What changed in this filing

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Item 1A. Risk Factors

2024-11-14 compared with 2024-08-07 · 122 added, 58 removed, 1299 unchanged (12% of the section changed)

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• Our recurring losses, negative cash flows and significant accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern.

We will need to raise additional capital, which may not be available on acceptable terms, if at all, to fund our existing operations.

If we are unable to raise sufficient additional capital in the very near term, we will be required to further curtail our operations, liquidate or otherwise dispose of assets, wind-down or cease operations entirely.

In these circumstances, investors may not receive full value, or any value, for their investment;

• Our corporate cash saving initiatives and the associated headcount reductions we announced in May 2023, October 2023 and March 2024 could disrupt our business, and may not achieve our intended objectives;

• We are an early commercial-stage company and have a limited commercial history, which may make it difficult to evaluate our current business and predict our future performance;

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• Our future capital needs are uncertain and we may require additional funding in the future to advance the commercialization of our OGM systems, Ionic Purification system, VIA software, and our other products, technologies and services, as well as continue our research and development efforts.

If we fail to obtain additional funding, we will be forced to delay, reduce or eliminate our commercialization and development efforts and there is substantial doubt about our ability to continue as a going concern;

If we fail to obtain additional funding, we will be forced to delay, reduce or eliminate our commercialization and development efforts;

• The terms of the Debentures and the Debenture Purchase Agreement restrict our current and future operations.

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Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions;

litigation (including class claims) and mass arbitration demands;

litigation (including class claims) and mass

arbitration demands;

fines and penalties;

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• If the U.S.

Food and Drug Administration, or FDA, ends enforcement discretion for Laboratory Developed Tests or determines that our RUO products are medical devices or if we seek to market our RUO products for clinical diagnostic or health screening use, we or our collaborators or customers will be required to obtain regulatory clearance(s) or approval(s), and we may be required to cease or limit sales of our then marketed products, which could

materially and adversely affect our business, financial condition and results of operations.

Any such regulatory process would be expensive, time-consuming and uncertain both in timing and in outcome;

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• The price of our securities has been and may in the future be volatile or may decline regardless of our operating performance, and you could lose all or part of your investment;

• We may not be successful in identifying and implementing any potential strategic alternatives in a timely manner, or at all, and any strategic transactions that we may consummate in the future could have negative consequences;

• If a strategic transaction is not consummated, our Board may decide to pursue a dissolution and liquidation.

In such an event, the amount of cash available for distribution to our stockholders will depend significantly on the timing of such liquidation as well as the amount of cash that may need to be reserved for commitments and contingent liabilities.

Investing in our common stock involves a high degree of risk.

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Since our inception, we have incurred recurring net losses and we expect that our losses will continue for the foreseeable future.

We incurred net losses of $47.6 million and $76.0 million, and used cash in operations of $49.1 million and $69.1 million for the six months ended June 30, 2024 and 2023, respectively.

As of June 30, 2024, we had an accumulated deficit of $628.9 million.

We incurred net losses of $91.9 million and $188.6 million, and used cash in operations of $62.4 million and $95.4 million for the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, we had an accumulated deficit of $673.1 million.

We cannot predict if we will be profitable in the near future or at all.

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Our recurring losses, negative cash flows and significant accumulated deficit have raised substantial doubt regarding our ability to continue as a going concern .

We will need to raise additional capital, which may not be available on acceptable terms, if at all, to fund our existing operations.

In these circumstances, investors may not receive full value, or any value, for their investment.

Since inception, we have experienced recurring operating losses and negative cash flows from operating activities, and have significant accumulated deficit.

We expect to continue to generate operating losses and consume significant cash resources for the foreseeable future.

We believe that with receipt of the net proceeds in July 2024 from the July 2024 Offering and in May 2024 from the transaction pursuant to that certain securities purchase agreement dated May 24, 2024, between us and certain accredited investors and JGB Collateral LLC, as collateral agent for the investors (the “JGB Purchase Agreement”) and restructuring of redemption terms for our debt instruments, together with the Company’s existing cash and, cash equivalents and short-term investments, and after taking into account inaccessible “restricted cash” under the terms of the transaction under the JGB Purchase Agreement, based on the Company’s current business plans we will be able to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024.

