What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-13 compared with 2024-05-13 · 167 added, 86 removed, 125 unchanged (67% of the section changed)

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We typically recognize revenue when products are shipped.

We generated revenue of $9 .3 million during the three months ended March 31, 2024, which represents an increase of $0 .2 million compared to revenue of $9 .1 million during the three months ended March 31, 2023.

For the three months ended March 31, 2024 and 2023, only 4 .5 % and 4 .3 %, respectively, of our revenue was generated from customers located outside of the United States.

We generated revenue of $9.6 million during the three months ended June 30, 2024, which represents a decrease of $1.9 million compared to revenue of $11.5 million during the three months ended June 30, 2023.

For the three months ended June 30, 2024 and 2023, only 4.0% and 3.9%, respectively, of our revenue was generated from customers located outside of the United States.

We generated revenue of $18.9 million during the six months ended June 30, 2024, which represents a decrease of $1.7 million compared to revenue of $20.6 million during the six months ended June 30, 2023.

Excluding revenue of $2.7 million from a single large Clinical Solutions order that was delivered during the three and six months ended June 30, 2023, total revenue was up 9% and 5% for the three and six months ended June 30, 2024, compared to the three and six months ended June 30, 2023, respectively.

For the six months ended June 30, 2024 and 2023, only 4.3% and 4.1%, respectively, of our revenue was generated from customers located outside of the United States.

Our sales outside of the United States are denominated in U.S.

We had an operating loss of $8 .0 million during the three months ended March 31, 2024, compared to an operating loss of $8 .9 million during the three months ended March 31, 2023.

We had an operating loss of $5.1 million during the three months ended June 30, 2024, compared to an operating loss of $7.0 million during the three months ended June 30, 2023.

We had an operating loss of $13.1 million during the six months ended June 30, 2024, compared to an operating loss of $15.9 million during the six months ended June 30, 2023.

While our expenses may fluctuate over the short term, we expect our expenses will continue to increase in future periods, but at a slower rate, in connection with our ongoing activities as we:

• attract, hire, and retain qualified personnel;

• invest in processes and infrastructure to enable manufacturing automation and expand capacity, including the ramp up of our new, state-of-the-art manufacturing, warehouse, and distribution facilities;

• invest in processes and infrastructure to improve operating efficiency and expand capacity at our facilities, including the ramp up of our new, state-of-the-art manufacturing, warehouse, and distribution facilities;

• build our brand and market, and sell our products and services.

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General inflation, including rising prices for our raw materials and other inputs, as well as rising salaries and other expenses, negatively impact our business by increasing our cost of sales and operating expenses.

In addition, the

In addition, the U.S.

Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation.

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Results of Operations

Comparison of the Three Months Ended March 31, 2024, and Three Months Ended March 31, 2023

The following tables set forth our results of operations for the three months ended March 31, 2024 and 2023 (dollars in thousands):

For the Three Months Ended March 31,

Comparison of the Three Months Ended June 30, 2024, and Three Months Ended June 30, 2023

The following tables set forth our results of operations for the three months ended June 30, 2024 and 2023 (dollars in thousands):

For the Three Months Ended June 30,

Cost of sales

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Amortization of intangible assets

Long-lived assets impairment

Total operating expenses

Loss from operations

Other (expenses) income, net

Interest (expense) income, net

Other expenses, net

Interest expense, net

Other income, net

Total other (expenses) income, net

Total other expenses, net

Loss before income taxes

(Benefit from) provision for income taxes

Our revenue disaggregated by product category for the three months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended June 30,

Lab Essentials

Clinical Solutions

Total revenue

Total revenue was $9.6 million and $11.5 million for the three months ended June 30, 2024 and 2023, respectively.

Excluding revenue of $2.7 million from a single large Clinical Solutions order that was delivered during the three months ended June 30, 2023, total revenue was up 9% and Clinical Solutions revenue was up 66%.

Lab Essentials revenue was $7 .6 million in each of the three months ended June 30, 2024 and 2023.

Lab Essentials revenue was consistent as an increase in number of customers was offset by a similar decline in average revenue per customer.

