Bionano Genomics, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2024 (“Quarterly Report”) and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K for the year ended December 31, 2023, (“Annual Report”), filed with the Securities and Exchange Commission, (“SEC”), on March 9, 2023. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc. and its subsidiaries or, as the context may require, Bionano Genomics, Inc. only. 25 Table of Contents Forward-Looking Statements The information in this Quarterly Report contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to any statements concerning our strategy, future operations, future financial position, future revenues, projected costs, expected savings including from restructuring initiatives, projected cash runway, prospects and plans, expected growth in sales of instruments and consumables, installed bases and provision of clinical services, and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth- under Part II, Item 1A. Risk Factors in this Quarterly Report and in our other filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements. Overview We are a provider of genome analysis solutions that can enable researchers and clinicians to reveal answers to challenging questions in biology and medicine. Our mission is to transform the way the world sees the genome through optical genome mapping (“OGM”) solutions, diagnostic services and software. We offer OGM solutions for applications across basic, translational and clinical research, and for other applications including bioprocessing. Through our Bionano Laboratories business, we also provide diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities. 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. Recent Highlights Commercial Adoption of Offerings for OGM Systems In executing on our commercialization strategy, we expanded the utilization of our OGM systems and: • Grew our installed base to 347 as of March 31, 2024, an increase of approximately 34% from a total installed base of 259 as of March 31, 2023. Installed base represents the global number of OGM instruments installed at end-customer locations and therefore having the technology to process OGM. • Sold 8,249 flowcells in the three-month period ended March 31, 2024, an increase of approximately 58% from 5,226 flowcells sold in the same quarter of 2023. The OGM cartridge is the consumable that packages nanochannel arrays for DNA linearization. In its current form, the OGM cartridge can comprise - one, two or three flowcells per cartridge. Flowcells sold refers to the units of genome mapping consumables used for analyzing one genome, purchased by customers to process samples for optical genome mapping. Macroeconomic and Geopolitical Developments We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic developments, such as recent and potential future bank failures, the ongoing conflict between Ukraine and Russia and related sanctions, the Israel-Hamas war, any effects of global pandemics and uncertain market conditions, including inflation and supply chain disruptions, which could continue to have a material impact on our business and financial results. We closely monitor and comply with various applicable guidelines and legal requirements in the jurisdictions in which we operate. 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 months ended March 31, 2024, 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. For instance, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, rising inflation rates, labor shortages, reduction in consumer confidence, adverse geopolitical and macroeconomic developments, or any similar 26 Table of Contents negative economic condition. These negative effects could have a material impact on our operations, business, earnings, and liquidity. Recent Developments In March 2024, we announced a cost savings plan that aims to reduce annualized operating expenses by approximately $35.0 to $40.0 million starting in the second half of 2024. As part of the plan, we reduced our overall headcount by approximately 120 employees. In addition, Bionano Laboratories will phase out over time the offering of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders and other disorders of childhood development. These cost-saving measures are incremental to the cost saving initiatives previously announced in May 2023 and October 2023. See Note 7 (Commitments and Contingencies) to our unaudited condensed consolidated financial statements for additional information. Financial Overview Revenue We generate product revenue from sales of our OGM and Ionic ® Purification systems and consumables, which includes our instruments, and our VIA™ software. At the end of July 2023 we began installations of VIA software as a replacement to NxClinical software. Like NxClinical, VIA has a simple integrated workflow for visualization, interpretation and reporting of NGS and microarray data. VIA additionally incorporates OGM data to that workflow creating a standard software tool for use across molecular pathology and cytogenomics applications. We currently sell our systems for research use only applications and our customers are primarily laboratories associated with academic and governmental research institutions, academic and commercial clinical laboratories, as well as pharmaceutical, biotechnology and contract research companies. In addition, we provide instruments to certain customers at no cost under our reagent rental program, and the customers agree to purchase minimum quantities of consumables. Consumable revenue consists of sales of reagents and chips necessary to process a sample. Sales of our VIA software, which provides customers with solutions for analysis, interpretation and reporting of genomic data, are made on a subscription basis. We generate service revenue from the sale of diagnostic testing services for those with autism spectrum disorder and other neurodevelopmental disabilities through Bionano Laboratories, as well as services performed related to customer sample evaluations using an OGM system. Other revenue consists of warranty and other service-based revenue, including support, repair and maintenance services. The following table