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Item 1A. Risk Factors

2023-03-14 compared with 2022-03-08 · 241 added, 391 removed, 633 unchanged (50% of the section changed)

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Summary of Risk Factors

Risks Related to the Private Placement Issuance

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

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

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

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

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

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

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

Risks Related to our Business, Industry, and Strategy

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

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

• If we engage in future acquisitions or strategic collaborations, our capital requirements may increase, our stockholders may be diluted, we may incur debt or assume contingent liabilities, and we may be subject to other risks.

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

• The ongoing COVID-19 pandemic, a potential domestic and global recession, and related supply chain issues may adversely affect our business operations.

• Market opportunities may not develop as we expect.

• The life science markets are highly competitive and subject to rapid technological change.

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

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

• Our efficiency and cost-savings initiatives could be disruptive to our operations.

• Implementation of a company-wide enterprise resource planning (ERP) system could adversely affect our business.

• If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed.

• The planned implementation of a new company-wide enterprise resource planning (ERP) system could adversely affect our business.

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

Risks Related to Operations and Reliance on Third Parties

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

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

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

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

• Our business operations depend upon the continuing efforts of our management team and other skilled and experienced personnel.

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

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• Our products could have defects or errors.

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

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

• To the extent we elect to label and promote any of our products as medical devices, we would be required to obtain prior approval or clearance by the U.S.

Food and Drug Administration (FDA) or comparable foreign regulatory authority.

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

Risks Related to Economic Conditions and Operating a Global Business

• We generate a substantial portion of our revenue internationally.

• We generate a substantial portion of our revenue internationally and our international business exposes us to additional business, regulatory, political, operational, financial, and economic risks.

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

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Financial, Tax, and Accounting Risks

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

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

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

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

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

• If we fail to comply with the covenants and other obligations under our debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined below), may foreclose upon the assets securing our obligations.

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

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

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

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

RISKS RELATED TO THE PRIVATE PLACEMENT ISSUANCE

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

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

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

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

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

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

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

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

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

• the Purchase Agreements may be terminated;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Egholm’s signed offer letter to become our Chief

Executive Officer.

Any claims for indemnification made by Dr.

Egholm could cause us to incur costs and expenses.

To the extent that we expend funds to indemnify Dr.

Egholm, those funds will be unavailable for other purposes.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(i) to capitalize Fluidigm appropriately;

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

(iii) to manage operating expenses;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• If securities or industry analysts publish unfavorable research about us, or if they commence coverage of us and then cease to cover us, our stock price and/or trading volume could decline.

• Any conversions of our 2014 Notes or 2019 Notes (each as defined below) will dilute the ownership interest of our existing stockholders.

Risks Related to our Capital Structure

• The holders of our Series B Preferred Stock (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions.

• The market value of our common stock could decline if the holders of our Series B Preferred Stock sell their shares.

• The holders of our Series B Preferred Stock may exercise influence over us, including through their ability to designate members of our board of directors.

RISKS RELATED TO OUR BUSINESS, INDUSTRY, AND STRATEGY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The extent to which the COVID-19 pandemic will continue to impact our business and financial results will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the continued spread and resurgences of the coronavirus;

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

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

the scope and duration of the public health emergency;

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

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

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

governmental, business, and individual actions that have been and continue to be taken in response to the pandemic (including restrictions on travel, transport and workforce pressures);

the impact of the pandemic and actions taken in response on global and regional economies, travel, and economic activity;

the availability of federal, state, local or non-U.S.

funding programs;

general economic uncertainty in key global markets and financial market volatility;

global economic conditions and levels of economic growth;

labor and materials shortages;

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

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

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

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

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

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

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

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

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

We may be unable to achieve revenue growth in future periods similar to some past years.

Variability in our quarterly or annual results of operations, mix of product revenue, or rates of revenue growth, if any, may lead to volatility in our stock price as research analysts and investors respond to these fluctuations.

These fluctuations are due to numerous factors that are difficult to forecast, including:

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A significant reduction in orders from one or more of these customers could adversely affect our revenue and operating results, and if these customers defer or cancel purchases or otherwise alter their purchasing patterns, our financial results and actual results of operations could be significantly impacted.

Similarly, the loss of one or more key customers, or the inability of any such customer to pay amounts owing to us, could materially and adversely affect our business, financial performance and results of operations.

Other unknown or unpredictable factors also could harm our results.

In addition, inflationary pressure, including as a result of supply shortages, has adversely impacted and could continue to adversely impact our financial results.

Our operating costs have increased, and may continue to increase, due to the recent growth in inflation.

We may not fully offset these cost increases by raising prices for our products and services, which could result in downward pressure on our margins.

Further, our customers may choose to reduce their business with us if we increase our pricing.

The foregoing factors, as well as other factors, could materially and adversely affect our quarterly and annual results of operations and rates of revenue growth, if any.

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If we are unable to achieve adequate revenue growth, our operating results could suffer and our stock price could decline.

In addition, a significant amount of our operating expenses are relatively fixed due to our manufacturing, research and development, and sales and general administrative efforts.

Any failure to adjust spending quickly enough to compensate for a shortfall relative to our anticipated revenue could magnify the adverse impact of such shortfalls on our results of operations.

We expect that our sales will continue to fluctuate on an annual and quarterly basis and that our financial results for some periods may be below those projected by securities analysts, which could significantly decrease the price of our common stock.

In addition, a significant amount of our operating expenses is relatively fixed due to our manufacturing, research and development, and sales and general administrative efforts.

failure to adjust spending quickly enough to compensate for a shortfall relative to our anticipated revenue could magnify the adverse impact of such shortfalls on our results of operations.

We expect that our sales will continue to fluctuate on an annual and quarterly basis and that our financial results for some periods may be below market expectations or projections of securities analysts, which could significantly decrease the price of our common stock.

If we engage in future acquisitions or strategic collaborations, our capital requirements may increase, our stockholders may be diluted, we may incur debt or assume contingent liabilities, and we may be subject to other risks.

We may evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary products, intellectual property rights, technologies, or businesses.

Any potential acquisition or strategic collaborations may entail numerous risks, including:

• increased operating expenses and cash requirements;

• the assumption of additional indebtedness or contingent liabilities;

• the issuance of our equity securities;

• the diversion of our management’s attention from our existing product programs and initiatives in pursuing such a strategic merger or acquisition;

• risks and uncertainties associated with the other party to such a transaction, including the prospects of that party, their regulatory compliance status, and their existing products or product candidates and marketing approvals;

• our inability to generate revenue from acquired technology or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

If we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.

Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business.

Any of the foregoing may materially harm our business, financial condition, results of operations, stock price and prospects.

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

We have incurred significant losses in each fiscal year since our inception, including net losses of $59.2 million, $53.0 million, and $64.8 million during the years 2021, 2020, and 2019, respectively.

We have incurred significant losses in each fiscal year since our inception, including net losses of $190.1 million and $59.2 million during the years 2022 and 2021, respectively.

As of December 31, 2022, we had an accumulated deficit of $926.1 million.

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

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

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

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

While we plan to reduce our general and administrative spend and levels of investment in microfluidics research and development and marketing as part of the restructuring plan that we announced in August 2022, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, and there is no guarantee that our post-restructuring focus will be sufficient for us to achieve success.

Consequently, we may incur operating losses for the foreseeable future and may never achieve profitability.

The ongoing COVID-19 pandemic has adversely impacted, and may continue to impact the global economy and disrupt our operations and related supply chain, which may have an adverse effect on our results of operations.

COVID-19 has impacted and may further impact the global e conomy and could have additional impacts on economic growth, the proper functioning of financial and capital markets, foreign currency exchange rates and interest rates.

The pandemic has resulted in authorities around the world implementing numerous unprecedented measures such as travel restrictions, quarantines, shelter in place orders, vaccine mandates and facility shutdowns.

These measures have impacted, and may continue to impact our workforce, operations and supply chains, and those of our customers, contract manufacturers and suppliers, particularly in the event of a significant global resurgence of the illness or similar global health crisis.

There is considerable uncertainty regarding the duration, scope and severity of the pandemic and the impacts on our business and the global economy from the effects of the ongoing pandemic and response measures.

Market opportunities may not develop as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.

The application of our technologies to high-throughput genomics, single-cell genomics and, particularly, mass cytometry applications are in many cases emerging market opportunities.

We believe these opportunities will take several years to develop or mature and we cannot be certain that these market opportunities will develop as we expect.

The future growth of our markets and the success of our products depend on many factors beyond our control, including recognition and acceptance by the scientific community, and the growth, prevalence, and costs of competing methods of genetic and protein analysis.

Additionally, our success depends on the ability of our sales organization to successfully sell our products into these new markets.

If we are not able to successfully market and sell our products, or to achieve the revenue or margins we expect, our operating results may be harmed and we may not recover our product development and marketing expenditures.

In addition, our product development and strategic plans may change, which could delay or impede our entry into these markets.

The life science markets are highly competitive and subject to rapid technological change, and we may not be able to successfully compete.

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

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

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

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

We consider Agilent Technologies, Inc., Thermo Fisher Scientific Inc.

(Thermo), Bio-Rad Laboratories, Inc., NanoString Technologies, Inc.

(NanoString), and Agena Bioscience, Inc.

to be our principal competitors in the microfluidics space.

(Thermo), Bio-Rad Laboratories, Inc., and Mesa Laboratories, Inc.

(formerly Agena Bioscience, Inc.) to be our principal competitors in the Genomics space.

We believe that Cytek Biosciences, Inc.

and Becton, Dickinson and Company are currently our principal competitors for our mass cytometry market share, and that IonPath Inc., Akoya Biosciences, Inc., NanoString, and 10x Genomics, Inc.

are our principal competitors for our Imaging Mass Cytometry™ market share.

and Becton, Dickinson and Company are currently our principal competitors in Flow Cytometry, and that Akoya Biosciences, Inc., NanoString Technologies, Inc., and 10x Genomics, Inc.

are our principal competitors in Spatial Biology.

While the aforementioned principal competitors are the largest and most prevalent in their representative technology areas, the combined markets in which we compete have an additional 10 to 20 smaller competitors with competing approaches and technologies that we routinely face in selling situations.

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Our business is dependent on the improvement of our existing products, our development of new products to serve existing markets, and our development of new products to create new markets and applications that were previously not practical with existing systems.

We intend to devote significant personnel and financial resources to research and development activities designed to advance the capabilities of our technology.

We have developed design rules for the implementation of our technology that are frequently revised to reflect new insights we have gained about the technology.

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Furthermore, many such reactions take place within the confines of single cells, which have also demonstrated unexpected behavior when grown and manipulated within microfluidic environments.

As a result, research and development efforts may be required to transfer certain reactions and cell handling techniques to our systems.

As a result, research

and development efforts may be required to transfer certain reactions and cell handling techniques to our systems.

In the past, product development projects have been significantly delayed when we encountered unanticipated difficulties in implementing a process on our systems.

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Any delay or failure by us to develop and release new products or product enhancements would have a substantial adverse effect on our business and results of operations.

Market opportunities may not develop as quickly as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.

The application of our technologies to high-throughput genomics, single-cell genomics and, particularly, mass cytometry applications are in many cases emerging market opportunities.

We believe these opportunities will take several years to develop or mature and we cannot be certain that these market opportunities will develop as we expect.

Additionally, our success depends on the ability of our sales organization to successfully sell our products into these new markets.

In addition, our product development and strategic plans may change, which could delay or impede our entry into these markets.

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

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

Our success will depend, in part,

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

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

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

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

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

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

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It is critical to our success for us to anticipate changes in technology and customer requirements and to successfully introduce new, enhanced, and competitive technology to meet our customers’ and prospective customers’ needs on a timely and cost-effective basis.

Developing and implementing new technologies will require us to incur substantial development costs and we may not have adequate resources available to be able to successfully introduce new applications of, or enhancements to, our systems.

Developing and implementing new technologies typically involve substantial development costs and we may not have adequate resources available to be able to successfully introduce new applications of, or enhancements to, our systems.

We cannot guarantee that we will be able to maintain technological advantages over emerging technologies in the future.

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

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

If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed.

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

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

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

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

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

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

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

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

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

In August 2022, we announced a restructuring plan including reduction in force.

In addition to the reduction in force, we will also seek to reduce leased office space and other operating expenses.

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

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

There is no guarantee that the restructuring plan will achieve its intended benefits and cost savings or that our post-restructuring focus will be sufficient for us to achieve success.

For example, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, which could require us to seek potentially dilutive financing alternatives, disrupt or restrain the scope of our business activities, and would make it more difficult to attract and retain qualified personnel, each of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Similarly, changes in our commercial and strategic focus and allocation of resources contemplated by the restructuring plan, including reductions in our levels of investment in microfluidics research and development and marketing, as well as implementation of our other strategic initiatives, may be unsuccessful or result in unanticipated risks or other unintended consequences for our business, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Risks associated with implementing a company-wide enterprise resource planning (ERP) system could adversely affect our business and results of operations or the effectiveness of internal control over financial reporting.

We are preparing to implement a new company-wide ERP system in 2023 to handle the business and financial processes within our operations and corporate functions.

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

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

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

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

Our business and results of operations may be adversely affected if we experience operating problems and/or cost overruns during the ERP implementation process, or if the ERP system and the associated process changes do not give rise to the benefits that we expect.

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

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

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• our responsibility for the liabilities of the businesses we acquire, including those which we may not anticipate;

• the possibility that we may not realize the value of acquired assets recorded as goodwill or intangible assets, and would be required to incur material charges relating to the impairment of those assets;

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

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

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

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

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

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

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

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

Additionally, the imposition of tariffs and delays in issuing VAT and import tax exemptions have adversely

affected the sales of our products in China.

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

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In addition, our business is international in nature, with our sales, service and administrative personnel and our customers located in numerous countries throughout the world.

Operations at our manufacturing facilities and our subcontractors, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises (including the ongoing COVID-19 pandemic), fire, earthquake, volcanic eruptions, energy shortages, flooding, or other natural disasters.

Operations at our manufacturing facilities and our subcontractors, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises, fire, earthquake, volcanic eruptions, energy shortages, flooding, or other natural disasters.

Such disruption could cause delays in, among other things, shipments of products to our customers, our ability to perform services requested by our customers, or the installation of our products at customer sites.

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

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

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

We do not have long-term contracts with our suppliers of these components and materials or our assembly service providers.

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

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

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

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

Our reliance on single and sole source suppliers and assembly service providers also subjects us to other risks that could harm our business, including the following:

• we may be subject to increased component or assembly costs and

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

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

• we may be subject to increased component or assembly costs;

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

If, as a result of global economic or political instability, such as the ongoing escalation of the situation in Ukraine, or health pandemics, our suppliers experience shortages or delays for materials sourced or manufactured in the affected countries, their ability to supply us with instruments or product components may be affected.

If any of these events occur, our business and operating results could be harmed.

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

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

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

Additionally, in response to a surge in COVID-19 infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains.

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

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

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

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

Attrition and workforce reductions included in the August 2022 restructuring plan could adversely affect our reputation among job seekers.

It may also cause our existing employees to experience distractions or a decrease in employee morale.

It could result in a loss of institutional know-how, reduced productivity, slower customer service response, reduced effectiveness of internal compliance and risk-mitigation programs, and cancellations of or delays in completing new product developments and other strategic projects.

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

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

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

Competition for these people is intense and we may face challenges in retaining and recruiting such individuals if, for example, our stock price declines, reducing the retention value of equity awards, or our business or technology is no longer perceived as leading in our field.

Competition for these people is intense and we may face challenges in retaining and recruiting such individuals if, for example, our stock price declines, thereby reducing the retention value of equity awards, or our business or technology is no longer perceived as leading in our field.

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

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

If our direct sales, field support, and marketing forces and distribution capabilities are not sufficient to adequately address our customers’ needs, our business will be adversely affected.

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

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

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

Our future sales will depend on a number of factors including our ability to execute with our existing team, the scope of our marketing efforts and development of our direct sales force, field application specialists and service engineer teams.

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

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

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

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

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

To use our products—our X9, CyTOF, and Hyperion systems in particular—customers typically need to purchase specialized reagents.

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

Our products, and our X9, CyTOF, and Hyperion systems in particular, must be used in conjunction with one or more reagents designed to produce or facilitate the particular biological or chemical reaction desired by the user.

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

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If a patent holder or authorized licensee were to assert against us or our customers that the license or covenant relating to a reagent precluded its use with our systems, our ability to sell and market our products could be materially and adversely affected.

For example, our Biomark system involves real-time quantitative polymerase chain reaction (qPCR) technology.

For example, our X9 system involves real-time quantitative polymerase chain reaction (qPCR) technology.

Leading suppliers of reagents for real-time qPCR reactions include Life Technologies Corporation (now part of Thermo) and Roche Diagnostics Corporation, who are our direct competitors, and their licensees.

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

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

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

Furthermore, there may be a heightened risk of potential cyberattacks by state actors or others since the escalation of the war in Ukraine.

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

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

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

The cost and operational consequences of implementing further data protection measures, either as a response to

specific breaches or as a result of evolving risks, could be significant.

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

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

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

Since the beginning of the COVID-19 pandemic, a significant percentage of our employees has been working remotely.

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

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

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

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

In issuing an EUA, the FDA will consider the totality of scientific evidence available to the FDA regarding safety, efficacy and known and potential risks of such products and availability of alternatives to the emergency use products, among others.

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

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

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

Four supplements have been submitted and authorized as follows:

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

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

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

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

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

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

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

We cannot predict how long this EUA will remain effective.

The termination or revocation of the EUA and changing policies and regulatory requirements could adversely impact our business, financial condition and results of operations.

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

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

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

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

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

The NIH launched the Rapid Acceleration of Diagnostics (RADx) program to expedite development, commercialization, and implementation of technologies for COVID-19 testing to help increase testing in the United States.

In July 2020, we entered into a letter contract with the NIH for a project under the RADx program.

The letter contract provided access to approximately $12.2 million of the total proposed funding for the project prior to execution of a further definitive contract for the project.

In September 2020, we executed a definitive contract with the NIH as an amendment to the letter contract (collectively, the NIH Contract) to expand production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology.

Pursuant to the terms of the NIH Contract, the funding for the project was increased by approximately $22.0 million, for a total contract value of up to approximately $34.0 million.

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

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

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

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

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

government substantial rights and remedies, many of which are not typically found in commercial contracts.

For example, the NIH Contract contains provisions permitting unilateral termination or modification, in whole or in part, at the convenience of the U.S.

Under general principles of government contracting law, if the U.S.

government terminates a contract for convenience, the government contractor may recover only its incurred or committed costs, settlement expenses and profit on work completed prior to the termination.

government terminates a contract for default, the government contractor is entitled to recover costs incurred and associated profits on accepted items only and may be liable for excess costs incurred by the government in procuring undelivered items from another source.

In addition, government contracts normally contain additional requirements that may increase our costs of doing business, reduce our profits, and expose us to liability for failure to comply with these terms and conditions.

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

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

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

• terminate the NIH Contract, in whole or in part, for any reason or no reason;

• unilaterally reduce or modify the U.S.

government’s obligations under the NIH Contract, without our consent, including by imposing price adjustments;

• claim rights, including intellectual property rights, in or to (i) products, (ii) data, and (iii) facilities, in each case developed under the NIH Contract;

• under certain circumstances involving public health and safety, license inventions made under such agreements to third parties;

• suspend us from receiving new contracts pending resolution of alleged violations of procurement laws or regulations;

• impose U.S.

manufacturing requirements for products that embody inventions conceived or first reduced to practice under the NIH Contract;

• suspend or debar us from doing future business with the government;

• change the course of a development program in a manner that differs from the NIH Contract’s original terms or from our desired development plan, including decisions regarding our partners in the program;

• pursue civil or criminal remedies under the False Claims Act and False Statements Act;

• control or prohibit the export of products.

Furthermore, we may be required to enter into agreements and subcontracts with third parties, including suppliers, consultants and other third-party contractors in order to satisfy our contractual obligations pursuant to our agreements with the U.S.

Negotiating and entering into such arrangements can be time-consuming and we may not be able to reach agreement with such third parties.

Any such agreement must also be compliant with the terms of the NIH Contract.

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

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

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

The audit may also include review of the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s accounting, purchasing, property, estimating, compensation and management information systems.

If an audit uncovers improper or illegal activities, we may be subject to civil and criminal penalties and administrative sanctions.

In addition, we could suffer serious reputational harm if allegations of impropriety were made against us, which could cause our stock price to decrease.

To the extent we elect to label and promote any of our non-EUA products as medical devices, we would be required to obtain prior approval or clearance by the FDA or comparable foreign regulatory authority, which could take significant time and expense and could fail to result in a marketing authorization for the intended uses we believe are commercially attractive.

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

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

The products we currently sell are labeled, promoted and sold to academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, contract research organizations, and biopharmaceutical, biotechnology, and plant and animal research companies as “research use only” (RUO), and are not designed, or intended to be used, for clinical diagnostic tests or as medical devices as currently marketed.

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

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

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

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

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

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

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

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

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

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It is possible, in the event we elect to submit 510(k) applications for certain of our products, that the FDA would take the position that a more burdensome premarket application, such as a premarket approval application or a de novo application is required for some of our products.

If such applications were required, greater time and investment would be required to obtain FDA approval.

If such applications were required, greater time

and investment would be required to obtain FDA approval.

Even if the FDA agreed that a 510(k) was appropriate, FDA clearance can be expensive and time consuming.

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As a result, the time required to obtain clearances or approvals outside the United States may differ from that required to obtain FDA clearance or approval and we may not be able to obtain foreign regulatory approvals on a timely basis or at all.

In Europe, we need to comply with the In Vitro Diagnostic Directive 98/79/EC and transition to the In Vitro Diagnostic Regulation 2017/746, which became effective May 26, 2017, with an application date of May 26, 2022.

This will increase the difficulty of regulatory approvals in Europe in the future.

In addition, the FDA regulates exports of medical devices.

Failure to comply with these regulatory requirements or obtain and maintain required approvals, clearances and certifications could impair our ability to commercialize our products for diagnostic use outside of the United States.

In February 2021, we announced a supply and distribution agreement to market our CyTOF technology, panels, and reagents to clinical labs in China.

As part of the agreement, we are working to seek National Medical Products Administration (NMPA) approval for our CyTOF instrument for diagnostic use in China.

As we increase our operations outside of the United States, our compliance and operational costs will increase, and we will be exposed to greater liability under additional laws and regulations.

Our products could become subject to regulation as medical devices by the FDA or other regulatory agencies even if we do not elect to seek regulatory clearance or approval to market our products for diagnostic purposes, which would adversely impact our ability to market and sell our products and harm our business.

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

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

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

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

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

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We cannot predict how these various efforts will be resolved, how Congress or the FDA will regulate LDTs in the future, or how that regulatory system will impact our business.

Additionally, on November 25, 2013, the FDA issued Final Guidance “Distribution of In Vitro Diagnostic Products Labeled for Research Use Only.” The guidance emphasizes that the FDA will review the totality of the circumstances when it comes to evaluating whether equipment and testing components are properly labeled as RUO.

it comes to evaluating whether equipment and testing components are properly labeled as RUO.

The final guidance states that merely including a labeling statement that the product is for research purposes only will not necessarily render the device exempt from the FDA’s clearance, approval, and other regulatory requirements if the circumstances surrounding the distribution, marketing and promotional practices indicate that the manufacturer knows its products are, or intends for its products to be, used for clinical diagnostic purposes.

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government’s efforts to combat COVID-19 and consistent with the direction in Executive Orders 13771 and 13924, the Department of Health and Human Services (HHS) announced rescission of guidances and other informal issuances of the FDA regarding premarket review of LDTs absent notice-and-comment rulemaking, stating that, absent notice-and-comment rulemaking, those seeking approval or clearance of, or an emergency use authorization, for an LDT may nonetheless voluntarily submit a premarket approval application, premarket notification or an EUA request, respectively, but are not required to do so.

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

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

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If the FDA determines our products or related applications should be subject to additional regulation as in vitro diagnostic devices based upon customers’ use of our products for clinical diagnostic or therapeutic decision-making purposes, our ability to market and sell our products could be impeded and our business, prospects, results of operations and financial condition may be adversely affected.

In addition, the FDA could consider our products to be misbranded or adulterated under the Federal Food, Drug, and Cosmetic Act and subject to recall and/or other enforcement action.

In addition, the FDA could consider our products to be misbranded or adulterated under the FD&C Act and subject to recall and/or other enforcement action.

Compliance or the failure to comply with current and future regulations affecting our products and business operations worldwide, such as environmental regulations enacted in the European Union, could cause us significant expense and adversely impact our business.

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

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

During the years 2022 and 2021 approximately 59% and 56%, respectively, of our product and service revenue was generated from sales to customers located outs ide of the United States.

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

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• difficulties protecting or procuring intellectual property rights.

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

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

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

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

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

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

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

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

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

In addition, the United States has commenced certain trade actions as a result of the Russian invasion of Ukraine, which has resulted in retaliatory measures by Russia.

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

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

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

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

Any additional changes in export control laws, sanctions requirements, or our operations in the affected regions may require us to expend additional resources or to discontinue certain products or services, which would negatively affect our business, financial condition, and operating results.

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

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

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

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

Adverse economic conditions in the U.S.

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

Even before the current public health crisis took hold,

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

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

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

and international markets, including any worldwide economic disruption related to another or worsening global pandemic or a recession, could negatively impact our revenues and results of operations.

The global credit and financial markets continue to experience volatility and disruptions, including diminished liquidity and credit availability, increased concerns about inflation, and uncertainty about economic stability.

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

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

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dollar and foreign currencies.

A majority of our product sales are currently denominated in U.S.

Our revenue is generally denominated in the local currency of the contracting party.

Historically, the majority of our revenue has been denominated in U.S.

dollars and fluctuations in the value of the U.S.

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dollar decreases relative to the Singapore dollar or the Canadian dollar, it would become more costly in U.S.

dollars for us to manufacture our products in Singapore and/or in Canada.

Additionally, our expenses are generally denominated in the currencies of the countries in which our operations are located, which is primarily in the United States, with a portion of expenses incurred in Singapore and Canada where a significant portion of our manufacturing operations are located.

dollars for us to manufacture our products in Singapore

and/or in Canada.

Additionally, our expenses are generally denominated in the currencies where our operations are located, which is primarily in the United States, with a portion of expenses incurred in Singapore and Canada where our manufacturing facilities are located.

Our results of operations and cash flows are, therefore, subject to fluctuations due to changes in foreign currency exchange rates.

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FINANCIAL, TAX, AND ACCOUNTING RISKS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

• funding our operations;

• debt repayments;

• acquiring other businesses or assets and licensing technologies;

• expanding the commercialization of our products;

• furthering our research and development.

• acquiring other businesses or assets and licensing technologies.

Our future funding requirements will depend on many factors, including:

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• variability in sales and timing of related cash collections;

• the effectiveness of our efficiency and cost-savings initiatives;

• the effectiveness of our efficiency, cost-savings and other strategic initiatives (including those contemplated by the restructuring plan that we announced in August 2022);

• the impact of any natural disasters or public health crises (including the COVID-19 pandemic);

• the effect of competing technological and market developments;

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

• the extent to which we acquire, license or otherwise invest in businesses, products, and technologies.

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

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Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all.

The ongoing COVID-19 pandemic has led to significant disruption and volatility in the global capital markets, increasing the cost of—and adversely impacting access to—capital.

We entered into an Open Market Sale Agreement (Sale Agreement) with Jefferies LLC (Jefferies) to sell shares of our common stock having aggregate sales proceeds of up to $50 million, from time to time, through an at-the-market (ATM) equity offering program under which Jefferies acts as sales agent.

During the third quarter of 2020, we sold approximately 2.5 million shares of our common stock pursuant to the Sale Agreement, for aggregate gross proceeds of $20.9 million.

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

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

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

In recent years, there has been significant volatility in the global capital markets, increasing the cost of—and adversely impacting access to—capital.

If we raise additional funds by issuing equity securities, our stock holders will experience dilution.

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

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

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If we do not have or are unable to raise adequate funds, we may have to liquidate some or all of our assets, delay development or commercialization of our products, or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize.

We also may have to reduce marketing, customer support, research and development, or other resources devoted to our products, or cease operations.

We also may have to reduce marketing, customer support, research and

development, or other resources devoted to our products, or cease operations.

Any of these factors could harm our operating results.

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We currently do not have an internal audit group, and we continue to evaluate our need for additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.

Moreover, if we do not comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Stock Market LLC, the SEC, or other regulatory authorities, which would require additional financial and management resources.

We also monitor our ability to retain and motivate our key existing workers with highly trained accounting and finance skills in a competitive market.

Our restructuring activities could diminish our resource capacity and impact our control processes with changes implemented.

Our planned enterprise resource planning (ERP) upgrade in 2023 will also result in changes to our processes and control procedures.

If we do not comply with the requirements of Section 404, or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by The Nasdaq Stock Market LLC, the Securities and Exchange Commission (SEC), or other regulatory authorities, which would require additional financial and management resources.

We may not realize the value of our goodwill or other intangible assets, which would be reflected in an impairment charge.

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

(DVS) in February 2014 and InstruNor in 2020.

in February 2014 and InstruNor AS in 2020.

In addition, if in the future we acquire additional businesses, technologies, or other intangible assets, a substantial portion of the value of such assets may be recorded as goodwill or intangible assets.

We assess the realizability of goodwill and indefinite-lived intangible assets annually as well as whenever events or changes in circumstances indicate that these assets may be impaired.

We assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.

These events or circumstances would generally include operating losses or a significant decline in earnings associated with the acquired business or asset.

Our ability to realize the value of the goodwill and intangible assets will depend on the future cash flows of these businesses.

We also assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.

These events or circumstances may include a significant deterioration in overall economic conditions, a decline in our market capitalization, reorganizations of our business, the disposal of all or a portion of a reporting unit, operating losses or a significant decline in earnings associated with the acquired business or asset.

Our ability to realize the value of the goodwill and intangible assets will depend on the future cash flows of these businesses, including our ability to realize revenue growth, cost savings, and other macro factors which impact the enterprise value.

These cash flows in turn depend in part on how well we have integrated these businesses.

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

If we fail to comply with the covenants and other obligations under our debt facilities, the lenders may be able to accelerate amounts owed under the facilities and, in the case of our Credit Facility (as defined below), may foreclose upon the assets securing our obligations.

In August 2021, we amended our Loan and Security Agreement dated as of August 2, 2018, between the Company and Silicon Valley Bank (SVB) (the Credit Agreement), which provides for secured revolving loans in an aggregate amount of up to $15.0 million (the Revolving Credit Facility), to extend the maturity date to August 2, 2023 and to provide for a new $10.0 million term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).

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 on goodwill as of August 31, 2022 and September 30, 2022 and on long-lived intangibles as of August 31, 2022 and concluded there was no impairment.

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.

We performed our annual goodwill assessment as of December 31, 2022 and concluded that we did not have a goodwill impairment as of December 31, 2022.

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

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 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.

In August 2021, we amended our Revolving Credit Facility to extend the maturity date to August 2, 2023 and to provide for a new $10.0 million term loan facility (the Term Loan Facility and, together with the Revolving Credit Facility, the Credit Facility).

The 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.

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

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

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

If we fail to comply with the covenants and our other obligations under the Credit Facility, the lenders would be able to accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.

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

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

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

If we fail to comply with the covenants and our other obligations under the Bridge Loan Agreements, the lenders would, subject to a subordination agreement, be able to accelerate the required repayment of amounts due under the Bridge Loan Agreements.

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

If we fail to comply with the covenants and our other obligations under the Credit Facility, the lending bank would be able to accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.

On March 10, 2023, Silicon Valley Bank was announced as closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation has been appointed as a receiver.

As a result, we no longer expect to be able to draw on the Revolving Credit Facility.

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

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

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

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

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

There is no assurance that we will be able to fully utilize our NOLs or other tax benefits, which could adversely impact our results of operations.

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

In 2022, we experienced an ownership change, which substantially limited our ability to use our NOLs.

There is no assurance that we will be able to fully utilize our future NOLs or other tax benefits, which could adversely impact our results of operations.

We believe that these tax benefits are a valuable asset for us and we monitor our stock ownership to determine whether our NOLs are at material risk of limitation based on an ownership change pursuant to Section 382.

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Internal Revenue Service or other taxing authorities disagree with the positions, our effective income tax rate could be adversely affected and we could have additional tax liability, including interest and penalties.

From time to time, we may review our corporate structure and tax positions in the various international jurisdictions in which we operate and such review may result in changes to how we structure our international business operations, which may adversely impact our effective income tax rate.

time to time, we may review our corporate structure and tax positions in the various international jurisdictions in which we operate and such review may result in changes to how we structure our international business operations, which may adversely impact our effective income tax rate.

Our effective income tax rate could also be adversely affected by changes in the mix of earnings in tax jurisdictions with different statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in existing tax laws or tax rates, changes in the level of non-deductible expenses (including share-based compensation), changes in our future levels of research and development spending, mergers and acquisitions, or the result of examinations by various tax authorities.

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We have significant outstanding convertible debt.

As of December 31, 2021, we had outstanding $0.6 million aggregate principal amount of our 2.75% Senior Convertible Notes due 2034 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% convertible senior notes due 2024 (2019 Notes, and collectively with the 2014 Notes, the Convertible Notes).

As of December 31, 2022, we had outstanding $0.6 million aggregate principal amount of our 2.75% Convertible Senior Notes due 2034 that were issued in February 2014 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% Convertible Senior Notes due 2024 that were issued in November 2019 (2019 Notes and, together with the 2014 Notes, the Convertible Notes).

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

Pursuant to the terms of the indenture governing the 2014 Notes (2014 Notes Indenture), holders of the 2014

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

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

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

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

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

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

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

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

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

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

A recent U.S.

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

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

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

In addition, third parties may assert

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

Our customers have been sued for various claims of intellectual property infringement in the past, and we expect that our customers will be involved in additional litigation in the future.

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Additionally, our business and product development plans anticipate and may substantially depend on future in-license agreements with additional third parties, some of which are currently in the early discussion phase.

For example, Fluidigm Canada Inc.

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

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

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

For example, our Canadian subsidiary (SB Canada) was party to an interim license agreement, now expired, under which the licensor granted SB Canada a worldwide, non-exclusive, research use only, royalty bearing license to certain cytometric reagents, instruments, and other products.

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

In-licensed intellectual property rights that are fundamental to our business being operated present numerous risks and limitations.

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

Potential disputes between us and one of our existing licensors concerning the terms or conditions of the applicable license agreement could result, among other risks, in substantial management distraction;

Potential disputes between us and one of our existing licensors concerning the terms or

conditions of the applicable license agreement could result, among other risks, in substantial management distraction;

increased expenses associated with litigation or efforts to resolve disputes;

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Waivers may be requested prior to any government notification.

We have assisted the licensors of these technologies with the analysis of the domestic manufacturing requirement, and, in December 2008, the sole licensor subject to the requirement applied for a waiver of the domestic manufacturing requirement with respect to the relevant patents licensed to us by this licensor.

In July 2009, the funding government agency granted the requested waiver of the domestic manufacturing requirement for a three-year period commencing in July 2009.

In June 2012, the licensor requested a continued waiver of the domestic manufacturing requirement with respect to the relevant patents, but the government agency has not yet taken any action in response to this request.

If the government agency does not grant the requested waiver or the government fails to grant additional waivers of such requirement that may be sought in the future, then the U.S.

government could exercise its march-in rights with respect to the relevant patents licensed to us.

In addition, the license agreement under which the relevant patents are licensed to us contains provisions that obligate us to comply with this domestic manufacturing requirement.

We are not currently manufacturing instruments and IFCs in the United States that incorporate the relevant licensed technology.

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

Any of the exercise of march-in rights, the

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

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

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

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

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As of December 31, 2022, we had 79,481,514 shares of common stock outstanding, and stockholders holding at least 5% of our stock, individually or with affiliated persons or entities, collectively beneficially owned or controlled approximately 51% of such shares.

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

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

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

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These factors include:

• the impact of public health crises, including the COVID-19 pandemic, on global financial markets;

• actual or anticipated quarterly variation in our results of operations or the results of our competitors;

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• failure to complete significant sales;

• manufacturing disruptions that could occur if we are unable to successfully expand our production in our current or an alternative facility;

• manufacturing disruptions that could occur if we are unable to successfully expand our production in our current or alternative facilities;

• supply chain disruptions;

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

• the impact of public health crises, including the COVID-19 pandemic, on global financial markets;

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

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

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

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

• general economic conditions, including current macroeconomic trends and geopolitical events, and slow or negative growth of our markets.

The stock market in general, and market prices for the securities of technology-based companies like ours in particular, have from time to time experienced volatility that often has been unrelated to the operating performance of the underlying companies.

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

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

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

Such actions can be costly, divert the time and attention of our management and could negatively impact our operating results.

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

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In addition, in the future, we may issue additional shares of common stock or other equity or debt securities convertible into common stock in connection with a financing, acquisition, litigation settlement, employee arrangements or otherwise.

Any such future issuance, including any issuances pursuant to our ATM equity offering program under our Sale Agreement with Jefferies, could result in substantial dilution to our existing stockholders and could cause our stock price to decline.

We will have broad discretion over the use of the proceeds to us from our ATM equity offering program and may apply the proceeds to uses that do not improve our operating results or the value of your securities.

We will have broad discretion to use the net proceeds to us from our ATM equity offering program, and investors will be relying solely on the judgment of our board of directors and management regarding the application of these proceeds.

Investors will not have the opportunity, as part of their investment decision, to assess whether the proceeds are being used appropriately.

Our use of the proceeds may not improve our operating results or increase the value of the securities offered pursuant to the ATM equity offering program.

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

Any such future issuance could result in substantial dilution to our existing stockholders and could cause our stock price to decline.

If securities or industry analysts publish unfavorable research about us, or if they commence coverage of us and then cease to cover us, our stock price and/or trading volume could decline.

The trading market for our common stock may rely, in part, on the research and reports that equity research analysts publish about us and our business.

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The price of our stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research.

If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

If one or more equity research analysts commence coverage of us and then cease coverage of our company or fails to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

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

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

the jurisdiction of such court (and the indispensable party does not consent to the personal jurisdiction of such court within 10 days following such determination), which is vested in the exclusive jurisdiction of a court or forum other than such court or for which such court does not have subject matter jurisdiction):

• any derivative action or proceeding brought on our behalf;

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

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

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

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

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

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

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

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

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

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

As a result of the Private Placement Issuance (as defined below), the Purchasers (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions, and the Purchasers’ interests may conflict with those of our other stockholders.

In April 2022, (i) we issued and sold to (a) Casdin Private Growth Equity Fund II, L.P.

and Casdin Partners Master Fund, L.P.

(collectively, Casdin) an aggregate of 112,500 shares of our Series B-1 Convertible Preferred Stock, par value $0.001 per share (Series B-1 Preferred Stock) and (b) Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers) an aggregate of 112,500 shares of our Series B-2 Convertible Preferred Stock, par value $0.001 per share (Series B-2 Preferred Stock and, together with the Series B-1 Preferred Stock, the Series B Preferred Stock) and (ii) in connection therewith, bridge loans previously provided to us by the Purchasers were automatically converted into an aggregate of 30,559 shares of Series B Preferred Stock (such transactions, collectively, the Private Placement Issuance).

