STANDARD BIOTOOLS INC. 10-Q

Item 1. Financial Statements STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) (Unaudited) June 30, December 31, 2022 2021 ASSETS Current assets: Cash and cash equivalents $ 74,361 $ 28,451 Short-term investments 136,850 — Accounts receivable (net of allowances of $ 545 and $ 356 at June 30, 2022 and December 31, 2021, respectively) 10,937 18,320 Inventories, net 22,791 20,825 Prepaid expenses and other current assets 5,938 4,470 Total current assets 250,877 72,066 Property and equipment, net 27,275 28,034 Operating lease right-of-use asset, net 35,412 37,119 Other non-current assets 3,158 3,689 Developed technology, net 18,200 27,927 Goodwill 106,200 106,379 Total assets $ 441,122 $ 275,214 LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable $ 9,016 $ 10,602 Accrued compensation and related benefits 8,576 4,920 Operating lease liabilities, current 3,293 3,053 Deferred revenue, current 11,409 11,947 Deferred grant income, current 3,729 3,535 Other accrued liabilities 6,747 8,673 Advances under revolving credit agreement, current — 6,838 Total current liabilities 42,770 49,568 Convertible notes, net 54,384 54,160 Term loan, net 10,162 10,049 Deferred tax liability 1,651 4,329 Operating lease liabilities, non-current 35,732 37,548 Deferred revenue, non-current 5,064 5,966 Deferred grant income, non-current 16,263 18,116 Other non-current liabilities 1,297 882 Total liabilities 167,323 180,618 Commitments and contingencies (Note 15) Redeemable preferred stock: $ 0.001 par value; 256 and — shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively; aggregate liquidation preference of $ 255,559 and $ — as of June 30, 2022 and December 31, 2021, respectively 311,253 — Stockholders’ equity (deficit): Preferred stock: $ 0.001 par value, 9,744 and 10,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; no shares issued and outstanding at either June 30, 2022 or December 31, 2021 — — Common stock: $ 0.001 par value, 400,000 and 200,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; 78,654 and 76,919 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 79 77 Additional paid-in capital 840,545 831,424 Accumulated other comprehensive loss ( 2,253 ) ( 907 ) Accumulated deficit ( 875,825 ) ( 735,998 ) 1 Total stockholders’ equity (deficit) ( 37,454 ) 94,596 Total liabilities, mezzanine equity and stockholders’ equity (deficit) $ 441,122 $ 275,214 See accompanying notes 2 STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Revenue Product revenue $ 12,219 $ 22,627 $ 32,223 $ 47,355 Service revenue 5,806 6,627 11,950 12,913 Development revenue 356 850 444 2,330 Other revenue 396 914 664 1,214 Total revenue 18,777 31,018 45,281 63,812 Costs and expenses Cost of product revenue 12,738 12,730 25,077 24,393 Cost of service revenue 1,612 1,867 3,540 3,957 Research and development 12,606 9,441 21,471 20,194 Selling, general and administrative 30,384 24,248 61,259 51,856 Total costs and expenses 57,340 48,286 111,347 100,400 Loss from operations ( 38,563 ) ( 17,268 ) ( 66,066 ) ( 36,588 ) Interest expense ( 1,062 ) ( 896 ) ( 2,092 ) ( 1,783 ) Loss on forward sale of Series B Preferred Stock ( 22,289 ) — ( 60,081 ) — Loss on bridge loans ( 3,064 ) — ( 13,719 ) — Other income (expense), net ( 174 ) 504 ( 56 ) 219 Loss before income taxes ( 65,152 ) ( 17,660 ) ( 142,014 ) ( 38,152 ) Income tax benefit 1,613 517 2,187 2,188 Net loss $ ( 63,539 ) $ ( 17,143 ) $ ( 139,827 ) $ ( 35,964 ) Net loss per share, basic and diluted $ ( 0.82 ) $ ( 0.23 ) $ ( 1.81 ) $ ( 0.48 ) Shares used in computing net loss per share, basic and diluted 77,821 75,452 77,430 75,084 See accompanying notes 3 STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (In thousands) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Net loss $ ( 63,539 ) $ ( 17,143 ) $ ( 139,827 ) $ ( 35,964 ) Other comprehensive income (loss), net of tax: Foreign currency translation adjustment ( 485 ) 47 ( 635 ) ( 396 ) Net change in unrealized gain (loss) on investments ( 711 ) — ( 711 ) — Other comprehensive income (loss), net of tax ( 1,196 ) 47 ( 1,346 ) ( 396 ) Comprehensive loss $ ( 64,735 ) $ ( 17,096 ) $ ( 141,173 ) $ ( 36,360 ) See accompanying notes 4 STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (In thousands) (Unaudited) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity (Deficit) Shares Amount Balance as of December 31, 2021 76,919 $ 77 $ 831,424 $ ( 907 ) $ ( 735,998 ) $ 94,596 Issuance of restricted stock, net of shares withheld for taxes, and other 278 — ( 89 ) — — ( 89 ) Issuance of common stock from option exercises 2 — 2 — — 2 Stock-based compensation expense — — 4,042 — — 4,042 Net loss — — — — ( 76,288 ) ( 76,288 ) Other comprehensive loss, net of tax — — — ( 150 ) — ( 150 ) Balance as of March 31, 2022 77,199 $ 77 $ 835,379 $ ( 1,057 ) $ ( 812,286 ) $ 22,113 Issuance of restricted stock, net of shares withheld for taxes, and other 1,119 1 ( 89 ) — — ( 88 ) Issuance of common stock under ESPP 309 1 496 — — 497 Issuance of common stock from option exercises 27 — 96 — — 96 Stock-based compensation expense — — 4,663 — — 4,663 Net loss — — — — ( 63,539 ) ( 63,539 ) Other comprehensive loss, net of tax — — — ( 1,196 ) — ( 1,196 ) Balance as of June 30, 2022 78,654 $ 79 $ 840,545 $ ( 2,253 ) $ ( 875,825 ) $ ( 37,454 ) Common Stock Additional Paid-in Capital Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders’ Equity Shares Amount Balance as of December 31, 2020 74,543 $ 75 $ 815,624 $ 112 $ ( 676,761 ) $ 139,050 Issuance of restricted stock, net of shares withheld for taxes, and other 420 — ( 525 ) — — ( 525 ) Stock-based compensation expense — — 3,677 — — 3,677 Net loss — — — — ( 18,821 ) ( 18,821 ) Other comprehensive loss, net of tax — — — ( 443 ) — ( 443 ) Balance as of March 31, 2021 74,963 $ 75 $ 818,776 $ ( 331 ) $ ( 695,582 ) $ 122,938 Issuance of restricted stock, net of shares withheld for taxes, and other 1,028 1 ( 1,028 ) — — ( 1,027 ) Issuance of common stock under ESPP 139 — 685 — — 685 Issuance of common stock from option exercises 36 — 209 — — 209 Stock-based compensation expense — — 3,741 — — 3,741 Net loss — — — — ( 17,143 ) ( 17,143 ) Other comprehensive loss, net of tax — — — 47 — 47 Balance as of June 30, 2021 76,166 $ 76 $ 822,383 $ ( 284 ) $ ( 712,725 ) $ 109,450 See accompanying notes 5 STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Operating activities Net loss $ ( 139,827 ) $ ( 35,964 ) Adjustments to reconcile net loss to net cash used in operating activities: Loss on forward sale of Series B Preferred Stock 60,081 — Loss on bridge loans 13,719 — Stock-based compensation expense 8,705 7,418 Amortization of developed technology 5,928 5,965 Depreciation and amortization 1,878 1,851 Provision for excess and obsolete inventory 4,597 1,248 Impairment of intangible 3,526 — Amortization of debt discounts, premiums and issuance costs 423 211 Other non-cash items 176 328 Changes in assets and liabilities: Accounts receivable, net 7,277 9,419 Inventories, net ( 6,484 ) ( 7,489 ) Prepaid expenses and other assets ( 1,304 ) ( 2,593 ) Accounts payable ( 1,712 ) 1,903 Accrued compensation and related benefits 3,598 ( 5,359 ) Deferred revenue ( 1,557 ) ( 619 ) Other liabilities ( 4,602 ) ( 3,884 ) Net cash used in operating activities ( 45,578 ) ( 27,565 ) Investing activities Purchases of investments ( 137,302 ) — Proceeds from NIH Contract — 2,000 Purchases of property and equipment ( 1,806 ) ( 11,095 ) Net cash used in investing activities ( 139,108 ) ( 9,095 ) Financing activities Proceeds from bridge loans 25,000 — Proceeds from issuance of Series B Preferred Stock 225,000 — Repayment of advances under credit agreement ( 6,838 ) — Repayment of long-term debt — ( 501 ) Payment of equity issuance costs ( 12,547 ) — Proceeds from exercise of stock options 98 209 Proceeds from stock issuance of ESPP 497 685 Payments for taxes related to net share settlement of equity awards and other ( 177 ) ( 1,552 ) Net cash provided by (used in) financing activities 231,033 ( 1,159 ) Effect of foreign exchange rate fluctuations on cash and cash equivalents ( 437 ) 162 Net increase (decrease) in cash, cash equivalents and restricted cash 45,910 ( 37,657 ) Cash, cash equivalents and restricted cash at beginning of period 29,467 69,536 Cash, cash equivalents and restricted cash at end of period $ 75,377 $ 31,879 Supplemental disclosures of cash flow information Cash paid for interest $ 1,679 $ 1,520 Cash paid for income taxes, net of refunds $ 638 $ 1,418 Asset retirement obligations $ 717 $ 703 See accompan ying notes 6 STANDARD BIOTOOLS INC. (formerly known as FLUIDIGM CORPORATION) NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2022 1. Description of Business Standard BioTools Inc. (Standard BioTools, the Company, we, our or us) 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. Standard BioTools works 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. The Company, formerly known as Fluidigm Corporation, changed its name to Standard BioTools Inc. in April 2022, in connection with the completion of the Private Placement Issuance discussed in Note 3. The Company was founded in 1999 and is headquartered in South San Francisco, California. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of June 30, 2022, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated upon consolidation. In the audited 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. We subsequently closed the $ 225 million Series B Preferred Equity Financing, as defined in Note 3. The completion of this financing eliminated the doubt about the Company’s ability to continue as a going concern. See Note 3 for further discussion. Certain prior period amounts in the condensed consolidated financial statements were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss. Unaudited Interim Financial Information The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented. The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated results of operations for the three and six months ended June 30, 2022 is not necessarily indicative of the results to be expected for the full year or for any other year or interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the audited 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. Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates on historical experience, the current economic environment and on various other assumptions believed to 7 be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. 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 assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 and the war in Ukraine. Accounting matters that rely on forecasted financial information included, but were not limited to, our inventory, and related reserves, and the carrying value of goodwill and other long-lived assets and liabilities. Actual results could differ materially from these estimates and could have a material adverse effect on our condensed consolidated financial statements. We also use significant judgment in determining the fair value of financial instruments, including debt and equity instruments. Foreign Currency Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense accounts are translated at monthly average exchange rates during the year. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity. Private Placement Issuance See Note 3 for a detailed discussion of the transactions, including the accounting treatment, and additional information. Comprehensive Loss Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) generally consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss. The components of accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2022 are as follows (in thousands): Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Investments Accumulated Other Comprehensive Income (Loss) Ending balance at December 31, 2021 $ ( 907 ) $ — $ ( 907 ) Other comprehensive income (loss) ( 150 ) — ( 150 ) Ending balance at March 31, 2022 $ ( 1,057 ) $ — $ ( 1,057 ) Other comprehensive income (loss) ( 485 ) ( 711 ) ( 1,196 ) Ending balance at June 30, 2022 $ ( 1,542 ) $ ( 711 ) $ ( 2,253 ) Net Loss per Share Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period. 8 The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands): Six Months Ended June 30, 2022 2021 Stock options, restricted stock units and performance awards 14,955 7,944 Series B Preferred Stock 75,164 — 2019 Convertible Notes 18,966 18,966 2019 Convertible Notes potential make-whole shares 4,741 809 2014 Convertible Notes 10 10 Total 113,836 27,729 Potentially dilutive securities in the above table include the impact of the Series B Preferred Stock defined in Note 3. See Note 3 for further discussion. Recent Accounting Changes and Accounti ng Pronouncements Adoption of New Accounting Guidance In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not have an impact on our 2014 and 2019 Convertible Notes. In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendment is effective for annual periods beginning after December 15, 2021. The amendment establishes financial disclosure requirements for business entities that receive government assistance that the entities account for by analogizing to a grant or contribution model because there is no specific authoritative guidance under U.S. GAAP that applies to the transaction. Entities that receive this type of assistance should include the following information in their annual report: (1) the nature of the transaction, (2) the significant terms and conditions, (3) the accounting treatment, (4) the line items on the balance sheet and income statement that are affected along with (5) the respective amounts that have been recorded. We adopted ASU 2021-10 effective January 1, 2022. The adoption of ASU 2021-10 did not have a material impact on our financial statements. Recent Accounting Pronouncements None. 3. Private Placement Issuance Overview of Transactions On January 23, 2022, we entered into (i) a Loan Agreement (the Casdin Bridge Loan Agreement) with Casdin Private Growth Equity Fund II, L.P. and Casdin Partners Master Fund, L.P. (collectively, Casdin) and (ii) a Loan Agreement (the Viking Bridge Loan Agreement, and together with the Casdin Bridge Loan Agreement, the Bridge Loan Agreements) with Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers and each, a Purchaser). Each Bridge Loan Agreement provided for a $ 12.5 million term loan (the Bridge Loans) to the Company. The Bridge Loans were fully drawn on January 24, 2022. The Bridge Loans automatically converted into Series B Preferred Stock, defined below, upon the completion of the Preferred Equity Financ ing, defined below. Also on January 23, 2022, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements) with each of Casdin and Viking pursuant to which 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: (i) 112,500 shares of the Company’s Series B-1 Convertible Preferred Stock, par value $ 0.001 per share (the Series B-1 Preferred Stock), at a purchase price of $ 1,000 per share to Casdin; and (ii) 112,500 shares of the Company’s Series B-2 Convertible Preferred Stock, par value 9 $ 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 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 (collectively, the Series B Certificates of Designations), each as defined in the respective Purchase Agreements. The Series B Preferred Stock ranks senior to our common stock with respect to dividend rights, redemption rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The holders of Series B Preferred Stock are entitled to participate in all dividends declared on our common stock on an as-converted basis, on the terms and subject to the conditions set forth in the Series B Certificates of Designations. 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 our 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, 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 the Company’s name to Standard BioTools Inc. (the Charter Amendment Proposal); (ii) a proposal to approve, in accordance with Nasdaq Listing Rule 5635, the issuance of (A) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock pursuant to the Purchase Agreements, (B) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock issuable pursuant to the terms of the Bridge Loan Agreements and (C) the common stock issuable upon the conversion of the Series B Preferred Stock (the Private Placement Issuance Proposal); and (iii) a proposal to adjourn the Special Meeting if the Special Meeting were convened and a quorum were present, but there were not sufficient votes to approve the Charter Amendment Proposal and the Private Placement Issuance Proposal (the Adjournment Proposal, and, together with the Private Placement Issuance Proposal and the Charter Amendment Proposal, the Stockholder Proposals). Each of the Private Placement Issuance Proposal and Charter Amendment Proposal were conditioned on the approval of the other proposal, and neither proposal would take effect unless both were approved by our stockholders. Our stockholders approved the Charter Amendment Proposal and Private Placement Issuance Proposal on April 1, 2022. The Private Placement Issuance closed on April 4, 2022. Upon closing, 225,000 shares of Series B Preferred Stock were issued in accordance with the Purchase Agreements and the Bridge Loans converted into 30,559 shares of Series B Preferred Stock, for a total of 255,559 shares of Series B Preferred Stock. The proceeds of the Private Placement Issuance have been and will be used to fund 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. Series B Redeemable Preferred Stock Preferred stock is classified as debt, equity or mezzanine equity based on its redemption features. Preferred stock with redemption features outside of the control of the issuer, such as contingent redemption features, is classified as mezzanine equity. We recorded the Series B Preferred Stock as mezzanine equity at its fair value upon issuance, net of any issuance costs, on the condensed consolidated balance sheet as of June 30, 2022 because it had features, such as change of control and liquidation preference, which are outside of the issuer’s control. Subsequent adjustment of the amount presented within mezzanine equity to its redemption amount is unnecessary as it is not probable that the instrument will become redeemable. Upon closing, the value of the Bridge Loans and the Purchase Agreements, discussed in detail below, were reclassified and included in the carrying value of the Series B Redeemable Preferred Stock. The carrying value of the Series B Redeemable Preferred Stock as of April 4, 2022 was $ 311.3 million and was unchanged as of June 30, 2022. The components of the carrying value of the Series B Redeemable Preferred Stock are as follows (in thousands): June 30, 2022 Proceeds from Purchase Agreements $ 225,000 Proceeds from Bridge Loans 25,000 Loss on Forward Purchase Agreements 60,081 Loss on Bridge Loans 13,719 Less equity issuance costs ( 12,547 ) Total Series B Redeemable Preferred Stock $ 311,253 The Series B Preferred Stock Certificates of Designations contain several conversion rights, redemption features and other key provisions described below. 10 Holder Voluntary Conversion Rights The Series B Preferred Stock is convertible at the option of the holders thereof at any time into a number of shares of common stock equal to the Conversion Rate (as defined in the Series B Certificates of Designations), which is initially 294.1176 shares of common stock per share of Series B Preferred Stock, in each case subject to certain adjustments and certain limitations on conversion. Issuer Call Provision At any time after the fifth anniversary of the closing of the Private Placement Issuance, if the last reported sale price of the common stock is greater than 250 % of the Conversion Price (as defined in the Series B Certificates of Designations) as of such time for at least 20 consecutive trading days, we may elect to convert all of the outstanding shares of Series B Preferred Stock into shares of common stock. Issuer Redemption Provision After the seventh anniversary of the closing of the Private Placement Issuance, subject to certain conditions, we may, at our option, redeem all of the outstanding shares of Series B Preferred Stock at a redemption price per share of Series B Preferred Stock, payable in cash, equal to the Liquidation Preference (as defined in the Series B Certificates of Designations). Change of Control Provisions If we undergo certain change of control transactions, each holder of outstanding shares of Series B Preferred Stock will have the option, subject to the holder’s right to convert all or a portion of the shares of Series B Preferred Stock held by such holder into common stock, to require us to purchase all or a portion of such holder’s outstanding shares of Series B Preferred Stock that have not been converted into common stock at a purchase price per share of Series B Preferred Stock, 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 such holder would have been entitled to receive if such holder had converted such share of Series B Preferred Stock into common stock immediately prior to the change of control transaction (Change of Control Put). In the event of a change of control in which we are not expected to 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. 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 Series B Certificates 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). Series B Convertible Preferred Stock Purchase Agreements 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 because the Series B Preferred Stock included certain contingent redemption features which created an obligation for the Company to repurchase its shares. The fair value of the Series B Preferred Stock payable portion of the forward sales contracts was determined using a Monte Carlo Simulation (MCS). The MCS analysis used a random-walk process to simulate the value of our common stock and the resulting impact on the value of our Series B Preferred Stock, given the convertibility of the Series B Preferred Stock into cash or our common stock under several scenarios, as well as various provisions discussed above. The fair value of the 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 from March 31, 2022 to April 4, 2022 is included in the loss on forward sale of Series B Preferred Stock on the condensed consolidated statement of operations for the three months ended June 30, 2022. The loss is 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 $ 60.1 million loss on 11 forward sales of Series B Preferred Stock for the six months ended June 30, 2022 reflected the increase in the share price of our common stock from $ 2.84 at the inception of the contracts to $ 3.99 per share value as of April 4, 2022 and the value of the various conversion rights and key provisions discussed above. Bridge Loans Prior to their conversion, the Bridge Loans bore interest (i) from and including the effective date of the Bridge Loan Agreements to but excluding March 1, 2022, at 10 %, (ii) from and including March 1, 2022 to but excluding June 1, 2022, at 12 %, (iii) from and including June 1, 2022 to but excluding September 1, 2022, at 14 %, and (iv) from and including September 1, 2022 and thereafter, at 16 %. Interest accrued daily and was payable in kind by adding the accrued interest to the outstanding principal amount. Unless earlier converted, the outstanding principal amount of the Bridge Loans (inclusive of principal and accrued and unpaid interest) was due and payable in cash on the maturity date. The Bridge Loans automatically converted into Series B Preferred Stock upon the closing of the Private Placement Issuance, in accordance with the terms of the Bridge Loan Agreements. The Bridge Loans converted into a number of shares of Series B Preferred Stock equal to (i) the then outstanding principal amount of the applicable Bridge Loan (including any interest added to the original principal amount thereof) plus accrued and unpaid interest (together, the Conversion Amount) on the Bridge Loans divided by $ 1,000 multiplied by (ii) the Conversion Price (as defined in the Series B Certificates of Designations) divided by $ 2.84 . If the Series B Preferred Stock had not been approved for issuance by our stockholders, or the Purcha se Agreements were terminated, then the Bridge Loans would have become convertible, at each lender’s option, into common stock, par value $ 0.001 per share, of the Company at an initial conversion rate of 352.1126 shares of common stock per $1,000 of the Conversion Amount, subject to the cap set forth in the Bridge Loan Agreements. Applying the guidance in ASC 825 Financial Instruments, we elected to record the Bridge Loans at their fair value. We employed a probability‐weighted expected return method in our valuation analysis of the Bridge Loans. Specifically, our analysis contemplated two scenarios: 1) our stockholders approve the transaction (Approval Scenario) and 2) our stockholders do not approve the transaction (Disapproval Scenario). To estimate the fair value of the Bridge Loans pursuant to the Approval Scenario, we employed a Monte Carlo Simulation (MCS) analysis, discussed above, based on the underlying Series B Preferred Stock into which the Bridge Loans were convertible. The change in fair value of the Bridge Loans from inception to conversion on April 4, 2022 is included as a non-operating loss on Bridge Loans in the condensed consolidated statement of operations. The loss on Bridge Loans was $ 3.1 million for the three months ended June 30, 2022 and $ 13.7 million for the six months ended June 30, 2022. The losses were attributable to the increases in our share price from the prior quarter end and from inception of the Bridge Loans to the April 4, 2022 closing date, respectively. In addition, as required under the fair value option, issuance costs associated with the Bridge Loans of $ 0.2 million were recognized in selling, general and administrative expenses in the first quarter of 2022 . 4. NIH Contract In 2020, we were awarded the NIH Contract under the RADx program to support the expansion of our production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology. We completed the required milestones in 2021 and received the total NIH Contract value of $ 34.0 million. Proceeds from the NIH Contract have been used primarily for capital expenditures to expand production capacity and, to a lesser extent, to offset applicable operating costs. Grant proceeds that exceed the cost of the capital expenditures and expenses that have been and are expected to be incurred are recorded in other non-operating income on the condensed consolidated statement of operations. 12 The following table summarizes the activity under the NIH Contract as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Cash receipts from milestones achieved $ 34,016 $ 34,016 Cumulative amounts applied against operating costs (excluding depreciation) ( 4,526 ) ( 4,522 ) Cumulative amounts applied against depreciation expense for assets placed in service ( 2,358 ) ( 703 ) Cumulative amounts recognized as non-operating income ( 7,140 ) ( 7,140 ) Total deferred grant income $ 19,992 $ 21,651 Assets placed in service, gross $ 20,776 $ 16,890 Construction-in-progress 1,044 3,909 Cumulative amounts applied against depreciation expense for assets placed in service ( 2,358 ) ( 703 ) Carrying value of property and equipment, net 19,462 20,096 Estimated future capital expenditures 530 1,555 Total deferred grant income $ 19,992 $ 21,651 Deferred grant income, current $ 3,729 $ 3,535 Deferred grant income, non-current 16,263 18,116 Total deferred grant income $ 19,992 $ 21,651 Deferred grant income, current on our condensed consolidated balance sheet represents the amounts expected to be offset against depreciation expense over the next twelve months. Deferred grant income, non-current includes amounts expected to be offset against depreciation expense in future later periods. We expect to s pend $ 22.4 million on cap ital expenditures associated with the NIH Contract. As of June 30, 2022, we have placed $ 20.8 million of assets in service and expect to place the remaining assets in service by the end of 2022. 13 5. Revenue Disaggregation of Revenue The following table presents our revenue based upon the geographic location of our customers’ facilities a nd by source 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 Geographic Markets Americas $ 9,433 $ 16,120 $ 22,363 $ 34,643 EMEA 5,669 9,220 14,278 18,362 Asia-Pacific 3,675 5,678 8,640 10,807 Total revenue $ 18,777 $ 31,018 $ 45,281 $ 63,812 Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Source Instruments $ 2,661 $ 10,179 $ 10,184 $ 17,887 Consumables 9,558 12,448 22,039 29,468 Product revenue 12,219 22,627 32,223 47,355 Service revenue 5,806 6,627 11,950 12,913 Development revenue 356 850 444 2,330 Other revenue: License and royalty revenue 396 93 664 93 Grant revenue — 821 — 1,121 Total other revenue 396 914 664 1,214 Total revenue $ 18,777 $ 31,018 $ 45,281 $ 63,812 Unfulfilled Performance Obligations We reported $ 17.9 million of deferred revenue on our December 31, 2021 consolidated balance sheet. During the six months ended June 30, 2022, $ 7.1 million of the opening balance was recognized as revenue and $ 5.7 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At June 30, 2022, we reported $ 16.5 million of deferred revenue. We expect to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed on June 30, 2022 in the following periods (in thousands): Fiscal Year Expected Revenue (1) 2022 remainder of the year $ 7,819 2023 7,759 2024 3,887 Thereafter 2,478 Total $ 21,943 _______ (1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty. We apply the practical expedient that permits us not to disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less. 14 Customer Concentration We had an outstanding trade accounts receivable of $ 1.1 million from one customer which represented more than 10% of our total accounts receivable, net as of June 30, 2022 . No customer had an outstanding trade accounts receivable balance that represented more than 10% of total accounts receivable, net as of December 31, 2021 . 6. Goodwill and Intangible Assets, net In connection with our acquisition of DVS in February 2014, we recognized goodwill of $ 104.1 million and $ 112.0 million of developed technology. In the first quarter of 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill from the InstruNor acquisition and $ 5.4 million (Euro 4.9 million) of developed technology. Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. Due to the significant decline in our share price since the prior quarter end, we performed an analysis of our goodwill as of June 30, 2022 and concluded that no impairment charge was necessary. In June 2022, the decision was made to discontinue further development on the pro duct lines supported by the InstruNor developed technology. As there are no future cash flows attributable to this asset group, an impairment charge of $ 3.5 million was recognized, representing the remaining carrying value of the intangible asset. Intangible assets also include other patents and licenses, which are included in other non-current assets. Intangibl e assets, net, were as follows (in thousands): June 30, 2022 Gross Amount Accumulated Amortization and Impairment Net Weighted-Average Amortization Period Developed technology $ 117,070 $ ( 98,870 ) $ 18,200 10.0 years Patents and licenses $ 11,254 $ ( 10,337 ) $ 917 7.0 years December 31, 2021 Gross Amount Accumulated Amortization Net Weighted-Average Amortization Period Developed technology $ 117,503 $ ( 89,576 ) $ 27,927 9.9 years Patents and licenses $ 11,257 $ ( 10,000 ) $ 1,257 7.0 years Total amortization expense was $ 3.2 million for both the three months ended June 30, 2022 and 2021. Total amortization expense for the six months ended June 30, 2022 and 2021 was $ 6.3 million and $ 6.4 million, respectively. The $ 3.5 million impairment charge on InstruNor’s developed technology intangible asset was recorded in research and development expense and is reflected in accumulated amortization in the above table. 15 Based on the carrying value of intangible assets as of June 30, 2022, our estimated future amortization expense is as follows (in thousands): Fiscal Year Developed Technology Amortization Expense Patents and Licenses Amortization Expense Total 2022 remainder of the year $ 5,600 $ 338 $ 5,938 2023 11,200 572 11,772 2024 1,400 7 1,407 Total $ 18,200 $ 917 $ 19,117 7. Balance Sheet Details Cash, Cash Equivalents and Restricted Cash Cash, cash equivalents and restricted cash consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Cash and cash equivalents $ 74,361 $ 28,451 Restricted cash 1,016 1,016 Total cash, cash equivalents and restricted cash $ 75,377 $ 29,467 Short-term restricted cash of approximately $ 16 thousand is included in prepaid expenses and other current assets and $ 1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of June 30, 2022 and December 31, 2021. Inventories, net Inventories, net consisted of the follo wing as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Raw materials $ 12,353 $ 9,345 Work-in-process 288 867 Finished goods 10,150 10,613 Total inventories, net $ 22,791 $ 20,825 Property and Equipment, net Property and equipment, net consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Laboratory and manufacturing equipment 33,621 30,260 Leasehold improvements 12,332 12,095 Computer equipment and software 5,876 5,759 Office furniture and fixtures 2,034 2,074 Property and equipment, gross 53,863 50,188 Less accumulated depreciation and amortization ( 28,669 ) ( 26,703 ) Construction-in-progress 2,081 4,549 Property and equipment, net $ 27,275 $ 28,034 16 Accrued Compensation and Related Benefits Accrued compensation and related benefits, which are included in current liabilities on the condensed consolidated balance sheet consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands): June 30, 2022 December 31, 2021 Accrued incentive compensation $ 264 $ 14 Accrued vacation 3,683 3,388 Accrued payroll taxes and other 1,266 1,411 Accrued severance and retention payments 3,363 107 Accrued compensation and related benefits $ 8,576 $ 4,920 Warranties Accrued warranty is included in current other accrued liabilities on our condensed consolidated balance sheet. Activity for our warranty accrual for the six months ended June 30, 2022 and 2021 is summarized below (in thousands): Six Months Ended June 30, 2022 2021 Beginning balance $ 1,170 $ 1,663 Accrual for current period warranties 566 220 Warranty costs incurred ( 590 ) ( 522 ) Ending balance $ 1,146 $ 1,361 8. Debt 2014 Senior Convertible Notes (2014 Notes) and 2019 Senior Convertible Notes (2019 Notes) The carrying values of the components of the 2014 Notes and 2019 Notes are as follows (in thousands): June 30, 2022 December 31, 2021 2.75 % 2014 Notes due 2034 Principal amount $ 578 $ 578 Unamortized debt discount ( 8 ) ( 8 ) Unamortized debt issuance cost ( 2 ) ( 2 ) Net carrying value of 2014 Notes $ 568 $ 568 5.25 % 2019 Notes due 2024 Principal amount $ 55,000 $ 55,000 Unamortized debt issuance cost ( 1,184 ) ( 1,408 ) Net carrying value of 2019 Notes $ 53,816 $ 53,592 Net carrying value of all Notes $ 54,384 $ 54,160 2014 Senior Convertible Notes (2014 Notes) In February 2014, we closed an underwritten public offering of 2014 Notes. In 2019, the outstanding 2014 Notes were largely refinanced with the 2019 Notes, discussed below. The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is approximately 3 %. The 2014 Notes will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes. Holders may 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. 17 As provided by the indenture governing the 2014 Notes, in February 2021, holders of $ 0.5 million of the 2014 Notes required us to repurchase their notes at 100 % of the principal amount plus accrued and unpaid interest. As of June 30, 2022, there was $ 0.6 million aggregate principal of the 2014 Notes outstanding. 2019 Senior Convertible Notes (2019 Notes) In November 2019, we issued $ 55.0 million aggregate principal amount of 2019 Notes. Net proceeds of the 2019 Notes issuance were $ 52.7 million, after deductions for commissions and other debt issuance costs. $ 51.8 million of the proceeds of the 2019 Notes were used to retire $ 50.2 million aggregate principal amount of our 2014 Notes, leaving $ 1.1 million of aggregate principal value of 2014 Notes then outstanding. The 2019 Notes bear interest at 5.25 % per annum, payable semiannually on June 1 and December 1 of each year. The 2019 Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms. The 2019 Notes will be convertible at the option of the holder at any point prior to the close of business on the second scheduled trading day preceding the maturity date. The initial conversion rate of the 2019 Notes is 344.8276 shares of our common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $ 2.90 per share). The conversion rate is subject to adjustment upon the occurrence of certain specified events. Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes. The conversion rate will not be adjusted for any accrued and unpaid interest. The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes. On or after December 1, 2021 to December 1, 2022, if the price of our common stock has equaled or exceeded 150 % of the Conversion Price (as defined in the indenture) then in effect for a specified number of days (Issuer’s Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of common stock of the Company, determined in accordance with the terms of the indenture. On or after December 1, 2022, if the price of our 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 common stock of the Company, determined in accordance with the terms of the indenture. Offering-related costs for the 2019 Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes. The effective rate on the 2019 Notes is 6.2 %. Revolving Credit Facility and Term Loan, net The carrying values of our term loan and advances under the Credit Facility are as follows (in thousands): June 30, 2022 December 31, 2021 Term Loan Principal amount $ 10,000 $ 10,000 End of term fee accretion 187 79 Unamortized debt issuance cost ( 25 ) ( 30 ) Net carrying value of term loan $ 10,162 $ 10,049 Revolving Credit Facility Carrying value of advances under credit agreement $ — $ 6,838 In August 2018, we entered into a revolving credit facility with Silicon Valley Bank (as amended, the Revolving Credit Facility) in an aggregate principal amount of up to the lesser of (i) $ 15.0 million (Maximum Amount) or (ii) the sum of (a) 85 % of our eligible receivables and (b) 50 % of our eligible inventory, in each case, subject to certain limitations (Borrowing Base), provided that the amount of eligible inventory that may be counted towards the Borrowing Base shall be subject to a cap as set forth in the Revolving Credit Facility. On August 2, 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 stated maturity of the Term Loan Facility is July 1, 2025. However, if the principal amount of our convertible debt exceeds $ 0.6 million as of June 1, 2024 or if the maturity of our 2019 Notes has not been extended beyond 18 January 1, 2026 by June 1, 2024, then the maturity date of the Term Loan Facility will be June 1, 2024. The Credit Facility is collateralized by substantially all our property, other than intellectual property. The Credit Facility also includes a financial covenant that requires us to maintain a minimum Adjusted Quick Ratio, as defined in the agreement, of at least 1.25 to 1.00. The interest rate on advances made under the Revolving Credit Facility is the greater of (i) prime rate plus 0.50 % or (ii) 5.25 %. Interest on any outstanding amounts is due and payable monthly and the principal balance is due at maturity, though loans can be prepaid at any time without penalty. Fees for the Revolving Credit Facility include an annual commitment fee of $ 112,500 and a quarterly unused line fee based on the Borrowing Base. Total availability un der the Revolving Credit Facility as of June 30, 2022 was $ 8.1 million. There were no borrowings outstanding under the Revolving Credit Facility at June 30, 2022. As of June 30, 2022, the Term Loan Facility was fully drawn. The interest rate on the Term Loan Facility is the greater of 4.0 % or a floating per annum rate equal to three quarters of one percentage point ( 0.75 %) above the prime rate. Interest on any outstanding term loan advances is due and payable monthly. In addition to the monthly interest payments, a final payment equal to 6.5 % of the original principal amount of each advance is due on the earlier of the maturity date or the date the advance is repaid. Principal balances are required to be repaid in twenty-four equal installments beginning on August 1, 2023. The effective interest rate on the Term Loan Facility, reflecting the impact of debt issuance costs, the end-of-term fee and expected timing of principal repayment was 6.3 % as of June 30, 2022. 9. Leases We have operating leases for buildings, equipment and vehicles. Existing leases have remaining terms of less than one year to eight years . Some leases contain options to extend the lease, usually for up to five years , and termination options. Supplemental balance sheet information related to leases was as follows as of June 30, 2022 and December 31, 2021 (in thousands, except for discount rate and lease term): June 30, 2022 December 31, 2021 Operating lease right-of-use buildings $ 43,419 $ 43,457 Operating lease right-of-use equipment 77 84 Operating lease right-of-use vehicles 579 676 Total operating lease right-of-use assets, gross 44,075 44,217 Accumulated amortization ( 8,663 ) ( 7,098 ) Total operating lease right-of-use assets, net $ 35,412 $ 37,119 Operating lease liabilities, current $ 3,293 $ 3,053 Operating lease liabilities, non-current 35,732 37,548 Total operating lease liabilities $ 39,025 $ 40,601 Weighted average remaining lease term (in years) 7.3 7.7 Weighted average discount rate per annum 11.8 % 11.7 % 19 10. Fair Value of Financial Instruments The following tables summarize our cash, cash equivalents and available-for-sale securities that were measured at fair value by significant investment category within the fair value hierarchy (in thousands): June 30, 2022 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted Assets: Cash and money market funds $ 74,361 $ — $ — $ 74,361 $ 74,361 $ — $ — Cash-restricted 1,016 — — 1,016 — — 1,016 Total cash, cash equivalents and restricted cash $ 75,377 $ — $ — $ 75,377 $ 74,361 $ — $ 1,016 Available-for-sale: Level I: U.S. treasury securities $ 137,561 $ — $ ( 711 ) $ 136,850 $ — $ 136,850 $ — Total $ 212,938 $ — $ ( 711 ) $ 212,227 $ 74,361 $ 136,850 $ 1,016 December 31, 2021 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted Assets: Cash and money market funds $ 28,451 $ — $ — $ 28,451 $ 28,451 $ — $ — Cash-restricted 1,016 — — 1,016 — — 1,016 Total cash, cash equivalents and restricted cash $ 29,467 $ — $ — $ 29,467 $ 28,451 $ — $ 1,016 Available-for-sale: Level I: U.S. treasury securities $ — $ — $ — $ — $ — $ — $ — Total $ 29,467 $ — $ — $ 29,467 $ 28,451 $ — $ 1,016 Cash and cash equivalents are Level I measurements. There were no transfers between Level I and Level II measurements, and no changes in the valuation techniques used during the six months ended June 30, 2022. Our convertible notes are not regularly traded and it is difficult to estimate a reliable and accurate market price for these securities. The estimated fair values for these securities represent Level III valuations since a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices. Fair values were estimated using pricing models and risk-adjusted value ranges. The estimated fair value of our term loan also represents a Level III valuation since the value cannot be determined by using readily observable inputs or measures, such as market prices. The fair value of our term loan was estimated using a discounted cash flows approach and current market interest rate data for similar loans. 20 The following table summarizes the par value, carrying value and the estimated fair value of our debt as of June 30, 2022 and December 31, 2021, respectively (in thousands): June 30, 2022 December 31, 2021 Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value Convertible Notes: 2014 Notes $ 578 $ 568 $ 467 $ 578 $ 568 $ 601 2019 Notes 55,000 53,816 49,970 55,000 53,592 81,880 Total Notes $ 55,578 $ 54,384 $ 50,437 $ 55,578 $ 54,160 $ 82,481 Term loan, net $ 10,000 $ 10,162 $ 9,168 $ 10,000 $ 10,049 $ 10,113 Advances under revolving credit agreement $ — $ — $ — $ 6,838 $ 6,838 $ 6,838 Total debt $ 65,578 $ 64,546 $ 59,605 $ 72,416 $ 71,047 $ 99,432 11. Shareholders’ Equity On April 1, 2022, our stockholders approved the Charter Amendment Proposal and Private Placement Issuance Proposal discussed in Note 3. The Private Placement Issuance closed on April 4, 2022 and we issued 255,559 shares of Series B Preferred Stock. In connection with the closing, we adopted the 2022 Inducement Equity Incentive Plan (2022 Inducement Plan) with an initial reserve for issuance of approximately 9.5 million shares. Following stockholder approval of the Charter Amendment Proposal and the Private Placement Issuance Proposal, our name was changed to Standard BioTools Inc. Shortly after the closing of the Private Placement Issuance, we also changed the trading symbol for our common stock on the Nasdaq Global Select Market to LAB. Upon the closing of the Private Placement Issuance, Dr. Michael Egholm was appointed as our President and Chief Executive Officer and as a member of the Board of Directors. Common Shares Reserved As of June 30, 2022, we had reserved shares of common stock for future issuance under equity compensation plans as foll ows: In thousands Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock and Performance Stock Units at Maximum Number Of Remaining Securities Available For Future Issuance 2022 Inducement Equity Incentive Plan 6,498 1,067 1,112 2011 Equity Incentive Plan 1,724 6,228 3,191 2017 Inducement Award Plan 159 27 — DVS Sciences Inc. 2010 Equity Incentive Plan 6 — — 2017 Employee Stock Purchase Plan — — 2,324 8,387 7,322 6,627 Included in the securities to be issued upon release of restricted stock units (RSUs) and performance stock units (PSUs) are the maximum number of shares that could be issued for performance share unit awards, which can vest at 0 %- 200 % of the number of awards granted. The number of shares available for future issuance also reflects PSU awards granted at the maximum number of shares that could be issued under these awards. 12. Stock-Based Plans Our board of directors sets the terms, conditions, and restrictions related to our 2017 Employee Stock Purchase Plan (ESPP) and the grant of stock options, RSUs and performance-based awards under our equity incentive plans. Our board of directors determines the number of awards to grant and also sets the vesting criteria. 21 In general, RSUs vest on a quarterly basis over a period of four years from the date of grant at a rate of 25 % on the first anniversary of the grant date and ratably each quarter over the remaining 12 quarters, or ratably over 16 quarters, subject to the employees’ continued employment. We may grant RSUs with different vesting terms from time to time. Stock options granted under our 2022 Inducement Plan and 2011 Equity Incentive Plan (2011 Plan) have a term of no more than ten years from the date of grant and an exercise price of at least 100 % of the fair market value of the underlying common stock on the date of grant. Generally, options vest at a rate of either 25 % on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months. We may grant options with different vesting terms from time to time. For performance-based share awards, our board of directors sets the performance objectives and other vesting provisions in determining the number of shares or value of performance units and performance shares that will be paid out. Such payout will be a function of the extent to which performance objectives or other vesting provisions have been achieved. 2011 Equity Incentive Plan In January 2011, our board of directors adopted the 2011 Plan under which incentive stock options, non-statutory stock options, RSUs, stock appreciation rights, PSUs and performance shares may be granted to our employees, directors, and consultants. In April 2019, our board of directors authorized, and in June 2019, our stockholders approved an amendment and restatement of the 2011 Plan to make various changes, including increasing the number of shares reserved for issuance by approximately 5.0 million shares and extending the term of the 2011 Plan until April 2029. In May 2020, our board of directors authorized, and in June 2020, our stockholders approved, an increase of 1.4 million shares reserved for issuance under the 2011 Plan. In April 2021, our board of directors authorized, and in May 2021, our stockholders approved, an additional increase of 4.1 million shares reserved for issuance under the 2011 Plan. 2022 Inducement Equity Incentive Plan As discussed in Note 11, we adopted the 2022 Inducement Plan in April 2022 and reserved 9.5 million shares of common stock for the issuance of equity-based awards, including non-statutory stock options, RSUs, restricted stock, stock appreciation rights, performance shares and PSUs. In accordance with Nasdaq listing rules, equity awards issued under the 2022 Inducement Plan are restricted to individuals who are not already employees or directors of the Company. The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the 2011 Plan. Activity under the various plans was as follows: Restricted Stock Units : Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance at December 31, 2021 5,141 $ 5.18 RSU granted 3,055 $ 3.39 RSU released ( 1,464 ) $ 4.70 RSU forfeited ( 918 ) $ 4.36 Balance at June 30, 2022 5,814 $ 4.46 As of June 30, 2022, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 21.7 million. We expect to recognize those costs over a weighted average period of 2.5 years. 22 Stock Options : Number of Options (000s) Weighted-Average Exercise Price per Option Weighted- Average Remaining Contractual Life (in Years) Aggregate Intrinsic Value (1) in (000s) Balance at December 31, 2021 1,597 $ 7.08 5.6 $ 82 Options granted 7,810 $ 3.91 $ — Options exercised ( 29 ) $ 3.44 $ 8 Options forfeited ( 991 ) $ 4.51 $ — Balance as of June 30, 2022 8,387 $ 4.44 8.9 $ 2 Vested at June 30, 2022 1,861 $ 6.35 6.0 $ 2 Unvested awards at June 30, 2022 6,526 $ 3.90 9.8 $ — _______ (1) Aggregate intrinsic value as of June 30, 2022 was calculated as the difference between the closing price per share of our common stock on the last trading day of June 30, 2022, which was $ 1.60 , and the exercise price of the options, multiplied by the number of in-the-money options. The majority of the options granted during 2022 were under the 2022 Inducement Plan and awarded to new members of our management team. As of June 30, 2022, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 16.2 million. We expect to recognize those costs over a weighted average period of 3.8 years. Performance Stock Units: We have granted PSU awards to certain executive officers and senior level employees. The number of PSUs ultimately earned under these awards is calculated based on the Total Shareholder Return (TSR) of our common stock as compared to the TSR of a defined group of peer companies during the applicable three-year performance period. The percentage of PSUs that vest will depend on our relative position at the end of the performance period and can range from 0 % to 200 % of the number of units granted. Based on the performance of our stock relative to our defined group of peer companies, none of the PSUs awarded in 2019 for the 2019-2021 measurement period were vested. The performance adjustment in the table below reflects that no shares were issued upon vesting of the 2019 PSU awards. Activity under the TSR-based PSUs was as follows: Number of Units (in 000s) Weighted-Average Grant Date Fair Value per Unit Balance at December 31, 2021 1,210 $ 10.11 PSU granted — $ — Performance adjustment for 2019 awards ( 341 ) $ 16.97 PSU released — $ — PSU forfeited ( 115 ) $ 7.66 Balance at June 30, 2022 754 $ 6.56 As of June 30, 2022, the unrecognized compensation costs related to these awards were $ 2.1 million. We expect to recognize those costs over a weighted average period of 1.4 years. 