What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-09 · 174 added, 134 removed, 213 unchanged (59% of the section changed)

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The forward-looking statements are contained principally in the section entitled “Risk Factors” and this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking statements include information concerning our possible or assumed future cash flow, revenue, sources of revenue and results of operations, cost of product revenue and product margin, operating and other income and expenses, unit sales and the selling prices of our products, business strategies, financing plans, expansion of our business, competitive position, industry environment, potential growth opportunities, market growth expectations, and the effects of competition and public health crises (including the COVID-19 pandemic) on our business, the global supply chain, and our customers, suppliers, and other business partners.

Forward-looking statements include information concerning our possible or assumed future cash flow, revenue, sources of revenue and results of operations, cost of product revenue and product margin, operating and other income and expenses, unit sales and the selling prices of our products, business strategies, our restructuring and reduction-in-force plans, financing plans, expansion of our business, competitive position, industry environment, potential growth opportunities, market growth expectations, and the effects of competition and public health crises (including the COVID-19 pandemic) on our business, the global supply chain, and our customers, suppliers, and other business partners.

Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would,” or similar expressions and the negatives of those terms.

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You should read this Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect.

Standard BioTools™, the Standard BioTools logo, Fluidigm®, the Fluidigm logo, Access Array™, Acculift™, Advanta™, Atlas™, Biomark™, Bringing new insights to life™, C1™, Callisto™, Cell-ID™, CyTOF®, CyTOF XT™, CyTOF XT logo, D3™, Delta Gene™, Direct™, Digital Array™, Dynamic Array™, EP1™, EQ™, FC1™, Flex Six™, Flow Conductor™, GeckoGrip™, Helios™, High-Precision 96.96 Genotyping™, HTI™, Hyperion™, IMC™, Imaging Mass Cytometry™, Immune Profiling Assay™, Juno™, Maxpar®, MCD™, MSL®, Nanoflex™, Open App™, Pathsetter™, Polaris™, qdPCR 37K™, Script Builder™, Script Hub™, Singular™, SNP Trace™, and SNP Type™ are trademarks or registered trademarks of Standard BioTools Inc.

S tandard BioTools™, the Standard BioTools logo, Fluidigm®, the Fluidigm logo, 48.Atlas™, Access Array™, AccuLift™, Advanta™, Atlas™, Biomark™, Biomark X™, Bringing new insights to life™, C1™, Callisto™, Cell-ID™, CyTOF®, CyTOF XT™, CyTOF XT logo, D3™, Delta Gene™, Direct™, Digital Array™, Dynamic Array™, EP1™, EQ™, FC1™, Flex Six™, Flow Conductor™, FluiDesign™, GeckoGrip™, Helios™, High-Precision 96.96 Genotyping™, HTI™, HTI+™, Hyperion™, Hyperion+™, IMC™, Imaging Mass Cytometry™, Immune Profiling Assay™, Juno™, Maxpar®, MCD™, MSL®, Nanoflex™, Open App™, Pathsetter™, Polaris™, qdPCR 37K™, Script Builder™, Script Hub™, Singular™, SNP Trace™, SNP Type™, “Unleashing tools to accelerate breakthroughs in human health” ™, and Xgrade™ are trademarks or registered trademarks of Standard BioTools Inc.

or its affiliates.

Other service marks, trademarks and trade names referred to in this quarterly report on Form 10-Q are the property of their respective owners.

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• Liquidity and Capital Resources

Standard BioTools Inc., previously known as Fluidigm Corporation, is driven by a bold vision – unleashing tools to accelerate breakthroughs in human health.

Standard BioTools has an established portfolio of essential, standardized next-generation technologies that help biomedical researchers develop medicines faster and better.

As a leading solutions provider, we provide reliable and repeatable insights in health and disease using our proprietary mass cytometry and microfluidics technologies that help transform scientific discoveries into better patient outcomes.

We work with leading academic,

government, pharmaceutical, biotechnology, plant and animal research, and clinical laboratories worldwide, focusing on the most pressing needs in translational and clinical research, including oncology, immunology, and immunotherapy.

Standard BioTools Inc.

is driven by a bold vision – unleashing tools to accelerate breakthroughs in human health.

We have an established portfolio of essential, standardized next-generation technologies that help biomedical researchers develop medicines faster and better.

patient outcomes.

We work with leading academic, government, pharmaceutical, biotechnology, plant and animal research, and clinical laboratories worldwide, focusing on the most pressing needs in translational and clinical research, including oncology, immunology, and immunotherapy.

We distribute our systems through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries.

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Our mass cytometry instruments, assays and reagents are manufactured at our facility in Canada.

Our total revenue for the three months ended March 31, 2022 was $26.5 million and $32.8 million for the three months ended March 31, 2021.

We have incurred significant net losses since our inception in 1999 and, as of March 31, 2022, our accumulated deficit was $812.3 million.

Our total revenue for the six months ended June 30, 2022 and 2021 was $45.3 million and $63.8 million, respectively.

We have incurred significant net losses since our inception in 1999 and, as of June 30, 2022, our accumulated deficit was $875.8 million.

Recent Developments

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The Bridge Loans automatically converted into Series B Preferred Stock, defined below, upon the completion of the Preferred Equity Financing, defined below.

The proceeds of the Bridge Loans may be used for working capital and general corporate purposes.

Also on January 23, 2022, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements) with each of the Purchasers pursuant to which, among other things, at the closing of the transactions contemplated thereby, and on the terms and subject to the conditions set forth therein, including the approval of our stockholders, we issued and sold an aggregate of $225 million of convertible preferred stock on April 4, 2022, consisting of:

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and (ii) 112,500 shares of the Company’s Series B-2 Convertible Preferred Stock, par value $0.001 per share (the Series B-2 Preferred Stock, and together with the Series B-1 Preferred Stock, the Series B Preferred Stock) at a purchase price of $1,000 per share to Viking (the Preferred Equity Financing, and together with the issuance of shares of Series B Preferred Stock in connection with the conversion of the Bridge Loans, the Private Placement Issuance).

