What changed in this filing

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Item 1A. Risk Factors

2021-08-06 compared with 2021-05-07 · 38 added, 34 removed, 847 unchanged (8% of the section changed)

47 unchanged sentences

• We may not realize the value of our goodwill or other intangible assets.

• If we fail to comply with the covenants and other obligations under our Revolving Credit Facility, the lenders may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.

• If we fail to comply with the covenants and other obligations under our Credit Facility, the lenders may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.

• We are subject to risks related to taxation in multiple jurisdictions.

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In addition to its negative impact on some aspects of our business, the COVID-19 pandemic has been a source of opportunity for our diagnostics business, opening up external funding sources to support innovation and product development and resulting in increased revenues due to sales of our Advanta Dx SARS-CoV-2 RT-PCR test and related sales of our microfluidics instruments.

However, as vaccines for the coronavirus have become available and the perceived threat of the pandemic recedes, the demand for our COVID-19 testing products has slowed, resulting in a corresponding decline in COVID-19 revenue.

However, as vaccines and alternative testing options for the coronavirus have become available and the perceived threat of the pandemic has receded, the demand for our COVID-19 testing products has slowed, resulting in a corresponding decline in COVID-19 revenue.

As a result of these trends, we have lowered our revenue expectations for 2021.

If our revenues decline more than expected, we may be required implement cost control initiatives as the year progresses, and may be required to raise additional financing to support our investment priorities.

Additional details concerning these risks are provided in the risk

factors below, including under “ Our efficiency and cost-savings initiatives could be disruptive to our operations and adversely affect our results of operations and financial condition ,” and “ Our future capital needs are uncertain and we may need to raise additional funds in the future, which may cause dilution to stockholders or may be upon terms that are not favorable to us.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued spread of the disease, the duration of the public health emergency, and actions taken in the United States and elsewhere to contain the virus and prevent new outbreaks, such as social distancing and quarantines, business closures or business disruptions.

Additional details concerning these risks are

provided in the risk factors below, including under “ Our efficiency and cost-savings initiatives could be disruptive to our operations and adversely affect our results of operations and financial condition ,” and “ Our future capital needs are uncertain and we may need to raise additional funds in the future, which may cause dilution to stockholders or may be upon terms that are not favorable to us.

the emergence of new strains of the disease, such as the Delta variant;

the availability, efficacy, and acceptance of COVID-19 vaccines;

the duration of the public health emergency;

and actions taken in the United States and elsewhere to contain the virus and prevent new outbreaks, such as social distancing and quarantines, business closures or business disruptions.

Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain and rapidly changing, we are unable to predict the impact of COVID-19 on our operations, our financial performance, and our ability to successfully execute our business strategies and initiatives.

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We have incurred significant losses in each fiscal year since our inception, including net losses of $53.0 million, $64.8 million and $59.0 million during the years 2020, 2019, and 2018, respectively.

As of March 31, 2021, we had an accumulated deficit of $695.6 million.

As of June 30, 2021, we had an accumulated deficit of $712.7 million.

These losses have resulted principally from costs incurred in our research and development programs, and from our manufacturing costs and selling, general, and administrative expenses.

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In light of these advantages, even if our technology is more effective than the product or service offerings of our competitors, current or potential customers might accept competitive products and services in lieu of purchasing our technology.

We anticipate that we will continue to face increased competition in the future as existing companies and competitors develop new or improved products and as new companies enter the market with new technologies.

We anticipate that we will continue to face increased competition in the future as existing companies and competitors develop new or improved products and as new companies enter the market with new

technologies.

Increased competition is likely to result in pricing pressures, which could reduce our profit margins and increase our sales and marketing expenses.

In addition, mergers, consolidations, or other strategic transactions between two or more of

our competitors, or between our competitor and one of our key customers, could change the competitive landscape and weaken our competitive position, adversely affecting our business.

In addition, mergers, consolidations, or other strategic transactions between two or more of our competitors, or between our competitor and one of our key customers, could change the competitive landscape and weaken our competitive position, adversely affecting our business.

If our research and product development efforts do not result in commercially viable products within anticipated timelines, if at all, our business and results of operations will be adversely affected.

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In addition, it is important that our systems be perceived as accurate and reliable by the scientific and medical research community as a whole.

Historically, a significant part of our sales and marketing efforts has been directed at convincing industry leaders of the advantages of our systems and encouraging such leaders to publish or present the results of their

evaluation of our system.

If we are unable to continue to induce leading researchers to use our systems, or if such researchers are unable to achieve and publish or present significant experimental results using our systems, acceptance and adoption of our systems will be slowed and our ability to increase our revenue would be adversely affected.

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Any delayed sales, significant costs or lost customers resulting from these technology failures could adversely affect our business, operations, and financial results.

We have implemented security controls to protect our information technology infrastructure but, despite our efforts, we are not fully insulated from technology disruptions that could adversely impact us.

We have implemented security controls to protect our information technology infrastructure but, due to the ever-evolving nature of information security threats, we are not fully insulated from technology disruptions that could adversely impact us.

For example, in early 2019, we experienced a ransomware attack that infiltrated and encrypted certain of our information technology systems, including systems containing critical business data.

Immediately following the attack, actions were taken to recover the compromised systems and we believe we were able to restore their operation without significant loss of business data.

Immediately following the attack, actions were taken to recover the compromised systems and we were able to restore their operation without significant loss of business data within weeks.

Based on the nature of the attack and its impact on our systems, we do not believe confidential data was lost or disclosed.

If, however, confidential data were later determined to have been released in the course of this or any future event, it is possible that we could be the subject of actions by governmental authorities or claims from persons alleging they suffered damages from such a release.

We believe our mitigation measures have reduced, but cannot eliminate, the risk of a similar attack, and we anticipate additional work and expense in the future as we continue to enhance our security processes and initiatives in response to ever-evolving information security threats.

If, however, confidential data were determined to have been released in the course of any event, it is possible that we could be the subject of actions by governmental authorities or claims from persons alleging they suffered damages from such a release.

We believe our mitigation measures and expanded information security program have reduced, but cannot eliminate, the risk of a similar attack, and we anticipate additional work and expense in the future as we continuously improve our security processes and initiatives in response to ever-changing information security challenges.

In addition to risks affecting our own systems, we could also be negatively impacted by a data breach or cyber incident happening to a third party’s network and affecting us.

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As a result, we may have increased cyber security and data security risks, due to increased use of home wi-fi networks and virtual private networks, as well as increased disbursement of physical machines.

While we have implemented security controls to reduce the risk of

cyberattacks and security breaches, there is no guarantee that these measures will be adequate to safeguard all systems with the increased number of employees working remotely.

While we have implemented security controls, updated our policies, and

augmented our information security training program to reduce the risk of cyberattacks and security breaches, there is no guarantee that these measures will be adequate to safeguard all systems with the increased number of employees working remotely.

To use our products—our Biomark, EP1, Helios/CyTOF 2, and Hyperion systems in particular—customers typically need to purchase specialized reagents.

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Our future capital needs are uncertain and we may need to raise additional funds in the future, which may cause dilution to stockholders or may be upon terms that are not favorable to us.

We believe that our existing cash and cash equivalents and availability under our $15.0 million revolving senior credit facility (Revolving Credit Facility) will be sufficient to meet our anticipated cash requirements for at least the next 18 months.

We believe that our existing cash, cash equiv alents, and investments, along with funding available under our $10.0 million term loan facility and $15.0 million revolving senior credit facility (collectively, Credit Facility) will be sufficient to meet our anticipated cash requirements for at least the next 18 months.

However, we have continued to experience losses and, if that trend continues, we may need to seek additional sources of financing.

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• the extent to which we acquire or invest in businesses, products, and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

To the extent we draw on our Revolving Credit Facility or otherwise incur additional indebtedness, the risks described above could increase.

To the extent we draw on our Credit Facility or otherwise incur additional indebtedness, the risks described above could increase.

Further, if we increase our indebtedness, our actual cash requirements in the future may be greater than expected.

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Our net proceeds were approximately $20.1 million, after deducting related expenses, including commissions of approximately $0.6 million and issuance costs of approximately $0.2 million.

If we raise additional funds by issuing equity securities, either under the ATM program or otherwise, our stockholders will experience dilution.

Debt financing in addition to

the Revolving Credit Facility, if available, may involve covenants restricting our operations or our ability to incur additional debt.

If we raise additional funds by issuing equity securities, either under the ATM

program or otherwise, our stockholders will experience dilution.

Debt financing in addition to the Credit Facility, if available, may involve covenants restricting our operations or our ability to incur additional debt.

Any additional debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders, and our ability to raise additional capital may be adversely impacted by the impact of the COVID-19 pandemic on the economy.

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We make estimates and assumptions in valuing such intangible assets that affect our condensed consolidated financial statements.

As of March 31, 2021, we had approximately $145.2 million of goodwill and net intangible assets, including approximately $106.5 million of goodwill and $38.8 million of net intangible assets.

As of June 30, 2021, we had approximately $142.6 million of goodwill and net intangible assets, including approximately $106.5 million of goodwill and $35.7 million of net intangible assets.

These assets represent a significant portion of the assets recorded on our condensed consolidated balance sheet and relate primarily to our acquisition of DVS Sciences, Inc.

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If we are not able to realize the value of the goodwill and intangible assets, we may be required to incur material charges relating to the impairment of those assets.

If we fail to comply with the covenants and other obligations under our Revolving Credit Facility, the lenders may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.

In April 2020, we amended our Revolving Credit Facility, which provides for secured revolving loans in an aggregate amount of up to $15.0 million, to extend the maturity date to August 2, 2022.

The Revolving Credit Facility is secured by substantially all of our assets, other than intellectual property.

The Revolving Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.

If we fail to comply with the covenants and our other obligations under the Revolving Credit Facility, the lenders would be able to accelerate the required repayment of amounts due under the Loan and Security Agreement dated as of August 2, 2018, between the Company and Silicon Valley Bank (SVB) (as amended by the Default Waiver and First Amendment to Loan and Security

Agreement dated September 7, 2018, the Second Amendment to Loan and Security Agreement dated November 20, 2019, and the Third Amendment to Loan and Security Agreement dated April 21, 2020, the Revolving Credit Agreement) and, if they are not repaid, could foreclose upon the assets securing our obligations under the Revolving Credit Facility.

If we fail to comply with the covenants and other obligations under our Credit Facility, the lenders may be able to accelerate amounts owed under the facilities and may foreclose upon the assets securing our obligations.

In August 2021, we amended our Revolving Credit Facility, which provides for secured revolving loans in an aggregate amount of up to $15.0 million, to extend the maturity date to August 2, 2023 and to provide for a new $10.0 million term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).

The Credit Facility is secured by substantially all of our assets, other than intellectual property.

The Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.

If we fail to comply with the covenants and our other obligations under the Credit Facility, the lenders would be able to

accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.

Our ability to use net operating loss carryforwards to offset future taxable income for U.S.

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We have significant outstanding convertible debt.

As of March 31, 2021, we had outstanding $0.6 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes) and $55.0 million aggregate principal amount

of our 5.25% convertible senior notes due 2024 (2019 Notes).

The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

As of June 30, 2021, we had outstanding $0.6 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% convertible senior notes due 2024 (2019 Notes).

The 2014 Notes will mature on February 1, 2034, unless earlier

converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

Pursuant to the terms of the indenture governing the 2014 Notes (2014 Notes Indenture), holders of the 2014 Notes may require us to repurchase all or a portion of the 2014 Notes at a repurchase price in cash equal to 100% of the principal amount of such 2014 Notes plus accrued and unpaid interest thereon, on each of February 6, 2024 and February 6, 2029.

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Moreover, if there is no active trading market or if the volume of trading is limited, holders of our common stock may have difficulty selling their shares.

In addition, the concentration of ownership of our outstanding common stock (approximately 38.3% held by our top six stockholders) means that a relatively small number of stockholders have significant control over the outcomes of stockholder voting.

In addition, the concentration of ownership of our outstanding common stock (approximately 38.3% held by our top six stockholders as of December 31, 2020) means that a relatively small number of stockholders have significant control over the outcomes of stockholder voting.

The trading price of our common stock is highly volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control.

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Any conversion of some or all of the 2014 Notes or 2019 Notes will dilute the ownership interests of our existing stockholders.

Any sales in the public market of our common stock issuable upon such conversion could also adversely affect prevailing market prices of our common stock.

Any sales in the public market of our common stock issuable upon such conversion could also adversely affect

prevailing market prices of our common stock.

In addition, holders of the 2014 Notes or 2019 Notes may hedge their position in such Convertible Notes by entering into short positions with respect to the underlying common stock.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors