What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-15 compared with 2022-03-22 · 169 added, 203 removed, 469 unchanged (44% of the section changed)

13 unchanged sentences

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.

(the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for the years then ended, 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, 2022 and 2021, and the results of their operations and cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

22 unchanged sentences

Accounts receivable

Accounts receivable - TIA (Note 9)

Prepaid expenses and other current assets

2 unchanged sentences

Right-of-use asset - operating leases

Right of use asset - finance leases

Liabilities and stockholders’ equity

5 unchanged sentences

Total current liabilities

Note payable, net of discount, and deferred fees

Operating lease liability, net of current portion

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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

5,000,000 shares authorized and no shares issued and outstanding at December 31, 2022 and December 31, 2021

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

400,000,000 shares authorized, 102,397,913 and 101,202,705 shares issued and outstanding at December 31, 2022 and December 31, 2021, respectively

Additional paid-in capital

18 unchanged sentences

( 18,188,600 )

( 12,420,000 )

Other income (expense):

6 unchanged sentences

( 19,082,200 )

( 12,895,000 )

Basic and diluted net loss per share

4 unchanged sentences

Stockholders’

Balance at January 1, 2019

( 70,510,900 )

Issuance of common stock, net of issuance costs

Stock-based compensation expense

Exercise of stock options

( 12,895,000 )

Balance at December 31, 2020

1 unchanged sentence

Issuance of common stock, net of issuance costs

Issuance of common stock upon initial public offering, net of issuance costs

Stock-based compensation expense

Exercise of stock options

Cashless exercise of warrant

( 19,082,200 )

2 unchanged sentences

( 114,304,500 )

Issuance of common stock, net of issuance costs

Issuance of common stock upon initial public offering, net of issuance costs

Stock-based compensation expense

Exercise of stock options

Cashless exercise of warrant

( 23,570,800 )

9 unchanged sentences

( 19,082,200 )

( 12,895,000 )

Adjustments to reconcile net loss to net cash used in operating activities:

4 unchanged sentences

Stock-based compensation

Bad debt (recovery) expense

Amortization of discounts on short-term investments

( 2,667,400 )

Non-cash interest expense

3 unchanged sentences

( 1,705,100 )

Accounts receivable – TIA

( 1,912,400 )

( 3,493,300 )

Other current assets

( 1,405,800 )

Prepaid expense and other current assets

( 2,304,400 )

Right of use asset – operating leases

( 4,164,200 )

( 3,806,200 )

Right of use asset – finance lease

6 unchanged sentences

( 10,679,600 )

( 8,802,500 )

Cash flows from investing activities:

2 unchanged sentences

( 268,683,600 )

( 7,424,100 )

Maturities of short-term investments

2 unchanged sentences

( 3,834,200 )

( 1,271,300 )

Proceeds from sale of equipment

Net cash (used in) provided by investing activities

Net cash used in investing activities

( 24,823,300 )

3 unchanged sentences

Net proceeds from issuance of common stock upon initial public offering

Borrowings under notes payable

Principal payments on notes payable

( 4,922,400 )

( 1,440,000 )

( 5,105,500 )

Proceeds from exercise of stock options

1 unchanged sentence

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 36,717,700 )

Cash and cash equivalents, beginning of year

4 unchanged sentences

Property and equipment purchases included in accounts payable

Lease liability reduction due to operating lease modification

Issuance of warrant in conjunction with debt transaction

Reduction of lease right-of-use asset due to early termination

Right-of-use assets obtained in exchange for new operating lease obligations

Other liability reduction due to exercise of warrant

See accompanying notes to consolidated financial statements.

MaxCyte, Inc.

Notes to Consolidated Financial Statements

Organization and Description of Business

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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.

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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

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.

The preparation of consolidated 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 the date of the consolidated 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, 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.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary.

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.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments 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.

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.

1 unchanged sentence

During the years ended December 31, 2022 and 2021, one customer represented 23 % and 21 % 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.

