What changed in this filing

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Item 1. Financial Statements

2022-11-09 compared with 2022-08-09 · 313 added, 192 removed, 583 unchanged (46% of the section changed)

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CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

June 30, December 31,

(In thousands, except per share amounts)

September 30, December 31,

Current assets:

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Short-term investments 124,968 —

Accounts receivable (net of allowances of $ 545 and $ 356 at June 30, 2022 and December 31, 2021, respectively)

Accounts receivable (net of allowances of $ 594 and $ 356 at September 30, 2022 and December 31, 2021, respectively)

17,294 18,320

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Advances under revolving credit agreement, current — 6,838

Term loan, current 833 —

Total current liabilities 46,169 49,568

Convertible notes, net 54,499 54,160

Term loan, net 10,162 10,049

Term loan, non-current 9,386 10,049

Deferred tax liability 620 4,329

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$ 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

256 and no shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively;

aggregate liquidation preference of $ 255,559 and $ — as of September 30, 2022 and December 31, 2021, respectively

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

$ 0.001 par value, 9,744 and 10,000 shares authorized at September 30, 2022 and December 31, 2021, respectively;

no shares issued and outstanding at either September 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

$ 0.001 par value, 400,000 and 200,000 shares authorized at September 30, 2022 and December 31, 2021, respectively;

79,246 and 76,919 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 845,034 831,424

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(In thousands, except per share amounts)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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Service revenue 5,857 6,016 17,807 18,929

Development revenue 356 850 444 2,330

Other revenue 477 551 1,585 4,095

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Loss on bridge loans — — ( 13,719 ) —

Surplus funding from NIH Contract 153 5,000 153 5,000

Other income (expense), net ( 216 ) 315 ( 272 ) 534

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(In thousands)

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Net loss $ ( 29,426 ) $ ( 13,843 ) $ ( 169,253 ) $ ( 49,808 )

Other comprehensive income (loss), net of tax:

Other comprehensive loss, net of tax:

Foreign currency translation adjustment ( 118 ) ( 446 ) ( 753 ) ( 842 )

Net change in unrealized gain (loss) on investments ( 711 ) — ( 711 ) —

Other comprehensive income (loss), net of tax ( 1,196 ) 47 ( 1,346 ) ( 396 )

Net change in unrealized loss on investments ( 238 ) — ( 949 ) —

Other comprehensive loss, net of tax ( 356 ) ( 446 ) ( 1,702 ) ( 842 )

Comprehensive loss $ ( 29,782 ) $ ( 14,289 ) $ ( 170,955 ) $ ( 50,650 )

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Comprehensive

Income (Loss) Accumulated

Loss Accumulated

Deficit Total

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Balance as of June 30, 2022 78,654 $ 79 $ 840,545 $ ( 2,253 ) $ ( 875,825 ) $ ( 37,454 )

Issuance of restricted stock, net of shares withheld for taxes, and other 592 — ( 5 ) — — ( 5 )

Stock-based compensation expense — — 4,494 — — 4,494

Net loss — — — — ( 29,426 ) ( 29,426 )

Other comprehensive loss, net of tax — — — ( 356 ) — ( 356 )

Balance as of September 30, 2022 79,246 $ 79 $ 845,034 $ ( 2,609 ) $ ( 905,251 ) $ ( 62,747 )

Common Stock Additional

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Balance as of June 30, 2021 76,166 $ 76 $ 822,383 $ ( 284 ) $ ( 712,725 ) $ 109,450

Issuance of restricted stock, net of shares withheld for taxes, and other 318 — ( 143 ) — — ( 143 )

Issuance of common stock from option exercises 1 — ( 1 ) — — ( 1 )

Stock-based compensation expense — — 4,320 — — 4,320

Net loss — — — — ( 13,843 ) ( 13,843 )

Other comprehensive loss, net of tax — — — ( 446 ) — ( 446 )

Balance as of September 30, 2021 76,485 $ 76 $ 826,559 $ ( 730 ) $ ( 726,568 ) $ 99,337

See accompanying notes

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(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Operating activities

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Provision for excess and obsolete inventory 7,239 1,539

Impairment of intangible 3,526 —

Impairment of InstruNor developed technology intangible 3,526 —

Amortization of debt discounts, premiums and issuance costs 628 427

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Accounts receivable, net 1,123 11,438

Inventories, net ( 6,484 ) ( 7,489 )