The proceeds of the Preferred Equity Financing will be used for expenses related to the Private Placement Issuance, as well as working capital, general corporate purposes and potential future merger and acquisition opportunities that we may identify from time to time.

The proceeds from the Private Placement Issuance have been and will be used for expenses related to the Private Placement Issuance, as well as working capital, general corporate purposes and potential future merger and acquisition opportunities that we may identify from time to time.

Our board of directors (the Board) called a meeting (Special Meeting) to ask our stockholders to consider, vote upon and approve (i) a proposal to amend the Company’s Eighth Amended and Restated Certificate of Incorporation (the Charter) to, among other things, increase the number of shares of common stock, par value $0.001 per share, (Common Stock) of the Company that we are authorized to issue from two hundred million (200,000,000) shares to four hundred million (400,000,000) shares and to change our name to Standard BioTools Inc.

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With the approval of the proposals, our name was changed to Standard BioTools Inc.

Shortly after the closing of the Private Placement Issuance we also changed our ticker symbol for our common stock to LAB.

Shortly after the closing of the Private Placement Issuance we also changed our trading symbol for our common stock to LAB.

Upon the closing of the Private Placement Issuance, Dr.

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Business Update

The capital from the Private Placement Issuance is expected to help fuel a realization of identified growth and cost opportunities and allow for new growth drivers as we pursue and consolidate complementary technologies across the life science ecosystem.

• Achieving significantly greater breadth and scale .

With a strong platform and deeply experienced management team, we will strive to accelerate growth both organically and, importantly, inorganically to deliver breadth and scale to the Company.

• Optimizing the cost structure .

As we work toward our goal of being sustainably cash flow positive, we intend to have a leaner general and administrative expense structure and a sales and marketing spend that is better aligned to support high-growth areas.

• Leveraging a larger menu to expanding customer base.

We expect to direct sales and marketing towards expanding our relationships deeper into the life science ecosystem, including large biopharma, emerging biotech, and diagnostic companies and the broader contract research organization and contract manufacturing organization service provider network.

• Accelerating growth in mass cytometry .

With particular emphasis on expanding our CyTOF and Imaging Mass Cytometry™ platforms to further support translational and clinical research, we intend to simplify the design and execution of deep cell profiling, standardize sample analysis with reproducible workflows and automation, and significantly advance capabilities for novel therapeutic development.

• Realizing and rationalizing opportunities in targeted high-profit areas within microfluidics .

We plan to focus on targeted end-applications (e.g., proteomics, biomarker analysis) and key partnerships (e.g., Olink® Bioscience) while rationalizing business processes and execution .

In the audited consolidated financial statements and the related notes for the year ended December 31, 2021 included in our annual report on Form 10-K, filed with the SEC on March 8, 2022, we disclosed that we had performed an assessment to determine whether there were conditions or events, considered in the aggregate, that 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.

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

Since then, we have closed the $225 million Series B Preferred Equity Financing, as discussed in Note 3.

The financing, which was contingent upon stockholder approval, was previously disclosed in Note 18 to our audited financial statements included in our 2021 annual report on Form 10-K.

The completion of this investment has eliminated the doubt about the Company’s ability to continue as a going concern.

See Note 3 and Note 17 for additional discussion.

We expect to use the cash from the Private Placement Issuance to help realize identified growth and cost opportunities and allow for new growth drivers as we pursue and consolidate complementary technologies across the life science ecosystem.

Our newly assembled management team is focused on streamlining our operations for efficiency and cost reduction, using our Standard BioTools Business Systems (SBS) approach.

On August 8, 2022, we announced that a phased restructuring plan, including a reduction in force, was underway which is expected to significantly lower operating cash usage beginning in the second half of 2022.

The purpose of the restructuring plan is to improve efficiency and operating costs and better align our workforce with the current needs of our business.

As part of the restructuring, the following steps are being taken:

• Right Sizing General and Administrative Expenses.

We plan to significantly lower general and administrative spend through a reduction in headcount and a decrease in office space to better align our spend with our streamlined operations.

Specifically, we plan to reduce our real estate footprint, including our headquarters location in South San Francisco while fostering remote work for certain employees.

Beyond these near-term initiatives, we will pursue continued process optimization through a focused SBS-based approach which may result in additional cost savings and will direct resources into areas with the highest impact to the business.

• Right Sizing Microfluidics Business.

We will significantly reduce investment in research and development and marketing while narrowing our commercial focus to high value niche markets for specialized applications for which the platform is ideally suited.

In addition, we plan to pursue additional OEM opportunities, similar to our relationship with Olink® Bioscience, as a lower cost and more efficient go-to-market approach.

• Portfolio Rationalization.

We are rationalizing our product portfolio by discontinuing our laser capture microdissection (LCM), and Flow Conductor offerings, while deemphasizing our diagnostics/COVID-19 activities.

Revenues from these product lines are not significant.

We currently expect cash expenses related to the reduction in force, consisting primarily of severance and termination benefits and related costs, to be in the range of $3 million to $5 million.

At this time, we are not able, in good faith, to make a determination of the estimated amount or range of amounts to be incurred for every major type of restructuring cost, including the leased office space reduction charges.

Upon the determination of such amounts, we expect to provide an update as such information becomes available.

We expect to recognize the restructuring costs over the next four quarters.

These estimates are subject to a number of assumptions, and actual results may differ.

Critical Accounting Policies, Significant Judgments and Estimates

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Actual results could differ materially from these estimates and could have a material adverse effect on our condensed consolidated financial statements.

The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will

depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic.

The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business

reactions to the pandemic.

We also use significant judgment in determining the fair value of financial instruments, including debt and equity instruments.