presents our revenue for the periods indicated: Three Months Ended March 31, 2024 2023 Product revenue $ 6,828,000 $ 5,447,000 Service and other revenue 1,941,000 1,968,000 Total $ 8,769,000 $ 7,415,000 The following table reflects total revenue by geography and as a percentage of total revenue, based on the billing address of our customers. Americas consists of North America and South America. EMEA consists of Europe, the Middle East, and Africa. Asia Pacific includes China, Japan, South Korea, Singapore, India and Australia. Three Months Ended March 31, 2024 2023 $ % $ % Americas $ 4,690,000 53 % $ 3,444,000 47 % EMEA 3,133,000 36 % 2,992,000 40 % Asia Pacific 946,000 11 % 979,000 13 % Total $ 8,769,000 100 % $ 7,415,000 100 % Cost of Revenue Cost of product revenue for our systems and consumables includes raw material parts costs and associated freight, shipping and handling costs, contract manufacturing costs, 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 third-party laboratory costs to process the diagnostic samples, salaries of our clinical technicians who interpret and deliver the results to patients, warranty services, and other costs of servicing equipment at customer sites. 27 Table of Contents Research and Development Expenses Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, equipment depreciation, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception, and plan to continue to make investments in the future. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products. We believe that our continued investment in research and development is essential to our long-term competitive position. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries and other personnel costs, amortization expense related to acquired intangibles, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal and accounting services. Results of Operations We have incurred losses in each year since our inception. Our net loss was $31.4 million for the three months ended March 31, 2024. As of March 31, 2024, we had an accumulated deficit of $612.6 million. We expect to continue to incur significant expenses and operating losses as we: • expand our sales and marketing efforts to further commercialize our products; • continue research and development efforts to improve our existing products; • enter into collaboration arrangements, if any; • add operational, financial and management information systems; and • incur increased costs as a result of operating as a public company. 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. 28 Table of Contents Comparison of the Three Months Ended March 31, 2024 and 2023 The following table sets forth our results of operations for the three months ended March 31, 2024 and 2023: Three Months Ended March 31, Period-to-Period Change 2024 2023 $ % Revenues: Product revenue $ 6,828,000 $ 5,447,000 $ 1,381,000 25 % Service and other revenue 1,941,000 1,968,000 (27,000) (1) % Total revenue 8,769,000 7,415,000 1,354,000 18 % Cost of revenue: Cost of product revenue 4,904,000 3,858,000 1,046,000 27 % Cost of service and other revenue 1,041,000 1,487,000 (446,000) (30) % Total cost of revenue 5,945,000 5,345,000 600,000 11 % Operating expenses: Research and development 9,779,000 13,937,000 (4,158,000) (30) % Selling, general and administrative 19,536,000 25,976,000 (6,440,000) (25) % Restructuring costs 4,632,000 — 4,632,000 100 % Total operating expenses 33,947,000 39,913,000 (5,966,000) (15) % Loss from operations (31,123,000) (37,843,000) 6,720,000 (18) % Other income (expenses): Interest income 1,044,000 704,000 340,000 48 % Interest expense (122,000) (76,000) (46,000) 61 % Other income (expenses) (1,239,000) 117,000 (1,356,000) (1,159) % Total other income (expenses) (317,000) 745,000 (1,062,000) (143) % Loss before income taxes (31,440,000) (37,098,000) 5,658,000 (15) % Provision for income taxes 18,000 (26,000) 44,000 (169) % Net loss $ (31,422,000) $ (37,124,000) $ 5,702,000 (15) % Revenue Product revenue increased by $1.4 million, or 25%, to $6.8 million for the three months ended March 31, 2024 compared to $5.4 million for the same period in 2023. The increase in product revenue was driven by increased sales of consumables with expansion of the install base and software 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. We expect product 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. There was no material change in service and other revenue for the three months ended March 31, 2024 when compared to the same period in 2023. We expect service and other revenue to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories. Cost of Revenue Cost of product revenue increased by $1.0 million, or 27%, to $4.9 million for the three months ended March 31, 2024, compared to $3.9 million for the three months ended March 31, 2023. The increase in cost of product revenue was due to higher sales of instruments and consumables. We expect cost of product revenue to continue to increase as product revenues increase. Cost of service and other revenue decreased $0.4 million, or 30%, to $1.0 million for the three months ended March 31, 2024, compared to $1.5 million for the three months ended March 31, 2023. The decrease in cost of service and other revenue is primarily due to a decrease in product warranty and maintenance costs. We expect cost of service and other revenue to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories. 