Clinical Solutions revenue was $1 .6 million for the three months ended June 30, 2024, a decrease of $2 .1 million, or 57 .2 %, compared to $3.7 million for the three months ended June 30, 2023.

The decrease in Clinical Solutions revenue was attributable to lower average revenue per customer, partially offset by an increased number of customers.

Our revenue disaggregated by geographic region, for the three months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended June 30,

United States

International

Total revenue

Revenue from U.S.

sales was $9 .2 million and $11 .1 million for the three months ended June 30, 2024 and 2023, respectively.

Revenue from U.S.

sales as a percentage of our total revenue was consistent period over period, representing 96.0% and 96 .1 % of our total revenue during the three months ended June 30, 2024 and 2023, respectively.

Revenue from international sales was $0 .4 million and $0.5 million for the three months ended June 30, 2024 and 2023, respectively.

Revenue from international sales as a percentage of our total revenue was also consistent, representing 4 .0 % and 3 .9 % of our total revenue during the three months ended June 30, 2024 and 2023, respectively.

Our gross profit for the three months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended June 30,

Cost of sales

Gross profit %

Gross profit percentage was 29 .2 % and 43.9% for the three months ended June 30, 2024 and 2023, respectively.

The decrease in gross profit percentage was primarily driven by lower Clinical Solutions revenue and increased overhead costs, largely depreciation expense following the completion of our new manufacturing facility in the prior year, partially offset by reduced headcount.

Operating expenses

Our operating expenses for the three months ended June 30, 2024 and 2023, were as follows (dollars in thousands):

For the Three Months Ended June 30,

Research and development

Sales and marketing

General and administrative

Amortization of intangible assets

Long-lived assets impairment

Total operating expenses

Research and development expenses were $0 .7 million and $1 .5 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease was primarily driven by reduced headcount and supplies expense.

Sales and marketing expenses were $1 .5 million and $2.2 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease was primarily driven by reduced headcount.

General and administrative expenses were $5.5 million and $5.9 million for the three months ended June 30, 2024 and 2023, respectively.

The decrease was driven by reduced headcount and spending, primarily on professional fees, partially offset by increased facility costs.

Amortization of intangible assets was consistent at $0.3 million for each of the three months ended June 30, 2024 and 2023.

We incurred a $2.2 million impairment charge related to long-lived assets for the three months ended June 30, 2023, with no comparable charges for the three months ended June 30, 2024.

Refer to “Notes to Financial Statements—Note 6—Property, Plant, and Equipment, Net,” in our 2023 Annual Report on Form 10-K for details regarding the impairment.

Other expenses, net

Our other expenses, net for the three months ended June 30, 2024 and 2023, were as follows (dollars in thousands):

For the Three Months Ended June 30,

Interest expense, net

Other income, net

Total other expenses, net

Total other expenses, net was $0.3 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively.

The increase in total other expenses, net was primarily due to lower amounts of interest capitalized.

Additionally, interest expense was lower due to a lower debt balance outstanding despite higher interest rates, partially offset by lower interest income earned on short-term liquid investments.

Capitalized interest costs were zero and $0.3 million for the three months ended June 30, 2024 and 2023, respectively.

(Benefit from) provision for income taxes

Our (benefit from) and provision for income taxes for the three months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended June 30,

(Benefit from) provision for income taxes

Effective tax rate

Our benefit from income taxes was not significant for the three months ended June 30, 2024, and our provision for income taxes was not significant for the three months ended June 30, 2023.

The effective tax rates for the three months ended June 30, 2024 and 2023 were 0.1% and (0.2)%, respectively.

The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.

Comparison of the Six Months Ended June 30, 2024, and Six Months Ended June 30, 2023

The following tables set forth our results of operations for the six months ended June 30, 2024 and 2023 (dollars in thousands):

For the Six Months Ended June 30,

Cost of sales

Operating expenses:

Research and development

Sales and marketing

General and administrative

Amortization of intangible assets

Long-lived assets impairment

Total operating expenses

Loss from operations

Other expenses, net

Interest expense, net

Other income, net

Total other expenses, net

Loss before income taxes

Benefit from income taxes

Our revenue disaggregated by product category for the three months ended March 31, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Our revenue disaggregated by product category for the six months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Lab Essentials

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Total revenue

Total revenue was $9.3 million for the three months ended March 31, 2024, and $9.1 million for the three months ended March 31, 2023.

Lab Essentials revenue was $7 .3 million in each of the three months ended March 31, 2024 and 2023, respectively.

Lab Essentials revenue was consistent as the slight increase in number of customers, was offset by a similar decline in average revenue per customer.

Clinical Solutions revenue was $1 .7 million for the three months ended March 31, 2024, an increase of $0 .1 million, or 6 .8 %, compared to $1.6 million for the three months ended March 31, 2023.

The increase in Clinical Solutions revenue was attributable to an increased number of customers, partially offset by lower average revenue per customer.

Our revenue disaggregated by geographic region, for the three months ended March 31, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Total revenue was $18.9 million and $20.6 million for the six months ended June 30, 2024 and 2023, respectively.

Excluding revenue of $2.7 million from a single large Clinical Solutions order that was delivered during the six months ended June 30, 2023, total revenue was up 5% and Clinical Solutions revenue was up 29%.

Lab Essentials revenue was $14 .9 million for the six months ended June 30, 2024, an increase of $0.1 million, or 0.4%, compared to $14.8 million for the six months ended June 30, 2023.

Lab Essentials revenue was consistent as the increase in number of customers was offset by a similar decline in average revenue per customer.

Clinical Solutions revenue was $3 .3 million for the six months ended June 30, 2024, a decrease of $2 .0 million, or 37 .6 %, compared to $5.3 million for the six months ended June 30, 2023.

The decrease in Clinical Solutions revenue was attributable to lower average revenue per customer, partially offset by an increased number of customers.

Our revenue disaggregated by geographic region, for the six months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Six Months Ended June 30,

United States

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Revenue from U.S.

sales was $8 .9 million and $8 .7 million for the three months ended March 31, 2024 and 2023, respectively.

sales was $18 .1 million and $19 .8 million for the six months ended June 30, 2024 and 2023, respectively.

Revenue from U.S.

sales as a percentage of our total revenue was consistent period over period, representing 95.5% and 95 .7 % of our total revenue during the three months ended March 31, 2024 and 2023, respectively.

Revenue from international sales was $0 .4 million in each of the three months ended March 31, 2024 and 2023.

Revenue from international sales as a percentage of our total revenue was also consistent, representing 4 .5 % and 4 .3 % of our total revenue during the three months ended March 31, 2024 and 2023, respectively.

Our gross profit for the three months ended March 31, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended March 31,

sales as a percentage of our total revenue was consistent period over period, representing 95.7% and 95 .9 % of our total revenue during the six months ended June 30, 2024 and 2023, respectively.

Revenue from international sales was $0 .8 million in each of the six months ended June 30, 2024 and 2023.

Revenue from international sales as a percentage of our total revenue was also consistent, representing 4 .3 % and 4 .1 % of our total revenue during the six months ended June 30, 2024 and 2023, respectively.

Our gross profit for the six months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Cost of sales

Gross profit %

Gross profit percentage was 23 .8 % and 26.6% for the three months ended March 31, 2024 and 2023, respectively.

The decrease in gross profit percentage was primarily driven by increased overhead costs, largely depreciation expense following the completion of our new manufacturing facility in the prior year, partially offset by reduced headcount.

Gross profit percentage was 26 .5 % and 36.3% for the six months ended June 30, 2024 and 2023, respectively.

Operating expenses

Our operating expenses for the three months ended March 31, 2024 and 2023, were as follows (dollars in thousands):

For the Three Months Ended March 31,

Our operating expenses for the six months ended June 30, 2024 and 2023, were as follows (dollars in thousands):

For the Six Months Ended June 30,

Research and development

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Amortization of intangible assets

Long-lived assets impairment

Total operating expenses

Research and development expenses were $0 .9 million and $1 .4 million for the three months ended March 31, 2024 and 2023, respectively.

Research and development expenses were $1 .5 million and $2 .9 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease was primarily driven by reduced headcount and supplies expense.

