908 Devices Inc. 10-K

Item 8. Financial Statements and Supplementary Data. 908 DEVICES INC. Index to Consolidated Financial Statements Page(s) Report of Independent Registered Public Accounting Firm (PCAOB ID 238 ) 88 Consolidated Balance Sheets 89 Consolidated Statements of Operations and Comprehensive Loss 90 Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) 91 Consolidated Statements of Cash Flows 92 Notes to Consolidated Financial Statements 93 ​ ​ 87 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ Report of Independent Registered Public Accounting Firm ​ To the Board of Directors and Stockholders of 908 Devices Inc. ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of 908 Devices Inc. and its subsidiary (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, of redeemable convertible preferred stock and stockholders’ equity (deficit) and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. ​ We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. ​ Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ ​ ​ /s/ PricewaterhouseCoopers, LLP ​ ​ Boston, Massachusetts March 11, 2022 ​ We have served as the Company's auditor since 2013. ​ ​ 88 Table of Contents 908 DEVICES INC. Consolidated Balance Sheets (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ 2021 2020 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 224,073 ​ $ 159,227 Accounts receivable, net of allowance for doubtful accounts of $ 1,750 and $ 25 , respectively ​ 16,375 ​ 6,825 Inventory ​ 7,918 ​ 4,568 Prepaid expenses and other current assets ​ 4,527 ​ 347 Total current assets ​ 252,893 ​ 170,967 Operating lease, right-of-use assets ​ 5,182 ​ 6,287 Property and equipment, net ​ 1,603 ​ 850 Other long-term assets ​ 1,228 ​ 723 Total assets ​ $ 260,906 ​ $ 178,827 Liabilities and Stockholders' Equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 1,371 ​ $ 1,004 Accrued expenses ​ 6,961 ​ 5,038 Deferred revenue ​ 5,160 ​ 3,104 Operating lease liabilities ​ 1,344 ​ 1,187 Current portion of long-term debt ​ — ​ 500 Total current liabilities ​ 14,836 ​ 10,833 Long-term debt, net of discount and current portion ​ 15,000 ​ 14,332 Operating lease liabilities, net of current portion ​ 4,508 ​ 5,839 Deferred revenue, net of current portion ​ 11,958 ​ 8,588 Other long-term liabilities ​ — ​ 194 Total liabilities ​ 46,302 ​ 39,786 Commitments and contingencies (Note 9) ​ ​ Stockholders' equity: ​ ​ Preferred stock, $ 0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding at December 31, 2021 and December 31, 2020, respectively ​ ​ — ​ ​ — Common stock, $ 0.001 par value; 100,000,000 shares authorized; 31,077,004 shares and 27,273,095 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively ​ 31 ​ 27 Additional paid-in capital ​ 315,210 ​ 217,482 Accumulated deficit ​ ( 100,637 ) ​ ( 78,468 ) Total stockholders' equity ​ 214,604 ​ 139,041 Total liabilities and stockholders' equity ​ $ 260,906 ​ $ 178,827 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 89 Table of Contents 908 DEVICES INC. Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Revenue: ​ ​ ​ ​ Product and service revenue ​ $ 41,108 ​ $ 24,756 License and contract revenue ​ 1,098 ​ 2,138 Total revenue ​ 42,206 ​ 26,894 Cost of revenue: ​ ​ ​ ​ Product and service cost of revenue ​ 18,654 ​ 11,114 License and contract cost of revenue ​ 319 ​ 857 Total cost of revenue ​ 18,973 ​ 11,971 Gross profit ​ 23,233 ​ 14,923 Operating expenses: ​ ​ ​ ​ Research and development ​ 13,067 ​ 8,235 Selling, general and administrative ​ 32,235 ​ 12,503 Total operating expenses ​ 45,302 ​ 20,738 Loss from operations ​ ( 22,069 ) ​ ( 5,815 ) Other income (expense): ​ ​ ​ ​ Interest expense ​ ( 486 ) ​ ( 976 ) Other income (expense), net ​ 386 ​ ( 6,028 ) Total other expense, net ​ ( 100 ) ​ ( 7,004 ) Net loss and comprehensive loss ​ ​ ( 22,169 ) ​ ​ ( 12,819 ) Accretion of redeemable convertible preferred stock to redemption value ​ — ​ ( 90 ) Net loss attributable to common stockholders ​ $ ( 22,169 ) ​ $ ( 12,909 ) Net loss per share attributable to common stockholders ​ $ ( 0.79 ) ​ $ ( 2.35 ) Weighted average common shares outstanding ​ ​ 27,957,904 ​ ​ 5,485,032 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 90 Table of Contents 908 DEVICES INC. Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit) (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable Convertible ​ ​ ​ ​ Additional ​ ​ ​ Total ​ ​ Preferred Stock ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Stockholders' ​ Shares Amount Shares Amount Capital Deficit Equity (Deficit) Balances at December 31, 2019 ​ 23,905,267 ​ $ 71,017 ​ ​ 4,990,702 ​ $ 5 ​ $ 2,476 ​ $ ( 65,649 ) ​ $ ( 63,168 ) Accretion of redeemable convertible preferred stock to redemption value ​ — ​ ​ 90 ​ ​ — ​ ​ — ​ ​ ( 90 ) ​ ​ — ​ ​ ( 90 ) Conversion of preferred stock to common stock upon initial public offering ​ ( 23,905,267 ) ​ ​ ( 71,107 ) ​ ​ 14,691,929 ​ ​ 15 ​ ​ 71,092 ​ ​ — ​ ​ 71,107 Issuance of common stock upon initial public offering, net of issuance costs of $ 2,472 ​ — ​ ​ — ​ ​ 7,475,000 ​ ​ 7 ​ ​ 136,556 ​ ​ — ​ ​ 136,563 Conversion of preferred stock warrants into common stock warrants upon initial public offering ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 6,870 ​ ​ — ​ ​ 6,870 Issuance of common stock upon exercise of common stock warrants ​ — ​ ​ — ​ ​ 55,994 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Issuance of common stock upon exercise of stock options ​ — ​ ​ — ​ ​ 59,470 ​ ​ — ​ ​ 53 ​ ​ — ​ ​ 53 Stock-based compensation expense ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 525 ​ ​ — ​ ​ 525 Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 12,819 ) ​ ​ ( 12,819 ) Balances at December 31, 2020 ​ — ​ ​ — ​ ​ 27,273,095 ​ ​ 27 ​ ​ 217,482 ​ ​ ( 78,468 ) ​ ​ 139,041 Issuance of common stock upon exercise of stock options ​ — ​ ​ — ​ ​ 653,735 ​ ​ 1 ​ ​ 851 ​ ​ — ​ ​ 852 Issuance of common stock, net of issuance costs of $ 376 ​ — ​ ​ — ​ ​ 3,150,000 ​ ​ 3 ​ ​ 94,373 ​ ​ — ​ ​ 94,376 Stock-based compensation expense ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 2,504 ​ ​ — ​ ​ 2,504 Vesting of restricted stock units ​ — ​ ​ — ​ ​ 174 ​ ​ — ​ ​ — ​ ​ — ​ ​ — Net loss ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ ( 22,169 ) ​ ​ ( 22,169 ) Balances at December 31, 2021 — ​ $ — ​ ​ 31,077,004 ​ $ 31 ​ $ 315,210 ​ $ ( 100,637 ) ​ $ 214,604 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 91 Table of Contents 908 DEVICES INC. Consolidated Statements of Cash Flows (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Cash flows from operating activities: ​ ​ ​ ​ Net loss ​ $ ( 22,169 ) ​ $ ( 12,819 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ Depreciation and amortization expense ​ 925 ​ 831 Stock-based compensation expense ​ 2,504 ​ 525 Change in fair value of preferred stock warrant liability ​ — ​ 6,142 Change in fair value of commercial services agreement liability – related party ​ ​ — ​ ​ ( 750 ) Noncash interest expense and loss on extinguishment of debt ​ 178 ​ 63 Provision for inventory obsolescence ​ 191 ​ — Provision for doubtful accounts ​ ​ 1,725 ​ ​ 100 Changes in operating assets and liabilities: ​ ​ ​ ​ Accounts receivable, net ​ ( 11,275 ) ​ ( 1,820 ) Inventory ​ ( 4,481 ) ​ 223 Prepaid expenses and other current assets ​ ( 4,120 ) ​ 78 Other long-term assets ​ ( 476 ) ​ ( 212 ) Accounts payable and accrued expenses ​ 2,753 ​ 1,980 Deferred revenue ​ 5,426 ​ 9,631 Right-of-use operating lease assets ​ 1,121 ​ 1,050 Operating lease liabilities ​ ( 1,190 ) ​ ( 1,085 ) Other long-term liabilities ​ ​ ( 194 ) ​ ​ 194 Net cash provided by (used in) operating activities ​ ( 29,082 ) ​ 4,131 Cash flows from investing activities: ​ ​ ​ ​ Purchases of property and equipment ​ ( 737 ) ​ ( 9 ) Net cash used in investing activities ​ ( 737 ) ​ ( 9 ) Cash flows from financing activities: ​ ​ ​ ​ Proceeds from public offerings, net of underwriting discounts and commissions ​ ​ 94,752 ​ ​ 139,035 Payments of public offering costs ​ ​ ( 840 ) ​ ​ ( 1,896 ) Proceeds from issuance of common stock upon option exercise ​ 852 ​ 53 Proceeds from borrowings on revolving line of credit ​ 30,000 ​ — Repayment of borrowings on revolving line of credit ​ ​ ( 15,000 ) ​ ​ — Repayment of notes payable ​ ​ ( 15,000 ) ​ ​ — Payments of debt issuance costs ​ ( 39 ) ​ — Proceeds from Paycheck Protection Program loan ​ ​ — ​ ​ 2,202 Repayment of Paycheck Protection Program loan ​ ​ — ​ ​ ( 2,202 ) Net cash provided by financing activities ​ 94,725 ​ 137,192 Net increase in cash, cash equivalents and restricted cash ​ 64,906 ​ 141,314 Cash, cash equivalents and restricted cash at beginning of period ​ 159,227 ​ 17,913 Cash, cash equivalents and restricted cash at end of period ​ $ 224,133 ​ $ 159,227 Supplemental disclosure of noncash investing and financing information: ​ ​ ​ ​ Public offering costs included in accounts payable and accrued expenses ​ $ 112 ​ $ 576 Transfers of inventory to property and equipment ​ $ 940 ​ $ 346 Accretion of redeemable convertible preferred stock to redemption value ​ $ — ​ $ 90 Conversion of convertible preferred stock to common stock upon initial public offering ​ $ — ​ $ 71,107 Reclassification of warrant liability to equity upon initial public offering ​ $ — ​ $ 6,870 Reconciliation of cash, cash equivalents and restricted cash: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 224,073 ​ $ 159,227 Restricted cash included in prepaid expenses and other current assets ​ ​ 60 ​ — Total cash, cash equivalents and restricted cash shown