29 Table of Contents Gross Profit, and Gross Margin Three Months Ended March 31, Period-to-Period Change Period-to-Period Percentage Change 2024 2023 2024 to 2023 2024 to 2023 Gross profit (loss): Product $ 1,924,000 $ 1,589,000 $ 335,000 21% Service and other 900,000 481,000 419,000 87% Total gross profit $ 2,824,000 $ 2,070,000 $ 754,000 36% Gross margin: Product 28 % 29 % Service and other 46 % 24 % Total gross margin 32 % 28 % Product gross profit increased $0.3 million, or 21%, to $1.9 million for the three months ended March 31, 2024, compared to $1.6 million for the three months ended March 31, 2023. The increase in product gross profit was primarily due to higher sales of consumables and software. Service and other gross profit increased by $0.4 million, or 87%, to $0.9 million for the three months ended March 31, 2024, compared to $0.5 million for the three months ended March 31, 2023. The increase in service and other gross profit was primarily due to a decrease in product warranty and maintenance costs. We expect service and other gross profit to decrease over the remainder of 2024 as a result of our decision to phase out certain clinical service offerings from Bionano Laboratories. Research and Development Expenses Research and development (“R&D”) expenses decreased by $4.2 million, or 30%, to $9.8 million for the three months ended March 31, 2024 compared to $13.9 million for the same period in 2023. The decrease is primarily due to a decrease of $1.5 million in professional and consulting fees including costs incurred to support clinical research studies and Stratys development, a decrease of $2.2 million in salaries, wages and benefits driven by headcount reductions announced in 2023, and a decrease of $0.5 million of information technology costs. We anticipate that R&D expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024. Selling, General and Administrative Expenses Selling, general and administrative (“SG&A”) expenses decreased by $6.4 million, or 25%, to $19.5 million for the three months ended March 31, 2024 compared to $26.0 million for the same period in 2023. The decrease is primarily due to a $3.9 million decrease in salaries, wages and benefits driven by headcount reductions announced in 2023, a $1.5 million decrease in primarily marketing-related expenses and a $0.8 million decrease in administration and other expenses which includes the gain/loss recorded on fair value of the contingent consideration due for Purigen milestones and is offset by intangible impairment charges recorded to our non-OGM Bionano Laboratories asset group. We anticipate that SG&A expenses will decrease for the remainder of 2024 as a result of our cost savings initiatives announced in March 2024. Restructuring Costs Restructuring costs were $4.6 million for the three months ended March 31, 2024, as a result of our cost savings initiatives announced in March 2024. We had no restructuring costs during the same period in 2023. Interest Income Interest income increased by $0.3 million, or 48%, to $1.0 million for the three months ended March 31, 2024, as compared to $0.7 million for the same period in 2023 resulting from positive returns on investments. Other income (expense) Other income (expenses) decreased by $1.4 million, or 1,159%, to $(1.2) million for the three months ended March 31, 2024, as compared to other income of $0.1 million for the same period in 2023. The change is primarily due to the change in fair value adjustments and interest payments related to the High Trail transaction. 30 Table of Contents Liquidity and Capital Resources Since our inception, we have incurred net losses and negative cash flows from operations. We have primarily generated cash flows from sales of equity securities and debt financings. We incurred net losses of $31.4 million and $93.9 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, we had an accumulated deficit of $612.6 million, cash and cash equivalents of $15.8 million, $24.8 million in restricted cash and cash equivalents and restricted short-term investments and available for sale investment securities of $12.6 million. The amount we are required to hold as restricted cash and cash investments and restricted short-term investments is reduced as the outstanding principal amount of the Notes is paid. Sources of Liquidity and Capital Resources In the three months ended March 31, 2024, we incurred negative cash flows from operating activities of $28.1 million. We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments, borrowings from credit facilities and revenue from our commercial operations. Revenue from our commercial operations has increased due to increased demand for our product offerings and our acquisition of BioDiscovery and Purigen. See Note 6 (Stockholder’s Equity and Stock-Based Compensation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent equity activity for more information. On October 13, 2023, we completed a registered offering (the “Registered Offering”) of senior secured convertible notes payable due 2025 (the “Registered Notes”) and warrants (the “Registered Warrants”) and a concurrent private placement (the “Private Placement”) of senior secured convertible notes payable due 2025 (the “Private Placement Notes” and, together with the Registered Notes, the “Notes”) and warrants (the “Private Placement Warrants” and, together with the Registered Warrants, the “Warrants”) and received net proceeds from the sale of the Notes and the Registered Warrants of approximately $75.6 million, after deducting the estimated Offering and Private Placement expenses and placement agent fees. $35.0 million of the proceeds of the Private Placement Notes was deposited into a restricted account subject to an account control agreement that only permits funds to be released once per calendar month upon the satisfaction of certain funding conditions specified in the Notes. The Amendment (as defined below) reduces the amount required to be held as restricted cash and removes the need for us to meet certain funding conditions before being able to access such funds. On February 27, 2024, we entered into a letter agreement (the “Letter Agreement”) and an Amendment to the Registered Notes (the “Amendment”), with the purchaser of the Registered Notes which provided reduction (i) of the minimum liquidity covenant from $50.0 million, and (ii) of the restricted cash covenant from $35.0 million, to the amount equal to the sum of (iii) the outstanding principal amount of the Registered Notes plus (iv) approximately $0.7 million, which will be further reduced as the remaining principal on the Registered Notes are retired. We also redeemed the outstanding $17.0 million of the Private Placement Notes for a redemption payment of approximately $19.6 million and a retirement fee of $3.2 million paid concurrently and $10.7 million of the Registered Notes for a redemption payment of approximately $12.3 million. See Note 5 (High Trail