Sales and marketing expenses were $1 .7 million and $2.3 million for the three months ended March 31, 2024 and 2023, respectively.

Sales and marketing expenses were $3 .1 million and $4.5 million for the six months ended June 30, 2024 and 2023, respectively.

The decrease was primarily driven by reduced headcount.

General and administrative expenses were $7.4 million in each of the three months ended March 31, 2024 and 2023.

Excluding the one-time, non-recurring charges related to the reduction in workforce of $1.3 million and $0.7 million for the three months ended March 31, 2024 and 2023, respectively, general and administrative expenses decreased $0.5 million.

The decrease was driven by reduced headcount, partially offset by increased stock-based compensation expense related to the stock option repricing.

General and administrative expenses were $12.9 million and $13.3 million for the six months ended June 30, 2024 and 2023, respectively.

Excluding the one-time, non-recurring charges related to the reduction in workforce of $1.3 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively, general and administrative expenses decreased $1.0 million.

The decrease was driven by reduced headcount and spending, primarily on professional fees and insurance, partially offset by increased stock-based compensation expense related to the stock option repricing as well as facility costs.

See “Notes to Financial Statements—Note 12.

Stock-Based Compensation” for a more detailed discussion of the stock option repricing.

Amortization of intangible assets was consistent at $0.3 million for each of the three months ended March 31, 2024 and 2023.

Other (expenses) income, net

Our other (expenses) income, net for the three months ended March 31, 2024 and 2023, were as follows (dollars in thousands):

For the Three Months Ended March 31,

Interest (expense) income, net

Amortization of intangible assets was consistent at $0.6 million for each of the six months ended June 30, 2024 and 2023.

We incurred a $2.2 million impairment charge related to long-lived assets for the six months ended June 30, 2023, with no comparable charges for the six months ended June 30, 2024.

Refer to “Notes to Financial Statements—Note 6—Property, Plant, and Equipment, Net,” in our 2023 Annual Report on Form 10-K for details regarding the impairment.

Other expenses, net

Our other expenses, net for the six months ended June 30, 2024 and 2023, were as follows (dollars in thousands):

For the Six Months Ended June 30,

Interest expense, net

Other income, net

Total other (expenses) income, net

Total other expenses, net was $0.1 million for the three months ended March 31, 2024, compared to total other income, net of $0.1 million for the three months ended March 31, 2023.

The increase in total other expenses, net was attributable to higher interest expense driven by higher interest rates despite a lower debt balance outstanding as well as lower amounts of interest capitalized, partially offset by higher interest income due to higher interest rates earned on short-term liquid investments.

Capitalized interest costs were zero and $0.6 million for the three months ended March 31, 2024 and 2023, respectively.

Total other expenses, net

Total other expenses, net was $0.4 million and not significant for the six months ended June 30, 2024 and 2023, respectively.

The increase in total other expenses, net was primarily due to lower interest capitalized.

Additionally, interest expense was lower due to a lower debt balance outstanding despite higher interest rates, partially offset by lower interest income earned on short-term liquid investments.

Capitalized interest costs were zero and $0.9 million for the six months ended June 30, 2024 and 2023, respectively.

Benefit from income taxes

Our benefit from income taxes for the three months ended March 31, 2024 and 2023, was as follows (dollars in thousands):

For the Three Months Ended March 31,

Our benefit from income taxes for the six months ended June 30, 2024 and 2023, was as follows (dollars in thousands):

For the Six Months Ended June 30,

Benefit from income taxes

Effective tax rate

Our benefit from income taxes was not significant in either of the three months ended March 31, 2024 and 2023, respectively.

The effective tax rates for the three months ended March 31, 2024 and 2023 were 0.4% and 0.2%, respectively.

Our benefit from income taxes was not significant in either of the six months ended June 30, 2024 and 2023.

The effective tax rates for the six months ended June 30, 2024 and 2023 were 0.3% and 0.0%, respectively.

The effective tax rates differ from the federal statutory rate primarily due to operating losses not expected to produce an income tax benefit.