We believe that with receipt of the net proceeds in July 2024 from the July 2024 Offering, in October 2024 from the October 2024 Offering, and in May 2024 from the transaction pursuant to that certain securities purchase agreement dated May 24, 2024, between us and certain accredited investors and JGB Collateral LLC, as collateral agent for the investors (the “JGB Purchase Agreement”) and restructuring of redemption terms for our debt instruments, together with the Company’s existing cash and, cash equivalents and short-term investments, and after taking into account inaccessible “restricted cash” under the terms of the transaction under the JGB Purchase Agreement, based on the Company’s current business plans we will be able to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2024.

See Note 5 and 6 (Debt and Stockholders’ Equity and Stock-Based Compensation) to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report for a further discussion of our recent debt and equity financings.

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As a result, our financial statements include an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

We will continue to seek to raise additional capital, but without additional financing we may not be able to continue as a going concern, we may have to reorganize or liquidate our business and may receive less than the value at which those assets are carried on our consolidated financial statements, and investors may lose all or a part of their investment.

We will continue to seek to raise additional capital, but without sufficient additional financing in the very near term we will not be able to continue as a going concern, we may have to reorganize or liquidate our business and may receive less than the value at which those assets are carried on our consolidated financial statements, further curtail planned operations or cease operations entirely and wind down our business.

Any of these could materially and adversely affect our liquidity, financial condition and business prospects and, as a result, our investors may lose all or a part of their investment.

In light of our existing cash and cash equivalents and our current obligations, such a liquidation or disposition process may occur subject to bankruptcy protections, which may further reduce the value that we may receive for our assets.

If we seek additional financing to fund our business activities in the future and there remains doubt about our ability to continue as a going concern, investors or other financing sources may be unwilling to provide additional funding on commercially reasonable terms or at all.

The Board has established a strategy committee to work with the Company and outside advisors in evaluating our options and considering alternatives that we believe will maximize stakeholder value, including any of the following or a combination thereof:

The Board has established a strategy committee to

work with the Company and outside advisors in evaluating our options and considering alternatives that we believe will maximize stakeholder value, including any of the following or a combination thereof:

debt financing, equity investments, combinations with other companies, or the sale of all or part of the company.

There can be no assurances that any transactions will be completed and if we are not able to raise sufficient additional capital to fund our future operations, we may potentially seek relief available under applicable insolvency laws.

There can be no assurances that any transactions will be available to us or completed and if we are not able to raise sufficient additional capital in the very near term to fund our operations, we may seek relief available under applicable insolvency laws.

We do not intend to make further announcements regarding this process unless and until the Board approves a specific transaction or otherwise determines that further disclosure is appropriate.

Our corporate cost saving initiatives and the associated headcount reductions we announced in May 2023, October 2023, March 2024, and September 2024 could disrupt our business, and may not achieve our intended objectives.

In May 2023, October 2023, March 2024, and September 2024, we undertook cost saving initiatives intended to decrease expenses and maintain a streamlined organization to support key programs and customers, and that are expected to conserve cash.

These initiatives primarily related to the Company’s efforts on the current installed base of OGM systems with less emphasis on new placements of OGM systems and more emphasis on ensuring customers are able to maximize their utilization of the OGM systems and included a reduction in force.

These initiatives may be disruptive to our operations and there is no guarantee that they will achieve the intended benefits.

For example, our headcount reductions could yield unanticipated consequences and costs, such as increased difficulties in implementing our business strategy due to the loss of institutional knowledge and expertise, reduced strength of our sales force and marketing efforts, attrition beyond the intended number of employees, decreased morale among our remaining employees, and the risk that we may not achieve the anticipated benefits of the reduction in force.

In addition, while certain positions have been eliminated, certain functions necessary to our operations remain, and we may be unsuccessful in distributing the duties and obligations of departed employees among our remaining employees.

The reduction in workforce could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives, including restricting the strength of our sales force and marketing efforts, due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives.

Moreover, any employee litigation related to the headcount reductions could be costly and prevent management from fully concentrating on the business.

In addition, Bionano Laboratories’ phase out of the offering of certain testing services related to neurodevelopmental disorders (“NDDs”), including autism spectrum disorders (“ASDs”), and other disorders of childhood development could have a negative impact on our cash flow, financial conditions or results of operations.

In 2023, these products generated approximately $7.0 million of our overall $36.1 million in revenues.

Further, our reduction in personnel through these headcount reductions and voluntary attrition could limit our ability to segregate responsibility for certain accounting and related treasury functions within our organization.

Our future financial performance and our ability to develop our product candidates or additional assets will depend, in part, on our ability to effectively manage future growth or restructuring, as the case may be.

In addition, if we are unable to realize the anticipated benefits from our cost saving initiatives including those we discussed under “Part I.

Management’s Discussion and Analysis of Operations – Liquidity and Capital Resources”, or if we experience significant adverse consequences of such initiatives, our business, financial condition, and results of operations may be materially adversely affected.

We are an early commercial-stage company and have a limited commercial history, which may make it difficult to evaluate our current business and predict our future performance.

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These changes in revenue and expenses, among others, may make it difficult to evaluate our current business, assess our future performance relative to prior performance and accurately predict our future performance.

We have encountered in the past, and will continue to encounter in the future, risks and difficulties frequently experienced by early commercial-stage companies, including those associated with scaling up our infrastructure, increasing and decreasing the size of our organization, integrating acquired businesses and implementing cost savings initiatives.

If we do not address these risks successfully, or if our assumptions regarding these risks and uncertainties are incorrect or change over time, our results of operations could differ materially from our expectations and our business, financial condition and results of operations could be materially and adversely affected.

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This variability and unpredictability caused by factors such as those described above and elsewhere in this section could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.

If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the guidance we provide is below the expectations of analysts or investors, the price of our securities could decline substantially.

Further our financial condition may result in certain additional restructuring or advisory expenses which may result in our corporate expenditures increasing, potentially materially, and we may observe fluctuations in the cash used in operating activities on a quarterly basis to sustain our current commercial offerings.

If our revenue or operating results fall below the expectations of analysts or investors or below any guidance we may provide, or if the

guidance we provide is below the expectations of analysts or investors, the price of our securities could decline substantially.

Such a stock price decline could occur even when we have met or exceeded any previously publicly stated guidance or expectations.

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We may not achieve substantial growth rates in future periods.

In particular as part of our cost saving plans we have also made a change in its business strategy and refocused our efforts on the current installed base of OGM systems with less emphasis on new placements of OGM systems and more emphasis on ensuring customers are able to maximize their utilization of the OGM systems.

Investors should not rely on our operating results for any prior periods as an indication of our future operating performance.

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We expect to continue to spend substantial amounts of cash in order to continue the commercialization of our products and technologies, fund our research and development programs, and execute potential strategic transactions.

In connection with the preparation of our financial statements for the three and six months ended June 30, 2024, we had performed an analysis of our ability to continue as a going concern and based on our current business plan, we believed that our existing cash and cash equivalents and short-term investments would not be sufficient for the next twelve months from the issuance of the unaudited condensed consolidated financial statements included in this Quarterly Report and, accordingly, there continued to be substantial doubt about our ability to continue as a going concern within 12 months of the issuance of such financial statements.

In connection with the preparation of our financial statements for the three and nine months ended September 30, 2024, we had performed an analysis of our ability to continue as a going concern and based on our current business plan, we believed that our existing cash and cash equivalents and short-term investments would not be sufficient for the next twelve months from the issuance of the unaudited condensed consolidated financial statements included in this Quarterly Report and, accordingly, there continued to be substantial doubt about our ability to continue as a going concern within 12 months of the issuance of such financial statements.

Our ability to execute our operating plan depends on our ability to generate sales and obtain additional funding through equity offerings, debt financings or potential licensing and collaboration arrangements.

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• the effect of competing technological and market developments.

As of June 30, 2024, we had $10.4 million in cash and cash equivalents, $8.5 million in short-term investments, and $11.4 million in restricted cash.

We received net proceeds of approximately $9.3 million after deducting placement agent fees and offering expenses, from the issuance and sale of our securities in the July 2024 Offering.

As of September 30, 2024, we had $8.8 million in cash and cash equivalents, $3.2 million in short-term investments, and $11.4 million in restricted cash and investments.

We received net proceeds of approximately $9.3 million after deducting placement agent fees and offering expenses, from the issuance and sale of our securities in the July 2024 Offering and net proceeds of approximately $2.7 million after deducting placement agent fees and offering expenses, from the issuance and sale of our securities in the October 2024 Offering.

Based on our current business plans, we believe the net proceeds from such financings together with our existing cash and cash equivalents and short-term investments, and after taking into account inaccessible “restricted cash” under the terms of the JGB Purchase Agreement, will be sufficient to fund our operating expenses and capital expenditure requirements into at least the fourth quarter of 2024.

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We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.

If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution.

Any equity or debt securities we issue could provide for rights, preferences, or privileges senior to those of holders of our common stock.

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If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us.

In addition, we may not be able to access a portion of our existing cash and

cash equivalents and short-term investments or “restricted cash” in the account control agreement due to market conditions such as recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures.

In addition, we may not be able to access a portion of our existing cash and cash equivalents and short-term investments or “restricted cash” in the account control agreement due to market conditions such as recent and potential future disruptions in access to bank deposits or lending commitments due to bank failures.

Based on our current business plans, we will continue to require additional capital in the very near term to fund our operating expenses and capital expenditure requirements, or we may need to further curtail or cease operations and seek protection by filing a voluntary petition for relief under the United States Bankruptcy Code.

If this were to occur, the value available to our various stakeholders, including our creditors and stockholders, is uncertain and trading prices for our securities may bear little or no relationship to the actual recovery, if any, by holders of our securities in bankruptcy proceedings, if any.

Global economic conditions have been challenging, with disruptions to, and volatility in, the credit and financial markets in the U.S.

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If these conditions persist or worsen, we could experience an inability to access additional capital.

If we do not have, or are not able to obtain, sufficient funds, we will have to delay, reduce or eliminate significant portions of our development and commercialization efforts related to our technologies and products and we may be unable to continue to expand our installed base of OGM systems, any of which could, among other things, negatively impact our revenue opportunities.

If we do not have, or are not able to obtain, sufficient funds, we will have to delay, reduce or eliminate significant portions of our development and commercialization efforts related to our technologies and products, any of which could, among other things, negatively impact our revenue opportunities.

For example, in September 2024, we decided to focus our efforts on the current installed base of OGM systems with less emphasis on new placements of OGM systems and more emphasis on ensuring customers are able to maximize their utilization of the OGM systems.

As a result, we anticipate a reduction in our future product revenue.

Bionano Laboratories’

phase out of the offering of certain testing services related to NDDs, including ASDs, and other disorders of childhood development could also have a negative impact on our cash flow, financial conditions or results of operations.

We also may have to further reduce marketing, customer support or other resources devoted to our products or technologies or cease operations entirely.

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You may experience future dilution as a result of future equity offerings.

In order to raise additional capital, we may in the future offer additional shares of our common stock, or other securities convertible into or exchangeable for our common stock at prices that may not be the same as the price per share in this offering.

We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering.

In order to raise additional capital, we may in the future offer additional shares of our common stock, or other securities convertible into or exchangeable for our common stock and, as a result, our stockholders may experience dilution.

For example, as a result of our July 2024 Offering and October 2024 Offering, our investors experienced dilution of their ownership interests.

We may sell additional shares of our common stock or other securities convertible or exchangeable into common stock in future equity offerings at a price per share that is less than the price per share paid by investors in previous equity offerings, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders.

Servicing the Debentures requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our obligations under the Debentures or our other permitted indebtedness.

Our ability to make scheduled payments of principal or default interest, if any, or to refinance the Debentures or our other permitted indebtedness, depends on our future performance, which is subject to economic, financial, competitive and other factors, some of which are beyond our control.

As of June 30, 2024, we had aggregate principal amount outstanding under the Debentures of $20.0 million.

As of September 30, 2024, we had aggregate principal amount outstanding under the Debentures of $20.0 million.

Our business may not continue to generate cash flow from operations in the future sufficient to satisfy our obligations under the Debentures or our other permitted indebtedness.

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We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on the Debentures or our other indebtedness.

As of June 30, 2024, there is substantial doubt about our ability to continue as a going concern and servicing the Debentures continues to impact our cash flow and liquidity.

As of September 30, 2024, there is substantial doubt about our ability to continue as a going concern and servicing the Debentures continues to impact our cash flow and liquidity.

The terms of the Debentures and the Debenture Purchase Agreement restrict our current and future operations.

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In particular, the Debentures contain customary affirmative and negative covenants (including covenants that limit our ability to incur debt, make investments, transfer assets, engage in certain transactions with affiliates and merge with other companies, in each case, other than those permitted by the Debentures, and events of default, and the Debentures and the Debenture Purchase Agreement contains customary covenants (including covenants that limit our ability to issue additional securities during specified periods and enter into variable rate transactions).

Furthermore, we will be required to maintain cash subject to account control agreements in favor of the purchaser in a minimum amount equal to the lesser of (i) $11.0 million and (ii) the then outstanding balance of the Debenture.

Furthermore, we will be required to maintain cash or investments subject to account control agreements in favor of the purchaser in a minimum amount equal to the lesser of (i) $11.0 million and (ii) the then outstanding balance of the Debenture.

Our ability to meet the financial tests under the Debentures can be affected by events beyond our control, and we may be unable to meet them.

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Furthermore, if we were unable to repay the Debentures or other permitted indebtedness then due and payable, secured lenders could proceed against the assets, if any, securing such indebtedness.

In the event such lenders or holders accelerate the

repayment of the Debentures, or our other permitted borrowings, we may not have sufficient assets to repay that indebtedness.

In the event such lenders or holders accelerate the repayment of the Debentures, or our other permitted borrowings, we may not have sufficient assets to repay that indebtedness.

A default would also likely significantly diminish the market price of our common stock.

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Unfavorable geopolitical and macroeconomic developments could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy, the global financial markets and adverse geopolitical and macroeconomic developments, including without limitation inflation, potential future disruptions in access to bank deposits or lending commitments due to bank failures, slowing growth, rising interest rates and recession and the conflicts in the middle east.

A severe or prolonged global economic downturn could result in a variety of risks to our business.

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Unless the United States Department of the Treasury issues regulations that narrow the application of this provision to a smaller subset of our research and development expenses or the provision is deferred, modified, or repealed by Congress, it could harm our future operating results by effectively increasing our future tax obligations.

The actual impact of this provision will depend on multiple factors, including the amount of research and development expenses we will incur, whether we achieve sufficient income to fully utilize such deductions and whether we conduct our research and development activities inside or outside the United States.

The actual impact of this provision will depend on multiple factors, including the amount of research and

development expenses we will incur, whether we achieve sufficient income to fully utilize such deductions and whether we conduct our research and development activities inside or outside the United States.

Our ability to use net operating losses and certain other tax attributes to offset future taxable income and taxes may be subject to limitations.

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If our assumptions underlying our estimates and judgements relating to our critical accounting policies change or if actual circumstances differ from our assumptions, estimates or judgements, our operating results may be adversely affected and could fall below our publicly announced guidance or the expectations of securities analysts and investors, resulting in a decline in the market price of our securities.

Our corporate cash saving initiatives and the associated headcount reductions we announced in May 2023, October 2023 and March 2024 could disrupt our business, and may not achieve our intended objectives.

In May 2023, October 2023 and March 2024, we undertook a cash savings initiative that included a reduction in force.

These initiatives may be disruptive to our operations.

Moreover, employee litigation related to the headcount reductions could be costly and prevent management from fully concentrating on the business.

In addition, Bionano Laboratories’ phase out of the offering of certain testing services related to NDDs, including ASDs, and other disorders of childhood development could have a negative impact on our cash flow, financial conditions or results of operations.

In 2023, these products generated approximately $7.0 million of our overall $36.1 million in revenues.

In addition, if we are unable to realize the anticipated benefits from our cash savings initiatives including those we discussed under “Part I.

Management’s Discussion and Analysis of Operations – Liquidity and Capital Resources”, or if we experience significant adverse consequences of such initiative, our business, financial condition, and results of operations may be materially adversely affected.

Risks related to our business operations

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In March 2021, we entered into a Sales Agreement with Cowen which provides for the sale, in our sole discretion, of shares of our common stock having a maximum aggregate offering price of up to $350.0 million through or to Cowen, acting as sales agent or principal, which we amended in March 2023 to decrease the maximum aggregate offering price to $200.0 million going forward.

For the six months ended June 30, 2024, we sold approximately 14.0 million shares of common stock under the Cowen ATM for gross proceeds of approximately $17.6 million before deducting offering costs.

For the nine months ended September 30, 2024, we sold approximately 14.2 million shares of common stock under the Cowen ATM for gross proceeds of approximately $17.7 million before deducting offering costs.

Further, t he exercise of the Registered Warrants issued in the October 2023 Offering (as amended in February 2024) will dilute the ownership interests of existing stockholders to the extent we deliver shares upon exercise of the Registered Warrants.

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Additionally, we issued shares of our common stock in connection with the July 2024 Registered Direct Offering pursuant to which we agreed to issue and sell to certain institutional investors (i) an aggregate of 11.7 million shares of common stock, (ii) pre-funded warrants to purchase up to an aggregate of 5.8 million shares of common stock and (iii) warrants to purchase up to 35.0 million shares of common stock.

Any future significant sales of our capital stock or strategic transactions in which we use equity as consideration would result in further dilution to our current stockholders.

In connection with the October

2024 Offering, we agreed to issue and sell to certain institutional investors (i) an aggregate of 9.9 million shares of common stock and (ii) warrants to purchase up to 19.8 million shares of common stock.

As a result of these issuances, our investors experienced dilution of their ownership interests.

Any future significant sales of our capital stock or strategic transactions in which we use equity as consideration would result in further dilution to our current stockholders.

The issuance of shares under awards granted under existing or future employee equity benefit plans may cause immediate and substantial dilution to our existing stockholders.

In order to provide persons who have a responsibility for our management and/or growth with additional incentive, to increase their proprietary interest in our success, and to support and increase our ability to attract and retain individuals of exceptional talent, we maintain multiple equity incentive plans.

As of June 30, 2024, we had outstanding equity awards underlying those plans accounting for 4.4 million underlying shares.

As of September 30, 2024, we had outstanding equity awards underlying those plans accounting for 3.8 million underlying shares.

The total number of shares of our common stock available for the grant of awards under these plans is 2.7 million, 0.01 million and 0.3 million for our 2018 Equity Incentive Plan, as amended, 2018 Employee Stock Purchase Plan and 2020 Inducement Plan, as amended, respectively, subject to adjustment, including pursuant to automatic “evergreen” increases in certain of our plans.

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Geopolitical and macroeconomic developments, such as potential future disruptions in access to bank deposits or lending commitments due to bank failures, may also increase the risk and uncertainty of the events described above and delay our development timelines.

Failure to achieve widespread market acceptance of our current products, assays and services, as well as

our planned future products, assays and services, would materially harm our business, financial condition and results of operations.

Failure to achieve widespread market acceptance of our current products, assays and services, as well as our planned future products, assays and services, would materially harm our business, financial condition and results of operations.

In the near term, sales of our OGM systems, Ionic Purification system, VIA software, consumables and genome analysis services will depend on levels of research and development spending by clinical research laboratories, academic and governmental research institutions and biopharmaceutical companies, a reduction in which could limit demand for our technologies and products and adversely affect our business and operating results.

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Any decrease in customers’ budgets or expenditures, including impacts stemming from various geopolitical and macroeconomic developments, or in the size, scope or frequency of capital or operating expenditures, could materially and adversely affect our business, operating results and financial condition.

Our recent decision to focus our efforts on the current installed base of OGM systems with less emphasis on new placements of OGM systems and more emphasis on ensuring customers are able to maximize their utilization of the OGM could also have a negative impact on our cash flow, financial conditions or results of operations.

The sales cycle for our systems can be lengthy and variable, which makes it difficult for us to forecast revenue and other operating results.

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We expect to generate a substantial portion of our revenue internationally in the future and can become further subject to various risks relating to our international activities, which could adversely affect our business, operating results and financial condition.

During the six months ended June 30, 2024 and 2023, approximately 59% and 60%, respectively, of our revenue was generated from customers located outside of the United States.

During the nine months ended September 30, 2024 and 2023, approximately 62% and 56%, respectively, of our revenue was generated from customers located outside of the United States.

We believe that a substantial percentage of our future revenue will continue to come from international sources as we maintain our existing overseas operations and aim to develop opportunities in additional areas.

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Certain data privacy and security obligations may require us to implement and maintain specific security measures, or industry-standard or reasonable security measures to protect our information technology systems and Sensitive Data.

Applicable data privacy and security obligations may require us, or we may voluntarily choose, to notify relevant stakeholders, including affected individuals, customers, regulators, and investors, of security incidents, or to take other actions, such as providing credit monitoring and identify theft protection services.

Such disclosures and related actions can be costly, and the disclosures or the failure to comply with such applicable requirements could lead to adverse consequences.

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Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or in conflict among jurisdictions.

Preparing for and complying with these obligations requires us to devote significant resources (including, without limitation, financial and time-related resources) and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties on with whom we work.

If we or the third parties on with whom we work fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences.

If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with data privacy and security obligations, we could face significant consequences.

These consequences may include, but are not limited to, government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);

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Our stock price has been and may continue to be volatile.

The daily closing market price for our common stock has varied significantly in the last 12 months, ranging between a high price of $5.89 on August 3, 2023 and a low price of $0.55 on July 5, 2024 and July 8, 2024 (as adjusted for the reverse stock split effectuated on August 3, 2023).

The daily closing market price for our common stock has varied significantly in the last 12 months, ranging between a high price of $2.10 on December 27, 2023 and a low price of $0.28 on November 1, 2024 and November 4, 2024 (as adjusted for the reverse stock split effectuated on August 3, 2023).

During this time, the price per share of common stock has ranged from an intra-day low of $0.26 per share to an intra-day high of $2.27 per share (as adjusted for the reverse stock split effectuated on August 3, 2023).

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• general political and economic conditions, including potential future disruptions in access to bank deposits or lending commitments due to bank failures;

• our cost savings initiatives announced in May 2023, October 2023 and March 2024;

• our cost saving initiatives announced in May 2023, October 2023, March 2024, and September 2024;

• other events or factors, many of which are beyond our control.

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Accordingly, the market price and the value of your investment could be materially and negatively impacted.

The effective increase in the number of shares of our common stock available for issuance as a result of the reverse stock split could result in further dilution to our existing stockholders and have antitakeover implications.

The total number of authorized shares of our common stock was not proportionately reduced in connection with our reverse stock split.

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Further, in connection with the April 2024 Registered Direct Offering, we issued and sold, among other things, warrants to purchase approximately 8.7 million shares of our common stock;

and in connection with the July 2024 Registered Direct Offering, we

issued and sold, among other things, warrants to purchase approximately 35.0 million shares of our common stock following stockholder approval.

in connection with the July 2024 Registered Direct Offering, we issued

and sold, among other things, warrants to purchase approximately 35.0 million shares of our common stock following stockholder approval;

and in connection with the October 2024 Registered Direct Offering, we issued and sold, among other things, warrants to purchase approximately 19.8 million shares of our common stock following stockholder approval.

Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of control which could limit the market price of our securities and may prevent or frustrate attempts by our security holders to replace or remove our current management.

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To prevent having to litigate claims in multiple jurisdictions and the threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to

bring a claim in a venue other than those designated in the exclusive forum provisions.

Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring a claim in a venue other than those designated in the exclusive forum provisions.

In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation.

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Any inactive trading market for our common stock may also impair our ability to raise capital to continue to fund our operations by selling shares and may impair our ability to acquire other companies or technologies by using our shares as consideration.

Risks Related to Our Review of Strategic Alternatives

We may not be successful in identifying and implementing any potential strategic alternatives in a timely manner, or at all, and any strategic transactions that we may consummate in the future could have negative consequences.

The Board has established a strategy committee to work with the Company and outside advisors in evaluating our options and considering alternatives that we believe will maximize stockholder value.

We expect to devote substantial time and resources to exploring strategic alternatives that our Board believes will maximize stockholder value.

Despite management devoting significant efforts to identify and evaluate potential strategic alternatives, there can be no assurance that this strategic review process will result in us pursuing any transaction or that we will be able to successfully consummate any particular strategic transaction on attractive terms, on a timely basis, or at all.

For example, certain types of strategic transactions may require third-party consents, such as stockholder approval, which could be difficult or costly to obtain.

We have not set a timetable for completion of this strategic review process, and our Board has not approved a definitive course of action.

Additionally, there can be no assurance that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value or that we will make any cash distributions to our stockholders.

The process of continuing to evaluate our strategic alternatives may be costly, time-consuming and complex, and we may incur significant legal, accounting and advisory fees and other expenses, some of which may be incurred regardless of whether we successfully enter into a transaction.

We may also incur additional unanticipated expenses in connection with this process.

Any such expenses will decrease the remaining cash available for use in our business.

Our ability to pursue or consummate strategic transactions also depends upon our ability to retain certain of our employees, the loss of whose services may adversely impact the ability to identify, negotiate and consummate such transaction.

If we are unable to successfully retain certain of our key remaining personnel, we are at risk of a disruption to our exploration and consummation of one or more strategic transactions.

In addition, potential counterparties in a strategic transaction involving us may place minimal or no value on our assets and our public listing and any strategic transactions that we may pursue could have a variety of negative consequences, and we may enter into a transaction that yields unexpected results that adversely affect our business and decreases the remaining cash available for use in our business.

Any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us, obtaining stockholder approval and the availability of financing to third parties in a potential transaction with us on reasonable terms.

There can be no assurance that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated, lead to increased stockholder value, or achieve the anticipated results.

If we are not successful in setting forth a new strategic path for us, or if our plans are not executed in a timely fashion, this may cause reputational harm with our stockholders and the value of our securities may be adversely impacted.

In addition, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to our future could cause our stock price to fluctuate significantly.

Even if we successfully consummate any strategic transaction, or series of transactions, from our strategic assessment, we may fail to realize all or any of the anticipated benefits of any such transaction, such benefits may take longer to realize than expected, we may encounter integration difficulties or we may be exposed to other operational and financial risks.

Our ability to realize the anticipated benefits of any potential strategic transaction will depend on a number of factors, including our ability to integrate with any future business partner, our ability to obtain value for portions of our business, if divested, and our ability to generate future stockholder value.

The process may be disruptive to our business, and the expected benefits may not be achieved within the anticipated timeframe, or at all.

The failure to overcome the challenges involved and to realize the anticipated benefits of any potential transaction could adversely affect our business and financial condition.

The negotiation and consummation of any potential strategic transaction will require significant time on the part of our management, and the diversion of management’s attention may disrupt our business.

The negotiation and consummation of any such transaction may also require more time or greater cash resources than we anticipate and expose us to other operational and financial risks, including, but not limited to, increased near-term and long-term expenditures, exposure to unknown liabilities, higher than expected acquisition or integration costs, incurrence of substantial debt or dilutive issuances of equity securities to fund future operations, including financings in connection with a strategic transaction, write-downs of assets or goodwill or incurrence of non-recurring, impairment or other charges, increased amortization expenses, difficulty and cost in combining the operations and personnel of any acquired or acquiring business with our operations and personnel, impairment of relationships with key suppliers or customers of any acquired or acquiring business due to changes in management and ownership, inability to retain our key employees or any acquired or acquiring business and possibility of future litigation.

Any of the foregoing risks could have a material adverse effect on our business, financial condition and prospects.

If a strategic transaction is not consummated, our Board may decide to pursue a dissolution and liquidation.

If we do not successfully consummate a strategic transaction, our Board may decide to pursue a dissolution and liquidation.

In such an event, the amount of cash available for distribution to our stockholders will depend heavily on the timing of such decision and, with the passage of time, the amount of cash available for distribution will be reduced as we continue to fund our operations.

In addition, if our Board were to approve and recommend, and our stockholders were to approve, a dissolution and liquidation, we would be required under Delaware corporate law to pay our outstanding obligations, as well as to make reasonable provision for contingent and unknown obligations, prior to making any distributions in liquidation to our stockholders.

As a result of this requirement, a portion of our assets may need to be reserved pending the resolution of such obligations and the timing of any such resolution is uncertain.

In addition, we may be subject to litigation or other claims related to a dissolution and liquidation.

If a dissolution and liquidation were pursued, our Board, in consultation with our advisors, would need to evaluate these matters and make a determination about a reasonable amount to reserve.

Accordingly, holders of our common stock could lose all or a significant portion of their investment in the event of a liquidation, dissolution or winding up.

The value to stockholders in the event of a strategic transaction or dissolution may depend on the extent to which we will be able to successfully satisfy our existing contractual obligations to third parties on favorable terms, which may include the outcome of our negotiations to reduce or terminate such commitments.

We are currently subject to certain contractual obligations and commitments.

In connection with our comprehensive exploration of strategic alternatives, we may seek to negotiate with third parties to reduce or eliminate such obligations and commitments.

Our ability to successfully negotiate such obligations or commitments on favorable terms, or at all, or our ability to satisfy any such obligations may impact our ability to pursue a strategic transaction on terms favorable to us, the resulting value to stockholders in a strategic transaction or the cash available for distribution to our stockholders in the event of our dissolution.

We may also incur substantial costs in connection with or as a result of such negotiations or termination of any of our commitments.

There can be no assurance that we will be successful in negotiating to reduce or eliminate any of our existing contractual obligations and commitments, or that we will be able to satisfy any such obligations on a timetable that will allow us to maximize potential value to our stockholders.

General Risk Factors

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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

All unregistered sales of equity securities during the quarter ended June 30, 2024 have been previously reported.

All unregistered sales of equity securities during the quarter ended September 30, 2024 have been previously reported.

DEFAULTS UPON SENIOR SECURITIES

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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 1A. Risk Factors