implement our cash savings initiative announced May 9, 2023.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses increased by $10.9 million, or 26%, to $52.9 million for the six months ended June 30, 2023 compared to $42.1 million for the same period in 2022.

The increase is primarily due to a $4.9 million increase in compensation expenses, of which $0.7 million relates to stock-based compensation, a $0.7 million increase in amortization of intangibles related to the acquisition of Purigen, a $2.8 million increase in professional services, a $1.2 million increase in marketing expenses, and a $2.1 million increase in the estimated fair value of the contingent consideration liabilities primarily related to the acquisition of Purigen, which rolls into SG&A expense.

The increase in compensation expense is driven primarily by increased headcount.

This was due to growth in our global sales, service, and back-office teams to facilitate the expanding customer base, as well as headcount additions attributed to the acquisition of Purigen.

We anticipate that our previously planned SG&A expenses will decrease for the remainder of 2023 as we implement our cash savings initiative announced May 9, 2023.

Interest Income

Interest income was $1.4 million for the six months ended June 30, 2023, as compared to $0.3 million for the same period in 2022 resulting from positive returns on investments due to higher interest rates in 2023.

Our total available for sale securities balance was $62.2 million as of June 30, 2023.

Liquidity and Capital Resources

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See Note 6 to our unaudited condensed consolidated financial statements for a discussion of our recent equity activity included elsewhere in this Quarterly Report on Form 10-Q for more information.

We incurred net losses of $37.1 million and $29.9 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, we had an accumulated deficit of $385.8 million, cash and cash equivalents of $4.1 million, and available for sale investment securities of $91.7 million.

We incurred net losses of $76.0 million and $62.1 million for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, we had an accumulated deficit of $424.8 million, cash and cash equivalents of $14.9 million, and available for sale investment securities of $62.2 million.

Future Capital Requirements

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Since our inception, we have generally incurred significant losses and negative cash flows.

Based on our $4.1 million in cash and cash equivalents and $91.7 million in available for sale securities as of March 31, 2023, we anticipate our available cash balance will not be sufficient for the next twelve months from the issuance of this report.

Based on our $14.9 million in cash and cash equivalents and $62.2 million in available for sale securities as of June 30, 2023, we anticipate our available cash balance will not be sufficient for the next twelve months from the issuance of this report.

Accordingly, based on recurring losses from operations incurred since inception, our expectation of continued operating losses, our current business plan, and the need to raise additional capital to finance our future operations, we determined that there is substantial doubt about our ability to continue as a going concern within 12 months after the date that the unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q are issued.

We plan to continue to fund our losses from operations through revenues, cash and cash equivalents on hand, sale of marketable securities and equity or debt financings.

As a result, in order to continue to operate our business beyond that time, we will need to raise additional funds.

As a result, in order to continue to operate our business beyond that time, we will need to raise substantial additional funds.

Accordingly, we are actively evaluating debt and equity financing sources available to us as well as cost reduction strategies, but there can be no assurance that financing will be available on terms acceptable to us, on a timely basis, or at all, or that we are able to effectively reduce our operating expenses.

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See Note 1 to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

In May 2023, following a strategic review of our operations, we announced our initiative to reduce cash expenditures by approximately $20.0 million during the next four to five calendar quarters.

This cost-reduction initiative includes, among other things, a reduction in force that we effected on May 8, 2023, plans to decrease anticipated new hires for the remainder of 2023, a reduction in our safety stock of inventory due to reduced supply chain risks, implementation of operational efficiencies, and other cost controls to reduce previously planned spending.

The following table sets forth the cash flow from operating, investing and financing activities for the periods presented:

Net cash provided by (used in):

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities $ (69,109,000) $ (60,826,000)

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however, we may observe fluctuations in the cash used in operating activities on a quarterly basis to sustain the expansion of our commercial offerings.

Net cash used in operating activities was $32.4 million during the three months ended March 31, 2023 as compared to $32.5 million during the same period in 2022.

The decrease in cash used in operating activities of $0.1 million was primarily attributed to increased headcount-related expenses offset by timing of invoice payments in accounts payable.

Net cash used in operating activities was $69.1 million during the six months ended June 30, 2023 as compared to $60.8 million during the same period in 2022.

The increase in cash used in operating activities of $8.3 million was primarily attributed to increased headcount related expenses offset by the cost reduction efforts previously described elsewhere in this Quarterly Report on Form 10-Q and the timing of invoice payments in accounts payable.

Investing Activities

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We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

During the three months ended March 31, 2023, cash provided by investing activities was $16.5 million, as compared to $32.0 million provided by investing activities during the same period in 2022.

The decrease in cash provided by investing activities of $15.4 million was primarily attributed to the maturity of $16.9 million in available for sale securities during the three months ended March 31, 2023, compared to the maturity of $47.2 million in available for sale securities during the same period in 2022, which was partially offset by a purchase of $15.0 million of available for sale securities during the same period.

During the six months ended June 30, 2023, cash provided by investing activities was $46.1 million, as compared to $63.2 million provided by investing activities during the same period in 2022.

The decrease in cash provided by investing activities of $17.1 million was primarily attributed to the maturity of $46.9 million in available for sale securities during the six months ended June 30, 2023, compared to the maturity of $93.5 million in available for sale securities during the same period in 2022, which was partially offset by a purchase of $29.5 million of available for sale securities during the same period.

Financing Activities

Net cash provided by financing activities was $14.9 million during the three months ended March 31, 2023 as compared to the same period in 2022 where we had net cash provided by financing activities of $7,000, an increase of $14.9 million.

During the three months ended March 31, 2023, we raised approximately $15.2 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”).

Net cash provided by financing activities was $32.7 million during the six months ended June 30, 2023 as compared to the same period in 2022 where we had net cash provided by financing activities of $0.2 million, an increase of $32.5 million.

During the six months ended June 30, 2023, we raised approximately $33.5 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”).

Capital Resources

As of March 31, 2023, we had approximately $4.1 million in cash and cash equivalents, available for sale securities of $91.7 million, and working capital of $104.4 million.

As of June 30, 2023, we had approximately $14.9 million in cash and cash equivalents, available for sale securities of $62.2 million, and working capital of $89.1 million.

We have in place a Sales Agreement with Cowen (the “Cowen ATM”), as amended, pursuant to which we may offer and sell from time to time up to $200.0 million of shares from the date of the amendment going forward through or to Cowen, acting as sales agent or principal.

During the three months ended March 31, 2023, we sold approximately 9.5 million shares of common

stock under the Cowen ATM and received gross proceeds of approximately $15.2 million before deducting offering costs of $0.4 million.

During the six months ended June 30, 2023, we sold approximately 3.5 million shares of common stock under the Cowen ATM and received gross proceeds of approximately $33.5 million before deducting offering costs of $0.8 million.

From July 1, 2023 through the date of the filing of this Quarterly Report on Form 10-Q, the Company has sold

approximately 2.1 million shares of common stock under the Cowen ATM at an average share price of $6.16 per share, and received gross proceeds of approximately $13.0 million before deducting offering costs of $0.3 million.

Contingent Consideration

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The outcome of the milestone consideration is binary, meaning the milestone is either achieved or not achieved, and the only other variable factor is the timing of when the milestone is achieved.

We determined it is highly likely that the milestone will be achieved and therefore used a 95% probability factor which is applied to the $10.0 million milestone consideration.

We determined as of June 30, 2023 it is highly likely that the milestone will be achieved and therefore used a 100% probability factor which is applied to the $10.0 million milestone consideration.

As part of the merger agreement related to the acquisition of Purigen, we agreed to pay two independent milestone payments up to an aggregate of $32.0 million.

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We determined the likelihood of each independent milestone and used probability factors ranging from 20% to 80% which were applied to the individual payments.

At March 31, 2023 and December 31, 2022, a Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved and was applied to the milestone consideration payment.

Based on these valuation assumptions, the fair value of the contingent consideration liabilities was determined to be $23.1 million as of March 31, 2023, $9.5 million of which is current as of March 31, 2023.

At June 30, 2023 and December 31, 2022, a Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved and was applied to the milestone consideration payment.

Based on these valuation assumptions, the fair value of the contingent consideration liabilities was determined to be $24.6 million as of June 30, 2023, $10.0 million of which is current as of June 30, 2023.

Contractual Obligations

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Historically, revisions to our estimates have not resulted in a material change to our financial statements.

As of March 31, 2023, we performed a qualitative assessment of goodwill impairment which included an evaluation of changes in industry, market and macroeconomic conditions as well as consideration of our financial performance and any significant trends.

Our qualitative assessment indicated that it was not more likely than not that goodwill is impaired as of March 31, 2023.

However, our stock price has significantly declined after March 31, 2023.

A sustained decline in our stock price or other material changes in the significant assumptions that affect the determination of the fair value of the Company’s single reporting unit may result in a goodwill impairment charge in future periods, and such charge may be material.

During the three months ended March 31, 2023, there have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

As of June 30, 2023, we performed a qualitative assessment of goodwill impairment which included an evaluation of changes in industry, market and macroeconomic conditions as well as consideration of our financial performance and any significant trends.

Our qualitative assessment indicated that it was not more likely than not that goodwill is impaired as of June 30, 2023.

If we experience a sustained decline in our stock price or other material changes in the significant assumptions that affect the determination of the fair value of the Company’s single reporting unit, it may result in a goodwill impairment charge in future periods, and such charge may be material.

During the six months ended June 30, 2023, there have been no changes to our critical accounting policies and estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Recent Accounting Pronouncements

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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-Q

Item 2. Management’s Discussion and Analysis