2017 Employee Stock Purchase Plan (ESPP) Our ESPP offers U.S. and some non-U.S. employees the right to purchase shares of our common stock. Our ESPP program has a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year. Employees are eligible to participate through payroll deductions of up to 10 % of their compensation. Employees may not purchase more than $ 25 thousand of stock for any calendar year. The purchase price at which shares are sold under the 23 ESPP is 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period. Stock-based Compensation Expense Total stock-based compensation expense recognized was as follows (in thousands): Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Restricted stock units, stock options and performance stock units $ 4,569 $ 3,566 $ 8,511 $ 7,039 Employee stock purchase plan 94 175 194 379 Total stock-based compensation $ 4,663 $ 3,741 $ 8,705 $ 7,418 13. Income Taxes Our quarterly provision for income taxes is based on an estimated effective annual income tax rate. Our quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, such as the effects of changes in tax laws or rates, in the interim period in which they occur. We recorded a tax benefit of $ 1.6 million and $ 0.5 million for the three months ended June 30, 2022 and 2021, respectively. Higher lo sses in 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 compared to the prior year period. For both the six months ended June 30, 2022 and 2021, we recorded a tax benefit of $ 2.2 million. While the amounts of income tax benefit were approximately the same for both periods, the effective tax rate decreased due to higher pre-tax losses for the six months ended June 30, 2022. Our tax benefit for the periods presented in this report differs from the 21% U.S. Federal statutory rate principally because we maintain a valuation allowance for our domestic deferred tax assets, which primarily consist of net-operating loss carryforwards. Recording deferred tax assets is appropriate when realization of these assets is more likely than not. Assessing the realizability of deferred tax assets is dependent upon several factors including historical financial results and future expected financial results. Domestic deferred tax assets have been offset by valuation allowances. Any release of valuation allowances could have the effect of decreasing the income tax provision in the period the valuation allowance is released. We continue to assess the likelihood that we will be able to recover our deferred tax assets, including those for which a valuation allowance is recorded. There can be no assurance that we will generate profits in the future periods enabling us to fully realize our deferred tax assets. The timing of recording a valuation allowance or the reversal of such valuation allowance is subject to objective and subjective factors that cannot be readily predicted in advance. Our tax positions are subject to audits by multiple tax jurisdictions. We believe that we have provided adequate reserves for uncertain tax positions for all tax years still open for assessment. For the six months ended June 30, 2022 and 2021, respectively, we did not recognize any material interest or penalties related to uncertain tax positions. 14. Information About Geographic Areas We operate in one reporting segment that develops, manufactures and commercializes tools for life science research. Our chief executive officer manages our operations and evaluates our financial performance on a consolidated basis. For purposes of allocating resources and evaluating regional financial performance, our chief executive officer reviews separate sales information for the different regions of the world. Our general and administrative expenses and our research and development expenses are not allocated to any specific region. Most of our principal operations, other than manufacturing, and our decision-making functions are located at our corporate headquarters in the United States. A summary table of our revenue by geographic areas of our customers and by product and services for the three and six months ended June 30, 2022 and 2021 is included in Note 5 to the condensed consolidated financial statements. Revenue from customers in the United States represented $ 8.8 million, or 47 % of total revenues, and $ 15.5 million, or 50 % of total revenues, for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, revenue from domestic customers totaled $ 20.6 million, or 46 % of total revenues, and $ 33.7 million, or 53 % of total revenues, respectively. 24 Revenue from customers in China represented $ 1.6 million, or 9 % of total revenues, and $ 2.5 million, or 8 % of total revenues, for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, revenue from customers in China totaled $ 4.5 million, or 10 % of total revenues, and $ 5.5 million, or 9 % of total re venues, respectively. With the exception of China, no foreign country had revenue in excess of 10% of total revenues during any of the periods presented. 15. Commitments and Contingencies Indemnification From time to time, we have entered into indemnification provisions under certain of our agreements in the ordinary course of business, typically with business partners, customers, and suppliers. Pursuant to these agreements, we may indemnify, hold harmless, and agree to reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to our products. The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement. The maximum potential amount of future payments we could be required to make under these indemnification provisions is typically not limited to a specific amount. In addition, we have entered into indemnification agreements with our officers, directors, and certain other employees. With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. Contingencies In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our now-former Chief Executive Officer and our Chief Financial Officer as defendants) in the U.S. District Court for the Northern District of California (Reena Saintjermain, et al. v. Fluidigm Corporation, et al). The Court appointed a lead plaintiff and lead counsel in December 2020, and an amended complaint was filed on February 19, 2021. The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between February 7, 2019 and November 5, 2019 and alleges securities laws violations based on statements and alleged omissions made by the Company during such period. The Company filed a motion to dismiss the complaint on April 5, 2021 and, on August 4, 2021, the Court granted defendants’ motion to dismiss with leave to amend. A second amended complaint was filed on September 14, 2021. The Company filed a motion to dismiss the second amended complaint on October 29, 2021 and, on February 14, 2022, the Court granted defendants’ motion and dismissed the second amended complaint with prejudice. The plaintiff has appealed the decision, and the appeal remains pending before the U.S. Court of Appeals for the Ninth Circuit. We believe the claims alleged in the complaint lack merit and we intend to defend this action vigorously. From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business. These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters. Periodically, we review the status of each matter and assess its potential financial exposure. If the potential loss from any claim or legal proceeding is considered probable and a range of possible losses can be estimated, we accrue a liability for the estimated loss. Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict. Because of such uncertainties, accruals are based only on the best information available at the time. As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates. 16. Subsequent Events On August 8, 2022, we announced a restructuring plan, including a reduction in force. In addition, we will also seek to reduce leased office space and other operating expenses. The purpose of the restructuring plan is to improve operational efficiency and operating costs and better align our workforce with the current needs of our business. 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. 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. 25