in the statement of cash flows ​ $ 224,133 ​ $ 159,227 Supplemental disclosure of cash flow information: ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 366 ​ $ 913 The accompanying notes are an integral part of these consolidated financial statements. ​ 92 Table of Contents 908 DEVICES INC. Notes to Consolidated Financial Statements 1. Nature of the Business and Basis of Presentation 908 Devices Inc. (the “Company”) was incorporated in the State of Delaware on February 10, 2012 . The Company is a commercial-stage technology company providing a suite of purpose-built handheld and desktop mass spectrometry devices for the point-of-need to interrogate unknown and invisible materials in a broad array of markets including life sciences research, bioprocessing, industrial biotech, forensics and adjacent markets. The Company is subject to risks and uncertainties common to technology companies in the device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations. Potential risks and uncertainties also include, without limitation, uncertainties regarding the duration and magnitude of the impact of the COVID-19 pandemic on the Company’s business and the economy generally. Products currently under development will require additional research and development efforts prior to commercialization and will require additional capital and adequate personnel and infrastructure. The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval, and approved products may not prove commercially viable. The Company operates in an environment of rapid change in technology and competition. In March 2020, the World Health Organization declared the global novel coronavirus disease 2019 (“COVID-19”) outbreak a pandemic. The impact of this pandemic has been and will likely continue to be extensive in many aspects of society, which has resulted in and will likely continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world. The Company cannot at this time predict the specific extent, duration, or full impact that the COVID-19 pandemic will have on its future financial condition and operations. The impact of the COVID-19 coronavirus outbreak on the Company’s financial performance will depend on future developments, including the duration and spread of the pandemic and related governmental advisories and restrictions. These developments and the impact of COVID-19 on the financial markets and the overall economy are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s results may be materially adversely affected. Future impacts to the Company’s business as a result of COVID-19 could include disruptions to the Company’s manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts; labor shortages; decreased productivity and unavailability of materials or components; limitations on its employees’ and customers’ ability to travel, and delays in shipments to and from affected countries and within the United States. While the Company maintains an inventory of finished products and raw materials used in its products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture its products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture its products. An additional potential impact to the Company’s business is the negative impact to the Company’s customers’ and potential customer’s inability to make investments and timely payments for purchased products as a result of allocating resources to address COVID-19 issues. On December 22, 2020, the Company completed its initial public offering (“IPO”), pursuant to which it issued and sold 7,475,000 shares of common stock, inclusive of 975,000 shares pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company received net proceeds of $ 136.6 million after deducting underwriting discounts and commissions and other offering costs . Upon the closing of the IPO, all of the shares of the Company’s outstanding redeemable convertible preferred stock then outstanding automatically converted into 14,691,929 shares of common stock. 93 Table of Contents On November 15, 2021, the Company completed an underwritten public offering, pursuant to which it issued and sold 3,150,000 shares of common stock at a public offering price of $ 32.00 per share. The Company received net proceeds of $ 94.4 million after deducting underwriting discounts and commissions and other offering costs. Basis of Presentation The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, 908 Devices Securities Corporation. All intercompany balances and transactions have been eliminated. The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since inception, including net losses of $ 22.2 million and $ 12.8 million for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021, the Company had an accumulated deficit of $ 100.6 million. The Company expects to continue to generate operating losses in the foreseeable future. As of March 11, 2022, the issuance date of the consolidated financial statements, the Company expects that its cash and cash equivalents will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the consolidated financial statements. The Company may seek additional funding through private or public equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations. Although management continues to pursue these financing plans, there is no assurance that the Company will be successful in obtaining sufficient funding on terms acceptable to the Company to fund continuing operations, if at all. ​ ​ 2. Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these consolidated financial statements include, but are not limited to, revenue recognition, the valuation of inventory and the valuation of common stock and stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Due to the COVID-19 pandemic, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of March 11, 2022, the date of issuance of these consolidated financial statements. These estimates may change, as new events occur and additional information is obtained. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions. Risk of Concentrations of Credit, Significant Customers and Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains its cash and cash equivalents with two financial 94 Table of Contents institutions that management believes to be of high credit quality. The Company has not experienced any other-than-temporary losses with respect to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Significant customers are those that accounted for 10 % or more of the Company’s total revenue or accounts receivable. One customer represented 43 % and 33 % of total revenue, respectively, for the year ended December 31, 2021 and 2020. As of December 31, 2021, two customers accounted for 63 % and 11 % of gross accounts receivable. As of December 31, 2020, three customers accounted for 27 %, 11 % and 11 %, respectively, of gross accounts receivable. The credit and economic conditions within countries in Europe, Middle East and Africa that the Company does business with have been weak in recent years. These conditions have continued to deteriorate as a result of COVID-19 and may continue to increase the average length of time that it takes to collect on the accounts receivables outstanding in these countries. As of December 31, 2021, the gross accounts receivable balance from these countries amounted to $ 3.0 million, of which $ 1.7 million is more than 90 days past due and for which the Company has provided for an allowance for doubtful accounts of $ 1.7 million. Certain of the components included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers. Although the Company seeks to reduce dependence on those limited sources of suppliers and manufacturers, the partial or complete loss of certain of these sources, or the requirement to establish a new supplier for the components, could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships. Deferred Financing Costs Deferred financing costs related to a recognized debt liability are recorded as a reduction of the carrying amount of the debt liability and amortized to interest expense using the effective interest method over the repayment term of the debt. Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Accounts Receivable, net Accounts receivable are presented net of a provision for doubtful accounts, which is an estimate of amounts that may not be collectible. The allowance for doubtful accounts is the best estimate of the amount of probable credit losses in the existing accounts receivable. An allowance for doubtful accounts is established when it is probable a credit loss has been incurred based on historical collection information, a review of major customer accounts receivable balances and an assessment of current economic conditions. The Company writes off accounts receivable against the allowance when it determines a balance is uncollectible and no longer actively pursues collection of the receivable. During the year ended December 31, 2021, the Company deemed certain receivables from a customer in the Middle East uncollectible due to credit and economic conditions, including the impact of COVID-19, and recorded a provision for bad debts of $ 1.7 million. As of December 31, 2021 and 2020, the Company’s allowance for doubtful accounts were $ 1.8 million and less than $ 0.1 million, respectively. Inventory Inventory is valued at the lower of cost or net realizable value. Cost is computed using the first-in, first-out method. The Company regularly reviews inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, records charges to write down inventories to their estimated net realizable value, after evaluating historical sales, future demand, market conditions and expected product life cycles. Such charges are classified as cost of revenue in the consolidated statements of operations and comprehensive loss. Any write-down of inventory to net realizable value creates a new cost basis. 