As of December 31, 2022, one customer accounted for 14 % of accounts receivable.

Two customers accounted for 16 % and 13 % of accounts receivable, respectively, at December 31, 2021.

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.

Of the inventory on hand at December 31, 2022 and 2021, the Company purchased approximately 34 % and 33 %, respectively, from a single supplier.

At December 31, 2022, amounts payable to two suppliers totaled 34 % of total accounts payable.

As of December 31, 2021, amounts payable to one supplier totaled 14 % of total accounts payable.

Foreign Currency

2 unchanged sentences

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.

For the years ended December 31, 2022 and 2021, the Company recognized $ 79,100 and $ 72,000 in foreign currency transaction loss, respectively.

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.

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See Note 7 for additional information regarding fair value.

Cash, Cash Equivalents and Short-term Investments

Cash and 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.

2 unchanged sentences

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.

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.

Inventory that is obsolete or in excess of forecasted usage is written down to its estimated net realizable value based on assumptions about future demand and market conditions.

Inventory write-downs are charged to cost of goods sold and establish a new cost basis for the inventory.

Accounts Receivable

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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

probable of being consummated, all deferred offering costs will be charged to operating expenses in the consolidated statement of operations at such time.

If the equity financing is no longer considered 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.

5 unchanged sentences

(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.

(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.

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Research costs performed for fees paid by customers are included in cost of goods sold.

Stock-Based Compensation

Stock-Based Compensation Expense

Stock-based compensation expense is measured based on grant-date fair value.

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

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:

The Company uses the market closing price of its common stock as reported on the Nasdaq Global Select Market for the fair value of equity awards.

The grant-date fair value of stock options is estimated using the Black-Scholes option pricing model for estimating fair value of its stock options granted.

Option valuation models, including the Black-Scholes option pricing 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 the expected volatility, expected dividend yield, risk-free rate of interest and the expected life of the award.

Historically, the Company exclusively used identified comparable companies’ stock price volatility to calculate expected volatility for the periods presented due to lack of history with its own common stock available to determine its volatility.

Beginning with the third quarter of 2022, the Company has observed sufficient historical information regarding its common stock to use the Company’s common stock for the estimate of volatility in the Black-Scholes option pricing model.

Management’s methodology for developing other assumptions has not changed from prior periods.

A discussion of management’s methodology for developing each of the assumptions used in the Black-Scholes option pricing 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.

For 2021 and the first two quarters of 2022, the Company identified several public entities of similar size, complexity and stage of development to calculate historical volatility using the volatility of these companies.

Beginning with the third

quarter of 2022, the Company estimates its expected stock volatility based on historical volatility of its own common stock.

Expected Dividend Yield

18 unchanged sentences

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,

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.

2 unchanged sentences

The Company is subject to taxation in various jurisdictions in the United States and abroad and remains subject to examination by taxing jurisdictions for 2018 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.

The Company has a federal Net Operating Loss

(“NOL”) carryforward of approximately $ 93.9 million as of December 31, 2022, of which approximately $ 32.7 million begins to expire in 2025.

Certain of the Company’s NOLs were initially limited on an annual basis pursuant to Section 382 of the Internal Revenue Code of 1986 (“Section 382”), as amended, as a result of a cumulative change in ownership that occurred in 2016;

however, as of December 31, 2022 the Company has determined that the cumulative limitation amount exceeds the NOLs subject to the limitation and, as a result, no annual limitation remains.

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.

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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.

See Note 9 for additional details about leases where the Company is the lessee.

All transactions in which 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.

See Note 3 for details about 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.

Basic loss per share is computed by dividing net loss available to common stockholders 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 stockholders 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.

The number of anti-dilutive shares, consisting of stock options and restricted stock units excluded from the computation of diluted loss per share, was 15.0 million and 12.4 million for the years ended December 31, 2022 and 2021, respectively.

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

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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.

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Revenue from fees for research services is recognized when services have been provided.

Disaggregated revenue for the year ended December 31, 2021 is as follows:

Product sales

Lease elements

Disaggregated revenue for the year ended December 31, 2020 is as follows:

Disaggregated revenue for the year ended December 31, 2022 was as follows:

Year ended December 31, 2022

Product sales

Lease elements

Disaggregated revenue for the year ended December 31, 2019 is as follows:

Disaggregated revenue for the year ended December 31, 2021 was as follows:

Year ended December 31, 2021

Product sales

7 unchanged sentences

( 4,828,000 )

( 2,435,000 )

Current period deferrals, net of amounts recognized in the current period

2 unchanged sentences

In the years ended December 31, 2022 and 2021, the Company did not incur, and therefore did not defer, any material incremental costs to obtain contracts or costs to fulfil contracts.

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 2019, the Company entered into a credit facility with MidCap Financial SBIC, LP (“MidCap”) that provided for a $ 5 million term loan maturing on November 1, 2024.

In March 2021, the Company repaid the MidCap loan in full.

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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.

Stockholders’ Equity

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.

In February 2021, the Company completed an equity capital raise on the AIM, a market operated by the London Stock Exchange Plc, 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).

1 unchanged sentence

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 also issued 2,490,629 shares of common stock as a result of stock option exercises, receiving gross proceeds of $ 3.6 million.

During the year ended December 31, 2022, the Company issued 1,195,208 shares of common stock as a result of stock option exercises, receiving gross proceeds of $ 2.9 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 .

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.

In July 2021, upon stockholder approval, the Company amended its certificate of incorporation to authorize 5,000,000 shares of preferred stock, par value $ 0.01 per share.

As of December 31, 2022 and 2021, no shares of preferred stock were issued or outstanding.

In connection with the 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.

1 unchanged sentence

In a cashless settlement in August 2021, the lender fully exercised the warrant in exchange for 64,603 shares of common stock.

Stock Options

Stock Incentive Plans

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.

Long-Term Incentive Plan (the “2016 Plan”) in January 2016 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.

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;

2021 Inducement Plan (the “Inducement Plan”) to provide for the awarding of (i) non-qualified stock options;

(ii) stock appreciation rights;

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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.

The board of directors reserved 2,500,000 shares for issuance under the Inducement Plan, and as of December 31, 2021 no awards had been granted.

As of December 31, 2022, options to purchase 855,900 shares had been granted under the Inducement Plan.

In May 2022, the Company’s board of directors adopted, and in June 2022 the Company’s stockholders approved, the MaxCyte, Inc.

2022 Equity Incentive Plan (the “2022 Plan”) to provide for the awarding of (i) incentive stock options, (ii) non-qualified stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards, (vi) performance awards, and (vii) other awards.

Following the approval of the 2022 Plan, no additional awards can be granted under the 2016 Plan or the Inducement Plan, but all outstanding awards will continue to remain subject to the terms of the applicable plan.

Upon the effectiveness of the 2022 Plan, a total of 3,692,397 shares were initially reserved for issuance pursuant to future awards under the 2022 Plan, consisting of 1,928,000 new shares and 1,764,397 shares previously available under the 2016 Plan.

If and to the extent that outstanding options under the 2016 Plan or the Inducement Plan are forfeited, the shares underlying such forfeited options will become available for issuance under the 2022 Plan.

The Company has not issued performance awards under any plan.

Stock Option Activity

A summary of stock option activity for the years ended December 31, 2022 and 2021 is as follows:

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Intrinsic Value

Outstanding at January 1, 2019

Outstanding at December 31, 2020

( 2,490,629 )

( 2,057,818 )

Outstanding at December 31, 2021

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The weighted-average fair value of the options granted during the years ended December 31, 2022 and 2021 was estimated to be $ 3.48 and $ 7.39 , 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:

The value of a stock option is recognized as expense on a straight-line basis over the requisite service period.

As of December 31, 2022, total unrecognized compensation expense for outstanding stock options was $ 26,287,100 , which will be recognized over the next 2.7 years.

Restricted Stock Unit Activity

During the year ended December 31, 2022, the Company issued restricted stock unit awards (“RSUs”) under the 2022 Plan.

Each RSU represents the contingent right to receive one share of common stock.

The Company had not issued RSUs in any prior period.

RSUs activity for the year ended December 31, 2022 is presented below:

Contractual Life

Outstanding at January 1, 2022

Outstanding at December 31, 2022

Exercisable at December 31, 2022

The weighted-average fair value of the RSUs granted during the year ended December 31, 2022 was $ 5.56 .

The value of an RSU is recognized as expense on a straight-line basis over the requisite service period.

As of December 31, 2022, total unrecognized compensation expense for outstanding RSUs was $ 2,914,700 , which will be recognized over the next 2.1 years.

Stock-based Compensation Expense

Stock-based compensation expense recognized in connection with stock options and RSUs for the years ended December 31, 2022 and 2021 was classified as follows on the consolidated statements of operations:

Year Ended December 31,

General and administrative

Sales and marketing

Research and development

Sales and marketing

Consolidated Balance Sheet Components

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Property and equipment, net comprised the following:

Furniture and equipment

Leasehold improvements

Internal-use software and other assets under development

Furniture and equipment

Internal-use software

Construction and internal-use software in process

Accumulated depreciation and amortization

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For the years ended December 31, 2022 and 2021, the Company incurred depreciation and amortization expense of $ 2,697,900 and $ 1,423,900 , 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.

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

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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:

Liability classified warrant

Total at December 31, 2020

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:

The Company did not have any outstanding warrants at December 31, 2022 and 2021.

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:

Mark-to-market liabilities — warrant

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Balance at December 31

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 gains and losses resulting from the changes in the fair value of the liability classified warrant were classified as other income or expense in the accompanying 2021 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.

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holding losses

Money market funds

Money market funds and cash equivalents

Cash equivalents

Commercial paper

Cash equivalents

Short-term investments

Corporate debt

Short-term investments

Commercial paper

US Treasury securities and government agency bonds

Short-term investments

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Cash equivalents

Commercial paper

Short-term investments

Corporate debt

Short-term investments

Commercial paper

Short‑term investments

Total cash equivalents and short-term investments

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No such fair value impairment was recognized during the years ended December 31, 2022 or 2021.

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.

The Company’s provision (benefit) for income taxes in 2022 and 2021 consisted of the following:

Current provision (benefit):

Total current provision

Deferred tax provision (benefit):

( 2,581,400 )

( 7,780,600 )

Change in valuation allowance

Total deferred provision

Total provision (benefit) for income taxes

The Company is required to establish a valuation allowance for deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

The Company considers projected future taxable income and tax planning strategies in making this assessment.

As of December 31, 2022 and 2021, the Company established a full valuation allowance against its net deferred tax assets.

Net deferred tax assets as of December 31, 2022 and 2021 are presented in the table below:

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Net operating loss carryforwards

Research and development credits

Research and experimental expenditures

Stock-based compensation

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Lease liability

Tenant incentive

Accruals and other

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( 2,531,600 )

Valuation allowance

( 1,480,700 )

( 4,605,300 )

Valuation allowance

( 33,065,500 )

( 28,389,100 )

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.

Income tax expense reconciled to the tax computed at statutory rates for the years ended December 31, 2021, 2020 and 2019 is as follows:

The difference between the expected income tax provision (benefit) from applying the U.S.

Federal statutory rate to pre-tax income (loss) and the actual income tax provision (benefit) for the years ended December 31, 2022 and 2021 relates primarily to the effect of the following:

Year Ended December 31,

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( 4,007,300 )

( 2,707,900 )

State income taxes (benefit), net of Federal benefit

Windfall tax benefits

Excess tax benefits

( 6,082,100 )

2 unchanged sentences

Total Income Tax Expense

On August 16, 2022, the U.S.

Inflation Reduction Act of 2022 (the “Inflation Reduction Act”) was signed into law.

