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Item 1. Financial Statements

2023-08-08 compared with 2023-05-09 · 275 added, 358 removed, 334 unchanged (65% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

March 31, December 31,

(In thousands, except par value)

June 30, December 31,

Current assets:

1 unchanged sentence

Short-term investments — 84,475

Accounts receivable (net of allowances of $ 318 and $ 592 at March 31, 2023 and December 31, 2022, respectively)

Accounts receivable (net of allowances of $ 331 and $ 592 at June 30, 2023 and December 31, 2022, respectively)

15,119 17,280

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$ 0.001 par value;

256 shares authorized, issued and outstanding at March 31, 2023 and December 31, 2022;

aggregate liquidation preference of $ 255,559 at March 31, 2023 and December 31, 2022

256 shares authorized, issued and outstanding at June 30, 2023 and December 31, 2022;

aggregate liquidation preference of $ 255,559 at June 30, 2023 and December 31, 2022

311,253 311,253

1 unchanged sentence

Preferred stock:

$ 0.001 par value, 9,744 shares authorized at March 31, 2023 and December 31, 2022;

no shares issued and outstanding at March 31, 2023 and December 31, 2022

$ 0.001 par value, 9,744 shares authorized at June 30, 2023 and December 31, 2022;

no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock:

$ 0.001 par value, 400,000 shares authorized at March 31, 2023 and December 31, 2022;

80,324 and 79,904 shares issued at March 31, 2023 and December 31, 2022, respectively;

78,652 and 79,482 shares outstanding at March 31, 2023 and December 31, 2022, respectively

$ 0.001 par value, 400,000 shares authorized at June 30, 2023 and December 31, 2022;

82,002 and 79,904 shares issued at June 30, 2023 and December 31, 2022, respectively;

79,121 and 79,482 shares outstanding at June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital 853,466 847,008

2 unchanged sentences

Treasury stock at cost:

1,672 and 422 shares at March 31, 2023 and December 31, 2022, respectively

2,881 and 422 shares at June 30, 2023 and December 31, 2022, respectively

( 5,404 ) ( 563 )

5 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended March 31,

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

2023 2022 2023 2022

Product revenue $ 21,665 $ 12,219 $ 39,103 $ 32,223

2 unchanged sentences

Total revenue 27,666 18,777 52,785 45,281

Costs and expenses:

Cost of revenue:

Cost of product revenue 11,883 12,738 21,873 25,077

Cost of service revenue 2,181 1,612 4,973 3,540

Total cost of revenue 14,064 14,350 26,846 28,617

Gross profit 13,602 4,427 25,939 16,664

Operating expenses:

Research and development 6,184 12,606 12,669 21,471

Selling, general and administrative 22,600 30,084 43,895 59,569

Total costs and expenses 41,712 54,007

Restructuring and related charges 2,267 300 3,417 1,690

Total operating expenses 31,051 42,990 59,981 82,730

Loss from operations ( 17,449 ) ( 38,563 ) ( 34,042 ) ( 66,066 )

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Loss on Bridge Loans — ( 3,064 ) — ( 13,719 )

Other income, net 1,130 118

Other income (expense), net 1,839 ( 174 ) 2,969 ( 56 )

Loss before income taxes ( 16,739 ) ( 65,152 ) ( 33,319 ) ( 142,014 )

7 unchanged sentences

(In thousands)

Three Months Ended March 31,

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

2023 2022 2023 2022

Net loss $ ( 17,040 ) $ ( 63,539 ) $ ( 33,883 ) $ ( 139,827 )

1 unchanged sentence

Foreign currency translation adjustment ( 327 ) ( 485 ) ( 157 ) ( 635 )

Net change in unrealized gain on investments 398 —

Net change in unrealized gain (loss) on investments 104 ( 711 ) 502 ( 711 )

Other comprehensive income (loss), net of tax ( 223 ) ( 1,196 ) 345 ( 1,346 )

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Balance as of March 31, 2023 80,324 $ 80 $ 850,063 $ ( 1,328 ) $ ( 942,939 ) ( 1,672 ) $ ( 3,029 ) $ ( 97,153 )

Issuance of restricted stock, net of shares withheld for taxes, and other 1,410 1 ( 37 ) — — — — ( 36 )

Issuance of common stock under ESPP 268 — 326 — — — — 326

Stock-based compensation expense — — 3,114 — — — — 3,114

Repurchase of common stock — — — — — ( 1,209 ) ( 2,375 ) ( 2,375 )

Net loss — — — — ( 17,040 ) — — ( 17,040 )

Other comprehensive loss net of tax — — — ( 223 ) — — — ( 223 )

Balance as of June 30, 2023 82,002 $ 81 $ 853,466 $ ( 1,551 ) $ ( 959,979 ) ( 2,881 ) $ ( 5,404 ) $ ( 113,387 )

Common Stock Additional

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Issuance of restricted stock, net of shares withheld for taxes, and other 278 — ( 89 ) — — — — ( 89 )

Issuance of common stock from option exercises 2 2 2

Stock-based compensation expense — — 4,042 — — — — 4,042

2 unchanged sentences

Balance as of March 31, 2022 77,199 $ 77 $ 835,379 $ ( 1,057 ) $ ( 812,286 ) — $ — $ 22,113

Issuance of restricted stock, net of shares withheld for taxes, and other 1,119 1 ( 89 ) — — — — ( 88 )

Issuance of common stock under ESPP 309 1 496 — — — — 497

Issuance of common stock from option exercises 27 — 96 — — — — 96

Stock-based compensation expense — — 4,663 — — — — 4,663

Net loss — — — — ( 63,539 ) — — ( 63,539 )

Other comprehensive loss, net of tax — — — ( 1,196 ) — — — ( 1,196 )

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

See accompanying notes

2 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Operating activities

7 unchanged sentences

Provision for excess and obsolete inventory 572 4,597

Impairment of InstruNor developed technology intangible — 3,526

Amortization of debt discounts, premiums and issuance costs 410 423

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Proceeds from bridge loans — 25,000

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

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

Payment of equity issuance costs — ( 12,547 )

Repurchase of common stock ( 4,841 ) —

Proceeds from ESPP stock issuance 326 497

Payments for taxes related to net share settlement of equity awards and other ( 127 ) ( 79 )

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2023

Basis of Presentation and Organization

June 30, 2023

Organization and Basis of Presentation

Standard BioTools Inc.

(Standard BioTools or the Company), formerly known as Fluidigm Corporation, is a Delaware corporation headquartered in South San Francisco, California.

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

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

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

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements of Standard Biotools Inc.

(together with its wholly owned subsidiaries, Standard Biotools, the Company, we, our, or us) have been prepared in conformity with U.S.

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

generally accepted accounting principles (U.S.

As of March 31, 2023, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway.

As of June 30, 2023, the Company had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway.

All subsidiaries, except for Singapore, use their local currency as their functional currency.

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The year-end condensed consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S.

The condensed consolidated results of operations for the three months ended March 31, 2023 are not necessarily indicative of results to be expected for the full year or for any other year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2022 included in our Annual Report on Form 10-K, filed with the Security Exchange Commission (SEC) on March 14, 2023.

The condensed consolidated results of operations for the three and six months ended June 30, 2023 are not necessarily indicative of results to be expected for the full year or for any other year or interim period.

The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2022 included in the Annual Report on Form 10-K, filed with the Security Exchange Commission (SEC) on March 14, 2023.

Use of Estimates

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GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

We base our estimates on historical experience, the current economic environment and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities.

We assessed certain accounting matters that generally require consideration of forecasted financial information, including the impact of geopolitical factors, including the war in Ukraine;

and the possibility of a global economic recession.

The Company bases its estimates on historical experience, the current economic environment and on various other assumptions believed to be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities.

These accounting matters included but were not limited to inventory and related reserves;

the carrying value of goodwill and other long-lived assets;

and the potential outcome of uncertain tax positions that have been recognized in our consolidated financial statements or tax returns.

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

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

Recent Accounting Changes, Recently Adopted Accounting Guidance, and New Accounti ng Pronouncements

and the potential outcome of uncertain tax positions that have been recognized in the Company’s consolidated financial statements or tax returns.

The Company also uses significant judgment in determining the fair value of financial instruments, including debt and equity instruments.

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

Recent Accounti ng Pronouncements

From time to time, new accounting standards are issued by the Financial Accounting Standards Board or other standard setting bodies and adopted by the Company as of the specified effective date.

Unless otherwise discussed, the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s financial position or results of operations upon adoption.

Reclassification

Certain amounts in the condensed consolidated financial statements have been reclassified from their original presentation to conform to current year presentation.

Net Loss Per Share

Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period.

Restricted share units (RSUs), performance stock awards (PSUs), and options to purchase our common stock are considered to be potentially dilutive common shares but have been excluded from the calculation of diluted net loss per share as their effect is anti-dilutive for all periods presented.

The Company’s basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period.

Restricted share units (RSUs), performance stock awards (PSUs), and options to purchase the Company’s common stock are considered to be potentially dilutive common shares.

The following potentially dilutive common shares (in thousands) were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive:

Three Months Ended March 31,

Six Months Ended June 30,

RSUs, PSUs, and stock options 14,366 14,955

Bridge Loans — 8,979

Series B Preferred Stock 75,164 75,164

2019 Convertible Notes 18,966 18,966

2019 Convertible Notes potential make-whole shares 4,741 1,775

2014 Convertible Notes 10 10

2019 Notes (1)

18,966 18,966

2014 Notes 10 10

Total 108,506 109,095

(1) The conversion rate is subject to adjustment upon the occurrence of certain specified events, including voluntary conversion of the 2019 Notes prior to the Company’s exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined based on the effective date and current price of the Company’s common stock, subject to a minimum and maximum price per share.

The maximum number of additional shares of common stock that may be issued under the make-whole premium is 4,741,374 shares.

Refer to Note 6 for additional information on the 2019 Notes.

Revenue and Geographic Area

Disaggregation of Revenue by Product Type and Geographic Area

The following tables present our revenue based upon product type and the geographic regions of our customers’ facilities (in thousands):

Three Months Ended March 31, 2023 Three Months Ended March 31, 2022

Proteomics Genomics Total Proteomics Genomics Total

The following tables present revenue based upon product type and the geographic regions of the Company’s customers’ facilities (in thousands):

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

2023 2022 2023 2022

Instruments $ 11,587 $ 2,661 $ 17,510 $ 10,184

Consumables 10,078 9,558 21,593 22,039

Product revenue 10,047 7,391 17,438 9,136 10,868 20,004

Total product revenue 21,665 12,219 39,103 32,223

Service revenue 5,821 5,806 12,702 11,950

2 unchanged sentences

Total revenue $ 27,666 $ 18,777 $ 52,785 $ 45,281

Three Months Ended March 31,

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

2023 2022 2023 2022

Americas $ 10,448 $ 9,433 $ 22,110 $ 22,363

2 unchanged sentences

Total revenue $ 27,666 $ 18,777 $ 52,785 $ 45,281

Revenue from customers in the United States represented $ 11.2 million and $ 11.8 million, or 45 % of total revenue for the three months ended March 31, 2023 and 2022, respectively.

Revenue from customers in China totaled $ 3.4 million and $ 2.8 million, or 14 % and 11 % of total revenue for the three months ended March 31, 2023 and 2022, respectively.

Except for China, no foreign country represented more than 10% of our total revenue during the periods presented in this report.

No single customer represented more than 10% of our total revenue for the three months ended March 31, 2023 and 2022.

Revenue from our five largest customers represented 22 % and 21 % of total revenue for the three months ended March 31, 2023 and 2022, respectively.

Except for China, which represented $ 4.2 million and $ 7.4 million of the total revenue for the three and six months ended June 30, 2023, respectively, no foreign country represented more than 10% of the Company’s total revenue during the periods presented in this report.

Refer to Note 13 for additional information on revenue by reporting segment.

Unfulfilled Performance Obligations

The condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 included total deferred revenue of $ 15.5 million and $ 14.6 million, respectively.

During the three months ended March 31, 2023, $ 3.6 million of the opening deferred revenue balance was recognized as revenue and $ 4.5 million of net additional advance payments, primarily for instrument services contracts, were received from customers.

We expect to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed as of March 31, 2023 in the following periods (in thousands):

The condensed consolidated balance sheets as of June 30, 2023 and December 31, 2022 included total deferred revenue of $ 15.5 million and $ 14.6 million, respectively.

During the six months ended June 30, 2023, $ 6.8 million of the opening deferred revenue balance was recognized as revenue and $ 7.7 million of net additional advance payments, primarily for instrument service contracts, were received from customers.

The Company expects to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed as of June 30, 2023 in the following periods (in thousands):

Fiscal Year Expected Revenue (1)

2 unchanged sentences

Total $ 23,625

(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts.

(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in the Company’s condensed consolidated financial statements and are subject to change if the Company’s customers decide to cancel or modify their contracts.

Purchase orders for instrument service contracts can generally be canceled before the service period begins.

We apply the practical expedient that permits us to not disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less.

The Company also has unsatisfied performance obligations for service contracts with an expected term of one year or less not included in the amounts above.

Goodwill and Intangible Assets, net

In connection with our acquisition of DVS Sciences, In c.

in February 2014, we recorded $ 104.1 million of goodwill and $ 112.0 million of intangible assets associated with the acquired technology.

Also, in the first quarter of 2020, we recorded $ 2.2 million of goodwill and $ 5.4 million of developed technology intangibles from the InstruNor AS acquisition.

In connection with the Company’s acquisition of DVS Sciences, In c.

in February 2014, the Company recorded $ 104.1 million of goodwill and $ 112.0 million of intangible assets associated with the acquired technology.

Also, in the first quarter of 2020, the Company recorded $ 2.2 million of goodwill and $ 5.4 million of developed technology intangibles from the Company’s acquisition of InstruNor AS (InstruNor).

Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable.

Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding our future performance, strategic initiatives and overall economic factors, including the impact of rising inflation and the possibility of a global recession, to determine the existence of potential indicators of impairment.

Qualitative assessment includes assessing significant events and circumstances such as the Company’s current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the impact of rising inflation and the possibility of a global recession, to determine the existence of potential indicators of impairment.

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

There have been no indicators of impairment of goodwill, long-lived assets or intangible assets during the three months ended March 31, 2023.

There have been no indicators of impairment of goodwill, long-lived assets or intangible assets during the six months ended June 30, 2023.

In June 2022, the decision was made to discontinue further development on the pro duct lines supported by the InstruNor developed technology and an impairment charge of $ 3.5 million, representing the remaining carrying value of the intangible asset, was recorded in research and development expense.

Intangible assets with finite lives include developed technology, patents and licenses.

1 unchanged sentence

Intangible assets, net, were as follows (in thousands):

March 31, 2023

June 30, 2023

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

5 unchanged sentences

Patents and licenses $ 11,247 $ ( 10,669 ) $ 578 7.0 years

Total amortization expense of our intangible assets was $ 3.0 million and $ 3.1 million for the three months ended March 31, 2023 and 2022, respectively .

Based on the carrying value of intangible assets as of March 31, 2023, we expect our estimated future amortization expense to be as follows (in thousands):

Total amortization expense of our intangible assets was $ 3.0 million and $ 3.2 million for the three months ended June 30, 2023 and 2022, respectively.

Total amortization expense for the six months ended June 30, 2023 and 2022 was $ 5.9 million and $ 6.3 million, respectively.

The $ 3.5 million impairment charge resulting in the write-off of InstruNor’s developed technology intangible is reflected in the accumulated amortization balance shown in the above table.

Based on the carrying value of intangible assets as of June 30, 2023, the Company expects estimated future amortization expense to be as follows (in thousands):

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

5 unchanged sentences

Cash, cash equivalents and restricted cash consisted of the following (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Cash and cash equivalents $ 142,304 $ 81,309

4 unchanged sentences

Inventories, net consisted of the follo wing (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Raw materials $ 16,876 $ 16,866

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Property and equipment, net consisted of the following (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Laboratory and manufacturing equipment $ 33,856 $ 33,329

8 unchanged sentences

Accrued compensation and related benefits, which are included in current liabilities on the condensed consolidated balance sheets consisted of the following (in thousands):

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Accrued incentive compensation $ 3,694 $ 1,170

1 unchanged sentence

Accrued payroll taxes and other 1,276 1,174

Accrued severance and retention payments 595 775

Accrued restructuring 1,922 4,014

2 unchanged sentences

Deferred Grant Income

In September 2020, we executed a contract with the National Institutes of Health (NIH) under their Rapid Acceleration of Diagnostics program to support the expansion of our production capacity and throughput capabilities for COVID-19 test products that use our genomics technology.

Under the now-completed contract, we received $ 34.0 million of funding from the NIH and used $ 22.2 million for capital expenditures on expansion of production capacity.

The amortization of the deferred income, which is offset against depreciation, was $ 0.9 million and $ 0.8 million for the three months ended March 31, 2023 and March 31, 2022, respectively.

Cumulative amounts applied against depreciation expense for these assets placed in service were $ 5.1 million and $ 4.2 million as of March 31, 2023 and December 31, 2022, respectively, and the carrying values of these assets were $ 17.1 million and $ 18.0 million, respectively, as of these same dates.

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

In September 2020, the Company executed a contract with the National Institutes of Health (NIH) under NIH’s Rapid Acceleration of Diagnostics program to support the expansion of the Company’s production capacity for its COVID-19 test products.

Under the now-completed contract, the Company received $ 34.0 million of funding from the NIH and used $ 22.2 million on capital expenditures for their Singapore manufacturing facility.

The amortization of the deferred income, which is offset against depreciation, was $ 0.9 million and $ 0.8 million for the three months ended June 30, 2023 and June 30, 2022, respectively, and $ 1.8 million and $ 1.7 million for the six months ended June 30, 2023 and June 30, 2022, respectively Cumulative amounts applied against depreciation expense for these assets placed in service were $ 6.0 million and $ 4.2 million as of June 30, 2023 and December 31, 2022, respectively, and the carrying values of these assets were $ 16.2 million and $ 18.0 million, respectively, as of these same dates.

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

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

The current and non-current portions of deferred grant income were as follows (in thousands):

March 31, 2023 December 31, 2022

Deferred grant income, current $ 3,637 $ 3,644

Deferred grant income, non-current 13,452 14,359

Total deferred grant income $ 17,089 $ 18,003

2014 Senior Convertible Notes (2014 Notes) and 2019 Senior Convertible Notes (2019 Notes)

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

March 31, 2023 December 31, 2022

2.75 % 2014 Notes due 2034

Principal amount $ 578 $ 578

Unamortized debt discount ( 7 ) ( 8 )

Unamortized debt issuance cost ( 2 ) ( 2 )

Net carrying value of 2014 Notes

5.25 % 2019 Notes due 2024

Principal amount $ 55,000 $ 55,000

Unamortized debt issuance cost ( 836 ) ( 953 )

Net carrying value of 2019 Notes $ 54,164 $ 54,047

Net carrying value of all Notes $ 54,733 $ 54,615

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

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

The effective interest rate on the 2014 Notes, reflecting the impact of debt discounts and issuance costs, is approximately 2.9 % per annum.

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

Holders may require us to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024 and February 6, 2029, at a repurchase price in cash equal to 100 % of the principal amount of the 2014 Notes plus accrued and unpaid interest.

In November 2019, we issued $ 55.0 million aggregate principal amount of 2019 Notes.

Total debt consists of the following (in thousands):

June 30, 2023 December 31, 2022

Convertible notes:

2014 Notes $ 568 568

2019 Notes 54,285 54,047

Total convertible notes, net 54,853 54,615

Term loan, non-current 5,809 8,194

Term loan, current 4,583 2,083

Total debt $ 65,245 $ 64,892

Convertible Notes

In February 2014, the Company closed an underwritten public offering of 2014 Senior Convertible Notes (2014 Notes), which will mature on February 1, 2034, unless earlier converted, redeemed, or repurchased in accordance with the terms of the 2014 Notes.

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

In November 2019, the Company issued $ 55.0 million aggregate principal amount of 2019 Senior Convertible Notes (2019 Notes).

Net proceeds from the 2019 Notes issuance of $ 52.7 million, after deductions for commissions and other debt issuance costs were used to retire all but $ 1.1 million of the aggregate principal value of the 2014 Notes then outstanding.

In February 2021, holders of $ 0.5 million of the 2014 Notes required us to repurchase their notes at 100 % of the principal amount plus accrued and unpaid interest, leaving $ 0.6 million aggregate principal outstanding at March 31, 2023.

The 2019 Notes bear interest at 5.25 % per annum, payable semiannually on June 1 and December 1 of each year, beginning on June 1, 2020.

The 2019 Notes bear interest at 5.25 % per annum, payable semiannually on June 1 and December 1 of each year.

The 2019 Notes will mature on December 1, 2024, unless earlier repurchased or converted pursuant to their terms.

The 2019 Notes will be convertible at the option of the holder at any point prior to the close of business on the second scheduled trading day preceding the maturity date.

The initial conversion rate of the 2019 Notes is 344.8276 shares of our common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $ 2.90 per share).

The initial conversion rate of the 2019 Notes is 344.8276 shares of the Company’s common stock per $1,000 principal amount of 2019 Notes (which is equivalent to an initial conversion price of approximately $ 2.90 per share).

The conversion rate is subject to adjustment upon the occurrence of certain specified events.

Those certain specified events include voluntary conversion of the 2019 Notes prior to our exercise of the Issuer’s Conversion Option or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes.

Those certain specified events include voluntary conversion of the 2019 Notes prior to the Company’s exercise of the Issuer’s Conversion Option (as defined therein) or in connection with a make-whole fundamental change, entitling the holders, under certain circumstances, to a make-whole premium in the form of an increase in the conversion rate determined by reference to a make-whole table set forth in the indenture governing the 2019 Notes.

The conversion rate will not be adjusted for any accrued and unpaid interest.

The 2019 Notes will also be convertible at our option upon certain conditions in accordance with the terms of the indenture governing the 2019 Notes.

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

Offering-related costs for the 2019 Notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes.

The effective rate on the 2019 Notes is 6.2 % per annum.

Revolving Credit Facility and Term Loan Facility, net

The 2019 Notes are convertible at the Company’s option in whole but not in part into shares of the Company’s common stock upon certain conditions if the volume-weighted average price of the Company’s common stock has equaled or exceeded 130 % of the Conversion Price then in effect for a specified number of days.

Offering-related costs related to both notes were capitalized as debt issuance costs and are recorded as an offset to the carrying value of the 2019 Notes.

Revolving Credit Facility

On August 2, 2018, we entered into a revolving credit facility with Silicon Valley Bank (SVB) (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.

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

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

The Credit Facility also includes a financial covenant that requires us to maintain a minimum Adjusted Quick Ratio of at least 1.25 to 1.00 and a liquidity requirement of greater than $ 20 million, which are both defined in the Credit Facility.

The interest rate on advances made under the Revolving Credit Facility is the greater of (i) prime rate plus 0.50 % or (ii) 5.25 % per annum.

Interest on any outstanding advances is due and payable monthly and the principal balance is due at maturity, though loans can be prepaid at any time without penalty.

Fees for the Revolving Credit Facility include an annual commitment fee of $ 112,500 and a quarterly unused line fee based on the Borrowing Base.

As of March 31, 2023, there were no borrowings under the Revolving Credit Facility and the total amount available was $ 7.1 million.

On August 2, 2018, the Company entered into a revolving credit facility with Silicon Valley Bank (SVB) (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 eligible receivables and (b) 50 % of 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.

The Credit Facility was collateralized by substantially all the Company’s property, other than intellectual property and contains certain financial covenants and expired on August 2, 2023 .

As of June 30, 2023, the Company was in compliance with all financial covenants.

There were no borrowings under the Revolving Credit Facility and the total amount available was $ 7.1 million.

On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation was appointed as receiver.

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Term Loan Facility, net

As of March 31, 2023, the Term Loan Facility was fully drawn and the carrying value of the loan was $ 10.3 million.

On August 2, 2021, we amended our Revolving Credit Facility to, amongst other things, provide for a new $ 10.0 million term loan facility (the Term Loan Facility).

As of June 30, 2023, the Term Loan Facility was fully drawn with an outstanding

principal balance of $ 10.0 million and a carrying value of $ 10.4 million.

The interest rate on the Term Loan Facility is the greater of 4.0 % per annum or a floating per annum rate equal to the prime rate plus 0.75 %.

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Principal balances are required to be repaid in 24 equal installments beginning on August 1, 2023.

The effective interest rate on the Term Loan Facility, reflecting the impact of debt issuance costs, the end-of-term fee and expected timing of principal repayment, was 8.4 % per annum as of March 31, 2023.

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 date 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 carrying value of our term loan was as follows (in thousands):

March 31, 2023 December 31, 2022

Term Loan Facility

Principal amount $ 10,000 $ 10,000

End-of-term fee accretion 350 296

Unamortized debt issuance cost ( 16 ) ( 19 )

Net carrying value of term loan 10,334 10,277

term loan, current 3,333 2,083

Term loan, non-current $ 7,001 $ 8,194

On January 23, 2022, we entered into separate loan agreements (the Bridge Loan Agreements) with Casdin Private Growth Equity Fund II, L.P.

and Casdin Partners Master Fund, L.P.

(collectively, Casdin) and Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking).

Under the Bridge Loan Agreements, Casdin and Viking (collectively the Lenders) each provided to the Company a $ 12.5 million term

loan (collectively, the Bridge Loans).

The Bridge Loans were fully drawn on January 24, 2022, and automatically converted into Series B Preferred Stock upon the subsequent closing of the Private Placement, as more fully discussed below in Note 9.

Prior to their conversion, the Bridge Loans bore interest at (i) a rate of 10 % per annum from the effective date of the Bridge Loan Agreements to February 28, 2022, and (ii) a rate of 12 % per annum from March 1, 2022 to the closing of the Private Placement on April 4, 2022.

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

We employed a probability‐weighted expected return method in our valuation analysis of the Bridge Loans.

The $ 10.7 million change in fair value of the Bridge Loans from $ 25.0 million at inception to $ 35.7 million as of March 31, 2022, including the portion attributable to accrued interest, was reflected as a non-operating unrealized loss on the Bridge Loans in the accompanying condensed consolidated statements of operations.

The loss was primarily due to the increase in our common stock price from $ 2.84 per share at inception of the Bridge Loans to $ 3.59 per share on March 31, 2022.

Upon conversion as of April 4, 2022, the change in the fair value from inception was $ 13.7 million and the carrying value of the Bridge Loans of $ 38.7 million was reclassified to Series B Redeemable Preferred Stock.

We have operating leases for buildings, equipment and vehicles.

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

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

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

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

On February 28, 2023, we signed a second agreement to sublease an additional 25 % of our corporate headquarters for a period of 77 months.

We expect to recognize additional sublease income of $ 9.1 million over the lease term, commencing on December 1, 2023.

Sublease income is reported in the condensed consolidated statements of operations as a reduction in selling, general and administrative expenses.

Supplemental balance sheet information related to our leases was as follows (dollars in thousands):

March 31, 2023 December 31, 2022

Operating lease right-of-use buildings $ 43,311 $ 43,500

Operating lease right-of-use equipment — 65

Operating lease right-of-use vehicles 617 749

Total operating lease right-of-use assets, gross 43,928 44,314

Accumulated amortization ( 10,954 ) ( 10,431 )

Total operating lease right-of-use assets, net $ 32,974 $ 33,883

Operating lease liabilities, current $ 3,764 $ 3,682

Operating lease liabilities, non-current 33,151 34,081

Total operating lease liabilities $ 36,915 $ 37,763

Weighted-average remaining lease term (in years) 6.6 6.8

Weighted-average discount rate per annum 11.8 % 11.8 %

However, if the principal amount of the Company’s convertible debt exceeds $ 0.6 million as of June 1, 2024 or if the maturity date of the 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.

On January 23, 2022, the Company entered into separate loan agreements (collectively, the Bridge Loan Agreements) with various investors for a $ 25.0 million term loan (collectively, the Bridge Loans).

The Bridge Loans were fully drawn on January 24, 2022, and automatically converted into Series B Preferred Stock upon the subsequent closing of the Private Placement (as defined below) on April 4, 2022 (the Closing Date).

Applying the guidance in ASC 825 Financial Instruments, the Company elected to record the Bridge Loans at their fair value using a probability‐weighted expected return method for the valuation analysis of the Bridge Loans.

This resulted in a $ 13.7 million change in fair value of the Bridge Loans from $ 25.0 million at inception to $ 38.7 million as of the Closing Date, including the portion attributable to accrued interest, which is reflected as a non-operating unrealized loss on the Bridge Loans in the accompanying condensed consolidated statements of operations for the six months ended June 30, 2022.

See Note 9 for further detail.

Commitments and Contingencies

The Company has operating leases for buildings and vehicles, which includes a facility lease for its headquarters consisting of four floors.

The Company’s facility lease has an expiration date of April 30, 2030 and contains an option to extend the lease, for up to five years , along with termination options.

The Company is utilizing one floor (19 th floor) for its corporate operations with all expense for this floor included within selling, general and administrative expense on the Company’s condensed consolidated statement of operations for the three and six months ended June 30, 2023 and 2022.

As part of the Company’s restructuring plan discussed further in Note 14 , in August 2022, the Company entered into an agreement to sublease approximately 25 % of its corporate headquarters space (18 th floor) in South San Francisco, California for a period of 39 months.

As of June 30, 2023, 30 months were remaining on the sublease.

The Company expects to recognize $ 4.7 million of sublease income over the lease term that commenced in October 2022.

In addition, on February 28, 2023, the Company signed a second agreement to sublease an additional 25 % of its corporate headquarters (21 st floor) for a period of 77 months.

The Company expects to recognize additional sublease income of $ 9.1 million over the lease term, commencing on December 1, 2023.

Rent expense, net of sublease income, is reported within restructuring and related charges for the three and six months ended June 30, 2023 in the condensed consolidated statements of operations.

The Company is currently in the process of fully vacating and potentially subleasing an additional floor (20 th floor).

Indemnification

From time to time, the Company has entered into indemnification provisions under certain of its agreements in the ordinary course of business, typically with business partners, customers, and suppliers.

Pursuant to these agreements, the Company may indemnify, hold harmless, and agree to reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to the Company’s products.

The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement.

The maximum potential amount of future payments the Company could be required to make under these indemnification provisions is typically not limited to a specific amount.

In addition, the Company has entered into indemnification agreements with its officers, directors, and certain other employees.

With certain exceptions, these agreements provide for indemnification for related expenses including, among others, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding.

From time to time, the Company may be subject to various legal proceedings and claims arising in the ordinary course of business.

These include disputes and lawsuits related to intellectual property, mergers and acquisitions, licensing, contract law, tax, regulatory, distribution arrangements, employee relations and other matters.

Periodically, the Company reviews the status of each matter and assess its potential financial exposure.

If the potential loss from any claim or legal proceeding is considered probable and a range of possible loss can be estimated, the Company accrues a liability for the estimated loss.

The Company has not recorded any such liabilities in any of the periods presented.

Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict.

Because of such uncertainties, accruals are based only on the best information available at the time.

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

Fair Value of Financial Instruments

Cash, Cash Equivalents, and Short-Term Investments

The following tables summarize our cash, cash equivalents, restricted cash, and available-for-sale securities by significant investment category within the fair value hierarchy (in thousands):

March 31, 2023

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

Cash-unrestricted $ 17,041 $ — $ 17,041 $ 17,041 $ — $ —

Cash-restricted 795 — 795 — — 795

Total cash $ 17,836 $ — $ 17,836 $ 17,041 $ — $ 795

Available-for-sale:

Fair Value of Financial Instruments

The following tables summarize the Company’s financial instruments by significant investment category measured at fair value on a recurring basis within the fair value hierarchy (in thousands):

Fair Value Measurements At Reporting Date Using

Total Quoted Prices in Active Markets For Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

As of June 30, 2023

Cash and cash equivalents:

Money market funds $ 120,975 $ 120,975 $ — $ —

treasury securities 40,978 ( 104 ) 40,874 — 40,874 —

Total available for sale 137,600 ( 104 ) 137,496 96,622 40,874 —

Total $ 155,436 $ ( 104 ) $ 155,332 $ 113,663 $ 40,874 $ 795

December 31, 2022

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

Cash-unrestricted $ 27,415 $ — $ 27,415 $ 27,415 $ — $ —

Cash-restricted 1,015 — 1,015 — — 1,015

Total cash $ 28,430 $ — $ 28,430 $ 27,415 $ — $ 1,015

Available-for-sale:

Total cash and cash equivalents $ 120,975 $ 120,975 $ — $ —

Fair Value Measurements At Reporting Date Using

Total Quoted Prices in Active Markets For Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3)

As of December 31, 2022

Cash and cash equivalents:

Money market funds $ 53,894 $ 53,894 $ — $ —

Total cash and cash equivalents $ 53,894 $ 53,894 $ — $ —

Short-term investments:

treasury securities $ 84,475 $ 84,475 $ — $ —

Total available for sale $ 138,871 $ ( 502 ) $ 138,369 $ 53,894 $ 84,475 $ —

Total $ 167,301 $ ( 502 ) $ 166,799 $ 81,309 $ 84,475 $ 1,015

There were no transfers between Level I and II measurements and no changes in the valuation techniques used during the three months ended March 31, 2023.

The money market and U.S.

treasury investments mature on or before July 6, 2023.

The 2014 Notes and 2019 Notes are not regularly traded.

Total short-term investments $ 84,475 $ 84,475 $ — $ —

Total assets measured at fair value $ 138,369 $ 138,369 $ — $ —

There were no transfers within the hierarchy and no changes in the valuation techniques used during the six months ended June 30, 2023.

The following table summarizes available-for-sale securities (in thousands):

As of June 30, 2023

Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value

Cash and cash equivalents:

Money market funds $ 120,975 $ — $ — $ 120,975

Total cash and cash equivalents $ 120,975 $ — $ — $ 120,975

As of December 31, 2022

Maturity (in years) Amortized Cost Unrealized Gains Unrealized Losses Estimated Fair Value

Cash and cash equivalents:

Money market funds $ 53,894 $ — $ — $ 53,894

Total cash and cash equivalents $ 53,894 $ — $ — $ 53,894

Short-term investments:

treasury securities 1 or less $ 84,977 $ — $ ( 502 ) $ 84,475

Total short-term investments $ 84,977 $ — $ ( 502 ) $ 84,475

Total available-for-sale securities $ 138,871 $ — $ ( 502 ) $ 138,369

As of June 30, 2023, the Company had no allowance for credit losses as it did not hold any financial instruments other than money market funds.

The 2014 Notes and 2019 Notes (collectively, the Convertible Notes) are not regularly traded.

The estimated fair values for these securities represent Level III valuations since a fair value for these securities cannot be determined by using readily observable inputs or measures, such as market prices.

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The fair value of our Term Loan Facility was estimated using a discounted cash flow model and current market interest rate data for similar loans.

Advances under the Revolving Credit Facility typically have short repayment periods and their carrying values approximate their fair values due to their short-term duration.

The Company had no advances under the Revolving Credit Facility as of March 31, 2023 or December 31, 2022.

The following table summarizes the par value, carrying value and estimated fair value of our debt (in thousands):

March 31, 2023 December 31, 2022

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

Convertible Notes:

2014 Notes $ 578 $ 569 $ 517 $ 578 $ 568 $ 498

2019 Notes 55,000 54,164 55,869 55,000 54,047 48,408

Total Notes $ 55,578 $ 54,733 $ 56,386 $ 55,578 $ 54,615 $ 48,906

Term Loan Facility, Net $ 10,000 $ 10,334 $ 10,055 $ 10,000 $ 10,277 $ 9,820

Total debt $ 65,578 $ 65,067 $ 66,441 $ 65,578 $ 64,892 $ 58,726

The carrying amounts of our lines of Term Loan Facility approximates fair value as interest rates applied to the underlying debt are adjusted quarterly to market interest rates.

The carrying value of the Convertible Notes approximates fair value as the interest rate and terms are reflective of the rate the Company could obtain on debt with similar terms and conditions.

Mezzanine Equity

Series B Redeemable Preferred Stock

On January 23, 2022, we entered into the Bridge Loan Agreements, as more fully discussed in Note 6.

Also, on that date, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements) with the Lenders.

Under the terms and conditions of the Purchase Agreements, we issued and sold an aggregate of $ 225 million of convertible preferred stock, consisting of:

On January 23, 2022, the Company entered into separate Series B Convertible Preferred Stock Purchase Agreements (collectively, the Purchase Agreements) with Casdin Private Growth Equity Fund II, L.P.

and Casdin Partners Master Fund, L.P., (collectively, Casdin) and Viking Global Opportunities Illiquid Investments Sub Master LP and Viking Global Opportunities Drawdown LP (collectively, Viking, and collectively with Casdin, the Lenders), whereby the Company issued and sold an aggregate of $ 225 million of convertible preferred stock, consisting of:

(i) 112,500 shares of the Company’s Series B-1 Convertible Preferred Stock, par value $ 0.001 per share (the Series B-1 Preferred Stock), at a purchase price of $ 1,000 per share;

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

The Private Placement closed on April 4, 2022 (the Closing Date).

Upon closing, 225,000 shares of Series B Preferred Stock were issued in accordance with the Purchase Agreements and the Bridge Loans converted into 30,559 shares of Series B Preferred Stock, for a total of 255,559 shares of Series B Preferred Stock.

The Purchase Agreements were accounted for as forward sales contracts at fair value in accordance with ASC 480 Distinguishing Liabilities from Equities because the Series B Preferred Stock included certain contingent redemption features that created an obligation for the Company to repurchase its shares.

On the Closing Date, 225,000 shares of Series B Preferred Stock were issued in accordance with the Purchase Agreements and the Bridge Loans converted into 30,559 shares of Series B Preferred Stock, for a total of 255,559 shares of Series B Preferred Stock.