Inventories ( 7,810 ) ( 7,467 )

Prepaid expenses and other assets ( 83 ) ( 2,720 )

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Proceeds from NIH Contract — 2,000

Proceeds from maturities of investments 12,000 —

Purchases of property and equipment ( 3,070 ) ( 12,801 )

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Proceeds from issuance of Series B Preferred Stock 225,000 —

Repayment of advances under credit agreement ( 6,838 ) —

Proceeds from term loan — 10,000

Repayment of advances under revolving credit agreement ( 6,838 ) —

Repayment of long-term debt — ( 501 )

Payment of equity issuance costs ( 12,547 ) —

Payment of debt and equity issuance costs ( 12,547 ) ( 35 )

Proceeds from exercise of stock options 97 208

Proceeds from stock issuance of ESPP 497 685

Proceeds from ESPP stock issuance 497 685

Payments for taxes related to net share settlement of equity awards and other ( 181 ) ( 1,695 )

Net cash provided by (used in) financing activities 231,033 ( 1,159 )

Net cash provided by financing activities 231,028 8,662

Effect of foreign exchange rate fluctuations on cash and cash equivalents ( 719 ) ( 13 )

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Cash paid for income taxes, net of refunds $ 248 $ 1,113

Non-cash right-of-use assets and lease liabilities $ 503 $ 2,241

Asset retirement obligations $ 703 $ 702

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2022

September 30, 2022

Description of Business

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(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.

We have 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.

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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.

in April 2022, in connection with the completion of the Private Placement Issuance (as defined and discussed in Note 3).

The Company was founded in 1999 and is headquartered in South San Francisco, California.

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Basis of Presentation and Consolidation

The accompanying condensed consolidated financial statements have been prepared in conformity with U.S.

The accompanying unaudited 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.

As of September 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.

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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.

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 U.S.

Securities and Exchange Commission (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.

We subsequently closed the $ 225 million 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.

We believe our current levels of cash, cash equivalents, and short-term investments along with the funding available under the Revolving Credit Facility will be sufficient to support the operations of our business for at least the next 12 months.

See Note 3 for further discussion.

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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 accompanying unaudited 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.

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 condensed consolidated results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of 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.

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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

be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities.

We base these estimates on historical experience, the current economic environment and on various other assumptions believed to 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.

We assessed certain accounting matters that generally require consideration of forecasted financial information, including the impact of COVID-19-related supply chain shortages, the war in Ukraine, and inflation.

Assets and liabilities that rely on forecasted financial information to determine their carrying value include, but are not limited to, inventory, its related reserves, 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.

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Assets and liabilities of non-U.S.

subsidiaries that use the local currency as their functional currency are translated into U.S.

subsidiaries that use their local currency as their functional currency are translated into U.S.

dollars at exchange rates in effect on the balance sheet date.

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The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity.

The $ 25 million Bridge Loans (as defined in Note 3) were recorded at fair value in January 2022 when the loans were issued.

The Company elected to use the fair value option as of the issuance date that was available under Accounting Standards Codification (ASC) 825 Financial Instruments.

The change in fair value of the Bridge Loans from inception to the April 4, 2022 closing date of the Private Placement Issuance is recorded as a non-operating loss on Bridge Loans in the condensed consolidated statement of operations.

The Bridge Loans were reported as a non-current liability on the condensed consolidated balance sheet until their conversion.

Upon conversion, the carrying value of the Bridge Loans was reclassified to Series B Redeemable Preferred Stock (as defined in Note 3).

We had accrued interest daily on the outstanding principal amount of the Bridge Loans until they were converted, which was capitalized while the debt issuance costs were expensed when incurred.

Private Placement Issuance

See Note 3 for a detailed discussion of the transactions, including the accounting treatment, and additional information.

Restructuring

We record liabilities for costs associated with exit or disposal activities in the period in which the liability is incurred.

Severance and other employee termination costs are primarily recorded when the actions become probable and estimable.

Costs for one-time termination benefits in which the employee is required to render service until termination in order to receive the benefits are recognized ratably over the future service period.

We record costs to implement business improvement programs, including external consulting and legal expenses, as they are incurred.

Segment Reporting

We have historically operated as a single reportable segment and managed our business operations and evaluated our financial performance on a consolidated basis.

During the third quarter of 2022, our Chief Executive Officer (CEO), who is our Chief Operating Decision Maker (CODM), instituted the practice of evaluating operating performance and making resource allocation decisions using two reportable segments:

mass cytometry and microfluidics.