Liquidity and Capital Resources

The primary sources of financing for our operations were our (i) initial public offering, which we completed in June 2021 (IPO) and resulted in net proceeds to us of $99.1 million, and (ii) registered direct offering and concurrent private placement (collectively, the Offerings), which we completed in September 2023 and which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million owed under the Term Loan as discussed below.

The primary sources of financing for our operations were our (i) initial public offering, which we completed in June 2021 (IPO) and resulted in net proceeds to us of $99.1 million, (ii) registered direct offering and concurrent private placement completed in September 2023 (collectively, the September 2023 Offerings), which resulted in aggregate gross proceeds of $22.9 million before deducting offering expenses of $0.4 million and the prepayment of $10.0 million owed under the Term Loan as discussed below, and (iii) private placement completed in July 2024 (the July 2024 Offering), which resulted in aggregate gross proceeds of $15.4 million before deducting offering expenses payable by the Company.

To facilitate our expected growth, we have used our sources of liquidity to make investments to expand our operations and increase capacity, and may continue to do so in the future.

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Our principal liquidity requirements are to fund our operations and capital expenditures.

As of March 31, 2024, we have limited capital resources to fund ongoing operations.

During the three months ended March 31, 2024, we incurred net losses of $8.1 million .

In addition, as of March 31, 2024, we had an accumulated deficit of $99.9 million and borrowings outstanding under our Term Loan (defined below).

As of March 31, 2024, we had $31.8 million of working capital, which included $21.6 million in cash and cash equivalents.

Our available capital resources may not be sufficient for us to continue to meet our obligations as they become due over the next twelve months if we cannot improve our operating results or increase our operating cash inflows.

If these capital resources are not sufficient, we may need to raise additional capital through the sale of equity or debt securities, enter into strategic business collaboration agreements with other companies, seek other funding sources, or sell assets.

However, there can be no assurance that we will be able to accomplish any of the foregoing or do so on favorable terms.

If we are unable to meet our obligations when they become due over the next twelve months through our available capital resources, or obtain new sources of capital when needed, we may have to delay expenditures, reduce the scope of our manufacturing operations, reduce or eliminate one or more of our development programs, make significant changes to our operating plan, or cease our operations.

As of March 31, 2024, we had an outstanding principal amount of $12.1 million under a senior secured term loan (the Term Loan) pursuant to Amendment No.

During the three and six months ended June 30, 2024, we incurred net losses of $5.4 million and $13.5 million, respectively.

In addition, as of June 30, 2024, we had an accumulated deficit of $105.2 million and $12.1 million in borrowings outstanding under our Term Loan (defined below).

As of June 30, 2024, we had $27.9 million of working capital, which included $18.6 million in cash and cash equivalents.

As of June 30, 2024, we had an outstanding principal amount of $12.1 million under a senior secured term loan (the Term Loan) pursuant to Amendment No.

5 to our Credit Agreement with MidCap Financial Trust (MidCap).

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Amendment No.

5 also reduced the revenue covenants for future periods up to and including for the twelve months ending

December 31, 2024, from $42.0 million to $34.0 million.

5 also reduced the revenue covenants for future periods up to and including for the twelve months ending December 31, 2024, from $42.0 million to $34.0 million.

Amendment No.

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5 conditions the next borrowing under the Revolving Loan on the Company achieving net revenue for the preceding twelve-month period of at least $38.0 million down from $45.0 million.

We were in compliance with our financial covenants under the terms of the Amended Credit Agreement as of March 31, 2024.

However, we continue to experience unfavorable market conditions, like other companies in our industry.

As a result, we believe we may be unable to comply with the trailing twelve months revenue covenant for the twelve-month period following the date on which the financial statements are available for issuance.

If we violate one or more of our covenants under the Amended Credit Agreement, including the monthly revenue covenant, and are not able to obtain a waiver from or agree to an accommodation with the lender with respect to any such violation, we could be required to pay all or a portion of the outstanding amount under the Term Loan.

In that event, we may need to seek other sources of capital and there can be no assurances that we would be able to do so on acceptable terms.

S ee “Notes to Financial Statements—Note 10—Debt, Net,” for a more detailed discussion of the material terms of our Amended Credit Agreement.

“Notes to Financial Statements—Note 10—Long-term Debt, Net,” for a more detailed discussion of the material terms of our Amended Credit Agreement.

We were in compliance with our financial covenants under the terms of the Amended Credit Agreement as of June 30, 2024.

As a result of recent business improvements and actions taken by management in the current fiscal year to amend our credit agreement, reduce operating costs, and raise additional capital, management believes that there is no longer substantial doubt about our ability to continue as a going concern for the twelve-month period following the date on which the accompanying unaudited financial statements are being issued.

However, debt service requirements in the future require that we continue to execute our plans both in terms of operations and financial results.

Additionally, unforeseen events or changes in assumptions may occur and result in material differences between our future financial results or forecasts and the current financial forecast, and those differences could result in management concluding in the future that there is substantial doubt about our ability to continue as a going concern based upon the new information.

We also have an ATM Facility under which we may offer and sell, from time to time, shares of our common stock having aggregate gross proceeds of up to $50.0 million.

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See “Notes to Financial Statements—Note 11—Stockholder’s Equity,” for a more detailed discussion of the material terms of our ATM Facility.

As of March 31, 2024, our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities.

As of June 30, 2024, our material cash requirements from known contractual obligations and commitments relate primarily to operating leases for our office, manufacturing, warehouse, and distribution facilities.

See “Notes to Financial Statements—Note 7—Leases,” for a discussion of our lease obligations reflected on our balance sheet.

Accounting Standards Codification (ASC) 205-40, Presentation of Financial Statements—Going Concern , requires us to evaluate our ability to continue as a going concern for the twelve-month period following the date on which the financial statements are available for issuance.

We performed an assessment to determine whether there were conditions or events that, considered individually and in the aggregate, raised substantial doubt about our ability to continue as a going concern for the twelve-month period following the date on which our financial statements are being issued.

This assessment indicated certain negative conditions and events, described further above related to our availability of capital resources and ability to meet the monthly revenue covenant under our Amended Credit Agreement, that raise substantial doubt about our ability to continue as a going concern.

The accompanying unaudited financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q, have been prepared assuming we will continue as a going concern, which contemplates continuity of operations, realization of assets, and the satisfaction of liabilities in the normal course of business for one year following the issuance of these unaudited financial statements.

As such, the accompanying unaudited financial statements do not include any adjustments relating to the recoverability and classification of assets and their carrying amounts, or the amount and classification of liabilities that may result should the Company be unable to continue as a going concern.

The following table sets forth, for the periods indicated, net cash flows used in operating activities, used in investing activities, and (used in) provided by financing activities (in thousands):

For the Three Months Ended March 31,

The following table sets forth, for the periods indicated, net cash flows used in operating activities, used in investing activities, and used in financing activities (in thousands):

For the Six Months Ended June 30,

Net cash used in operating activities

Net cash provided by (used in) investing activities

Net cash used in investing activities

Net cash used in financing activities

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Net cash used in operating activities consists primarily of net loss adjusted for certain non-cash items (including depreciation and amortization, bad debt expense, deferred taxes, loss on disposal of property, plant, and equipment, inventory reserve, amortization of debt issuance costs, and stock-based compensation expense), and the effect of changes in working capital and other activities.

Net cash used in operating activities was $6.6 million for the three months ended March 31, 2024, which primarily consisted of net loss of $8.1 million plus net adjustments for non-cash charges of $3.0 million, offset by net changes in operating assets and liabilities of $1.5 million.

The primary non-cash adjustments to net loss included $1.6 million of depreciation and amortization and $1.3 million of stock-based compensation.

The main drivers of the changes in operating assets and liabilities were a $1.7 million decrease in accrued liabilities, a $0.6 million increase in accounts receivable, partially offset by a $0.5 million decrease in inventories, a $0.2 million decrease in prepaid expenses and other current assets, a $0.1 million increase in accounts payable, and a $0.1 million decrease other non-current assets.

Net cash used in operating activities was $7.7 million for the three months ended March 31, 2023, which primarily consisted of net loss of $8.8 million plus net adjustments for non-cash charges of $2.1 million, offset by net changes in operating assets and liabilities of $1.0 million.

The primary non-cash adjustments to net loss included $1.1 million of depreciation and amortization and $1.0 million of stock-based compensation.

The main drivers of the changes in operating assets and liabilities were a $0.7 million decrease in accrued liabilities, a $0.5 million increase in accounts receivable, a $0.4 million decrease in accounts payable, partially offset by a $0.3 million decrease in prepaid expenses and other current assets, a $0.2 million decrease in inventories, and a $0.1 million decrease in other non-current assets.

Net cash used in operating activities was $9.4 million for the six months ended June 30, 2024, which primarily consisted of net loss of $13.5 million plus net adjustments for non-cash charges of $6.6 million, offset by net changes in operating assets and liabilities of $2.6 million.

The primary non-cash adjustments to net loss included $3.3 million of depreciation and amortization, $2.1 million of stock-based compensation, and $0.9 million provision for inventory.

The main drivers of the changes in operating assets and liabilities were a $1.8 million decrease in accrued liabilities, a $0.7 million increase in accounts receivable, a $0.4 million decrease in accounts payable, and a $0.3 million increase in inventories, partially offset by a $0.4 million decrease in prepaid expenses and other current assets and a $0.2 million decrease other non-current assets.

Net cash used in operating activities was $11.5 million for the six months ended June 30, 2023, which primarily consisted of net loss of $16.0 million plus net adjustments for non-cash charges of $7.0 million, offset by net changes in operating assets and liabilities of $2.5 million.

The primary non-cash adjustments to net loss included $2.4 million of depreciation and amortization, $2.2 million impairment charge related to long-lived assets, $2.1 million of stock-based compensation, and $0.2 million amortization of debt financing costs.

The main drivers of the changes in operating assets and liabilities were a $1.4 million decrease in accounts payable, $1.2 million decrease in accrued liabilities, $1.1 million increase in contract assets, and a $0.3 increase in accounts receivable, partially offset by a $1.0 million decrease in prepaid expenses and other current assets, a $0.2 million decrease other non-current assets, and a $0.2 million decrease in inventories.

Investing Activities

Net cash provided by investing activities was not significant for the three months ended March 31, 2024, as proceeds from the sale of certain long-lived assets of $0.1 million were partially offset by purchases of property, plant, and equipment of $0.1 million.

Net cash used in investing activities was $4.3 million for the three months ended March 31, 2023, which consisted of purchases of property, plant, and equipment.

Net cash used in investing activities was $0.1 million for the six months ended June 30, 2024, which consisted of purchases of property, plant, and equipment of $0.2 million, partially offset by proceeds from the sale of certain long-lived assets of $0.1 million.

Net cash used in investing activities was $6.7 million for the six months ended June 30, 2023, which consisted of purchases of property, plant, and equipment.

Financing Activities

Net cash used in financing activities was $0.3 million for the three months ended March 31, 2024, which primarily consisted of repayments of financed insurance premiums.

Net cash used in financing activities was not significant for the three months ended March 31, 2023.

Net cash used in financing activities was $0.4 million for the six months ended June 30, 2024, which was primarily attributable to repayments of financed insurance premiums of $0.4 million, partially offset by proceeds of $0.1 million from the issuance of common stock under our employee stock purchase plan.

Net cash used in financing activities was $0.2 million for the six months ended June 30, 2023, which was primarily attributable to the payment of ATM Facility costs of $0.4 million, partially offset by proceeds of $0.1 million from the exercise of stock options and $0.1 million from issuance of common stock under our employee stock purchase plan.

Critical Accounting Policies and Estimates

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We may continue to be a smaller reporting company even after we are no longer an emerging growth company.

We may take advantage of certain of the scaled disclosures available to smaller reporting companies until the fiscal year following the determination that (i) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $250.0 million measured on the last business day of our most recently completed second fiscal quarter, and our annual revenues are more than $100.0 million during the most recently completed fiscal year or (ii) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of our most recently completed second fiscal quarter.

completed fiscal year or (ii) the market value of our voting and non-voting common stock held by non-affiliates equals or exceeds $700.0 million measured on the last business day of our most recently completed second fiscal quarter.

Recent Accounting Pronouncements

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis