SEC Filing | Bionano Genomics, Inc.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________________________________________

FORM 10-Q

_________________________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission file number: 001-38613

_________________________________________________________

Bionano Genomics, Inc.

(Exact name of registrant as specified in its charter)


Delaware						26-1756290
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)

9540 Towne Centre Drive, Suite 100, San Diego, CA						92121
(Address of Principal Executive Offices)						(Zip Code)

(858) 888-7600

(Registrant’s Telephone Number, Including Area Code)

_________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

BNGO

The Nasdaq Stock Market, LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and ‘‘emerging growth company’’ in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☒

Emerging growth company

☐

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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of August 1, 2024, the registrant had 85,997,130 shares of Common Stock ($0.0001 par value) outstanding.

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BIONANO GENOMICS, INC.

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PART I. FINANCIAL INFORMATION		3
	Item 1. Financial Statements	3
	Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Loss for the three and six months ended June 30 , 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and six months ended June 30 , 2024 and 2023 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30 , 2024 and 2023 (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3. Quantitative and Qualitative Disclosures about Market Risk	39
	Item 4. Controls and Procedures	40
PART II. OTHER INFORMATION		41
	Item 1. Legal Proceedings	41
	Item 1A. Risk Factors	41
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	86
	Item 3. Defaults Upon Senior Securities	86
	Item 4. Mine Safety Disclosures	86
	Item 5. Other Information	86
	Item 6. Exhibits	87
SIGNATURES		89

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BIONANO GENOMICS, INC.

Condensed Consolidated Balance Sheets


	(Unaudited)
	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	10,425,000	$	17,948,000
Investments	8,516,000		48,823,000
Accounts receivable, net	6,255,000		9,319,000
Inventory	19,475,000		22,892,000
Prepaid expenses and other current assets	4,889,000		6,019,000
Restricted cash	11,008,000		—
Restricted investments	—		35,117,000
Total current assets	60,568,000		140,118,000
Restricted cash, net of current portion	400,000		400,000
Property and equipment, net	24,863,000		23,345,000
Operating lease right-of-use assets	4,221,000		5,633,000
Finance lease right-of-use assets	3,402,000		3,503,000
Intangible assets, net	30,021,000		33,974,000
Other long-term assets	5,889,000		7,431,000
Total assets	$	129,364,000	$	214,404,000

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	8,734,000		10,384,000
Accrued expenses	5,530,000		8,089,000
Contract liabilities	1,147,000		783,000
Operating lease liability	2,139,000		2,163,000
Finance lease liability	266,000		272,000

Purchase option liability (at fair value)	—		8,534,000
Convertible notes payable (at fair value)	19,359,000		69,803,000
Total current liabilities	37,175,000		100,028,000
Operating lease liability, net of current portion	2,242,000		3,590,000
Finance lease liability, net of current portion	3,564,000		3,585,000
Contingent consideration	5,774,000		10,890,000

Long-term contract liabilities	272,000		154,000
Total liabilities	$	49,027,000	$	118,247,000
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized at June 30, 2024 and December 31, 2023; no shares issued and outstanding at June 30, 2024 and December 31, 2023	—		—
Common stock, $0.0001 par value, 400,000,000 shares authorized at June 30, 2024 and December 31, 2023; 70,776,000 and 45,752,000 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	7,000		5,000
Additional paid-in capital	709,187,000		677,337,000
Accumulated deficit	(628,854,000)		(581,208,000)
Accumulated other comprehensive income (loss)	(3,000)		23,000
Total stockholders’ equity	$	80,337,000	$	96,157,000
Total liabilities and stockholders’ equity	$	129,364,000	$	214,404,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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BIONANO GENOMICS, INC.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue:
Product revenue	$	6,510,000	$	6,609,000	$	13,338,000	$	12,056,000
Service and other revenue	1,261,000		2,053,000		3,202,000		4,021,000
Total revenue	7,771,000		8,662,000		16,540,000		16,077,000
Cost of revenue:
Cost of product revenue	4,703,000		4,752,000		9,607,000		8,610,000
Cost of service and other revenue	483,000		1,602,000		1,525,000		3,090,000
Total cost of revenue	5,186,000		6,354,000		11,132,000		11,700,000
Operating expenses:
Research and development	6,831,000		14,610,000		16,608,000		28,547,000
Selling, general and administrative	11,557,000		26,936,000		31,092,000		52,913,000
Restructuring costs	1,215,000		—		5,847,000		—
Total operating expenses	19,603,000		41,546,000		53,547,000		81,460,000
Loss from operations	(17,018,000)		(39,238,000)		(48,139,000)		(77,083,000)
Other income (expense):
Interest income	457,000		689,000		1,500,000		1,392,000




Other income (expense)	363,000		(330,000)		(998,000)		(288,000)
Total other income (expense)	820,000		359,000		502,000		1,104,000
Loss before income taxes	(16,198,000)		(38,879,000)		(47,637,000)		(75,979,000)
Benefit (provision) for income taxes	(26,000)		(33,000)		(9,000)		(59,000)
Net loss	$	(16,224,000)	$	(38,912,000)	$	(47,646,000)	$	(76,038,000)
Net loss per share, basic and diluted	$	(0.24)	$	(1.24)	$	(0.79)	$	(2.46)
Weighted-average common shares outstanding basic and diluted	67,583,000		31,498,000		60,175,000		30,855,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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BIONANO GENOMICS, INC.

Condensed Consolidated Statements of Comprehensive Loss

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net loss:	$	(16,224,000)	$	(38,912,000)	$	(47,646,000)	$	(76,038,000)
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities	15,000		365,000		2,000		787,000
Foreign currency translation adjustments	(2,000)		(10,000)		(28,000)		27,000
Other comprehensive income (loss)	$	13,000	$	355,000	$	(26,000)	$	814,000
Total comprehensive loss	$	(16,211,000)	$	(38,557,000)	$	(47,672,000)	$	(75,224,000)

See accompanying notes to the unaudited condensed consolidated financial statements.

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BIONANO GENOMICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(Unaudited)


	Common Stock			Additional Paid-in Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders’ Equity (Deficit)
	Shares	Amount

























Balance at January 1, 2023	29,718,000	$	3,000		$	599,234,000		$	(348,715,000)		$	(1,124,000)		$	249,398,000
Stock option exercises	4,000	—			23,000			—			—			23,000
Stock-based compensation expense	—	—			3,882,000			—			—			3,882,000
Issue common stock, net of issuance costs	950,000	—			14,848,000			—			—			14,848,000
Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes	7,000	—			—			—			—			—
Net loss	—	—			—			(37,124,000)			—			(37,124,000)
Other comprehensive income (loss)	—	—			—			—			459,000			459,000
Balance at March 31, 2023	30,679,000	$	3,000		$	617,987,000		$	(385,839,000)		$	(665,000)		$	231,486,000
Stock option exercises	—	—			1,000			—			—			1,000
Stock-based compensation expense	—	—			3,932,000			—			—			3,932,000
Issue common stock, net of issuance costs	2,552,000	—			17,802,000			—			—			17,802,000
Issuance of common stock due to the vesting of restricted stock units, net of shares withheld to cover taxes	(6,000)	—			—			—			—			—
Issue stock for employee stock purchase plan	15,000	—			92,000			—			—			92,000
Net loss	—	—			—			(38,912,000)			—			(38,912,000)
Other comprehensive income (loss)	—	—			—			—			355,000			355,000
Balance at June 30, 2023	33,240,000	$	3,000		$	639,814,000		$	(424,751,000)		$	(310,000)		$	214,756,000

Balance at January 1, 2024	45,752,000	$	5,000		$	677,337,000		$	(581,208,000)		$	23,000		$	96,157,000

Stock-based compensation expense	—	—			3,015,000			—			—			3,015,000
Issue common stock, net of issuance costs	11,787,000	1,000			15,059,000			—			—			15,060,000




Net loss	—	—						(31,422,000)			—			(31,422,000)
Other comprehensive income (loss)	—	—									(39,000)			(39,000)
Balance at March 31, 2024	57,539,000	$	6,000		$	695,411,000		$	(612,630,000)		$	(16,000)		$	82,771,000
Stock-based compensation expense	—	—			2,583,000			—			—			2,583,000
Issue common stock, net of issuance costs	11,025,000	1,000			11,181,000			—			—			11,182,000
Issue stock for warrant exercises	2,197,000	—			2,000			—			—			2,000
Issue stock for employee stock purchase plan	15,000	—			10,000			—			—			10,000
Net loss	—	—			—			(16,224,000)			—			(16,224,000)
Other comprehensive income (loss)	—	—			—			—			13,000			13,000
Balance at June 30, 2024	70,776,000	$	7,000		$	709,187,000		$	(628,854,000)		$	(3,000)		$	80,337,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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BIONANO GENOMICS, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Six Months Ended June 30,
	2024		2023
Operating activities:
Net loss	$	(47,646,000)	$	(76,038,000)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	5,995,000		6,487,000
Amortization of financing lease right-of-use asset	102,000		102,000
Amortization (accretion) of interest on securities	(912,000)		(226,000)
Non-cash lease expense	113,000		20,000
Gain on lease modification	(73,000)		—
Net realized loss (gain) on investments	18,000		23,000
Stock-based compensation	5,598,000		7,814,000
Change in fair value of contingent consideration	(5,116,000)		2,218,000
Change in fair value of convertible debentures, convertible notes payable and option liability	(7,084,000)		—
Loss on issuance of convertible debentures	1,890,000		—
Gain on High Trail extinguishment	(3,965,000)		—
Loss on intangible asset impairment	448,000		—
Loss on property and equipment disposal	374,000		—
Cost of leased equipment sold to customer	210,000		88,000
Changes in operating assets and liabilities:
Accounts receivable	3,064,000		(590,000)
Inventory	(1,073,000)		(7,345,000)
Prepaid expenses and other current assets	1,129,000		1,785,000
Other assets	1,545,000		(587,000)
Accounts payable	(1,648,000)		(791,000)
Accrued expenses and contract liabilities	(2,078,000)		(2,069,000)
Net cash used in operating activities	(49,109,000)		(69,109,000)
Investing Activities:
Purigen acquisition, return of purchase consideration from escrow	—		96,000
Purchases of property and equipment	(103,000)		(839,000)
Purchase of available for sale securities	(151,585,000)		—
Sale and maturity of available for sale securities	227,905,000		46,879,000
Construction in progress	—		(32,000)
Net cash provided by investing activities	76,217,000		46,104,000
Financing activities:





Principal payments on financing lease liability	(28,000)		(22,000)
Proceeds from sale of common stock and warrants	27,602,000		33,487,000
Offering expenses on sale of common stock and warrants	(1,362,000)		(837,000)
Proceeds from sale of common stock under employee stock purchase plan	10,000		92,000
Proceeds from warrant and option exercises	2,000		23,000
Proceeds from issuance of convertible debentures	18,000,000		—
Payments on High Trail Notes	(61,001,000)		—
Debt issuance costs on sale of convertible debentures	(1,444,000)		—
Payments of retirement fees for redemption of High Trail Notes	(5,375,000)		—
Net cash (used in)/provided by financing activities	(23,596,000)		32,743,000
Effect of exchange rates on cash, cash equivalents and restricted cash	(27,000)		27,000
Net decrease in cash, cash equivalents and restricted cash	3,485,000		9,765,000
Cash, cash equivalents and restricted cash at beginning of period	18,348,000		5,491,000

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Cash, cash equivalents and restricted cash at end of period	$	21,833,000	$	15,256,000
Reconciliation of cash, cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total amounts reported on the unaudited condensed consolidated statements of cash flows
Cash and cash equivalents	10,425,000		14,856,000
Restricted cash	11,408,000		400,000
Total cash, cash equivalents and restricted cash at end of period	$	21,833,000	$	15,256,000
Supplemental cash flow disclosures:
Cash paid for interest	$	9,670,000	$	149,000
Cash paid for operating lease liabilities	$	1,340,000	$	1,291,000
Supplemental disclosure of non-cash investing and financing activities:

Transfer of instruments and servers from inventory to property and equipment, net	$	4,490,000	$	4,615,000
Property and equipment included in accounts payable	$	—	$	104,000

Construction in progress included in accounts payable	$	—	$	65,000

See accompanying notes to the unaudited condensed consolidated financial statements.