The Company recorded the Series B

Preferred Stock as mezzanine equity at its fair value upon issuance, net of any issuance costs, on the condensed consolidated balance sheets as it has features, such as change of control and liquidation preference, which are outside of the Company’s control.

The Purchase Agreements were accounted for as forward sales contracts at fair value in accordance with the authoritative accounting guidance as the Series B Preferred Stock included certain contingent redemption features that created an obligation for the Company to repurchase its shares.

The fair value of the payable portion of the forward sales contracts was determined using a Monte Carlo Simulation, which relies on significant assumptions regarding the estimated yield and term of the Series B Preferred Stock.

The fair value of the 225,000 shares of Series B Preferred Stock was determined to be $ 262.8 million as of March 31, 2022 and $ 285.1 million on the Closing Date.

The $ 37.8 million and $ 60.1 million increase in the fair value of the Series B Preferred Stock from the date of the Purchase Agreements to March 31, 2022 and the Closing Date, respectively, was primarily due to the increase in our common stock price during the same period and the various conversion rights and key provisions discussed below.

The increase in fair value was included as a non-operating loss on the forward sale of Series B Preferred Stock on the condensed consolidated statements of operations.

Preferred stock is classified as debt, equity or mezzanine equity based on its redemption features.

Preferred stock with redemption features outside of the control of the issuer, such as contingent redemption features, is classified as mezzanine equity.

We recorded the Series B Preferred Stock as mezzanine equity at its fair value upon issuance, net of any issuance costs, on the condensed consolidated balance sheets because it had features, such as change of control and liquidation preference, which are outside of the Company’s control.

Subsequent adjustment of the amount presented within mezzanine equity to its redemption amount is unnecessary as it is not probable that the instrument will become redeemable.

Upon closing, the value of the Bridge Loans and the Purchase Agreements, discussed in detail above, were reclassified and included in the carrying value of the Series B Redeemable Preferred Stock.

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

T he components of the carrying value of the Series B Preferred Stock as of March 31, 2023 and December 31, 2022 were as follows (in thousands):

T he components of the carrying value of the Series B Preferred Stock as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

Proceeds from Purchase Agreements $ 225,000

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The holders of Series B Preferred Stock are entitled to participate in all dividends declared on our common stock on an as-converted basis.

The Series B Preferred Stock contains several conversion rights, redemption features and other key provisions described below.

Holder Voluntary Conversion Rights

The Series B Preferred Stock is convertible at the option of the holders at any time into a number of shares of common stock equal to the Conversion Rate, which is initially 294.1176 shares of common stock per share of Series B Preferred Stock, in each case subject to certain adjustments and certain limitations on conversion.

Issuer Call Provision

At any time after the fifth anniversary of the Closing Date of the Private Placement, if the last reported sale price of the Company’s common stock is greater than 250 % of the Conversion Price as of such time for at least 20 consecutive trading days, we may elect to convert all the outstanding shares of Series B Preferred Stock into shares of common stock.

Issuer Redemption Provision

After the seventh anniversary of the Closing Date of the Private Placement, subject to certain conditions, we may, at our option, redeem the outstanding shares of Series B Preferred Stock at a redemption price per share of Series B Preferred Stock, payable in cash, equal to the amount that must be paid by the Company in a corporate liquidation (the Liquidation Preference).

Change of Control Provisions

If we undergo certain change of control transactions, each holder of outstanding shares of Series B Preferred Stock will have the option, subject to the holder’s right to convert all or a portion of the shares of Series B Preferred Stock held by such holder into common stock, to require us to purchase all or a portion of such holder’s outstanding shares of Series B Preferred Stock that have not been converted into common stock at a purchase price per share of Series B Preferred Stock, payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series B Preferred Stock, and (B) the amount of cash and/or other assets that such holder would have been entitled to receive if such holder had converted such share of Series B Preferred Stock into common stock immediately prior to the change of control transaction (Change of Control Put).

In the event of a change of control in which we are not expected to be the surviving corporation or our common stock will no longer be listed on a U.S.

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

Liquidation Rights

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

Shareholders’ Deficit

Stock Repurchase Program

On November 23, 2022, our board of directors authorized the repurchase of up to $ 20.0 million in shares of the Company’s common stock in the open market or in negotiated transactions through December 31, 2023.

We repurchased a total of 1,250,484 shares of common stock under the program at a cost of $ 2.5 million, excluding commission fees, for an average of $ 1.97 per share for the three months ended March 31, 2023.

On November 23, 2022, the Company’s board of directors authorized the repurchase of up to $ 20.0 million in shares of the Company’s common stock in the open market or in negotiated transactions through December 31, 2023.

The Company repurchased a total of 1,208,200 shares of common stock under the program at a cost of $ 2.4 million, excluding commission fees, for an average of $ 1.97 per share for the three months ended June 30, 2023.

Cumulative repurchases under the program amount to 2,880,993 shares at a total cost of $ 5.4 million.

T he Company had a remaining authorization to repurchase up to approximately $ 17.0 million in shares under this program as of March 31, 2023.

T he Company had a remaining authorization to repurchase up to approximately $ 14.6 million in shares under this program as of June 30, 2023.

Repurchases may be suspended or discontinued at any time at the Company’s discretion.

Private Placement

In connection with the closing of the Private Placement, our stockholders approved o n April 1, 2022, an increase in the number of shares of common stock, par value $ 0.001 per share, that we are authorized to issue from 200.0 million shares to 400.0 million shares.

Also, we adopted the 2022 Inducement Equity Incentive Plan (the 2022 Inducement Plan) with an initial reserve for issuance of approximately 9.5 million shares.

The Series B Preferred Stock issued in connection with the Private Placement contains several rights and other key provisions that may result in the conversion of the Series B Preferred Stock to our common stock, as more fully discussed in No te 9 .

Common Shares Reserved

As of March 31, 2023, we had reserved shares of common stock for future issuance under equity compensation plans as foll ows (in thousands):

Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock and Performance Share Units at Maximum Number Of Remaining Securities Available For Future Issuance

As of June 30, 2023, the Company had reserved shares of common stock for future issuance under equity compensation plans as foll ows (in thousands):

Securities To Be Issued Upon Exercise Of Options Securities To Be Issued Upon Release Of Restricted Stock Number Of Remaining Securities Available For Future Issuance

2022 Inducement Equity Incentive Plan 7,595 1,350 147

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2017 Inducement Award Plan 60 2 —

DVS Sciences Inc.

2010 Equity Incentive Plan 1 — —

2017 Employee Stock Purchase Plan — — 1,782

9,006 5,360 10,077

Included in the securities to be issued upon release of RSUs and PSUs are the maximum number of shares that could be issued for PSU awards, which can vest at 0 %- 200 % of the number of awards granted.

Benefit Plans

Our board of directors sets the terms, conditions, and restrictions related to our 2017 Employee Stock Purchase Plan (ESPP) and the grant of stock options, RSUs and PSUs under our stock-based incentive plans.

Our board of directors determines the number of awards to grant and sets the vesting criteria.

In general, RSUs vest on a quarterly basis over a period of four years from the date of grant at a rate of 25 % on the first anniversary of the grant date and ratably each quarter over the remaining 12 quarters, or ratably over 16 quarters, subject to the employees’ continued employment.

We may grant RSUs with different vesting terms from time to time.

Stock options granted under our 2022 Inducement Plan and 2011 Equity Incentive Plan (the 2011 Plan) have a term of no more than ten years from the date of grant and an exercise price of at least 100 % of the fair market value of the underlying common stock on the date of grant.

Generally, options vest at a rate of either 25 % on the first anniversary of the option grant date and ratably each month over the remaining period of 36 months, or ratably each month over 48 months.

We may grant options with different vesting terms from time to time.

For PSUs, our board of directors sets the performance objectives and other vesting provisions in determining the number of shares or value of performance units and performance shares that will be paid out.

Such payouts will be a function of the extent to which performance objectives or other vesting provisions have been achieved.

2011 Equity Incentive Plan

In January 2011, our board of directors adopted the 2011 Plan under which incentive stock options, non-statutory stock options, RSUs, stock appreciation rights, PSUs and performance shares may be granted to our employees, directors, and consultants.

In April 2019, our board of directors authorized, and in June 2019, our stockholders approved an amendment and restatement of the 2011 Plan to make various changes, including increasing the number of shares reserved for issuance by approximately 5.0 million shares and extending the term of the 2011 Plan until April 2029.

In May 2020, our board of directors authorized, and in June 2020, our stockholders approved, an increase of 1.4 million shares reserved for issuance under the 2011 Plan.

In April 2021, our board of directors authorized, and in May 2021, our stockholders approved, an additional increase of 4.1 million shares reserved for issuance under the 2011 Plan.

Our ESPP offers U.S.

and some non-U.S.

employees the right to purchase shares of our common stock.

Our ESPP program has a six-month offering period, with a new period commencing on the first trading day on or after May 31 and November 30 of each year.

Employees are eligible to participate through payroll deductions of up to 10 % of their compensation.

Employee stock purchases under this plan are limited to $ 25,000 for any calendar year.

Shares are sold to employees under the ESPP for 85 % of the lower of the fair market value of a share of our common stock on the first day of the offering period or the last day of the offering period.

2022 Inducement Equity Incentive Plan

As discussed in Note 10 , we adopted the 2022 Inducement Plan in April 2022 and reserved 9.5 million shares of common stock for the issuance of equity-based awards, including non-statutory stock options, RSUs, restricted stock, stock appreciation rights, performance shares and PSUs.

In accordance with Nasdaq listing rules, equity awards issued under the 2022 Inducement Plan are restricted to individuals who are not already employees or directors of the Company.

The terms and conditions of the 2022 Inducement Plan are substantially similar to those of the 2011 Plan.

Plan Activity

Activity under the various plans was as follows:

Stock-based Compensation

Restricted Stock Units

Number of Units

(in 000s) Weighted-Average

(in thousands) Weighted-Average

Grant Date Fair Value per Unit

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RSU forfeited ( 607 ) $ 2.36

Balance at March 31, 2023 6,565 $ 2.56

As of March 31, 2023, the unrecognized compensation costs related to outstanding unvested RSUs under our equity incentive plans were $ 13.5 million.

We expect to recognize those costs over a weighted average period of 2.7 years.

Balance at June 30, 2023 5,360 $ 2.45

As of June 30, 2023, the unrecognized compensation costs related to outstanding unvested RSUs under the Company’s equity incentive plans were $ 11.3 million.

The Company expects to recognize those costs over a weighted-average period of 2.5 years.

Stock Options

Options (in 000s) Weighted-Average

Options (in thousands) Weighted-Average

Exercise Price

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Average Remaining Contractual Life (in years) Aggregate

Value (1) in (000s)

Value (1) (in thousands)

Balance at December 31, 2022 7,882 $ 4.43 7.9 $ —

Options granted 1,959 $ 2.61 $ —

Options forfeited ( 822 ) $ 6.72 $ —

Balance at March 31, 2023 8,007 $ 3.92 8.9 $ 28

Vested at March 31, 2023 741 $ 5.92 6.2 $ 19

Unvested awards at March 31, 2023 7,266 $ 3.71 9.1 $ 9

(1) Aggregate intrinsic value as of March 31, 2023 was calculated as the difference between the closing price per share of our common stock on the last trading day of March, which was $ 1.95 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of March 31, 2023, the unrecognized compensation costs related to outstanding unvested options under our equity incentive plans were $ 14.2 million.

We expect to recognize those costs over a weighted average period of 3.3 years.

Options cancelled ( 835 ) $ 6.88 $ —

Balance at June 30, 2023 9,006 $ 3.81 8.8 $ 102

Vested at June 30, 2023 2,826 $ 4.36 8.2 $ 22

Unvested awards at June 30, 2023 6,180 $ 3.56 9.1 $ 80

(1) Aggregate intrinsic value as of June 30, 2023 was calculated as the difference between the closing price per share of the Company’s common stock on the last trading day of June, which was $ 1.93 , and the exercise price of the options, multiplied by the number of in-the-money options.

As of June 30, 2023, the unrecognized compensation costs related to outstanding unvested options under the Company’s equity incentive plans were $ 13.9 million.

The Company expects to recognize those costs over a weighted-average period of 2.7 years.

Performance-based Awards

We have granted PSUs to certain executive officers and senior level employees.

The number of PSUs ultimately earned under these awards is calculated by comparing the Total Shareholder Return (TSR) of our common stock over the applicable three-year period against the TSR of a defined group of peer companies.

The Company has granted PSUs to certain executive officers and senior level employees.

The number of PSUs ultimately earned under these awards is calculated by comparing the Total Shareholder Return (TSR) of the Company’s common stock over the applicable three-year period against the TSR of a defined group of peer companies.

The Company’s relative performance against its peer group determines the payout, which can range from 0 % to 200 % of the base awards.

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Number of Units

(in 000s) Weighted-Average

(in thousands) Weighted-Average

Grant Date Fair Value per Unit

Balance at December 31, 2022 453 $ 4.81

PSU granted — $ —

PSU released ( 52 ) $ 9.6

Performance adjustment for 2020 awards ( 401 ) $ 4.19

Balance at March 31, 2023 52 $ 9.60

As of March 31, 2023, the unrecognized compensation costs related to these awards were $ 0.2 million.

We expect to recognize those costs over a weighted average period of 0.8 years.

Balance at June 30, 2023 — $ —

Stock-based Compensation Expense

Total stock-based compensation expense recognized was as follows (in thousands):

Three Months Ended March 31,

RSUs, stock options and PSUs $ 3,060 $ 3,942

Employee stock purchase plan 88 100

Total stock-based compensation $ 3,148 $ 4,042

Our quarterly provision for income taxes is based on an estimated annual effective income tax rate.

Our quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, such as the effects of changes in tax laws or rates, in the interim period in which they occur.

We recorded an income tax expense of $ 0.3 million in the three months ended March 31, 2023 and an income tax benefit of $ 0.6 million for the three months ended March 31, 2022 .

The increase in our tax provision reflects the effect of our foreign operations, which reported pre-tax income in the first quarter of 2023 and pre-tax loss in the first quarter of 2022.

The effective tax rate (benefit) was 1.6 % in the three months ended March 31, 2023 compared to ( 0.7 %) in the three months ended March 31, 2022.

Stock-based compensation expense is reported in our condensed consolidated statement of operations as follows (in thousands):

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

2023 2022 2023 2022

Cost of product revenue $ 107 $ 163 $ 460 $ 305

Research and development expense 366 705 782 1,404

Selling, general and administrative expense 2,641 3,795 5,020 6,996

Total stock-based compensation expense $ 3,114 $ 4,663 $ 6,262 $ 8,705

The Company’s quarterly provision for income taxes is based on an estimated annual effective income tax rate.

The quarterly provision for income taxes also includes discrete items, such as changes in valuation allowances or adjustments upon finalization of tax returns as well as infrequently occurring items, if any, such as the effects of changes in tax laws or rates, in the interim period in which they occur.

The Company recorded an income tax expense of $ 0.3 million and an income tax benefit of $ 1.6 million in the three months ended June 30, 2023 and June 30, 2022, respectively.

