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Item 1A. Risk Factors

2022-03-08 compared with 2021-02-25 · 370 added, 202 removed, 654 unchanged (47% of the section changed)

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Summary of Risk Factors

Risks Related to the Private Placement Issuance

• The pending strategic Private Placement Issuance may not be consummated or may be delayed.

• While the Private Placement Issuance is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition, operating results and business.

• We have incurred, and will incur, substantial expenses in connection with the Private Placement Issuance.

• Following the Closing, the Purchasers will own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions following completion of the Private Placement Issuance.

• We may not be able to realize the anticipated benefits of the Private Placement Issuance, and we will be subject to business uncertainties that could adversely affect our business.

• The Private Placement Issuance, if consummated, will cause dilution to our current stockholders.

• The market value of our common stock could decline if the Purchasers sell their Series B Preferred Stock or common stock after certain transfer restrictions expire.

Risks Related to our Business, Industry, and Strategy

• The COVID-19 pandemic has significantly affected our business operations.

• Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year, and may not be consistent with market expectations.

• Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year, and may not be consistent with expectations.

• We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future.

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• 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.

• Market opportunities may not develop as quickly as we expect, limiting our ability to successfully sell our products.

• Our future success is dependent upon our ability to expand our customer base and introduce new applications.

• If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected.

• We may not be able to develop new products or enhance the capabilities of our existing systems.

• Our business growth strategy involves the potential for significant acquisitions.

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• Our business depends on research and development spending levels of our customers.

• If one or more of our manufacturing facilities become unavailable or inoperable, we will be unable to continue manufacturing our instruments, IFCs, assays and/or reagents.

• Disruption of our manufacturing facilities or other operations, or in the operations of our customers or business partners, could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers.

• We rely on single and sole source suppliers for some of the components and materials used in our products.

• Any disruption or delay in the shipping or off-loading of our products may have an adverse effect on our financial condition and results of operations.

• We are dependent on single and sole source suppliers for some of the components and materials used in our products.

• Our business operations depend upon the continuing efforts of our management team and other key employees.

• Security breaches, loss of data, cyberattacks, and other IT failures could adversely affect our business.

• To use our analytical systems, customers typically need to purchase specialized reagents.

• Our distribution capabilities and direct sales, field support, and marketing forces must be sufficient to meet our customers’ needs.

• To use our analytical systems, customers typically need to purchase specialized reagents.

• Security breaches, loss of data, cyberattacks, and other IT failures could adversely affect our business.

Risks Related to Quality and the Regulatory Environment

• Our products could have defects or errors.

• Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020, this authorization is only valid during the COVID-19 public health emergency.

• Our contract with the National Institutes of Health (NIH) could expose us to risks and costs.

• Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020 and an update to our EUA for use of the AZOVA COVID-19 Test Collection Kit in February 2021, among other updates, these authorizations are only valid during the COVID-19 public health emergency.

• To the extent we elect to label and promote any of our non-EUA products as medical devices, we would be required to obtain prior approval or clearance by the FDA or comparable foreign regulatory authority.

• Our products could become subject to regulation as medical devices by the FDA or other regulatory agencies.

• Compliance or the failure to comply with current and future regulations affecting our products and business operations worldwide could cause us significant expense and adversely impact our business.

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Financial, Tax, and Accounting Risks

• We believe that our current level of cash and cash equivalents, together with committed financing facilities, are not sufficient to fund ongoing operations for at least the twelve-month period after the financial statements were issued.

The existence of these conditions raises substantial doubt about our ability to continue as a “going concern” for at least the twelve-month period following the date the financial statements were issued.

• Our future capital needs are uncertain and we may need to raise additional funds in the future.

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• 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 debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined herein), may foreclose upon the assets securing our obligations.

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

• Changes in accounting principles, or interpretations thereof, could impact our financial position and results of operations.

• We have a significant amount of outstanding indebtedness.

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• Future sales of our common stock in the public market could cause our stock price to fall.

• We will have broad discretion over the use of the proceeds to us from our ATM equity offering program.

• If securities or industry analysts publish unfavorable research about us or cease to cover our business, our stock price and/or trading volume could decline.

• Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us more difficult.

• Any conversions of our 2014 Notes or 2019 Notes will dilute the ownership interest of our existing stockholders.

RISKS RELATED TO THE PRIVATE PLACEMENT ISSUANCE

The pending strategic Private Placement Issuance may not be consummated or may be delayed, and any failure to complete the Private Placement Issuance could materially and adversely impact our financial condition, results of operations, growth prospects and/or stock price.

As further described in Item 1, Business , we entered into (i) the Casdin Loan Agreement and (ii) the Viking Loan Agreement (the Bridge Loan Agreements).

Each Bridge Loan Agreement provides for a Bridge Loan of $12.5 million to the Company.

The Bridge Loans were fully drawn on January 24, 2022.

Also, as further described in Item 1, Business , on January 23, 2022, we entered into separate Purchase Agreements with each of the Purchasers, pursuant to which, among other things, at the Closing, and on the terms and subject to the conditions set forth therein, the Company will issue and sell in a private placement (a) to Casdin, 112,500 shares of the Company’s newly designated Series B-1 Convertible Preferred Stock in exchange for $112.5 million, and (b) to Viking, 112,500 shares of the Company’s newly designated Series B-2 Convertible Preferred Stock in exchange for $112.5 million.

Consummation of the Private Placement Issuance is subject to certain closing conditions, a number of which are not within our control, including stockholder approval of the Private Placement Issuance.

We cannot predict with certainty whether or when any of the required closing conditions will be satisfied, and we can provide no assurance that all closing conditions will be satisfied or waived (where permissible) or that the Private Placement Issuance will be consummated timely or at all.

Any failure to satisfy the closing conditions may prevent, delay or otherwise materially adversely affect the completion of the Private Placement Issuance.

If the Private Placement Issuance is not consummated, our ongoing business and financial results may be materially adversely affected and we will be subject to a number of risks, including the following:

• the Purchase Agreements may be terminated;

• we may be unable to meet our debt maintenance or repayment obligations;

• we may lose the anticipated benefits of the Private Placement Issuance and access to the relationships and expertise of the Purchasers, which could negatively impact our financial results, growth prospects and strategic plans;

• our management may be required to divert attention from our business in order to negotiate an alternative transaction;

• we will be liable for significant transaction costs, including legal, accounting, financial advisory and other costs relating to the Private Placement Issuance;

• we may be required to pay termination fees as required under the Purchase Agreements.

In addition, if the Private Placement Issuance is not completed, we may experience negative reactions from the financial markets and from our existing stockholders, customers, partners, employees, vendors and creditors.

The trading price of our common stock may decline to the extent that the current market price for our common stock reflects a market assumption that the Private Placement Issuance will be completed.

We may be unable to find a comparable alternative transaction that would allow us to meet our debt and other obligations as they come due, which could have important consequences, including potentially forcing us into bankruptcy or liquidation.

These risks may materialize and may adversely affect our business, financial position, results of operations and cash flows, as well as the price of our common stock.

Litigation relating to the Private Placement Issuance may be filed that could prevent or delay the Private Placement Issuance closing and/or result in the payment of damages.

In connection with the Private Placement Issuance, it is possible that stockholders or other parties may file putative class action or other lawsuits against us or the Purchasers.

Among other remedies, these parties could seek damages and/or to enjoin the Special Meeting.

The outcome of any litigation is uncertain, and any such potential lawsuits could prevent or delay the Closing of the Private Placement Issuance and/or result in substantial costs to us.

Any such actions may create uncertainty relating to the Private Placement Issuance and may be costly and distracting to management.

Further, the defense or settlement of any lawsuit or claim that remains unresolved at the time the Private Placement Issuance is completed may adversely affect our business, financial condition, results of operations and cash flows.

In addition, in connection with the announcement of the Private Placement Issuance, we entered into an indemnification agreement with Dr.

Egholm for indemnification with respect to potential claims by a prior employer against Dr.

Egholm that may arise in connection with his engagement with us and becoming our Chief Executive Officer.

We are currently responding to certain inquiries that a prior employer has made in connection with Dr.

Egholm’s signed offer letter to become our Chief

Executive Officer.

Any claims for indemnification made by Dr.

Egholm could cause us to incur costs and expenses.

To the extent that we expend funds to indemnify Dr.

Egholm, those funds will be unavailable for other purposes.

While the Private Placement Issuance is pending, we are subject to business uncertainties and contractual restrictions that could harm our business relationships, financial condition, operating results and business.

During the period prior to the Closing of the Private Placement Issuance and pursuant to the terms of the Purchase Agreements, we are exposed to certain inherent risks and contractual restrictions that could harm our business relationships, financial condition, operating results, and business, including:

• potential uncertainty in the marketplace, which could lead current and prospective customers to purchase products and services from other providers or delay purchasing from us;

• difficulties maintaining existing and/or establishing new business relationships, including business relationships with significant customers, suppliers and partners;

• the possibility of disruption to our business and operations resulting from the announcement and pendency of the Private Placement Issuance, including diversion of management attention and resources;

• the inability to attract and retain key personnel and recruit prospective employees, and the possibility that our current employees could be distracted, and their productivity decline as a result, due to uncertainty regarding the Private Placement Issuance;

• the inability to pursue alternative business opportunities or make changes to our business pending the completion of the Private Placement Issuance, and other restrictions on our ability to conduct our business;

• our inability to take certain actions that we might believe are beneficial for our business;

• the amount of the costs, fees, expenses and charges related to the Purchase Agreements and the Private Placement Issuance, which may materially and adversely affect our financial condition;

• other developments beyond our control, including, but not limited to, changes in domestic or global economic conditions, that may affect the timing or success of the Private Placement Issuance.

If any one or more of these effects were to occur, they could materially and adversely impact our business, cash flow, results of operations or financial condition, as well as the market price of our common stock and our perceived value, regardless of whether the Private Placement Issuance is completed.

The Purchase Agreements limit our ability to pursue alternatives to the Private Placement Issuance.

The Purchase Agreements contain certain customary restrictions on our ability to solicit proposals from third parties for alternative transactions, including a strategic investment or a sale of the Company.

In addition, subject to certain customary “fiduciary out” exceptions, our board of directors is required to recommend that our stockholders vote in favor of the approval of the Private Placement Issuance.

In connection with termination of the Purchase Agreements under specified circumstances, we will be obligated to pay each Purchaser a termination fee of up to $5,000,000.

Moreover, we may be required to reimburse each Purchaser for an amount not to exceed $1,250,000 for each Purchaser’s documented expenses if the Purchase Agreements are terminated for any reason other than the applicable Purchaser’s breach of its Purchase Agreement.

The payment of these fees and expenses could materially and adversely impact our business, cash flow, results of operations or financial condition.

These provisions might discourage an otherwise-interested third party from considering or proposing an alternative transaction, including a transaction that may be deemed to offer greater value to our stockholders than the Private Placement Issuance.

Actions of activist stockholders or other parties may impair our ability to consummate the Private Placement Issuance or otherwise could negatively impact our business.

Actions taken by activist stockholders could impair our ability to satisfy conditions to the consummation of the Private Placement Issuance, including receiving the requisite stockholder approval, or otherwise preclude us from consummating the Private Placement Issuance.

Such activist stockholders could also take actions that disrupt our business, divert the time and attention of management and our employees away from our business operations, cause us to incur substantial additional expense, create perceived uncertainties among current and potential customers, clients, suppliers, employees and other constituencies as to our future direction as a consequence thereof, which may result in lost sales or other business arrangements and the loss of potential business opportunities, and make it more difficult to attract and retain qualified personnel and business partners.

Actions that our board of directors has taken, and may take in the future, in response to any offer or proposal by activist stockholders may result in litigation against us, which could also be a significant distraction for our management and

employees and may require us to incur significant costs or otherwise result in an adverse effect on us.

In addition, actual or perceived actions of activist stockholders may cause significant fluctuations in the trading price of our common stock that do not necessarily reflect the underlying fundamentals and prospects of our business.

We have incurred, and will incur, substantial expenses in connection with the Private Placement Issuance.

We have incurred, and will incur, substantial expenses in connection with and as a result of the Private Placement Issuance, including financial advisory, legal, accounting, consulting and other advisory fees and expenses.

A portion of the costs related to the Private Placement Issuance will be incurred regardless of whether the Private Placement Issuance is completed.

While we have assumed that a certain level of transaction expenses will be incurred, factors beyond our control could affect the total amount or the timing of these expenses.

Some of the expenses that will be incurred, by their nature, are difficult to estimate accurately.

These expenses will exceed the costs historically borne by us and could adversely affect our financial condition and results of operations prior to and following the Private Placement Issuance.

Following the Closing, the Purchasers will own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions following completion of the Private Placement Issuance, and the Purchasers’ interests may conflict with those of our other stockholders.

Assuming the Closing occurs on April 1, 2022 (the Assumed Closing Date), the Series B Preferred Stock will initially be convertible into up to approximately 75,157,929 shares of our common stock (without giving effect to limitations associated with any conversion cap), including any shares of our common stock issuable upon conversion of the Series B Preferred Stock issued upon conversion of the Bridge Loans.

On an as-converted basis, we expect this to collectively represent approximately 49.4% of our issued and outstanding common stock immediately following the Closing (equating to approximately 24.7% per Purchaser) based on the number of shares of common stock outstanding as of January 31, 2022, but assuming full conversion of all Series B Preferred Stock (without giving effect to limitations associated with any conversion cap) immediately following the Assumed Closing Date.

As a result, the Purchasers are expected to be our largest stockholders.

This concentration of ownership, together with the voting rights, director designation rights and consent rights granted to the Purchasers as part of the Private Placement Issuance, may be perceived negatively by other investors and, as a result, may adversely affect the market price of our common stock.

The Purchasers, if they acted together, could significantly influence all matters requiring approval by our stockholders, including the election of directors and the approval of mergers or other business combination transactions.

The interests of the Purchasers may not always coincide with our interests or the interests of other stockholders.

We may not be able to realize the anticipated benefits of the Private Placement Issuance, and we will be subject to business uncertainties that could adversely affect our business.

The anticipated benefits of the Private Placement Issuance, including, among others:

(i) to capitalize Fluidigm appropriately;

(ii) to avoid frequently recurring liquidity concerns that temper stock price performance;

(iii) to manage operating expenses;

(iv) to find new sources of growth both organic and inorganic;

and (v) to implement management changes as necessary to achieve the foregoing may not be realized fully or at all, or may take longer to realize than we currently expect.

Additionally, the Purchasers are preeminent investors in the life sciences market, and the Company may not realize the benefits from their domain experience and success in building growth companies in life sciences.

Actual operating, strategic and revenue opportunities, if achieved at all, may be less significant than we expect or may take longer to achieve than we anticipate.

If we are not able to achieve these objectives and realize the anticipated benefits from the Private Placement Issuance within the anticipated timing or at all, our business, financial condition and operating results may be adversely affected.

Parties with whom we do business may experience uncertainty associated with the Private Placement Issuance.

Our business relationships may be subject to disruption as customers, partners, vendors, landlords and other parties with whom we do business may attempt to delay or defer entering into new business relationships with us, negotiate changes in existing business relationships, terminate their contracts with us, or consider entering into business relationships with our competitors following the Private Placement Issuance.

The occurrence of any of these events could have an adverse effect on our operating results, particularly during the period immediately following the Closing.

Uncertainty about the effect of the Private Placement Issuance could also have an adverse effect on our employee relations.

This uncertainty may impair our ability to attract, retain and motivate key personnel until the Private Placement Issuance is consummated and for a period of time thereafter.

Any loss of key personnel, including members of our senior management team, could have an adverse effect on our operations and financial results.

The Private Placement Issuance, if consummated, will cause dilution to our current stockholders, which may negatively affect the market price of our common stock.

If our stockholders approve the Private Placement Issuance, upon the Closing, the Series B-1 Preferred Stock issued pursuant to the B-1 Purchase Agreement and Casdin Loan Agreement will initially be convertible into an aggregate of

approximately 37,578,964 shares of our common stock (subject to adjustment), and the Series B-2 Preferred Stock issued pursuant to the B-2 Purchase Agreement and Viking Loan Agreement will initially be convertible into an aggregate of approximately 37,578,964 shares of our Common Stock (subject to adjustment), assuming the Closing occurs on the Assumed Closing Date, and without giving effect to limitations associated with any conversion cap.

On an as-converted basis, and assuming the Closing occurs on the Assumed Closing Date, we currently expect this to represent an aggregate of approximately 49.4% of our issued and outstanding shares of Common Stock immediately following the Closing (equating to approximately 24.7% per Purchaser) based on the number of shares of Common Stock outstanding as of January 31, 2022, but assuming full conversion of all Series B Preferred Stock (without giving effect to limitations associated with any conversion cap) immediately following the Closing.

In connection with the Closing of the Private Placement Issuance, we also intend to adopt a 2022 Inducement Equity Incentive Plan (the “Inducement Plan”).

The initial share reserve under the Inducement Plan is estimated to be 5% of the outstanding shares of Common Stock at the Closing, calculated on a fully diluted basis (assuming all equity awards to be granted in connection with the Closing are outstanding).

As a result, our current stockholders will experience substantial dilution of any earnings per share we may have in the future, as well as of ownership percentage and voting rights.

This could have the effect of depressing the market price of our common stock.

The market value of our common stock could decline if the Purchasers sell their Series B Preferred Stock or common stock after certain transfer restrictions expire or if our current stockholders sell large amounts of common stock following the Private Placement Issuance.

Pursuant to the Registration Rights Agreement that we entered into on January 23, 2022 with the Purchasers, we agreed to certain customary registration rights with respect to shares issuable under the Bridge Loan Agreements and the Purchase Agreements, including (i) any shares of common stock acquired by any Purchaser pursuant to the conversion of the Series B Preferred Stock in accordance with the Certificates of Designations, (ii) common stock issued upon conversion of the Bridge Loans if no Series B Preferred Stock is issued in accordance with the Bridge Loan Agreements and (iii) any shares of common stock acquired by any Purchaser pursuant to preemptive rights under the Purchase Agreements, which means that such shares would become eligible for resale in the public markets following the expiration of any applicable transfer restrictions.

Any sale of such shares, or the anticipation of the possibility of such sales, could create downward pressure on the market price of our common stock.

Furthermore, our current stockholders may decide to reduce their investment in us due to the changes to our investment profile as a result of the Private Placement Issuance, and may sell large amounts of common stock leading up to or following the Private Placement Issuance.

Such sales of our common stock could have the effect of depressing the market price of our common stock.

RISKS RELATED TO OUR BUSINESS, INDUSTRY, AND STRATEGY

The global COVID-19 pandemic has significantly affected our business operations and could adversely impact our financial position and cash flows to an extent that is unknown and difficult to predict.

The pandemic and international public health emergency caused by SARS-CoV-2, the novel strain of coronavirus that causes the disease commonly known as COVID-19, has spread throughout all the countries in which we and our customers, suppliers, and other business partners operate, causing significant disruption and volatility in global financial markets and raising the prospect of an extended global recession.

Public health problems resulting from COVID-19 and precautionary measures instituted by governments and businesses to mitigate its spread, including travel restrictions and quarantines, could continue to contribute to a general slowdown in the global economy, cause increasingly adverse impacts on our customers, suppliers, and other business partners, and further disrupt our operations.

The global COVID-19 pandemic has significantly affected our business operations and could continue to adversely impact our financial position and cash flows to an extent that is unknown and difficult to predict.

The pandemic and international public health emergency caused by SARS-CoV-2, the novel strain of coronavirus that causes the disease commonly known as COVID-19, has adversely affected all the countries in which we and our customers, suppliers, and other business partners operate, disrupting supply chains, causing significant volatility in global financial markets, and raising the prospect of an extended global recession.

Public health problems resulting from COVID-19 and precautionary measures instituted by governments and businesses to mitigate its spread and resurgence, including travel restrictions and quarantines, could continue to contribute to a general slowdown in the global economy, cause increasingly adverse impacts on our customers, suppliers, and other business partners, and further disrupt our operations.

Changes in our operations as a result of the COVID-19 pandemic have resulted in inefficiencies and delays, including in sales and product development efforts, and additional costs related to business continuity initiatives that cannot be fully mitigated through succession planning, employees working remotely, or teleconferencing technologies.

The COVID-19 pandemic and related governmental reactions have had, and may continue to have, a negative impact on our business, liquidity, results of operations, and stock price due to the occurrence of some or all of the following events or circumstances among others:

The COVID-19 pandemic and related governmental and societal reactions have had, and may continue to have, a negative impact on our business, liquidity, results of operations, and stock price due to the occurrence of some or all of the following events or circumstances among others:

• reduced demand for some of our products and services due to the impact of COVID-19 on our customers, including in the global academic research community;

• the negative impact of ongoing travel restrictions and social distancing policies on our sales operations, marketing efforts, and customer field support;

• diminished business productivity due to inefficiencies in employees working from home or increasing physical distancing and other pandemic response protocols in our production facilities;

• increased voluntary turnover, together with impaired ability to hire and effectively train new personnel due to labor shortages, travel restrictions, and physical distancing protocols;

• increased susceptibility to the risk of information technology security breaches and other disruptions due to increased volumes of remote access to our information systems from our employees working at home;

• the negative impact of travel restrictions and social distancing policies on our sales operations, marketing efforts, and customer field support;

• impaired ability to hire and effectively train new personnel due to travel restrictions and physical distancing protocols;

• increased operating costs if one of our facilities were to experience a COVID-19 outbreak;

• disruption of the operations of our contract manufacturers, suppliers, and other business partners;

• shortages or delays in the supply of components and materials used in our products;

• increased volatility in our stock price due to financial market instability.

The extent to which the COVID-19 pandemic will continue to adversely 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.

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.

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 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 related revenue.

In 2021, factors such as supply chain constraints, China trade restrictions, and the ongoing slowdown in the Asia-Pacific region caused our overall revenues to decline more than expected.

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 and resurgences of the coronavirus;

the emergence of new strains of the disease, such as the Delta and Omicron variants;

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

the scope and duration of the public health emergency;

and COVID-19 mitigation measures such as travel bans and restrictions, social distancing, quarantines, and business shutdowns and closures.

Because the severity, magnitude, and duration of the COVID-19 pandemic and its economic consequences are uncertain, 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.

The ultimate impact of the COVID-19 pandemic on our operations and financial performance depends on many factors that are not within our control, including, but not limited, to:

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global economic conditions and levels of economic growth;

and the pace of recovery when the COVID-19 pandemic subsides.

As the COVID-19 crisis continues to adversely affect our operating and financial results, it may also have the effect of heightening many of the other risks described in our other risk factors below.

labor and materials shortages;

supply chain difficulties, including disruption of logistics, shipping, and other distribution operations;

and the pace of recovery when the threat of COVID-19 subsides.

As the COVID-19 pandemic continues to affect our operating and financial results, it may also have the effect of heightening many of the other risks described in our other risk factors below.

COVID-19 may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not expect to present significant risks to our operations or financial results, particularly if the pandemic and its associated impacts reoccur in the coming months.

Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year due to a number of factors, and a significant variance in our operating results or rates of growth from market expectations, if any, could lead to substantial volatility in our stock price.

Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year due to a number of factors, and a significant variance in our operating results or rates of growth from our financial guidance or market expectations, if any, could lead to substantial volatility in our stock price.

Our revenue, results of operations, and revenue growth rates have varied in the past and may continue to vary significantly from quarter-to-quarter or year-to-year.

We may experience substantial variability in our product mix from period-to-period as revenue from sales of our instruments relative to sales of our consumables may fluctuate or deviate significantly from expectations.

Our revenue increased year-over-year in 2019 compared to 2018, and again in 2020 compared to 2019, but we may not be able to achieve similar revenue growth in future periods.

Although our revenue increased year-over-year in 2020 compared to 2019 and in 2019 compared to 2018, we experienced a year-over-year decline in revenue in 2021 compared to 2020, and we may be similarly unable to achieve revenue growth in future periods.

Variability in our quarterly or annual results of operations, mix of product revenue, including any decline in our revenue related to the COVID-19 pandemic, or variability in rates of revenue growth, if any, may lead to volatility in our stock price as research analysts and investors respond to these fluctuations.

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• fluctuations in demand for our products;

changes in customer budget cycles and capital spending;

• changes in customer budget cycles, capital spending, and the availability of VAT and import tax exemptions;

• seasonal variations in customer operations;

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• our ability to design, manufacture, market, sell, and deliver products to our customers in a timely and cost-effective manner;

• our ability to timely obtain adequate quantities of the materials or components used in our products, which in certain cases are purchased through sole and single source suppliers;

• staffing shortages, lack of skilled labor, increased turnover, and competitive job markets;

• fluctuations or reductions in revenue from sales of legacy instruments that may have contributed significant revenue in prior periods;

• quality control or yield problems in our manufacturing operations;

• our ability to timely obtain adequate quantities of the materials or components used in our products, which in certain cases are purchased through sole and single source suppliers;

• new product introductions and enhancements by us and our competitors;

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• our complex, variable and, at times, lengthy sales cycle;

• trade restrictions and government protectionism;

• global economic conditions;

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To date, we have funded our operations primarily through equity offerings, the issuance of debt instruments, and from sales of our products.

we are able to generate additional revenue to support our level of operating expenses, we will continue to incur operating and net losses and negative cash flow from operations.

Until we are able to generate additional revenue to support our level of operating expenses, we will continue to incur operating and net losses and negative cash flow from operations.

We believe that our continued investment in research and development, sales, and marketing is essential to our long-term competitive position and future revenue growth and, as a result, we may incur operating losses for the foreseeable future and may never achieve profitability.

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The markets for our products are characterized by rapidly changing technology, evolving industry standards, changes in customer needs, emerging competition, new product introductions, and strong price competition.

We compete with both established and development stage life science research companies that design, manufacture, and market instruments and consumables for gene expression analysis, single-cell targeted gene expression and protein expression analysis, SNP genotyping, quantitative polymerase chain reaction (qPCR), digital PCR, flow cytometry, cell imaging, and additional applications using well established laboratory techniques, as well as newer technologies such as bead encoded arrays, microfluidics, next-generation DNA sequencing (NGS), microdroplets, spatial protein expression, and photolithographic arrays.

applications using well established laboratory techniques, as well as newer technologies such as bead encoded arrays, microfluidics, next-generation DNA sequencing (NGS), microdroplets, spatial protein expression, and photolithographic arrays.

Most of our current competitors have significantly greater name recognition, greater financial and human resources, broader product lines and product packages, larger sales forces, larger existing installed bases, larger intellectual property portfolios, and greater experience and scale in research and development, manufacturing, and marketing than we do.

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Our customer base is primarily composed of academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, biopharmaceutical, biotechnology, and plant and animal research companies, and contract research organizations that perform analyses for research and commercial purposes.

Our success will depend, in part, upon our ability to increase our market share among these customers, attract additional customers outside of these markets, and market new applications to existing and new customers as we develop such applications.

Our success will depend, in part,

upon our ability to increase our market share among these customers, attract additional customers outside of these markets, and market new applications to existing and new customers as we develop such applications.

Attracting new customers and introducing new applications require substantial time and expense.

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While we typically plan improvements to our systems, we may not be able to successfully implement these improvements.

If we fail to keep pace with emerging technologies, demand for our systems

will not grow and may decline, and our business, revenue, financial condition, and operating results could suffer materially.

If we fail to keep pace with emerging technologies, demand for our systems will not grow and may decline, and our business, revenue, financial condition, and operating results could suffer materially.

In addition, if we introduce enhanced systems but fail to manage product transitions effectively, customers may delay or forgo purchases of our systems and our operating results may be adversely affected by product obsolescence and excess inventory.

Even if we successfully implement some or all of these planned improvements, we cannot guarantee that our current and potential customers will find our enhanced systems to be an attractive alternative to existing technologies, including our current products.

Our efficiency and cost-savings initiatives could be disruptive to our operations and adversely affect our results of operations and financial condition.

From time to time, we have implemented efficiency and cost-savings initiatives intended to stabilize our business operations.

These efficiency initiatives have included targeted workforce reductions, optimizing our facilities, and reducing excess space.

In 2020, in response to the uncertainty arising from the COVID-19 pandemic, we initiated a range of additional actions aimed at temporarily reducing our operating expenses and preserving liquidity, including implementing temporary enterprise-wide salary reductions of 20% for employees at or above the ‘director’ level and 10% for all others, temporarily reducing our board members’ cash retainers by 20%, and constraining hiring.

Although we discontinued our hiring constraints and pandemic-related pay reductions in 2020, we regularly review other possible actions to preserve liquidity and optimize our organization.

For example, we may need to decrease or defer capital expenditures and development activities or implement further operating expense reduction measures.

The implementation of these and other efficiency and cost-savings initiatives

could impair our ability to invest in developing, marketing and selling new and existing products, be disruptive to our operations, make it difficult to attract or retain employees, result in higher than anticipated charges, divert the attention of management, result in a loss of accumulated knowledge, impact our customer and supplier relationships, and otherwise adversely affect our results of operations and financial condition.

If we seek to implement a company-wide enterprise resource planning (ERP) system, such implementation could adversely affect our business and results of operations or the effectiveness of internal control over financial reporting.

We are considering implementing a company-wide ERP system to handle the business and financial processes within our operations and corporate functions.

ERP implementations are complex and time-consuming projects that involve substantial expenditures on system software and implementation activities that can continue for several years.

ERP implementations also require transformation of business and financial processes in order to reap the benefits of the ERP system.

If we decide to implement a company-wide ERP system, our business and results of operations could be adversely affected if we experience operating problems and/or cost overruns during the ERP implementation process, or if the ERP system and the associated process changes do not give rise to the benefits that we expect.

If we do not effectively implement the ERP system as planned or if the system does not operate as intended, our business, results of operations, and internal controls over financial reporting could be adversely affected.

Our business growth strategy involves the potential for significant acquisitions, and our operating results and prospects could be harmed if we are unable to integrate future acquisitions successfully.

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If we finance acquisitions by issuing equity or convertible debt securities, our existing stockholders will likely experience dilution, and if we finance future acquisitions with debt funding, we will incur interest expense and may have to comply with financial covenants and secure that debt obligation with our assets.

Our efficiency and cost-savings initiatives could be disruptive to our operations and adversely affect our results of operations and financial condition.

From time to time, we have implemented efficiency and cost-savings initiatives intended to stabilize our business operations.

These efficiency initiatives have included targeted workforce reductions, optimizing our facilities, and reducing excess space.

In 2020, in response to the uncertainty arising from the COVID-19 pandemic, we initiated a range of additional actions aimed at temporarily reducing our operating expenses and preserving liquidity.

These actions included implementing temporary enterprise-wide salary reductions of 20% for employees at or above the ‘director’ level and 10% for all others, temporarily reducing our board members’ cash retainers by 20%, and constraining hiring.

Although we have discontinued our hiring constraints and pandemic-related pay reductions, actions such as these may be required in the future to preserve liquidity and optimize our organization.