In the fourth quarter of 2022, we will begin referring to these two segments as proteomics and genomics, respectively.

Each segment is identified by its unique portfolio of products

We determine each segment’s loss from operations by subtracting direct expenses, including cost of product and service revenues, research and development (R&D) expense and sales and marketing expense, from revenues.

Amortization, depreciation, and restructuring expense are included in each segment’s operating expenses.

Corporate costs, including general and administrative expenses for functions shared by both operating segments such as executive management, human resources

and finance, along with interest and taxes, are excluded from each segment’s results, which is consistent with how our CODM measures segment performance.

See Note 14 for additional information.

Series B Redeemable Preferred Stock

The Purchase Agreements (as defined in Note 3) for the issuance of shares of Series B Preferred Stock were accounted for as forward sales contracts at fair value in accordance with ASC 480 Distinguishing Liabilities from Equities.

The Series B Preferred Stock was treated as mezzanine equity and recorded at its fair value upon issuance, net of issuance costs due to its redemption features, such as change of control and liquidation preference, which are outside of the Company’s control.

Subsequent remeasurement of the Series B Redeemable Preferred Stock amount presented within mezzanine equity to its redemption amount is not required since it is not probable that the instrument will become redeemable.

Mezzanine equity which has characteristics of both liabilities and shareholders’ equity (deficit) is presented separately on the condensed consolidated balance sheets between these items because it has some characteristics of both.

See Note 3 for 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.

Comprehensive loss is comprised of net loss and other comprehensive loss.

Other comprehensive 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)

The components of accumulated other comprehensive loss, net of tax, for the three and nine months ended September 30, 2022 are as follows (in thousands):

Foreign Currency Translation Adjustment Unrealized Loss on Investments Accumulated Other Comprehensive Loss

Ending balance at December 31, 2021 $ ( 907 ) $ — $ ( 907 )

Other comprehensive income (loss) ( 150 ) — ( 150 )

Other comprehensive loss ( 150 ) — ( 150 )

Ending balance at March 31, 2022 $ ( 1,057 ) $ — $ ( 1,057 )

Other comprehensive income (loss) ( 485 ) ( 711 ) ( 1,196 )

Other comprehensive loss ( 485 ) ( 711 ) ( 1,196 )

Ending balance at June 30, 2022 $ ( 1,542 ) $ ( 711 ) $ ( 2,253 )

Other comprehensive loss ( 118 ) ( 238 ) ( 356 )

Ending balance at September 30, 2022 $ ( 1,660 ) $ ( 949 ) $ ( 2,609 )

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.

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,

The following potentially dilutive common shares were excluded from the computation (in thousands):

Nine Months Ended September 30,

Stock options, restricted stock units and performance awards 14,253 8,234

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Total 113,134 27,945

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.

Potentially dilutive securities in the above table include the impact of the Series B Preferred Stock defined and discussed in Note 3.

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):

In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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.

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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.

The adoption of ASU 2020-06 did not have an impact on our 2014 Notes and 2019 Notes (each as defined in Note 8).

In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832):

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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 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.

$ 0.001 per share (the Series B-2 Preferred Stock, and together with the Series B-1 Preferred Stock, the Series B Preferred Stock or the Series B Redeemable 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 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.

Our board of directors 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);

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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.

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 September 30, 2022 because it had features, such as change of control and liquidation preference, which are outside of the Company’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

The carrying value of the Series B Redeemable Preferred Stock as of April 4, 2022 was $ 311.3 million and was unchanged as of September 30, 2022.

T he components of the carrying value of the Series B Redeemable Preferred Stock are as follows (in thousands):

September 30, 2022

Proceeds from Purchase Agreements $ 225,000

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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.

In the event of a change of control in which we are not expected to be the surviving corporation or our 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.

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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 Purchase Agreements for the issuance of 225,000 shares of Series B Preferred Stock for $ 225 million 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).

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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

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.

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 %.

The $ 22.3 million increase in the fair value of the Series B Preferred Stock from March 31, 2022 to April 4, 2022 was 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 was primarily due to the increase in our common stock 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 forward sales of Series B Preferred Stock for the nine months ended September 30, 2022 reflected the increase in the share price of our common stock from $ 2.84 per share at the inception of the contracts to $ 3.99 per share as of April 4, 2022 and the value of the various conversion rights and key provisions discussed above.

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 a rate of 10 % per annum, (ii) from and including March 1, 2022 to but excluding June 1, 2022, at a rate of 12 % per annum, (iii) from and including June 1, 2022 to but excluding September 1, 2022, at a rate of 14 % per annum, and (iv) from and including September 1, 2022 and thereafter, at a rate of 16 % per annum.

Interest accrued daily and was payable in kind by adding the accrued interest to the outstanding principal amount.

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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 .

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.

The loss on Bridge Loans was $ 13.7 million for the nine months ended September 30, 2022.

The loss was attributable to the increase in our share price from the inception of the Bridge Loans to the April 4, 2022 closing date.

Upon conversion, the carrying value of the Bridge Loans was reclassified to Series B Redeemable Preferred Stock.

In addition, as required under the fair value option, issuance costs associated with the Bridge Loans of $ 0.2 million were recognized in general and administrative expenses in the first quarter of 2022 .

In September 2020, we executed a definitive contract with the National Institutes of Health (NIH), which amended the letter contract we entered into with NIH in July 2020 (collectively, the NIH Contract), under the NIH Rapid Acceleration of Diagnostics (RADx) program to support the expansion of our production capacity and throughput capabilities for COVID-19 test products that use 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.

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

The non-operating income recognized from the grant proceeds received in excess of the amounts spent for capital expenditures and operating expenses incurred is reflected on the condensed consolidated statement of operations as surplus funding from the NIH contract.

The following table summarizes the activity under the NIH Contract as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Cash receipts from milestones achieved $ 34,016 $ 34,016

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Total deferred grant income $ 18,921 $ 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.

The current portion of deferred grant income on our condensed consolidated balance sheet represents the amounts expected to be offset against depreciation expense over the next twelve months.

The non-current portion of deferred grant income includes amounts expected to be offset against depreciation expense in later periods.

We spent a total of $ 22.2 million on cap ital expenditures associated with the NIH Contract.

As of September 30, 2022, the capacity expansion project has been completed and all of the related assets have been placed in service.

During the three months ended September 30, 2022, we recognized $ 0.2 million of non-operating income associated with the contract, bringing the cumulative total of such income under the NIH Contract to $ 7.3 million.

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,

The following tables present our revenue based upon the geographic location of our customers’ facilities, and by segment, for the three and nine months ended September 30, 2022 and 2021 (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Geographic Markets

Americas $ 11,119 $ 13,013 $ 33,482 $ 47,656

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Total revenue $ 25,646 $ 28,504 $ 70,927 $ 92,316

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

2022 2021 2022 2021

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

Three Months Ended September 30, 2022 Three Months Ended September 30, 2021

Mass Cytometry Microfluidics Total Mass Cytometry Microfluidics Total

Product and service revenue $ 14,266 $ 10,903 $ 25,169 $ 15,837 $ 12,116 $ 27,953

Other revenue 300 177 477 — 551 551

License and royalty revenue 396 93 664 93

Grant revenue — 821 — 1,121

Total other revenue 396 914 664 1,214

Total revenue $ 14,566 $ 11,080 $ 25,646 $ 15,837 $ 12,667 $ 28,504

Nine Months Ended September 30, 2022 Nine Months Ended September 30, 2021

Mass Cytometry Microfluidics Total Mass Cytometry Microfluidics Total

Product and service revenue $ 37,914 $ 31,428 $ 69,342 $ 46,498 $ 41,723 $ 88,221

Other revenue 850 735 1,585 — 4,095 4,095

Total revenue $ 38,764 $ 32,163 $ 70,927 $ 46,498 $ 45,818 $ 92,316

Revenue from customers in the United States represented $ 10.6 million and $ 12.0 million, or 41 % and 42 % of total revenue, respectively, for the three months ended September 30, 2022 and 2021.

For the nine months ended September 30, 2022 and 2021, respectively, revenue from domestic customers totaled $ 31.2 million and $ 45.6 million, or 44 % and 49 % of total revenue.

Revenue from customers in China and Sweden totaled $ 3.2 million and $ 2.7 million, or 12 % and 11 % of total revenue, respectively, for the three months ended September 30, 2022.

For the three months ended September 30, 2021, revenue from customers in China totaled $ 3.2 million, or 11 % or total revenue.

For the nine months ended September 30, 2022 and 2021, revenue from customers in China totaled $ 7.7 million and $ 8.7 million, or 11 % and 9 % of total revenue, respectively.

With the exception of China and Sweden, no foreign country had revenue in excess of 10% of total revenue during any periods presented in this report.

Most of our principal operations, other than manufacturing and our decision-making functions, continue to be located at our corporate headquarters in the United States.

One microfluidics customer accounted for 15 % and 10 % of our total revenues for the three and nine months ended September 30, 2022.

No single customer represented more than 10% of total revenue for the same periods in 2021.

Revenue from our five largest customers represented 28 % and 21 % of total revenue for the three months ended September 30, 2022, and 2021, respectively.

For the nine months ended September 30, 2022 and 2021, revenue from our five largest customers represented 19 %, and 22 % of total revenue, respectively.

Refer to Note 14 Segment Reporting for additional information.

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):

During the nine months ended September 30, 2022, $ 9.5 million of the opening balance was recognized as revenue and $ 7.4 million of net additional advance payments were received from customers, primarily associated with instrument service contracts.

At September 30, 2022, we reported $ 15.8 million of deferred revenue.

We expect to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed as of September 30, 2022 in the following periods (in thousands):

Fiscal Year Expected Revenue (1)

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Total $ 21,190

(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.

(1) Expected revenue includes both billed amounts included in deferred revenue and $ 5.4 million of 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.

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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 .

One customer accounted for $ 2.7 million, or 15 %, of our trade accounts receivable, net as of September 30, 2022 .

No customer had an outstanding trade accounts receivable balance that represented more than 10% of net trade receivables as of December 31, 2021.

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.

In connection with our acquisition of DVS Sciences, Inc.

(DVS) in February 2014, we recognized $ 104.1 million of goodwill and $ 112.0 million of long-lived intangible assets associated with DVS’ developed technology.

In the first quarter of 2020, we recognized $ 2.2 million (Euro 2.0 million) of goodwill and $ 5.4 million (Euro 4.9 million) of developed technology from the InstruNor AS (InstruNor) acquisition.

Goodwill and long-lived intangible assets are tested for impairment either annually during the fourth quarter of the fiscal year or whenever events or changes in circumstances indicate the carrying amount of the assets may not be recoverable.

To test for impairment, a qualitative assessment is initially performed.

The qualitative evaluation includes assessing significant events and circumstances such as our current operating results, assumptions about our future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic, in order to determine if potential indicators of impairment exist.

If indicators of impairment are identified during the qualitative test, a quantitative impairment test is performed.

As a result of our operating and reporting segment change and the significant decline in our share price during the three months ended September 30, 2022, we performed quantitative impairment tests for goodwill and our long-lived intangibles as of August 31, 2022 and as of September 30, 2022 and concluded that no impairment charge was necessary.

In determining the fair value of our two operating segments, significant assumptions including forecasted cash flows (revenue growth rates), discount rates, earnings multiples and an implied control premium were utilized.

As these assumptions are inherently judgmental and subject to uncertainty, future impairments that cannot be reasonably estimated, but could be material, may occur.

Intangible assets include patents and licenses, which are included in other non-current assets on our condensed consolidated balance sheet.

Intangibl e assets, net, were as follows (in thousands):

June 30, 2022

September 30, 2022

Gross Amount Accumulated Amortization and Impairment Net Weighted-Average Amortization Period

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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.

Based on the carrying value of intangible assets as of June 30, 2022, our estimated future amortization expense is as follows (in thousands):

Total amortization expense was $ 2.9 million and $ 3.1 million for the three months ended September 30, 2022 and 2021, respectively.

Total amortization expense for the nine months ended September 30, 2022 and 2021 was $ 9.2 million and $ 9.5 million, respectively.

A $ 3.5 million impairment charge on InstruNor’s developed technology intangible asset was recorded in research and development expense in the second quarter of 2022 and is reflected in accumulated amortization in the above table.

Based on the carrying value of intangible assets as of September 30, 2022, our estimated future amortization expense is as follows (in thousands):

Fiscal Year Developed Technology Amortization Expense Patents and Licenses Amortization Expense Total

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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, cash equivalents and restricted cash consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Cash and cash equivalents $ 60,200 $ 28,451

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Total cash, cash equivalents and restricted cash $ 61,215 $ 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.

Restricted cash of $ 1.0 million is included in other non-current assets while the remainder of restricted cash is included in prepaid expenses and other current assets on the September 30, 2022 and December 31, 2021 condensed consolidated balance sheets.

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

Inventories, net consisted of the follo wing as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Raw materials $ 12,540 $ 9,345

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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

Property and equipment, net consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Laboratory and manufacturing equipment $ 33,449 $ 30,260

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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 compensation and related benefits, which are included in current liabilities on the condensed consolidated balance sheets consisted of the following as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Accrued incentive compensation $ 1,928 $ 14

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Accrued severance and retention payments 2,640 107

Accrued restructuring 907 —

Accrued compensation and related benefits $ 10,624 $ 4,920

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,

Refer to Note 15 for additional information on restructuring.

Accrued warranty is included in current other accrued liabilities on our condensed consolidated balance sheets.

Activity for our warranty accrual for the nine months ended September 30, 2022 and 2021 is summarized below (in thousands):

Nine Months Ended September 30,

Beginning balance $ 1,170 $ 1,663

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The carrying values of the components of the 2014 Notes and 2019 Notes are as follows (in thousands):

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

2.75 % 2014 Notes due 2034

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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 %.

In 2019, the outstanding 2014 Notes were largely refinanced with the 2019 Notes, as discussed below.

The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is approximately 3 % per annum.

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

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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.

As of September 30, 2022, there was $ 0.6 million aggregate principal of the 2014 Notes outstanding.

2019 Senior Convertible Notes (2019 Notes)

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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.

Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option (as defined below) 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.

On or after December 1, 2021 to December 1, 2022, if the volume-weighted average price of our common stock has equaled or exceeded 150 % of the Conversion Price (as defined in the indenture governing the 2019 Notes) 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 our common stock, determined in accordance with the terms of the indenture governing the 2019 Notes.

On or after December 1, 2022, if the volume-weighted average 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 our common sto ck, deter mined in accordance with the terms of the indenture governing the 2019 Notes.

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 %.

The effective rate on the 2019 Notes is 8.2 % per annum.

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

The carrying values of our term loan and advances under the Credit Facility (as defined below) are as follows (in thousands):

September 30, 2022 December 31, 2021

Principal amount $ 10,000 $ 10,000

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Net carrying value of term loan 10,219 10,049

term loan, current 833 —

Term loan, non-current $ 9,386 $ 10,049

Revolving Credit Facility

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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

January 1, 2026 by June 1, 2024, then the maturity date of the Term Loan Facility will be June 1, 2024.

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 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 %.

The Credit Facility also includes a financial covenant that requires us to maintain a minimum Adjusted Quick Ratio (as defined in the Credit Facility) 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 % per annum.

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.

Fees for the Revolving Credit Facility include an annual commitment fee of $ 112,500 and a quarterly unused line fee of 0.75 % per annum based on the availability amount.

Total availability un der the Revolving Credit Facility as of September 30, 2022 was $ 12.5 million .

There were no borrowings outstanding under the Revolving Credit Facility at September 30, 2022.

As of September 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.

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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.

The $0.8 million current portion of the term loan reflected on the September 30, 2022 condensed consolidated balance sheet represents principal debt repayments scheduled to be made in the third quarter of 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 8.2 % per annum as of September 30, 2022.

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

Existing leases have remaining terms ranging from less than one year to seven years .

Some leases contain options to extend the lease, typically for periods of up to five years , along with termination options.

In August 2022, we entered into an agreement to sublease approximately 25 % of our corporate headquarters location in South San Francisco for a period of 39 months.

We expect to recognize $ 4.7 million of sublease income over the lease term commencing in October 2022.

Supplemental balance sheet information related to our leases as of September 30, 2022 and December 31, 2021 is as follows (in thousands, except for discount rate and lease term):

September 30, 2022 December 31, 2021

Operating lease right-of-use buildings $ 43,520 $ 43,457

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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

The following tables summarize our cash, cash equivalents, restricted cash, and available-for-sale securities by significant investment category within the fair value hierarchy as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022

Amortized Cost Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted

Cash and money market funds $ 60,200 $ — $ 60,200 $ 60,200 $ — $ —

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December 31, 2021

Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted

Amortized Cost Gross Unrealized Loss Fair Value Cash and Cash Equivalents Short-Term Marketable Securities Cash- Restricted

Cash and money market funds $ 28,451 $ — $ 28,451 $ 28,451 $ — $ —

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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.

There were no changes in the valuation techniques used during the nine months ended September 30, 2022.

Our convertible notes are not regularly traded and it is difficult to estimate a reliable and accurate market price for these securities.

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The fair value of our term loan was estimated using a discounted cash flows approach and current market interest rate data for similar loans.

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

The following table summarizes the par value, carrying value and estimated fair value of our debt as of September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 December 31, 2021

Par Value Carrying Value Fair Value Par Value Carrying Value Fair Value

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Total debt $ 65,578 $ 64,718 $ 56,267 $ 72,416 $ 71,047 $ 99,432

Assets Measured at Fair Value on a Nonrecurring Basis

During the third quarter of 2022, the Company changed its reporting structure and reorganized itself under two reporting units.

This transition from one to two units required us to assign a portion of goodwill to each reporting unit using a relative fair value approach and then test the goodwill for impairment by comparing each unit’s fair value to its respective carrying value.

The fair value of a reporting unit refers to the amount received when an entire operating unit is sold in an orderly transaction between market participants.

We estimated the fair value of our two reporting units using a discounted cash flow (DCF) approach which utilized Level 3 unobservable inputs.

Our DCF model relied on assumptions regarding forecasted cash flows (revenue growth rates), discount rates, earnings multiples and an implied control premium.

We prepared separate DCF valuations as of August 31, 2022 and September 30, 2022 and concluded that no impairment charge was necessary.

Shareholders’ Equity

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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:

As of September 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

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8,345 6,622 7,534

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.

Included in the number of 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 PSU awards, which can vest at 0 %- 200 % of the number of awards granted.

Stock-Based Plans

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RSU forfeited ( 1,379 ) $ 4.64

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.

Balance at September 30, 2022 5,195 $ 4.02

As of September 30, 2022, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 17.1 million.

We expect to recognize those costs over a weighted average period of 2.5 years.

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Options forfeited ( 1,031 ) $ 4.55 $ —

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.

Balance at September 30, 2022 8,345 $ 4.44 8.7 $ —

Vested at September 30, 2022 1,898 $ 6.20 6.0 $ —

Unvested awards at September 30, 2022 6,447 $ 3.92 9.5 $ —

(1) Aggregate intrinsic value as of September 30, 2022 was calculated as the difference between the closing price per share of our common stock on the last trading day of September 30, 2022, which was $ 1.10 , 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.

As of September 30, 2022, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 15.0 million.

We expect to recognize those costs over a weighted average period of 3.5 years.

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PSU forfeited ( 156 ) $ 8.17

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.

Balance at September 30, 2022 713 $ 6.38

As of September 30, 2022, the unrecognized compensation costs related to these awards were $ 1.3 million.

We expect to recognize those costs over a weighted average period of 1.2 years.

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Employees may not purchase more than $ 25 thousand of stock for any calendar year.

The purchase price at which shares are sold under the

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.

The purchase price at which shares are sold under the 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,

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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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.

We recorded a tax benefit of $ 0.7 million and $ 1.4 million for the three months ended September 30, 2022 and 2021, respe ctively.

Higher profits in our foreign subsidiaries during the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021 resulted in a lower tax benefit for our foreign operations.

For the nine months ended September 30, 2022 and 2021, we recorded a tax benefit of $ 2.9 million and $ 3.6 million, respectively.

The effective tax rates were 1.7 % and 6.8 % for the nine months ended September 30, 2022 and 2021, respectively.

The effective tax rates decreased due to higher pre-tax losses for the three and nine months ended September 30, 2022 compared to the same periods in 2021.

Our tax benefit for the periods presented in this report differs from the 21% U.S.

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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.

There can be no assurance that we will generate profits in the future periods enabling us to fully realize our deferred

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.

1 unchanged sentence

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.

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.

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.

For the nine months ended September 30, 2022 and 2021, respectively, we did not recognize any material interest or penalties related to uncertain tax positions.

Segment Reporting

We have historically operated as a single reportable segment and managed our business operations and evaluated our financial performance on a consolidated basis.

During the third quarter of 2022, our CEO, who is our CODM, instituted the practice of evaluating operating performance and making resource allocation decisions using two reportable segments:

mass cytometry and microfluidics.

In the fourth quarter of 2022, we will begin referring to these two segments as proteomics and genomics, respectively.

Each segment is identified by its unique portfolio of products.

We determine each segment’s loss from operations by subtracting direct expenses, including cost of product and service revenues, R&D expense and sales and marketing expense, from revenues.

Amortization, depreciation, and restructuring expense are included in each segment’s operating expenses.

Corporate costs, including general and administrative expenses for functions shared by both operating segments such as executive management, human resources and finance, along with interest and taxes, are excluded from each segment’s results, which is consistent with how our CODM measures segment performance.

In conjunction with our change in segment reporting, we allocated goodwill to each operating segment using a relative fair value approach and performed trigger-based impairment testing on the goodwill and our long-lived intangible assets.

We conducted the tests as we considered the change in operating segments to be a triggering event.

The tests were performed as of August 31, 2022, and no impairment was identified.

Following the significant decline in the price of our common stock during the month of September, we performed the trigger-based impairment tests again as of September 30, 2022.

No impairment was identified.

Goodwill was tested at the reporting unit level, while our long-lived intangible assets were tested at the asset group level.

Segment reporting for historical periods has been included in this report to ensure comparability with the current year.

We do not prepare or report segmented balance sheet information as our CODM does not use the information to assess operating performance.

Our business segment information for the three and nine months ended September 30, 2022 and 2021 a ppears below (in thousands):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Mass cytometry $ 14,566 $ 15,837 $ 38,764 $ 46,498

Microfluidics 11,080 12,667 32,163 45,818

Total revenue $ 25,646 $ 28,504 $ 70,927 $ 92,316

Loss from operations:

Mass cytometry $ ( 4,851 ) $ ( 3,574 ) $ ( 22,929 ) $ ( 12,080 )

Microfluidics ( 8,552 ) ( 4,819 ) ( 24,612 ) ( 8,483 )

Corporate expenses ( 15,624 ) ( 11,219 ) ( 47,552 ) ( 35,637 )

Total loss from operations $ ( 29,027 ) $ ( 19,612 ) $ ( 95,093 ) $ ( 56,200 )

Restructuring and Other Related Costs

In August 2022, we announced a restructuring plan, including a reduction in force, to improve operational efficiency, achieve cost savings and align our Company’s workforce to the future needs of the business.

In addition to the reduction in force, we are reducing leased office space, optimizing our manufacturing footprint, and streamlining support functions.

We are employing a more disciplined cost management culture throughout our organization, investing in training, and plan to take advantage of more advanced technologies including upgrading our enterprise resource planning (ERP) system.

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

We expect to recognize the restructuring costs over the remainder of 2022 and 2023.

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

We recognized $ 1.3 million of restructuring expense and $ 1.0 million of other related costs for both the three and nine months ended September 30, 2022.

We record restructuring and other related costs as incurred.

These items are classified within cost of product and service revenue, R&D expenses, and selling, general and administrative expenses in our condensed consolidated statements of operations.

A summary of the changes in our restructuring and other related liabilities for the three and nine months ended September 30, 2022 appears below (in thousands):

Balance at December 31, 2021 Three and Nine Months Ended September 30, 2022 Balance at September 30, 2022

Liabilities Charges Payments Liabilities (1)

Restructuring:

Severance and employee-related benefits $ — $ 1,293 $ ( 386 ) $ 907

Other related costs:

Legal and consulting expenses — 952 ( 840 ) 112

Total $ — $ 2,245 $ ( 1,226 ) $ 1,019

(1) Restructuring liabilities are recorded in accrued compensation and related benefits on the condensed consolidated balance sheet.

Other related costs are recorded in other accrued liabilities on the condensed consolidated balance sheet.

We expect to fund these liabilities using our cash reserves.

Restructuring and other related costs were classified in the condensed consolidated statement of operations as follows for the three and nine months ended September 30, 2022 (in thousands):

Three and Nine Months Ended September 30,

Restructuring:

Cost of product and service $ 36

Research and development 164

Selling, general and administrative 1,093

Total restructuring 1,293

Other related costs:

Selling, general and administrative 952

Total other related costs 952

Total restructuring and other related costs $ 2,245

The Company’s restructuring and other related costs by segment were as follows for the three and nine months ended September 30, 2022 (in thousands):

Three and Nine Months Ended September 30,

Restructuring:

Mass cytometry $ 428

Microfluidics 499

Total restructuring 927

Other related costs :

Corporate expenses 1,318

Total other related costs 1,318

Total restructuring and other related costs $ 2,245

Commitments and Contingencies

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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.

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.

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As additional information becomes available, we continue to reassess the potential liability related to pending claims and litigation and may revise estimates.

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.

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 1. Financial Statements