The Company recorded an income tax expense of $ 0.6 million and an income tax benefit of $ 2.2 million in the six months ended June 30, 2023 and June 30, 2022, respectively.

The increase in our tax provision reflects the effect of our foreign operations, which reported pre-tax income in the first half of 2023 and pre-tax loss in the first half of 2022.

The Company’s effective tax rates for both periods differ from the 21% U.S.

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and foreign countries.

Our tax positions are subject to audits by multiple tax jurisdictions.

We believe that we have provided adequate reserves for uncertain tax positions for all tax years still open for assessment.

For the three months ended March 31, 2023 and 2022, we did not recognize any material interest or penalties related to uncertain tax positions.

The Company maintains a valuation allowance against its U.S.

deferred tax assets as the Company believes it is more likely than not the deferred tax assets will not be realized.

Segment Reporting

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

proteomics and genomics (also known as mass cytometry and microfluidics, respectively).

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

proteomics and genomics.

Each segment is identified by its unique portfolio of products.

Proteomics includes our instruments, consumables, software, and services based upon technologies used in the identification of proteins.

Genomics includes our instruments, consumables, software, and services based upon technologies used in the identification of genes (DNA, RNA) and their functions.

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

Proteomics includes the Company’s instruments, consumables, software, and services based upon technologies used in the identification of proteins.

Genomics includes the Company’s instruments, consumables, software, and services based upon technologies used in the identification of genes (DNA, RNA) and its functions.

The Company determines each segment’s loss from operations by subtracting direct expenses, including cost of product and service revenues, research and development expense, and sales and marketing expense, from revenues.

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

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

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

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

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

The Company does not prepare or report segmented balance sheet information as its CODM does not use the information to assess segment operating performance.

The segments adhere to the same accounting policies that the Company adheres to as a whole.

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

Our business segment information was as follows (in thousands):

Three Months Ended March 31,

The Company’s business segment information was as follows (in thousands):

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

2023 2022 2023 2022

Proteomics $ 18,088 $ 10,418 $ 33,288 $ 24,198

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Corporate expenses ( 11,035 ) ( 15,736 ) ( 21,174 ) ( 31,019 )

Restructuring and related charges ( 2,267 ) ( 300 ) ( 3,417 ) ( 1,690 )

Total loss from operations $ ( 17,449 ) $ ( 38,563 ) $ ( 34,042 ) $ ( 66,066 )

Restructuring and Other Related Costs

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

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

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

We record restructuring and other related costs as incurred.

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

We recognized $ 0.3 million of restructuring expense and $ 0.1 million of other related costs for the three months ended March 31, 2023.

We expect to complete all restructuring actions by the end of 2023 and to incur additional charges up to $ 2.0 million related primarily to employee severance and facility exit costs for the remainder of 2023.

Restructuring and Related Charges

Beginning with the appointment of the Company’s new management team in April 2022 and as further announced in August 2022, the Company has implemented a restructuring plan, including a reduction in force, to improve operational efficiency, achieve cost savings and align the Company’s workforce to the future needs of the business.

In addition to the reduction in force, the Company is reducing leased office space, optimizing its manufacturing footprint, and streamlining support functions.

The Company is developing a more disciplined cost management culture throughout its organization by investing in training and advanced information systems.

The Company records restructuring and related charges as incurred.

These items are classified within restructuring and related charges in the condensed consolidated statements of operations for the three and six months ended June 30, 2023, and primarily include severance costs as well as facility costs (net of sublease income) for leased space in South San Francisco that the Company has vacated as part of the restructuring plan.

The Company recognized restructuring and related charges of $ 2.3 million and $ 0.3 million for the three months ended June 30, 2023 and 2022, respectively, and $ 3.4 million and $ 1.7 million for the six months ended June 30, 2023 and 2022, respectively.

The Company expects to fully relieve the liability for restructuring charges primarily related to employee severance by the end of 2023.

Ongoing restructuring charges will continue to be incurred for facility related costs through the termination of the facility leases.

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

A summary of the changes in our restructuring and other related liabilities for the three months ended March 31, 2023 was as follows (in thousands):

Balance at December 31, 2022 Three Months Ended March 31, 2023 Balance at March 31, 2023

Liabilities Charges Payments Liabilities (1)

Restructuring:

Severance and employee-related benefits $ 3,220 $ 294 $ ( 1,735 ) $ 1,779

Other related costs:

Legal and consulting expenses 19 63 ( 44 ) 38

Total $ 3,239 $ 357 $ ( 1,779 ) $ 1,817

The following table summarizes the change in the Company’s restructuring and other related liabilities for the six months ended June 30, 2023 (in thousands):

Severance and other employee-related benefits (1)

Costs Legal and consulting expenses (2)

Balance at December 31, 2022 $ 4,014 $ — $ 19 $ 4,033

Restructuring and related charges 1,346 1,980 91 3,417

Cash payments ( 3,438 ) ( 1,980 ) ( 110 ) ( 5,528 )

Balance at June 30, 2023 $ 1,922 $ — $ — $ 1,922

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

(2) Liabilities related to other related costs are recorded in other accrued liabilities on the condensed consolidated balance sheets.

Restructuring and other related costs were classified in the condensed consolidated statements of operations as follows (in thousands):

Three Months Ended March 31,

Restructuring:

Cost of product and service $ 213

Research and development ( 76 )

Selling, general and administrative 157

Total restructuring 294

Other related costs:

Selling, general and administrative 63

Total other related costs 63

Total restructuring and other related costs $ 357

The Company’s restructuring and other related costs by segment and corporate were as follows (in thousands):

Three Months Ended March 31,

The Company’s restructuring and related charges by segment and corporate were as follows (in thousands):

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

2023 2022 2023 2022

Restructuring:

Proteomics $ 287 $ — $ 478 $ —

Total restructuring 294

Other related costs :

Total other related costs 63

Total restructuring and other related costs $ 357

Commitments and Contingencies

Indemnification

From time to time, we have entered into indemnification provisions under certain of our agreements in the ordinary course of business, typically with business partners, customers, and suppliers.

Pursuant to these agreements, we may indemnify, hold harmless, and agree to reimburse the indemnified parties on a case-by-case basis for losses suffered or incurred by the indemnified parties in connection with any patent or other intellectual property infringement claim by any third party with respect to our products.

The term of these indemnification provisions is generally perpetual from the time of the execution of the agreement.

The maximum potential amount of future payments we could be required to make under these indemnification provisions is typically not limited to a specific amount.

In addition, we have entered into indemnification agreements with our officers, directors, and certain other employees.

Contingencies

In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our Chief Financial Officer and our former Chief Executive Officer as defendants) in the U.S.

District Court for the Northern District of California (Reena Saintjermain, et al.

Fluidigm Corporation, et al).

On February 14, 2022, the Court granted defendants’ motion to dismiss the second amended complaint with prejudice.

On March 15, 2022, the lead plaintiff filed a notice of appeal of the District Court’s decision.

Following a hearing before t he Ninth Circuit Court of Appeals, the dismissal was affirmed on February 21, 2023 .

From time to time, we may be subject to various legal proceedings and claims arising in the ordinary course of business.

Periodically, we review the status of each matter and assess its potential financial exposure.

If the potential loss from any claim or legal proceeding is considered probable and a range of possible loss can be estimated, we accrue a liability for the estimated loss.

We have not recorded any such liabilities in any of the periods presented.

Legal proceedings are subject to uncertainties, and the outcomes are difficult to predict.

Because of such uncertainties, accruals are based only on the best information available at the time.

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

Genomics 151 — 559 —

Corporate expenses 1,829 300 2,380 1,690

Total restructuring and related charges $ 2,267 $ 300 $ 3,417 $ 1,690

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

What changed 10-Q

Item 1. Financial Statements