For example, we may need to decrease or defer capital expenditures and development activities or implement further operating expense reduction measures.

The implementation of further efficiency and cost-savings initiatives could impair our ability to invest in developing, marketing and selling new and existing products, be disruptive to our operations, make it difficult to attract or retain employees, result in higher than anticipated charges, divert the attention of management, result in a loss of accumulated knowledge, impact our customer and supplier relationships, and otherwise adversely affect our results of operations and financial condition.

We have considered implementing a company-wide ERP system to handle the business and financial processes within our operations and corporate functions.

ERP implementations are complex and time-consuming projects that involve substantial expenditures on system software and implementation activities that can continue for several years.

ERP implementations also require transformation of business and financial processes in order to reap the benefits of the ERP system.

RISKS RELATED TO OPERATIONS AND RELIANCE ON THIRD PARTIES

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Our success will depend upon their demand for and use of our products.

Accordingly, the spending policies and practices of these customers—which have been impacted by the COVID-19 pandemic and may additionally be impacted by other factors—could have a significant effect on the demand for our technology.

These policies may be based on a wide variety of factors, including concerns regarding any future federal government budget sequestrations, the availability of resources to make purchases, the spending priorities among various types of equipment, policies regarding spending during recessionary periods, and changes in the political climate.

Accordingly, the spending policies and practices of these customers—which have been impacted by the COVID-19 pandemic and may additionally be impacted by other factors—have had and will continue to have a significant effect on the demand for our technology.

In addition, academic, governmental, and other research institutions that fund research and development activities may be subject to stringent budgetary constraints that could result in spending reductions, reduced allocations, or budget cutbacks, which could jeopardize the ability of these customers to purchase our products.

Our operating results may fluctuate substantially due to reductions and delays in research and development expenditures by our customers.

For example, reductions in operating expenditures by global academic research facilities

because of the COVID-19 pandemic have resulted in lower than expected sales of our mass cytometry instruments.

Similar reductions and delays in customer spending may result from other factors that are not within our control, such as:

Our operating results have fluctuated and may continue to fluctuate substantially due to reductions and delays in research and development expenditures by our customers.

For example, reductions in operating expenditures by global academic research facilities because of the COVID-19 pandemic have resulted in lower than expected sales of our mass cytometry instruments.

Additionally, the imposition of tariffs and delays in issuing VAT and import tax exemptions have adversely affected the sales of our products in China.

Similar reductions and delays in customer spending have resulted and may continue to result from other factors that are not within our control, such as:

• changes in economic conditions;

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• changes in government programs that provide funding to research institutions and companies;

• macroeconomic conditions and the political climate;

• governmental protectionism, the escalation of tariffs and other trade barriers;

• availability of tax permits and incentives, including VAT and import tax exemptions;

• changes in the regulatory environment affecting life science and plant and animal research companies engaged in research and commercial activities;

• changes in our customers’ research priorities;

• differences in budget cycles across various geographies and industries;

• personnel shortages among our customers;

• market-driven pressures on companies to consolidate operations and reduce costs;

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• other factors affecting research and development spending.

Any decrease in our customers’ budgets or expenditures, or in the size, scope, or frequency of capital or operating expenditures, could materially and adversely affect our operations or financial condition.

Any decrease in our customers’ budgets or expenditures or in the size, scope, or frequency of capital or operating expenditures, as well as any increase in local tariffs could materially and adversely affect our operations or financial condition.

If one or more of our manufacturing facilities become unavailable or inoperable, we will be unable to continue manufacturing our instruments, IFCs, assays and/or reagents and, as a result, our business will be harmed until we are able to secure a new facility.

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We cannot provide any assurance that alternate means of conducting our operations (whether through alternate production capacity or service providers or otherwise) would be available if a major disruption were to occur or that, if such alternate means were available, they could be obtained on favorable terms.

Any disruption or delay in the shipping or off-loading of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations.

We rely on shipping providers to deliver products to our customers globally.

inadequate equipment to load, dock, and offload our products, energy-related tie-ups, or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.

Such disruptions or delays may have an adverse effect on our financial condition and results of operations.

We are dependent on single and sole source suppliers for some of the components and materials used in our products, and the loss of any of these suppliers could harm our business.

We rely on single and sole source suppliers for certain components and materials used in our products.

We rely on a limited number of third-party suppliers for some of the components and materials used in our products, and the loss of any of these suppliers, or delays or problems in the supply of components and materials could harm our business.

We rely on a limited number of third-party suppliers for certain components and materials used in our products, including single and sole source suppliers.

Additionally, several of our instruments are assembled at the facilities of contract manufacturers in Singapore.

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In the past, we have encountered quality issues that have reduced our manufacturing yield or required the use of additional manufacturing processes.

• The electron multiplier detector included in the Hyperion/Helios systems and certain metal isotopes used with the Hyperion/Helios systems are purchased from sole source suppliers.

• The electron multiplier detector included in the Hyperion/CyTOF systems and certain metal isotopes used with the Hyperion/CyTOF systems are purchased from sole source suppliers.

• The raw materials for our Delta Gene and SNP Type assays and Access Array target-specific primers are available from a limited number of sources.

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• we may not be able to obtain adequate supply or services in a timely manner or on commercially reasonable terms.

We have in the past experienced quality control and supply problems with some of our suppliers, such as manufacturing errors, and may again experience problems in the future.

In connection with the global supply chain disruptions following the onset of the COVID-19 pandemic, we experienced and are continuing to experience problems with some of our suppliers.

In the third quarter of 2021, shortages of certain components caused a backlog and we were unable to fulfill all of the demand for our products during the quarter.

We have in the past experienced supply issues, as well as quality control problems such as manufacturing errors, with some of our suppliers, and may again experience problems in the future.

We may not be able to quickly establish additional or replacement suppliers, particularly for our single source components, or assembly service providers.

Any interruption or delay in the supply of components or materials or assembly of our instruments, or our inability to obtain components, materials, or assembly services from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products.

Any continued or future interruption or delay in the supply of components or materials or assembly of our instruments, or our inability to obtain components, materials, or assembly services from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders or switch to competitive products, which would harm our business.

We may not be able to convert our orders in backlog into revenue.

Our backlog represents product orders from our customers that we have confirmed but have not been able to fulfill, and, accordingly, for which we have not yet recognized revenue.

We may not receive revenue from these orders, and any order backlog we report may not be indicative of our future revenue.

Many events can cause an order to be delayed or not completed at all, some of which may be out of our control, including the potential impacts from the COVID-19 pandemic and our suppliers not being able to provide us with products or components.

If we delay fulfilling customer orders or if customers reconsider their orders, those customers may seek to cancel or modify their orders with us.

Customers may otherwise seek to cancel or delay their orders even if we are prepared to fulfill them.

If our orders in backlog do not result in sales, our operating results may suffer.

Any disruption or delay in the shipping or off-loading of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations.

We rely on shipping providers to deliver products to our customers globally.

Labor, tariff, or World Trade Organization-related disputes, piracy, physical damage to shipping facilities or equipment caused by severe weather or terrorist incidents, congestion at shipping facilities, complications related to public health crises (including the ongoing COVID-19 pandemic), inadequate equipment to load, dock, and offload our products, energy-related tie-ups, or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.

Such disruptions or delays may have an adverse effect on our financial condition and results of operations.

Our business operations depend upon the continuing efforts of our management team and other skilled and experienced personnel, and if we are unable to retain them or to recruit and train new key executives, scientists, and technical support personnel, we may be unable to achieve our goals.

Our success depends largely on the skills, experience, and performance of our management team and scientific and technical support personnel.

The loss of the services of any key member of our management team or our scientific or technical support staff might significantly delay or prevent the development of our products or achievement of other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, if any, and could have a material adverse effect on our business.

The loss of the services of certain members of our management team or our scientific or technical support staff might significantly delay or prevent the development of our products or achievement of other business objectives by diverting management’s attention to transition matters and identification of suitable replacements, and staffing shortages could also negatively impact our ability to expand and scale functions that are needed to support the development of our products and the growth of our business.

Our research and product development efforts could also be delayed or curtailed if we are unable to attract, train, and retain highly skilled employees, particularly, senior scientists and engineers.

For example, as part of our cost reduction program to manage the impact of the COVID-19 pandemic, we implemented temporary enterprise-wide salary reductions and delayed implementation of 2020 merit-based salary increases.

Although all salaries have been restored as of the date of this filing, any reinstatement of salary reductions or any other failure to maintain competitive levels of compensation may negatively impact our ability to retain the personnel necessary to achieve our goals.

We do not maintain fixed term employment contracts or significant key person life insurance with any of our employees.

Additionally, to expand our research and product development efforts, we need to retain and recruit scientists skilled in areas such as molecular and cellular biology, assay development, and manufacturing.

Competition for qualified senior management and key employees in our industry is intense.

We have experienced increased turnover at all levels since the start of the COVID-19 pandemic and general labor shortages in various areas of our business, all of which could have a material adverse impact on our business.

We may need to increase employee wages and benefits in order to attract and retain the personnel necessary to achieve our goals, and our business, operations, and financial results may suffer if we are unable to do so.

We do not maintain significant key person life insurance with any of our employees and all our employees, including our management team, may terminate employment without notice and without cause or good reason.

We also need highly trained technical support personnel with the necessary scientific background and ability to understand our systems at a technical level to effectively support potential new customers and the expanding needs of current customers.

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Because of the complex and technical nature of our systems and the dynamic market in which we compete, any failure to attract and retain a sufficient number of qualified employees could materially harm our ability to develop and commercialize our technology.

Security breaches, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results.

We are dependent upon our data and information technology systems for the effective operation of our business and for the secure maintenance and storage of confidential data relating to our business and third-party businesses.

Our information technology systems may be damaged, disrupted or shut down due to attacks by experienced programmers or hackers who may be able to penetrate our security controls and deploy computer viruses, cyberattacks, phishing schemes, or other malicious software programs, or due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.

Any such compromise of our information technology systems could result in the unauthorized publication of our confidential business or proprietary information and unauthorized release of customer, supplier or employee data, any of which could expose us to a risk of legal claims or proceedings, liability under privacy or other laws, disruption of our operations and damage to our reputation, which could divert our management’s attention from the operation of our business and materially and adversely affect our business, revenues and competitive position.

In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.

The cost and operational consequences of implementing further data protection measures, either as a response to specific breaches or as a result of evolving risks, could be significant.

In addition, our inability to use or access our information systems at critical points in time could adversely affect the timely and efficient operation of our business.

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.

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.

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.

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.

Third parties with which we conduct business have access to certain portions of our sensitive data, including information pertaining to our customers and employees.

In the event that these third parties do not adequately safeguard our data, security breaches could result and negatively impact our business, operations, and financial results.

Due to the COVID-19 pandemic, we have an increased number of employees working remotely.

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.

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

If we are unable to expand our direct sales, field support, and marketing forces or distribution capabilities to adequately address our customers’ needs, our business will be adversely affected.

We may not be able to market, sell, and, distribute our products effectively enough to support our planned growth.

We sell our products primarily through our own sales force and through distributors in certain territories.

Our future sales will depend in large part on our ability to continue to increase the scope of our marketing efforts and develop and substantially expand our direct sales force and field application specialist and service engineer teams.

Our products are technically complex and used for highly specialized applications.

As a result, we believe it is necessary to continue to develop a direct sales force that includes people with specific scientific backgrounds and expertise, and a marketing group with technical sophistication.

In the past year, we have experienced significant changes and increased turnover in our sales and marketing organizations, and we face considerable challenges in recruiting and training qualified replacements.

Our future success will depend largely on our ability to recruit, retain, and motivate the skilled sales and marketing force necessary to support our business activities, and any failure to maintain competitive levels of compensation will negatively impact our ability to so.

Because competition for such employees is intense, we can provide no assurance that we will be able to retain them on favorable or commercially reasonable terms, if at all.

Failure to attract and retain our current personnel or to build an efficient and effective sales and marketing force would negatively impact sales of our products and reduce our revenue and profitability.

In addition, we may continue to enlist one or more sales representatives and distributors to assist with sales, distribution, and customer support globally or in certain regions of the world.

If we do seek to enter into such arrangements, we may not be successful in attracting desirable sales representatives and distributors, or we may not be able to enter into such arrangements on favorable terms.

If our sales and marketing efforts, or those of any third-party sales representatives and distributors, are not successful, our technologies and products may not gain market acceptance, which would materially and adversely impact our business operations.

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

Any interruption in the availability of these reagents for use in our products could limit our ability to market our products.

Our products, our Biomark, EP1, Helios, and Hyperion systems in particular, must be used in conjunction with one or more reagents designed to produce or facilitate the particular biological or chemical reaction desired by the user.

Our products, our Biomark, EP1, CyTOF, and Hyperion systems in particular, must be used in conjunction with one or more reagents designed to produce or facilitate the particular biological or chemical reaction desired by the user.

Many of these reagents are highly specialized and available to the user only from a single supplier or a limited number of suppliers.

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In addition, the use of a reagent for a particular process may be covered by one or more patents relating to the reagent itself, the use of the reagent for the particular process, the performance of that process, or the equipment required to perform the process.

Typically, reagent suppliers, who are either the patent holders or their authorized licensees, sell the reagents along with

a license or covenant not to sue with respect to such patents.

Typically, reagent suppliers, who are either the patent holders or their authorized licensees, sell the reagents along with a license or covenant not to sue with respect to such patents.

The license accompanying the sale of a reagent often purports to restrict the purposes for which the reagent may be used.

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We do not have any contractual supply agreements for these real-time qPCR reagents, and we cannot assure you that these reagents will continue to be available to our customers for use with our systems, or that these patent holders will not seek to enforce their patents against us, our customers, or suppliers.

If we are unable to expand our direct sales, field support, and marketing forces or distribution capabilities to adequately address our customers’ needs, our business may be adversely affected.

We may not be able to market, sell, and, distribute our products effectively enough to support our planned growth.

We sell our products primarily through our own sales force and through distributors in certain territories.

Our products are technically complex and used for highly specialized applications.

We have experienced significant changes in our sales organization.

In addition, as part of our cost reduction program to manage the impact of the COVID-19 pandemic, we implemented temporary enterprise-wide salary reductions, including with respect to our sales and marketing employees.

Although all salaries have been restored to prior levels as of the date of this filing, any reinstatement of salary reductions or any other failure to maintain competitive levels of compensation may negatively impact our ability to maintain the skilled sales and marketing force necessary to support our business activities.

As a result, our future success will depend largely on our ability to retain and motivate such personnel.

Because competition for such employees is intense, we can provide no assurance that we will be able to retain them on favorable or commercially reasonable terms, if at all.

In addition, we may continue to enlist one or more sales representatives and distributors to assist with sales, distribution, and customer support globally or in certain regions of the world.

failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.

In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches.

The cost and operational consequences of implementing further data protection measures, either as a response to specific breaches or as a result of evolving risks, could be significant.

In addition, our inability to use or access our information systems at critical points in time could adversely affect the timely and efficient operation of our business.

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, 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 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 believe no confidential data was lost or disclosed.

If, however, confidential data were determined to have been released in the course of 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 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.

Third parties with which we conduct business have access to certain portions of our sensitive data, including information pertaining to our customers and employees.

In the event that these third parties do not adequately safeguard our data, security breaches could result and negatively impact our business, operations, and financial results.

Due to the COVID-19 pandemic, we have an 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.

RISKS RELATED TO QUALITY AND THE REGULATORY ENVIRONMENT

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The occurrence of any one or more of the foregoing could negatively affect our business, financial condition, and results of operations.

Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020, this authorization is only valid during the COVID-19 public health emergency, and when the federally declared public health emergency ends, we will be required to stop commercial distribution of our assay immediately in the United States unless we can obtain FDA clearance or approval for our assay under a traditional regulatory pathway for in vitro diagnostics, which is lengthy and expensive.

Although the FDA granted Emergency Use Authorization (EUA) for our Advanta Dx SARS-CoV-2 RT-PCR Assay in August 2020 (which was updated for use with the AZOVA COVID-19 Test Collection Kit in February 2021, among other updates) and our Advanta Dx COVID-19 EASE Assay in February 2022, these authorizations are only valid during the COVID-19 public health emergency, and when the federally declared public health emergency ends, we will be required to stop commercial distribution of our assay and the collection kit immediately in the United States unless we comply with FDA requirements, which may include obtaining FDA clearance or approval for our assay under a traditional regulatory pathway for in vitro diagnostics, which is lengthy and expensive.

Under section 564 of the Federal Food, Drug, and Cosmetic Act (FD&C Act), the FDA has authority to allow certain unapproved medical products or unapproved uses of approved medical products to be used during a public health emergency under an EUA.

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EUAs issued by the FDA will specify the scope of authorization and conditions of authorization, including limitations on distribution and conditions related to product advertising and promotion.

Once granted, an EUA is effective until the declaration that circumstances exist justifying the authorization of the emergency use is terminated under Section 564(b)(2) of the FD&C Act or the EUA is revoked under Section 564(g) of the FD&C Act, after which the product must be cleared or approved by the FDA under a traditional pathway and we must comply with the quality system regulation at 21 CFR 820 in order to remain on the market or to continue commercialization of the product.

In August 2020, the FDA granted EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay for qualitative detection of nucleic acid from SARS-CoV-2 in saliva specimens from individuals suspected by their healthcare providers of having COVID-19, with the use of the assay limited to authorized laboratories.

Three supplements have been submitted and authorized as follows:

S001 for addition of the FDA reference Panel Results, S002 for software updates and labeling changes, S003 for addition of alternative source of targets and labeling updates.

As set forth in the EUA, we are required to comply with the conditions of authorization, including certain requirements pertaining to FDA notification, distribution, printed materials, advertising and promotion.

If we, our distributors, or authorized laboratories do not comply with the EUA requirements, our business, financial condition and results of operations may be adversely impacted, and we may be subject to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions.

If the FDA’s policies and guidance change unexpectedly and/or materially or if we misinterpret them, potential sales of Advanta Dx SARS-CoV-2 RT-PCR could be adversely impacted.

In addition, the FDA will revoke an EUA where it is determined that the underlying public health emergency no longer exists or warrants such authorization, or if new evidence becomes available that indicates the test does not meet the conditions of authorization or perform as provided in the EUA application.

Once granted, an EUA is effective until the declaration that circumstances exist justifying the authorization of the emergency use is terminated under Section 564(b)(2) of the FD&C Act or the EUA is revoked under Section 564(g) of the FD&C Act, after which the product must be cleared or approved by the FDA under a traditional pathway as defined by the FDA and we must comply with the FDA quality system regulations in order to remain on the market or to continue commercialization of the product.

Four supplements have been submitted and authorized as follows:

S001 for addition of the FDA Reference Panel Results, S002 for software updates and labeling changes, S003 for addition of alternative source of targets and labeling updates, and S004 for addition of AZOVA home collection kit.

In February 2021, the FDA updated that EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay for use with the AZOVA COVID-19 Test Collection Kit, which is authorized for self-collection of saliva specimens at home.

In February 2022, we were granted EUA for our the Advanta Dx COVID-19 EASE Assay, which is authorized for the qualitative detection of nucleic acid from SARS-CoV-2 in nasopharyngeal swab, oropharyngeal swab, mid-turbinate nasal swab, and anterior nasal swab specimens from individuals suspected of COVID-19 by their healthcare provider.

As set forth in each EUA, we are required to comply with the conditions of authorization, including certain requirements pertaining to FDA notification, distribution, printed materials, advertising and promotion.

If we, our distributors, or authorized laboratories do not comply with the EUA requirements, our business, financial condition and results of operations may be adversely impacted, and we may be subject to regulatory or enforcement actions, including recall of our products and the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions.

If the FDA’s policies and guidance change unexpectedly and/or materially or if we misinterpret them, potential sales of Advanta Dx SARS-CoV-2 RT-PCR and the AZOVA COVID-19 Test Collection Kit could be adversely impacted.

the FDA will revoke an EUA where it is determined that the underlying public health emergency no longer exists or warrants such authorization, or if new evidence becomes available that indicates the test does not meet the conditions of authorization or perform as provided in the EUA application.

We cannot predict how long this EUA will remain effective.

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The demand for our product and our profitability may decline or be adversely impacted by the federal government’s implementation of a national COVID-19 testing strategy.

Given the uncertain nature of the COVID-19 pandemic and future

legislation and regulation in this space, we can provide no assurance with respect to our ability to achieve or sustain profitability on a quarterly or annual basis.

Given the uncertain nature of the COVID-19 pandemic and future legislation and regulation in this space, we can provide no assurance with respect to our ability to achieve or sustain profitability on a quarterly or annual basis.