The Inflation Reduction Act includes, among other provisions, (i) a new corporate alternative minimum tax of 15 percent on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.0 billion over a three-year period, and (ii) a new excise tax of 1 percent on the fair market value of net corporate stock repurchases.

The provisions of the Inflation Reduction Act are effective for tax years beginning after December 31, 2022.

The Company does not expect the Inflation Reduction Act to have a material impact on its provision for income taxes.

The Tax Cuts and Jobs Act of 2017 (TCJA) amended IRC Section 174 to require capitalization of all research and developmental (“R&D”) costs incurred in tax years beginning after December 31, 2021.

These costs are required to be amortized over five years if the R&D activities are performed in the United States or over 15 years if the activities were performed outside the United States.

The Company capitalized approximately $ 16.1 million of R&D expenses incurred during the year ended December 31, 2022.

Commitments and Contingencies

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 was a party to various leases for office and laboratory and other space that were terminated in 2022.

One portion of leased space was an operating lease (the “Original Headquarters Lease”), which was originally scheduled to expire in October 2023.

The Original Headquarters Lease was early terminated as allowed for under the lease on June 9, 2022.

The Company was also a sublessee of certain additional office, laboratory, and other space under several subleases (the “Original Headquarters Subleases”) that were originally scheduled to expire in October 2023, all of which were terminated as allowed for under the subleases on various dates between June and August 2022.

A member of the Company’s board of directors is the Chief Executive Officer and a member of the board of directors of the sublandlord under the Original Headquarters Subleases, and the Company’s Chairman is also a member of the sublandlord’s board of directors.

The Company’s rent payments to the sublandlord totaled $ 296,300 and $ 692,000 in the years ended December 31, 2022 and 2021, respectively.

In May 2021, the Company entered into a lease for its new headquarters (the “New Headquarters Lease”), consisting of an operating lease agreement, as amended, for new office, laboratory, manufacturing and other space.

The New Headquarters Lease consists of three phases, with Phase 1 having commenced in December 2021 and Phase 2 having commenced in the first quarter of 2022.

Phase 3 will commence no later than November 1, 2023.

The current lease term for all phases will expire on August 31, 2035.

The Company designed and constructed the leasehold improvements with the approval of the landlord.

The New Headquarters Lease agreement includes a landlord-provided tenant improvement allowance (“TIA”) of $ 6.3 million to offset the cost of construction of leasehold improvements.

As of December 31, 2022, the Company had received TIA reimbursements of $ 4.3 million.

Under the New Headquarters Lease, the Company has three five-year options to extend the term of the lease.

However, the Company is not reasonably certain to exercise any of these options.

The initial monthly base rents for Phases 1 and 2 are $ 66,000 and $ 72,100 , respectively, 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.

The Phase 1 and 2 lease commencements resulted in the Company establishing approximately $ 10.3 million of ROU assets and $ 10.2 million of lease liabilities.

The Company used an incremental borrowing rate of 6.5 % in calculating its Phase 1 and 2 lease liability.

The total incremental non-cancellable lease payments under the New Headquarters Lease are approximately $ 29.6 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.

In 2020, the Company entered into a three-year laboratory equipment lease that 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.

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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.

The components of lease cost and supplemental balance sheet information for the Company’s lease portfolio were as follows:

At December 31, 2022 and 2021, the Company had no ROU finance asset or lease liability.

The components of lease cost and balance sheet information for the Company’s lease portfolio were as follows:

Year ended December 31,

Finance lease cost

Amortization of ROU asset

Interest on expense

Amortization of right-of-use asset

Interest expense

Operating lease cost

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As of December 31,

Operating leases

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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.

Participating employees may voluntarily contribute up to limits provided by the Internal Revenue Code of 1986, as amended.

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, 2022 and 2021, Company matching contributions amounted to $ 723,100 and $ 378,900 , respectively.

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.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

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

What changed 10-K

Item 8. Financial Statements and Supplementary Data