Agreement) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for further information on the Notes and Warrants. As of March 31, 2024, we had $29.1 million of Notes at fair value, which is classified as current. The holder may require us to redeem the $24.3 million outstanding principal amount of the Notes at a redemption price of 115% of the principal amount (the “Repayment Price”) or $28.0 million in 2024. On January 1, 2024, and February 1, 2024, the holders redeemed an aggregate of $9.0 million principal of the Notes, for a Repayment Price of $10.4 million. In February 2024, in connection with the Letter Agreement and Amendment we redeemed an aggregate of $27.7 million principal amount of Notes for a total redemption payment of approximately $31.8 million, together with a retirement fee of approximately $3.2 million. Following the redemptions we have $24.3 million of principal of the Notes outstanding as of March 31, 2024. On April 20, 2024, and May 1, 2024, the holders redeemed an aggregate of $9.0 million of principal, at the Repayment Price of $10.4 million. 31 Table of Contents On April 4, 2024,we entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which we agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “Registered Direct Offering”): (i) an aggregate of 6.5 million shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate of 2.2 million shares of common stock and (iii) warrants to purchase up to 8.7 million shares of common stock. The combined purchase price of each share of common Stock and accompanying warrant was $1.15 per share. The combined purchase price of each pre-funded warrant and accompanying warrant was $1.14 (equal to the combined purchase price per share of common stock and accompanying warrant, minus $0.001). We received gross proceeds from the Registered Direct Offering of approximately $10.0 million, before deducting placement agent fees and other offering expenses of $0.7 million. Based on our current business plans, we believe the net proceeds from the financings above together with our existing cash and cash equivalents and short-term investments, will be sufficient to fund our operating expenses and capital expenditure requirements into at least the third quarter of 2024. This estimate assumes the inclusion of the amount equal to the sum of (i) the outstanding principal amount of the Registered Notes plus (ii) approximately $0.7 million that we are required to hold as restricted cash in an account control agreement under the terms of the Registered Notes. Our existing cash and cash equivalents and short-term investments, will not be sufficient for us to achieve cash-flow break even and we expect to need to seek additional capital based on strategic consideration alternatives in the future. Future Capital Requirements We expect that our near and longer-term liquidity requirements will consist of working capital and general corporate expenses associated with the growth of our business, including, without limitation, expenses associated with scaling up our operations and continuing to increase our manufacturing capacity, sales and marketing expense, increasing market awareness of our products and services to target customers, instrument placements with customers via the reagent rental sales strategy, additional research and development expenses associated with expanding and proving the utility of our offerings, expenses associated with continuing to build out our corporate infrastructure, enhancements to information technology, and expenses associated with being a public company. We expect such expenditures to continue throughout 2024. We had $15.8 million in cash and cash equivalents, $12.6 million in available for sale securities and $24.8 million in restricted cash and cash equivalents and restricted short-term investments as of March 31, 2024. The amount we are required to hold as restricted cash and cash investments and restricted short-term investments is reduced as the outstanding principal amount of the Notes is paid. Based on recurring losses from operations incurred since inception and the expectation of continued operating losses, we anticipate our available cash balance will not be sufficient to operate our business for the next twelve months from the issuance of this Quarterly Report. Accordingly, we determined that there is substantial doubt about our ability to continue as a going concern within 12 months after the date that the financial statements included in this Quarterly Report are issued. In order to continue to operate our business beyond that time, we will need to raise substantial additional capital. 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. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of common stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making acquisitions or capital expenditures or declaring dividends. Any disruptions to, or volatility in, the credit and financial markets or any deterioration in overall economic conditions may make any necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive. If we are unable to raise additional funds through debt or equity financing or other arrangements when needed, we may be required to delay, limit, reduce or terminate our research and development activities or future commercialization efforts. Even if we raise additional capital, we may also be required to modify, delay or abandon some of our plans which could have a material adverse effect on our business, operating results and financial condition and our ability to achieve our intended business objectives. In addition, our estimate as to the sufficiency of our current cash, cash equivalents and available for sale securities, and our current operating plan as discussed above are based on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we currently anticipate. See Note 1 (Organization and Basis of Presentation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for more information. 32 Table of Contents Cash Flows 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, 2024 2023 Operating activities $ (28,131,000) $ (32,413,000) Investing activities 47,586,000 16,528,000 Financing activities (21,618,000) 14,862,000 Operating Activities We derive cash flows from operations primarily from the sale of our products and services. Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses to support our business. We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure, and this may continue in the future. As discussed above, we anticipate our available cash balance will not be sufficient for the next twelve months from the issuance of this report. We plan to raise additional capital to fulfill our operating and capital requirements for at least 12 months through equity or debt financings, however, we may not be able to secure such financing in a timely manner or on favorable terms, if it all. See Note 5 (High Trail Agreement) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a discussion of our recent debt financing. We anticipate that our cash used in operating activities will decrease over the next 12 to 24 months; 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 $28.1 million during the three months ended March 31, 2024 as compared to $32.4 million during the same period in 2023. The decrease in cash used in operating activities of $4.3 million was primarily attributed to a decrease in our net loss in the current quarter offset by an increase in our working capital usage. Investing Activities Historically, our primary investing activities have consisted of capital expenditures for the purchase of capital equipment to support our expanding infrastructure, as well as the acquisitions of Lineagen, BioDiscovery and Purigen to grow our business. 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, 2024, cash provided by investing activities was $47.6 million, as compared to $16.5 million provided by investing activities during the same period in 2023. The increase in cash provided by investing activities of $31.1 million was primarily attributed to the maturity of $158.2 million in available for sale securities which was partially offset by a purchase of available for sale securities of $110.6 million during the three months ended March 31, 2024, compared to the maturity of $16.9 million in available for sale securities during the same period in 2023. Financing Activities Net cash used in financing activities was $21.6 million during the three months ended March 31, 2024 as compared to net cash provided by financing activities of $14.9 million during the same period in 2023, a decrease of $36.5 million. During the three months ended March 31, 2024, the Company made payments of $36.7 million towards the convertible notes payable which was slightly offset by approximately $15.4 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”) as compared to $15.2 million during the same period in 2023. Capital Resources As of March 31, 2024, we had approximately $15.8 million in cash and cash equivalents, available for sale securities of $12.6 million, $24.8 million in restricted cash and cash equivalents and restricted short-term investments and working capital of $27.1 million. The amount we are required to hold as restricted cash and cash investments and restricted short-term investments is reduced as the outstanding principal amount of the Notes is paid. 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, 2024, we sold approximately 11.8 million shares of common 33 Table of Contents stock under the Cowen ATM and received gross proceeds of approximately $15.4 million before deducting offering costs of $0.4 million. Contingent 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. The fair value of the Purigen milestones are reassessed on a quarterly basis using a probability weighted model and a Monte Carlo Simulation. We determined the fair value of this milestone consideration using a scenario-based technique, as the trigger for payment is event driven. We determined the likelihood of each independent milestone and used probability factors ranging from 0% to 49% which were applied to the individual payments. At March 31, 2024, 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 $10.3 million as of March 31, 2024. Contractual Obligations There were no material changes to our contractual obligations from those disclosed in the Company’s Annual Report. Critical Accounting Policies and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. These accounting principles require us to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during the periods presented. We have discussed the development, selection and disclosure of the accounting estimates with our audit committee. We believe that the estimates, judgments and assumptions are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. To the extent there are material differences between these estimates, judgments or assumptions and actual results, our financial statements will be affected. Historically, revisions to our estimates have not resulted in a material change to our financial statements. Change in Accounting Estimates The Company reviews the estimated useful life of its fixed assets on an ongoing basis. This review indicated that the actual lives of the Company’s Saphyr and Stratys instruments were longer than the estimated useful lives used for depreciation purposes in the Company’s unaudited condensed consolidated financial statements. We first assessed several qualitative and quantitative factors as part of our review including an analysis of the product life cycle, continued product support, customer commitments, technical durability, and compatibility of the Company’s Saphyr and Stratys instruments. As described further in Note 1, (Organization and Basis of Presentation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report, effective January 1, 2024, the Company changed its estimates of the useful lives of the Company’s Saphyr and Stratys instruments to better reflect the estimated period during which these assets will remain in service. During the three months ended March 31, 2024, there have been no changes to our critical accounting policies and estimates as described in our Annual Report. Recent Accounting Pronouncements See Note 1 (Organization and Basis of Presentation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for information concerning recent accounting pronouncements.