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Results of Operations

The following table presents our historical condensed consolidated statements of operations data for the three months ended March 31, 2022 and 2021, and as a percentage of total revenue (in thousands):

Three Months Ended March 31,

The following table presents our historical condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Revenue $ 18,777 100 % $ 31,018 100 % $ 45,281 100 % $ 63,812 100 %

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Loss on forward sale of Series B Preferred Stock (22,289) (119) — — (60,081) (133) — —

Unrealized loss on bridge loans (10,655) (40) — —

Loss on bridge loans (3,064) (16) — — (13,719) (30) — —

Other income (expense), net (174) (1) 504 2 (56) — 219 —

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Development Revenue .

On March 31, 2020, we entered into an OEM Supply and Development Agreement (Development Agreement) with a customer to develop products based on our microfluidics technology.

The Development Agreement provided for up-front and periodic milestone payments during its development stage, which was completed in the third quarter of 2021, and for on-going annual payments of $0.4 million for sustaining efforts.

During the three months ended March 31, 2022, we recognized $0.1 million of development revenue associated with these fees.

During the three months ended March 31, 2021, we recognized $1.5 million of revenue from the project.

Costs associated with the Development Agreement were recorded in research and development expense in the condensed consolidated statement of operations.

In March 2020, we entered into an OEM Supply and Development Agreement with a customer to develop OEM products based on our microfluidics technology.

The agreement provided for up-front and periodic milestone payments during its development stage, which was completed during the third quarter of 2021, and $0.4 million of annual on-going payments for sustaining efforts.

We recognized $0.4 million and $0.9 million of development revenue during the three months ended June 30, 2022 and 2021 , respectively.

We recognized $0.4 million and $2.3 million of development revenue during the six months ended June 30, 2022 and 2021 , respectively.

Grant Revenue .

During the three months ended March 31, 2021, we recognized $0.3 million of grant revenue by providing research and development services under a contractual arrangement we entered into in the second half of 2019.

During the three and six months ended June 30, 2021 we recognized $0.8 million and $1.1 million of grant revenue for research and development services performed under a contract we entered into in the second half of 2019.

The contract was completed during the third quarter of 2021.

Costs associated with the agreement were recorded in research and development expense in the condensed consolidated statement of operations.

License Revenue .

We recognize revenue from license agreements when the license is transferred to the customer and the customer is able to use and benefit from the license.

During the three months ended March 31, 2022, we entered into an agreement to settle intellectual property infringement claims and received a $0.3 million payment in exchange for a license to certain of our intellectual property.

No single customer represented more than 10% of our total revenue for the three months ended March 31, 2022.

Revenue from one customer exceeded 10% of total revenue for the three months ended March 31, 2021.

Revenue from our five largest customers represented 21% and 27% of total revenue for the three months ended March 31, 2022 and 2021, respectively.

The following table presents our revenue disaggregated by source for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-over-Year Change

We recognize revenue from license agreements when the contract has been signed, the license has been transferred to the customer and the customer is able to use and benefit from the license.

During the three months ended June 30, 2022 and 2021, we recognized $0.4 million and $0.1 million of license revenue, respectively.

During the six months ended June 30, 2022 and 2021, we recognized $0.7 million and $0.1 million of license revenue, respectively.

No single customer represented more than 10% of total revenues for any of the periods presented in this report.

Revenue from our five largest customers represented 17%, and 24% of total revenue, for the three months ended June 30, 2022, and 2021, respectively.

For the six months ended June 30, 2022 and 2021, revenue from our five largest customers represented 18%, and 24% of total revenues, respectively.

The following table presents our revenue by source for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Instruments $ 2,661 14 % $ 10,179 33 % (74)% $ 10,184 22 % $ 17,887 28 % (43)%

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Grant revenue — — 821 3 (100)% — — 1,121 2 (100)%

License revenue 268 2 — — NA

License revenue 396 2 93 — 326% 664 1 93 — 614%

Total revenue $ 18,777 100 % $ 31,018 100 % (39)% $ 45,281 100 % $ 63,812 100 % (29)%

The following table presents our total revenue by geographic area for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-over-Year Change

The following table presents our revenue based upon the geographic location of our customers’ facilities for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Americas $ 9,433 50 % $ 16,120 52 % (41)% $ 22,363 49 % $ 34,643 54 % (35)%

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Total Revenue

Total revenue decreased by $6.3 million, or 19%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 primarily driven by a decline in consumables revenue and development revenue.

A weaker dollar negatively impacted Company total revenues by 1.1 percentage points .

Americas revenue decreased by $5.6 million, or 30%, for the three months ended March 31, 2022 compared to th e three months ended March 31, 2021.

The decline is primarily attributable to a reduction in product revenue driven by the sharp decline in the demand for COVID-19 testing products and by a $1.4 million decline in development revenue.

EMEA revenue decreased by $0.5 million driven by a decline in mass cytometry instruments, and partially offset by an increase in microfluidics instruments revenue primarily from products launched in the second half of 2021 .

A weaker dollar contributed 4.0 percentage points of the 5.8 percentage point decrease in EMEA revenue.

In Asia-Pacific, revenue decreased by $0.2 million, or 3.2%, primarily due to a decline in consumables revenue, which was largely offset by an increase in instruments revenue.

Three months ended June 30, 2022

Total revenue decreased by $12.2 million, or 39%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, driven primarily by a decline in prod uct revenue.

Instruments revenue fell by $7.5 million, or 74%, while consumables revenue declined by $2.9 million, or 23%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

A stronger dollar negatively impacted the Company’s total revenues by approximately 4.0 percent.

Americas revenue decreased by $6.7 million, or 41%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The decline was primarily due to lower instruments revenue and a sharp decline in demand for COVID-19 testing products.

EMEA revenue decreased by $3.6 million, primarily driven by a decline in instruments revenue and to a lesser extent, lower consumables revenue.

A stronger dollar negatively impacted EMEA revenues by approximately 10.0 percent.

In Asia-Pacific, revenue decreased by $2.0 million, or 35%, for three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to a decline in instruments revenue, and to a lesser extent, consumables revenue.

Six months ended June 30, 2022

Total revenue decreased by $18.5 million, or 29%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily driven by a $7.7 million decline in instruments revenue and $7.4 million d ecline in consumables revenue.

A stronger dollar negatively impacted the Company’s total revenues by approximately 3.0 percent.

Americas revenue decreased by $12.3 million, or 35%, for the six months ended June 30, 2022 compared to th e six months ended June 30, 2021.

The decline was primarily attributable to a reduction in product revenue driven by the sharp decline in the demand for COVID-19 testing products, lower instruments revenue and a $1.9 million reduction in development revenue.

EMEA revenue decreased by $4.1 million primarily driven by a decline in mass cytometry instruments and, to a lesser extent, lower consumables revenue.

A stronger dollar negatively impacted EMEA revenues by approximately 6.0 percent.

In Asia-Pacific, revenue decreased by $2.2 million, or 20%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to a decline in consumables revenue.

Product and Service Revenue .

The following tables present the split of product and service revenue between mass cytometry and microfluidics product categories and as a percentage of the respective category’s total product and service revenue for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-Over-Year Change

The following tables present the split of product and service revenue between our mass cytometry and microfluidics product categories for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-Over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Mass cytometry:

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Total product and service revenue $ 7,907 100% $ 12,623 100% (37)% $ 20,525 100% $ 29,607 100% (31)%

Mass cytometry revenue decreased by $0.5 million, or 4%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The year-over-year decrease was primarily attributable to an overall decrease in legacy mass cytometry instruments revenue, partially offset by an increase in revenue from CyTOF XT instruments, which were released in May 2021.

The decline in microfluidics revenue of $4.4 million, or 26%, during the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is directly attributable to reduced demand for our COVID-19 testing products, partially offset by revenues from new BioMark O and BioMark X instruments, which were both released in the second half of 2021.

We expect the average selling prices of our products to fluctuate over time based on market conditions, product mix, and currency fluctuations.

Mass cytometry revenue decreased by $6.5 million, or 39%, during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The year-over-year decrease was primarily due to a decrease in legacy instruments revenue.

The decline in microfluidics revenue of $4.7 million, or 37%, during the three months ended June 30, 2022 compared to the three months ended June 30, 2021 is attributable to reduced demand for microfluidic instruments and our COVID-19 testing products.

Mass cytometry revenue decreased by $7.0 million, or 23%, during the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

The year-over-year decrease was primarily attributable to an overall decrease in legacy mass cytometry instruments revenue.

The decline in microfluidics revenue of $9.1 million, or 31%, during the six months ended June 30, 2022 compared to the six months ended June 30, 2021 was attributable to reduced demand for microfluidic instruments and COVID-19 testing products.

Product and Service Cost, Product and Service Gross Profit and Product and Service Margin

Cost of product revenue includes manufacturing costs incurred in the production process, including component materials, labor and overhead, installation, packaging, and delivery costs.

In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty, provisions for slow-moving and obsolete inventory, and stock-based compensation expense.

In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty, and provisions for slow-moving and obsolete inventory.

Our cost of product revenue and related product margin may fluctuate depending on the capacity utilization of our manufacturing facilities in response to market conditions and the demand for our products.

Cost of service revenue includes direct labor hours, overhead and instrument parts.

Our cost of service revenue and related service margin may fluctuate depending on the variability in material and labor costs of servicing instruments.

The following table presents our product and service cost, product and service gross profit, and product and service margin for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-over-Year Change

Our cost of service revenue and related service margin may fluctuate depending on the variability of material and labor costs required to service instruments.

The following table presents our product and service cost, product and service gross profit, and product and service margin for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Cost of product revenue $ 12,738 $ 12,730 —% $ 25,077 $ 24,393 3%

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Product and service gross profit $ 3,675 $ 14,657 (75)% $ 15,556 $ 31,918 (51)%

Product and service margin 45.4 % 55.7 % (10.3) ppt

Product and service margin decreased by 10.3 percentage points for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Products introduced in the second half of 2021, which have lower average gross margins, reduced product and service margins by 2.4 percentage points for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Higher inventory reserves and warranty costs contributed 2.2 percentage points and 1.7 percentage points, respectively, to the decline in product and service margins.

Fixed depreciation and amortization costs on a lower revenue base contributed 2.4 percentage points to the decline in product and service margins for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Other factors, including unfavorable product mix from lower COVID-19 consumables sales in the three months ended March 31, 2022 compared to the three months ended March 31, 2021, coupled with the impact of lower plant utilization for mass cytometry products account for the majority of the remaining decline in product and service gross margins for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

Product and service margin 20.4 % 50.1 % (29.7) ppt 35.2 % 53.0 % (17.8) ppt

Product and service margin decreased by 29.7 percentage points for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Increased provisions for excess and obsolete inventory contributed 17.6 percentage points of the decrease in the product and service margin and reflected the impact of the portfolio rationalization discussed in “Recent Developments” above.

Provisions for excess and obsolete inventory were $3.7 million, or 20.8%, of product and service revenue for the three months ended June 30, 2022 compared to $0.9 million, or 3.2%, of product and service revenue for the three months ended June 30, 2021.

Fixed depreciation and amortization costs on a lower revenue base contributed 5.5 percentage points to the decline in the product and service margin, while other factors, including unfavorable product mix from lower COVID-19 consumables sales and the impact of lower plant utilization for mass cytometry products accounted for the majority of the remaining decline in the product and service gross margin for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Product and service margin decreased by 17.8 percentage points for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Higher provisions for excess and obsolete inventory, reflected the impact of the portfolio rationalization discussed above and contributed 8.3 percentage points of the decrease in the product and service margin.

Provisions for excess and obsolete inventory were $4.6 million, or 10.4%, of product and service revenue for the six months ended June 30, 2022 compared to $1.2 million, or 2.1%, of product and service revenue for the six months ended June 30, 2021.

Fixed depreciation and amortization costs on a lower revenue base contributed 3.5 percentage points to the decline in the product and service margin, while other factors, including unfavorable product mix from lower COVID-19 consumables sales coupled with the impact of l ower plant utilization for mass cytometry products accounted for the majority of the remaining decline in the product and service gross margin for the six months ended June 30, 2022 compared to the six months ended June 30, 2021.

Operating Expenses

The following table presents our operating expenses for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-over-Year Change

The following table presents our operating expenses for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Research and development $ 12,606 $ 9,441 34% $ 21,471 $ 20,194 6%

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Our research and development efforts have focused primarily on enhancing our technologies and supporting development and commercialization of new and existing products and services.

Research and development expense also includes costs incurred in conjunction with research grants and development arrangements.

Research and development expense also includes costs incurred in conjunction with research grants and product development arrangements.

We have made substantial investments in research and development since our inception and expect to continue to do so.

Research and development expense decreased by $1.9 million, or 18%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 as the year-ago period includes development costs related to products that were launched in the second half of 2021.

Research and development expense increased by $3.2 million, or 34%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

Research and development costs for the three months ended June 30, 2022 included $3.5 million of an impairment charge on certain developmental technology intangibles and $0.4 million for retention bonuses.

These increases were partially offset by $1.0 million of lower laboratory supplies and consulting costs.

The impairment charge reflected the decision to discontinue certain product lines supported by the InstruNor developed technology intangible, while lower l aboratory supplies and consulting costs were due to products launched in the second half of 2021 as well as less project activity.

Research and development expense increased by $1.3 million, or 6%, for the six months ended June 30, 2022 compared to the six months ended June 30, 2021 primarily due to the $3.5 million impairment charge described above, and partially offset by a decrease of $2.3 million in laboratory supplies and consulting costs due to less project activity.

Selling, General and Administrative

Selling, general and administrative expense consists primarily of personnel costs for our sales and marketing, business development, finance, legal, human resources, information technology and general management, as well as professional services, such as legal and accounting services.

Selling, general and administrative expense increased by $3.3 million, or 12%, for the three months ended March 31, 2022 compared to the three months ended March 31, 2021.

The increase was primarily due to $3.4 million of costs associated with the Private Placement Issuance, and $1.2 million of severance costs for our former CEO.

Litigation costs decreased by $1.1 million due to the resolution of patent infringement claims.

Selling, general and administrative expenses for the rest of 2022 will be negatively impacted by costs associated with approximately $5.0 million of cash retention bonuses and approximately $2.9 million of stock-based compensation that will pay out over the next year through the first quarter of 2023.

Selling, general and administrative expense increased by $6.1 million, or 25%, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The increase included $2.7 million in retention bonuses and higher severance costs.

Stock-based compensation and salaries increased by $0.9 million and $0.3 million, respectively, for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, reflecting the impact of new management hires.

Legal and consulting fees increased by $1.0 million, reflecting costs associated with the name change and rebranding activities.

Travel expenses increased by $0.8 million as COVID-19 related travel restrictions eased and sites visits by senior management increased.

Selling, general and administrative expense increased by $9.4 million, or 18%, for the six months ended June 30, 2022, compared to the six months ended June 30, 2021.

The increase included $4.2 million in severance and retention bonuses.

Legal and consulting fees increased by $2.8 million, reflecting the costs of the Private Placement Issuance, as well as costs associated with the name change and rebranding activities.

Stock-based compensation increased $1.1 million due to equity grants to the new management team and first quarter 2022 retention grants to existing employees, partially offset by the impact of forfeited equity awards by former employees.

Travel expenses increased by $1.0 million as COVID travel restrictions eased and site visits by senior management increased.

Interest Expense and Other Non-Operating Items

The following table presents these items for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31, Year-over-Year Change

The following table presents these items for the three and six months ended June 30, 2022 and 2021 (in thousands):

Three Months Ended June 30, Year-over-Year Change Six Months Ended June 30, Year-over-Year Change

2022 2021 2022 2021

Interest expense $ (1,062) $ (896) 19% $ (2,092) $ (1,783) 17%

Loss on forward sale of Series B Preferred Stock (37,792) — NA

Unrealized loss on bridge loans (10,655) — NA

Loss on forward sale of Series B Preferred Stock (22,289) — NA (60,081) — NA

Loss on bridge loans (3,064) — NA (13,719) — NA

Other income (expense), net (174) 504 (135)% (56) 219 (126)%

Total $ (49,359) $ (1,172) 4112 %

I nterest expense i s comprised primarily of interest on our convertible debt and Term Loan Facility.

The increase in interest expense for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 is due primarily to our Term Loan Facility.

The Purchase Agreements, which promised to exchange 225,000 shares of Series B Preferred Stock for $225 million at a future date, accounted for as forward sales contracts at fair value in accordance with ASC 480 because the Series B Preferred Stock includes certain contingent redemption features which created an obligation for the Company to repurchase its shares.

The fair value of the forward sales contracts was determined using a Monte Carlo Simulation (MCS) analysis.

Given the convertibility of the Series B Preferred Stock into cash or our common stock under several scenarios, the MCS analysis simulated the value of the Series B Preferred Stock under numerous scenarios, reflecting the impact of the various conversion and redemption provisions of the Series B Preferred Stock.

The fair value of 225,000 shares of Series B Preferred Stock was $262.8 million as of March 31, 2022.

The increase in the fair value of the Series B Preferred Stock from January 23, 2022 to March 31, 2022 reflects the increase in the price of our common stock price since the inception of the contracts and the change in the value of the various conversion rights and key provisions discussed below.

The loss of $37.8 million on the forward sale of the Series B Preferred Stock represents the difference between the fair value of the Series B Preferred Stock of $262.8 million and the $225.0 million of cash to be received.

Applying the guidance in ASC 825 to the Bridge Loans, we have elected to record the Bridge Loans at their fair value, given the short period of time in which the Bridge Loans were expected to be outstanding.

The Unrealized Loss on the Bridge Loans reflects the entire change in the value of the Bridge Loans as a single line item on the condensed consolidated statement of operations, including the portion attributable to accrued interest.

Accordingly, we have recognized no interest expense on the Bridge Loans for the three months ended March 31, 2022.

The fair value of the Bridge Loans is largely driven by the value of our common stock and the value of the Series B Preferred Stock into which they were converted.

The Unrealized Loss on the Bridge Loans of $10.7 million was largely driven by an increase in the value in the price of our common stock from $2.84 per share at inception to $3.59 per share as of March 31, 2022 and, to a lesser extent, by the impact of the change in value of the various conversion options of the Series B Preferred Stock.

Total $ (26,589) $ (392) NA $ (75,948) $ (1,564) NA

I nterest expense is primarily comprised of interest on our convertible debt and our Term Loan Facility.

The increase in interest expense for the three months ended and six months ended June 30, 2022 compared to the same periods in the prior year is due primarily to our Term Loan Facility, which began on August 1, 2021.

The Purchase Agreements for the issuance of 225,000 shares of Series B Preferred Stock for $225 million at a future date were accounted for as forward sales contracts at fair value in accordance with ASC 480 Distinguishing Liabilities from Equities.

The fair value of the payable portion of the Purchase Agreements for 225,000 shares of Series B Preferred Stock was determined to be $262.8 million as of March 31, 2022 and $285.1 million as of April 4, 2022.

The $22.3 million increase in the fair value of the Series B Preferred Stock for the three months ended June 30, 2022 was included in the loss on forward sale of Series B Preferred Stock.

The loss was primarily due to the increase in our common share price from $3.59 per share on March 31, 2022 to $3.99 per share on April 4, 2022.

The $61.3 million loss on forward sales of Series B Preferred Stock for the six months ended June 30, 2022 reflected the increase in the price per share of our common stock from $2.84 at the inception of the contracts to $3.99 per share value as of April 4, 2022.

Applying the guidance in ASC 825 Financial Instruments, we elected to record the Bridge Loans at their fair value.

The change in fair value of the Bridge Loans from inception to conversion on April 4, 2022 was included as loss on bridge loans.

The fair value of the Bridge Loans was largely driven by the value of our common stock and the value of the Series B Preferred Stock into which they were converted.

The loss on the bridge loans of $3.1 million and $13.7 million for the three months ended and six months ended June 30, 2022, respectively, was largely driven by an increase in the value in the price of our common stock over those time periods.

Income Tax Benefit

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Depending on the relative value of these components, we can have either a tax benefit or expense for any given period.

We recorded a tax benefit of $0.6 million, or an effective tax rate of 0.7%, for the three months ended March 31, 2022.

In the three months ended March 31, 2021, we recorded a tax benefit of $1.7 million, or an effective tax rate of 8.2%.

Lower losses in certain of our foreign operations in the quarter ended March 31, 2022 compared to the quarter ended March 31, 2021 resulted in a lower tax benefit for our foreign operations for the three months ended March 31, 2022.

We recorded a tax benefit of $1.6 million, or an effective tax rate of 2.5%, for the three months ended June 30, 2022.

In the three months ended June 30, 2021, we recorded a tax benefit of $0.5 million, or an effective tax rate of 2.9%.

Higher losses in certain of our foreign operations in the quarter ended June 30, 2022 compared to the quarter ended June 30, 2021 resulted in a higher tax benefit for our foreign operations for the three months ended June 30, 2022.

For the six months ended June 30, 2022, we recorded a tax benefit of $2.2 million, resulting in an effective tax rate of 1.5%.

For the six months ended June 30, 2021, we recorded a tax benefit of $2.2 million, resulting in an effective rate of 5.7%.

While the tax benefit was approximately the same for the six months ended June 30, 2022 compared to the same period the previous year, the lower effective tax rate is due to higher pre-tax losses.

Liquidity and Capital Resources

Sources of Liquidity

As of March 31, 2022, our principal sources of liquidity consisted of $30.0 million of cash and cash equivalents, as well as $1.0 million of restricted cash and $8.4 million of availability under the Revolving Credit Facility.

The following table presents our cash flow summary for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended March 31,

As of June 30, 2022, our principal sources of liquidity consisted of $74.4 million of cash and cash equivalents, $136.9 million of short-term investments and $1.0 million of restricted cash, as well as $8.1 million of availability under the Revolving Credit Facility.

The following table presents our cash flow summary for the six months ended June 30, 2022 and 2021 (in thousands):

Six Months Ended June 30,

Cash flow summary:

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We have additional obligations as part of our ordinary course of business, beyond those committed for capital expenditures and other purchase obligations and commitments for purchases of goods and services.

For example, see Note 3 and Note 9 within our condensed consolidated financial statements for information about our short-term and long-term debt obligations and the Private Placement Issuance.

See Note 3 within our condensed consolidated financial statements included elsewhere in this Form 10-Q for information on our contingent obligations as a result of our issuance of Series B Preferred Stock.

See Note 8 within our condensed consolidated financial statements for information about our short-term and long-term debt obligations.

See Note 9 within our condensed consolidated financial statements for information about our lease obligations and see Note 15 within our condensed consolidated financial statements included elsewhere in this Form 10-Q for information about our various contractual and legally binding purchase commitments to purchase goods and services.

Other than as disclosed above, there have been no material changes during the three months ended March 31, 2022 to our contractual obligations disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, 2021.

Other than as disclosed above, there have been no material changes during the six months ended June 30, 2022 to our contractual obligations disclosed in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the year ended December 31, 2021.