The Series B Preferred Stock is initially convertible into up to approximately 75,164,397 shares of our common stock (without giving effect to limitations associated with any conversion cap).

On an as-converted basis, this collectively represents approximately 48.6% of our issued and outstanding common stock (equating to approximately 24.3% per Purchaser) based on the number of shares of common stock outstanding as of December 31, 2022, but assuming full conversion of all Series B Preferred Stock (without giving effect to limitations associated with any conversion cap).

As a result, the Purchasers are our largest stockholders on an as-converted to common basis.

This concentration of ownership, together with the voting rights, director designation rights and consent rights granted to the Purchasers as part of the Private Placement Issuance, may adversely affect the market price of our common stock.

The Purchasers, if they acted together, could significantly influence all matters requiring approval by our stockholders, including the election of directors and the

approval of mergers or other business combination transactions.

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

RISKS RELATED TO OUR CAPITAL STRUCTURE

The market value of our common stock could decline if the Purchasers sell their Series B Preferred Stock or common stock.

Pursuant to the Registration Rights Agreement that we entered into on January 23, 2022 with the Purchasers, we registered the resale of the shares of common stock issuable upon conversion of the Series B Preferred Stock with the SEC, which means that such shares would become eligible for resale in the public markets, subject to any applicable transfer restrictions.

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

Our Series B Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders, which could adversely affect our liquidity and financial condition, result in the interests of holders of our Series B Preferred Stock differing from those of our common stockholders and make an acquisition of us more difficult.

Holders of our Series B Preferred Stock have (i) a liquidation preference, (ii) rights to dividends, which are senior to all of our other equity securities, (iii) the right to require us to repurchase any or all of their Series B Preferred Stock in connection with certain change of control events, and (iv) conversion price adjustments upon the occurrence of certain events, each subject to the terms, conditions and exceptions contained in the applicable Certificate of Designations.

These dividend and other rights and obligations could impact our liquidity and reduce the amount of cash flows available for working capital, capital expenditures, growth opportunities, acquisitions, and other general corporate purposes.

The terms of our Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

The preferential rights could also result in divergent interests between the Purchasers and holders of our common stock.

Furthermore, a sale of our Company, as a change of control event, may require us to repurchase the Series B Preferred Stock, which could have the effect of making an acquisition of our Company more expensive and potentially deterring proposed transactions that may otherwise be beneficial to our stockholders.

The holders of our Series B Preferred Stock are entitled to vote with the holders of our common stock with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock, and the holders of our Series B Preferred Stock have rights to approve certain actions.

The holders of our Series B Preferred Stock may exercise influence over us, including through the ability of the holders of the Series B-1 Preferred Stock and the holders of the Series B-2 Preferred Stock to each designate a member of our board of directors.

The holders of our Series B Preferred Stock are generally entitled to vote with the holders of our common stock on all matters submitted for a vote of holders of our common stock (voting together with the holders of common stock as one class) with voting power measured in a manner related to the conversion ratio of the shares of Series B Preferred Stock, subject to certain voting limitations as described in the applicable Certificate of Designations.

Additionally, the consent of the holders of at least 60% of the shares of Series B Preferred Stock is required for, among other things, (i) amendments to our certificate of incorporation or bylaws that have an adverse effect on the rights, preferences, privileges or voting powers of the Series B Preferred Stock and (ii) issuances by us of securities that are senior to, or equal in priority with, the Series B Preferred Stock.

Additionally, pursuant to the Certificates of Designations for the Series B Preferred Stock, the holders of a majority of the outstanding Series B-1 Preferred Stock and the holders of a majority of the outstanding Series B-2 Preferred Stock each have the right to nominate and elect one member to our board of directors at each annual meeting of the stockholders of the Company or at any special meeting called for the purpose of electing directors, for so long as the Casdin Preferred Percentage or Viking Preferred Percentage (each as defined in the applicable Certificate of Designations), as applicable, is equal to or greater than 7.5%.

Such directors are not subject to the classified board of directors provisions of our certificate of incorporation, and are entitled to serve on committees of our board of directors, subject to applicable law and Nasdaq rules.

Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the directors designated by the holders of Series B Preferred Stock may differ from the interests of our security holders as a whole or of our other directors.

These significant stockholders may be able to determine or significantly influence matters requiring stockholder approval.

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

The Certificates of Designations for the Series B Preferred Stock also provide that for so long as the Casdin Preferred Percentage or Viking Preferred Percentage, as applicable, is equal to or greater than 7.5%, the director designated by the holders of the Series B-1 Preferred Stock or the Series B-2 Preferred Stock, as applicable, will have certain consent rights over, among other things:

(i) any increase in the number of directors on our board of directors beyond seven;

(ii) the hiring, promotion, demotion, or termination of the Company’s Chief Executive Officer;

(iii) entering into or modifying (including by waiver) any transaction, agreement or arrangement with any Related Person (as defined in the Certificates of Designations for the Series B Preferred Stock), subject to certain exceptions;

(iv) any voluntary petition under any applicable federal or state bankruptcy or insolvency law effected by the Company;

(v) any change in the principal business of the Company or entry by the Company into any material new line of business;

and (vi) for a period of three years after the closing date of the Private Placement Issuance, (A) any acquisition (including by merger, consolidation or acquisition of stock or assets) of any assets, securities or property of any other person or (B) any sale, lease, license, transfer or other disposition of any assets of the Company or any of its subsidiaries, in each case, other than acquisitions or dispositions of inventory or equipment in the ordinary course of business consistent with past practice, for consideration in excess of $50,000,000 in the aggregate in any six month period.

As a result, the holders of our Series B Preferred Stock have the ability to influence the outcome of certain matters affecting our governance and capitalization.

Our obligations to the holders of our Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.

UNRESOLVED STAFF COMMENTS

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

What changed 10-K

Item 1A. Risk Factors