95 Table of Contents Assets Recognized from Costs to Obtain a Contract with a Customer The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were not significant during the periods presented and are included in other current assets and other long-term assets in the Company’s consolidated balance sheets. Leases The Company accounts for leases under ASC 842, Leases (“ASC 842”). In accordance with ASC 842, the Company accounts for a contract as a lease when it has the right to control the asset for a period of time while obtaining substantially all of the asset’s economic benefits. The Company determines if an arrangement is a lease or contains an embedded lease at inception. For arrangements that meet the definition of a lease, the Company determines the initial classification and measurement of its right-of-use asset and lease liability at the lease commencement date and thereafter if modified. The lease term includes any renewal options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise, the Company uses its estimated secured incremental borrowing rate for that lease term. The Company’s policy is to not record leases with an original term of twelve months or less on its consolidated balance sheets and recognizes those lease payments in the consolidated statements of operations and comprehensive loss on a straight-line basis over the lease term. The Company’s existing leases are for office and laboratory space. In addition to rent, the leases may require the Company to pay additional costs, such as utilities, maintenance and other operating costs, which are generally referred to as non-lease components. The Company has elected to not separate lease and non-lease components. Only the fixed costs for lease components and their associated non-lease components are accounted for as a single lease component and recognized as part of a right-of-use asset and liability. Rent expense for operating leases is recognized on a straight-line basis over the reasonably assured lease term based on the total lease payments and is included in operating expense in the consolidated statements of operations and comprehensive loss. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense is recognized using the straight-line method over the estimated useful life of each asset as follows: ​ ​ ​ ​ ​ Estimated Useful Life Laboratory and demonstration equipment 2 to 5 years Computer equipment and software 3 years Furniture and fixtures 7 years Leasehold improvements Shorter of remaining life of lease or useful life ​ Costs for capital assets not yet placed into service are capitalized as construction-in-progress and depreciated once placed into service. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation and amortization are removed from the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance are charged to expense as incurred. Impairment of Long-Lived Assets Long-lived assets consist of operating lease right-of-use assets and property and equipment. Long-lived assets to be held and used are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. Factors that the Company considers in deciding when to perform an impairment review include significant underperformance of the business in relation to expectations, significant negative industry or economic trends and significant changes or planned changes in the use of the assets. If an impairment review is performed to evaluate a long-lived asset group for recoverability, the Company compares forecasts 96 Table of Contents of undiscounted cash flows expected to result from the use and eventual disposition of the long-lived asset group to its carrying value. An impairment loss can be recognized in loss from operations when estimated undiscounted future cash flows expected to result from the use of an asset group are less than its carrying amount. The impairment loss is based on the excess of the carrying value of the impaired asset group over its fair value, determined based on discounted cash flows. The Company did not record any impairment losses on long-lived assets during the years ended December 31, 2021 and 2020. Software Development Costs The Company incurs costs to develop computer software that is embedded in the hardware components of the Company’s products. Research and development costs related to this software are expensed as incurred, except for costs of internally developed or externally purchased software that qualify for capitalization. Software development costs incurred subsequent to the establishment of technological feasibility, but prior to the general release of the product, are capitalized and, upon general release, are amortized based upon the pattern in which economic benefits related to such assets are realized. Due to the short time period between achieving technological feasibility and product release and the insignificant amount of costs incurred during such periods, the Company did not capitalize any software development costs during the years ended December 31, 2021 and 2020. Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company’s cash equivalents are carried at fair value, determined according to the fair value hierarchy described above (see Note 3). The carrying values of the Company’s accounts receivable, unbilled receivables, accounts payable and accrued expenses approximate their fair values due to the short-term nature of these assets and liabilities. The carrying value of the Company’s long-term debt approximates its fair value (a level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate. Product Warranties The Company offers a one-year limited warranty on most products, which is included in the selling price. The Company’s standard limited warranty covers repair or replacement. The Company provides for estimated warranty expenses as a component of cost of revenue at the time product revenue is recognized. Warranty costs are estimated based on the current expected product replacement or repair cost and expected replacement or repair rates based on historical experience. The Company evaluates its warranty accrual at the end of each reporting period and makes adjustments as necessary. 97 Table of Contents Classification and Accretion of Redeemable Convertible Preferred Stock In periods prior to the IPO, the Company classified redeemable convertible preferred stock outside of stockholders’ equity (deficit) because the shares contained certain redemption features that were not solely within the control of the Company. Costs incurred in connection with the issuance of each series of redeemable convertible preferred stock were recorded as a reduction of gross proceeds from issuance. The Company recorded periodic accretion to the values of its outstanding redeemable convertible preferred stock such that the carrying value of the redeemable convertible preferred stock would equal to the redemption value at the earliest date of redemption. Adjustments to the carrying values of the redeemable convertible preferred stock at each reporting date resulted in an increase or decrease to net income (loss) attributable to common stockholders. Preferred Stock Warrant Liability The Company classified warrants for the purchase of shares of its redeemable convertible preferred stock (see Notes 3 and 9) as a liability on its consolidated balance sheets as these warrants were freestanding financial instruments that could have required the Company to transfer assets upon exercise. The warrant liability was initially recorded at fair value upon the date of issuance of each warrant and was subsequently remeasured to fair value at each reporting date. Changes in the fair value of the warrant liability were recognized as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. On December 22, 2020, immediately prior to the closing of the IPO, these warrants were converted into warrants to purchase common stock and the fair value of the warrant liability at that time was reclassified to common stock. As a result, subsequent to the closing of the IPO, the Company no longer remeasures the fair value of the warrant liabilities at each reporting date. Segment Information The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. The Company provides a suite of purpose-built handheld and desktop mass spectrometry devices for use in a broad array of markets. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the Company’s chief operating decision maker, or decision-making group, in deciding how to allocate resources and assess performance. The Company has determined that its chief operating decision maker is its Chief Executive Officer. All of the Company’s long-lived assets are held in the United States. Revenue Recognition The Company recognizes revenue from sales to customers under ASC 606, Revenue from Contracts with Customers (“ASC 606”), by applying the following five steps: (1) identification of the contract, or contracts, with a customer, (2) identification of the performance obligations in the contract, (3) determination of the transaction price, (4) allocation of the transaction price to the performance obligations in the contract and (5) recognition of revenue when, or as, performance obligations are satisfied. For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management. Allocation of the transaction price is determined at the contract’s inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Product and Service Revenue The Company derives product and service revenue primarily from the sale of handheld and desktop products and related consumables and services. Revenue is recognized when control of the promised products, consumables or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to 98 Table of Contents be entitled to in exchange for those products, consumables or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of accounting under ASC 606. For devices and consumables sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is other than perfunctory, the customer must have accepted the product or service. The Company’s principal terms of sale are freight on board (“FOB”) shipping point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB shipping point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. For extended warranty and support, control transfers to the customer over the term of the arrangement. Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement. The Company recognizes a receivable at the point in time at which it has an unconditional right to payment. Such receivables are not contract assets. Payment terms for customer orders, including for each of the Company’s primary performance obligations, are typically 30 to 90 days after the shipment or delivery of the product, and such payments typically do not include payments that are variable, dependent on specified factors or events. In limited circumstances, there exists a right of return for product if agreed to by the Company. Revenue is only recognized for those goods that are not expected to be returned such that it is probable that there will not be a significant reversal of cumulative revenue. Service arrangements commonly call for payments in advance of performing the work (e.g., extended warranty/service contracts), upon completion of the service or a mix of both. The Company does not enter into significant financing agreements or other forms of variable consideration. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not only subject to the passage of time. The Company had no contract assets related to product or service revenue as of December 31, 2021 or 2020. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has determined that its only contract liability related to product and service revenue is deferred revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as noncurrent deferred revenue. The following is a summary of the activity of the Company’s deferred revenue related to product and service revenue (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Balances at beginning of period ​ $ 8,938 ​ $ 1,509 Recognition of revenue included in balance at beginning of the period ​ ( 2,363 ) ​ ( 666 ) Other adjustments ​ ​ ( 110 ) ​ ​ — Revenue deferred during the period, net of revenue recognized ​ 8,056 ​ 8,095 Balances at end of period ​ $ 14,521 ​ $ 8,938 99 Table of Contents ​ ​ The amount of deferred revenue equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such deferred revenue amounts related to product and service revenue are expected to be recognized in the future as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Deferred revenue expected to be recognized in: ​ ​ One year or less ​ $ 5,063 ​ $ 2,850 One to two years ​ 3,731 ​ 1,934 Three years and beyond ​ 5,727 ​ 4,154 ​ ​ $ 14,521 ​ $ 8,938 ​ As of December 31, 2021, the Company’s wholly- or partially-unsatisfied performance obligations totaled $ 7.6 million related to product and service agreements entered prior to year end, which the Company expects to recognize through 2024. License and Contract Revenue The Company generates revenue from short and long-term contracts associated with the design and development and delivery of detection devices or related design and support services. To date, these contracts are primarily with the U.S. government or commercial entities contracting with the U.S. government, but the Company has also had such contracts with commercial partners. The Company’s contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) and are priced based on estimated or actual costs of producing goods or providing services. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods or services provided under U.S. government contracts. The pricing for non-U.S. government contracts is based on the specific negotiations with each customer. Under the typical payment terms of U.S. government fixed-price contracts, the customer pays in accordance with the terms of the specific agreement, but generally through progress payments. If these progress payments are made in advance, these payments are recorded as a contract liability, classified as deferred revenue within the accompanying consolidated balance sheet, until the Company provides the underlying services. For U.S. government cost-type contracts, the customer generally pays for actual costs incurred within a short period of time. For contracts with commercial partners, payments are made in accordance with the terms of the specific agreement. For agreements which call for milestone payments, to the extent the Company does not conclude that it is probable that a significant reversal of cumulative revenue will occur, a contract asset is generated until the Company is permitted to bill for costs incurred, which is classified as prepaid expense and other current assets in the accompanying consolidated balance sheet. In some cases, payments received in advance under license agreements are recorded as deferred revenue and recognized over the respective contract term, absent any other performance obligations. Generally, revenue for long-term contracts is recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time such as not creating an asset with an alternative use and having an enforceable right to payment for completed performance. However, the Company evaluates the proper revenue recognition on a contract by contract basis, as each contract generally contains terms specific to the underlying agreement which result in differing performance obligations and payment terms (cost plus, fixed price agreements among others). For revenue recognized under the cost-to-cost measure of progress basis, the Company continually assesses total costs expected to be incurred and if such costs require adjustment to the measure of progress, the Company records such adjustment as a change in estimate on a cumulative catch-up basis in the period of adjustment. The Company includes the unconstrained amount of consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative 100 Table of Contents revenue recognized will not occur. At the end of each subsequent reporting period, as required under ASC 606, the Company re-evaluates the estimated consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time. The Company includes contract assets within prepaid and other current assets in the accompanying consolidated balance sheet. The Company had contract assets related to contract or license revenue totaling $ 0.2 million and less than $ 0.1 million, respectively, for the years ended December 31, 2021 and 2020. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. As of December 31, 2021, the Company had contract liabilities totaling $ 2.6 million related to contract and license revenue, which the Company expects to recognize during the years ended December 31, 2022 and 2023. As of December 31, 2020, the Company had contract liabilities totaling $ 2.8 million related to contract and license revenue, of which the Company recognized $ 0.2 million during the year ended December 31, 2021. The Company recognizes deferred revenue by first allocating from the beginning deferred revenue balance to the extent that the beginning deferred revenue balance exceeds the revenue to be recognized. Billings during the period are added to the deferred revenue balance to be recognized in future periods. As of December 31, 2021, the Company’s wholly- or partially-unsatisfied performance obligations totaled $ 0.7 million related to contract and license agreements entered into prior to year end, which the Company expects to recognize during the years ended December 31, 2022 and 2023. Distribution Channels A majority of the Company’s revenue is generated by sales in conjunction with its distribution partners, such as its international distributors and, in the United States, for end customers where a government contract is required or a customer has a pre-existing relationship. When the Company transacts with a distribution partner, its contractual arrangement is with the partner and not with the end-use customer. Whether the Company transacts business with and receives the order from a distribution partner or directly from an end-use customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are the same. Disaggregated Revenue The Company’s product and service revenue consists of sales of devices and consumables and the sale of service and extended warranty plans. The following table presents the Company’s revenue by revenue stream (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Product and service revenue: ​ ​ ​ Device sales revenue ​ $ 33,287 ​ $ 21,269 Consumables and service revenue ​ 7,821 ​ 3,487 Total product and service revenue ​ 41,108 ​ 24,756 License and contract revenue ​ 1,098 ​ 2,138 Total revenue ​ $ 42,206 ​ $ 26,894 ​ The following table