MAXCYTE, INC. 10-K

Item 8. Financial Statements and Supplementary Data. ​ MaxCyte, Inc. ​ Index to Consolidated Financial Statements ​ ​ ​ ​ Page No ​ Report of Independent Registered Public Accounting Firm ( CohnReznick LLP ; Tysons, Virginia ; PCAOB ID: 596 ) 95 ​ Consolidated Balance Sheets 96 ​ Consolidated Statements of Operations 97 ​ Consolidated Statements of Changes in Stockholders’ Equity 98 ​ Consolidated Statements of Cash Flows 99 ​ Notes to Consolidated Financial Statements 100 ​ ​ 94 Table of Contents Report of Independent Registered Public Accounting Firm To the Board of Directors and Stockholders of MaxCyte, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of MaxCyte, Inc. and Subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2021, 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 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 audit, 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/ CohnReznick LLP We have served as the Company’s auditor since 2018. Tysons, Virginia March 22, 2022 ​ 95 Table of Contents MaxCyte, Inc. Consolidated Balance Sheets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 47,782,400 ​ $ 18,755,200 Short-term investments, at amortized cost ​ 207,261,400 ​ 16,007,500 Accounts receivable ​ 6,877,000 ​ 5,171,900 Inventory ​ 5,204,600 ​ 4,315,800 Prepaid expenses and other current assets ​ 3,307,400 ​ 1,003,000 Total current assets ​ 270,432,800 ​ 45,253,400 ​ ​ ​ ​ ​ ​ ​ Property and equipment, net ​ ​ 7,681,200 ​ 4,546,200 Right of use asset - operating leases ​ 5,689,300 ​ 1,728,300 Right of use asset - finance leases ​ - ​ 218,300 Other assets ​ 316,700 ​ 33,900 Total assets ​ $ 284,120,000 ​ $ 51,780,100 ​ ​ ​ ​ ​ ​ ​ Liabilities and stockholders’ equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 1,820,300 ​ $ 890,200 Accrued expenses and other ​ 6,523,500 ​ 5,308,500 Operating lease liability, current ​ 527,200 ​ 572,600 Deferred revenue, current portion ​ 6,746,800 ​ 4,843,000 Total current liabilities ​ 15,617,800 ​ 11,614,300 ​ ​ ​ ​ ​ ​ ​ Note payable, net of discount, and deferred fees ​ — ​ 4,917,000 Operating lease liability, net of current portion ​ 5,154,900 ​ 1,234,600 Other liabilities ​ 450,200 ​ 788,800 Total liabilities ​ 21,222,900 ​ 18,554,700 ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 9) ​ ​ Stockholders’ equity ​ ​ Preferred stock, $ 0.01 par value; 5,000,000 and no shares authorized at December 31, 2021 and 2020, respectively; no shares issued and outstanding ​ ​ — ​ ​ — Common stock, $ 0.01 par value; 400,000,000 and 200,000,000 shares authorized, 101,202,705 and 77,382,473 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively ​ ​ 1,012,000 ​ ​ 773,800 Additional paid-in capital ​ 376,189,600 ​ 127,673,900 Accumulated deficit ​ ( 114,304,500 ) ​ ( 95,222,300 ) Total stockholders’ equity ​ 262,897,100 ​ 33,225,400 Total liabilities and stockholders’ equity ​ $ 284,120,000 ​ $ 51,780,100 ​ See accompanying notes to consolidated financial statements. ​ 96 Table of Contents MaxCyte, Inc. Consolidated Statements of Operations ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 2019 Revenue ​ $ 33,894,100 ​ $ 26,168,900 ​ $ 21,620,700 Cost of goods sold ​ 3,647,400 ​ 2,767,000 ​ 2,499,200 Gross profit ​ 30,246,700 ​ 23,401,900 ​ 19,121,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ Research and development ​ 15,407,300 ​ 17,734,800 ​ 17,592,300 Sales and marketing ​ 13,002,900 ​ 8,328,700 ​ 7,852,100 General and administrative ​ 18,676,000 ​ 7,370,000 ​ 5,555,800 Depreciation and amortization ​ ​ 1,349,100 ​ ​ 1,025,100 ​ ​ 541,300 Total operating expenses ​ 48,435,300 ​ 34,458,600 ​ 31,541,500 Operating loss ​ ( 18,188,600 ) ​ ( 11,056,700 ) ​ ( 12,420,000 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense): ​ ​ ​ Interest and other expense ​ ( 1,044,400 ) ​ ( 825,600 ) ​ ( 681,100 ) Interest income ​ 150,800 ​ 65,900 ​ 206,100 Total other income (expense) ​ ( 893,600 ) ​ ( 759,700 ) ​ ( 475,000 ) Provision for income taxes ​ ​ — ​ ​ — ​ ​ — Net loss ​ $ ( 19,082,200 ) ​ $ ( 11,816,400 ) ​ $ ( 12,895,000 ) Basic and diluted net loss per share ​ $ ( 0.21 ) ​ $ ( 0.17 ) ​ $ ( 0.23 ) Weighted average shares outstanding, basic and diluted ​ 90,619,057 ​ 69,464,751 ​ 56,397,524 ​ See accompanying notes to consolidated financial statements. ​ 97 Table of Contents MaxCyte, Inc. Consolidated Statements of Changes in Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ Total ​ ​ Common Stock ​ Paid-in ​ Accumulated ​ Stockholders’ ​ Shares Amount Capital Deficit Equity Balance at January 1, 2019 51,332,764 ​ $ 513,300 ​ $ 82,279,300 ​ $ ( 70,510,900 ) ​ $ 12,281,700 Issuance of common stock, net of issuance costs 5,908,319 ​ 59,100 ​ 12,271,200 ​ — ​ 12,330,300 Stock-based compensation expense — ​ — ​ 1,752,100 ​ — ​ 1,752,100 Exercise of stock options 162,500 ​ 1,600 ​ 131,100 ​ — ​ 132,700 Net loss — ​ — ​ — ​ ( 12,895,000 ) ​ ( 12,895,000 ) Balance at December 31, 2019 57,403,583 ​ ​ 574,000 ​ ​ 96,433,700 ​ ​ ( 83,405,900 ) ​ ​ 13,601,800 Issuance of common stock, net of issuance costs 19,181,423 ​ 191,800 ​ 28,375,400 ​ — ​ 28,567,200 Stock-based compensation expense — ​ — ​ 2,471,800 ​ — ​ 2,471,800 Exercise of stock options 797,467 ​ 8,000 ​ 393,000 ​ — ​ 401,000 Net loss — ​ — ​ — ​ ( 11,816,400 ) ​ ( 11,816,400 ) Balance at December 31, 2020 77,382,473 ​ ​ 773,800 ​ ​ 127,673,900 ​ ​ ( 95,222,300 ) ​ ​ 33,225,400 Issuance of common stock, net of issuance costs 5,740,000 ​ ​ 57,400 ​ ​ 51,751,500 ​ ​ — ​ 51,808,900 Issuance of common stock upon initial public offering, net of issuance costs ​ 15,525,000 ​ ​ 155,300 ​ ​ 184,113,100 ​ ​ — ​ ​ 184,268,400 Stock-based compensation expense — ​ ​ — ​ ​ 7,958,800 ​ ​ — ​ 7,958,800 Exercise of stock options 2,490,629 ​ ​ 24,900 ​ ​ 3,606,300 ​ ​ — ​ 3,631,200 Cashless exercise of warrant ​ 64,603 ​ ​ 600 ​ ​ 1,086,000 ​ ​ — ​ ​ 1,086,600 Net loss — ​ ​ — ​ ​ — ​ ​ ( 19,082,200 ) ​ ( 19,082,200 ) Balance at December 31, 2021 101,202,705 ​ $ 1,012,000 ​ $ 376,189,600 ​ $ ( 114,304,500 ) ​ $ 262,897,100 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ See accompanying notes to consolidated financial statements. ​ 98 Table of Contents MaxCyte, Inc. Consolidated Statements of Cash Flows ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 2019 Cash flows from operating activities: ​ ​ ​ Net loss ​ $ ( 19,082,200 ) ​ $ ( 11,816,400 ) ​ $ ( 12,895,000 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 1,423,900 ​ 1,047,700 ​ 613,500 Net book value of consigned equipment sold ​ 51,600 ​ 79,900 ​ 25,000 Loss on disposal of fixed assets ​ 32,500 ​ 25,900 ​ 1,700 Fair value adjustment of liability classified warrant ​ 645,400 ​ 366,500 ​ 14,000 Stock-based compensation ​ 7,958,800 ​ 2,471,800 ​ 1,752,100 Bad debt (recovery) expense ​ - ​ ( 117,200 ) ​ 54,200 Amortization of discounts on short-term investments ​ ( 70,300 ) ​ ( 3,800 ) ​ ( 32,600 ) Non-cash interest expense ​ 5,400 ​ 21,700 ​ 51,900 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Changes in operating assets and liabilities: ​ ​ ​ ​ ​ ​ Accounts receivable ​ ( 1,705,100 ) ​ ( 1,810,200 ) ​ 1,592,000 Inventory ​ ( 1,405,800 ) ​ ( 890,600 ) ​ ( 1,890,200 ) Other current assets ​ ( 2,304,400 ) ​ ( 205,900 ) ​ 66,600 Right of use asset – operating leases ​ ( 3,806,200 ) ​ 525,000 ​ 474,600 Right of use asset – finance lease ​ 63,500 ​ 83,400 ​ — Other assets ​ ( 282,800 ) ​ ( 33,900 ) ​ — Accounts payable, accrued expenses and other ​ 2,090,900 ​ 391,000 ​ 1,160,200 Operating lease liability ​ 3,874,900 ​ ( 508,800 ) ​ 68,600 Deferred revenue ​ 1,903,800 ​ 1,649,800 ​ 795,900 Other liabilities ​ ( 73,500 ) ​ ( 58,000 ) ​ ( 655,000 ) Net cash used in operating activities ​ ( 10,679,600 ) ​ ( 8,782,100 ) ​ ( 8,802,500 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities: ​ ​ ​ Purchases of short-term investments ​ ( 268,683,600 ) ​ ​ ( 22,505,900 ) ​ ​ ( 7,424,100 ) Maturities of short-term investments ​ 77,500,000 ​ ​ 8,000,000 ​ ​ 9,149,900 Purchases of property and equipment ​ ( 3,834,200 ) ​ ​ ( 2,072,100 ) ​ ​ ( 1,271,300 ) Proceeds from sale of equipment ​ ​ 4,600 ​ ​ — ​ ​ — Net cash (used in) provided by investing activities ​ ( 195,013,200 ) ​ ( 16,578,000 ) ​ 454,500 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities: ​ ​ ​ Net proceeds from issuance of common stock ​ 51,808,900 ​ ​ 28,567,200 ​ ​ 12,330,300 Net proceeds from issuance of common stock upon initial public offering ​ ​ 184,268,400 ​ ​ — ​ ​ — Borrowings under notes payable ​ - ​ ​ 1,440,000 ​ ​ 4,953,300 Principal payments on notes payable ​ ( 4,922,400 ) ​ ​ ( 1,440,000 ) ​ ​ ( 5,105,500 ) Proceeds from exercise of stock options ​ 3,631,200 ​ ​ 401,000 ​ ​ 132,700 Principal payments on finance leases ​ ( 66,100 ) ​ ​ ( 63,700 ) ​ ​ — Net cash provided by financing activities ​ 234,720,000 ​ 28,904,500 ​ 12,310,800 Net increase in cash and cash equivalents ​ 29,027,200 ​ 3,544,400 ​ 3,962,800 Cash and cash equivalents, beginning of year ​ 18,755,200 ​ 15,210,800 ​ 11,248,000 Cash and cash equivalents, end of year ​ $ 47,782,400 ​ $ 18,755,200 ​ $ 15,210,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental cash flow information: ​ ​ ​ Cash paid for interest ​ $ 420,900 ​ $ 421,400 ​ $ 669,600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosure of non-cash investing and financing activities: ​ ​ ​ ​ Property and equipment purchases included in accounts payable ​ $ 296,400 ​ $ 70,900 ​ $ 399,900 Lease liability reduction due to operating lease modification ​ $ 304,600 ​ $ — ​ $ — Issuance of warrant in conjunction with debt transaction ​ $ — ​ ​ — ​ ​ 60,700 Other liability reduction due to exercise of warrant ​ $ 1,086,600 ​ $ — ​ $ — See accompanying notes to consolidated financial statements. 99 Table of Contents 1. Organization and Description of Business MaxCyte, Inc. (the “Company” or “MaxCyte”) was incorporated as a majority owned subsidiary of EntreMed, Inc. (“EntreMed”) on July 31, 1998, under the laws and provisions of the state of Delaware and commenced operations on July 1, 1999. In November 2002, MaxCyte was recapitalized and EntreMed was no longer deemed to control the Company. MaxCyte is a global life sciences company focused on advancing the discovery, development and commercialization of next-generation cell therapies. MaxCyte leverages its proprietary cell engineering technology platform to enable the programs of its biotechnology and pharmaceutical company customers who are engaged in cell therapy, including gene editing and immuno-oncology, as well as in drug discovery and development and biomanufacturing. The Company licenses and sells its instruments and technology and sells its consumables to developers of cell therapies and to pharmaceutical and biotechnology companies for use in drug discovery and development and biomanufacturing. In early 2020, the Company established a wholly owned subsidiary, CARMA Cell Therapies, Inc. (“CCTI”), as part of its development of CARMA, MaxCyte’s proprietary, mRNA-based, clinical-stage, immuno-oncology cell therapy. CARMA ceased all material operations by the end of March 2021. The COVID-19 pandemic has disrupted economic markets and the economic impact, duration and spread of related effects is uncertain at this time and difficult to predict. As a result, it is not possible to ascertain the overall future impact of COVID-19 on the Company’s business and, depending upon the extent and severity of such effects, including, but not limited to potential slowdowns in customer operations, extension of sales cycles, shrinkage in customer capital budgets or delays in customers’ clinical trials, the pandemic could have a material adverse effect on the Company’s business, results of operations, financial condition and cash flows. In 2020 and 2021, the Company made adjustments to its operating, sales and marketing practices to mitigate the effects of COVID-19 restrictions which reduced planned spending, particularly on travel and marketing expenditures. In addition, COVID-19 restrictions may have delayed or slowed the research activities of some existing and prospective customers. It is not possible to quantify the impact of COVID-19 on the Company’s revenues and expenses to date or its expected impact on future periods. The Company’s registration statement on Form S-1 related to its initial public offering of common stock in the United States (the “IPO”) was declared effective on July 29, 2021, and the Company’s common stock began trading on the Nasdaq Global Select Market on July 30, 2021. On August 3, 2021, the Company issued and sold 15,525,000 shares of common stock in the IPO at a price to the public of $ 13.00 per share, inclusive of 2,025,000 shares issued pursuant to the full exercise of the underwriters’ option to purchase additional shares. The IPO generated gross proceeds to the Company of $ 201.8 million. The Company received aggregate net proceeds of $ 184.3 million from the IPO after deducting aggregate underwriting commissions and offering costs of $ 17.6 million. 2. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). Prior years’ depreciation and amortization expenses included in individual functional operating expense categories were reclassified on the consolidated statement of operations to one functional expense category “Depreciation and Amortization Expense” to conform with current year presentation. For the years ended 2020 and 2019, the amounts of $ 1,025,100 and $ 541,300 were reclassified from other functional operating expenses to depreciation and amortization expense, respectively. This reclassification did not impact the Company’s balance sheets, statements of cash flows, and statements of change in stockholders’ equity. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at 100 Table of Contents the date of the financial statements and the reported amount of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, revenue recognition, stock-based compensation, allowance for doubtful accounts, allowance for inventory obsolescence, accruals for contingent liabilities, accruals for clinical trials, deferred taxes and valuation allowance, and the depreciable lives of fixed assets. Actual results could differ from those estimates. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, CCTI. All significant intercompany balances have been eliminated in consolidation. Concentrations of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities and trade receivables. The Company’s cash and cash equivalents balances may exceed federally insured limits and cash may also be deposited in foreign bank accounts that are not covered by federal deposit insurance. The Company does not believe that this results in any significant credit risk. The Company invests its excess cash in money market funds, commercial paper and corporate debt. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Significant customers are those that accounted for 10% or more of the Company’s total revenue for the period or accounts receivable as the end of a reporting period. During the years ended December 31, 2021, 2020 and 2019, one customer represented 21 %, 15 % and 10 % of revenue, respectively. As of December 31, 2021, two customers accounted for 16 % and 13 % of accounts receivable, respectively. One customer accounted for 13 % of accounts receivable at December 31, 2020. Certain components included in the Company’s products are obtained from a single source or a limited group of suppliers. During the years ended December 31, 2021, 2020 and 2019, the Company purchased approximately 33 %, 47 % and 56 % of its inventory from a single supplier, respectively. At December 31, 2021, amounts payable to one supplier totaled 14 % of total accounts payable. As of December 31, 2020, amounts payable to three suppliers totaled 62 % of total accounts payable. Foreign Currency The Company’s functional currency is the US Dollar; transactions denominated in foreign currencies are transacted at the exchange rate in effect at the date of each transaction. Differences in exchange rates during the period between the date a transaction denominated in foreign currency is consummated and the date on which it is either settled or at the reporting date are recognized in the consolidated statements of operations as general and administrative expense. For the year ended December 31, 2021, 2020 and 2019, the Company recognized $ 72,000 in foreign currency transaction loss, $ 81,800 in foreign currency transaction gain and $ 24,700 in foreign currency transaction loss, respectively. Fair Value Fair value is the price that would be received from the sale of an asset or paid to transfer a liability assuming an orderly transaction in the most advantageous market at the measurement date. US GAAP establishes a hierarchical disclosure framework which prioritizes and ranks the level of observability of inputs used in measuring fair value. These tiers include: ● Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs. ● Level 2—Observable market-based inputs other than quoted prices in active markets for identical assets or liabilities. 101 Table of Contents ● Level 3—Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs. See Note 7 for additional information regarding fair value. Cash, Cash Equivalents and Short-term Investments Cash and cash equivalents consist of financial instruments including money market funds and commercial paper with original maturities of less than 90 days. Short-term investments consist of commercial paper and corporate bonds with original maturities greater than 90 days and less than one year. All money market funds, commercial paper and corporate debt instruments are recorded at amortized cost unless they are deemed to be impaired on an other-than-temporary basis, at which time they are recorded at fair value using Level 2 inputs. Inventory The Company sells or licenses products to customers. The Company uses the average cost method of accounting for its inventory and adjustments resulting from periodic physical inventory counts are reflected in costs of goods sold in the period of the adjustment. Inventory is carried at the lower of cost or net realizable value. ​ Accounts Receivable Accounts receivable are reduced by an allowance for doubtful accounts, if needed. The allowance for doubtful accounts reflects the best estimate of probable losses determined principally on the basis of historical experience and specific allowances for known troubled accounts. All accounts or portions thereof that are deemed to be uncollectible or to require an excessive collection cost are written off to the allowance for doubtful accounts. The Company determined no allowance was necessary at December 31, 2021 and 2020. Property and Equipment Property and equipment are stated at cost. Depreciation is computed using the straight-line method. Office equipment (principally computers) is depreciated over an estimated useful life of three years . Laboratory equipment is depreciated over an estimated useful life of five years . Furniture is depreciated over a useful life of seven years . Leasehold improvements are amortized over the shorter of the estimated lease term or useful life. Instruments represent equipment held at a customer’s site that is typically leased to customers on a short-term basis and is depreciated over an estimated useful life of five years . Property and equipment include capitalized costs to develop internal-use software. Applicable costs are capitalized during the development stage of the project and include direct internal costs, third-party costs and allocated interest expenses as appropriate. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. The Company recognized no impairment in either of the years ended December 31, 2021 or 2020. Deferred Offering Costs The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs (non-current) until such financings are consummated or determined not to be probable of consummation. After consummation of the equity financing, these costs are recorded in stockholders’ equity as a reduction of proceeds received as a result of the offering. If the equity financing is no longer considered 102 Table of Contents probable of being consummated, all deferred offering costs will be charged to operating expenses in the consolidated statement of operations at such time. During the third quarter of 2021, the Company netted $ 17.6 million in issuance costs against IPO proceeds (see Note 1) and additional paid-in capital. As of December 31, 2021 and 2020, there were no capitalized deferred offering costs in the consolidated balance sheets. Revenue Recognition The Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations and (v) determination of revenue recognition based on timing of satisfaction of the performance obligations. In some arrangements, product and services have been sold together representing distinct performance obligations. In such arrangements the Company allocates the sale price to the various performance obligations in the arrangement on a relative selling price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. The Company recognizes revenue upon the satisfaction of its performance obligation (generally upon transfer of control of promised goods or services to its customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The Company defers incremental costs of obtaining a customer contract and amortizes the deferred costs over the period that the goods and services are transferred to the customer. The Company had no material incremental costs to obtain customer contracts in any period presented. Deferred revenue results from amounts billed in advance to customers or cash received from customers in advance of services being provided. Cost of Goods Sold Cost of goods sold primarily consists of costs for raw material parts, contract manufacturer costs, salaries, overhead, leased equipment depreciation