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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-03-05 · 193 added, 166 removed, 181 unchanged (66% of the section changed)

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You should read the following discussion and analysis of our financial condition and results of operations together in conjunction with our financial statements and the related notes included elsewhere in this Annual Report.

All dollar amounts and share counts presented below have been rounded to the nearest thousand and, thus are approximate.

Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and expected financial results, includes forward-looking statements that involve risks and uncertainties.

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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.

We offer a platform-agnostic software solution, which integrates next-generation sequencing, microarray and OGM 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.

The Company also offers nucleic acid extraction and purification solutions using proprietary isotachophoresis (“ITP”) technology.

Through our Bionano Laboratories business, we also provide OGM-based diagnostic testing services.

We expect to see OGM adoption in cytogenomics, discovery research and cell bioprocessing quality control (“QC”).

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We believe there are additional potential future market opportunities for OGM including newborn screening, population genomics, and neurological and cardiological risk assessment which are not included in our estimates above.

Additionally, we believe the market for our platform-agnostic software solution, which can be used in next-generation sequencing and microarray data analysis, includes the clinical NGS market estimated to be $3.4 billion in 2024 and growing at a 20% compound annual growth rate.

We have incurred losses in each year since our inception.

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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 our sales and marketing efforts to maintain sales of our existing products;

• continue research and development efforts to improve our existing products;

• enter into collaboration arrangements, if any;

• add operational, financial and management information systems;

• maintain operational, financial and management information systems;

• 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 Annual Report.

We will continue to seek to raise additional capital, but without sufficient additional financing in the near term we will not be able to continue as a going concern.

If we are unable 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.

The board of directors 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 available to us or completed and if we are not able to raise sufficient additional capital in the very near term to fund our operation, 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 of directors approves a specific transaction or otherwise determines that further disclosure is appropriate.

Macroeconomic and Geopolitical Developments

We are subject to additional risks and uncertainties as a result of adverse geopolitical and macroeconomic developments, such as 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 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 conflicts between Ukraine and Russia and in the Middle East, related sanctions, and any effects of global pandemics and uncertain market conditions, including inflation and supply chain disruptions, which, have not had a material impact on our business and financial results to date, but could result in a material impact to our business or financial results in the future.

Additionally, we have experienced a slowdown in our Asia Pacific business, including as a result of headwinds in the region, which negatively impacted our manufacturing partners who are reliant on government funding.

While our manufacturing partners in the Asia Pacific region have obtained some approvals from the National Medical Products Administration, and are waiting on more, we do not anticipate that the funding headwinds will change in the near term.

Following the invasion of Ukraine by Russia, the U.S.

and global financial markets experienced volatility, which has led to disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity globally.

In response to the invasion, the United States, United Kingdom and EU, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

In response to the invasion, the United States, UK and EU, along with others, imposed significant new sanctions and export controls against Russia, Russian banks and certain Russian individuals and may implement additional sanctions or take further punitive actions in the future.

The full economic and social impact of the sanctions imposed on Russia and possible future punitive measures that may be implemented, as well as the counter measures imposed by Russia, in addition to the ongoing military conflict between Ukraine and Russia, which could conceivably expand into the surrounding region, remains uncertain;

however, both the conflict and related sanctions have resulted, and could continue to result, in disruptions to trade, commerce, pricing stability, credit availability, supply chain continuity and reduced access to liquidity on acceptable terms, in both Europe and globally, and has introduced significant uncertainty into global markets.

As a result, our business and

results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia and related sanctions, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

As a result, our business and results of operations may be adversely affected by the ongoing conflict between Ukraine and Russia and related sanctions, particularly to the extent it escalates to involve additional countries, further economic sanctions or wider military conflict.

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 twelve months ended December 31, 2023, we did not experience material increases in our supply chain costs, but we may experience such increases in future fiscal periods.

During the year ended December 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, high inflation rates, labor shortages, reduction in consumer confidence, adverse geopolitical and macroeconomic developments, or any similar negative economic condition.

For instance, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, high inflation rates, labor shortages, reduction in consumer confidence, adverse geopolitical and macroeconomic developments, or any similar negative economic condition.

These negative effects could have a material impact on our operations, business, earnings, and liquidity.

Recent Developments

On March 5, 2024, we announced a cost savings plan that aims to reduce annual savings of operating expenses of approximately $35.0 to $40.0 million starting in the second half of 2024.

As part of the plan, we expect to reduce our overall headcount by approximately 110 to 125 employees, which represents approximately 34% to 39% of our full-time employees as of the date of this Annual Report.

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.

At this time, we are unable to make a good faith determination of the cost estimates, or ranges of cost estimates, associated with implementation of the plan, including the reduction in force.

In March 2024 and September 2024, we announced restructuring plans that aimed to reduce annualized operating expenses by approximately $35.0 to $40.0 million starting in the second half of 2024, and by an additional $25.0 million to $30.0 million beginning in the fourth quarter of 2024.

As part of the plans, we reduced our overall headcount by approximately 120 and 83 employees, respectively.

In addition, we have phased out the offerings of Bionano Laboratories for certain testing services related to neurodevelopmental disorders, including autism spectrum disorders and other disorders of childhood development.

These measures were incremental to the cost saving initiatives previously announced in May 2023 and October 2023.

See Note 11 (Commitments and Contingencies) to our consolidated financial statements included elsewhere in this Annual Report for additional information.

As part of the plans we have also made a change in our 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.

Financial Overview

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Sales of our VIA™ software, which provides customers with solutions for analysis, interpretation and reporting of genomics 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.

We generate service revenue from the sale of diagnostic testing services 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.

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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.

Our research and development efforts have focused primarily on the tasks required to support development and commercialization of existing products.

We believe that our continued investment in research and development is essential to our long-term competitive position.

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— 77,280,000 (77,280,000) (100) %

Intangible assets and other long-lived assets impairment

19,683,000 — 19,683,000 100%

Restructuring costs

8,022,000 741,000 7,281,000 983%

Total operating expenses

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Interest income 2,101,000 3,311,000 (1,210,000) (37)%

Interest expense (5,119,000) (298,000) (4,821,000) 1,618%

Other income (expenses)

3,449,000 (223,000) 3,672,000 (1,647)%

Loss on High Trail Agreement

Other expenses

(10,102,000) (20,497,000) 10,395,000 (51)%

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Total revenue $ 30,776,000 $ 36,116,000 $ (5,340,000) (15)%

Revenue increased by $8.3 million, or 30% to $36.1 million for the year ended December 31, 2023, as compared to $27.8 million for the same period in 2022, driven primarily from an increase in instrument, consumable, and service and other revenue as discussed below.

Instrument revenue increased $1.4 million, or 17%, to $10.0 million for the year ended December 31, 2023, as compared to $8.6 million for the year ended December 31, 2022, due to an increase in OGM and Ionic instruments sold.

For the year ended December 31, 2023, our installed base grew to 326 OGM systems compared to the 240 OGM systems for the year ended December 31, 2022.

We expect the number of our OGM system placements to continue to grow during 2024, driven by increased market awareness, the full commercial release of our Stratys system in the first quarter of 2024, additional published data demonstrating the utility of OGM solutions, along with continued efficiencies gained in the OGM workflow through research and development, and the acquisitions of BioDiscovery and Purigen.

Total revenue decreased $5.3 million, or 15% to $30.8 million for the year ended December 31, 2024, as compared to $36.1 million for the same period in 2023, driven primarily by a decrease in service and other revenue.

Instrument revenue decreased $2.0 million, or 20%, to $8.0 million for the year ended December 31, 2024, as compared to $10.0 million for the year ended December 31, 2023, due to a decrease in the number of OGM and Ionic® instruments sold.

For the year ended December 31, 2024, our installed base grew to 371 OGM systems compared to the 326 OGM systems for the year ended December 31, 2023, which only represented a 14% increase year-over-year as compared to a 36% year-over-year increase in the prior year.

In September 2024, we announced a change in our business strategy to focus on driving utilization and adoption of OGM from our existing installed base, with less emphasis on new placements of our OGM systems.

We anticipated that this change in strategy would slow the pace of our revenue growth when compared to historical growth rates and that the reduced pace of our revenue growth will continue into 2025.

Consumables revenue increased $1.6 million, or 14%, to $12.8 million for the year ended December 31, 2024, as compared to $11.2 million for the year ended December 31, 2023.

The increase in consumable revenue was attributable to higher OGM

consumable sales given the growth of the instrument installed base and an increase in the consumable purchase quantities under our reagent rental program.

The increase in consumable revenue is in-line with the increase in flowcells sold.

For the year ended December 31, 2024, total flowcells sold reached 30,307, an increase of approximately 15% from the 26,444 flowcells sold during the year ended December 31, 2023.

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The increase is attributed to an increase in sales of our VIA™ software.

Service and other revenue increased $2.0 million, or 27%, to $9.4 million for the year ended December 31, 2023 as compared to $7.4 million for the year ended December 31, 2022.

The increase was primarily due to a $1.9 million increase in diagnostic and service project revenue contributed from Bionano Laboratories.

As of March 1, 2024, we have determined that Bionano Laboratories will phase out over time the products related to testing services for individuals demonstrating clinical presentations consistent with NDDs, including ASDs and other disorders of childhood development.

Service and other revenue decreased $5.6 million, or 60%, to $3.8 million for the year ended December 31, 2024, as compared to $9.4 million for the year ended December 31, 2023, which is the result of discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024.

Such clinical service offerings from Bionano Laboratories contributed $1.7 million in revenue for the year ended December 31, 2024, as compared to $7.1 million for the same period in 2023.

We expect service and other revenue to decline in 2025 relative to 2024 as these service offerings have been fully phased out as of December 31, 2024.

Cost of Revenue, Gross Profit, and Gross Margin

Years Ended December 31, Period-to-Period Change

Cost of revenue:

Cost of product revenue 28,449,000 20,415,000 8,034,000 39%

Cost of service and other revenue 1,947,000 6,135,000 (4,188,000) (68)%

Total cost of revenue 30,396,000 26,550,000 3,846,000 14%

Gross profit (loss):

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Cost of product revenue increased by $8.0 million, or 39%, to $28.4 million for the year ended December 31, 2024, compared to $20.4 million for the year ended December 31, 2023.

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

Cost of service and other revenue increased $0.2 million, or 4%, to $6.1 million for the year ended December 31, 2023, compared to $5.9 million for the year ended December 31, 2022.

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

Product gross profit increased $1.9 million, or 42%, to $6.3 million for the year ended December 31, 2023, compared to $4.5 million for the year ended December 31, 2022.

The increase in gross profit was primarily due to higher sales of instruments and consumables.

Service and other gross profit increased by $1.8 million, or 119%, to $3.3 million for the year ended December 31, 2023, compared to $1.5 million for the year ended December 31, 2022.

The increase in gross profit was primarily due to increased sales of our Bionano Laboratories service offerings.

The increase in cost of product revenue was due to higher sales of consumables offset by lower sales of instruments.

In addition, for the year ended December 31, 2024 , $9.8 million in total expenses were recognized to write-off excess Saphyr ® instrument spare parts and other obsolete inventory for $7.2 million as well as dispose of reagent rentals that were underutilized for $2.6 million .

We expect cost of product revenue to fluctuate with the volume of product sales.

Underperforming assets that were subject to impairment are included in the install base.

Cost of service and other revenue decreased $4.2 million, or 68%, to $1.9 million for the year ended December 31, 2024, compared to $6.1 million for the year ended December 31, 2023.

The decrease in cost of service and other revenue was primarily due to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024.

We expect cost of service and other revenue to remain relatively flat in 2025 as these service offerings have been fully phased out as of December 31, 2024.

Product gross profit decreased $7.8 million, or 123%, to $(1.4) million for the year ended December 31, 2024, compared to $6.3 million for the year ended December 31, 2023.

The decrease in product gross profit was primarily due to $9.8 million in total expenses recognized to write-off excess Saphyr ® instrument spare parts and other obsolete inventory for $7.2 million as well as dispose of reagent rentals that were underutilized for $2.6 million.

Service and other gross profit decreased by $1.4 million, or 44%, to $1.8 million for the year ended December 31, 2024, compared to $3.3 million for the year ended December 31, 2023.

T he decrease in service and other gross profit was primarily due to discontinuing sales of certain clinical service offerings from Bionano Laboratories effective March 2024.

We expect service and other gross profit to decline in 2025 relative to 2024 as these service offerings have been fully phased out as of December 31, 2024.

Research and Development Expenses

Research and development expenses increased by $5.0 million, or 10%, to $54.0 million for the year ended December 31, 2023 as compared to $49.0 million for the same period in 2022.

The increase was primarily due to a $6.8 million increase in headcount-related expenses.

On a full year basis, we averaged 28 more employees allocated to research and development departments in 2023 than we did in 2022.

This was mostly attributed to the fourth quarter 2022 acquisition of Purigen and partially offset by the cost-savings initiatives announced in early 2023.

In addition, we recognized a $2.0 million increase in materials and supplies costs, a $1.4 million increase in information technology (“IT”) and software related costs, a $1.3 million increase in facilities costs, and a $1.2 million increase in depreciation expense.

These increases were incurred in support of our efforts to develop more scalable and efficient manufacturing workflows, clinical trial research, expand the utility of OGM, and develop the next versions of OGM products – including integration of OGM data into our VIA software and full commercial launch of the Stratys system.

The increases were primarily offset by a decrease in stock-based compensation of $8.3 million due to the vesting of stock issued as consideration in the BioDiscovery acquisition, which primarily rolled up into research and development expense and vested in full in 2022, as further described in Note 10 (Stockholders’ Equity and Stock-Based

Compensation).

We anticipate that our research and development expenses will decrease in 2024 as a result of our cost savings initiatives announced in May 2023 and October 2023.

Research and development (“R&D”) expenses decreased by $29.2 million, or 54%, to $24.8 million for the year ended December 31, 2024, as compared to $54.0 million for the same period in 2023.

The decrease was partially due to decreases of $16.1 million in salaries, wages and benefits driven by headcount reductions announced throughout 2023 and 2024 and $7.7 million in professional and consulting fees, including decreases in costs incurred to support clinical research studies, Stratys™ development, foundry expenses, and cloud computing.

Lastly, we reduced information technology and rent and facility costs by $0.8 million, and we reduced our internal consumption of inventory, materials and supplies by $4.2 million.

We anticipate that R&D expenses will continue to decrease throughout 2025 as a result of our cost saving initiatives announced in March and September 2024.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased $4.9 million, or 6%, to $93.5 million for the year ended December 31, 2023 as compared to $88.6 million for the same period in 2022.

The increase was primarily due to a $4.6 million increase in headcount-related expenses.

On a full year basis, we averaged 16 more employees allocated to selling, general and administrative departments in 2023 than we did in 2022.

This was mostly attributed to the fourth quarter 2022 acquisition of Purigen and partially offset by the cost-savings initiatives announced in early 2023.

In addition, we recognized a $2.2 million increase in marketing expenses, a $1.5 million increase in consulting and professional fees, and a $1.4 million increase in amortization of acquisition-related intangibles — including an additional 11 months of amortization expense from the Purigen acquisition.

The increases are being offset by decreases of $1.9 million in materials and supplies, $1.5 million in facilities costs, and $0.9 million in legal expenses.

We anticipate that our SG&A expenses will decrease in 2024 in part due to the cost savings initiatives announced in May 2023 and October 2023.

Selling, general and administrative (“SG&A”) expenses decreased $40.9 million, or 44%, to $51.9 million for the year ended December 31, 2024, as compared to $92.8 million for the same period in 2023.

The decrease was primarily due to a $21.0 million decrease in salaries, wages and benefits driven by headcount reductions announced in 2023 and 2024, a $9.4 million decrease in the gain/loss recorded on fair value of the contingent consideration due for Purigen and BioDiscovery milestones, a $8.9 million decrease in professional and consulting fees which is primarily marketing, software, and legal expenses, and a $2.6 million decrease in travel and entertainment.

We anticipate that SG&A expenses will continue to decrease throughout 2025 as a result of our cost saving initiatives announced in March and September 2024.

Goodwill impairment

Goodwill impairment increased for the twelve months ended December 31, 2023 compared to the twelve months ended December 31, 2022.

The carrying value of the net assets of the Company’s reporting unit exceeded its enterprise wide fair value and the Company recognized a goodwill impairment charge of $77.3 million on the consolidated statements of operations and comprehensive loss for the year ended December 31, 2023.

Interest Expense

Interest expense increased by $4.8 million, or 1,618%, to $5.1 million for the year ended December 31, 2023, as compared to $0.3 million for the same period in 2022.

The increase was primarily driven by the debt issuance costs incurred in connection with the convertible notes.

See Note 9 (High Trail Agreement) to our consolidated financial statements for further discussion.

Goodwill of $77.3 million was fully impaired during the year ended December 31, 2023.

Intangible assets and other long-lived assets impairment

The Company recognized $19.7 million in impairment losses on intangible assets and other long-lived assets during the year ended December 31, 2024 due to our restructuring initiatives and change in business strategy.

The Company recognized no additional impairment losses during the year ended December 31, 2023.

See Note 2 (Summary of Significant Accounting Policies) to our condensed consolidated financial statements included elsewhere in this Annual Report for further discussion on the impairment charges that were recorded during the period.

Restructuring Costs

Restructuring costs were $8.0 million for the year ended December 31, 2024 , as a result of our cost saving initiatives announced in March and September 2024, and $0.7 million for the year ended December 31, 2023, as a result of our cost saving initiatives announced in May and October 2023 .

Interest Income

Interest income increased by $1.8 million, or 120%, to $3.3 million for the year ended December 31, 2023, as compared to $1.5 million for the same period in 2022 resulting from positive returns on investments.

Our total short-term investments balance was $48.8 million as of December 31, 2023.

Loss on High Trail Agreement

A loss on the High Trail Agreement of $18.8 million was recognized during the year ended December 31, 2023 for the difference between the combined fair value of the Notes and option to purchase additional Notes and the proceeds from the transaction, which is recorded as Loss on High Trail Agreement on the consolidated statement of operations.

Income tax benefit (expense)

Income tax expense decreased by $1.8 million, or 97%, to a $0.1 million expense for the year ended December 31, 2023, as compared to a $1.9 million expense for the same period in 2022, driven by the acquisition of BioDiscovery.

We adjusted the business combination accounting for the tax impact of the BioDiscovery acquisition within the one year measurement period for the acquisition.

The effect of the adjustment was to decrease the net deferred tax liability, decrease goodwill, and increase the valuation allowance associated with our deferred taxes by $1.8 million, which we recorded to deferred tax expense for the year ended December 31, 2022.

Interest income decreased by $1.2 million, or 37%, to $2.1 million for the year ended December 31, 2024, as compared to $3.3 million for the same period in 2023 resulting from a reduction in investments offset by higher return s.

Our total short-term investments balance was $0.3 million as of December 31, 2024, as compared to $48.8 million for the same period in 2023.

Other expenses

Other expense was $10.1 million for the year ended December 31, 2024 compared to $20.5 million for the same period in 2023.

The decrease was driven by a net gain on the extinguishment of the High Trail Note and an option (the “Purchase Option”), which expired on the maturity date of the High Trail Notes to purchase up to an additional $25.0 million aggregate principal amount of private placement notes) of $4.0 million, offset by a loss recorded on the issuance of the JGB Debentures of $1.9 million and a loss recorded on the issuance of the High Trail Notes and Purchase Option of $18.8 million (representing a total change in loss on issuance of $16.9 million), an increase in the change in fair value (net gain) of $5.7 million for the convertible High Trail Notes, Purchase Option, and convertible debentures, an increase in interest expense of $2.8 million incurred for the debt issuance costs recorded in connection with the debt instruments, and a loss on extinguishment of $7.3 million for the convertible debentures payable.

See Note 9 (Debt) to our consolidated financial statements included elsewhere in this Annual Report for further discussion on the debt transactions that took effect during the year.

Liquidity and Capital Resources

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Sources of Liquidity and Capital Resources

In the years ended December 31, 2023 and 2022, we have generated cash flows from sales of common stock, other equity instruments and the issuance of convertible notes payable.

In the years ended December 31, 2024 and 2023, we have generated cash flows from sales of common stock, other equity instruments and the issuance of convertible notes and debentures payable.

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.

See Notes 9 (High Trail Agreement) and 10 (Stockholder’s Equity and Stock-Based Compensation) to our consolidated financial statements for a discussion of our recent debt and equity activity.

As of December 31, 2023, we received net proceeds of approximately $75.2 million, after deducting placement agent fees and offering expenses from the issuance and sale of our securities pursuant to the Purchase Agreement in October 2023.

our current business plans, we believe such net proceeds 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.

As of December 31, 2023, we had $69.8 million of Notes at fair value, which is classified as current.

At the holder’s option, as of December 31, 2023, we would have been required to redeem $62.1 million of Notes at the Repayment Price (as defined in Note 9 (High Trail Agreement) to our consolidated financial statements) in 2024.

Because the Notes have a history of both redemptions ($20.7 million) and conversions ($10.0 million) since issuance in October 2023 through February 1, 2024, and twelve months of redemptions at the Repayment Price represents most of the outstanding balance of the Notes, we have classified the entire amount of Notes as current as of December 31, 2023.

Additionally, we would have been required to pay a retirement fee to the holder based on amounts redeemed when the outstanding balance is paid in full, which as of December 31, 2023, was estimated at $4.4 million assuming full redemption and no further conversions.

On January 1, 2024, and February 1, 2024, the holders redeemed an aggregate of $9.0 million of principal, at the 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 of Notes for a total redemption payment of approximately $31.9 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.

See Note 9 (High Trail Agreement) to our consolidated financial statements.

See Notes 9 (Debt) and 10 (Stockholder’s Equity and Stock-Based Compensation) to our consolidated financial statements for a discussion of our recent debt and equity activity.

On October 13, 2023, we completed a registered offering (the “October 2023 Registered Offering”) of senior secured convertible notes payable due 2025 (the “High Trail Registered Notes”) and warrants (the “Registered Warrants”) and a concurrent private placement (the “October 2023 Private Placement” and together with the October 2023 Registered Offering, the “October 2023 Offering”) of senior secured convertible notes payable due 2025 (the “High Trail Private Placement Notes” and, together with the High Trail Registered Notes, the “High Trail Notes”) and warrants (the “Private Placement Warrants” and, together with the Registered Warrants, the “Warrants”) and received net proceeds from the sale of the High Trail Notes and the Registered Warrants of approximately $75.2 million, after deducting the offering expenses and placement agent fees.

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 High Trail 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 High Trail Registered Notes plus (iv) approximately $0.7 million, which will be further reduced as the remaining principal on the High Trail Registered Notes are retired.

We also redeemed the outstanding $17.0 million of the High Trail 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 High Trail Registered Notes for a redemption payment of approximately $12.3 million.

On March 1, 2024, we redeemed $27.7 million aggregate principal amount of the High Trail Notes at a redemption price of 115% of the outstanding principal (the “Repayment Price”) or $31.8 million, and for the period January 1, 2024 through May 1, 2024, redeemed an additional $18.0 million aggregate principal amount of the High Trail Notes at the holders’ option at the Repayment Price for an aggregate of $20.7 million.

On May 24, 2024, we entered into a securities purchase agreement with certain accredited investors (the “Holders”) and JGB Collateral LLC, as collateral agent for the Holders, for the sale by the Company in a private placement (the “JGB Debentures Offering”) of:

• 0.04 million shares of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and

• Senior Secured Convertible Debentures in the aggregate principal amount of $20.0 million (the “Debentures”), for an aggregate purchase price of $18.0 million.

The closing of the JGB Debentures Offering occurred on May 24, 2024.

In connection with the closing of the JGB Debentures Offering, the Company received net proceeds of approximately $16.6 million, after payment of placement agent fees, and other offering expenses.

The Company used the proceeds received to fully redeem the outstanding balance due under the High Trail Note of approximately $17.6 million, as amended (see further discussion below).

On May 23, 2024, in connection with the JGB Debentures Offering, the Company entered into a redemption agreement with High Trail (“HT Agreement”).

Pursuant to the HT Agreement, the Company agreed to redeem the entire outstanding principal amount of $15.3 million under the High Trail Note at a redemption price of 115% for a total redemption payment of $17.6 million (the “Redemption Payment”).

Upon High Trail’s receipt of the Redemption Payment on May 24, 2024, the High Trail Note and related Purchase Option to purchase additional High Trail Notes at fair value were cancelled.

In addition, the Company agreed to pay High Trail a retirement fee of $2.2 million and to reimburse High Trail for all of its reasonable and documented out-of-pocket expenses incurred with the release and termination of security interests relating to the High Trail Note.

On December 31, 2024, the Company entered into an amendment of the Debentures (the “Amendment”) with the Selling Securityholders.

Pursuant to the Amendment, the parties agreed that (i) no amortization payment would be paid in December 2024;

(ii) the maximum monthly amortization payments due between January 2025 and July 2025 would be reduced from $1.0 million per month to $0.5 million per month;

(iii) the maximum monthly amortization payments due from August 2025 through repayment in full of the principal aggregate amount would be $1.4 million per month;

(iv) the conversion price of the Debentures would be reduced from $120.00 to $16.20;

and (v) the Debentures will become non-callable by the Company until August 2025.

As consideration for the Amendment, the Company issued to the Selling Securityholders approximately 83,000 shares of its common stock (the “Private Placement Shares”).

As of December 31, 2024, the Company reported $20.4 million of Debentures at fair value, which is classified as current on the consolidated balance sheet.

Through December 31, 2024, the Company paid $1.2 million in interest and $5.0 million in principal redemption amounts on the Debentures.

As of December 31, 2024, the Company may be required to redeem up to $10.4 million of principal and expects to pay an additional $1.3 million in interest on the Debentures in 2025.

See Note 9 (Debt) to our consolidated financial statements included elsewhere in this Annual Report for further information.

On April 4, 2024, the Company entered into a securities purchase agreement (the “April 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “April 2024 Registered Direct Offering”):

(i) an aggregate of approximately 109,000 shares of the Company’s common stock (as adjusted for the reverse stock split), (ii) pre-funded warrants to purchase up to an aggregate of approximately 37,000 shares of common stock (as adjusted for the reverse stock split) (the “April Pre-Funded Warrants”), and (iii) warrants to purchase up to approximately 146,000 shares of common stock (as adjusted for the reverse stock split) (the “April Purchase Warrants”).

Each share of common stock and each April Pre-Funded Warrant sold pursuant to the April 2024 Purchase Agreement was accompanied by an April Purchase Warrant.

The combined purchase price of each share of common stock and accompanying April Purchase Warrant was $68.70 per share.

The combined purchase price of each April Pre-Funded Warrant and accompanying April Purchase Warrant was $68.64 (equal to the combined purchase price per share of common stock and accompanying April Purchase Warrant, minus $0.001).

The gross proceeds to the Company from the April 2024 Registered Direct Offering was $10.0 million.

The Company received net proceeds of $9.3 million after deducting placement agent fees and other offering expenses of $0.7 million payable by the Company.

On July 4, 2024, the Company entered into a securities purchase agreement (the “July 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “July 2024 Registered Direct Offering”):

(a) an aggregate of approximately 195,000 shares of the Company’s common stock (as adjusted for the reverse stock split), and (b) pre-funded warrants to purchase up to an aggregate of approximately 97,000 shares of common stock (as adjusted for the reverse stock split) (the “July Pre-Funded Warrants”), and (ii) in a concurrent private placement (the “Private Placement” and together with the July 2024 Registered Direct Offering, the “July 2024 Offering”), Series A warrants to purchase up to an aggregate of approximately 292,000 shares of common stock (as adjusted for the reverse stock split) (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of approximately 292,000 shares of common stock (as adjusted for the reverse stock split) (the “Series B Warrants”, and together with the Series A Warrants, the “July Purchase Warrants”).

Each share of common stock and each July Pre-Funded Warrant sold pursuant to the July 2024 Purchase Agreement was accompanied by one Series A Warrant and one Series B Warrant.

The combined purchase price of each share of common stock and accompanying July Purchase Warrants was $34.260 per share (as adjusted for the reverse stock split).

The combined purchase price of each July Pre-Funded Warrant and accompanying July Purchase Warrants was $34.259 (equal to the combined purchase price per share of common stock and accompanying July Purchase Warrant, minus $0.001) (as adjusted for the reverse stock split).

The gross proceeds to the Company from the July 2024 Offering were approximately $10.0 million (excluding up to $20.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the July Purchase Warrants issued in the Private Placement), before deducting placement agent fees and other offering expenses payable by the Company.

The Company received net proceeds of $9.3 million after deducting placement agent fees and other offering expenses of $0.7 million payable by the Company.

On October 30, 2024, the Company entered into a securities purchase agreement (the “October 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “October 2024 Offering”):

(i) an aggregate of approximately 165,000 shares of the Company’s common stock (as adjusted for the reverse stock split) , (ii) Series C warrants to purchase up to an aggregate of approximately 165,000 shares of the Company’s common stock (as adjusted for the reverse stock split) (the “Series C Warrants”) and (iii) Series D warrants to purchase up to an aggregate of approximately 165,000 shares of the Company’s common stock (as adjusted for the reverse stock split) (the “Series D Warrants”, and tog ether with the Series C Warrants, the (“October Purchase Warrants”).

Each share of common stock sold pursuant to the October 2024 Purchase Agreement was accompanied by one Series C Warrant to purchase one share of common stock and one Series D Warrant to purchase one share of common stock .

Each share of common stock and accompanying October Purchase Warrant are immediately separable and were issued separately.

The combined purchase price of each share of common stock and accompanying October Purchase Warrant was $18.234 per share (as adjusted for the reverse stock split) .

The gross proceeds to the Company from the October 2024 Offering were approximately $3.0 million (excluding up to approximately $6.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the October Purchase Warrants), before deducting placement agent fees and other offering expenses payable by the Company.

On January 3, 2025, the Company entered into a securities purchase agreement (the “January 2025 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “January 2025 Offering”) (i) an aggregate of approximately 382,000 shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to an aggregate of approximately 280,000 shares of common stock (as adjusted for the reverse stock split) (the “January Pre-Funded Warrants”) and (iii) warrants to purchase up to an aggregate of approximately 661,000 shares of common stock (as adjusted for the reverse stock split) (the “January Purchase Warrants”).

Each share of common stock and each January Pre-Funded Warrant sold pursuant to the January 2025 Purchase Agreement were accompanied by a January Purchase Warrant.

Both the shares of common stock and the accompanying January Purchase Warrants, and the January Pre-Funded Warrants and the accompanying January Purchase Warrants were immediately separable and were issued separately.

The combined purchase price of each share of common stock and accompanying January Purchase Warrant was $15.120 per share (as adjusted for the reverse stock split) .

The combined purchase price of each January Pre-Funded Warrant and accompanying January Purchase Warrant was $15.119 (equal to the combined purchase price per share of common stock and accompanying January Purchase Warrant, minus $0.001) (as adjusted for the reverse stock split) .

The gross proceeds to the Company from the January 2025 Offering were approximately $10.0 million (excluding up to approximately $20.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the January Purchase Warrants which is contingent upon stockholder approval), before deducting placement agent fees and other offering expenses payable by the Company.

Each January Purchase Warrant is exercisable for one share of common stock at an exercise price of $15.120 per share beginning on the effective date of stockholder approval of the issuance of the shares of common stock upon exercise of the January Purchase Warrants (the “Stockholder Approval”).

The January Purchase Warrants will expire on the five-year anniversary of the Stockholder Approval.

See Note 10 (Stockholder’s Equity and Stock-Based Compensation) to our consolidated financial statements included elsewhere in this Annual Report for further information.

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.

This estimate assumes the inclusion of the amount equal to the outstanding principal amount of the Debentures.

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 the Company’s current business plans we believe we will be able to fund our operating expenses and capital expenditure requirements into the first quarter of 2026.

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 increasing 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, research and development expenses associated with expanding our offerings, and expenses associated with being a public company.

Our short-term capital expenditure needs relate primarily to our facilities, service lab and service-related capabilities, research and development expenses related to current and future product offerings, and enhancements to information technology.

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, restructuring and advisory fees, and expenses associated with being a public company.

We expect such expenditures to continue throughout 2025.

We had $9.2 million in cash and cash equivalents, $0.3 million short-term investments, and $11.4 million in restricted cash and cash equivalents and restricted short-term investments as of December 31, 2024.

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 report.

The amount we are required to hold as restricted cash or restricted investments is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures.

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 Annual Report are issued.

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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 and 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.

In addition, our estimate as to the sufficiency of our current cash, cash equivalents and short-term investments 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 Operations) to our consolidated financial statements included elsewhere in this Annual Report for more information.

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 the growth of 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.

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

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

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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.

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 an annual basis to sustain the expansion of our commercial offerings.

We expect to seek 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, and if we are unable to raise sufficient additional capital in the very near term, 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.

Our recent restructuring activities are anticipated to reduce the cash used in operating activities over the next 12 months;

however, 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.

Net cash used in operating activities was $68.9 million during the year ended December 31, 2024, as compared to $125.2 million during the year ended December 31, 2023.

The increase in cash used in operating activities of $0.4 million is primarily attributed to an increase in our net loss in the current year offset by a decrease in our working capital usage due to higher inventory purchases in the prior year.

The decrease in cash used in operating activities of $56.3 million was primarily attributed to a decrease in our net loss and a decrease in our working capital usage as a result of our cost saving initiatives that were initiated in March and September of 2024.

Investing Activities

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

Net cash provided by investing activities was $24.2 million during the year ended December 31, 2023, compared to $82.8 million provided by investing activities during the year ended December 31, 2022.

This decrease in cash provided by investment activities of $58.6 million is attributed to an increase in purchases of available-for-sale securities of $111.3 million as of December 31, 2023, compared to purchases of available-for-sale securities of $84.2 million as of December 31, 2022, in addition to the acquisition of Purigen, net of cash acquired of $31.3 million that occurred during the year ended December 31, 2022 only.

The decrease in cash is offset by the sales and maturity of available-for-sale securities of $137.0 million as of December 31, 2023, compared to the sales and maturity of available-for-sale securities of $200.9 million as of December 31, 2022.

Net cash provided by investing activities was $73.8 million during the year ended December 31, 2024, as compared to $24.2 million provided by investing activities during the year ended December 31, 2023.

This increase in cash provided by investment activities of $49.7 million is attributed to an increase in the sales and maturity of available-for-sale securities of $307.0 million as of December 31, 2024, as compared to the sales and maturity of available-for-sale securities of $137.0 million as of December 31, 2023.

The increase in cash is offset by an increase in the purchases of available-for-sale securities of $233.0 million as of December 31, 2024, as compared to purchases of available-for-sale securities of $111.3 million as of December 31, 2023.

Financing Activities

2024 Compared to 2023

Net cash provided by financing activities was $113.8 million during the year ended December 31, 2023 as compared to $23.0 million during the year ended December 31, 2022, an increase of $90.8 million.

This increase in cash provided by financing activities is mainly attributed to the proceeds from the issuance of convertible notes payable and warrants of $80.0 million as further discussed in Note 9 (High Trail Agreement).

During the year ended December 31, 2023, we raised approximately $57.8 million in gross proceeds from sales under the Cowen ATM as compared to $23.1 million during the year ended December 31, 2022.

Net cash used in financing activities was $13.7 million during the year ended December 31, 2024, as compared to net cash provided by financing activities of $113.8 million during the year ended December 31, 2023, a decrease of $127.5 million.

During the year ended December 31, 2024, the Company made principal payments of $61.0 million and payments on debt extinguishment costs of $5.4 million towards the High Trail Notes payable, $5.0 million in principal payments made toward the Debentures payable, which was offset by approximately $18.0 million in gross proceeds from the issuance of the Debentures and $44.4 million in gross proceeds from executing sales under our at-the-market facility with Cowen and Company, LLC (“Cowen”) and other equity registered direct offerings (see Note 10.

(Stockholders’ Equity and Stock-Based Compensation) as compared to $57.7 million during the year ended December 31, 2023.

Financial Information about Affiliates Whose Securities Collateralize a Registrant’s Securities and Consolidated Subsidiaries

The Notes are secured by a first-priority lien, subject only to certain permitted liens, on substantially all of our and our subsidiaries’ (other than certain foreign subsidiaries) tangible and intangible assets, whether now owned or hereafter acquired (other than certain excluded property).

For a list of subsidiaries whose securities collateralize the Notes, see Exhibit 22 to this Annual Report.

The Notes are our senior secured obligations, rank pari passu with the up to $25.0 million of additional notes that may be issued pursuant to the securities purchase agreement, senior in right of payment to all of our indebtedness that is expressly subordinated to the Notes in right of payment, effectively senior to all of our unsecured indebtedness to the extent of the collateral securing the Notes, effectively junior to all of our indebtedness secured by permitted liens, to the extent of the value of the assets subject to such permitted liens and to the extent such permitted liens have lien priority by contract or law and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries that are not party to the security documents.

We do not believe there is any trading market for any of our subsidiaries whose securities are pledged as collateral for the Notes.

See Note 9 (High Trail Agreement) to our consolidated financial statements for further details about the terms, conditions and other factors that may affect payments to holders and the collateral arrangements of the Notes.

Rule 13-02 of Regulation S-X requires the presentation of summarized financial information of the combined affiliates whose securities are pledged as collateral for the Notes unless such information is not material.

Because the combined assets, liabilities and results of operations of the Company and the affiliates whose securities are pledged as collateral for the Notes are not materially different than the corresponding amounts presented in our consolidated financial statements, summarized financial information of affiliates whose securities are pledged as collateral for the Notes is not required to be presented under Rule 13-02.

The High Trail Notes were secured by a first-priority lien, subject only to certain permitted liens, on substantially all of our and our subsidiaries’ (other than certain foreign subsidiaries) tangible and intangible assets, whether now owned or hereafter acquired (other than certain excluded property).

For a list of subsidiaries whose securities collateralize the High Trail Notes, see Exhibit 22 to this Annual Report.

The High Trail Notes were our senior secured obligations, ranked pari passu with the up to $25.0 million of additional notes that have been issued pursuant to the securities purchase agreement, were senior in right of payment to all of our indebtedness that was expressly subordinated to the High Trail Notes in right of payment, effectively senior to all of our unsecured indebtedness to the extent of the collateral securing the High Trail Notes, effectively junior to all of our indebtedness secured by permitted liens, to the extent of the value of the assets subject to such permitted liens and to the extent such permitted liens had lien priority by contract or law and structurally junior to all indebtedness and other liabilities (including trade payables) of our subsidiaries that were not party to the security documents.

We do not believe there is any trading market for any of our subsidiaries whose securities were pledged as collateral for the High Trail Notes.

See Note 9 (Debt) to our consolidated financial statements for further details about the terms, conditions and other factors and the collateral arrangements of the High Trail Notes.

Rule 13-02 of Regulation S-X requires the presentation of summarized financial information of the combined affiliates whose securities were pledged as collateral for the High Trail Notes unless such information is not material.

Because the combined assets, liabilities and results of operations of the Company and the affiliates whose securities were pledged as collateral for the High Trail Notes are not materially different than the corresponding amounts presented in our consolidated financial statements, summarized financial information of affiliates whose securities were pledged as collateral for the High Trail Notes is not required to be presented under Rule 13-02.

Capital Resources

As of December 31, 2024, we had approximately $9.2 million in cash and cash equivalents, $0.3 million in short-term investments, $11.4 million in restricted cash and cash equivalents and restricted short-term investments, and working capital of $2.1 million.

The amount we are required to hold as restricted cash or investments is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures (as defined in Note 9 (Debt) to our consolidated financial statements).

We had in place a Sales Agreement with Cowen (the “Cowen ATM”), as amended, pursuant to which we could 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 year ended December 31, 2024, the Company sold approximately 0.5 million (as adjusted for the reverse stock split) shares of common stock under the Cowen ATM and received gross proceeds of approximately $21.4 million before deducting offering costs of $0.6 million.

On February 4, 2025, the Company provided notice of its termination, effective February 14, 2025, of the Cowen ATM.

Contingent Consideration

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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.

The fair value of the Purigen milestones were 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 which were applied to the individual payments over the five year milestone term.

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 $10.9 million as of December 31, 2023, $0.0 of which is current as of December 31, 2023.

For the second milestone, we performed a Monte Carlo Simulation to determine the likelihood that the milestone will be achieved and was applied to the milestone consideration payment.

During the quarter ended September 30, 2024, the Company concluded that the probability of achievement of the two independent milestones was 0% which resulted in a reduction in the contingent consideration liability to zero.

Contractual Obligations

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Operating lease obligations, including interest $ 3,406,000 $ 2,608,000 $ 798,000 $ — $ —

Finance lease obligations, including interest, related party 6,963,000 330,000 685,000 721,000 5,227,000

Convertible notes payable*

Finance lease obligations, including interest

6,634,000 338,000 702,000 737,000 4,857,000

Convertible debentures payable

15,472,000 10,375,000 5,097,000 — —

Total contractual obligations $ 25,512,000 $ 13,321,000 $ 6,597,000 $ 737,000 $ 4,857,000

*Also refer to Note 9 (High Trail Agreement) in our consolidated financial statements.

Operating lease obligations relate to our office, laboratory and manufacturing space for our corporate headquarters in San Diego, California, Bionano Laboratories operations in Salt Lake City, Utah, and Purigen office and laboratory space in

Pleasanton, California.

Operating lease obligations relate to our office, laboratory and manufacturing space for our corporate headquarters in San Diego, California.

Finance lease obligations relate to our BioDiscovery office in El Segundo, California.

See Note 11, Commitments and Contingencies to our consolidated financial statements included in this Annual Report.

Purchase obligations primarily represent commitments for purchases of inventory from our supplier as disclosed in Note 11, Commitments and Contingencies to our consolidated financial statements included in this Annual Report.

See Note 11 (Commitments and Contingencies) to our consolidated financial statements included elsewhere in this Annual Report.

Critical Accounting Policies and Estimates

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

While our significant accounting policies are more fully described in Note 2, (Summary of Significant Accounting Policies) to our consolidated financial statements in this Annual Report, the significant accounting estimates that we believe are important to aid in fully understanding and evaluating our reported financial results include the following:

Stock-Based Compensation Expense

We recognize compensation expense for employees based on an estimated grant date fair value using the Black-Scholes option-pricing method.

We have elected to account for forfeitures as they occur.

The inputs for the Black-Scholes valuation model require management’s significant assumptions.

The common share price was determined by using the quoted price on the grant date.

The risk-free interest rates were based on the rate for U.S.

Treasury securities at the date of grant with maturity dates approximately equal to the expected life at the grant date.

The expected life was based on the simplified method in accordance with the SEC Staff Accounting Bulletin Nos.

The expected volatility was estimated based on historical volatility information of the Company and peer companies that are publicly available.

Our expected dividend yield assumption is zero as we have never paid dividends and have no present intention to do so in the future.

Valuation of Goodwill

Goodwill is tested annually for impairment, in the fourth quarter, and in interim periods if events or changes in circumstances indicate that the assets may be impaired.

We first assess qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test.

The qualitative factors include economic environment, business climate, market capitalization, operating performance, competition, and other factors.

If, after completing such assessment, we determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, then there is no need to perform any further testing.

If we conclude otherwise, or if we proceed directly to perform a quantitative assessment, then we calculate the estimated fair value of the reporting unit and compare the fair value with the carrying value of the reporting unit.

If the carrying amount of the reporting unit exceeds the fair value, we record an impairment loss based on the difference.

If a quantitative assessment is performed, the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by looking at market values of comparable companies.

Key assumptions include, but are not limited to, future revenue growth, operating margins, capital expenditures, terminal growth rates and discount rates.

We also consider our market capitalization as a part of our analysis .

As described further in Note 2, (Summary of Significant Accounting Policies) to our consolidated financial statements in this Annual Report, we performed qualitative goodwill impairment tests as of September 30, 2023 and concluded that it is more likely than not that the fair value of the reporting unit is less than its carrying value.

Therefore, we performed a quantitative impairment test and recognized a goodwill impairment charge, impairing goodwill of $77.3 million in full on the consolidated statements of operations and comprehensive loss for the quarter ended September 30, 2023.

During the years ended December 31, 2023, the Company recognized no additional impairment losses on goodwill and during the year ended December 31, 2022, no impairment losses were recorded on goodwill.

Business Combinations

We apply the provisions of Accounting Standards Codification (“ASC”) 805, Business Combinations, in accounting for acquisitions.

It requires us to recognize separately from goodwill the identifiable assets acquired and the liabilities assumed at the acquisition date fair values.

Goodwill as of the acquisition date is measured as the excess of consideration transferred over the net of the acquisition date fair values of the identifiable assets acquired and the liabilities assumed.

While we use our best estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date as well as any contingent consideration, where applicable, our estimates are inherently uncertain and subject to refinement.

As a result, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill.

Upon the conclusion of the measurement period or final determination of the values of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are required to be recorded to our consolidated statements of operations.

Accounting for business combinations requires management to make significant estimates and assumptions, especially at the acquisition date, including estimates for intangible assets, contractual obligations assumed, pre-acquisition contingencies and any contingent consideration, where applicable.

Although we believe that the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from management of the acquired company and are inherently uncertain.

We generally use the income approach to derive the fair value of the above identified intangible assets when accounting for business combinations.

This approach calculates fair value by estimating future cash flows attributable to the assets and then discounting these cash flows to a present value using a risk-adjusted discount rate.

We selected this method because we believe the income approach most appropriately measures the value of our income producing assets.

This approach requires significant management judgment with respect to future volume, revenue and expense growth rates, changes in working capital use, appropriate discount rates, terminal values and other assumptions and estimates.

The estimates and assumptions used are consistent with our business plans.

The use of alternative estimates and assumptions could increase or decrease the estimated fair value of the asset.

Actual results may differ from management’s estimates.

We record contingent consideration resulting from a business combination at its fair value on the acquisition date.

On a quarterly basis, we revalue this obligation and record any increase or decrease in fair value as an adjustment to the consolidated statement of operations.

Changes to the fair value of the contingent consideration obligation may result from changes to the discount rate, the passage of time, or changes in our estimate of the likelihood or timing of achieving the criteria for payment of the contingent consideration.

Significant judgment is employed in determining the appropriateness of these assumptions as of the acquisition date and for each subsequent reporting period.

Accordingly, changes in the assumptions described above could have a material impact on the amount of income or expense we record for contingent consideration in any given period.

Convertible Notes Payable

As described further in Note 2, (Summary of Significant Accounting Policies) to our consolidated financial statements in this Annual Report, the Company elected to account for the convertible notes payable issued using the fair value option under ASC 825-10.

While our significant accounting policies are more fully described in Note 2 (Summary of Significant Accounting Policies) to our consolidated financial statements included elsewhere in this Annual Report, the significant accounting estimates that we believe are important to aid in fully understanding and evaluating our reported financial results include the following:

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

Long-lived assets are reviewed for impairment if indicators of potential impairment exist.

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

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

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

If a fair value assessment is performed, the evaluation includes a discounted cash flow method to estimate the fair value of the asset group.

The cash flows were determined using market comps obtained from similar asset groups and includes estimates and assumptions for future sublease rental rates that reflect current sublease market conditions as well as discount rates.

Refer to Note 2 (Summary of Significant Accounting Policies) to our consolidated financial statements included elsewhere in this Annual Report, for further information on the impairment losses we recorded to our long-lived assets and intangible assets as of December 31, 2024.

Convertible High Trail Notes and Debentures Payable

As described further in Note 2 (Summary of Significant Accounting Policies) to our consolidated financial statements included elsewhere in this Annual Report, the Company elected to account for the convertible High Trail Notes and Debentures payable issued using the fair value option under ASC 825-10.

Such instruments are recognized at estimated fair value on the date of issuance, with changes in fair value after issuance recorded in other (income) expense, net on the consolidated statements of operations as a gain or loss, unless the change is a result of a change in credit risk, in which case such change in estimated fair value is recorded within other comprehensive income.

Increases or decreases in the fair value of the convertible notes payable can result from updates to assumptions such as the expected timing or probability of a qualified financing event, expected volatility or changes in discount rates.

Increases or decreases in the fair value of the convertible High Trail Notes and Debentures payable can result from updates to assumptions such as the expected timing or probability of a qualified financing event, expected volatility or changes in discount rates.

Judgment is used in determining these assumptions as of the initial valuation date and at each subsequent reporting period.

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Recent Accounting Pronouncements

Refer to Note 2 - Summary of Significant Accounting Policies, in the accompanying notes to our consolidated financial statements included in this Annual Report for a discussion of recent accounting pronouncements.

Refer to Note 2 (Summary of Significant Accounting Policies), in the accompanying notes to our consolidated financial statements included elsewhere in this Annual Report for a discussion of recent accounting pronouncements.

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What changed 10-K

Item 7. Management’s Discussion and Analysis