presents the Company’s product and service revenue by device type (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Handheld ​ ​ $ 29,160 ​ $ 17,613 Desktop ​ ​ 11,948 ​ 7,143 Total product and service revenue ​ ​ $ 41,108 ​ $ 24,756 ​ 101 Table of Contents Revenue based on the end-user entity type for the Company’s product and service revenue are presented below (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Government ​ ​ $ 29,755 ​ $ 17,382 Pharmaceutical/Biotechnology ​ ​ ​ 11,264 ​ 7,096 Academia ​ ​ ​ 89 ​ 278 Total product and service revenue ​ ​ $ 41,108 ​ $ 24,756 ​ The following table disaggregates the Company’s revenue from contracts with customers by geography, which are determined based on the customer location (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Americas ​ ​ $ 35,502 ​ $ 22,166 Europe, Middle East and Africa ​ ​ ​ 4,460 ​ 2,844 Asia Pacific ​ ​ ​ 2,244 ​ 1,884 ​ ​ ​ $ 42,206 ​ $ 26,894 ​ International sales are comprised of product and service revenue, with all license and contract revenue being attributable to North America. Shipping and Handling Fees and Costs Shipping and handling fees billed to customers for product shipments are recorded in product and service revenue in the accompanying consolidated statements of operations and comprehensive loss. Shipping and handling costs incurred for inventory purchases and product shipments are recorded in cost of revenue in the accompanying consolidated statements of operations and comprehensive loss. Cost of Revenue Product cost of revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, royalties, contract manufacturer costs, salaries and other personnel costs, overhead and other direct costs related to those sales recognized as product revenue in the period. Cost of revenue for services primarily consists of salaries and other personnel costs, travel related to services provided, facility costs associated with training, warranties and other costs of servicing equipment on a return-to-factory basis and at customer sites. License and contract cost of revenue primarily consists of salaries and other personnel costs, materials, travel and other direct costs related to those revenue recognized as license and contract in the period. Research and Development Expenses Research and development expenses consist primarily of employee-related expenses incurred for research activities, product development, hardware and software engineering, consultant services and other costs associated with the Company’s technology platform and products, research materials and facilities, depreciation and maintenance expense. Advertising Expense The Company expenses costs of advertising as incurred. Advertising costs were $ 1.7 million and $ 0.4 million during the years ended December 31, 2021 and 2020, respectively. 102 Table of Contents Patent Costs All patent-related costs incurred in connection with filing and prosecuting patent applications are expensed as incurred due to the uncertainty about the recovery of the expenditure. Amounts incurred are classified as general and administrative expenses. Stock-Based Compensation The Company measures stock-based option awards granted to employees, consultants and directors based on their fair value on the date of grant using the Black-Scholes option-pricing model. The fair value of restricted stock units is determined based on the number of shares granted and the closing price of our common stock quoted on the Nasdaq Global Market on the date of grant. Compensation expense for those awards is recognized, net of estimated forfeitures, over the requisite service period, which is generally the vesting period of the respective award. The straight-line method of expense recognition is applied to all awards with service-only conditions, while the graded vesting method is applied to all grants with both service and performance conditions. The Company classifies stock-based compensation expense in its consolidated statements of operations and comprehensive loss in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified. Comprehensive Loss Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than those with stockholders. For the years ended December 31, 2021 and 2020, there was no difference between net loss and comprehensive loss. Net Income (Loss) per Share Prior to the closing of the IPO, the Company followed the two-class method when computing net income (loss) per share, as the Company had issued shares that meet the definition of participating securities. The two-class method determines net income (loss) per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Basic net income (loss) per share attributable to common stockholders is computed by dividing the net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period. Diluted net income (loss) attributable to common stockholders is computed by adjusting net income (loss) attributable to common stockholders to reallocate undistributed earnings based on the potential impact of dilutive securities. Diluted net income (loss) per share attributable to common stockholders is computed by dividing the diluted net income (loss) attributable to common stockholders by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming the dilutive effect of common stock equivalents. The Company’s convertible preferred stock contractually entitled the holders of such shares to participate in dividends but does not contractually require the holders of such shares to participate in losses of the Company. Accordingly, in periods in which the Company reports a net loss, such losses are not allocated to such participating securities. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Subsequent to the closing of its IPO, the Company only has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential 103 Table of Contents dilutive common shares assuming the dilutive effect of outstanding stock awards. For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. The Company reported a net loss attributable to common stockholders for each of the years ended December 31, 2021 and 2020. Income Taxes The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company’s tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by estimating the future taxable profits expected and considering prudent and feasible tax planning strategies. The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, which are considered appropriate as well as the related net interest and penalties. Recently Adopted Accounting Pronouncements In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement which eliminates, modifies, and adds disclosure requirements on fair value measurements. The standard is effective for annual periods beginning after December 15, 2019, including interim periods within those fiscal years. The Company adopted this guidance as of January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements. Recently Issued Accounting Pronouncements The Company qualifies as “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) . The new standard adjusts the accounting for assets held at amortized costs basis, including marketable securities accounted for as available for sale, and trade receivables. The standard eliminates the probable initial recognition threshold and requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For public entities except smaller reporting companies, the guidance is effective for annual reporting periods beginning after December 15, 2019 and for interim periods within those fiscal years. For non-public entities and smaller reporting companies, the guidance was effective for annual reporting periods beginning after December 15, 2021. In November 2019, the FASB issued ASU No. 2019-10, which deferred the effective date for non-public entities to annual reporting periods beginning after December 15, 2022, including interim periods within those fiscal years. Early 104 Table of Contents application is allowed. The Company is currently assessing the date of the adoption and the impact of the adoption of this guidance on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (ASC 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various areas related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. For public entities the guidance is effective for annual reporting periods beginning after December 15, 2020 and for interim periods within those fiscal years. For non-public entities, the guidance is effective for annual reporting periods beginning after December 15, 2021 and for interim periods within years beginning after December 15, 2022, with early adoption permitted. The Company is currently evaluating the impact of this standard on its consolidated financial statements. ​ 3. Fair Value Measurements The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at December 31, 2021 Using: ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ Money market funds ​ $ 634 ​ $ — ​ $ — ​ $ 634 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements at December 31, 2020 Using: ​ Level 1 Level 2 Level 3 Total Assets: ​ ​ ​ ​ Cash equivalents: ​ ​ ​ ​ Money market funds ​ $ 339 ​ $ — ​ $ — ​ $ 339 ​ Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no transfers into or out of Level 3 during the years ended December 31, 2021 and 2020. ​ 4. Inventory Inventory consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 Raw materials ​ ​ $ 6,242 ​ $ 2,099 Work-in-progress ​ ​ ​ 551 ​ 213 Finished goods ​ ​ ​ 1,125 ​ 2,256 ​ ​ ​ $ 7,918 ​ $ 4,568 ​ ​ 105 Table of Contents 5. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 Laboratory and demonstration equipment ​ $ 4,789 ​ $ 4,394 Computer equipment and software ​ 139 ​ 417 Furniture and fixtures ​ 112 ​ 193 Leasehold improvements ​ 21 ​ 21 ​ ​ 5,061 ​ 5,025 Less: Accumulated depreciation and amortization ​ ( 3,458 ) ​ ( 4,175 ) ​ ​ $ 1,603 ​ $ 850 ​ Depreciation expense amounted to $ 0.9 million and $ 0.8 million in each of the years ended December 31, 2021 and 2020, respectively. ​ 6. Accrued Expenses Accrued expenses consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 Accrued employee compensation and benefits ​ ​ $ 3,271 ​ $ 2,069 Accrued warranty ​ ​ 1,593 ​ 1,265 Accrued professional fees ​ ​ 710 ​ 975 Accrued other ​ ​ 1,387 ​ 729 ​ ​ ​ $ 6,961 ​ $ 5,038 ​ Changes in the Company’s product warranty obligation are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Accrual balance at beginning of period ​ $ 1,265 ​ $ 968 Provision for new warranties ​ 1,776 ​ 1,273 Settlements and adjustments made during the period ​ ( 1,448 ) ​ ( 976 ) Accrual balance at end of period ​ $ 1,593 ​ $ 1,265 ​ ​ 7. Long-Term Debt Long-term debt consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 Principal amount of long-term debt ​ $ 15,000 ​ $ 15,000 Less: Current portion of long-term debt ​ — ​ ( 500 ) Long-term debt, net of current portion ​ 15,000 ​ 14,500 Debt discount, net of accretion ​ — ​ ( 168 ) Long-term debt, net of discount and current portion ​ $ 15,000 ​ $ 14,332 ​ Loan and Security Agreements As of December 31, 2020, the Company had outstanding borrowings under a Loan and Security Agreement, as amended (the “2019 Loan”) with a financial institution (the “Lender”). On March 11, 2021, the Company entered into an 106 Table of Contents Amended and Restated Loan and Security Agreement, (the “2021 Revolver”), with the Lender to replace the 2019 Loan. This agreement created a revolving line of credit totaling $ 25.0 million and eliminated the existing term loan. Borrowings under the revolving line of credit bear interest at an annual rate equal to the greater of (i) one-half percent ( 0.5 % ) above the prime rate or (ii) 4.0 % and mature on March 11, 2024 . Borrowings are collateralized by substantially all of the Company’s property, excluding intellectual property, which is subject to a negative pledge. The 2021 Revolver subjects the Company to various customary covenants, including requirements as to financial reporting and financial covenants (including an unrestricted minimum cash level of $ 10.0 million), and restrictions on the Company’s ability to dispose of its business or property, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on the Company’s property, to pay any dividends or make other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into in-bound licensing agreements, to engage in transactions with affiliates, and to encumber the Company’s intellectual property. Events of default under the 2021 Revolver include failure to make payments when due, insolvency events, failure to comply with covenants or material adverse events with respect to the Company. Upon the occurrence of an event of default and until such event of default is no longer continuing, the annual interest rate will be 5.0 % above the otherwise applicable rate. As of December 31, 2021, the Company was in compliance with all financial covenants under the 2021 Revolver. The total long-term debt under the 2021 Revolver of $ 15 million is due in 2024. The terms of the 2021 Revolver required that the existing term loan outstanding under the 2019 Loan be repaid with an advance under the line of credit. Accordingly, on March 11, 2021, the Company used $ 14.5 million of proceeds from the revolving line of credit to repay all amounts then due on the existing term loan. The Company accounted for the transaction as a debt extinguishment and recorded a loss on extinguishment of $ 0.2 million, which was included in interest expense in the condensed consolidated statements of operations and comprehensive loss. In accordance with the applicable accounting standards, a short-term debt obligation should be excluded from current liabilities if the entity has both the intent and ability to refinance the obligation on a long-term basis. The intent and ability can be demonstrated by the issuance of a long-term obligation to refinance the short-term obligation on a long-term basis after the date of an entity’s balance sheet but before that balance sheet is issued. Due to the initial drawdown of the 2021 Revolver to repay the amount outstanding under the 2019 Loan, the Company classified $ 14.5 million of debt outstanding as of December 31, 2020 as long-term debt, net of current portion. Principal amounts totaling $ 0.5 million paid in the first quarter of 2021 prior to entering the 2021 Revolver were classified as current portion of long-term debt as of December 31, 2020. Paycheck Protection Program Loan On April 18, 2020, the Company issued a Promissory Note to Signature Bank, pursuant to which it received loan proceeds of $ 2.2 million (the “Loan”) provided under the Paycheck Protection Program established under the Coronavirus Aid, Relief, and Economic Security Act and guaranteed by the U.S. Small Business Administration (the “Paycheck Protection Program”). However, based on updated guidance related to this program, the Company repaid the Loan on May 4, 2020. The Loan was unsecured, was scheduled to mature on April 18, 2022, had a fixed interest rate of 1.0% per annum and was subject to the standard terms and conditions applicable to loans administered under the Paycheck Protection Program. ​ ​ 8. Warrants In connection with its lease agreement and debt agreements, the Company had outstanding warrants to purchase Preferred Stock as of December 31, 2019. The Company classified all of its Preferred Stock warrants as a liability on its consolidated balance sheets because these warrants were freestanding financial instruments that could have required the Company to transfer assets upon exercise. Upon the closing of the IPO in December 2020, the Company’s outstanding warrants to purchase Preferred Stock automatically became warrants to purchase an aggregate of 154,634 shares of common stock. The liability associated with each of these warrants was initially recorded at fair value upon the issuance 107 Table of Contents date of each warrant and, subsequent to the closing of the IPO on December 22, 2020, the Company no longer remeasures the fair value of the warrant liability at each reporting date. In December 2020, holders of 61,931 warrants completed a cashless exercise of the warrants, resulting in the Company’s issuance of 55,994 shares of common stock. As of December 31, 2021 and 2020, the Company had outstanding warrants for the purchase of 92,703 shares of common stock at an exercise price of $ 9.17 per share, of which warrants for the purchase of 49,078 shares and 43,625 shares expire in 2027 and 2028, respectively. ​ 9. Equity Preferred Stock On December 22, 2020, the Company filed a restated certificate of incorporation in the State of Delaware, which, among other things, restated the number of shares of all classes of stock that the Company has authority to issue to 105,000,000 shares, consisting of (i) 100,000,000 shares of common stock, $ 0.001 par value per share, and (ii) 5,000,000 shares of preferred stock, $ 0.001 par value per share. The preferred stock will have such rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Company’s board of directors upon issuance. The shares of preferred stock are currently undesignated. Common Stock Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors. Reverse Stock Split On December 11, 2020, the Company effected a one -for-1.6271 reverse stock split of its issued and outstanding shares of common stock and a proportional adjustment to the existing conversion ratios for each series of the Company’s Preferred Stock. Accordingly, all share and per share amounts for all periods presented in the accompanying consolidated financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the Preferred Stock conversion ratios. Public Offerings ​ On December 22, 2020, the Company completed its IPO, pursuant to which it issued and sold 7,475,000 shares of common stock, inclusive of 975,000 shares sold by the Company pursuant to the full exercise of the underwriters’ option to purchase additional shares. The aggregate net proceeds received by the Company from the IPO were $ 136.6 million, after deducting underwriting discounts and commissions and other offering costs. Upon the closing of the IPO, all of the shares of the Company’s outstanding convertible preferred stock then outstanding automatically converted into 14,691,929 shares of common stock. Upon the closing of the IPO in December 2020, all 23,905,267 shares of the Company’s outstanding Preferred Stock automatically converted into 14,691,929 shares of common stock and, therefore, there was no outstanding Preferred Stock at December 31, 2020. ​ On November 15, 2021, the Company completed an underwritten public offering, pursuant to which it issued and sold 3,150,000 shares of common stock at a public offering price of $ 32.00 per share. The Company received net proceeds of $ 94.4 million after deducting underwriting discounts and commissions and other offering costs. ​ 108 Table of Contents 10. Stock-Based Compensation 2012 Stock Option and Grant Plan The Company’s 2012 Stock Option and Grant Plan (the “2012 Plan”) provided for the Company to sell or issue incentive stock options or nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards to employees, directors and non-employee consultants of the Company. The 2012 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions were determined at the discretion of the board of directors, or its committee if so delegated. Following the effectiveness of the Company’s 2020 Stock Option and Incentive Plan (the “2020 Plan”) in December 2020, no future awards will be made under the 2012 Plan. Additionally, shares underlying awards under the 2012 Plan that expire or are terminated, surrendered, or canceled without the delivery of shares will be available for future awards under the 2020 Plan. 2020 Stock Option and Incentive Plan On November 23, 2020, the Company’s board of directors adopted, and on December 11, 2020, the Company’s stockholders approved the 2020 Stock Option and Incentive Plan (the “2020 Stock Plan”), which became effective on December 17, 2020. The 2020 Stock Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, unrestricted stock units, dividend equivalent rights and cash-based awards to employees, directors and consultants of the Company. The total number of shares of common stock that may be issued under the 2020 Plan is 1,843,771 shares plus the number of shares underlying awards under the 2012 Plan that expire or are terminated, surrendered, or cancelled without the delivery of shares, are forfeited to or repurchased or otherwise become available again for grant under the 2012 Plan. As of December 31, 2021, 1,680,321 shares remained available for future issuance under the 2020 Plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase on each January 1 by 4 % of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by the administrator of the 2020 Stock Plan. On January 1, 2022, the number of shares reserved and available for issuance under the 2020 Plan automatically increased by 1,243,080 shares. 2020 Employee Stock Purchase Plan On November 23, 2020, the Company’s board of directors adopted, and on December 11, 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective on December 17, 2020. A total of 288,857 shares of common stock of the Company are reserved for issuance under the 2020 ESPP. As of December 31, 2021, 288,857 shares remained available for issuance under the 2020 ESPP. On November 1, 2021, the first 6-month offering period under the 2020 ESPP commenced, which period shall run through April 30, 2022, at which time the first issuances under the 2020 ESPP are expected to take place. The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2022 and each January 1 thereafter through January 1, 2030, by the least of (i) 307,295 shares of our common stock, (ii) 1 % of the outstanding number of shares of common stock on the immediately preceding December 31, or (iii) such lesser number of shares of common stock as determined by the administrator of the 2020 ESPP. On January 1, 2022, the number of shares reserved and available for issuance under the 2020 ESPP automatically increased by 307,295 shares. Stock Option Valuation The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company historically has been a private company and has limited company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the 109 Table of Contents award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Risk-free interest rate ​ 1.1 % 0.4 % Expected volatility 65 % 60 % Expected dividend yield — — ​ Expected term (in years) 6 6 ​ ​ The following table summarizes the Company’s option activity for the fiscal year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ Weighted ​ Aggregate ​ ​ Number ​ Exercise ​ Contractual ​ Intrinsic ​ of Shares Price Term Value ​ ​ ​ ​ ​ ​ ​ (in years) ​ (in thousands) Outstanding at beginning of period ​ 3,405,698 ​ $ 2.27 ​ 7.1 ​ $ 186,234 Granted 65,256 ​ ​ 36.89 ​ ​ ​ ​ ​ Exercised ( 671,661 ) ​ ​ 1.33 ​ Forfeited ( 52,252 ) ​ ​ 2.19 ​ Outstanding at end of period 2,747,041 ​ $ 3.32 6.7 ​ $ 62,714 Vested and expected to vest at end of period 2,682,327 ​ $ 3.27 6.6 ​ $ 61,353 Exercisable at end of period 1,766,726 ​ $ 2.01 5.7 ​ $ 42,324 ​ ​ The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2020 was $ 24.0 million and $ 1.6 million, respectively. As of December 31, 2021, total unrecognized compensation cost related to unvested stock options was $ 3.2 million, which is expected to be recognized over a weighted average period of 2.5 years. The weighted average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $ 20.34 per share and $ 2.89 per share, respectively. The following table summarizes the Company’s restricted stock units activity for the fiscal year ended December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Average ​ ​ Number ​ Grant Date ​ of Shares Fair Value ​ ​ ​ ​ ​ ​ Unvested at beginning of period ​ — ​ $ — Granted 197,669 ​ 36.43 Vested and released ( 174 ) ​ 57.47 Forfeited ( 9,731 ) ​ 46.78 Unvested at end of period 187,764 ​ $ 35.87 ​ 110 Table of Contents The remaining unrecognized compensation expense for outstanding restricted stock units as of December 31, 2021 was $ 5.2 million and the weighted-average period over which this cost will expected to be recognized is 3.3 years. The total fair value of restricted stock units vested in fiscal year 2021 was less than $ 0.1 million as of December 31, 2021. Stock-Based Compensation The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Cost of revenue ​ $ 97 ​ $ 37 Research and development expenses ​ ​ 448 ​ 129 Selling, general and administrative expenses ​ ​ 1,959 ​ 359 ​ ​ $ 2,504 ​ $ 525 ​ ​ ​ 11. Leases The Company has leases for office space and certain equipment. All of the leases recorded on the consolidated balance sheets as ROU assets are operating leases. The Company’s leases have remaining lease terms ranging from less than one year to approximately four years . Some of the leases include options to extend the lease for up to two years and these options were not included for the purpose of determining the right-of-use assets and associated lease liabilities as the Company determined that the renewal of these leases is not reasonably certain. The leases do not include any restrictions or covenants that had to be accounted for under the lease guidance. On January 2, 2018, the Company entered a new operating lease in Boston, Massachusetts (the “Lease”), for 37,500 rentable square feet of office space and is considered the Company’s corporate headquarters. A security deposit of $ 0.5 million was paid to the property owner and the Company issued a warrant to purchase 70,983 shares of Series D preferred stock at a purchase price of $ 5.6351 per share. The initial fair value of the warrants of $ 0.3 million was recorded as additional rent payments, increasing the value of the ROU asset and preferred stock warrant liability. The initial term of the lease is through July 2025 and has additional renewal options. The annualized base rent will increase by 2.5 % annually on the anniversary of the commencement date. The Company is obligated to pay its portion of real estate taxes and costs related to the premise, including costs of operations, maintenance, repair, replacement and management of the new leased premises. The Company had a facility lease in California for approximately 1,500 square feet that expired in February 2021. The Company also has a facility lease in North Carolina for approximately 2,000 square feet that had an expiration date of November 2020. In October 2020, the Company entered into an extension agreement for the North Carolina lease to extend it for an additional two years until November 2022. The components of lease expense under ASC 842 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Operating lease cost ​ $ 1,780 ​ $ 1,806 Short-term lease cost ​ 20 ​ 13 Variable lease cost ​ 541 ​ 243 ​ ​ $ 2,341 ​ $ 2,062 111 Table of Contents ​ Supplemental disclosure of cash flow information related to leases was as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 Cash paid for amounts included in the measurement of operating lease liabilities ​ $ 1,855 ​ $ 1,795 Operating lease liabilities arising from obtaining right-of-use assets ​ $ 16 ​ $ 92 ​ The weighted-average remaining lease term and discount rate were as follows: ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 Weighted-average remaining lease term - operating leases (in years) ​ 3.72 ​ 4.71 Weighted-average discount rate - operating leases 9.5 % 9.4 % ​ The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses its incremental borrowing rate based on information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Future annual minimum lease payments under operating leases as of December 31, 2021 are as follows (in thousands): ​ ​ ​ ​ Year Ending December 31, ​ 2022 ​ $ 1,841 2023 ​ 1,833 2024 ​ 1,878 2025 ​ 1,435 Total future minimum lease payments ​ 6,987 Less: imputed interest ​ ( 1,135 ) Total operating lease liabilities ​ $ 5,852 ​ ​ ​ 12. Commitments and Contingencies Leases The Company’s commitments under its leases are described in Note 11. Royalty Arrangements The Company has entered into royalty arrangements with two parties whereby the Company owes low- to mid-single digit royalty percentages related to revenue that is derived pursuant to in-licensed technologies. Royalty obligations are expensed when incurred or over the minimum royalty periods and have not been material. Some of the arrangements include minimum royalties over a defined term. The future minimum royalty payments are $ 0.1 million per year, through the end of the patents’ lives. The Company has the right to terminate the agreements with written notice. 401(k) Savings Plan The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the 112 Table of Contents discretion of the board of directors. The Company started matching contributions under the plan in 2021 and made or accrued contributions of $ 0.1 million for the year ended December 31, 2021. Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its executive officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of December 31, 2021 and 2020. Legal Proceedings The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings. ​ 13. Net Loss Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share amounts): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Numerator: ​ ​ ​ Net loss and comprehensive loss ​ $ ( 22,169 ) ​ $ ( 12,819 ) Accretion of redeemable convertible preferred stock to redemption value ​ — ​ ( 90 ) Net loss attributable to common stockholders ​ $ ( 22,169 ) ​ $ ( 12,909 ) ​ ​ ​ ​ ​ ​ ​ Denominator: ​ ​ Weighted average common shares outstanding basic and diluted ​ 27,957,904 ​ 5,485,032 Net loss per share attributable to common stockholders, basic and diluted ​ $ ( 0.79 ) ​ $ ( 2.35 ) ​ The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 Warrants to purchase common stock ​ 92,703 ​ 92,703 Options to purchase common stock 2,747,041 3,405,698 Restricted stock units ​ 187,764 ​ — ​ 3,027,508 3,498,401 ​ ​ 113 Table of Contents 14. Income Taxes During the years ended December 31, 2021 and 2020, the Company did not record income tax benefits for the net operating losses incurred or for the research and development tax credits generated in each year, due to its uncertainty of realizing a benefit from those items. The Company does not have any foreign operations and therefore, has not provided for any foreign taxes. A reconciliation of the U.S. federal statutory income tax rate to the Company’s effective income tax rate is as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Federal statutory income tax rate ( 21.0 ) % ( 21.0 ) % State income taxes, net of federal benefit ( 6.8 ) ( 2.2 ) ​ Federal and state research and development tax credits ( 4.5 ) ( 2.8 ) ​ Nondeductible items ( 11.7 ) 10.9 ​ Other — ( 0.4 ) ​ Change in valuation allowance 44.0 15.5 ​ Effective income tax rate 0.0 % 0.0 % ​ Net deferred tax assets consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 2020 Deferred tax assets: ​ ​ ​ Net operating loss carryforwards ​ $ 20,054 ​ $ 14,688 Research and development tax credit carryforwards ​ 7,054 ​ 6,064 Lease liability ​ 1,483 ​ 1,871 Deferred Revenue ​ 2,160 ​ 134 Accrued expenses and other ​ 3,194 ​ 1,730 Total deferred tax assets ​ 33,945 ​ 24,487 Deferred tax liabilities: ​ ​ Right-of-use asset ​ ( 1,314 ) ​ ( 1,602 ) Total deferred tax liabilities ​ ( 1,314 ) ​ ( 1,602 ) Valuation allowance ​ ( 32,631 ) ​ ( 22,885 ) Net deferred tax assets ​ $ — ​ $ — ​ As of December 31, 2021, the Company had U.S. federal and state net operating loss carryforwards of $ 80.4 million and $ 52.3 million, respectively, which may be available to offset future taxable income and begin to expire in 2032 and 2025, respectively, of which $ 46.0 million of federal net operating losses do not expire. As of December 31, 2021, the Company also had U.S. federal and state research and development tax credit carryforwards of $ 4.8 million and $ 2.7 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2032 and 2029, respectively. Utilization of the U.S. federal and state net operating loss carryforwards and research and development tax credit carryforwards may be subject to a substantial annual limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, and corresponding provisions of state law, due to ownership changes that have occurred previously or that could occur in the future. These ownership changes may limit the amount of carryforwards that can be utilized annually to offset future taxable income or tax liabilities. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain stockholders or public groups in the stock of a corporation by more than 50% over a three-year period. The Company has not conducted a study to assess whether a change of control has occurred or whether there have been multiple changes of control since inception due to the significant complexity and cost associated with such a study. If the Company has experienced a change of control, as defined by Section 382, at any time since inception, utilization of the net operating loss carryforwards or research and development tax credit 114 Table of Contents carryforwards would be subject to an annual limitation under Section 382, which is determined by first multiplying the value of the Company’s stock at the time of the ownership change by the applicable long-term tax-exempt rate, and then could be subject to additional adjustments, as required. Any limitation may result in expiration of a portion of the net operating loss carryforwards or research and development tax credit carryforwards before utilization. Further, until a study is completed by the Company and any limitation is known, no amounts are being presented as an uncertain tax position. The Company has not conducted a study to document qualified activities for research and development tax credits generated. Such a study may result in an adjustment to the Company’s research and development tax credit carryforwards; however, until a study is completed, and any adjustment is known, no amounts are being presented as an uncertain tax position . The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net operating losses incurred since inception and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the net deferred tax assets as of December 31, 2021 and 2020. Management reevaluates the positive and negative evidence at each reporting period. Changes in the valuation allowance for deferred tax assets related primarily to the increase in net operating loss carryforwards and research and development tax credit carryforwards and were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Valuation allowance as of beginning of year ​ $ 22,885 ​ $ 20,903 Increases recorded to income tax provision ​ 9,746 ​ 1,982 Valuation allowance as of end of year ​ $ 32,631 ​ $ 22,885 ​ As of December 31, 2021 and 2020, the Company had not recorded any amounts for unrecognized tax benefits. The Company’s policy is to record interest and penalties related to income taxes as part of its income tax provision. As of December 31, 2021 and 2020, the Company had no accrued interest or penalties related to uncertain tax positions and no amounts had been recognized in the Company’s consolidated statements of operations and comprehensive loss. The Company files income tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examination by federal and state jurisdictions, where applicable. The Company is open to future tax examination under statute from 2018 to the present; however, carryforward attributes that were generated prior to 2018 may still be adjusted upon examination by federal, state or local tax authorities if they either have been or will be used in a future period. The Company is currently under examination by the Internal Revenue Service for the year ending December 31, 2018. No material adjustments have been proposed to date. The Company has not received notice of examination by any other jurisdictions for any other tax year open under statute. ​ 15. Related Party Transactions Commercial Services Agreement In 2015, the Company entered into a commercial services agreement with one of its preferred stock investors under which the investor became eligible for payment of $ 1.5 million upon the achievement of certain sales and marketing milestones by December 31, 2016. Payment of the milestones was only upon the occurrence of a deemed liquidation event prior to an IPO. The Company accounted for the commercial services agreement liability as a financial instrument that may have required a transfer of assets because of the liquidation features. The liability was remeasured to fair value at each reporting period based on the probability of the occurrence of a deemed liquidation event. Upon the closing of the Company’s IPO in December 2020, the obligation was resolved, and the Company was no longer required to pay such milestone payments. Accordingly, the Company recorded other income of $ 0.8 million during the year ended December 31, 2020 to reduce the fair value of the liability to zero . ​ ​ 115 Table of Contents 16. Subsequent Event Grant of Restricted Stock Units and Stock Options under the 2020 Plan On March 1, 2022, the Company granted 555,173 restricted stock units to employees under the 2020 Stock Plan. The restricted stock units vest over a four -year period. The restricted stock units were valued based on market value of the Company’s closing stock price at the date of grant and had an aggregate fair value of $ 9.2 million, which is being amortized as stock compensation expense over the vesting term. On March 1, 2022, the Company granted 337,194 stock options to employees under the 2020 Stock Plan. The stock options vest over a four -year period. The stock options have an exercise price of $ 16.66 , which was the Company’s closing stock price at the date of grant. The total fair value of these stock options at the grant date was $ 3.4 million using the Black-Scholes option pricing model, and the value is being amortized as stock compensation expense over the vesting term. ​ Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. ​