The expected timing of payments of our obligations is estimated based on current information.

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In addition, some of our purchasing requirements are not current obligations and are therefore not included in the amounts above.

For example, some of these requirements are not handled through binding contracts or are fulfilled by vendors on a purchase order basis within short time horizons.

For example, some of these requirements are not managed through binding contracts or are fulfilled by vendors on a purchase order basis within short time horizons.

Net Cash Used in Operating Activities

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We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure domestically and internationally.

Net cash used in operating activities for the three months ended March 31, 2022 was $15.6 million and consisted of net loss of $76.3 million, less non-cash items of $57.6 million and cash provided by assets and liabilities, net, of $3.1 million.

Non-cash items included a loss on forward sale of Series B Preferred Stock of $37.8 million , an unrealized loss on the Bridge Loans of $10.7 million, st ock-based compensation expense of $4.0 million, amortization of developed technology of $3.0 million, depreciation and amortization of $1.0 million, provision for excess and obsolete inventory of $0.9 million, and a variety of smaller items.

The net decrease in assets and liabilities was primarily attributable to a $3.0 million increase of accrued compensation and related benefits due to an increase in severance and retention bonuses, a reduction of accounts receivable, net of $2.9 million, and an increase of accounts payable of $1.9 million.

These decreases were partially offset by an increase in inventories, net of $3.6 million, and a decrease of other liabilities of $1.3 million.

Net cash used in operating activities for the six months ended June 30, 2022 was $45.6 million and consisted of net loss of $139.8 million, less non-cash items of $99.0 million and cash used by assets and liabilities, net, of $4.8 million.

Non-cash items included a loss on forward sale of Series B Preferred Stock of $60.1 million , a loss on Bridge Loans of $13.7 million, st ock-based compensation expense of $8.7 million, amortization of developed technology of $5.9 million, depreciation and amortization of $1.9 million, provision for excess and obsolete inventory of $4.6 million and an impairment of an intangible of $3.5 million.

The net increase in assets and liabilities was primarily attributable to an increase in inventories, net of $6.5 million, a decrease of other liabilities of $4.6 million, a decrease of accounts payable of $1.7 million, a decrease of deferred revenue of $1.6 million, and an increase in prepaid expenses and other assets of $1.3 million.

These items were partially offset by a reduction of accounts receivable, net of $7.3 million, and a $3.6 million increase of accrued compensation and related benefits primarily due to an increase in severance and retention bonuses.

Net cash used in operating activities for the six months ended June 30, 2021 was $27.6 million and consisted of net loss of $36.0 million, adjusted for non-cash items of $17.0 million and cash used by assets and liabilities, net, of $8.6 million.

Non-cash items included stock-based compensation expense of $7.4 million, amortization of developed technology of $6.0 million, depreciation and amortization of $1.9 million, provisions for excess and obsolete inventory of $1.2 million, and a variety of smaller items.

The cash used by assets and liabilities, net was primarily driven by an increase of inventories, net of $7.5 million a reduction of accrued compensation and related benefits of $5.4 million due primarily to bonus payments in the first quarter of 2021, a reduction of other liabilities of $3.9 million, an increase in prepaid expenses and other assets of $2.6 million and an increase in deferred revenue of $0.6 million.

These uses of funds were partially offset by a decrease in accounts receivable, net, of $9.4 million, and an increase in accounts payable of $1.9 million, Also included in net cash from operating activities was $3.5 million of funding from the NIH Contract.

Net Cash Used in Investing Activities

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However, we may choose to decrease or defer certain capital expenditures and development activities, while further optimizing our organization.

Net cash used in investing activities for the three months ended March 31, 2022 was $0.9 million.

Capital expenditures of $0.9 million were incurred primarily to expand our microfluidics IFC production capacity in Singapore related to the NIH Contract.

Net cash used in investing activities for the six months ended June 30, 2022 was $139.1 million, which was primarily due to purchases of short-term investments of $137.3 million and capital expenditures of $1.8 million.

The $9.1 million of net cash used in investing activities during the six months ended June 30, 2021 was primarily related to the expansion our IFC manufacturing capacity in Singapore under the NIH Contract.

During the first six months of 2021,cash expenditures for manufacturing and plant assets totaled $11.1 million, while cash receipts from the contract earmarked to fund capital expenditures totaled $2.0 million.

Net Cash Provided by (Used in) Financing Activities

Net cash provided by financing activities totaled $18.1 million during the three months ended March 31, 2022.

The principal source of cash was proceeds from the $25.0 million Bridge Loans, which occurred as part of the Private Placement Issuance.

This was partially offset by repayments of $6.8 million of advances under the Revolving Credit Facility.

Net cash provided by financing activities totaled $231.0 million during the six months ended June 30, 2022.

The principal sources of cash were proceeds from issuance of Series B Preferred Stock of $225.0 million, and proceeds from Bridge Loans of $25.0 million, which were subsequently converted into Series B Preferred Stock on April 4, 2022.

These proceeds were also partially offset by a $12.5 million payment for e qui ty issuance costs on the Series B Preferred Stock and a repayment of $6.8 million of advances under the Revolving Credit Facility.

Net cash used in financing activities totaled $1.2 million during the six months ended June 30, 2021.

The amount included $0.5 million for the repurchase of our 2014 Notes and $1.6 million of withholding tax payments for net share settlements of equity awards, The payments were partially offset by $0.7 million of receipts from the sale of ESPP shares and $0.2 million of receipts from the exercise of stock options.

Capital Resources

At March 31, 2022 and December 31, 2021, our working capital, excluding deferred revenues, current and deferred grant income, current, and restricted cash, was $41.9 million and $38.0 million, respectively, including cash and cash equivalents of $30.0 million and $28.5 million, respectively.

We had no investments as of March 31, 2022 and December 31, 2021.

In February 2014, we closed an underwritten public offering of our 2014 Notes.

Pursuant to the Indenture governing the 2014 Notes, holders of the 2014 Notes have the right, subject to certain conditions specified in such indenture, to require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2024 and February 6, 2029, at a repurchase price in cash equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest.

On February 6, 2021, holders of $0.5 million of the 2014 Notes caused us to repurchase their notes in accordance with this provision leaving $0.6 million of 2014 Notes outstanding as of March 31, 2022.

At June 30, 2022 and December 31, 2021, our working capital, excluding deferred revenues, current and deferred grant income, current, and restricted cash, was $223.2 million and $38.0 million, respectively, including cash and cash equivalents of $74.4 million and $28.5 million, respectively.

We had $136.9 million short-term investments as of June 30, 2022 and no short-term investments as of December 31, 2021.

See Recent Developments - Business Update for additional information regarding our restructuring plans.

In November 2019, we closed a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of $55.0 million aggregate principal amount of our 2019 Notes.

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On or after December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 130% of the Conversion Price then in effect for a specified number of days, we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company, determined in accordance with the terms of the indenture.

The foregoing summaries of the 2014 Notes and the 2019 Notes are not complete and are qualified in their entirety by the applicable indentures, forms of global notes, and other agreements and documents filed with the SEC.

The foregoing summary of the 2019 Notes are not complete and are qualified in their entirety by the applicable indentures, forms of global notes, and other agreements and documents filed with the SEC.

On August 2, 2018, we entered into a Loan and Security Agreement with SVB (the Credit Agreement) for our Revolving Credit Facility, which provides for secured revolving loans in an aggregate amount of up to $15.0 million, In August 2021, we amended our 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 collateralized by substantially all our property, other than intellectual property.

Facility is collateralized by substantially all our property, other than intellectual property.

The maturity date of the Term Loan Facility is July 1, 2025, subject to the following condition:

in the event the principal amount of our convertible debt exceeds $0.6 million as o f June 1, 2024 or if the maturity date of our 2019 Notes has not been extended beyond January 1, 2026 by that date, then the maturity date of the Term Loan Facility will be June 1, 2024.

As of March 31, 2022, the balance outstanding on the Term Loan Facility was $10.1 million .

As of June 30, 2022, the balance outstanding on the Term Loan Facility was $10.2 million .

Interest on the term loan accrues on the outstanding principal amount thereof at the greater of (i) a floating per annum rate equal to three quarters of one percentage point (0.75%) above the prime rate (as customarily defined), or 4% with a final payment equal to 6.5% of the aggregate original principal amounts of each term loan advance due on the earlier of the maturity date of the Term Loan Facility, the acceleration of the term loan advances or any prepayment of a term loan advance.

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The Amendment also added a financial covenant to the Credit Facility, requiring us to maintain a minimum Adjusted Quick Ratio (as defined) of at least 1.25 to 1.00.

As of March 31, 2022, tota l availability under the Revolving Credit Facility was $8.4 million.

We currently have no outstanding debt under the Revolving Credit Facility, and we are in compliance with all the terms and conditions of the Revolving Credit Facility as of March 31, 2022.

As of June 30, 2022, tota l availability unde r the Revolving Credit Facility was $8.1 million.

We currently have no outstanding debt under the Revolving Credit Facility, and we are in compliance with all the terms and conditions of the Revolving Credit Facility as of June 30, 2022.

See Note 8 to our condensed consolidated financial statements for more information about the Revolving Credit Facility and Term Loan Facility.

On January 23, 2022, we entered into $25 million of Bridge Loans Agreements with Casdin and Viking.

On April 4, 2022, we completed the Private Placement Issuance, receiving $225 million of funding in exchange for the issuance of 225,000 shares of Series B Preferred Stock.

The Bridge Loans also automatically converted into 30,559 shares of Series B Preferred Stock on April 4, 2022.

On April 4, 2022, we completed the Private Placement Issuance, issuing 255,559 shares of Series B Preferred Stock.

The rights, preferences and privileges of the Series B Preferred Stock are set forth in the Series B-1 Certificate of Designations and Series B-2 Certificate of Designations.

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In the event of a change of control in which we are anticipated to merge with another person and will not be the surviving corporation or if the Common Stock will no longer be listed on a U.S.

national securities exchange, we will have a right to redeem, subject to the holder’s right to convert into Common Stock prior to such redemption, all of such holder’s shares of Series B Preferred Stock, or if a holder exercises the Change of Control Put in part, the remainder of such holder’s shares of

Series B Preferred Stock, at a redemption price per share payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series B Preferred Stock, and (B) the amount of cash and/or other assets that the holder would have received if such holder had converted such share of Series B Preferred Stock into Common Stock immediately prior to the change of control transaction.

national securities exchange, we will have a right to redeem, subject to the holder’s right to convert into Common Stock prior to such redemption, all of such holder’s shares of

Series B Preferred Stock, or if a holder exercises the Change of Control Put in part, the remainder of such holder’s shares of Series B Preferred Stock, at a redemption price per share payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series B Preferred Stock, and (B) the amount of cash and/or other assets that the holder would have received if such holder had converted such share of Series B Preferred Stock into Common Stock immediately prior to the change of control transaction.

Liquidation Rights

In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Series B Preferred Stock has a liquidation preference equal to the greater of (i) the Liquidation Preference (as defined in the Certificate of Designations, currently $3.40) and (ii) the amount per share of Series B Preferred Stock that such holder would have received had all holders of Series B Preferred Stock, immediately prior to such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, converted all shares of Series B Preferred Stock into Common Stock pursuant to the terms of the Series B Certificates of Designations (without regard to any limitations on conversion contained therein).

We believe our existing cash, cash equivalents, and investments, along with funding available from Private Placement Issuance and the Revolving Credit Facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

We believe our existing cash, cash equivalents, and short-term investments, along with funding available under the Revolving Credit Facility, will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis