What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-03-05 · 597 added, 419 removed, 906 unchanged (53% of the section changed)

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

As described in Note 1 to the financial statements, the Company has suffered recurring losses from operations that raise substantial doubt about its ability to continue as a going concern.

As described in Note 1 to the consolidated financial statements, the Company has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern.

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

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

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Contingent Consideration – Purigen Biosystems, Inc.

As described in Note 4 to the Company’s consolidated financial statements, the Company’s contingent consideration is related to potential future payments to be made upon achievement of milestones related to the acquisition of Purigen Biosystems, Inc.

(Purigen) in the prior year.

The fair value of the Purigen contingent consideration as of December 31, 2023 was approximately $ 10.9 million, which was calculated by using a probability weighted model and a Monte Carlo simulation.

We identified management’s estimates used in determining the probabilities of achieving milestones when the Company estimated the fair value of the Purigen contingent consideration as a critical audit matter.

The principal considerations for our

determination were the subjectivity and significant judgement required by management in assessing the probabilities.

Auditing these elements involved especially challenging auditor judgment due to the nature and extent of audit effort required to address this matter.

The primary procedures we performed to address this critical audit matter included:

• Evaluating the reasonableness of forecasted sales, including forecasted sales from the launch of a new product, by comparing them to historical sales and assessing them in relation to internal and external analyses.

• Corroborating management’s estimated probabilities of achievement by reviewing the Company’s internal product development plans.

• Considering disconfirming evidence by performing a market analysis of similar product types to corroborate the feasibility of the milestones.

High Trail Agreement

As described in Notes 4 and 9 to the Company’s consolidated financial statements, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with High Trail Special Situations LLC in October 2023, pursuant to which the Company issued $ 80.0 million aggregate principal amount of convertible notes payable, warrants and an option to purchase additional convertible notes (“purchase option liability”).

The Company received $ 75.2 million net proceeds after deducting the expenses and placement agent fees.

The convertible notes payable and the purchase option liability were recorded at fair value, which were $ 89.1 million at issuance and $ 69.8 million as of December 31, 2023, and $ 9.8 million at issuance and $ 8.5 million as of December 31, 2023, respectively.

The warrants qualified for classification as equity instruments and were recorded at $0, which represented the residual amount after allocation of proceeds to the convertible notes payable and the purchase option liability at fair value on the issuance date.

We identified (i) the accounting evaluation of all financial instruments within the Purchase Agreement, (ii) the allocation of the proceeds among the elements of the Purchase Agreement, and (iii) the valuation of the convertible notes payable and the purchase option liability at issuance and as of December 31, 2023 as a critical audit matter.

Our principal considerations included (i) the existence of accounting complexities related to such evaluation and significant judgments involved in the interpretation of the terms of the agreements and in the application of appropriate accounting guidance, and (ii) the valuation models used in determining the fair value of the convertible notes payable and the purchase option liability were complex and consisted of certain assumptions that were subjective, such as the expected volatility and the debt discount rates utilized in the valuation models.

Auditing these elements required especially challenging and complex auditor judgment due to the nature and extent of audit effort required, including the extent of specialized skills or knowledge needed.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Inventory Valuation - Excess and Obsolete Inventory

As described in Note 2 to the Company’s consolidated financial statements, provisions for slow-moving, excess, and obsolete inventories are estimated based on product life cycles, historical experience, and sales forecasts.

As of December 31, 2024, the Company’s excess and obsolete inventory reserve balance was $3.8 million.

Total net inventory as of December 31, 2024 was $13.3 million.

We identified auditing the Company’s estimate for excess and obsolete inventory as a critical audit matter.

Auditing forecasted sales data involves especially challenging auditor judgment due to the nature and extent of audit effort required to address the matter.

The primary procedures we performed to address this critical audit matter included:

(i) the terms of the Purchase Agreement, and (ii) the Company’s application of the relevant accounting literature including the allocation of the proceeds received.

• Utilizing personnel with specialized skills and knowledge in accounting to assist in:

(i) evaluating relevant terms of the Purchase Agreement in relation to the appropriate accounting literature, and (ii) assessing the appropriateness of the conclusions reached by the Company.

• Utilizing personnel with specialized skills and knowledge in valuation to assist in:

(i) assessing the appropriateness of the valuation models used in estimating the fair value of the convertible notes payable and the purchase option liability;

(ii) developing independent estimates of the expected volatility and the debt discount rates.

• Evaluating the reasonableness of forecasted sale quantities by reviewing historical sale quantities and agreeing certain sales data to relevant source documents.

• Testing the accuracy of the excess and obsolete inventory reserve calculation.

/s/ BDO USA, P.C.

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Intangible assets, net 9,705,000 33,974,000

Goodwill — 77,289,000

Other long-term assets 2,754,000 7,431,000

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260,000 272,000

Contingent consideration — 9,382,000

Purchase option liability (at fair value)

Convertible notes payable (at fair value)

Convertible debentures and High Trail notes payable (at fair value)

20,362,000 69,803,000

Total current liabilities 37,344,000 100,028,000

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3,539,000 3,585,000

Contingent consideration, net of current portion

10,890,000 12,970,000

Contingent consideration

Long-term contract liabilities 267,000 154,000

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Accumulated deficit ( 693,225,000 ) ( 581,208,000 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income

27,000 23,000

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Goodwill impairment

Intangible assets and other long-lived assets impairment

Restructuring costs

8,022,000 741,000

Total operating expenses 104,363,000 224,811,000

Loss from operations ( 103,983,000 ) ( 215,245,000 )

Other expenses

Other income (expense):

Interest income 2,101,000 3,311,000

Interest expense ( 5,119,000 ) ( 298,000 )

Other income (expenses) 3,449,000 ( 223,000 )

Loss on High Trail Agreement

Other expense

( 10,102,000 ) ( 20,497,000 )

Total other income (expense) ( 17,186,000 ) 986,000

Total other expense

( 8,001,000 ) ( 17,186,000 )

Loss before income taxes ( 111,984,000 ) ( 232,431,000 )

Benefit (provision) for income taxes ( 62,000 ) ( 1,884,000 )

Provision for income taxes

( 33,000 ) ( 62,000 )

Net loss $ ( 112,017,000 ) $ ( 232,493,000 )

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Other comprehensive income (loss):

Unrealized gain (loss) on investment securities

Unrealized gain on investment securities

11,000 1,082,000

Foreign currency translation adjustments ( 7,000 ) 65,000

Other comprehensive income (loss)

Other comprehensive income

$ 4,000 $ 1,147,000

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BIONANO GENOMICS, INC.

Consolidated Statements of Stockholders’ Equity (Deficit)

Consolidated Statements of Stockholders’ Equity

Capital Accumulated

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Balance at January 1, 2023

495,300 $ — $ 599,239,000 $ ( 348,715,000 ) $ ( 1,124,000 ) $ 249,400,000

Stock option exercises 100 — 23,000 — — 23,000

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Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes — — ( 61,000 ) — — ( 61,000 )

Issue stock for acquisition — — — —

Issuance of common stock for High Trail convertible notes payable

58,200 — 6,542,000 6,542,000

Net loss — — — ( 232,493,000 ) — ( 232,493,000 )

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Balance at December 31, 2023

Stock option exercises 4,000 — 23,000 — — 23,000

762,600 $ — $ 677,342,000 $ ( 581,208,000 ) $ 23,000 $ 96,157,000

Stock-based compensation expense — — 9,736,000 — — 9,736,000

Issue common stock, net of issuance costs 12,507,000 1,000 56,313,000 — — 56,314,000

Issue common stock and warrants, net of issuance costs

968,600 — 41,481,000 — — 41,481,000

Issue stock for warrant exercises

133,500 — 4,000 — — 4,000

Issue stock for employee stock purchase plan 500 — 13,000 — — 13,000

Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes 200 — ( 3,000 ) — — ( 3,000 )

Issuance of common stock for convertible notes payable 3,492,000 1,000 6,542,000 — — 6,543,000

Net loss — — — ( 112,017,000 ) — ( 112,017,000 )

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Balance at December 31, 2024

1,865,400 $ — $ 728,573,000 $ ( 693,225,000 ) $ 27,000 $ 35,375,000

See accompanying notes to the consolidated financial statements.

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Goodwill impairment

Inventory write-offs

Amortization of financing lease right-of-use asset

204,000 204,000

Amortization (accretion) of interest on securities ( 539,000 ) 638,000

Net realized loss (gain) on investments 23,000 66,000

Accretion of interest on securities

( 1,316,000 ) ( 539,000 )

Net realized loss on investments

14,000 23,000

Non-cash lease expense ( 122,000 ) 56,000

(Benefit) expense from deferred income taxes — 1,760,000

Gain on lease modification

Stock-based compensation 9,736,000 15,178,000

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Change in fair value of contingent consideration ( 10,890,000 ) ( 1,462,000 )

Change in fair value of convertible notes payable and option liability

Change in fair value of convertible debentures, convertible notes payable and option liability

( 8,118,000 ) ( 575,000 )

Loss on High Trail Agreement

Loss on issuance of convertible debentures

1,890,000 18,827,000

Gain on High Trail extinguishment

( 3,965,000 ) —

Loss on extinguishment of convertible debentures payable

Disposal of internal-use software

Intangible assets and other long-lived assets impairment

Long-lived assets held for sale impairment

Right-of-use-asset impairment

Disposal of property and equipment

Contingent consideration cash payment in excess of acquisition-date fair value

— ( 1,000,000 )

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

Changes in operating assets and liabilities

Accounts receivable 4,139,000 ( 2,296,000 )

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Investing activities:

BioDiscovery acquisition, return of purchase consideration from escrow — 694,000

Purigen acquisition, return of purchase consideration from escrow — 96,000

Purigen acquisition, net of cash acquired — ( 31,344,000 )

Purchases of property and equipment ( 103,000 ) ( 1,691,000 )

Sale of property and equipment — 26,000

Construction in process — ( 792,000 )

Purchases of intangible assets — ( 102,000 )

Purchase of available for sale securities ( 233,021,000 ) ( 111,264,000 )

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( 58,000 ) ( 47,000 )

Proceeds from sale of common stock 57,697,000 23,128,000

Offering expenses on sale of common stock ( 1,444,000 ) ( 578,000 )

Proceeds from sale of common stock and warrants

44,433,000 57,697,000

Offering expenses on sale of common stock and warrants

( 2,953,000 ) ( 1,444,000 )

Years Ended December 31,

Proceeds from sale of common stock under employee stock purchase plan 11,000 107,000

Proceeds from warrant and option exercises 4,000 23,000

Proceeds from High Trail Agreement

Payments on convertible notes payable

Proceeds from issuance of convertible debentures

18,000,000 80,000,000

Debt issuance costs related to High Trail Agreement

Payments on High Trail notes

( 61,000,000 ) ( 9,000,000 )

Payments on convertible debentures

( 5,000,000 ) —

Debt issuance costs on sale of convertible debentures

( 1,747,000 ) ( 4,521,000 )

Payments of retirement fees for redemption of High Trail notes

( 5,375,000 ) —

Contingent consideration milestone payment

— ( 9,000,000 )

Net cash provided by financing activities 113,815,000 23,007,000

Net cash provided by (used in) financing activities

( 13,685,000 ) 113,815,000

Effect of exchange rates on cash and cash equivalents and restricted cash

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( 8,775,000 ) 12,857,000

Years Ended December 31,

Cash and cash equivalents and restricted cash at beginning of period

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Supplemental disclosure of non-cash financing and investing activity

Contingent consideration related to Purigen acquisition $ — $ 12,970,000

Operating lease liabilities resulting from obtaining and modifying right-of-use assets $ — $ 517,000

Transfer of instruments and servers from inventory into property and equipment, net $ 5,291,000 $ 10,979,000

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$ — $ 150,000

Conversion of convertible notes payable into common stock at fair value

Conversion of High Trail convertible notes payable into common stock at fair value

$ — $ 6,542,000

Accrued liability for fees to be paid in common stock

$ 1,584,000 $ —

Non-cash Fill-Up Amount 472,000 —

See accompanying notes to the consolidated financial statements.

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(collectively, with its consolidated subsidiaries, the “Company”) is a provider of genome analysis solutions that can enable researchers and clinicians to reveal answers to challenging questions in biology and medicine.

The Company offers optical genome mapping (“OGM”) solutions for applications across basic, translational and clinical research, and for other applications including bioprocessing.

Through its Lineagen, Inc.

(doing business as Bionano Laboratories, “Bionano Laboratories”) business, the Company also provides diagnostic testing for patients with clinical presentations consistent with autism spectrum disorder and other neurodevelopmental disabilities.

Through its BioDiscovery, LLC (“BioDiscovery”) business, the Company also offers 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 its Purigen Biosystems Inc.

(“Purigen”) business, the Company offers nucleic acid extraction and purification solutions using proprietary isotachophoresis (“ITP”) technology.

The Company offers optical genome mapping (“OGM”) solutions, diagnostic services and software for applications across basic, translational and clinical research, and for other applications including bioprocessing.

The Company offers 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 its wholly-owned subsidiary, Lineagen Inc.

(doing business as Bionano Laboratories), the Company also provides OGM-based diagnostic testing services.

Liquidity and Going Concern

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

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

As of December 31, 2024, the Company 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 Company has an accumulated deficit of $ 581.2 million as of December 31, 2023.

In 2023, the Company used $ 125.2 million cash in operations.

As of December 31, 2023, the Company reported $ 69.8 million of Notes at fair value, which are classified as current.

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

Additionally, the Company will be 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 Notes, at the Repayment Price of $ 10.4 million.

In February 2024, in connection with the Letter Agreement and Amendment (each as defined in Note 9 (High Trail Agreement)) the Company 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 on the Notes outstanding.

See Note 9 (High Trail Agreement) for additional information.

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

The amount the Company is 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 ).

As of December 31, 2024 the Company had $ 15.5 million of principal outstanding under the Debentures (see Note 9 (Debt) to our consolidated financial statements) and an accumulated deficit of $ 693.2 million.

In 2024, the Company used $ 68.9 million of cash in operations.

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

Management has prepared cash flows forecasts which indicate that based on the Company’s expected operating losses and negative cash flows, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the financial statements for the year ended December 31, 2024, are issued.

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

Management’s plans to raise additional capital to fulfill its operating and capital requirements for at least 12 months include public or private equity or debt financings.

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

Management’s plans to raise additional capital to fulfill its operating and capital requirements for at least twelve months include public or private equity or debt financings.

However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all, and if the Company is unable to raise sufficient additional capital in the very near term, it may need to further curtail or cease operations and seek protection by filing a voluntary petition for relief under the United States Bankruptcy Code.

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

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

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Significant estimates and assumptions used by management include but are not limited to revenue recognition, the fair value of financial instruments measured at fair value, fair value of contingent consideration, the recoverability of long-lived assets, fair value of reporting units, equity based compensation expense, and net deferred tax assets (and related valuation allowance).

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

materially from these estimates.

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

Changes in estimates are recorded in the period in which they become known.

The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Reverse Stock Split

On August 4, 2023, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of all issued and outstanding shares of the Company’s common stock at a ratio of 1-for-10.

Reverse Stock Splits

On August 4, 2023 and January 24, 2025, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of all issued and outstanding shares of the Company’s common stock at a ratio of 1-for-10 and 1-for-60, respectively.

The reverse stock split did not change the par value or the authorized number of shares of the Company’s common stock.

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All intercompany transactions and balances have been eliminated in consolidation.

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

Reclassifications

Certain amounts reported in prior years have been reclassified to conform with the presentation in the current year.

These reclassifications had no effect on the reported results of operations.

Restructuring Expenses

The Company’s restructuring expense consists primarily of actions taken in May and October 2023 in order to reduce costs and improve operations and manufacturing efficiency.

This was accounted for as a one-time termination benefit communicated by period end without an additional service component, so the charge represents the total amount expected to be incurred.

As a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the reduction in force the Company initiated in May and October 2023, such plans are intended to decrease expenses and maintain a streamlined organization to support its business.

The Company’s restructuring expense consists primarily of actions taken in May and October 2023 (the “2023 Workforce Reductions”) and March and September 2024 (the “2024 Workforce Reductions”) in order to reduce costs and improve operations and manufacturing efficiency.

Severance-related costs were accounted for as a one-time termination benefit communicated by period end without an additional service component, so the charge represents the total amount expected to be incurred.

As a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the 2023 Workforce Reductions and 2024 Workforce Reductions, such plans are intended to decrease expenses and maintain a streamlined organization to support its business.

In connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City that resulted in a one-time termination fee of approximately $ 0.2 million in the third quarter of 2024.

The Company continued to lease the property through June 2024.

The Company accounted for the lease amendment as a lease modification and recorded a gain of $ 0.1 million during the three months ended March 31, 2024.

On March 1, 2024, and September 4, 2024, the Company’s board of directors approved restructuring plans, including reductions in force, that it expects to reduce the Company’s annualized operating expenses.

The 2024 Workforce Reductions were incremental to the 2023 Workforce Reductions.

As part of the 2024 Workforce Reductions, the Company reduced its overall headcount by approximately 120 and 83 employees in March and September 2024, respectively.

The Company has completed the reduction in force from the 2024 Workforce Reductions as of December 31, 2024.

In addition, as part of the 2024 Workforce Reductions, Bionano Laboratories phased out the offering of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders, and other disorders of childhood development.

The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reductions in force.

See Note 11 (Commitments and Contingencies) for additional information.

Business Combinations

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

See Note 14, (Acquisitions), for a more fulsome discussion of our acquisition of Purigen.

The Company accounts for its acquisitions using the acquisition method of accounting pursuant to Accounting Standards Codification Topic 805, Business Combinations (“ASC 805”).

There were no acquisitions during the years ended December 31, 2024 and 2023.

Under ASC 805, the tangible and identifiable intangible assets acquired and liabilities assumed in a business combination are recorded based on their estimated fair values as of the acquisition date.

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

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

The Company estimates the fair value of identifiable intangible assets acquired with the assistance of independent valuations that use information and assumptions provided by the Company’s management.

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

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Restricted Cash and Investments

Restricted cash consists of cash restricted from withdrawal and usage and represents funds that are restricted related to the lease assumed in the acquisition of Purigen, which is further discussed in Note 14.

As of December 31, 2023, restricted investments consisted of the proceeds received from the Private Placement Notes as described further in Note 9 (High Trail Agreement) that was deposited into a restricted account subject to an account control agreement that only permits funds to be released once per calendar month upon the satisfaction of certain funding conditions specified in the Notes.

As of December 31, 2024 and 2023, restricted cash consisted of cash restricted from withdrawal and usage and represents funds that were restricted related to the lease assumed in the acquisition of Purigen in 2022.

As of December 31, 2024, restricted investments consisted of the proceeds received from the Debentures as described further in Note 9 (Debt) that was deposited into a restricted account that requires the Company to maintain at all times, a cash or restricted investments balance equal to the lesser of (a) $ 11.0 million and (b) the then outstanding principal balance of the Debentures.

Fair Value Measurements

37 unchanged sentences

$ 4,752,000 $ 9,319,000 $ 7,022,000

Changes to the allowance for credit losses from December 31, 2021 to December 31, 2023 were as follows:

Changes to the allowance for credit losses from January 1, 2023 to December 31, 2024 were as follows:

Allowance for Credit Losses

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

As of December 31, 2023 and 2022, no customers met or exceeded 10% of the Company’s total accounts receivable balance.

As of December 31, 2024, there was one customer with a 10 % concentration in the Company’s total accounts receivable balance.

As of December 31, 2023, no customers met or exceeded 10% of the Company’s total accounts receivable balance.

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

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Inventory includes raw materials, work in process, and finished goods that may be used in the research and development process and such items are expensed as consumed or expired.

Provisions for slow-moving, excess, and obsolete inventories are estimated based on product life cycles, historical experience, and usage forecasts.

Provisions for slow-moving, excess, and obsolete inventories are estimated based on product life cycles, historical experience, and sales forecasts.

The components of inventories, net of reserve, are as follows:

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The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as non-current within other long-term assets.

As of December 31, 2023, $ 4.7 million of inventories were included in Other long term assets.

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

During the year ended December 31, 2024, the Company recorded a $ 7.2 million write-off of its Saphyr® instrument spare parts and other excess or obsolete inventory as a result of the Company’s restructuring initiatives and change in business strategy announced in September 2024.

As of December 31, 2024, the Company’s excess and obsolete inventory reserve balance was $ 3.8 million.

Loss on disposal of property and equipment

Loss on disposal of property and equipment includes the net book value of assets that have been abandoned or retired and consists primarily of our leasehold improvements, furniture, equipment and fixtures that were abandoned and disposed of in the normal course of business.

The Company recorded a loss on disposal of property and equipment of $ 1.4 million as of December 31, 2024.

Change in depreciable lives of property and equipment

The Company reviews the estimated useful life of its fixed assets on an ongoing basis.

This review indicated that the actual lives of the Company’s Saphyr® and Stratys™ instruments were longer than the estimated useful lives used for depreciation purposes in the Company’s consolidated financial statements.

As a result, effective January 1, 2024, the Company changed its estimates of the useful lives of the Company’s Saphyr® and Stratys™ instruments to better reflect the estimated period during which these assets will remain in service.

The estimated useful lives of the Company’s Saphyr® and Stratys™ instruments were increased from 5 to 7 years.

The effect of this change in estimate reduced depreciation expense by $ 1.8 million for the fiscal year 2024.

Disposal of In-Process Internal-Use Software

In September 2024, Bionano announced a change in its business strategy to focus on driving utilization and adoption of OGM from the Company’s existing installed base, with less emphasis on new placements of the Company’s OGM systems, which resulted in a change in the manner in which the Company’s in-process internally developed software would be used;

therefore, it became probable that the software would not be placed into service.

The Company disposed of the project, and recorded a loss of $ 1.3 million included in selling, general and administrative expense on the consolidated statement of operations during the year ended December 31, 2024.

No material disposals of internal-use software were recorded in the year ended December 31, 2023.

The Company’s in-process internal-use software was recorded in prepaid expenses and other current assets on the consolidated balance sheets.

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

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

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

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

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

Repairs and maintenance costs are charged to expense as incurred.

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

During the year ended December 31, 2023, the Company experienced a triggering event that required evaluation of our asset groups for impairment.

The Company performed a recoverability test and there was sufficient cushion related to the cash flows of each of our asset groups.

There was no indications of impairment of intangible assets during the year ended December 31, 2022.

During the years ended December 31, 2023 and 2022, the Company recognized no impairment losses on long-lived assets.

During the three months ended March 31, 2024, the Company experienced a triggering event as a result of the restructuring initiatives announced in March 2024 that required an evaluation of its non-OGM Bionano Laboratories asset group for impairment.

The Company performed a recoverability test and concluded that the non-OGM Bionano Laboratories long-lived assets were not recoverable;

therefore, the Company measured the impairment loss and fully impaired the intangible assets acquired through the acquisition of Lineagen, consisting of its trade name and customer relationship intangible assets.

The Company recognized an impairment loss of $ 0.4 million during the three months ended March 31, 2024.

During the three months ended September 30, 2024, the Company experienced a triggering event and identified indicators of impairment in all of its asset groups as a result of the restructuring initiatives and change in business strategy announced in September 2024.

The Company assessed the recoverability of each asset group and concluded the legacy OGM Bionano and Purigen asset groups were not recoverable.

Therefore, the Company was required to perform an impairment analysis to determine the fair value of the legacy OGM Bionano and Purigen asset groups as further described below.

The Company evaluated the fair value of the finite-lived assets of the legacy OGM Bionano asset group.

The Company evaluated the fair value of the reagent rental instruments based on the expected sales volume or usage and recorded an impairment loss of $ 2.6 million.

The estimates and assumptions used in the assessment of the reagent rental instrument impairments represent Level 2 measurements because they are supported by executed sales transactions.

The impairment loss associated with these reagent rental instruments was recorded to cost of product revenue in the Company’s consolidated statement of operations.

The Company estimated the fair value of the right-of-use assets and related office equipment and leasehold improvements for the San Diego facilities (Nancy Ridge and 9640 Towne Center Drive) and recorded an impairment loss of $ 0.4 million and $ 0.2 million, respectively.

The fair value of the right-of-use asset and related office equipment and leasehold improvements was estimated using the discounted future cash flow methods, which includes estimates and assumptions for future sublease rental rates that reflect current sublease market conditions as well as discount rates.

The estimates and assumptions used in the assessment of right-of-use assets impairments represent Level 3 measurements because they are supported by little or no market activity and reflect the Company’s assumptions in measuring fair value.

The impairment losses were recognized in intangible assets and other long-lived assets impairment in the consolidated statement of operations.

The Company evaluated the fair value of the finite-lived intangible assets of the Purigen asset group, consisting of the Purigen trade name, customer relationships and developed technology, as well as the operating lease right-of-use asset and related office equipment and leasehold improvements.

To estimate the fair value of the intangible assets, the Company utilized the discounted cash flow method to estimate the fair value of the asset group.

The Company identified that no projected after-tax cash flows would be generated from the Purigen intangible assets and that the cost to maintain and sell the Purigen products exceeded the expected revenue to be generated from the asset group.

The carrying value of the Purigen intangible assets therefore exceeded its fair value and the Company recorded an impairment loss of $ 17.3 million for the intangible assets .

The Company estimated the fair value of the right-of-use asset and related office equipment and leasehold improvements for the Pleasanton, California facility and recorded an impairment loss of $ 0.8 million.

The Company also recorded $ 0.1 million of leasehold improvements and office equipment impairments related to the Pleasanton, California facility.

The estimates and assumptions used in the assessment of intangible assets, right-of-use assets and related office equipment and leasehold improvement impairments represent Level 3 measurements because they are supported by little or no market activity and reflect the Company’s assumptions in measuring fair value.

The impairment losses were recognized in intangible assets and other long-lived assets impairment in the consolidated statement of operations.

During the year ended December 31, 2023, the Company experienced a triggering event that required an evaluation of our asset groups for impairment.

The Company performed a recoverability test and concluded there was sufficient cushion related to the cash flows of each of our asset groups.

No impairment losses on long-lived assets were recorded during the year ended December 31, 2023.

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

Contingent Consideration

The Company recorded contingent consideration resulting from a business combination at its fair value on the acquisition date.

The Company recorded contingent consideration resulting from its business combinations at its fair value on the acquisition date.

On a quarterly basis, the Company revalues this obligation and records 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 the estimate of the likelihood or timing of achieving the criteria for payment of the contingent consideration.

Changes to goodwill from December 31, 2021 to December 31, 2023 were as follows:

Balance as of December 31, 2021

Acquisitions 22,651,000

Measurement period adjustments

( 1,522,000 )

Balance as of December 31, 2022

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 the estimate of the likelihood or timing of achieving the criteria for payment of the contingent consideration.

Goodwill was fully impaired as of December 31, 2023.

Changes to goodwill from January 1, 2023 to December 31, 2023 were as follows:

Balance as of January 1, 2023

Measurement period adjustments

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therefore, we performed a quantitative impairment analysis.

The Company determined the fair value of its reporting unit using a

combination of the income and market approaches.

The Company determined the fair value of its reporting unit using a combination of the income and market approaches.

The Company placed a 50 % weighting on the market and income approach methods.

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During the quarter ended September 30, 2023, the carrying value of equity of the Company’s reporting unit exceeded its enterprise wide fair value of equity and the Company recognized a goodwill impairment charge, impairing goodwill of $ 77.3 million in full on the consolidated statements of operations.

During the year 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.

As of December 31, 2024 and 2023, the Company did not have a balance of goodwill on the consolidated balance sheets.

Right-of-use (“ROU”) assets represent our right to use an underlying asset during the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

Operating leases are included in operating lease right-of-use assets and operating lease liabilities in the consolidated balance sheets, while finance leases are included in finance lease right-of-use assets and finance lease liabilities.

Operating leases are included in operating lease right-of-use

assets and operating lease liabilities in the consolidated balance sheets, while finance leases are included in finance lease right-of-use assets and finance lease liabilities.

Lease assets and liabilities are recognized at commencement based on the present value of lease payments over the lease term.

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The Company accounts for the lease and non-lease components as a single lease component for all classes of underlying assets.

Convertible Notes Payable

The Company elected to account for convertible notes issued in October 2023 using the fair value option under ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities (or “ASC 825-10”).

Convertible Notes & Debentures Payable

The Company elected to account for its convertible notes (High Trail Agreement) issued in October 2023 and its convertible debentures issued in May 2024, using the fair value option under ASC 825-10, Recognition and Measurement of Financial Assets and Financial Liabilities (or “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.

Direct issuance costs are expensed as incurred and are included in interest expense in the consolidated statements of operations.

Increases or decreases in the fair value of the convertible notes payable can result from updates to assumptions such as the expected volatility or changes in discount rates.

Direct issuance costs are expensed as incurred and are charged to interest expense and recorded in other income (expense) in the consolidated statements of operations.

Increases or decreases in the fair value of the convertible notes and debentures payable can result from updates to assumptions such as the 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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Under ASC 815-40, contracts that may require settlement for cash that are not under the control of the Company are liabilities, regardless of the probability of the occurrence of the triggering event.

Liability-classified warrants are measured at

fair value on the date of issuance and on a recurring basis at the end of each reporting period with any change in fair value after issuance recorded in other (income) expense, net on the consolidated statements of operations as a gain or loss.

Liability-classified warrants are measured at fair value on the date of issuance and on a recurring basis at the end of each reporting period with any change in fair value after issuance recorded in other (income) expense, net on the consolidated statements of operations as a gain or loss.

If warrants do not require liability classification under ASC 815-40, in order to conclude warrants should be classified as equity, the Company assesses whether the warrants are indexed to its common stock and whether the warrants are classified as equity under ASC 815-40 or under another applicable GAAP standard.

1 unchanged sentence

The Company’s outstanding warrants do not meet the requirements for liability classification under ASC-480-10 or ASC-815-40.

Therefore, the Company’s outstanding warrants are classified as equity as of and for the years ended December 31, 2023 and 2022.

Therefore, the Company’s outstanding warrants are classified as equity as of December 31, 2024 and 2023.

Revenue Recognition

24 unchanged sentences

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

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

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

Rental revenue related to the reagent rental program recognized over-time totaled $ 2.0 million and $ 1.1 million during the years ended December 31, 2024 and 2023, respectively.

16 unchanged sentences

Warranty expense is recorded as a component of cost of product revenue.

The Company’s liability for product warranties provided under its agreements with customers was $ 0.4 million and $ 0.5 million as of December 31, 2023 and 2022, respectively.

The Company’s liability for product warranties provided under its agreements with customers was $ 0.3 million and $ 0.4 million as

of December 31, 2024 and 2023, respectively.

Warranty expense recorded in cost of goods sold totaled $ 0.2 million and $ 0.6 million during the years ended December 31, 2024 and 2023, respectively.

15 unchanged sentences

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

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

Cost of service and other revenue consists of third-party laboratory costs to process the diagnostic samples, salaries and other personnel costs of our clinical technicians who interpret and deliver the results to patients, facility costs associated with costs related to warranty services, and other costs of servicing equipment at customer sites.

Research and Development Costs

23 unchanged sentences

Segment Reporting

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

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

Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources to an individual segment and in assessing performance.

The Company’s CODM is its Chief Executive Officer.

The Company has determined it has one operating and reportable segment.

Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance.

The Company’s measure of segment performance on a consolidated basis is consolidated net loss.

The measure of segment assets is reported on the consolidated balance sheets as total assets.

Refer to the consolidated statements of operations and comprehensive loss for the Company’s measure of profit (loss).

See also Note 14 (Segment Reporting) in the accompanying notes to the consolidated financial statements.

Net Loss Per Share

2 unchanged sentences

Common share equivalents are only included when their effect is dilutive.

The Company’s potentially dilutive securities which include convertible notes payable into common stock and outstanding warrants to purchase stock under the High Trail Agreement, and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share.

The Company’s potentially dilutive securities which include outstanding convertible debentures and High Trail notes payable into common stock, outstanding common warrants to purchase common stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share.

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

3 unchanged sentences

Common warrants 1,419,700 362,000

Convertible notes payable into common stock

Convertible debentures and High Trail notes payable into common stock

955,000 355,000

RSUs 6,000 4,000

PSUs 29,000 29,000

Total 2,437,180 775,480

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-13, Financial Instruments - Credit Losses:

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

For trade receivables and other instruments, entities will be required to use a new forward-looking expected loss model that generally will result in the earlier recognition of allowances for losses.

For available-for-sale debt securities with unrealized losses, the losses will be recognized as allowances rather than as reductions in the amortized cost of the securities.

The Company adopted ASU 2016-13 as of January 1, 2023.

The cumulative effect of applying the new credit loss standard was not material and, therefore, did not result in an adjustment to retained earnings.

The adoption of this standard did not have a material impact on the Company’s consolidated financial statements or related financial statement disclosures.

In accordance with ASU 2016-13, the Company no longer evaluates whether its available-for-sale debt securities in an unrealized loss position are other than temporarily impaired.

Instead, the Company assesses whether such unrealized loss positions are credit-related.

The credit-related portion of unrealized losses, and any subsequent improvements, are recorded in other income through an allowance account.

Unrealized gains and losses that are not credit-related are included in accumulated other comprehensive income.

The Company’s adoption of ASU No.

2016-13, Financial Instruments - Credit Losses, included an assessment of our aged trade receivables balances and their underlying credit risk characteristics.

Our evaluation of past events, current conditions, and reasonable and supportable forecasts about the future resulted in an expectation of immaterial credit losses.

In November 2023, the FASB issued Accounting Standards Update, or ASU, 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which updates reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses for all public entities, including public entities with a single reportable segment.

On an annual and interim basis, entities are required to disclose significant segment expenses that are regularly provided to the CODM.

The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company adopted the new standard in the fourth quarter of 2024 which did not have a material impact on its consolidated financial statements.

See Note 14 (Segment Reporting) for disclosures related to the Company’s segment reporting.

Recently Issued Accounting Pronouncements

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvement to Income Tax Disclosures to enhance the transparency and decision usefulness of income tax disclosures.

Two primary enhancements related to this ASU include disaggregating existing income tax disclosures relating to the effective tax rate reconciliation and income taxes paid.

ASU 2023-09 is effective for annual periods beginning after December 15, 2024 on a prospective basis.

Early adoption is permitted.

The Company is currently evaluating the impact of this accounting standard update on the Company’s consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses , which requires additional disclosure about specific expense categories in the notes to financial statements.

The amendments are effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027.

Early adoption is permitted.

The amendments should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this accounting standard update on the Company’s consolidated financial statements and related disclosures.

Revenue from Contracts with Customers

13 unchanged sentences

Total $ 30,776,000 100 % $ 36,116,000 100 %

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

The tables above provide revenue from contracts with customers by source and geographic location (based on the customer’s billing address) on a disaggregated basis.

Americas consists of North America and South America.

2 unchanged sentences

For the years ended December 31, 2024 and 2023, sales in the United States represented 36 % and 44 % of revenues, respectively.

During the years ended December 31, 2023 and 2022, sales in China accounted for 10 % and 14 % of revenues, respectively.

During the year ended December 31, 2023, sales in China accounted for 10 % of revenues.

No other countries represented greater than 10% of revenue during the years ended December 31, 2024 and 2023.

8 unchanged sentences

Level 1 Level 2 Level 3

Corporate notes/bonds 14,360,000 — 14,360,000 —

34,463,000 — 34,463,000 —

Total investments:

treasuries classified as short-term investments

302,000 — 302,000 —

Money market funds $ 9,752,000 $ 9,752,000 $ — $ —

Commercial paper classified as restricted investments

Money market funds classified as cash equivalents

$ 5,844,000 $ 5,844,000 $ — $ —

treasuries classified as restricted investments 11,000,000 — 11,000,000

29,685,000 — 29,685,000 —

Total restricted investments:

$ 35,117,000 $ — $ 35,117,000 $ —

Contingent consideration 10,890,000 — — 10,890,000

Convertible notes payable

69,803,000 — — 69,803,000

Purchase option liability

Convertible debentures payable

$ 20,362,000 — — $ 20,362,000

2 unchanged sentences

Level 1 Level 2 Level 3

Commercial paper $ 20,020,000 $ — $ 20,020,000 $ —

Corporate notes/bonds 14,360,000 — 14,360,000 —

2 unchanged sentences

$ 48,823,000 $ — $ 48,823,000 $ —

Money market funds $ 1,868,000 $ 1,868,000 $ — $ —

Money market funds classified as restricted investments

$ 9,752,000 $ 9,752,000 $ — $ —

Commercial paper classified as restricted investments 5,432,000 — 5,432,000 —

treasuries classified as restricted investments 29,685,000 — 29,685,000 —

Total restricted investments:

$ 35,117,000 $ — $ 35,117,000 $ —

Contingent consideration 10,890,000 — — 10,890,000

Money market funds are classified as cash equivalents on the consolidated balance sheets.

Convertible High Trail notes payable

69,803,000 — — 69,803,000

Purchase option liability

8,534,000 — — 8,534,000

Contingent Consideration

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These unobservable inputs represent a Level 3 measurement because they are supported by little or no market activity and reflect the Company’s assumptions in measuring fair value.

The fair value of the BioDiscovery contingent consideration liability is reassessed on a quarterly basis using a probability weighted model.

Assumptions used to estimate the fair value of the contingent consideration related to the acquisition of BioDiscovery include the probability of achieving, or changes in timing of certain milestones, and a discount rate of 3 %.

The Company determined the fair value of the BioDiscovery milestone consideration using a scenario-based technique, as the trigger for payment is event driven.

The fair value of the contingent consideration as of December 31, 2022 was $ 9.4 million.

On October 2, 2023, the $ 10.0 million milestone consideration was paid in full.

Any change in fair value of the contingent consideration during the years ended December 31, 2023 and December 31, 2022 was due to the passage of time.

On October 2, 2023, the $ 10.0 million BioDiscovery milestone consideration was paid in full.

Contingent consideration liabilities related to the Purigen milestones are related to the achievement of two independent milestones with aggregate possible milestone payments totaling $ 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.

Assumptions used to estimate the fair value of the milestones using a probability weighted model include the probability of achieving independent milestones, anticipated payment date and a discount rate of 13.2 % and 15.3 % as of December 31, 2023 and 2022, respectively.

The Company determined the fair value of this milestone consideration using a scenario-based technique, as the trigger for payment is event driven.

The Company determined the likelihood of each independent milestone and used probability factors ranging from 9 % to 49 % which were applied to the individual payments over the five year milestone term.

At December 31, 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 .

The fair value of the Purigen contingent consideration as of December 31, 2023 was $ 10.9 million.

The fair value of the Purigen milestones were reassessed on a quarterly basis using a probability weighted model and a Monte Carlo Simulation.

The Company determined the likelihood of each milestone payment which is then applied to the individual payments over the five-year milestone terms.

The probability factors as of December 31, 2023 ranged from 9 % to 49 %.

For one milestone a Monte Carlo Simulation was performed to determine the likelihood that the milestone will be achieved to determine the milestone consideration payment.

Assumptions include the projected units, revenue discount rate of 7.0 % and 6.5 % and a discount rate of 13.2 % and 15.3 % as of December 31, 2023 and 2022, respectively.

The fair value of the Purigen contingent consideration as of December 31, 2023 and 2022 were $ 10.9 million and $ 13.0 million, respectively.

Convertible notes payable and purchase option liability

The estimated fair value of the convertible notes payable (or “Notes”, refer to Note 9 - High Trail Agreement) was based on a lattice model.

Assumptions used to estimate the fair value of the Notes are as follows:

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

Assumptions include the projected units, revenue discount rates of 7 % and discount rates of 13.2 % as of December 31, 2023.

JGB Convertible debentures payable, High Trail convertible notes payable and purchase option liability

The fair value of the JGB convertible debentures maturing in 2026, which were issued on May 24, 2024, and the High Trail convertible notes payable that were issued in October 2023, were estimated using a scenario-based analysis as of December 31, 2024 and December 31, 2023, respectively.

The fair value was estimated using a lattice model.

The key input assumptions utilized are summarized in the table below:

Convertible Debentures Payable

High Trail Convertible Notes Payable

December 31, 2024

May 24, 2024 December 31, 2023

October 13, 2023

4 unchanged sentences

Term to maturity (years)

1.33 1.76 0.80 1.47

Debt discount rate

2 unchanged sentences

4.15 % 4.94 % 4.92 % 5.17 %

The table above uses a weighted average of assumptions based on the fair value of the Notes.

The volatility is based on an analysis of the Company, the risk-free rate is based on US treasury yields, the equity discount rate is based on term-specific US treasury yields, and the debt discount rate is based on the Company’s credit rating.

In connection with the Notes, the Purchaser was granted an option which expires on the maturity date of the Notes to purchase up to an additional $ 25.0 million aggregate principal amount of private placement notes and warrants (refer to Note 9 - High Trail Agreement).

The estimated fair value of the Option as of the valuation date was assessed as the difference in the aggregate indicated value of the Subsequently Purchased Notes and the consideration to be paid upon exercising the option which was estimated to be $ 9.8 million at inception of the agreement and $ 8.5 million at December 31, 2023.

The terms used to estimate the fair value of the Subsequently Purchased Notes and Subsequently Purchased Warrant underlying the Purchase Option Liability are as follows:

The volatility is based on an analysis of the Company’s historical stock price, the risk-free rate is based on US treasury yields, the equity discount rate is based on term-specific US treasury yields, and the debt discount rate is based on the Company’s credit rating.

In connection with the High Trail Notes, the purchaser was granted 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 (the “Subsequently Purchased Notes”) and warrants (refer to Note 9 (Debt)).

The estimated fair value of the Purchase Option as of the valuation date was assessed as the difference in the aggregate indicated value of the Subsequently Purchased Notes and the consideration to be paid upon exercising the option which was estimated to be $ 8.5 million at December 31, 2023.

The outstanding amount of the High Trail Notes was redeemed on May 24, 2024, and the Purchase Option rights no longer exist.