and other direct costs related to sales recognized as revenue in the period. Research and Development Costs Research and development costs consist of independent proprietary research and development costs and the costs associated with work performed for fees from third parties. Research and development costs are expensed as incurred. Research costs performed for fees paid by customers are included in cost of goods sold. Stock-Based Compensation The Company grants stock-based awards in exchange for employee, consultant and non-employee director services. The value of the award is recognized as expense on a straight-line basis over the requisite service period. The Company utilizes the Black-Scholes option pricing model for estimating fair value of its stock options granted. Option valuation models, including the Black-Scholes model, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant-date fair value of an award. These assumptions include 103 Table of Contents the expected volatility, expected dividend yield, risk-free rate of interest and the expected life of the award. A discussion of management’s methodology for developing each of the assumptions used in the Black-Scholes model is as follows: Expected Volatility Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company does not currently have sufficient history with its own common stock to determine its actual volatility. The Company has been able to identify several public entities of similar size, complexity and stage of development; accordingly, historical volatility has been calculated for the periods presented using the volatility of these companies. Expected Dividend Yield The Company has never declared or paid common stock dividends and has no plans to do so in the foreseeable future. Therefore, the Company used an expected dividend yield of zero . Risk-Free Interest Rate This approximates the US Treasury rate for the day of each option grant during the year, having a term that closely resembles the expected term of the option. Expected Term This is the period that the options granted are expected to remain unexercised. Options granted have a maximum term of ten years . The Company estimates the expected term of the options to be approximately six years for options, with a majority vesting over a four-year period, using the simplified method. Over time, management intends to track estimates of the expected term of the option term so that estimates will approximate actual behavior for similar options. Expected Forfeiture Rate The Company records forfeitures as they occur. The fair value of stock options was estimated using the Black-Scholes option-pricing model based on the following assumptions during the years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 ​ 2020 ​ 2019 Expected volatility ​ 55 - 57 % ​ 49 - 55 % ​ 48 - 55 % Risk-free interest rate ​ 0.7 - 1.3 % ​ 0.4 - 1.7 % ​ 1.6 - 2.6 % Expected term (in years) ​ 6 ​ 6 ​ 6 ​ Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are expected to be in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more-likely-than-not that all or a portion of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, 104 Table of Contents classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company has not identified any uncertain income tax positions that could have a material impact on the consolidated financial statements. The Company is subject to taxation in various jurisdictions in the United States and abroad and remains subject to examination by taxing jurisdictions for 2017 and all subsequent periods. The Company had a Federal Net Operating Loss (“NOL”) carryforward of $ 90.3 million as of December 31, 2021, which was generally available as a deduction against future income for US federal corporate income tax purposes, subject to applicable carryforward limitations. The Company’s NOLs are limited on an annual basis, subject to certain carryforward provisions, pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, as a result of a greater than 50% change in ownership that occurred in prior periods. The Company has calculated that for the period ending December 31, 2022, the cumulative limitation amount exceeds the NOLs subject to the limitation. In addition, the Company’s NOLs may also be limited as a result of subsequent changes in ownership. Leases Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. In transactions where the Company is the lessee, at the inception of a contract, the Company determines if the arrangement is, or contains, a lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Lease expense is recognized on a straight-line basis over the lease term. The Company has made certain accounting policy elections for leases where it is the lessee whereby the Company (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less) and (ii) combines lease and non-lease elements of its operating leases. See Note 9 for additional details over leases where the Company is the lessee. All transactions where the Company is the lessor are short-term (one year or less) and have been classified as operating leases. All leases require upfront payments covering the full period of the lease and thus, there are no future payments expected to be received from existing leases. See Note 3 for details over revenue recognition related to lease agreements. Loss Per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average number of shares of Common Stock outstanding during the period. For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method. For periods of net loss, diluted loss per share is calculated similarly to basic loss per share because the impact of all dilutive potential common shares is anti-dilutive. The number of anti-dilutive shares, consisting of stock options and stock purchase warrants, which has been excluded from the computation of diluted loss per share, was 12.4 million, 12.9 million and 10.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. 105 Table of Contents Recent Accounting Pronouncements Recently Adopted On January 1, 2021, the Company adopted new guidance addressing income taxes, which is intended to simplify various aspects related to the accounting for income taxes. The guidance removes certain exceptions to the general principles in Accounting Standards Codification (“ASC”) 740, Income Taxes, and also clarifies and amends existing guidance to improve consistent application. The adoption did not have a material effect on the Company’s consolidated financial statements. New Accounting Pronouncements Not Yet Adopted In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance with respect to measuring credit losses on financial instruments, including trade receivables. The guidance eliminates the probable initial recognition threshold that was previously required prior to recognizing a credit loss on financial instruments. The credit loss estimate can now reflect an entity’s current estimate of all future expected credit losses. Under the previous guidance, an entity only considered past events and current conditions. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The adoption of certain amendments of this guidance must be applied on a modified retrospective basis and the adoption of the remaining amendments must be applied on a prospective basis. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its consolidated financial statements. In August 2020, the FASB issued guidance with respect to (i) accounting for convertible instruments, (ii) accounting for contracts in an entity’s own equity as derivatives and (iii) earnings per share calculations. The guidance attempts to simplify the accounting for convertible instruments by eliminating the requirement to separate embedded conversion options in certain circumstances. The guidance also provides for updated disclosure requirements for convertible instruments. The guidance further updates the criteria for determining whether a contract in an entity’s own equity can be classified as equity. Lastly, the guidance specifically addresses how to account for the effect of convertible instruments and potential cash settled instruments in calculating diluted earnings per share. The guidance is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. The adoption of this guidance may be applied on a modified retrospective basis or a full retrospective basis. The Company is currently evaluating the impact, if any, that this new accounting pronouncement will have on its consolidated financial statements. The Company has evaluated all other issued and unadopted Accounting Standards Updates and believes the adoption of these standards will not have a material impact on its results of operations, financial position or cash flows. 3. Revenue Revenue is principally from the sale of instruments and processing assemblies, and extended warranties and the lease of instruments, which lease agreements also include customer-specific milestone payments. In some arrangements, product and services have been sold together representing distinct performance obligations. In these arrangements the Company allocates the sale price to the various performance obligations in the arrangement on a relative selling price basis. Under this basis, the Company determines the estimated selling price of each performance obligation in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. Revenue is recognized at the time control is transferred to the customer and the performance obligation is satisfied. Revenue from the sale of instruments and processing assemblies is generally recognized at the time of shipment to the customer, provided no significant vendor obligations remain and collectability is reasonably assured. Revenue from equipment leases is recognized ratably over the contractual term of the lease agreement and when specific milestones are achieved by a customer. Licensing fee revenue is recognized ratably over the license period. Revenue from fees for research services is recognized when services have been provided. 106 Table of Contents Disaggregated revenue for the year ended December 31, 2021 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue from ​ Revenue ​ ​ ​ ​ ​ ​ Contracts ​ from ​ ​ ​ ​ ​ with ​ Lease ​ Total ​ ​ Customers Elements Revenue ​ Product sales ​ $ 20,786,800 ​ $ — ​ $ 20,786,800 ​ Lease elements ​ — ​ 12,322,700 ​ 12,322,700 ​ Other ​ 784,600 ​ — ​ 784,600 ​ Total ​ $ 21,571,400 ​ $ 12,322,700 ​ $ 33,894,100 ​ ​ Disaggregated revenue for the year ended December 31, 2020 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue from ​ Revenue ​ ​ ​ ​ ​ ​ Contracts ​ from ​ ​ ​ ​ ​ with ​ Lease ​ Total ​ ​ Customers Elements Revenue ​ Product sales ​ $ 14,850,200 ​ $ — ​ $ 14,850,200 ​ Lease elements ​ — ​ 10,717,400 ​ 10,717,400 ​ Other ​ 601,300 ​ — ​ 601,300 ​ Total ​ $ 15,451,500 ​ $ 10,717,400 ​ $ 26,168,900 ​ ​ Disaggregated revenue for the year ended December 31, 2019 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue from ​ Revenue ​ ​ ​ ​ ​ Contracts ​ from ​ ​ ​ ​ with ​ Lease ​ Total ​ Customers Elements Revenue Product sales ​ $ 12,917,800 ​ $ — ​ $ 12,917,800 Lease elements ​ — ​ 8,363,500 ​ 8,363,500 Other ​ 339,400 ​ — ​ 339,400 Total ​ $ 13,257,200 ​ $ 8,363,500 ​ $ 21,620,700 ​ ​ Additional disclosures relating to Revenue from Contracts with Customers Changes in deferred revenue for the years ended December 31, 2021, 2020 and 2019 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 ​ 2019 Balance at January 1 $ 5,014,300 ​ $ 3,452,800 ​ $ 2,770,100 Revenue recognized in the current period from amounts included in the beginning balance ​ ( 4,828,000 ) ​ ( 3,191,200 ) ​ ( 2,435,000 ) Current period deferrals, net of amounts recognized in the current period ​ 7,010,700 ​ 4,752,700 ​ 3,117,700 Balance at December 31 ​ $ 7,197,000 ​ $ 5,014,300 ​ $ 3,452,800 ​ ​ Remaining contract consideration for which revenue has not been recognized due to unsatisfied performance obligations with a duration greater than one year was $ 1,345,200 at December 31, 2021, of which the Company expects to recognize $ 894,900 in 2022 , $ 208,200 in 2023 , $ 61,200 in 2024 , $ 21,400 in 2024 and $ 159,500 thereafter . In the years ended December 31, 2021, 2020 and 2019, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts or costs to fulfil contracts. 107 Table of Contents 4. Debt The Company originally entered into a credit facility with MidCap Financial SBIC, LP (“MidCap”) in March 2014. In February 2019, the Company paid off the MidCap credit facility in full in accordance with its terms and conditions. In November 2019, the Company entered into a new credit facility with MidCap. The credit facility provided for a $ 5 million term loan maturing on November 1, 2024. The term loan provided for (i) an interest rate of one-month Libor plus 6.5 % with a 1.5 % Libor floor, (ii) monthly interest payments, (iii) 30 monthly principal payments of approximately $ 166,700 beginning June 2022 and (iv) a 3 % final payment fee. The Company used the proceeds from the credit facility for general operating purposes. The debt was collateralized by substantially all assets of the Company. At December 31, 2020, the term loan had an outstanding principal balance of $ 5 million and $ 83,000 of unamortized debt discount. In March 2021, the Company repaid the MidCap loan in full. The Company incurred fees of $ 260,000 associated with early repayment of the loan. The unamortized debt discounts and fees were expensed and recorded as interest expense. In April 2020, the Company received a loan from Silicon Valley Bank in the amount of $ 1,440,000 under the US Small Business Administration’s Paycheck Protection Program (“PPP”). The PPP was established as part of the US Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and provided for potential forgiveness of the loan upon the Company meeting certain conditions as to the use of the proceeds. The loan provided for interest at 1% and a maturity date of April 2022. In May 2020, the Company repaid the loan in full. 5. Stockholders’ Equity Common Stock In March 2019, the Company completed an equity capital raise issuing approximately 5.9 million shares of common stock at a price of £ 1.70 (or approximately $ 2.25 ) per share. The transaction generated gross proceeds of approximately £ 10 million (or approximately $ 13.3 million). In conjunction with the transaction, the Company incurred costs of approximately $ 1.0 million which resulted in the Company receiving net proceeds of approximately $ 12.3 million. During the year ended December 31, 2019, the Company issued 162,500 shares of common stock as a result of stock option exercises, receiving gross proceeds of $ 132,700 . In May 2020, the Company completed an equity capital raise issuing 19,181,423 shares of its common stock at a price of £ 1.31 (or approximately $ 1.60 ) per share in an unregistered offering. The transaction generated gross proceeds of approximately £ 25.1 million (or $ 30.5 million). In conjunction with the transaction, the Company incurred costs of approximately $ 1.9 million which resulted in the Company receiving net proceeds of approximately $ 28.6 million. During the year ended December 31, 2020, the Company issued 797,467 shares of common stock as a result of stock option exercises, receiving gross proceeds of $ 401,000 . In February 2021, the Company completed an equity capital raise issuing 5,740,000 shares of its common stock at a price of ₤ 7.00 (or approximately $ 9.64 ) per share. The transaction generated gross proceeds of ₤ 40.2 million (or $ 55.3 million). In conjunction with the transaction, the Company incurred costs of $ 3.5 million which resulted in the Company receiving net proceeds of $ 51.8 million. In August 2021, the Company completed the IPO and received aggregate net proceeds of $ 184.3 million (see Note 1). During the year ended December 31, 2021, the Company issued 2,490,629 shares of common stock as a result of stock option exercises, receiving gross proceeds of $ 3.6 million. Preferred Stock In July 2021, upon shareholder approval, the Company was authorized to issue 5,000,000 shares of preferred stock, par value $ 0.01 per share. As of December 31, 2021, no shares of preferred stock were issued or outstanding . 108 Table of Contents Warrant In connection with the November 2019 credit facility (see Note 4) the Company issued the lender a warrant to purchase 71,168 shares of Common Stock at an exercise price of £ 1.09081 per share. The warrant was exercisable at any time through the tenth anniversary of issuance. The warrant was classified as a liability as its strike price is in a currency other than the Company’s functional currency. The warrant was recorded at fair value at the end of each reporting period with changes from the prior balance sheet date recorded on the consolidated statements of operations (see Note 6). In a cashless settlement in August 2021, the lender fully exercised the warrant in exchange for 64,603 shares of common stock. Stock Options The Company adopted the MaxCyte, Inc. Long-Term Incentive Plan (the “Plan”) in January 2016 to amend and restate the MaxCyte 2000 Long-Term Incentive Plan to provide for the awarding of (i) stock options; (ii) restricted stock; (iii) incentive shares and (iv) performance awards to employees, officers, and directors of the Company and to other individuals as determined by the Board of Directors. Under the Plan, as amended, the maximum number of shares of Common Stock of the Company that the Company may issue is increased by ten percent ( 10 %) of the shares that are issued and outstanding at the time awards are made under the Plan. On December 10, 2019, and October 27, 2020, the Company’s Board resolved to increase the number of stock options under the Plan by 3,000,000 and 1,500,000 , respectively. At December 31, 2021 and 2020, there were 4,491,162 and 4,175,737 awards available to be issued under the Plan, respectively. The Company has not issued any restricted stock, incentive shares or performance awards under the Plan. Stock options granted under the Plan may be either incentive stock options as defined by the Internal Revenue Code or non-qualified stock options. The Board of Directors determines who will receive options under the Plan and determines the vesting period. The options can have a maximum term of no more than ten years . The exercise price of options granted under the Plan is determined by the Board of Directors and must be at least equal to the fair market value of the Common Stock of the Company on the date of grant. In December 2021 the Company adopted the MaxCyte, Inc. 2021 Inducement Plan (the “Inducement Plan”) to provide for the awarding of (i) Non-statutory Stock Options; (ii) stock appreciation rights; (iii) restricted stock awards; (iv) restricted stock unit awards; (v) performance awards; and (vi) other awards only to persons eligible to receive grants of awards who satisfy the standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) or 5635(c)(3), if applicable, and the related guidance under Nasdaq IM 5635-1. The Inducement Plan reserved 2,500,000 shares for issuance under awards, and as of December 31, 2021 no awards have been granted. 109 Table of Contents A summary of stock option activity for the years ended December 31, 2021, 2020 and 2019 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted- ​ ​ ​ ​ ​ ​ ​ ​ ​ Average ​ ​ ​ ​ ​ ​ ​ Weighted ​ Remaining ​ ​ ​ ​ ​ Number of ​ Average ​ Contractual Life ​ Aggregate ​ ​ Options ​ Exercise Price ​ (in years) ​ Intrinsic Value Outstanding at January 1, 2019 8,388,500 ​ $ 1.49 7.4 ​ $ 10,354,900 Granted 2,538,500 ​ ​ 2.17 ​ Exercised ( 162,500 ) ​ ​ 0.82 ​ $ 217,600 Forfeited ( 465,215 ) ​ ​ 2.48 ​ Outstanding at December 31, 2019 10,299,285 ​ $ 1.63 7.0 ​ $ 6,471,500 Granted 3,849,448 ​ ​ 3.00 ​ Exercised ( 797,467 ) ​ ​ 0.52 ​ $ 2,198,300 Forfeited ( 487,036 ) ​ ​ 2.59 ​ Outstanding at December 31, 2020 12,864,230 ​ $ 2.11 7.1 ​ $ 65,576,300 Granted 4,117,956 ​ ​ 13.96 ​ Exercised ( 2,490,629 ) ​ ​ 1.44 ​ $ 25,133,200 Forfeited ( 2,057,818 ) ​ ​ 4.54 ​ Outstanding at December 31, 2021 12,433,739 ​ ​ 6.03 7.5 ​ $ 66,547,300 Exercisable at December 31, 2021 6,099,959 ​ $ 2.19 6.0 ​ $ 49,021,600 ​ The weighted-average fair value of the options granted during the years ended December 31, 2021, 2020 and 2019 was estimated to be $ 7.39 , $ 1.39 and $ 1.08 , respectively. As of December 31, 2021, total unrecognized compensation expense was $ 26,748,900 , which will be recognized over the next 3.2 years. Stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 was classified as follows on the consolidated statements of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 ​ 2019 General and administrative ​ $ 4,609,900 ​ $ 1,230,700 ​ $ 827,500 Sales and marketing ​ 1,454,800 ​ 484,700 ​ 325,700 Research and development ​ 1,894,100 ​ 756,400 ​ 598,900 Total ​ $ 7,958,800 ​ $ 2,471,800 ​ $ 1,752,100 ​ ​ ​ ​ 6. Consolidated Balance Sheet Components Inventory The following tables show the components of inventory: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ ​ 2021 ​ 2020 ​ Raw materials inventory ​ $ 2,684,100 ​ $ 1,771,300 ​ Finished goods inventory ​ 2,520,500 ​ 2,544,500 ​ Total inventory ​ $ 5,204,600 ​ $ 4,315,800 ​ ​ ​ The Company determined no allowance for obsolescence was necessary at December 31, 2021 or 2020. ​ 110 Table of Contents Property and Equipment, Net Property and equipment, net comprised the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ ​ 2021 ​ 2020 ​ Furniture and equipment ​ $ 4,914,500 ​ $ 3,492,900 ​ Instruments ​ 3,208,900 ​ 1,424,600 ​ Leasehold improvements ​ 641,400 ​ 641,400 ​ Internal-use software and other assets under development ​ 1,163,200 ​ — ​ Internal-use software ​ 2,125,600 ​ 1,963,000 ​ Accumulated depreciation and amortization ​ ( 4,372,400 ) ​ ( 2,975,700 ) ​ Property and equipment, net ​ $ 7,681,200 ​ $ 4,546,200 ​ ​ For the years ended December 31, 2021 and 2020, the Company transferred $ 517,000 and $ 276,600 , respectively, of instruments previously classified as inventory to property and equipment leased to customers. For the years ended 31 December 2021, 2020 and 2019, the Company incurred depreciation and amortization expense of $ 1,423,900 , $ 1,047,700 and $ 613,500 , respectively. In the years ended December 31, 2021, 2020 and 2019, the Company capitalized approximately $ 0 , $ 16,700 and $ 13,800 , respectively, of interest expense related to capitalized software development projects. Maintenance and repairs are charged to expense as incurred. ​ 7. Fair Value The Company’s consolidated balance sheets include various financial instruments (primarily cash and cash equivalents, short-term investments, accounts receivable and accounts payable) that are carried at cost, which approximates fair value due to the short-term nature of the instruments. Notes payable are reflective of fair value based on market comparable instruments with similar terms. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company had an outstanding warrant accounted for as a liability and measured at fair value on a recurring basis, using Level 3 inputs. The lender exercised the warrant, in whole, in August 2021 (see Note 5). The Company did not have any outstanding warrants at December 31, 2021. ​ The following table identifies the carrying amounts of this warrant at December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Level 1 Level 2 Level 3 Total Liability classified warrant ​ $   — ​ $   — ​ $ 441,200 ​ $ 441,200 Total at December 31, 2020 ​ $ — ​ $ — ​ $ 441,200 ​ $ 441,200 ​ 111 Table of Contents The following table presents the activity for those items measured at fair value on a recurring basis using Level 3 inputs for the year ended December 31, 2021, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Mark-to-market liabilities — warrant ​ ​ ​ Year Ended December 31, ​ ​ 2021 ​ 2020 ​ 2019 Balance at January 1 ​ $ 441,200 ​ $ 74,700 ​ $ — Issuance ​ ​ — ​ ​ — ​ ​ 60,700 Change in fair value ​ 645,400 ​ 366,500 ​ 14,000 Exercise of warrant ​ ​ ( 1,086,600 ) ​ ​ — ​ ​ — Balance at December 31 ​ $ — ​ $ 441,200 ​ $ 74,700 ​ ​ The gains and losses resulting from the changes in the fair value of the liability classified warrant are classified as other income or expense in the accompanying consolidated statements of operations. The fair value of the warrant was determined based on the Black-Scholes option pricing model or other option pricing models as appropriate and included the use of unobservable inputs such as the expected term, anticipated volatility and expected dividends. The Company has no other financial assets or liabilities measured at fair value on a recurring basis. Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis Money market funds, commercial paper and corporate debt instruments classified as held-to-maturity are measured at fair value on a non-recurring basis when they are deemed to be impaired on an other-than-temporary basis. No such fair value impairment was recognized during the years ended December 31, 2021 or 2020. The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis at December 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ ​ ​ Amortized ​ unrecognized ​ unrecognized ​ Aggregate Description Classification cost holding gains holding losses fair value Money market funds Cash equivalents ​ $ 19,341,500 ​ $ — ​ $ — ​ $ 19,341,500 Commercial paper Cash equivalents ​ 25,492,200 ​ ​ 4,400 ​ ​ — ​ 25,496,600 Corporate debt Short-term investments ​ 4,909,200 ​ ​ — ​ ​ ( 1,800 ) ​ 4,907,400 Commercial paper Short-term investments ​ 202,352,200 ​ ​ 22,900 ​ ​ — ​ 202,375,100 Total cash equivalents and short-term investments ​ $ 252,095,100 ​ $ 27,300 ​ $ ( 1,800 ) ​ $ 252,120,600 ​ The following table summarizes the Company’s financial instruments that were measured at fair value on a non-recurring basis at December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ Gross ​ ​ ​ ​ ​ ​ ​ Amortized ​ unrecognized ​ unrecognized ​ Aggregate Description Classification cost holding gains holding losses fair value Money market funds Cash equivalents ​ $ 8,702,200 ​ $ — ​ $ — ​ $ 8,702,200 Commercial paper Cash equivalents ​ 6,523,500 ​ — ​ — ​ 6,523,500 Commercial paper Short-term investments ​ 13,996,800 ​ 1,800 ​ — ​ 13,998,600 Corporate debt ​ Short‑term investments ​ ​ 2,010,700 ​ ​ — ​ ​ ( 100 ) ​ ​ 2,010,600 Total cash equivalents and short-term investments ​ $ 31,233,200 ​ $ 1,800 ​ $ ( 100 ) ​ $ 31,234,900 112 Table of Contents ​ Non-Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis The Company has no non-financial assets and liabilities that are measured at fair value on a recurring basis. Non-Financial Assets and Liabilities Measured at Fair Value on a Non-Recurring Basis The Company measures its long-lived assets, including property and equipment, at fair value on a non-recurring basis. These assets are recognized at fair value when they are deemed to be impaired. No such fair value impairment was recognized during the years ended December 31, 2021 or 2020. 8. Income Taxes The Company did not recognize a provision (benefit) for income taxes in 2021, 2020 or 2019. Based on the Company’s historical operating performance, the Company has provided a full valuation allowance against its net deferred tax assets. Net deferred tax assets as of December 31, 2021, 2020 and 2019 are presented in the table below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2021 2020 2019 Deferred tax assets: ​ ​ ​ Net operating loss carryforwards ​ $ 22,306,600 ​ $ 14,998,000 ​ $ 12,842,100 Research and development credits ​ — ​ 875,400 ​ 875,400 Stock-based compensation ​ 3,177,500 ​ 1,662,600 ​ 1,146,200 Deferred revenue ​ 1,873,100 ​ 1,387,200 ​ 965,800 Lease liability ​ 1,478,800 ​ 566,900 ​ 647,800 Accruals and other ​ 1,103,900 ​ 971,700 ​ 652,700 Deferred tax liabilities: ​ ​ ​ ​ ROU asset ​ ( 1,480,700 ) ​ ( 538,500 ) ​ ( 630,300 ) Depreciation ​ ( 70,100 ) ​ — ​ ( 25,300 ) ​ ​ 28,389,100 ​ 19,923,300 ​ 16,474,400 Valuation allowance ​ ( 28,389,100 ) ​ ( 19,923,300 ) ​ ( 16,474,400 ) Net deferred tax assets ​ $ — ​ $ — ​ $ — ​ The Federal net operating loss (“NOL”) carryforwards of approximately $ 90.3 million as of December 31, 2021, will begin to expire in various years beginning in 2026. The use of NOL carryforwards is limited on an annual basis under Internal Revenue Code Section 382 when there is a change in ownership (as defined by this code section). As of December 31, 2021, the Company has NOL carryforwards of approximately $ 52.5 million in various states. Based on changes in Company ownership in the past, the Company believes that the use of its NOL carryforwards generated prior to the date of the change is limited on an annual basis; NOL carryforwards generated subsequent to the date of change in ownership can be used without limitation. The use of the Company’s NOL carryforwards may be restricted further if there are future changes in Company ownership. Additionally, despite the net operating loss carryforwards, the Company may have a future tax liability due to state tax requirements. 