The healthcare industry is highly regulated and if we fail to comply with applicable healthcare laws and regulations, we could suffer fines and penalties or be required to make significant changes to our operations which could have a significant adverse effect on the results of our business operations.

We compete in markets in which we or our customers must comply with federal, state, local and foreign regulations, such as healthcare fraud and abuse, data privacy and medical product laws and regulations.

The healthcare industry is subject to extensive and frequently changing international and United States federal, state and local laws and regulations.

In addition, federal and state enforcement agencies have substantial powers and remedies to pursue suspected violations under broad laws and regulations relating to healthcare fraud and abuse, interactions and financial arrangements with healthcare professionals or entities, data privacy and misconduct involving government programs or contracts.

If we, our employees, collaborators or contractors fail to comply with applicable laws and regulations, we could suffer civil and criminal damages, fines and penalties, exclusion from participation in governmental healthcare programs, and the loss of various licenses and authorizations necessary to operate our business, as well as incur liabilities from third-party claims, all of which could have a significant adverse effect on our business.

Our contract with the National Institutes of Health (NIH) could expose us to unique risks and costs as an entity contracting with the federal government.

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Release of funding under the NIH Contract is based on the achievement of milestones, including expansion of our manufacturing facilities, addition of production lines, and achieving full production capacity.

There is significant competition among RADx projects, which are evaluated by experts on a rolling basis.

Projects with the most potential for success are advanced to the next stage.

There is no certainty that we can meet all the milestones in our NIH Contract on a timely basis, if at all.

If we do not meet all the milestones, we will not be able to access all $34.0 million in funding under the NIH Contract.

We cannot guarantee that we will be able to access all the available funding under the NIH Contract in a timely manner, or at all.

As of December 31, 2021, all milestones have been achieved and accepted by NIH.

We must prioritize among many different opportunities, and we may expend our limited resources on programs that do not yield a successful or profitable product candidate and may forego other more profitable opportunities.

Further, the Bayh-Dole Act applies to all NIH research and development funding granted to for-profit organizations, which requires the government to be provided a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.

Factors that could materially adversely affect our funding under the NIH Contract include:

• budgetary constraints affecting U.S.

government spending generally, or NIH in particular;

• changes in U.S.

government or NIH fiscal policies or available funding, including due to changes in Congressional appropriations;

• changes in U.S.

government or NIH programs, requirements or priorities;

• adoption of new laws or regulations;

• technological developments;

government shutdowns, threatened shutdowns or budget delays;

• competition and consolidation in our industry;

• general economic conditions.

These or other factors could cause NIH to reduce its funding or future activities under the NIH Contract, or to exercise its right to terminate the NIH Contract for convenience, either of which could have a material adverse effect on the revenue generated by the NIH Contract.

The NIH Contract includes certain provisions from the Federal Acquisition Regulations, some of which are customary or legally required, that give the U.S.

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These requirements include, for example, mandatory internal control systems and policies, mandatory socioeconomic compliance requirements, including labor standards, non-discrimination and affirmative action programs and environmental compliance requirements and public disclosures of certain contract information, which may enable competitors to gain insights into our research program.

If we fail to maintain compliance with these requirements, we may be subject to potential contract or False Claims Act liability and to termination of our NIH Contract.

to maintain compliance with these requirements, we may be subject to potential contract or False Claims Act liability and to termination of our NIH Contract.

Other examples of rights and remedies under the NIH Contract include provisions that allow NIH to:

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Any delay or inability to enter into such arrangements or entering into such arrangements in a manner that is non-compliant with the terms of our contract, may result in violations of our contract.

government agencies routinely audit and investigate government contractors and recipients of federal grants and contracts.

government agencies routinely audit and investigate government contractors and recipients of federal grants and contracts (even after performance has been completed).

These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards.

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Obtaining marketing authorization in one jurisdiction does not mean that we will be successful in obtaining marketing authorization in other jurisdictions where we conduct business.

Except for the Advanta Dx SARS-CoV-2 Assay authorized by the FDA under an EUA granted in August 2020, our other products are currently labeled, promoted and sold to academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, contract research organizations, and biopharmaceutical, biotechnology, and plant and animal research companies as “research use only” (RUO), and are not designed, or intended to be used, for clinical diagnostic tests or as medical devices as currently marketed.

Except for the Advanta Dx SARS-CoV-2 RT-PCR Assay and the AZOVA COVID-19 Test Collection Kit authorized by the FDA under an EUA granted in August 2020 and updated in February 2021, among other updates, and our Advanta Dx COVID-19 EASE Assay authorized by the FDA under an EUA granted in February 2022, our other products are currently labeled, promoted and sold to academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, contract research organizations, and biopharmaceutical, biotechnology, and plant and animal research companies as “research use only” (RUO), and are not designed, or intended to be used, for clinical diagnostic tests or as medical devices as currently marketed.

If we elect to label and market our products for use as, or in the performance of, clinical diagnostics in the United States, thereby subjecting them to FDA regulation as medical devices, we would be required to obtain premarket 510(k) clearance or premarket approval from the FDA, unless an exception applies.

We are currently registered with the FDA as a medical device manufacturer, with the reagents for the Advanta Dx SARS-CoV-2 Assay listed as our sole medical device product.

As noted in the issued EUA for the Advanta Dx SARS-CoV-2 Assay, the FDA has waived certain quality system requirements under 21 CFR Part 820 for the duration of the EUA.

We may in the future list some of our other products with the FDA pursuant to an FDA Class I listing for general purpose laboratory equipment if we pursue clinical applications for such equipment.

We are currently registered with the FDA as a medical device manufacturer, with the reagents for the Advanta Dx SARS-CoV-2 RT-PCR Assay listed as our sole medical device product.

As noted in the issued EUA for the Advanta Dx SARS-CoV-2 RT-PCR Assay (including the EUA update for use with the AZOVA COVID-19 Test Collection Kit, among other updates) and the issued EUA for the Advanta Dx COVID-19 EASE Assay, the FDA has waived certain quality system requirements under 21 CFR Part 820 for the duration of each EUA.

We may in the future list some of our other products with the FDA pursuant to

an FDA Class I listing for general purpose laboratory equipment if we pursue clinical applications for such equipment.

While this regulatory classification is generally exempt from certain FDA requirements, such as the need to submit a premarket notification commonly known as a 510(k), and some of the requirements of the FDA’s Quality System Regulations (QSRs), we would be subject to ongoing FDA “general controls,” which include compliance with FDA regulations for labeling, inspections by the FDA, complaint evaluation, corrections and removals reporting, promotional restrictions, reporting adverse events or malfunctions for our products, and general prohibitions against misbranding and adulteration.

If we do not comply with all the requirements of the EUA or the normal

regulatory requirements for any of our medical device products, including additional regulatory requirements that would apply to the Advanta Dx SARS-CoV-2 Assay after the expiration or termination of the EUA, we may be subject to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions, any of which may adversely impact our business, financial condition and results of operations.

If we do not comply with all the requirements of the EUA or the normal regulatory requirements for any of our medical device products, including additional regulatory requirements that would apply to the Advanta Dx SARS-CoV-2 RT-PCR Assay and the AZOVA COVID-19 Test Collection Kit after the expiration or termination of the EUA, we may be subject to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, penalties, or fines, among other adverse actions, any of which may adversely impact our business, financial condition and results of operations.

Compliance with additional or changing regulatory requirements can be time-consuming and costly.

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As products that are currently labeled, promoted and intended as RUO, our products are not currently subject to regulation as medical devices by the FDA or comparable agencies of other countries.

However, the FDA or comparable agencies of other countries could disagree with our conclusion that our products are currently intended for research use only or deem our current sales, marketing and promotional efforts as being inconsistent with research use only products.

However, the FDA or comparable agencies of other countries could disagree with our conclusion that our products are currently intended for research use only or deem our current

sales, marketing and promotional efforts as being inconsistent with research use only products.

For example, our customers may independently elect to use our research use only labeled products in their own laboratory developed tests (LDTs) for clinical diagnostic use.

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However, on October 3, 2014, the FDA issued two draft guidance documents that set forth the FDA’s proposed risk-based framework for regulating LDTs, which are designed, manufactured, and used within a single laboratory.

The draft guidance documents provide the anticipated details through which the FDA would propose to establish an LDT oversight framework, including premarket review for higher-risk LDTs, such as those that have the same

intended use as FDA-approved or cleared companion diagnostic tests currently on the market.

In January 2017, the FDA announced that it would not issue final guidance on the oversight of LDTs and manufacturers of products used for LDTs, but would seek further public discussion on an appropriate oversight approach, and give Congress an opportunity to develop a legislative solution.

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However, laboratories opting to use LDTs without FDA premarket review or authorization would not be eligible for liability protection under the Public Readiness and Emergency Preparedness Act, or the PREP Act.

Following this HHS announcement, the FDA announced in October 2020 that it will no longer review EUA requests for COVID-19 LDTs at this time and will continue to prioritize review of EUA requests for point-of-care tests, home collection tests, at-home tests, tests that reduce reliance on test supplies, and high-throughput tests that are widely distributed.

While these actions by HHS and the FDA are expected to reduce the regulatory burden on clinical laboratories certified under the Clinical Laboratory Improvement Amendments of 1988 that develop LDTs, it is unclear how this action as well as legislation and executive orders by the Biden administration and state governments and FDA regulation will impact the industry, including our business and that of our customers.

In an FDA FAQ updated on January 13, 2021, FDA indicated that it is reviewing EUA requests from laboratories that offer COVID-19 diagnostic tests and appears to take a different position from the HHS rescission policy.

HHS’s policy and the FDA’s position with respect to LDTs in the short term and in general in the long-term may change, especially as the leadership at FDA changes under the Biden administration.

Congress could also enact legislation restricting LDTs.

Any restrictions on LDTs by the FDA, HHS, Congress, or state regulatory authorities may decrease the demand for our products.

The adoption of new restrictions on RUOs, whether by the FDA or Congress, could adversely affect demand for our specialized reagents and instruments.

In November 2021, HHS under the Biden administration issued a statement that withdrew the August 2020 policy announcement, stating that HHS does not have a policy on LDTs that is separate from FDA’s longstanding approach.

The FDA also issued a revised version of its COVID-19 test policy that states the FDA expects newly offered COVID-19 tests, including LDTs, to have an EUA, or traditional marketing authorization such as a granted De Novo or cleared 510(k), prior to clinical use.

Further, in June 2021, Congress introduced an updated legislation called the Verifying Accurate, Leading-edge IVCT Development Act (VALID Act), which, if enacted, will establish a new risk-based regulatory framework for in vitro clinical tests (IVCTs), which include IVDs, LDTs, collection devices, and instruments used with such tests, and a technology certification program, among other proposals.

The adoption of new restrictions on IVDs, LDTs, or RUOs, whether by the FDA or Congress, could adversely affect our ability to commercialize our products and the demand for our specialized reagents and instruments.

Further, we could be required to obtain premarket clearance or approval from the FDA before we can sell our products to certain customers.

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To comply with applicable regulations, we have and will continue to incur significant expense and allocate valuable internal resources to manage compliance-related issues.

In addition, such regulations could restrict our ability to expand or equip our facilities, or could require us to acquire costly equipment or to incur other

significant expenses to comply with the regulations.

In addition, such regulations could restrict our ability to expand or equip our facilities, or could require us to acquire costly equipment or to incur other significant expenses to comply with the regulations.

For example, the Restriction on the Use of Certain Hazardous Substances in Electrical and Electronic Equipment Directive (RoHS) and the Waste Electrical and Electronic Equipment Directive (WEEE), both enacted in the European Union, regulate the use of certain hazardous substances in, and require the collection, reuse, and recycling of waste from, products we manufacture.

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We generate a substantial portion of our revenue internationally and our international business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.

During the years 2020, 2019, and 2018, approximately 54%, 63%, and 57% respectively, of our product and service revenue was generated from sales to customers located outside of the United States.

During the years 2021, 2020, and 2019, approximately 56%, 54%, and 63% r espectively, of our product and service revenue was generated from sales to customers located outside of the United States.

We believe that a significant percentage of our future revenue will continue to come from international sources as we expand our international operations and develop opportunities in other countries.

Engaging in international business inherently involves a number of difficulties and risks, including:

• required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation and other data privacy requirements, labor and employment regulations, anticompetition regulations, the U.K.

• required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation, the California Consumer Privacy Act, and other data privacy requirements, labor and employment regulations, anticompetition regulations, the U.K.

Bribery Act of 2010 and other anticorruption laws, and the RoHS and WEEE directives and REACH regulation, which regulate the use and importation of certain hazardous substances in, and require the collection, reuse, and recycling of waste from, products we manufacture;

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• longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;

• changes in social, economic, and political conditions or in laws, regulations and policies governing foreign trade, manufacturing, development, and investment both domestically as well as in the other countries and jurisdictions in which we operate and into which we sell our products, including as a result of the separation of the United Kingdom from the European Union (Brexit);

• business interruptions resulting from global sociopolitical events, including war and terrorism, public health crises (including the ongoing COVID-19 pandemic), and natural disasters including earthquakes, typhoons, floods and fires;

• business interruptions and travel restrictions resulting from global sociopolitical events, including war and terrorism, public health crises (including the ongoing COVID-19 pandemic), and natural disasters including earthquakes, typhoons, floods and fires;

• potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers;

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• difficulties protecting or procuring intellectual property rights.

If one or more of these risks occurs, it could require us to dedicate significant resources to remedy, and if we are unsuccessful in finding a solution, our financial results will suffer.

Since the beginning of the COVID-19 pandemic, travel restrictions have caused significant slowdowns in China, Japan, and other parts of the Asia-Pacific region.

These slowdowns, in addition to shipment delays in China due to delays in obtaining VAT and import tax exemptions for our products, have caused our financial results to suffer.

If these situations continue, or if other risks occur, we could be forced to dedicate significant resources to their resolution, and if we are unsuccessful in finding a solution, our financial condition and results will suffer.

In addition, political instability, civil unrest, the deterioration of the political situation in a country in which we have significant sales or operations, or the breakdown of trade relations between the United States and a foreign country in which we have significant operations, could adversely affect our business, financial condition, and results of operations.

For example, a change in trade status between the United States and a foreign country could result in a substantial increase in the import duty of products manufactured in that foreign country and imported into the United States.

The United States has commenced certain trade actions, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China.

In addition, the United States has commenced certain trade actions as a result of the Russian invasion of Ukraine, which are widely expected to result in retaliatory measures or actions, including tariffs, by Russia.

Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures taken by China, Russia, or other countries in response, could adversely affect our business, financial condition, and results of operations.

Our business is subject to a variety of new U.S.

and foreign export controls and economic sanctions regulations that were issued in response to Russia’s invasion of Ukraine;

our failure to comply with these laws and regulations could harm our business.

Due to recent regulations, U.S.

companies can no longer provide or receive services or conduct any business with, including selling, shipping, or otherwise transferring any U.S.-controlled products to, the Donetsk People’s Republic (DNR) and Luhansk People’s Republic (LNR) regions of Ukraine.

Additionally, existing U.S.

sanctions continue to extend these prohibitions to the Crimea region of Ukraine.

Our business is also subject to the expansion of previously existing sanctions imposed by the Treasury Department’s Office of Foreign Assets Controls that now cover a significant number of individuals and entities located in Russia, Belarus, and surrounding regions as well as new U.S.

export controls imposed by the U.S.

Department of Commerce’s Export Administration Regulations on exports to Russia.

These laws and regulations cover U.S.

persons as well as U.S.-controlled products, software, and technologies wherever located.

Failure to comply with U.S.

and foreign export control and economic sanctions laws and regulations can result in criminal sanctions, civil fines, debarment from government contracting, the loss of export privileges, and, in some cases, imprisonment.

We are currently implementing new measures to reduce our exposure to this liability.

The implementation of these measures may require us to expend substantial resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results.

In addition, the increased attention focused upon liability issues as a result of lawsuits, regulatory proceedings, and legislative proposals could damage our brand or otherwise impact the growth of our business.

Finally, our ability to receive payment from these regions has been significantly impacted.

Any costs incurred or loss of business that occurs as a result of compliance or other liabilities under these laws or regulations could harm our business and operating results.

Adverse conditions in the global economy and disruption of financial markets may significantly harm our revenue, profitability, and results of operations.

Adverse economic conditions in the U.S.

and international markets, including the worldwide economic disruption related to the COVID-19 pandemic, have negatively affected our revenues and operating results and may continue to do so.

Even before the current public health crisis took hold, the global credit and financial markets had been experiencing volatility and disruptions, including diminished liquidity and credit availability, increased concerns about inflation and deflation, and the downgrade of U.S.

and international markets, including the worldwide economic disruption related to the COVID-19 pandemic and related slowdowns in China, Japan, and elsewhere in the Asia-Pacific region, have negatively affected our revenues and operating results and may continue to do so.

Even before the current public health crisis took hold,

the global credit and financial markets had been experiencing volatility and disruptions, including diminished liquidity and credit availability, increased concerns about inflation and deflation, and the downgrade of U.S.

debt and exposure risks on other sovereign debts, decreased consumer confidence, lower economic growth, volatile energy costs, increased unemployment rates, and uncertainty about economic stability.

Geopolitical events including the COVID-19 pandemic, the United States government’s adoption and expansion of trade restrictions, and the United Kingdom’s withdrawal from the European Union have caused significant economic, market, political and regulatory uncertainty in some of our markets.

Geopolitical events including the COVID-19 pandemic, the Russian invasion of Ukraine, including any resulting adoption and expansion of trade restrictions by the United States, Russia, and/or China, and Brexit have caused significant economic, market, political and regulatory uncertainty in some of our markets.

Volatility and disruption of financial markets could limit our customers’ ability to obtain adequate financing or credit to purchase and pay for our products in a timely manner or to maintain operations, which could result in a decrease in sales volume that could harm our results of operations.

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FINANCIAL, TAX, AND ACCOUNTING RISKS

As disclosed in footnote two of our consolidated financial statements, and referenced in our independent registered public accounting firm’s report, we believe that our current level of cash and cash equivalents, together with committed financing facilities, are not sufficient to fund ongoing operations for at least the twelve-month period after the financial statements were issued.

Our current cash position and recurring operating losses have raised substantial doubt about our ability to continue as a going concern for at least the twelve-month period following the date the financial statements were issued.

As of December 31, 2021, we had $29.5 million in cash, cash equivalents and restricted cash.

Due to an extended strategic review process related to the pending Private Placement Issuance, we were unable in 2021 to implement certain cash management actions, including potential financing and/or cost reduction initiatives.

Further, we have incurred, and expect to continue to incur, negative cash flows in pursuit of our business plans for at least the twelve-month period following the date the financial statements were issued.

Management’s plans to address the doubt regarding our ability to continue as a going concern are discussed under Part II, Item 7, “Management’s discussion and analysis of financial condition and results of operations.” Our ability to continue as a going concern is dependent upon our success in obtaining additional equity or debt financing, attaining further operating efficiencies, reducing expenditures and ultimately, generating significant revenue growth.

Our plans to raise additional capital, including our ability to consummate the Private Placement Issuance, or take other actions to address the doubt regarding our ability to continue as a going concern, may not be successful.

There can be no assurance that the Company would be able to obtain additional liquidity when needed or under acceptable terms, if at all.

The perception of our ability to continue as a going concern may make it more difficult for us to obtain financing for the continuation of our operations and could result in the loss of confidence by investors, suppliers and employees.

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.

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

In addition, we may need to raise substantial additional capital for various purposes, including:

• expanding the commercialization of our products;

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

If our plans to raise capital and to consummate the Private Placement Issuance are not successful, or if such funds are insufficient to meet our cash requirements, we may need to raise substantial capital for various purposes, including:

• funding our operations;

• expanding the commercialization of our products;

• furthering our research and development;

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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.

Debt financing in addition to our 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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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 debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined below), may foreclose upon the assets securing our obligations.

In August 2021, we amended our Loan and Security Agreement dated as of August 2, 2018, between the Company and Silicon Valley Bank (SVB) (the Credit Agreement), which provides for secured revolving loans in an aggregate amount of up to $15.0 million (the Revolving Credit Facility), 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.

Additionally, we are required to maintain a minimum Adjusted Quick Ratio (as defined in the amendment) of at least 1.25 to 1.00.

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.

In January 2022, we entered into the Bridge Loan Agreements.

Each Bridge Loan Agreement provides for a $12.5 million term loan to the Company.

Each Bridge Loan Agreement contains customary affirmative and negative covenants which, unless waived by the applicable lenders, 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 Bridge Loan Agreements, the lenders would, subject to a subordination agreement, be able to accelerate the required repayment of amounts due under the Bridge Loan Agreements.

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

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Various states also have limitations on the use of state NOLs following an ownership change.

Future changes in our stock ownership, some of which are outside our control, could result in an ownership change under Section 382 of the Code.

We may experience an ownership change in connection with the Private Placement Issuance.

Additionally, any other future changes in our stock ownership, some of which are outside our control, could result in an ownership change under Section 382 of the Code.

If we experience an ownership change, our ability to use our NOLs or other tax benefits could be substantially limited, which could significantly impair their value.

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Adoption of a tax benefit preservation plan could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, us or a large block of our common stock.

We are subject to risks related to taxation in multiple jurisdictions and if taxing authorities disagree with our interpretations of existing tax laws or regulations, our effective income tax rate could be adversely affected and we could have additional tax liability.

We are subject to risks related to taxation in multiple jurisdictions and our effective income tax rate could be adversely affected and we could have additional tax liability if existing tax laws or regulations change or if taxing authorities disagree with our interpretations of tax laws or regulations.

We are subject to income taxes in both the United States and certain foreign jurisdictions.

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We have significant outstanding convertible debt.

As of December 31, 2020, we had outstanding $1.1 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).

As of December 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, and collectively with the 2014 Notes, the Convertible 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.

On February 6, 2021, holders of $0.5 million of the 2014 Notes caused us to repurchase such 2014 Notes in accordance with the terms of the indenture governing the 2014 Notes (2014 Notes Indenture) at a repurchase price in cash equal to 100% of the principal amount of such 2014 Notes plus accrued and unpaid interest thereon.

Pursuant to the terms of the 2014 Notes Indenture, holders of the remaining 2014 Notes may require us to repurchase all or a portion of such remaining 2014 Notes, on the same terms, on each of February 6, 2024 and February 6, 2029.

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.

The 2019 Notes will mature on December 1, 2024, unless earlier converted, or repurchased in accordance with the terms of the 2019 Notes.

If we undergo a fundamental change (as defined in the 2014 Notes indenture or the indenture governing the 2019 Notes, as applicable (collectively, the Convertible Notes)), holders of the applicable series of Convertible Notes may require us to repurchase such Convertible Notes in whole or in part for cash at a repurchase price equal to 100% of the principal amount of the applicable series of Convertible Notes plus accrued and unpaid interest.

If we undergo a fundamental change (as defined in the 2014 Notes Indenture or the indenture governing the 2019 Notes, as applicable), holders of the applicable series of Convertible Notes may require us to repurchase such Convertible Notes in whole or in part for cash at a repurchase price equal to 100% of the principal amount of the applicable series of Convertible Notes plus accrued and unpaid interest.

If we refinance all or any portion of the Convertible Notes, we may issue additional convertible notes or other debt, which could include additional company obligations and represent more dilution to existing stockholders and noteholders.

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• limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise.

In January 2022, we borrowed $25.0 million under the Bridge Loan Agreements in connection with the Private Placement Issuance.

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

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Numerous significant intellectual property issues have been litigated, and will likely continue to be litigated, between existing and new participants in our existing and targeted markets.

For example, some of

our products provide for the testing and analysis of genetic material, and patent rights relating to genetic materials remain a developing area of patent law.

A recent U.S.

For example, some of our products provide for the testing and analysis of genetic material, and patent rights relating to genetic materials remain a developing area of patent law.

Supreme Court decision held, among other things, that claims to isolated genomic DNA occurring in nature are not patent eligible, while claims relating to synthetic DNA may be patent eligible.

We expect the ruling will result in additional litigation in our industry.

In addition, third parties may assert that we are employing their proprietary technology without authorization, and if they are successful in making such claims, we may be forced to enter into license agreements, pay additional royalties or license fees, or enter into settlements that include monetary obligations or restrictions on our business.

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For example, Fluidigm Canada Inc.

(Fluidigm Canada), an Ontario corporation and wholly owned subsidiary of Fluidigm Sciences, was party to an interim license agreement, now expired, with Nodality, Inc., or Nodality, under which Nodality granted Fluidigm Canada a worldwide, non-exclusive, research use only, royalty bearing license to certain cytometric reagents, instruments, and other products.

(Fluidigm Canada), an Ontario corporation and wholly owned subsidiary of Fluidigm Sciences, was party to an interim license agreement, now expired, with Nodality, Inc.

(Nodality) under which Nodality granted Fluidigm Canada a worldwide, non-exclusive, research use only, royalty bearing license to certain cytometric reagents, instruments, and other products.

While we were able to secure a license under a new license agreement with Nodality, we cannot provide assurances that we will always be able to obtain suitable license rights to technologies or intellectual property of other third parties on acceptable terms, if at all.

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An unfavorable resolution of such a dispute could lead to an increase in the royalties payable pursuant to the license.

If a licensor believed we were not paying the royalties due under the license or were otherwise not in compliance with the terms of the license, the licensor might

attempt to revoke the license.

If a licensor believed we were not paying the royalties due under the license or were otherwise not in compliance with the terms of the license, the licensor might attempt to revoke the license.

If such an attempt were successful and the license is terminated, we might be barred from marketing, producing, and selling some or all of our products, which would have an adverse effect on our business.

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If our lack of compliance with this provision constituted a material breach of the license agreement, the license of the relevant patents could be terminated or we could be compelled to relocate our manufacturing of microfluidic systems and IFCs to the United States to avoid or cure a material breach of the license agreement.

Any of the exercise of march-in rights, the termination of our license of the relevant patents or the relocation of our manufacturing of microfluidic systems and IFCs to the United States could materially adversely affect our business, operations and financial condition.

Any of the exercise of march-in rights, the

termination of our license of the relevant patents or the relocation of our manufacturing of microfluidic systems and IFCs to the United States could materially adversely affect our business, operations and financial condition.

We are subject to certain obligations and restrictions relating to technologies developed in cooperation with Canadian government agencies.

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In one instance, a dispute with the applicable government funded entity may require mediation, which could lead to unanticipated delays in our commercialization efforts to that project.

One of our Canadian government funded projects is also subject to certain limited “march-in” rights in favor of the government of the Province of Ontario, under which we may be required to grant a license to our intellectual property, including background intellectual property developed outside the scope of the project, to a responsible applicant on reasonable terms in circumstances where the

government determines that such a license is necessary in order to alleviate emergency or extraordinary health or safety needs or for public use.

In addition, we must provide reasonable assistance to the government in obtaining similar licenses from third parties required in connection with the use of its intellectual property.

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As of December 31, 2021, we had 76,919,287 shares of common stock outstanding, and stockholders holding at least 5% of our stock, individually or with affiliated persons or entities, collectively beneficially owned or controlled approximately 51% of such shares.

Sales of large numbers of shares by any of our large stockholders could adversely affect our trading price, particularly given our relatively small historic trading volumes.

Sales of large numbers of shares by any of our large stockholders, including in connection with the Private Placement Issuance, could adversely affect our trading price, particularly given our relatively small historic trading volumes.

If stockholders holding shares of our common stock sell, indicate an intention to sell, or if it is perceived that they will sell, substantial amounts of their common stock in the public market, the trading price of our common stock could decline.

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 51% held by our top seven stockholders as of December 31, 2021) 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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• manufacturing disruptions that could occur if we are unable to successfully expand our production in our current or an alternative facility;

• any future sales of our common stock or other securities in connection with raising additional capital or otherwise;

• supply chain disruptions;

• any future sales of our common stock or other securities in connection with raising additional capital or otherwise, including the Private Placement Issuance;

• any major change to the composition of our board of directors or management;

• general market conditions and other factors unrelated to our operating performance or the operating performance of our competitors, including deteriorating market conditions due to investor concerns regarding inflation and hostilities between Russia and Ukraine;

• general economic conditions and slow or negative growth of our markets.

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In several recent situations where the market price of a stock has been volatile, holders of that stock have instituted securities class action litigation against the company that issued the stock.

As discussed in Item 3 (Legal Proceedings) of this Annual Report on Form 10-K, a class action securities lawsuit against us is currently pending.

While we are continuing to defend such action vigorously, the defense of this action and any additional actions can be costly, divert the time and attention

of our management, and harm our operating results, and any judgment against us or any future stockholder litigation could result in substantial costs.

As discussed in Part I Item 3 (Legal Proceedings) of this Annual Report on Form 10-K, a class action securities lawsuit against us is currently pending.

While we are continuing to defend such action vigorously, the defense of this action and any additional actions can be costly, divert the time and attention of our management, and harm our operating results, and any judgment against us or any future stockholder litigation could result in substantial costs.

Future sales of our common stock in the public market could cause our stock price to fall.

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These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

Any conversions of the 2014 Notes or 2019 Notes will dilute the ownership interest of our existing stockholders and may otherwise depress the price of our common stock.

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

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law (DGCL), which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us.

The forum selection provision in our bylaws could limit the ability of our stockholders to bring a claim in a judicial forum viewed by the stockholders as more favorable for disputes with us or our directors, officers or other employees.

Our bylaws provide that the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another State court in Delaware or the federal district court for the District of Delaware) is the exclusive forum for the following (except for any claim as to which such court determines that there is an indispensable party not subject to the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction):

• any derivative action or proceeding brought on our behalf;

• any action asserting a claim of breach of fiduciary duty;

• any action asserting a claim against us arising under the DGCL, our certificate of incorporation or our bylaws;

• any action asserting a claim against us that is governed by the internal-affairs doctrine.

This provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act or any other claim for which the U.S.

federal courts have exclusive jurisdiction.

Our bylaws further provide that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act.

These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees.

Any person or entity purchasing or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to these provisions.

There is uncertainty as to whether a court would enforce such provisions, and the enforceability of similar choice of forum provisions in other companies’ charter documents has been challenged in legal proceedings.

It is possible that a court could find these types of provisions to be inapplicable or unenforceable, and if a court were to find either exclusive-forum provision in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could seriously harm our business.

Any conversions of the 2014 Notes, the 2019 Notes, or the Bridge Loans will dilute the ownership interest of our existing stockholders and may otherwise depress the price of our common stock.

Any conversion of some or all of the 2014 Notes, 2019 Notes, or Bridge Loans 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.

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.

As a result, any anticipated conversion of the 2014 Notes or 2019 Notes could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

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

As a result, any anticipated conversion of the 2014 Notes, 2019 Notes, or Bridge Loans could depress the market price of our common stock and impair our ability to raise capital through the sale of additional equity securities.

UNRESOLVED STAFF COMMENTS

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 1A. Risk Factors