The terms used to estimate the fair value of the Subsequently Purchased Notes and warrants underlying the Purchase Option Liability (the “Subsequently Purchased Warrants”) as of December 31, 2023 are as follows:

Subsequently Purchased Notes

Subsequently Purchased

December 31, 2023

October 13, 2023 December 31, 2023

October 13, 2023

December 31, 2023 October 13, 2023 December 31, 2023 October 13, 2023

Expected volatility

12 unchanged sentences

4.46 % 5.17 % — % — %

Changes in estimated fair value of contingent consideration liability, convertible notes payable and option liability in the year ended December 31, 2023 are as follows:

Changes in estimated fair value of contingent consideration liability, convertible debentures payable, convertible High Trail notes payable and option liability in the year ended December 31, 2024 are as follows:

Consideration

Debentures Payable (Level 3 Measurement)

Convertible High Trail

Notes Payable (Level 3 Measurement)

(Level 3 Measurement)

Balance as of January 1, 2024

$ 10,890,000 $ — $ 69,803,000 $ 8,534,000

Issuance of convertible debentures payable

— 19,890,000 — —

Change in estimated fair value, recorded in selling, general and administrative expenses ( 10,890,000 ) — — —

Change in estimated fair value, recorded in other income (expense), net

— ( 2,341,000 ) ( 4,524,000 ) ( 3,474,000 )

Cash payments

— — ( 61,000,000 ) —

Cash payments on redemptions

— ( 5,000,000 ) ( 5,374,000 )

(Gain)/loss on extinguishment of High Trail

— — 1,095,000 ( 5,060,000 )

(Gain)/loss on extinguishment of convertible debentures payable

— 7,341,000 — —

Fill-up amount

— 472,000 — —

Balance as of December 31, 2024

$ — $ 20,362,000 $ — $ —

Issuance of convertible notes payable and option

Changes in estimated fair value of contingent consideration liability, convertible High Trail notes payable and option liability in the year ended December 31, 2023 is as follows:

Consideration

Convertible High Trail

Notes Payable (Level 3 Measurement)

(Level 3 Measurement)

Balance as of January 1, 2023

$ 22,352,000 $ — $ —

Issuance of convertible High Trail notes payable and option liability

— 89,063,000 9,763,000

Change in estimated fair value, recorded in selling, general and administrative expenses ( 1,462,000 ) — —

7 unchanged sentences

$ 10,890,000 $ 69,803,000 $ 8,534,000

Changes in estimated fair value of contingent consideration liability in the year ended December 31, 2022 is as follows:

Consideration

Balance as of December 31, 2021

Liability recorded as a result of current period acquisition 12,970,000

Change in estimated fair value, recorded in selling, general and administrative expenses 316,000

Cash payments —

Balance as of December 31, 2022

Available for Sale Investments

The Company invests its excess cash in U.S.

Treasury and agency securities, corporate debt securities, and commercial paper, which are classified as available-for-sale investments.

These investments are carried at fair value and are included in the tables below.

The Company records an allowance for credit losses when unrealized losses are due to credit-related factors.

At each reporting date, the Company evaluates securities with unrealized losses to determine whether such losses, if any, are due to credit-related factors.

The Company evaluates, among others, whether the Company has the intention to sell any of these investments and whether it is not more likely than not that the Company will be required to sell any of them before recovery of the amortized cost basis.

Neither of these criteria were met in any period presented.

The credit ratings of the securities held remain of the highest quality.

Moreover, the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely.

Based on this evaluation, as of December 31, 2024 and December 31, 2023, the Company determined that unrealized losses of the below securities were primarily attributable to changes in interest rates and non-credit related factors.

As such, no allowances for credit losses were recorded during these periods.

As of December 31, 2024 and December 31, 2023, the Company held 1 and 15 securities, respectively, which have been in an unrealized loss position for a period of less than 12 months.

As of December 31, 2024 and December 31, 2023, the Company held 0 and 2 securities, respectively, which have been in an unrealized loss position for a period of greater than 12 months.

Realized gains and losses are calculated using the specific identification method and recorded in other income (expense) in the Company’s consolidated statements of operations and comprehensive loss.

The Company has the ability, if necessary, to liquidate any of its cash equivalents and marketable securities to meet its liquidity needs in the next 12 months.

During the year ended December 31, 2024, the Company sold 18 of its available for sale securities and received proceeds of $ 33.3 million, and recognized an immaterial loss in other income relating to the sale of its securities.

Amounts are reclassified out of accumulated other comprehensive income into earnings using the specific identification method.

During the year ended December 31, 2023, the Company had no sales of its available for sale securities

Interest receivable as of December 31, 2024 was immaterial and as of December 31, 2023 was $ 0.3 million.

Interest receivable is recorded as a component of prepaid expenses and other current assets on the consolidated balance sheets.

Included in interest income for the year ended December 31, 2024 and December 31, 2023 was interest income related to the Company’s available for sale securities of $ 1.5 million and $ 3.3 million, respectively.

All available-for-sale securities are classified as current assets, even if the maturity when acquired by the Company is greater than one year due to the ability to liquidate within the next 12 months.

As of December 31, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within investments:

Remaining Contractual Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Aggregate Estimated Fair Value

Corporate notes/bonds Less than 1 14,369,000 — ( 9,000 ) 14,360,000

Less than 1 301,000 1,100 ( 100 ) 302,000

Total maturity less than 1 year $ 301,000 $ 1,100 $ ( 100 ) $ 302,000

As of December 31, 2023, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities listed as restricted investments:

As of December 31, 2024, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within restricted investments:

Remaining Contractual Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Aggregate Estimated Fair Value

Commercial paper Less than 1 $ 5,435,000 $ — $ ( 3,000 ) $ 5,432,000

Less than 1 11,000,000 — — 11,000,000

Total maturity less than 1 year $ 11,000,000 $ — $ — $ 11,000,000

As of December 31, 2022, there were no available for sale securities listed as restricted investments.

As of December 31, 2022, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities:

As of December 31, 2023, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within investments:

Remaining Contractual Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Aggregate Estimated Fair Value

Commercial paper Less than 1 $ 20,093,000 $ — $ ( 73,000 ) $ 20,020,000

Corporate notes/bonds Less than 1 14,369,000 — ( 9,000 ) 14,360,000

1 unchanged sentence

Total maturity less than 1 year $ 48,828,000 $ 4,000 $ ( 9,000 ) $ 48,823,000

Corporate notes/bonds 1 to 5 14,268,000 — ( 88,000 ) 14,180,000

Total $ 109,182,000 $ — $ ( 1,087,000 ) $ 108,095,000

As of December 31, 2023, the following table summarizes the amortized cost and the unrealized gains (losses) of the available for sale securities presented within restricted investments:

Remaining Contractual Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Aggregate Estimated Fair Value

Commercial paper Less than 1 $ 5,435,000 $ — $ ( 3,000 ) $ 5,432,000

Less than 1 29,682,000 5,000 ( 2,000 ) 29,685,000

Total maturity less than 1 year $ 35,117,000 $ 5,000 $ ( 5,000 ) $ 35,117,000

As of December 31, 2024, the following table summarizes available-for-sale securities in an unrealized loss position:

1 unchanged sentence

Gross Unrealized Loss

Corporate notes/bonds

2,362,000 ( 5,000 ) 10,001,000 ( 4,000 ) 12,363,000 ( 9,000 )

Total $ 2,362,000 $ ( 5,000 ) $ 10,001,000 $ ( 4,000 ) $ 12,363,000 $ ( 9,000 )

As of December 31, 2023, the following table summarizes available-for-sale securities listed as restricted investments in an unrealized loss position:

Less Than 12 Months 12 Months or Greater Total

Gross Unrealized Loss

Gross Unrealized Loss Fair Value

Gross Unrealized Loss

Commercial paper $ 5,432,000 $ ( 3,000 ) $ — $ — $ 5,432,000 $ ( 3,000 )

80,000 ( 100 ) — — 80,000 ( 100 )

Total $ 80,000 $ ( 100 ) $ — $ — $ 80,000 $ ( 100 )

As of December 31, 2024, there were no available-for-sale securities listed as restricted investments in an unrealized loss position.

As of December 31, 2023, the following table summarizes available-for-sale securities in an unrealized loss position:

3 unchanged sentences

Gross Unrealized Loss

Commercial paper $ 20,020,000 $ ( 73,000 ) $ — $ — $ 20,020,000 $ ( 73,000 )

Corporate Notes/Bonds $ 2,362,000 $ ( 5,000 ) $ 10,001,000 $ ( 4,000 ) $ 12,363,000 $ ( 9,000 )

9,661,000 ( 27,000 ) 74,452,000 ( 971,000 ) 84,113,000 ( 998,000 )

Total $ 2,362,000 $ ( 5,000 ) $ 10,001,000 $ ( 4,000 ) $ 12,363,000 $ ( 9,000 )

As of December 31, 2023, the following table summarizes available-for-sale securities listed as restricted investments in an unrealized loss position:

Less Than 12 Months 12 Months or Greater Total

Gross Unrealized Loss Fair Value

Gross Unrealized Loss

Commercial paper $ 5,432,000 $ ( 3,000 ) $ — $ — $ 5,432,000 $ ( 3,000 )

11,789,000 ( 2,000 ) — — 11,789,000 ( 2,000 )

Total $ 17,221,000 $ ( 5,000 ) $ — $ — $ 17,221,000 $ ( 5,000 )

As of December 31, 2023, the Company held 15 securities which have been in an unrealized loss position for a period of less than 12 months.

As of December 31, 2023, the Company held 2 securities which have been in an unrealized loss position for a period of greater than 12 months.

As of December 31, 2022, the Company held 16 securities which had been in an unrealized loss position for a period of less than 12 months.

As of December 31, 2022, the company held 24 securities which had been in an unrealized loss position for a period greater than 12 months.

As of December 31, 2023 and December 31, 2022, the Company did not intend to sell these investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis.

The Company does not believe the unrealized losses incurred during the period are due to credit-related factors.

The credit ratings of the securities held remain of high quality, and the Company continues to receive payments of interest and principal as they become due, and our expectation is that those payments will continue to be received timely.

As such, the Company has not recognized any credit losses in its financial statements related to its available for sale investment securities.

During the year ended December 31, 2023, there were no sales of the Company’s available for sale securities.

During the year ended December 31, 2022, the Company received proceeds of $ 22.8 million relating to sales of its available for sale securities, and recognized a loss of $ 0.1 million in other income relating to the maturity of its securities.

Amounts are reclassified out of accumulated other comprehensive income into earnings using the specific identification method.

Included in interest income for the year ended December 31, 2023 was interest income related to the Company’s available for sale securities of $ 3.3 million.

Included in interest income for the year ended December 31, 2022 was interest income related to the Company’s available for sale securities of $ 1.5 million.

Prepaid Expenses and Other Current Assets

23 unchanged sentences

Intangible assets that are subject to amortization consisted of the following at December 31, 2024 and 2023:

2024 December 31,

Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount

4 unchanged sentences

The Company recorded amortization expense for intangible assets of $ 6.6 million and $ 7.2 million for the years ended December 31, 2024 and 2023 respectively, in selling, general and administrative expenses.

Intangible assets are amortized on a straight-line basis over their estimated useful lives of five years , with the exception of the developed technology intangible acquired through the acquisition of Purigen, which is amortized over fifteen years .

As of December 31, 2023, trade name intangibles, customer relationships, and developed technology have weighted average remaining amortization periods of three years , three years , and nine years , respectively.

The Purigen and Lineagen intangible assets were fully impaired during 2024.

S ee Note 1 (Organization and Operations) for further discussion on the impairment charges impacting the Company’s intangible assets in the period.

As of December 31, 2024, trade name intangibles, customer relationships, and developed technology have weighted average remaining amortization periods of 1.67 years each.

Intangible assets not subject to amortization totaled $ 0.1 million at December 31, 2024 and December 31, 2023 and related to the Company’s domain name.

Future amortization expense of intangible assets is as follows:

Thereafter 11,176,000

2025 $ 5,360,000

2026 4,243,000

Total $ 9,603,000

3 unchanged sentences

Compensation expenses*

$ 1,983,000 $ 5,030,000

Taxes payable 729,000 1,099,000

Insurance 16,000 512,000

Accrued liability for fees to be paid in common stock

Professional fees and royalties 402,000 387,000

4 unchanged sentences

Total $ 5,641,000 $ 8,089,000

*Compensation expenses include restructuring costs of $ 0.6 million as of December 31, 2024.

Refer to Note 11 (Commitments and Contingencies).

JGB Debentures

On May 24, 2024, the Company entered into a securities purchase agreement with certain 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 (the “Shares”) of the Company’s 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 $ 16.3 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 “High Trail Agreement & High Trail Amendment” below).

The Debentures have an aggregate face value of $ 20.0 million and were issued with an original issue discount of $ 2.0 million.

The Debentures mature on May 24, 2026, and have an interest rate of 11 % per annum payable monthly on the last business day of each calendar month.

As of December 31, 2024, the Company has paid the Holders $ 1.2 million in interest, which is included in the change in fair value within other income (expense), net.

The Company recorded the Debentures at their fair value at issuance of $ 19.9 million, per the fair value option under ASC 825 (refer to Note 4 (Investments and Fair Value Measurements)) and they will be measured on a recurring basis and adjusted

through other income and expense, net.

The Shares were recorded at $ 0 in common stock and additional paid in capital, which represents the residual amount after allocation of proceeds to the Debentures at fair value.

The Company recognized an initial loss on the issuance of the Debentures of $ 1.9 million for the difference between the fair value of the Debentures and proceeds from the transaction, which is recorded in other income (expense) on the consolidated statement of operations.

The Company incurred debt issuance costs of $ 1.4 million related to the JGB Debentures Offering, which was charged to interest expense and recorded in other income (expense) on the consolidated statement of operations.

The Holders of the Debentures requested that the Company redeem up to $ 1.0 million per calendar month of its Debentures, and as amended on December 31, 2024 (see “JGB Amendment” below), may request up to $ 0.5 million per calendar month beginning in January 2025 to July 2025, and up to $ 1.4 million from August 2025 onward.

The table below shows the amount of potential redemptions each year until the maturity of the Debentures as of December 31, 2024.

The Company may redeem the Debentures, subject to certain Equity Conditions (as defined in the Debentures), at any time after August 2025, as amended on December 31, 2024 (see “JGB Amendment” below) by paying an amount equal to the entire outstanding principal amount of the Debenture, plus all accrued and unpaid interest, plus the applicable Company Redemption Premium (as defined in the Debentures, the “Premium”) plus any other amounts due and payable under the Debentures.

The Premium is an amount equal to 112 % of the principal amount of the Debenture if the redemption is prior to the first anniversary of the original issue date, or 106 % of the principal amount of the Debenture if the redemption is on or after the first anniversary of the original issue date.

No partial redemptions by the Company are permitted.

At the election of the holder, each Debenture is convertible, in whole or in part, at any time and from time to time at a conversion price of $ 120.00 per share of common stock, and as amended on December 31, 2024 (see “JGB Amendment” below), at a conversion price of $ 16.20 .

The conversion price is subject to adjustment for stock dividends, stock splits, and certain other corporate events.

Notwithstanding the foregoing, the Company will not effect any conversion under the Debentures to the extent that such conversion would cause the holder’s beneficial ownership of the Company’s common stock to exceed 4.99 % (or 9.99 % at the election of the holder) of the Company’s issued and outstanding common stock.

Under the Debentures, the Company must at all times maintain a cash or restricted investments balance equal to the lesser of (a) $ 11.0 million and (b) the then outstanding principal balance of the Debentures, in a blocked account.

In addition, for as long as any portion of the Debentures remain outstanding, the Company is generally restricted from:

incurring indebtedness;

granting or suffering liens on any of its property or assets;

amending its organizational documents;

repurchasing any of its securities;

paying dividends;

selling, disposing, licensing or leasing its assets other than in the ordinary course;

and other customary restrictive covenants.

The Debentures also set forth certain customary events of default after which the Debentures may be declared immediately due and payable, including certain types of bankruptcy or insolvency events of default involving the Company and its subsidiaries, and in the event of a change of control or fundamental transaction as defined in the Debentures.

As of December 31, 2024, the Company had $ 15.5 million of principal outstanding, including $ 0.5 million of the “Fill-Up Amount” (as defined in the Debenture Amendment that represents the shares issuable to adjust for stock price volatility between the date of the settlement agreement and the effective date of the resale registration statement registering such shares for issuance).

The Fill-Up Amount shall be payable by adding each Holder’s pro rata share of the Fill-Up Amount to its Debenture) under the Debentures reported at fair value of $ 20.4 million (refer to Note 4 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and activity broken out as follows:

Principal balance, January 1, 2024

Issuance of convertible debentures

Redemption payments of principal

( 5,000,000 )

Fill-up amount

Debentures principal balance, December 31, 2024

JGB Amendment

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

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 JGB Amendment, the Company issued to the Holders approximately 83,000 shares of its common stock (the “Private Placement Shares”).

The Company accounted for the JGB Amendment as a debt extinguishment and recognized a loss on the extinguishment of the convertible debentures payable of $ 7.3 million, which is recorded in other income (expense) on the consolidated statement of operations.

On January 3, 2025, the holders had converted $ 0.4 million principal into approximately 22,000 shares of the Company’s common stock, at the conversion price of $ 16.20 per share (as adjusted for the reverse stock split).

High Trail Agreement

15 unchanged sentences

Notes principal balance, December 31, 2023

There were no amounts outstanding under the Notes as of December 31, 2022.

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

All payments due under the Notes rank (i) pari passu with all Other Notes, (ii) effectively senior to all unsecured obligations of the Company to the extent of the value of the collateral securing the Notes for so long as the collateral secures the Notes in accordance with the terms and (iii) senior to any subordinated indebtedness.

The Company recorded the Notes at their fair value at issuance of $ 89.1 million, per the fair value option under ASC 825 (refer to Note 4 - Investments and Fair Value Measurements) and will be measured on a recurring basis and adjusted through other income and expense.

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

All payments due under the High Trail Notes ranked (i) pari passu with all Other Notes, (ii) effectively senior to all unsecured obligations of the Company to the extent of the value of the collateral securing the High Trail Notes for so long as the collateral secured the High Trail Notes in accordance with the terms and (iii) senior to any subordinated indebtedness.

The Company recorded the High Trail Notes at their fair value at issuance of $ 89.1 million, per the fair value option under ASC 825 (refer to Note 4 (Investments and Fair Value Measurements)) and will be measured on a recurring basis and adjusted through other income and expense.

The Option was recorded as a liability at fair value at issuance of $ 9.8 million (refer to Note 4 (Investments and Fair Value Measurements)).

The Warrants qualified for classification as equity instruments and were recorded at $ 0 in additional paid in capital, which represents the residual amount after allocation of proceeds to the Notes and option to purchase additional Notes (“Option”) at fair value.

The Company recognized an initial loss on the issuance of the Notes and Option of $ 18.8 million for the difference between the combined fair value of the Notes and Option and proceeds from the transaction, which is recorded in Loss on High Trail Agreement on the consolidated statement of operations.

The Company incurred debt issuance costs of $ 4.8 million related to the Offering, which was charged to interest expense.

The Warrants qualified for classification as equity instruments and were recorded at $ 0 in additional paid in capital, which represents the residual amount after allocation of proceeds to the High Trail Notes and option to purchase additional High Trail Notes (“Option”) at fair value.

The Company recognized an initial loss on the issuance of the High Trail Notes and Option of $ 18.8 million for the difference between the combined fair value of the High Trail Notes and Option and proceeds from the transaction, which was recorded in Loss on High Trail Agreement within other income (expense) on the consolidated statement of operations.

The Company incurred debt issuance costs of $ 4.8 million related to the Offering, which was charged to interest expense and recorded in other income (expense) in the consolidated statements of operations.

Terms of Repayment

The Notes were sold at 100 % of their principal amount and will be repaid at 115 % of the principal amount (the “Repayment Price”).

The Notes do not bear regular interest and mature on September 1, 2025 (the “Maturity Date”), unless earlier repurchased, redeemed or converted.

On the earlier to occur of (i) the date that no principal amount remains outstanding or (ii) the Maturity Date, the Company will be required to pay a retirement fee (the “Retirement Fee”) to the holders of the Notes equal to (x) with respect to the Registered Notes, the product of (a) $ 2.8 million multiplied by (b) a fraction, whose numerator is an amount equal to $ 45.0 million less the aggregate principal amount of such Registered Notes converted into shares of the Company’s common stock, and whose denominator is $ 45.0 million;

The High Trail Notes were sold at 100 % of their principal amount and were repaid at 115 % of the principal amount (the “Repayment Price”).

The High Trail Notes do not bear regular interest and mature on September 1, 2025 (the “Maturity Date”), unless earlier repurchased, redeemed or converted as previously described above.

On the earlier to occur of (i) the date that no principal amount remains outstanding or (ii) the Maturity Date, the Company will be required to pay a retirement fee (the “Retirement Fee”) to the holders of the High Trail Notes equal to (x) with respect to the Registered Notes, the product of (a) $ 2.8 million multiplied by (b) a fraction, whose numerator is an amount equal to $ 45.0 million less the aggregate principal amount of such Registered Notes converted into shares of the Company’s common stock, and whose denominator is $ 45.0 million;

and (y) with respect to any Subsequently Purchased Notes, an amount equal to the product of (a) 6.25 % of the initial principal amount of such Subsequently Purchased Notes multiplied by (b) a fraction, whose numerator is an amount equal to the initial principal amount of such Subsequently Purchased Notes less the aggregate principal amount of such Subsequently Purchased Notes converted into shares of the Company’s common stock, and whose denominator is an amount equal to the initial principal amount of such Subsequently Purchased Notes.

In connection with the redemption of the Private Placement Notes in February 2024, the Company paid a Retirement Fee of $ 3.2 million.

The holder may convert the principal amount of the Notes in whole at any time prior to maturity, or in part in denominations of $1,000, per the terms.

The holder’s ability to convert the Notes is limited if after such conversion the holder and its affiliates and attribution parties beneficially own an aggregate of 4.99 % of the Company’s common stock, which percentage may be changed at the holders’ election to a higher or lower percentage not in excess of 9.99 % upon 61 days’ notice subject to the terms of the Notes.

The Company may require conversion of all, but not less than all, of the Notes upon occurrence of a forced conversion trigger and if certain equity conditions are satisfied on date of notice, pursuant to the terms of the Notes.

The holder was able to convert the principal amount of the High Trail Notes in whole at any time prior to maturity, or in part in denominations of $1,000, per the terms.

The holder’s ability to convert the High Trail Notes is limited if after such conversion the holder and its affiliates and attribution parties beneficially own an aggregate of 4.99 % of the Company’s common stock, which percentage may be changed at the holders’ election to a higher or lower percentage not in excess of 9.99 % upon 61 days’ notice subject to the terms of the High Trail Notes.

The Company could have required conversion of all, but not less than all, of the High Trail Notes upon occurrence of a forced conversion trigger and if certain equity conditions are satisfied on date of notice, pursuant to the terms of the High Trail Notes.

A forced conversion trigger occurs if the last reported sale price of the Company’s common stock exceeds 175 % of the conversion price on at least 20 volume-weighted average price (“VWAP”) trading days in any 30 consecutive trading day period.

The Notes contain standard antidilution provisions which adjust the conversion rate upon stock dividends, splits and combinations, certain events which include the distribution of rights, options and warrants, spin-offs and other distributed property, cash dividends or distributions, and tender or exchange offers.

The Company may increase the conversion rate on any portion of the Notes for any period of time (which decreases the conversion price) if the Board of Directors determines in good faith that such an increase is in the best interest of the Company.

The High Trail Notes contain standard antidilution provisions which adjust the conversion rate upon stock dividends, splits and combinations, certain events which include the distribution of rights, options and warrants, spin-offs and other distributed property, cash dividends or distributions, and tender or exchange offers.

The Company could have increased the conversion rate

on any portion of the High Trail Notes for any period of time (which decreases the conversion price) if the Board of Directors determined in good faith that such an increase is in the best interest of the Company.

As of December 31, 2023, the holder had converted $ 10.0 million principal into 0.1 million shares of the Company’s common stock, at the conversion price of $ 171.60 per share.

The holders have the option to partially redeem a portion of the Notes on the first day of each month beginning on November 1, 2023, (except for March 1, 2024, and subject to a delay of the April 2024 partial redemption date to April 20, 2024), at the Repayment Price, for an amount not to exceed $ 5.2 million, which amount may be increased upon agreement of both parties.

The Company has the right to redeem all of the then outstanding principal amount of the Notes under certain circumstances beginning on the 30th day following the date that the Resale Registration Statement became effective, and the holders of the Notes may require the Company to redeem the Notes upon a fundamental change, which includes a change in control, liquidation provisions or if the Company’s common stock ceases to be listed on any eligible exchange (as defined in the Notes), in each case for a redemption price set forth in the Notes.

If an event of default occurs (other than certain bankruptcy provisions which require automatic acceleration) and has not been waived by the holder, the holder may declare the Notes due and payable for cash in an amount equal to the event of default acceleration amount as set forth in the Notes.

The holders had the option to partially redeem a portion of the High Trail Notes on the first day of each month beginning on November 1, 2023, (except for March 1, 2024, and subject to a delay of the April 2024 partial redemption date to April 20, 2024), at the Repayment Price, for an amount not to exceed $ 5.2 million, which amount may be increased upon agreement of both parties.

The Company had the right to redeem all of the then outstanding principal amount of the High Trail Notes under certain circumstances beginning on the 30th day following the date that the Resale Registration Statement became effective, and the holders of the High Trail Notes could have required the Company to redeem the High Trail Notes upon a fundamental change, which includes a change in control, liquidation provisions or if the Company’s common stock ceases to be listed on any eligible exchange (as defined in the High Trail Notes), in each case for a redemption price set forth in the High Trail Notes.

If an event of default occurs (other than certain bankruptcy provisions which require automatic acceleration) and has not been waived by the holder, the holder could have declared the High Trail Notes due and payable for cash in an amount equal to the event of default acceleration amount as set forth in the High Trail Notes.

Events of default include, among other things, non-timely Form 10-Q and 10-K Exchange filings, “Big R” restatement for any previously filed 10-Q or 10-K and ceasing to satisfy the eligibility requirement under Section I.A.

of General Instruction to Form S-3.

If an event of default occurs, default interest of 15 % will automatically accrue on the principal amount outstanding until cured and interest is paid, as specified in the Notes.

As of December 31, 2023, the holders have redeemed $ 9.0 million of principal amount of the Notes at the Repayment Price of $ 10.4 million.

As of December 31, 2023, at the holder’s option, the Company may be required to make future aggregate redemptions of at the Repayment Price as follows (unless earlier converted per the terms):

As of December 31, 2023, and assuming no future conversions, the Company would be required to pay a retirement Fee of $ 4.4 million, based on full redemption of principal.

If an event of default occurred, default interest of 15 % would have automatically accrued on the principal amount outstanding until cured and interest is paid, as specified in the High Trail Notes.

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, the Company 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 the Company has $ 24.3 million of Notes outstanding, see “Debt Financing Amendment” below.

In February 2024, in connection with the Letter Agreement and Amendment, the Company redeemed an aggregate of $ 27.7 million of High Trail Notes for a total redemption payment of approximately $ 31.9 million, together with a retirement fee of approximately $ 3.2 million.

Following the redemptions the Company has $ 24.3 million of High Trail Notes outstanding, see “Debt Financing Amendment” below.

Covenants and Restrictions

The Notes subject the Company to various affirmative and negative covenants, and events of default that, among other things, restrict, subject to certain exceptions, the ability of the Company and its subsidiaries to incur or amend indebtedness, grant liens on their assets, make investments, make distributions or pay certain dividends, transfer assets, and place limitations or requirements on business combination events.

The High Trail Notes subjected the Company to various affirmative and negative covenants, and events of default that, among other things, restrict, subject to certain exceptions, the ability of the Company and its subsidiaries to incur or amend indebtedness, grant liens on their assets, make investments, make distributions or pay certain dividends, transfer assets, and place limitations or requirements on business combination events.

The Company must comply with certain financial maintenance covenants and shall have at all times a minimum liquidity amount which is tested monthly and must maintain a minimum cash spend availability tested quarterly.

As long as the Notes remain outstanding, the Company is required to maintain a share reserve and a required funding program, the Company and each subsidiary is prohibited from directly or indirectly entering into any variable rate transactions subject to certain exclusions, the Company is subject to certain restricted periods during which it will not issue equity or equity linked securities subject to certain exclusions, and as long as any Notes or Warrants remain outstanding the Company may not issue any Notes or Warrants or other securities which would cause a breach or default, without the consent of the required holders.

The Notes contain provisions for liquidated damages, and require the Company to reimburse the holder for out-of-pocket costs incurred in connection their reliance on receipt of shares as applicable, if the Company fails to timely deliver shares upon conversion of the Notes or exercise of the Warrants or fails to deliver certificates with removal of restrictive legend when required, and in the event the Company fails to reserve the required number of authorized but unissued shares.

As of December 31, 2023, the Company was in compliance with its covenants.

In connection with the Notes, the Company issued Warrants to purchase up to 21.7 million shares of the Company’s common stock at an exercise price of $ 3.19 per share and a term of 5 years from the date of issuance.

The Warrants qualified for classification as equity instruments, and as discussed above, were recorded in additional paid in capital at $ 0 , which represents the residual amount after allocation of proceeds to the Notes and Option at fair value (refer to Note 10 - Stockholders’ Equity and Stock-Based Compensation).

Debt Financing Amendment

On February 27, 2024, the Company entered into a letter agreement (the “Letter Agreement”) and an Amendment to the Registered Note (the “Amendment”), with the Purchaser of the Notes which provided for, among other things, the following:

As long as the High Trail Notes remain outstanding, the Company was required to maintain a share reserve and a required funding program, the Company and each subsidiary is prohibited from directly or indirectly entering into any variable rate transactions subject to certain exclusions, the Company was subject to certain restricted periods during which it could not issue equity or equity linked securities subject to certain exclusions, and as long as any High Trail Notes or Warrants remained outstanding the Company could not issue any Notes or Warrants or other securities which would cause a breach or default, without the consent of the required holders.

The High Trail Notes contained provisions for liquidated damages, and required the Company to reimburse the holder for out-of-pocket costs incurred in connection their reliance on receipt of shares as applicable, if the Company fails to timely deliver shares upon conversion of the High Trail Notes or exercise of the Warrants or fails to deliver certificates with removal of restrictive legend when required, and in the event the Company failed to reserve the required number of authorized but unissued shares.

In connection with the High Trail Notes, the Company issued Warrants to purchase up to 0.4 million shares of the Company’s common stock at an exercise price of $ 191.40 per share and a term of 5 years from the date of issuance.

The Warrants qualified for classification as equity instruments, and as discussed above, were recorded in additional paid in capital at $ 0 , which represents the residual amount after allocation of proceeds to the High Trail Notes and Option at fair value (refer to Note 10 (Stockholders’ Equity and Stock-Based Compensation)).

High Trail Amendment

On February 27, 2024, the Company entered into a letter agreement (the “Letter Agreement”) and an Amendment to the Registered Note (the “Amendment”), with the Purchaser of the High Trail Notes which provided for, among other things, the following:

• Reduction of the minimum available liquidity covenant from $ 50.0 million to $ 25.0 million;

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• Increase of $ 1.0 million to the Retirement Fee (as defined in the Notes) of the Private Placement Notes to $ 3.2 million payable concurrently with redemptions of the Initial Private Placement Note.

Immediately following the redemptions above, there is approximately $ 24.3 million in aggregate principal amount of the Registered Notes outstanding.

Immediately following the redemptions above, there was approximately $ 24.3 million in aggregate principal amount of the Registered Notes outstanding.

High Trail Redemption Agreement

On May 23, 2024, in connection with the JGB Debentures Offering, the Company entered into a redemption agreement with High Trail (the “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 Option 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 Notes.

The Company recognized a loss on the extinguishment of the High Trail Note of $ 1.1 million, and a gain on the extinguishment of the Purchase Option (as defined in Note 11 (Commitments and Contingencies) to our consolidated financial statements) of $ 5.1 million, for a net gain of $ 4.0 million, which is recorded in other income (expense) on the consolidated statement of operations.

As of December 31, 2024, the Company had no principal outstanding under the High Trail Notes (refer to Note 8 (Investments and Fair Value Measurements) to our consolidated financial statements), for fair value measurements and additional discussion) and activity broken out as follows:

Principal balance, January 1, 2024

Partial redemption of principal

Redemption payment of principal

In addition to redeeming $ 15.3 million and $ 27.7 million of the principal outstanding under the High Trail Notes on May 24, 2024, and March 1, 2024, respectively, for an aggregate principal redemption of $ 43.0 million at the aggregate Redemption Price of $ 49.5 million, the Holders redeemed $ 4.5 million each of principal on January 1, 2024, February 1, 2024, April 20, 2024, and May 1, 2024, for an aggregate principal redemption of $ 18.0 million at an aggregate Repayment Price of $ 20.7 million.

Under the terms of the High Trail Notes, the Holders had the option to redeem a portion of the High Trail Notes not to exceed $ 4.5 million principal on the first day of each month beginning November 1, 2023, at the Repayment Price.

The April 2024 payment was delayed to April 20, 2024, under the High Trail Amendment as discussed above.

Other Income (Expense), Net

The following is a summary of the charges included within other income (expense), net on the consolidated statement of operations:

Debt issuance costs on sale of convertible debenture

$ ( 1,747,000 ) $ ( 4,521,000 )

Other interest expense

( 289,000 ) ( 598,000 )

Changes in estimated fair value, interest and redemption payments on High Trail notes and convertible debentures

( 2,084,000 ) 3,597,000

Other expense

( 716,000 ) ( 148,000 )

Gain on High Trail extinguishment 3,965,000 —

Loss on issuance of convertible debentures and High Trail notes payable

( 1,890,000 ) ( 18,827,000 )

Loss on extinguishment of convertible debentures payable

( 7,341,000 ) —

Total other income (expense) $ ( 10,102,000 ) $ ( 20,497,000 )

Stockholders’ Equity and Stock-Based Compensation

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The Company is currently authorized to issue up to 10 million shares of $ 0.0001 par value preferred stock.

No preferred stock issued or outstanding as of December 31, 2023 and December 31, 2022.

No preferred stock was issued or outstanding as of December 31, 2024 and December 31, 2023.

Series A Preferred Stock

On April 13, 2023, the Company entered into an agreement with David Barker, the Chair of the Company’s board of directors, pursuant to which the Company agreed to issue and sell one share of the Company’s Series A Preferred Stock, par value $ 0.0001 per share for a purchase price of $ 100.00 .

The closing of the sale and purchase of the share of Series A Preferred was completed on April 13, 2023.The share of Series A Preferred was entitled 3.0 billion votes, but had the right to vote only on a proposal submitted to the stockholders of the Company to adopt an amendment, or a series of alternate amendments, to the Company’s Amended and Restated Certificate of Incorporation, as amended, to combine the outstanding shares of common stock into a smaller number of shares of common stock at a ratio specified in or determined in accordance with the terms of such amendment or series of alternate amendments (“Reverse Stock Split Proposal”), and had no voting rights (i) except with respect to a Reverse Stock Split Proposal and the votes of the share of Series A Preferred were required to be cast for and against such Reverse Stock Split Proposal in the same proportion as shares of common stock were voted for and against such Reverse Stock Split Proposal (with any shares of common stock that were not voted, whether due to abstentions, broker non-votes or otherwise not counted as votes for or against a Reverse Stock Split Proposal) and (ii) unless the holders of one-third (1/3rd) of the outstanding shares of common stock were present and voted, in person or by proxy, at the meeting of stockholders at which the Reverse Stock Split Proposal was submitted for stockholder approval (or any adjournment thereof).

The closing of the sale and purchase of the share of Series A Preferred was completed on April 13, 2023.

The share of Series A Preferred was entitled 3.0 billion votes, but had the right to vote only on a proposal submitted to the stockholders of the Company to adopt an amendment, or a series of alternate amendments, to the Company’s Amended and Restated Certificate of Incorporation, as amended, to combine the outstanding shares of common stock into a smaller number of shares of common stock at a ratio specified in or determined in accordance with the terms of such amendment or series of alternate amendments (“Reverse Stock Split Proposal”), and had no voting rights (i) except with respect to a Reverse Stock Split Proposal and the votes of the share of Series A Preferred were required to be cast for and against such Reverse Stock Split Proposal in the same proportion as shares of common stock were voted for and against such Reverse Stock Split Proposal (with any shares of common stock that were not voted, whether due to abstentions, broker non-votes or otherwise not counted as votes for or against a Reverse Stock Split Proposal) and (ii) unless the holders of one-third (1/3rd) of the outstanding shares of common stock were present and voted, in person or by proxy, at the meeting of stockholders at which the Reverse Stock Split Proposal was submitted for stockholder approval (or any adjournment thereof).

The share of Series A Preferred voted together with the common stock as a single class on the Reverse Stock Split Proposal at the Company’s 2023 Annual Meeting of Stockholders held on June 14, 2023.

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The outstanding share of Series A Preferred was redeemed in whole, for a redemption price of $ 100.00 , paid out of funds lawfully available therefor automatically immediately following the approval by the stockholders of the Reverse Stock Split Proposal on June 14, 2023.

Reverse Stock Splits

On August 4, 2023 and January 24, 2025, the Company completed a reverse stock split of its outstanding shares of common stock pursuant to which every 10 shares and 60 shares, respectively, of issued and outstanding common stock were exchanged for one share of common stock.

No fractional shares were issued in the reverse stock split.

Instead, the Company paid cash (without interest) equal to such fraction multiplied by $ 354.00 and $ 9.75 , respectively per share (a price equal to the average of the closing sales prices of the common stock on The Nasdaq Capital Market during regular trading hours for the five consecutive trading days immediately preceding August 4 and January 27, respectively, with such average closing sales prices being adjusted to give effect to a Reverse Stock Split).

All share and per share amounts included within these consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split.

Sale of Common Stock

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The Company agreed to pay Cowen a commission of up to 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights.

In August 2022, the Company sold approximately 0.7 million shares of common stock under the Cowen ATM at an average share price of $ 34.59 per share, and received gross proceeds of approximately $ 23.1 million before deducting offering costs of $ 0.6 million.

During the twelve months ended December 31, 2023, the Company sold approximately 12.5 million shares of common stock under the Cowen ATM at an average share price of $ 4.62 per share, and received gross proceeds of approximately $ 57.8 million before deducting offering costs of $ 1.4 million.

In January and February 2024, the Company sold approximately 9.1 million shares of common stock under the Cowen ATM at an average share price of $ 1.38 per share, and received gross proceeds of approximately $ 12.5 million before deducting offering costs of $ 0.3 million.

During the year ended December 31, 2023, the Company sold approximately 0.2 million shares of common stock under the Cowen ATM at an average share price of $ 277.09 per share, and received gross proceeds of approximately $ 57.8 million before deducting offering costs of $ 1.4 million.

During the year ended December 31, 2024, the Company sold approximately 0.5 million shares of common stock under the Cowen ATM at an average share price of $ 46.40 per share, and received gross proceeds of approximately $ 21.4 million before deducting offering costs of $ 0.6 million.

In January 2025, the Company sold approximately 0.1 million shares of common stock under the Cowen ATM at an average share price of $ 18.94 per share, and received gross proceeds of approximately $ 1.9 million before deducting offering costs of $ 0.05 million.

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

Wainwright At-the-Market Facility

On February 21, 2025, the Company entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C.

Wainwright & Co., LLC (“Wainwright”), pursuant to which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $ 75.0 million, through or to Wainwright, acting as sales agent or principal.

The Company agreed to pay Wainwright a commission of up to 3.0 % of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Wainwright with customary indemnification and contribution rights.

In February and March 2025, the Company sold approximately 0.4 million shares of common stock under the ATM Agreement at an average share price of $ 3.84 per share, and received gross proceeds of approximately $ 1.4 million before deducting offering costs of $ 0.05 million.

Stock Warrants

A summary of the Company’s warrant activity for the year ended December 31, 2024 was as follows:

Shares of Stock under Warrants Weighted-

Shares of Stock under

Price Weighted-

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1,419,700 $ 91.34 1.40 $ —

In connection with the issuance of the Notes on October 13, 2023, the Company issued warrants to purchase 21.7 million shares of the Company’s common stock (refer to Note 9 - High Trail Agreement).

In connection with the series of Registered Direct Offerings (as described further below) the Company issued warrants to purchase shares of the Company’s common stock.

2018 Equity Incentive Plan

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Under the 2018 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then its employees, directors and consultants, including employees and consultants of its affiliates.

The Company has initially reserved 1.5 million shares of common stock for issuance under the 2018 Plan, which is the sum of (1) 1.0 million new shares, plus (2) the number of shares that remained available for issuance under the 2006 Plan at the time the 2018 Plan became effective, and (3) any shares subject to outstanding stock options or other stock awards that were granted under the 2006 Plan that would have otherwise returned to the 2006 Plan.

In addition, the number of shares of common stock reserved for issuance under the 2018 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2019 through January 1, 2028, in an amount equal to 5 % of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Board.

As of December 31, 2023, 1.3 million shares of common stock were authorized for future grants under the 2018 Plan.

The Company had initially reserved approximately 2,500 shares of common stock for issuance under the 2018 Plan, which is the sum of (1) approximately 1,700 new shares, plus (2) the number of shares that remained available for issuance under the 2006 Plan at the time the 2018 Plan became effective, and (3) any shares subject to outstanding stock options or other stock awards that were granted under the 2006 Plan that would have otherwise returned to the 2006 Plan.

In addition, the number of shares of common stock reserved for issuance under the 2018 Plan will automatically increase on January 1 of each

calendar year, starting on January 1, 2019 through January 1, 2028, in an amount equal to 5 % of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Board.

As of December 31, 2024, approximately 53,000 shares of common stock were authorized for future grants under the 2018 Plan.

2020 Inducement Plan

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Under the 2020 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then its employees, directors and consultants, including employees and consultants of its affiliates.

The Company initially reserved 2.1 million shares of common stock for issuance under the 2020 Plan.

An additional 1.0 million of shares of common stock were reserved for issuance under the Inducement Plan on each of October 6, 2021 and November 21, 2022 for a total of 4.1 million shares pursuant to amendments approved by the Board.

As of December 31, 2023, there were approximately 0.1 million shares of common stock authorized for future grants under the 2020 Plan.

The Company initially reserved approximately 3,500 shares of common stock for issuance under the 2020 Plan.

An approximate additional 1,700 of shares of common stock were reserved for issuance under the Inducement Plan on each of October 6, 2021 and November 21, 2022 for a total of approximately 6,900 shares pursuant to amendments approved by the Board.

As of December 31, 2024, approximately 5,000 shares of common stock were authorized for future grants under the 2020 Plan.

Employee Stock Purchase Plan

In August 2018, the Board and the Company’s stockholders adopted the 2018 Employee Stock Purchase Plan (the “ESPP”).

A total of approximately 300 shares of common stock were initially reserved for issuance under the ESPP.

In addition, the number shares of common stock reserved for issuance under the ESPP will automatically increase on January 1 of each calendar year, beginning on January 1, 2019, through January 1, 2028, by the lesser of (1) 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of the automatic increase, (2) 400 shares, or (3) a lesser number of shares as determined by the Board.

As of December 31, 2024, approximately 1,000 shares of common stock were authorized for future grants under the ESPP plan and the Company had temporarily suspended the ESPP plan.

Stock Options

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The weighted-average grant date fair value of stock option grants during the years ended December 31, 2024 and 2023 was $ 39.48 and $ 489.00 , respectively.

The total intrinsic value of the stock options exercised during the years ended December 31, 2023 and 2022 were $ 0.03 million and $ 0.6 million, respectively.

The total intrinsic value of the stock options exercised during the years ended December 31, 2024 and 2023 were zero and $ 25,000 , respectively.

The contractual term of stock options granted to employees was 10 years, which is also the maximum contractual term permitted for stock options (and stock appreciation rights) issued under the 2018 Plan.

Stock options generally vest or become exercisable monthly over a four-year period.

Restricted Stock

A restricted stock award in the amount of 0.5 million shares with a grant date fair value of $ 52.00 a share was granted as part of the acquisition of BioDiscovery.

One-third of the Restricted Shares was scheduled to vest on October 18, 2022 and one-twelfth of the Restricted Shares was scheduled to vest every three months following October 18, 2022, subject to continuous service of the key employee.

The fair value of the restricted stock award was based on the market value of common stock as of the date of grant and was amortized to stock-based compensation expense over the service period.

On October 4, 2022, the restricted stock award was modified due to the change in employment status of the key employee from full time to emeritus.

As a result of the modification, the restricted stock award vested in full on October 4, 2022.

The award was revalued on the modification date, resulting in a modified grant date fair value of $ 20.40 a share ($ 15.8 million less than the initial grant date fair value of the award).

The fair value of the modified restricted stock award was based on the market value of common stock as of the modification date.

Executive Option Grants and RSUs

On February 15, 2023, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of 0.3 million shares of common stock at an exercise price of $ 16.30 per share, and RSUs amounting to 0.1 million shares of common stock at a grant date fair value of $ 16.30 per share, in each case with an effective grant date and vesting commencement date of February 15, 2023 (the “Grant Date”).

On February 15, 2023, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of approximately 6,000 shares of common stock at an exercise price of $ 978.00 per share, and RSUs amounting to approximately 1,000 shares of common stock at a grant date fair value of $ 978.00 per share, in each case with an effective grant date and vesting commencement date of February 15, 2023.

On June 3, 2024, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of approximately 8,000 shares of common stock at an exercise price of $ 55.80 per share, and RSUs amounting to approximately 2,000 shares of common stock at a grant date fair value of $ 55.80 per share, in each case with an effective grant date and vesting commencement date of June 3, 2024.

On March 14, 2025, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of approximately 41,000 shares of common stock at an exercise price of $ 3.47 per share, with an effective grant date and vesting commencement date of March 14, 2025.

These stock option grants and RSUs were issued from the 2018 Plan.

The shares subject to the option shall vest monthly over 48 months beginning on the one-month anniversary of the Grant Date, such that the option shall be fully vested and exercisable on the four-year anniversary of the Grant Date.

The RSUs shall vest monthly over 48 months beginning one year after the Grant Date, and the balance of the shares vest in a series of three successive equal annual installments measured from the first anniversary of the Grant Date, such that the option shall be fully vested and exercisable on the four-year anniversary of the Grant Date.

The shares subject to the stock options shall vest monthly over 48 months beginning on the one-month anniversary of their respective grant dates, such that the stock options shall be

fully vested and exercisable on the four-year anniversary of their respective grant dates.

The RSUs shall vest monthly over 48 months beginning one year after their respective grant dates, and the balance of the shares vest in a series of three successive equal annual installments measured from the first anniversary of the applicable grant date, such that the RSU shall be fully vested and exercisable on the four-year anniversary of the applicable grant date.

Restricted Stock Units and Performance Stock Units

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therefore, the remaining expense was accelerated as of December 31, 2023.

As a result of the accelerated vesting terms, the weighted average remaining contractual term for the PSUs is 0 as of December 31, 2023.

As a result of the accelerated vesting terms, the weighted average remaining contractual term for the PSUs was 0 as of December 31, 2023.

On March 14, 2025, the Compensation Committee certified that the Company had achieved the performance goals for the above PSUs.

Stock-Based Compensation Expense

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Expected volatility.

Prior to 2023, due to the Company’s limited operating history and lack of company-specific historical or implied volatility as a private company, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Beginning in 2023, we incorporated the Company’s own volatility assumption into the expected volatility calculation for Black-Scholes by using an equal weighting of the Company’s historical stock volatility and the historical volatilities of a group of industry peers whose share prices are publicly available.

The Company incorporates the Company’s own volatility assumption into the expected volatility calculation for Black-Scholes by using an equal weighting of the Company’s historical stock volatility and the historical volatilities of a group of industry peers whose share prices are publicly available.

Expected term.

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As of December 31, 2024, the unrecognized compensation expense for all non-vested share-based awards was $ 7.4 million, and is expected to be recognized as expense over a weighted-average period of 1.6 years.

Employee Stock Purchase Plan

In August 2018, the Board and the Company’s stockholders adopted the 2018 Employee Stock Purchase Plan (the “ESPP”).

A total of 0.2 million shares of common stock were initially reserved for issuance under the ESPP.

In addition, the number shares of common stock reserved for issuance under the ESPP will automatically increase on January 1 of each calendar year, beginning on January 1, 2019, through January 1, 2028, by the lesser of (1) 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of the automatic increase, (2) 220,000 shares, or (3) a lesser number of shares as determined by the Board.

As of December 31, 2023, 1.3 million shares of common stock were authorized for future grants under the ESPP.

Registered Direct Offerings

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, (ii) pre-funded warrants to purchase up to an aggregate of approximately 37,000 shares of common stock (the “April Pre-Funded Warrants”), and (iii) warrants to purchase up to approximately 146,000 shares of common stock (the “April Purchase Warrants”).

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 were $ 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.

Each April Purchase Warrant is exercisable for one share of common stock at an exercise price of $ 61.20 per share.

The Purchase Warrants are immediately exercisable as of the date of issuance of April 8, 2024, and will expire on the five-year anniversary of the date of issuance.

The April Pre-Funded Warrants are offered in lieu of shares of common stock and provide that the holder may not exercise any portion of an April Pre-Funded Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 4.99 % (or, at the election of the holder, 9.99 %) of the Company’s outstanding common stock immediately following the consummation of the April 2024 Registered Direct Offering.

Each April Pre-Funded Warrant is exercisable for one share of common stock at an exercise price of $ 0.001 per share.

The April Pre-Funded Warrants were immediately exercisable and were exercised in full at the time of closing.

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, and (b) pre-funded warrants to purchase up to an aggregate of approximately 97,000 shares of common stock (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 (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of approximately 292,000 shares of common stock (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 were 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.

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 Warrants, minus $ 0.001 ).

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 which was contingent upon the July Stockholder Approval described below), 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.

Each July Purchase Warrant became exercisable for one share of common stock at an exercise price of $ 34.260 per share beginning on November 27, 2024, the effective date of stockholder approval for the issuance of the shares of common stock upon exercise of the July Purchase Warrants (the “July Stockholder Approval”).

The Series A Warrants will expire on the earlier of (i) the 24-month anniversary of the July Stockholder Approval and (ii) 60 days following the later of (a) the date of the public announcement of the occurrence of a medical administrative contractor (including, without limitation, Molecular Diagnostic Services), issuing a final local coverage determination for optical genome mapping for hematological malignancies and (b) the date of the July Stockholder Approval.

The Series B Warrants will expire on the earlier of (i) the five-year anniversary of the July Stockholder Approval and (ii) six months following the later of (a) the date of the public announcement of the occurrence of the Company receiving clearance from the U.S.

Food and Drug Administration for an optical genome mapping system for any indication and (b) the date of the July Stockholder Approval.

The July Pre-Funded Warrants were immediately exercisable for one share of common stock at an exercise price of $ 0.001 per share and were exercised in full as of December 31, 2024.

The Company adjourned its Special Meeting of Stockholders originally held on October 2, 2024 (the “Special Meeting”) to October 30, 2024 because a quorum was not present at the time of the meeting.

The reconvened meeting held on October 30, 2024 was further adjourned to November 27, 2024 because a quorum was not present at the time of the reconvened meeting.

The Special Meeting reconvened on November 27, 2024 and obtained stockholder approval for the issuance of the shares of common stock upon exercise of the July Purchase Warrants.

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, (ii) Series C warrants to purchase up to an aggregate of approximately 165,000 shares of the Company’s common stock (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 (the “Series D Warrants”, and together 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 .

The shares of common stock and the October Purchase Warrants were immediately separable and were issued separately.

The combined purchase price of each share of common stock and accompanying October Purchase Warrants was $ 18.234 per share.

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, which was contingent upon the October Stockholder Approval described below), before deducting placement agent fees and other offering expenses payable by the Company.

Each October Purchase Warrant is exercisable for one share of common stock at an exercise price of $ 18.234 per share beginning on January 15, 2025, the effective date of stockholder approval of the issuance of the shares of common stock upon exercise of the October Purchase Warrants (the “October Stockholder Approval”) .

The Series C Warrants will expire on the five-year anniversary of the October Stockholder Approval.

The Series D Warrants will expire on the 18-month anniversary of the October Stockholder Approval.

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 (the “January Pre-Funded Warrants”) and (iii) warrants to purchase up to an aggregate of approximately 661,000 shares of common stock (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.

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 ).

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.

On January 15, 2025, the Company held a Special Meeting of Stockholders (the “2025 Special Meeting”), and obtained stockholder approval for the issuance of the shares of common stock issuable upon exercise of the October Purchase Warrants and approval, at the discretion of the Company’s board of directors, of a reverse stock split of the Company’s common stock at a ratio of between 1-for-25 and 1-for-75.

On January 15, 2025, the Company’s board of directors approved a reverse stock split at a ratio of 1-for-60, and on January 24, 2025, the Company filed a certificate of amendment to effect the reverse split ratio chosen by the Company’s board of directors as further described above under the section “Reverse Stock Splits.”

Commitments and Contingencies

Operating leases

The Company leases approximately 41,101 square feet of office, laboratory, and manufacturing space in two buildings at our headquarters in San Diego, California, with the lease for all rented space expiring December 31, 2025.

In December 2021, the Company executed a new lease for approximately 11,978 additional square feet square feet of office and laboratory space in San Diego, California that expires in January 2026.

In January 2022, the Company executed a new lease for an additional 5,278 square feet of office and laboratory space in San Diego, California that expires in January 2026.

In December 2022, the Company executed a new lease, subject to the consent of a third party that was obtained in February 2023, for an additional 18,005 square feet of office and laboratory space in San Diego, California that commences in April 2023 and expires in March 2024.

Rent payments for the additional space are $ 0.05 million each month through the end of the lease term.

In August 2020, through the acquisition of Lineagen, the Company obtained a lease for approximately 9,710 square feet of office space in a Salt Lake City, Utah under a non-cancelable operating lease that expires in December 2026.

As further described under the heading “Restructuring” below, in connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City.

The Company will continue to lease the property through June 2024.

In November 2022, through the acquisition of Purigen, the Company obtained a lease for approximately 16,165 square feet of office and laboratory space in Pleasanton, California, under a non-cancelable operating lease agreement that expires in July 2027.

Finance lease

In October 2021, through the acquisition of BioDiscovery, the Company obtained a finance lease of 4,786 square feet of office space in El Segundo, California that expires in February 2041.

The portion of the future payments designated as principal repayment and related interest was classified as a finance lease obligation on our consolidated balance sheets.

In connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City, as further described under the heading “Restructuring Expenses” in Note 2 (Summary of Significant Accounting Policies).

The Company continued to lease the property through June 2024.

In January 2025, the Company entered into a lease termination agreement with the landlord for the facility in Pleasanton, California, that resulted in a one-time termination fee of approximately $ 0.3 million in the first quarter of 2025.

The Company continued to lease the property through the end of January 2025.

Further, the restricted cash of $ 0.4 million held under the letter of credit related to the lease assumed in the acquisition of Purigen in 2022 expired concurrently with the payment of the above termination fee.

Supplemental information

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The Company’s estimated incremental borrowing rate summarized in the table below was used in its present value calculations as the operating and finance leases do not have a stated rate and the implicit rate was not readily determinable.

In determining the incremental borrowing rate, the Company considered the interest rate of the Term Loans as well as publicly available data for discount rates used by peer companies.

In determining the incremental borrowing rate, the Company considered the interest rate of its prior year term loans as well as publicly available data for discount rates used by peer companies.

Supplemental information pertaining to the Company’s leases in which the Company is the lessee is as follows:

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254,000 355,000

2027 255,000 356,000

Thereafter — 4,857,000

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The Company had a contractual commitment with a supplier to purchase $ 0.3 million of products every month for an initial term of two years which began in May 2021 and ended in May 2023.

$ 1.4 million and $ 3.2 million of materials were purchased under this minimum purchase commitment during the years ended December 31, 2023 and 2022, respectively.

$ 1.4 million of materials were purchased under this minimum purchase commitment during the year ended December 31, 2023.

The Company is currently negotiating an agreement with its instrument contract manufacturer under which it would make weekly deposits for future inventory purchases that are expected to begin in April 2025 and continue through November 21, 2025.

Total payments in 2025 are expected to range from approximately $ 1.7 million to $ 2.0 million.

The payments are intended to create a deposit for inventory Bionano may purchase above the 2025 minimum order quantity and guarantee the availability of certain raw materials previously purchased by the contract manufacturer to build instruments.

As of December 31, 2024, no liability has been recorded in connection with this commitment, as the obligation is contingent upon ongoing production and future deliveries of finished goods.

The Company will continue to evaluate the financial impact of this commitment and assess the need for future disclosures or accruals in accordance with ASC 450.

Restructuring

In October, 2023, the Company committed to a series of cost saving initiatives including a reduction in force (the “Workforce Reduction”) and, as a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the reduction in force the Company initiated in May 2023, such plan is intended to decrease expenses and maintain a streamlined organization to support its business.

In connection with the Workforce Reduction, the Company incurred $ 0.7 million of severance costs for impacted employees, consisting primarily of cash, which the Company recognized during the fourth quarter of 2023.

The Company substantially completed the Workforce Reduction as of December 31, 2023.

The Company had accrued severance of $ 0.1 million and none as of December 31, 2023 and 2022, respectively.

The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the Workforce Reduction.

In connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City that will result in a one-time termination fee of approximately $ 0.2 million in the third quarter of 2024.

The Company will continue to lease the property through June 2024.

On March 1, 2024, the Board of Directors approved a cost savings plan that it expects to reduce its annualized operating expenses which will include a reduction in force.

This cost savings plan is incremental to the 2023 Workforce Reduction.

As part of the plan, the Company will further reduce its overall headcount by approximately 110 to 125 employees.

In addition, Bionano Laboratories will phase out over time the offering of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders, and other disorders of childhood development.

As of the issuance of these consolidated financial statements, the Company is not able to estimate the impact of these actions on the financial statements

The 2024 Workforce Reductions described in Note 2 (Summary of Significant Accounting Policies) resulted in total restructuring charges of approximately $ 8.2 million , comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California Worked Adjustment and Retraining Notification (“WARN”) Act.

The following is a summary of restructuring charges associated with the reduction in force for the years ended December 31, 2024 and 2023 including severance and other exit related costs:

Year Ended December 31,

$ 5,475,000 $ 741,000

Lease related expenses

Contracted services and consulting

Total restructuring charges included in operating expenses

$ 8,022,000 $ 741,000

Total restructuring charges included in cost of revenue

$ 157,000 $ —

Total restructuring charges

$ 8,179,000 $ 741,000

The following restructuring liability activity was recorded in connection with the reductions in force for the year ended December 31, 2024 included within accrued expenses on the consolidated financial statements:

Accrued restructuring as of January 1, 2024

Restructuring charges incurred during the period

Cash payments

( 7,701,000 )

Accrued restructuring as of December 31, 2024

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

2 unchanged sentences

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

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

Based on the Company’s assessment, it currently does not have any material loss exposure.

Contingent Consideration

Refer to Note 4 (Investments and Fair Value Measurements) for discussion regarding contingent consideration.

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

The domestic and foreign components of income (loss) before income taxes are as follows:

Year Ended December 31,

17 unchanged sentences

Reduction of tax attributes under section 382

( 4,920,000 ) 43,680,000

Goodwill impairment

Research credits ( 647,000 ) ( 5,416,000 )

Convertible notes payable and warrants

Convertible High Trail notes and debentures payable and warrants

1,544,000 4,211,000

Stock-based compensation 1,716,000 1,836,000

21 unchanged sentences

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

As of December 31, 2023, the Company has federal and state tax net operating loss carryforwards of $ 394.0 million and $ 159.4 million, respectively.

As of December 31, 2024, the Company had federal and state tax net operating loss carryforwards of $ 488.3 million and $ 195.0 million, respectively.

The federal tax loss carryforwards include $ 446.7 million that do not expire but utilization is limited to 80% of the Company’s taxable income in any given tax year based on current federal tax laws.

The remaining federal tax loss carryforwards of $ 41.6 million and state tax loss carryforwards begin to expire in 2027 and 2024, respectively, unless previously utilized.

As of December 31, 2023, the Company also has federal and California research credit carryforwards of $ 5.1 million and $ 9.4 million, respectively.

As of December 31, 2024, the Company also had federal and California research credit carryforwards of $ 7.1 million and $ 10.2 million, respectively.

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

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

A valuation allowance of $ 110.7 million, and $ 122.0 million as of December 31, 2023, and 2022, respectively, has been established to offset the deferred tax assets.

The Company acquired BioDiscovery, LLC.

an entity designated for income tax purposes as a corporation in a plan of reorganization within the meaning of Section 368(a)(1)(A) on October 18, 2021.

Under ASC 805-740, the Company recorded deferred tax liabilities of $ 5.8 million related to customer lists, patents/trademarks, developed technology, and fixed assets as part of the business combination.

As the deferred tax liability recorded in the business combination constitutes a source of

future taxable income, the Company recorded a decrease to its valuation allowance against its deferred tax assets of $ 5.8 million as a deferred income tax benefit for the year ended December 31, 2021.

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

During the year ended December 31, 2022, the Company recorded a decrease to the deferred tax liabilities previously recorded by $ 1.8 million due to adjustments to pre-acquisition tax losses and the state rate change.

The Company recorded a corresponding increase in the valuation allowance of $ 1.8 million as a deferred income tax expense for the year ended December 31, 2022.

The purchase price for BioDiscovery was finalized during the year ended December 31, 2022.

In November 2022, the Company completed the stock acquisition of Purigen Biosystems, Inc.

The Company recorded a net deferred tax asset of $ 11.5 million of which $ 4.4 million related to deferred tax liabilities for non-deductible intangibles and $ 15.4 million related to deferred tax assets for pre-acquisition tax loss and credit carryforwards.

As management determined that the net deferred tax asset was not more likely than not to realize, a full valuation allowance was recorded.

There was no impact on the Company’s income tax provision as of December 31, 2022.

There was no adjustment to the deferred taxes related to the Purigen acquisition during the measurement period which is now closed.

A valuation allowance of $ 140.5 million, and $ 110.7 million as of December 31, 2024, and 2023, respectively, had been established to offset the deferred tax assets.

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

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

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

The Company has performed an ownership change analysis pursuant to Section 382 of the Code and identified that ownership changes occurred on various dates that will limit the Company’s ability to utilize its net operating loss and R&D credit carryforwards.

Based on the analysis, the Company’s deferred tax assets related to the tax attributes that will expire unused as a result of the ownership change limitations have been adjusted as of December 31, 2023 with related valuation allowance disclosed above.

As a result of limitations arising from the prior ownership changes, $ 33.0 million of federal and $ 5.4 million of California net operating loss carry-forwards were removed from the inventory of deferred tax assets.

In general, an “ownership change” as defined by Section 382 of the Code results from a transaction or series

of transactions over a three-year period resulting in an ownership change of more than 50 percentage points of outstanding stock of a company by certain stockholders.

The Company had performed an ownership change analysis pursuant to Section 382 of the Code through tax year 2023 and identified that ownership changes occurred on various dates that will limit the Company’s ability to utilize its net operating loss and R&D credit carryforwards.

Based on the analysis, the Company’s deferred tax assets related to the tax attributes that will expire unused as a result of the ownership change limitations (and their corresponding valuation allowance) have been adjusted as of December 31, 2023 and were further adjusted at December 31, 2024.

As a result of limitations arising from the prior ownership changes, $ 29.3 million of federal and $ 4.6 million of California net operating loss carry-forwards were removed from the inventory of deferred tax assets as of December 31, 2024.

In addition, $ 5.9 million of federal R&D tax credits were removed from the deferred tax assets as of December 31, 2023.

3 unchanged sentences

Additions/(reductions) for tax positions - prior year 1,190,000 ( 3,643,000 )

Increase related to current year positions 1,349,000 1,259,000

Increases related to current year positions

766,000 1,349,000

Balance at the end of the year $ 6,943,000 $ 4,987,000

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

The Company had no accrual of interest and penalties on the Company’s balance sheets and has not recognized any interest and penalties in the statements of operations for the years ended December 31, 2023 and 2022.

The Company had no accrual of interest and penalties on the Company’s balance sheets and had not recognized any interest and penalties in the statements of operations for the years ended December 31, 2024 and 2023.

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

2 unchanged sentences

The Company has a defined contribution 401(k) plan available to eligible employees.

Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, limited to the maximum amount allowable under federal tax

Under the terms of the plan, employees may make voluntary contributions as a percent of compensation, limited to the maximum amount allowable under federal tax regulations.

The Company, at its discretion, may make certain contributions to the 401(k) plan.

The Company expensed matching contributions of $ 1.4 million and $ 1.9 million for the years ended December 31, 2024 and 2023, respectively.

Purigen Acquisition

In November 2022, the Company, Mazdan Merger Sub, Inc., a wholly owned subsidiary of the Company (“Purigen Merger Sub”), Purigen and Shareholder Representative Services LLC, solely in its capacity as the securityholders’ representative, entered into an Agreement and Plan of Merger (the “Purigen Merger Agreement”) pursuant to which the Company agreed to acquire Purigen.

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

Purigen’s isotachophoresis (ITP) technology is expected to expand and accelerate the adoption of OGM.

Pursuant to Purigen Merger Agreement, the Company paid upfront consideration consisting of a combination of approximately $ 32.0 million in cash.

The upfront consideration is subject to adjustment for, among other things, cash, unpaid indebtedness, unpaid transaction expenses and working capital relative to a target.

Under the Purigen Merger Agreement, the Company has also agreed to pay additional consideration, up to an aggregate of $ 32.0 million in cash based on the achievement of certain milestones.

Cash of $ 1.2 million will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Purigen Merger Agreement.

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

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

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

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

The purchase price allocation for the acquisition of Purigen was finalized during the year ended December 31, 2023.

The following is the purchase price for the acquisition of Purigen:

Cash $ 32,034,000

Estimated fair value of milestone consideration $ 12,970,000

Return of cash to buyer from escrow

Total estimated purchase price $ 44,909,000

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

Cash & cash equivalents $ 290,000

Accounts receivable 259,000

Inventory 944,000

Prepaid expenses and other current assets 184,000

Property and equipment, net 805,000

Restricted cash 400,000

Operating lease right-of-use assets 1,636,000

Other long-term assets 533,000

Intangible assets 20,000,000

Goodwill 22,646,000

Accounts payable and other accrued liabilities ( 1,152,000 )

Operating lease liability (short-term and long-term) ( 1,636,000 )

Net assets acquired $ 44,909,000

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

Developed technology $ 18,800,000

Customer relationships 200,000

Tradename 1,000,000

Fair value of identifiable intangible assets $ 20,000,000

The Company uses the income approach to derive the fair value of the identified intangible assets acquired.

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.

The customer relationships and trade name intangibles are being amortized on a straight-line basis over their estimated useful lives of 5 years.

The developed technology intangible is being amortized on a straight-line basis over its estimated useful life of 15 years.

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

As the Company began integrating Purigen’s operations with its existing operations during the fourth quarter of 2022, it is not practical or meaningful to distinguish Purigen’s expenses or net income or loss from that of the combined operations.

Purigen revenues included in the Company’s consolidated statement of operations from the date of acquisition through December 31, 2023 were not significant.

The Company recognized approximately $ 1.8 million of acquisition-related transaction costs for the acquisition of Purigen, including financial advisor fees, legal expenses and accounting fees for the years ended December 31, 2022.

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

Pro forma Financial Information

The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company, and Purigen as if the companies had been combined as of the beginning of the year prior to the acquisition.

These amounts have been calculated after applying the Company’s accounting policies and adjusting the results of Purigen to reflect the additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied at the beginning of the year prior to the acquisition.

The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisitions had taken place as of January 1, 2021.

Years Ended December 31,

Revenue $ 29,893,000

Net loss ( 141,068,000 )

Basic and diluted net loss per share

Related Party Transactions

Through the acquisition of BioDiscovery in October 2021, the Company inherited a building lease with a landlord owned by BioDiscovery’s former Director and Chief Executive Officer, who served as the Company’s Chief Informatics Officer from the date of the acquisition through October 2022.

The Company recorded $ 0.5 million in finance lease costs related to this lease for the year ended December 31, 2022.

Refer to Note 11 - Commitments and Contingencies for future commitments pertaining to this finance lease.

Segment Reporting

The following table presents financial information with respect to the Company’s single operating segment, including significant segment expenses, which are regularly provided to the CODM and included within consolidated operating loss:

Year Ended December 31,

$ 30,776,000 $ 36,116,000

Cost of revenue

30,396,000 26,550,000

Operating expenses

Salaries, wages, and benefits

51,136,000 83,434,000

Contracted services

18,892,000 29,834,000

Non-inventory materials

2,716,000 7,066,000

4,659,000 8,211,000

Rent and facilities

4,095,000 4,624,000

Depreciation and amortization

8,826,000 10,400,000

Travel and entertainment

1,654,000 4,324,000

Administrative and other*

12,385,000 76,918,000

Total operating expenses

104,363,000 224,811,000

Loss from operations

$ ( 103,983,000 ) $ ( 215,245,000 )

*Administrative and other primarily includes operating expenses for intangible assets and other long-lived assets impairment of $ 19.7 million, changes in fair value of contingent consideration of $ 10.9 million, disposals of property, plant, and equipment of $ 2.7 million, gain on lease modification of $ 0.1 million, and taxes, interest, and fees of $ 1.0 million, as of December 31, 2024, as compared to operating expenses for $ 77.3 million of goodwill impairment and $ 0.4 million in taxes, interest, and fees as of December 31, 2023.

CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data