113 Table of Contents Income tax expense reconciled to the tax computed at statutory rates for the years ended December 31, 2021, 2020 and 2019 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 2019 Federal income taxes (benefit) at statutory rates ​ $ ( 4,007,300 ) ​ $ ( 2,481,400 ) ​ $ ( 2,707,900 ) State income taxes (benefit), net of Federal benefit ​ ( 959,100 ) ​ ( 787,600 ) ​ ( 898,800 ) Windfall tax benefits ​ ( 6,082,100 ) ​ ( 556,900 ) ​ ( 40,200 ) Permanent differences, rate changes and other ​ 2,565,800 ​ 377,100 ​ ( 29,700 ) Change in valuation allowance ​ 8,482,700 ​ 3,448,800 ​ 3,676,600 Total Income Tax Expense ​ $ — ​ $ — ​ $ — ​ ​ 9 . Commitments and Contingencies Leases Operating Leases The Company is a party to various leases for office and laboratory space. A member of the Company’s Board of Directors is the CEO and Board member of the lessor of certain of these leases for which the rent payments totaled $ 692,000 , $ 623,000 and $ 416,800 in the years ended December 31, 2021, 2020 and 2019, respectively. The Company’s long-term office and laboratory lease agreements as amended to date, for all leases excluding the 2021 Lease described below, expire between October 2022 and October 2023 and provide for annual increases to the base rent of between 3 % and 5 %. All of these leases are classified as operating leases and the current monthly base lease payment for these office and laboratory leases is approximately $ 59,100 . In addition to base rent, the Company pays a pro-rated share of common area maintenance (“CAM”) costs for the entire building, which is adjusted annually based on actual expenses incurred. None of the Company’s current operating leases, excluding the 2021 Lease described below, contain any renewal provisions. The Company used a discount rate of 8 % in calculating its lease liability under its operating leases. In 2021, the Company entered into an operating lease agreement, as amended, for new office and manufacturing space (the “2021 Lease”). The 2021 Lease for the new space consists of three phases, with Phase 1 having commenced in December 2021 and a portion of Phase 2 having commenced in January 2022 (see Note 10). The lease term for all phases is estimated to expire on August 31, 2035. The remainder of Phase 2 and all of Phase 3 are estimated to commence in the second quarter 2022 and the first quarter of 2023, respectively. The Company will design and construct the leasehold improvements with the approval of the landlord. The 2021 Lease agreement includes a landlord-provided tenant improvement allowance of $ 6.3 million, which will be applied to the cost of construction of leasehold improvements. Under the 2021 Lease, the Company has three five-year options to extend the term of the lease. The initial monthly base rent for Phase 1 is $ 66,000 , with such base rent increasing during the initial term by 3 % 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 lease premises, including costs of operations, maintenance, repair, replacement and management of the new leased premises. The Phase 1 lease commencement resulted in the Company establishing approximately $ 4.8 million of ROU assets and $ 4.7 million of lease liabilities. The Company used a discount rate of 6.5 % in calculating its Phase 1 lease liability. The total incremental non-cancellable lease payments under the 2021 Lease are approximately $ 29.9 million over the lease term. Finance Leases In 2020, the Company entered into a three-year laboratory equipment lease that expires in April 2023. The lease provided for monthly payments of approximately $ 9,200 per month and included an end of lease bargain purchase option. The lease was classified as a finance lease. The Company used a discount rate of 5.5 % in calculating its lease liability under this finance lease resulting in the establishment of approximately a $ 301,700 ROU asset and offsetting lease liabilities . 114 Table of Contents In August 2021, the Company exercised its purchase option under the finance lease and acquired the associated leased laboratory equipment. At December 31, 2021, the Company had no ROU finance asset or lease liability . At December 31, 2020, the Company had a $ 218,300 ROU asset, a $ 100,000 short-term lease liability included in “ Accrued expenses and other ” and $ 142,200 long-term lease liability included in “Other liabilities” related to its finance lease on the consolidated balance sheet. All Leases The components of lease cost and supplemental balance sheet information for the Company’s lease portfolio were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2021 2020 2019 Finance lease cost ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of ROU asset ​ $ 55,600 ​ $ 83,400 ​ $ — Interest on expense ​ 7,000 ​ 14,400 ​ — Operating lease cost ​ 714,100 ​ 673,900 ​ 551,100 Short-term lease cost ​ 43,300 ​ 19,100 ​ — Variable lease cost ​ 302,400 ​ 289,500 ​ 217,700 Total lease cost ​ $ 1,122,400 ​ $ 1,080,300 ​ $ 768,800 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, ​ ​ ​ ​ 2021 2020 Operating leases ​ ​ ​ ​ ​ ​ ​ ​ ​ Assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating lease right-of-use assets ​ ​ ​ ​ $ 5,689,300 ​ $ 1,728,300 Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ Current portion of operating lease liabilities ​ ​ ​ ​ $ 527,200 ​ $ 572,600 Operating lease liabilities, net of current portion ​ ​ ​ ​ 5,154,900 ​ 1,234,600 Total operating lease liabilities ​ ​ ​ ​ $ 5,682,100 ​ $ 1,807,200 Other information ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted-average remaining lease term (in years) ​ ​ ​ ​ ​ 11.7 ​ ​ 2.8 Weighted-average discount rate% ​ ​ ​ ​ ​ 6.6 % ​ ​ 8.0 % ​ As of December 31, 2021, maturities of lease liabilities that had commenced prior to December 31, 2021, were as follows: ​ ​ ​ ​ ​ ​ Operating Leases ​ ​ ​ 2022 ​ $ 579,200 2023 ​ 1,015,700 2024 ​ 829,100 2025 ​ ​ 849,800 2026 and thereafter ​ ​ 9,394,600 Total undiscounted lease payments ​ $ 12,668,400 Discount factor ​ ( 6,986,300 ) Present value of lease liabilities ​ $ 5,682,100 ​ 115 Table of Contents 401(k) Retirement Plan The Company sponsors a defined-contribution 401(k) retirement plan covering eligible employees. Participating employees may voluntarily contribute up to limits provided by the Internal Revenue Code. The Company matches employee contributions equal to 50 % of the salary deferral contributions, with a maximum Company contribution of 5 % of the employees’ eligible compensation. In the years ended December 31, 2021, 2020 and 2019, Company matching contributions amounted to $ 378,900 , $ 351,500 and $ 277,700 , respectively. ​ ​ 10. Subsequent Events On January 28, 2022, a portion of Phase 2 of the 2021 Lease (see Note 9) commenced. The Phase 2 commencement resulted in the Company establishing approximately $ 3.2 million each of ROU assets and lease liabilities . The initial monthly base rent for the commenced portion of Phase 2 is $ 35,800 , with such base rent increasing during the initial term by 3 % annually on the anniversary of the Phase 1 commencement date. The Company used a discount rate of 6.5 % in calculating its Phase 2 lease liability. The total incremental non-cancellable lease payments under the commenced portion of Phase 2 are approximately $ 6.7 million over the lease term. ​ ​ 116 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.