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BIONANO GENOMICS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Basis of Presentation

Description of Business

Bionano Genomics, Inc. (collectively, with its consolidated subsidiaries, the “Company”) is a provider of genome analysis solutions that can enable researchers and clinicians to reveal answers to challenging questions in biology and medicine. The Company offers optical genome mapping (“OGM”) solutions for applications across basic, translational and clinical research, and for other applications including bioprocessing. The Company offers a platform-agnostic software solution, which integrates next-generation sequencing, microarray and OGM data designed to provide analysis, visualization, interpretation and reporting of copy number variants, single-nucleotide variants and absence of heterozygosity across the genome in one consolidated view. The Company also offers nucleic acid extraction and purification solutions using proprietary isotachophoresis (“ITP”) technology. Through its Lineagen, Inc. (doing business as Bionano Laboratories, “Bionano Laboratories”) business, the Company also provides OGM-based diagnostic testing services.

Reverse Stock Split

On August 4, 2023, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to effect a reverse stock split of all issued and outstanding shares of the Company’s common stock at a ratio of 1-for-10. The reverse stock split did not change the par value or the authorized number of shares of the Company’s common stock. The accompanying consolidated financial statements and notes to the consolidated financial statements present the retroactive effect of the reverse stock split on the Company’s common stock and per share amounts for all periods presented.

Basis of Presentation

The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim reporting purposes. The condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of the Company’s management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, changes in equity, and comprehensive loss and cash flows for each period presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). All intercompany transactions and balances have been eliminated. The operating results presented in these unaudited interim condensed financial statements are not necessarily indicative of the results that may be expected for any future periods. These interim unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Liquidity and Going Concern

The Company has experienced recurring net losses from operations, negative cash flows from operating activities, and accumulated deficit since its inception and expects to continue to incur net losses into the foreseeable future. As of June 30, 2024, the Company had approximately $10.4 million in cash and cash equivalents, $8.5 million in short-term investments and $11.4 million in restricted cash. The amount we are required to hold as restricted cash is equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures (as defined in Note 5 (Debt) below).

The Company has an accumulated deficit of $628.9 million as of June 30, 2024. During the six months ended June 30, 2024, the Company used $49.1 million cash in operations.

On March 1, 2024, the Company redeemed $27.7 million aggregate principal amount of the convertible notes previously issued to High Trail Special Situations LLC (“High Trail”) pursuant to that certain securities purchase agreement in October 2023 (the “High Trail Notes”), at a redemption price of 115% of the outstanding principal (the “Repayment Price”) or $31.8 million, and for the period January 1, 2024, through May 1, 2024, redeemed an additional $18.0 million aggregate principal amount of the High Trail Notes at the holders’ option at the Repayment Price for an aggregate of $20.7 million. On May 23, 2024, in connection with the Debentures offering discussed below, the Company fully redeemed the outstanding aggregate principal amount of $15.3 million under the High Trail Notes at the Repayment Price for an aggregate of $17.6 million, and the High Trail Notes were cancelled. In addition, the Company paid High Trail aggregate retirement fees of $5.4 million related to the Notes’ redemptions. See Note 5 (Debt) for additional information.

On May 24, 2024, the Company issued $20.0 million of Debentures for $18.0 million in gross proceeds and paid debt costs of $1.4 million. Through June 30, 2024, the Company paid $0.2 million in interest and no principal amounts on the Debentures. As of June 30, 2024, the Company may be required to redeem up to $6.0 million of principal and expects to pay an additional $1.4 million in interest on the Debentures in 2024. See Note 5 (Debt) for additional information. Management expects operating

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losses and negative cash flows to continue for at least the next year as the Company continues to incur costs related to product development and commercialization efforts. Management has prepared cash flows forecasts which indicate that based on the Company’s expected operating losses and negative cash flows, there is substantial doubt about the Company’s ability to continue as a going concern within twelve months after the date that the unaudited condensed consolidated financial statements for the six months ended June 30, 2024, are issued. Management’s ability to continue as a going concern is dependent upon its ability to raise additional funding. Management’s plans to raise additional capital to fulfill its operating and capital requirements for at least 12 months include public or private equity or debt financings. However, the Company may not be able to secure such financing in a timely manner or on favorable terms, if at all.

Furthermore, if the Company issues equity securities to raise additional funds, its existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of the Company’s existing stockholders.

The unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities in the normal course of business, and do not include any adjustments to reflect the outcome of this uncertainty.

Significant Accounting Policies

During the three and six months ended June 30, 2024, there were no material changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Restructuring

The Company’s restructuring expense consists primarily of actions taken in May and October 2023 (the “2023 Workforce Reduction”) and March 2024 in order to reduce costs and improve operations and manufacturing efficiency. Severance-related costs were accounted for as a one-time termination benefit communicated by period end without an additional service component, so the charge represents the total amount expected to be incurred. As a result of reducing facility costs and discretionary spending unrelated to headcount and combined with the cost savings from the 2023 Workforce Reduction and March 2024, such plans are intended to decrease expenses and maintain a streamlined organization to support its business.

In connection with the Company’s restructuring initiatives, the Company entered into a lease termination agreement on February 28, 2024 with the landlord for the facility in Salt Lake City that will result in a one-time termination fee of approximately $0.2 million in the third quarter of 2024. The Company continued to lease the property through June 2024. The Company accounted for the lease amendment as a lease modification and recorded a gain of $0.1 million during the three months ended March 31, 2024.

On March 1, 2024, the Company’s board of directors approved a cost savings plan, including a reduction in force, that it expects to reduce its annualized operating expenses. This cost savings plan is incremental to the 2023 Workforce Reduction. As part of the plan, the Company reduced its overall headcount by approximately 120 employees. The Company has substantially completed the reduction in force as of June 30, 2024. In addition, Bionano Laboratories will phase out over time the offering of certain testing services related to neurodevelopmental disorders, including autism spectrum disorders, and other disorders of childhood development. The estimates of costs and expenses that the Company expects to incur in connection with the reduction in force are subject to a number of assumptions and actual results may differ materially. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the reduction in force. See Note 7 (Commitments and Contingencies) for additional information.

Impairment of Long-Lived Assets (including Finite-Lived Intangible Assets)

Long-lived assets are reviewed for impairment if indicators of potential impairment exist. If the Company identifies a change in the circumstances related to its long-lived assets, such as property and equipment and intangible assets (other than goodwill), that indicates the carrying value of any such asset may not be recoverable, the Company will perform an impairment analysis. A long-lived asset (other than goodwill) is not recoverable when the undiscounted cash flows expected to be generated by the asset (or asset group) are less than the asset’s carrying amount. Any required impairment loss would be measured as the amount

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by which the asset’s carrying value exceeds its fair value, and would be recorded as a reduction in the carrying value of the related asset and a charge to operating expense.

During the six months ended June 30, 2024, the Company experienced a triggering event as a result of the restructuring initiatives that required an evaluation of our non-OGM Bionano Laboratories asset group for impairment. The Company performed a recoverability test and concluded that the non-OGM Bionano Laboratories long-lived assets were not recoverable; therefore, the Company measured the impairment loss and fully impaired the intangible assets acquired through the acquisition of Lineagen, consisting of its trade name and customer relationship intangible assets. The Company recognized an impairment loss of $0.4 million during the six months ended June 30, 2024. No impairment losses were recorded for the three months ended June 30, 2024 or during the three or six months ended June 30, 2023.

Inventories

The Company reviews its inventories for classification purposes. The value of inventories not expected to be realized in cash, sold or consumed during the next 12 months are classified as non-current within other long-term assets. As of June 30, 2024, $3.7 million of inventories were included in other long-term assets.

Change in depreciable lives of property and equipment

The Company reviews the estimated useful life of its fixed assets on an ongoing basis. This review indicated that the actual lives of the Company’s Saphyr and Stratys instruments were longer than the estimated useful lives used for depreciation purposes in the Company’s unaudited condensed consolidated financial statements. As a result, effective January 1, 2024, the Company changed its estimates of the useful lives of the Company’s Saphyr and Stratys instruments to better reflect the estimated period during which these assets will remain in service. The estimated useful lives of the Company’s Saphyr and Stratys instruments were increased from 5 to 7 years. The effect of this change in estimate reduced depreciation expense by $0.5 million.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or FASB, or other standard setting bodies. The Company believes that the impact of the recently issued accounting pronouncements that are not yet effective will not have a material impact on its condensed consolidated financial condition or results of operations upon adoption.

2. Net Loss Per Share

Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. The Pre-Funded Warrants (as defined below) issued in the April 2024 Registered Direct Offering (as defined below) were exercised in full and included in the weighted-average number of common shares outstanding (See Note 6 (Stockholder’s Equity and Stock-Based Compensation) for further information). Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period. Common share equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities which include outstanding common warrants to purchase common stock, restricted stock units (“RSUs”), performance stock units (“PSUs”), and outstanding stock options under the Company’s equity incentive plans have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding because all potentially dilutive securities were anti-dilutive.

Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):


	June 30, 2024	June 30, 2023
Stock options	4,361,000	3,346,000
Warrants	30,430,000	436,000
Convertible notes payable into common stock	10,000,000	—
RSUs	561,000	230,000
PSUs	29,000	29,000
Total	45,381,000	4,041,000

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3. Revenue Recognition

Revenue by Source


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Instruments	$	2,260,000	$	2,450,000	$	3,874,000	$	4,346,000
Consumables	2,569,000		2,953,000		6,033,000		5,188,000
Software	1,681,000		1,206,000		3,431,000		2,522,000
Total product revenue	6,510,000		6,609,000		13,338,000		12,056,000
Service and other	1,261,000		2,053,000		3,202,000		4,021,000
Total revenue	$	7,771,000	$	8,662,000	$	16,540,000	$	16,077,000

Revenue by Geographic Location


	Three Months Ended June 30,								Six Months Ended June 30,
	2024				2023				2024				2023
	$		%		$		%		$		%		$		%
Americas	$	3,386,000	44	%	$	4,313,000	50	%	$	8,076,000	49	%	$	7,757,000	48	%
EMEA	3,624,000		47	%	2,748,000		32	%	6,757,000		41	%	5,740,000		36	%
Asia Pacific	761,000		10	%	1,601,000		18	%	1,707,000		10	%	2,580,000		16	%
Total	$	7,771,000	100	%	$	8,662,000	100	%	$	16,540,000	100	%	$	16,077,000	100	%

The table above provides revenue from contracts with customers by source and geographic region (based on the customer’s billing address) on a disaggregated basis. Americas consists of North America and South America. EMEA consists of Europe, the Middle East, and Africa. Asia Pacific includes China, Japan, South Korea, Singapore, India and Australia.

For the three months ended June 30, 2024 and 2023, the United States represented 38.6% and 39.1% of total revenue, respectively. For the six months ended June 30, 2024 and 2023, the United States represented 40.7% and 40.1% of total revenue, respectively. For the three and six months ended June 30, 2023, China represented 15.0% and 10.2% of total revenue, respectively. No other countries represented greater than 10% of revenue during the three and six months ended June 30, 2024 and 2023.

Remaining Performance Obligations

As of June 30, 2024, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was approximately $1.4 million. These remaining performance obligations primarily relate to extended warranty, support and maintenance obligations, as well as obligations related to software under hosting arrangements. The Company expects to recognize approximately 57.9% of this amount as revenue during the remainder of 2024, 30.8% in 2025, and 11.3% in 2026 and thereafter. Warranty revenue is included in service and other revenue.

The Company recognized revenue of approximately $0.4 million and $0.4 million during the three months ended June 30, 2024 and 2023, respectively, which was included in the contract liability balance at the end of the year preceding each period, and revenue of approximately $1.0 million and $1.1 million during the six months ended June 30, 2024 and 2023, respectively, which was included in the contract liability balance at the end of the year preceding each period.

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4. Balance Sheet Account Details

Accounts Receivable and Allowance for Credit Losses


	June 30, 2024		December 31, 2023		December 31, 2022
Accounts receivable, net:
Accounts receivable, trade	$	6,693,000	$	9,802,000	$	7,315,000
Allowance for credit losses	(438,000)		(483,000)		(293,000)
	$	6,255,000	$	9,319,000	$	7,022,000

Changes to the allowance for credit losses during the six months ended June 30, 2024 and 2023 were as follows:


	Allowance for Credit Losses
Balance as of January 1, 2023	$	(293,000)
Provision for expected credit loss	(5,000)
Write-offs	36,000
Balance as of June 30, 2023	$	(262,000)

Balance as of January 1, 2024	$	(483,000)
Provision for expected credit loss	(9,000)
Write-offs	54,000
Balance as of June 30, 2024	$	(438,000)

The Company’s analysis included an assessment of our aged trade receivables balances and their underlying credit risk characteristics. Our evaluation of past events, current conditions, and reasonable and supportable forecasts about the future resulted in an expectation of immaterial credit losses.

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Inventory

The components of inventories are as follows:


	June 30, 2024		December 31, 2023
Inventory:
Raw materials	$	8,932,000	$	7,567,000
Work in process	4,635,000		9,790,000
Finished goods	9,582,000		10,245,000
	$	23,149,000	$	27,602,000
Inventories current	$	19,475,000	$	22,892,000
Inventories non-current (included in other long-term assets)	$	3,674,000	$	4,710,000

Intangible Assets

Intangible assets that are subject to amortization consisted of the following for the periods presented:


	June 30, 2024						December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	$	2,000,000	$	(859,000)	$	1,141,000	$	2,630,000	$	(1,078,000)	$	1,552,000
Customer relationships	3,200,000		(1,688,000)		1,512,000		4,150,000		(2,002,000)		2,148,000
Developed technology	41,600,000		(14,334,000)		27,266,000		41,600,000		(11,428,000)		30,172,000
Intangibles, net	$	46,800,000	$	(16,881,000)	$	29,919,000	$	48,380,000	$	(14,508,000)	$	33,872,000

Intangible assets not subject to amortization totaled $0.1 million at June 30, 2024 and December 31, 2023, and related to the Company’s domain name.

Accrued Expenses

Accrued expenses consist of the following:


	June 30, 2024		December 31, 2023
Compensation expenses*	$	3,605,000	$	5,030,000
Customer deposits	17,000		17,000
Taxes payable	1,065,000		1,099,000
Insurance	44,000		512,000
Professional fees and royalties	299,000		387,000
Warranty liabilities	244,000		391,000
Accrued clinical study fees	1,000		138,000
Other	255,000		515,000
Total	$	5,530,000	$	8,089,000
*Compensation expenses include restructuring costs of $0.4 million as of June 30, 2024. Refer to Note 7 (Commitments and Contingencies).

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5. Debt

JGB Debentures

On May 24, 2024, the Company entered into a securities purchase agreement with certain accredited investors (the “Holders”) and JGB Collateral LLC, as collateral agent for the Holders, for the sale by the Company in a private placement (the “JGB Debentures Offering”) of:

•2.25 million shares (the “Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), and

•Senior Secured Convertible Debentures in the aggregate principal amount of $20.0 million (the “Debentures”), for an aggregate purchase price of $18.0 million.

The closing of the JGB Debentures Offering occurred on May 24, 2024. In connection with the closing of the JGB Debentures Offering, the Company received net proceeds of approximately $16.6 million, after payment of placement agent fees, and other offering expenses. The Company used the proceeds received to fully redeem the outstanding balance due under the High Trail Note of approximately $17.6 million, as amended (see “High Trail Agreement & Amendment” below).

Debentures

The Debentures have an aggregate face value of $20.0 million and were issued with an original issue discount of $2.0 million. The Debentures mature on May 24, 2026, and have an interest rate of 11% per annum payable monthly on the last business day of each calendar month. As of June 30, 2024, the Company has paid the Holders $0.2 million in interest, which is included in the change in fair value within other income (expense), net.

The Company recorded the Debentures at their fair value at issuance of $19.9 million, per the fair value option under ASC 825 (refer to Note 8 (Investments and Fair Value Measurements)) and they will be measured on a recurring basis and adjusted through other income and expense, net. The Shares were recorded at $0 in common stock and additional paid in capital, which represents the residual amount after allocation of proceeds to the Debentures at fair value. The Company recognized an initial loss on the issuance of the Debentures of $1.9 million for the difference between the fair value of the Debentures and proceeds from the transaction, which is recorded in other income (expense) on the unaudited condensed consolidated statement of operations. The Company incurred debt issuance costs of $1.4 million related to the JGB Debentures Offering, which was charged to interest expense and recorded in other income (expense) on the unaudited condensed consolidated statement of operations.

On July 24, 2024, the Holders of the Debentures requested that the Company redeem up to $1.0 million per calendar month of its Debentures. The table below shows the amount of potential redemptions each year until the maturity of the Debentures.


2024	$	6,000,000
2025	12,000,000
2026	2,000,000
Total	$	20,000,000

The Company may redeem the Debentures, subject to certain Equity Conditions (as defined in the Debentures), at any time by paying an amount equal to the entire outstanding principal amount of the Debenture, plus all accrued and unpaid interest, plus the applicable Company Redemption Premium (as defined in the Debentures, the “Premium”) plus any other amounts due and payable under the Debentures. The Premium is an amount equal to 112% of the principal amount of the Debenture if the redemption is prior to the first anniversary of the original issue date, or 106% of the principal amount of the Debenture if the redemption is on or after the first anniversary of the original issue date. No partial redemptions by the Company are permitted.

At the election of the holder, each Debenture is convertible, in whole or in part, at any time and from time to time at a conversion price of $2.00 per share of common stock. The conversion price is subject to adjustment for stock dividends, stock splits, and certain other corporate events. Notwithstanding the foregoing, the Company will not effect any conversion under the Debentures to the extent that such conversion would cause the holder’s beneficial ownership of the Company’s common stock to exceed 4.99% (or 9.99% at the election of the holder) of the Company’s issued and outstanding common stock.

Under the Debentures, the Company must at all times maintain a cash balance equal to the lesser of (a) $11.0 million and (b) the then outstanding principal balance of the Debentures, in a blocked account. In addition, for as long as any portion of the Debentures remain outstanding, the Company is generally restricted from: incurring indebtedness; granting or suffering liens on any of its property or assets; amending its organizational documents; repurchasing any of its securities; paying dividends; selling, disposing, licensing or leasing its assets other than in the ordinary course; and other customary restrictive covenants. The Debentures also set forth certain customary events of default after which the Debentures may be declared immediately due

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and payable, including certain types of bankruptcy or insolvency events of default involving the Company and its subsidiaries, and in the event of a change of control or fundamental transaction as defined in the Debentures.

As of June 30, 2024 the Company had $20.0 million of principal outstanding under the Debentures reported at fair value of $19.4 million (refer to Note 8 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and activity broken out as follows:


	Debentures
Principal balance, January 1, 2024	$	—
Issuance of convertible debentures	20,000,000
Less:
Conversions	—
Redemption payments of principal	—
Notes principal balance, June 30, 2024	$	20,000,000

High Trail Agreement & Amendment

On February 27, 2024, the Company entered into a letter agreement with High Trail and an amendment to the Registered Note (the “High Trail Amendment”) which provided for, among other things, the following:

•Reduction of the minimum available liquidity covenant from $50.0 million to $25.0 million;

•Reduction of the restricted cash covenant from $35.0 million to the amount equal to the sum of (i) the outstanding principal amount of the senior secured convertible notes payable due 2025 (the “High Trail Registered Notes”) plus (ii) approximately $0.7 million, which will be further reduced as the remaining principal on the High Trail Registered Notes are retired;

•Cancellation of the March 2024 partial redemption payment and delay of the April 2024 partial redemption payment;

•Redemption of the outstanding $17.0 million balance of the privately placed senior secured convertible notes payable due 2025 (the “High Trail Private Placement Notes”) at a redemption price of 115% for a total redemption payment of approximately $19.6 million;

•Redemption of approximately $10.7 million of the High Trail Registered Notes at a redemption price of 115% for a total redemption payment of approximately $12.3 million; and

•Increase of $1.0 million to the Retirement Fee (as defined in the Notes) of the High Trail Private Placement Notes to $3.2 million payable concurrently with redemptions of the Initial Private Placement Note.

Immediately following the redemptions above, there was approximately $24.3 million in aggregate principal amount of the High Trail Registered Notes outstanding.

High Trail Redemption Agreement

On May 23, 2024, in connection with the JGB Debentures Offering, the Company entered into a redemption agreement with High Trail (the “HT Agreement”). Pursuant to the HT Agreement, the Company agreed to redeem the entire outstanding principal amount of $15.3 million under the High Trail Note at a redemption price of 115% for a total redemption payment of $17.6 million (the “Redemption Payment”). Upon High Trail’s receipt of the Redemption Payment on May 24, 2024, the High Trail Note and related Option were cancelled. In addition, the Company agreed to pay High Trail a retirement fee of $2.2 million and to reimburse High Trail for all of its reasonable and documented out-of-pocket expenses incurred with the release and termination of security interests relating to the High Trail Note.

The Company recognized a loss on the extinguishment of the High Trail Note of $1.1 million, and a gain on the extinguishment of the Purchase Option (as defined in Note 7 (Commitments and Contingencies) below) of $5.1 million, for a net gain of $4.0 million, which is recorded in other income (expense) on the unaudited condensed consolidated statement of operations.

As of June 30, 2024, the Company had no principal outstanding under the High Trail Note (refer to Note 8 (Investments and Fair Value Measurements), for fair value measurements and additional discussion) and activity broken out as follows:

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Principal balance, January 1, 2024	61,000,000
Less:
Conversions	—
Partial redemption of principal	18,000,000
Redemption payment of principal	43,000,000
Total	$	—

In addition to redeeming $15.3 million and $27.7 million of the principal outstanding under the High Trail Note on May 24, 2024, and March 1, 2024, respectively, for an aggregate principal redemption of $43.0 million at the aggregate Redemption Price of $49.5 million, the Holders redeemed $4.5 million each of principal on January 1, 2024, February 1, 2024, April 20, 2024, and May 1, 2024, for an aggregate principal redemption of $18.0 million at an aggregate Repayment Price of $20.7 million. Under the terms of the High Trail Notes, the Holders had the option to redeem a portion of the Notes not to exceed $4.5 million principal on the first day of each month beginning November 1, 2023, at the Repayment Price. The April 2024 payment was delayed to April 20, 2024, under the High Trail Amendment as discussed above.

Other Income (Expense), Net

The following is a summary of the charges included within other income (expense), net on the unaudited condensed consolidated statement of operations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Debt issuance costs on sale of convertible debenture	(1,444,000)		—		(1,444,000)		—
Other interest expense	(74,000)		(74,000)		(195,000)		(149,000)
Changes in estimated fair value, interest and redemption payments on High Trail Notes and convertible debentures	298,000		—		(855,000)		—
Other expense	(492,000)		(256,000)		(579,000)		(139,000)
Gain on High Trail extinguishment	3,965,000		—		3,965,000		—
Loss on issuance of convertible debentures	(1,890,000)		—		(1,890,000)		—
Total other income (expense)	$	363,000	$	(330,000)	$	(998,000)	$	(288,000)

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6. Stockholders’ Equity and Stock-Based Compensation

Reverse Stock Split

On August 4, 2023, the Company completed a reverse stock split of its outstanding shares of common stock pursuant to which every 10 shares of issued and outstanding common stock were exchanged for one share of common stock. No fractional shares were issued in the reverse stock split. Instead, the Company paid cash (without interest) equal to such fraction multiplied by $5.90 per share (a price equal to the average of the closing sales prices of the common stock on The Nasdaq Capital Market during regular trading hours for the five consecutive trading days immediately preceding August 4, with such average closing sales prices being adjusted to give effect to a Reverse Stock Split). All share and per share amounts included within these condensed consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split.

Cowen At-the-Market Facility

On March 23, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”) which provides for the sale, in the Company’s sole discretion, of shares of common stock having an aggregate offering price of up to $350.0 million through or to Cowen, acting as sales agent or principal, which was amended on March 9, 2023 to decrease the maximum aggregate offering price to $200.0 million for sales made on and after the date of the amendment (the “Cowen ATM”). The Company agreed to pay Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights. During the six months ended June 30, 2024, the Company sold approximately 14.0 million shares of common stock under the Cowen ATM at an average share price of $1.26 per share, and received gross proceeds of approximately $17.6 million before deducting offering costs of $0.4 million.

Stock Warrants

A summary of the Company’s warrant activity during the six months ended June 30, 2024 was as follows:


	Shares of Stock under Warrants	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2024	21,696,000	$	4.38	4.78	$	—
Granted	10,931,000	0.82		—	—
Exercised	(2,197,000)	—		—	—
Canceled	—	—		—	—
Outstanding at June 30, 2024	30,430,000	$	3.41	4.43	$	—

Stock Options

A summary of the Company’s stock option activity during the six months ended June 30, 2024 was as follows:


	Shares of Stock under Stock Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2024	3,268,000	$	24.79	7.80	$	3,000
Granted	1,663,000	0.93		—
Exercised	—	—		—	—
Canceled	(570,000)	23.06		—
Outstanding and expected to vest at June 30, 2024	4,361,000	$	15.92	8.23	$	—
Vested and exercisable at June 30, 2024	1,701,000	$	28.55	6.53	$	—

For the three months ended June 30, 2024, the weighted-average grant date fair value of stock options granted was $0.67 per share. For the six months ended June 30, 2024, the weighted-average grant date fair value of stock options granted was $0.67 per share.

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Stock-Based Compensation

The Company recognized stock-based compensation expense for the periods presented as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of product revenue	$	81,000	$	154,000	$	162,000	$	256,000
Cost of service and other revenue	47,000		44,000		94,000		88,000
Research and development	114,000		1,301,000		1,285,000		$	2,658,000
General and administrative	2,341,000		2,433,000		4,057,000		4,812,000
Total stock-based compensation expense	$	2,583,000	$	3,932,000	$	5,598,000	$	7,814,000

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants during the periods presented were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Risk-free interest rate	4.3	%	3.9	%	4.3	%	3.9	%
Expected volatility	86.4	%	80.5	%	86.2	%	74.4	%
Expected term (in years)	5.7		5.5		5.7		5.9
Expected dividend yield	0.0	%	0.0	%	0.0	%	0.0	%

Restricted Stock Units and Performance Stock Units

The following table summarizes RSU activity during the six months ended June 30, 2024:


	Stock Units	Weighted- Average Grant Date Fair Value per Share
Outstanding at January 1, 2024	239,000	$	16.30
Granted	407,000	0.93
Released	(48,000)	16.30
Forfeited	(37,000)	16.13
Outstanding at June 30, 2024	561,000	$	16.19

The total fair value of the RSUs that vested during the six months ended June 30, 2024 was $0.8 million, determined as of the date of vesting. The weighted average remaining contractual term for the RSUs is 3.5 years as of June 30, 2024.

The following table summarizes PSU activity during the six months ended June 30, 2024:


	Stock Units	Weighted- Average Grant Date Fair Value per Share
Outstanding at January 1, 2024	29,000	$	47.40
Granted	—	—
Released	—	—
Forfeited	—	—
Outstanding at June 30, 2024	29,000	$	47.40

During the year ended December 31, 2023, the Company reassessed the implicit service period on its performance-based stock units relative to specified revenue targets and determined that the performance conditions were met from an accounting perspective, but subject to certain certifications and approval from the Compensation Committee; therefore, the remaining

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expense was accelerated as of December 31, 2023. As a result of the accelerated vesting terms, the weighted average remaining contractual term for the PSUs is 0 years as of June 30, 2024.

Registered Direct Offerings

On April 4, 2024, the Company entered into a securities purchase agreement (the “April 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “April 2024 Registered Direct Offering”): (i) an aggregate of 6.5 million shares of the Company’s common stock, (ii) pre-funded warrants to purchase up to an aggregate of 2.2 million shares of common stock (the “April Pre-Funded Warrants”), and (iii) warrants to purchase up to 8.7 million shares of common stock (the “April Purchase Warrants”). The combined purchase price of each share of common stock and accompanying April Purchase Warrant is $1.15 per share. The combined purchase price of each April Pre-Funded Warrant and accompanying April Purchase Warrant is $1.14 (equal to the combined purchase price per share of common stock and accompanying April Purchase Warrant, minus $0.001). The gross proceeds to the Company from the April 2024 Registered Direct Offering was $10.0 million. The Company received net proceeds of $9.3 million after deducting placement agent fees and other offering expenses of $0.7 million payable by the Company.

Each April Purchase Warrant is exercisable for one share of common stock at an exercise price of $1.02 per share. The Purchase Warrants are immediately exercisable as of the date of issuance of April 8, 2024, and will expire on the five-year anniversary of the date of issuance. The April Pre-Funded Warrants are offered in lieu of shares of common stock and provide that the holder may not exercise any portion of an April Pre-Funded Warrant to the extent that immediately prior to or after giving effect to such exercise the holder would own more than 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding common stock immediately following the consummation of the April 2024 Registered Direct Offering. Each April Pre-Funded Warrant is exercisable for one share of common stock at an exercise price of $0.001 per share. The April Pre-Funded Warrants are immediately exercisable and were exercised in full at the time of closing.

On July 4, 2024, the Company entered into a securities purchase agreement (the “July 2024 Purchase Agreement”) with certain institutional investors, pursuant to which the Company agreed to issue and sell, (i) in a registered direct offering priced at-the-market consistent with the rules of the Nasdaq Stock Market (the “July 2024 Registered Direct Offering”): (a) an aggregate of 11.7 million shares of the Company’s common stock, , and (b) pre-funded warrants to purchase up to an aggregate of 5.8 million shares of common stock (the “July Pre-Funded Warrants”), and (ii) in a concurrent private placement (the “Private Placement” and together with the July 2024 Registered Direct Offering, the “July 2024 Offering”), Series A warrants to purchase up to an aggregate of 17.5 million shares of common stock (the “Series A Warrants”) and Series B warrants to purchase up to an aggregate of 17.5 million shares of common stock (the “Series B Warrants”, and together with the Series A Warrants, the “July Purchase Warrants”). Each share of common stock and each July Pre-Funded Warrant sold pursuant to the Purchase Agreement will be accompanied by one Series A Warrant and one Series B Warrant. The combined purchase price of each share of common stock and accompanying July Purchase Warrants is $0.571 per share. The combined purchase price of each July Pre-Funded Warrant and accompanying July Purchase Warrants is $0.571 (equal to the combined purchase price per share of common stock and accompanying July Purchase Warrants, minus $0.001). The gross proceeds to the Company from the July 2024 Offering was approximately $10.0 million (excluding up to $20.0 million of aggregate gross proceeds that may be received in the future upon the cash exercise of the July Purchase Warrants issued in the Private Placement), before deducting placement agent fees and other offering expenses payable by the Company. The Company received net proceeds of $9.3 million after deducting placement agent fees and other offering expenses of $0.7 million payable by the Company.

Each July Purchase Warrant is exercisable for one share of common stock at an exercise price of $0.571 per share beginning on the effective date of stockholder approval of the issuance of the shares of common stock upon exercise of the July Purchase Warrants (the “Stockholder Approval”). The Series A Warrants will expire on the earlier of (i) the 24-month anniversary of the Stockholder Approval and (ii) 60 days following the later of (a) the date of the public announcement of the occurrence of a medical administrative contractor (including, without limitation, Molecular Diagnostic Services), issuing a final local coverage determination for optical genome mapping for hematological malignancies and (b) the date of the Stockholder Approval. The Series B Warrants will expire on the earlier of (i) the five-year anniversary of the Stockholder Approval and (ii) six months following the later of (a) the date of the public announcement of the occurrence of the Company receiving clearance from the U.S. Food and Drug Administration for an optical genome mapping system for any indication and (b) the date of the Stockholder Approval.

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7. Commitments and Contingencies

The Company has entered into various operating lease agreements and a finance lease agreement, primarily relating to our office, laboratory, and manufacturing space. See Note 11 (Commitments and Contingencies), subsection titled “Leases”, in Part II, Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the Company’s lease agreements.

The future minimum payments under non-cancellable operating and finance leases as of June 30, 2024, are as follows:


	Operating Leases		Finance Lease
Remainder of 2024	$	1,414,000	$	166,000
2025	2,608,000		338,000
2026	545,000		346,000
2027	254,000		356,000
2028	—		365,000
Thereafter	—		5,230,000
Total future lease payments	4,821,000		6,801,000
Less: imputed interest	(440,000)		(2,971,000)
Total lease liabilities	$	4,381,000	$	3,830,000

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Restructuring

The workforce reduction described in Note 1 (Organization and Basis of Presentation) resulted in total restructuring charges of approximately $4.4 million, comprised primarily of severance payments and wages for the 60-day notice period in accordance with the California Worked Adjustment and Retraining Notification (WARN) Act.

The following is a summary of restructuring charges associated with the reduction in force for the three and six months ended June 30, 2024 including severance, impairment, and other exit related costs:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024		2024
Severance	$	552,000	$	4,426,000
Lease related expenses	163,000		374,000
Other	500,000		1,047,000
Total restructuring charges including in operating expenses	$	1,215,000	$	5,847,000
COGS restructuring	$	7,000	$	18,000
Total restructuring charges	$	1,222,000	$	5,865,000

The following restructuring liability activity was recorded in connection with the reduction in force for the six months ended June 30, 2024 including within accrued expenses on the unaudited condensed consolidated financial statements:


Accrued restructuring as of January 1, 2024	$	83,000
Restructuring charges incurred during the period	5,865,000
Cash payments	(5,592,000)
Accrued restructuring as of June 30, 2024	$	356,000

Litigation

From time to time, the Company may be subject to potential liabilities under various claims and legal actions that are pending or may be asserted. These matters arise in the ordinary course and conduct of the business. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the unaudited condensed consolidated financial statements. An estimated loss contingency is accrued in the unaudited condensed consolidated financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any material loss exposure as it is not a defendant in any claims or legal actions.

Contingent Consideration

See Note 8 (Investments and Fair Value Measurements) for a discussion of the contingent consideration liability.

8. Investments and Fair Value Measurements

The Company holds investment securities that consist of highly liquid, investment grade debt securities. The Company determines the fair value of its investment securities based upon one or more valuations reported by its investment accounting and reporting service provider. The investment service provider values the securities using a hierarchical security pricing model that relies primarily on valuations provided by an industry-recognized valuation service. Such valuations may be based on trade prices in active markets for identical assets or liabilities (Level 1 inputs) or valuation models using inputs that are observable either directly or indirectly (Level 2 inputs), such as quoted prices for similar assets or liabilities, yield curves, volatility factors, credit spreads, default rates, loss severity, current market and contractual prices for the underlying instruments or debt, and broker and dealer quotes, as well as other relevant economic measures.

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of June 30, 2024 and December 31, 2023:

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	June 30, 2024
	Total Fair Value and Carrying Value on Balance Sheet		Fair Value Measurement Category
			Level 1		Level 2		Level 3
Assets:


U.S. treasuries	8,516,000		—		8,516,000		—
Total investments:	$	8,516,000	$	—	$	8,516,000	$	—
Money market funds classified as cash equivalents	$	8,010,000	$	8,010,000	$	—	$	—



Money market funds classified as restricted cash	$	11,008,000	$	11,008,000	$	—	$	—
Liabilities:
Contingent consideration	$	5,774,000	$	—	$	—	$	5,774,000
Convertible notes payable	$	19,359,000	$	—	$	—	$	19,359,000


	December 31, 2023
	Total Fair Value and Carrying Value on Balance Sheet		Fair Value Measurement Category
			Level 1		Level 2		Level 3
Assets:
Corporate notes/bonds	14,360,000		—		14,360,000		—
U.S. treasuries	34,463,000				34,463,000
Total investments:	$	48,823,000	$	—	$	48,823,000	$	—
Money market funds classified as cash equivalents	$	9,752,000	$	9,752,000	$	—	$	—
Commercial paper classified as restricted investments	5,432,000		—		5,432,000		—
U.S. treasuries classified as restricted investments	29,685,000		—