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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, 2022
or
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: 001-34180
https://cdn.kscope.io/ebe7406af64154875be0bf6aa8ae274f-fldm-20220630_g1.jpg
STANDARD BIOTOOLS INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0513190
State or other jurisdiction of incorporation or organization I.R.S. Employer Identification No.
2 Tower Place, Ste 2000
South San Francisco,
CA
94080
Address of principal executive officesZip Code
Registrant’s telephone number, including area code: (650) 266-6000
_____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par value per shareLABThe Nasdaq Global Select Market

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      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      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 filerAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
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 the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  
As of July 31, 2022 there were 78,654,802 shares of the registrant’s common stock, $0.001 par value per share, outstanding.



STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
TABLE OF CONTENTS
  Page
PART I.
FINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
OTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
 70





PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands) 
(Unaudited)
June 30,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$74,361 $28,451 
Short-term investments136,850  
Accounts receivable (net of allowances of $545 and $356 at June 30, 2022 and December 31, 2021, respectively)
10,937 18,320 
Inventories, net22,791 20,825 
Prepaid expenses and other current assets5,938 4,470 
Total current assets250,877 72,066 
Property and equipment, net27,275 28,034 
Operating lease right-of-use asset, net35,412 37,119 
Other non-current assets3,158 3,689 
Developed technology, net18,200 27,927 
Goodwill106,200 106,379 
Total assets$441,122 $275,214 
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable$9,016 $10,602 
Accrued compensation and related benefits8,576 4,920 
Operating lease liabilities, current3,293 3,053 
Deferred revenue, current11,409 11,947 
Deferred grant income, current3,729 3,535 
Other accrued liabilities6,747 8,673 
Advances under revolving credit agreement, current 6,838 
Total current liabilities42,770 49,568 
Convertible notes, net54,384 54,160 
Term loan, net10,162 10,049 
Deferred tax liability1,651 4,329 
Operating lease liabilities, non-current35,732 37,548 
Deferred revenue, non-current5,064 5,966 
Deferred grant income, non-current16,263 18,116 
Other non-current liabilities1,297 882 
Total liabilities167,323 180,618 
Commitments and contingencies (Note 15)
Redeemable preferred stock: $0.001 par value; 256 and shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively; aggregate liquidation preference of $255,559 and $ as of June 30, 2022 and December 31, 2021, respectively
311,253  
Stockholders’ equity (deficit):
Preferred stock: $0.001 par value, 9,744 and 10,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; no shares issued and outstanding at either June 30, 2022 or December 31, 2021
— — 
Common stock: $0.001 par value, 400,000 and 200,000 shares authorized at June 30, 2022 and December 31, 2021, respectively; 78,654 and 76,919 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively
79 77 
Additional paid-in capital840,545 831,424 
Accumulated other comprehensive loss(2,253)(907)
Accumulated deficit(875,825)(735,998)
1


Total stockholders’ equity (deficit)(37,454)94,596 
Total liabilities, mezzanine equity and stockholders’ equity (deficit)$441,122 $275,214 
See accompanying notes
2


STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenue
Product revenue$12,219 $22,627 $32,223 $47,355 
Service revenue5,806 6,627 11,950 12,913 
Development revenue356 850 444 2,330 
Other revenue396 914 664 1,214 
Total revenue18,777 31,018 45,281 63,812 
Costs and expenses
Cost of product revenue12,738 12,730 25,077 24,393 
Cost of service revenue1,612 1,867 3,540 3,957 
Research and development12,606 9,441 21,471 20,194 
Selling, general and administrative30,384 24,248 61,259 51,856 
Total costs and expenses57,340 48,286 111,347 100,400 
Loss from operations(38,563)(17,268)(66,066)(36,588)
Interest expense(1,062)(896)(2,092)(1,783)
Loss on forward sale of Series B Preferred Stock(22,289) (60,081) 
Loss on bridge loans(3,064) (13,719) 
Other income (expense), net(174)504 (56)219 
Loss before income taxes(65,152)(17,660)(142,014)(38,152)
Income tax benefit1,613 517 2,187 2,188 
Net loss$(63,539)$(17,143)$(139,827)$(35,964)
Net loss per share, basic and diluted$(0.82)$(0.23)$(1.81)$(0.48)
Shares used in computing net loss per share, basic and diluted77,821 75,452 77,430 75,084 
See accompanying notes
3


STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)


 
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net loss$(63,539)$(17,143)$(139,827)$(35,964)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustment(485)47 (635)(396)
Net change in unrealized gain (loss) on investments(711) (711) 
Other comprehensive income (loss), net of tax(1,196)47 (1,346)(396)
Comprehensive loss$(64,735)$(17,096)$(141,173)$(36,360)
See accompanying notes
4


STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(In thousands)
(Unaudited)

 Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity (Deficit)
 SharesAmount
Balance as of December 31, 202176,919 $77 $831,424 $(907)$(735,998)$94,596 
Issuance of restricted stock, net of shares withheld for taxes, and other278 — (89)— — (89)
Issuance of common stock from option exercises2 — 2 — — 2 
Stock-based compensation expense— — 4,042 — — 4,042 
Net loss— — — — (76,288)(76,288)
Other comprehensive loss, net of tax— — — (150)— (150)
Balance as of March 31, 202277,199 $77 $835,379 $(1,057)$(812,286)$22,113 
Issuance of restricted stock, net of shares withheld for taxes, and other1,119 1 (89)— — (88)
Issuance of common stock under ESPP309 1 496 — — 497 
Issuance of common stock from option exercises27 — 96 — — 96 
Stock-based compensation expense— — 4,663 — — 4,663 
Net loss— — — — (63,539)(63,539)
Other comprehensive loss, net of tax— — — (1,196)— (1,196)
Balance as of June 30, 202278,654 $79 $840,545 $(2,253)$(875,825)$(37,454)
Common StockAdditional
Paid-in
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Stockholders’
Equity
SharesAmount
Balance as of December 31, 202074,543 $75 $815,624 $112 $(676,761)$139,050 
Issuance of restricted stock, net of shares withheld for taxes, and other420 — (525)— — (525)
Stock-based compensation expense— — 3,677 — — 3,677 
Net loss— — — — (18,821)(18,821)
Other comprehensive loss, net of tax— — — (443)— (443)
Balance as of March 31, 202174,963 $75 $818,776 $(331)$(695,582)$122,938 
Issuance of restricted stock, net of shares withheld for taxes, and other1,028 1 (1,028)— — (1,027)
Issuance of common stock under ESPP139 — 685 — — 685 
Issuance of common stock from option exercises36 — 209 — — 209 
Stock-based compensation expense— — 3,741 — — 3,741 
Net loss— — — — (17,143)(17,143)
Other comprehensive loss, net of tax— — — 47 — 47 
Balance as of June 30, 202176,166 $76 $822,383 $(284)$(712,725)$109,450 
See accompanying notes
5


STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended June 30,
 20222021
Operating activities
Net loss$(139,827)$(35,964)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on forward sale of Series B Preferred Stock60,081  
Loss on bridge loans13,719  
Stock-based compensation expense8,705 7,418 
Amortization of developed technology5,928 5,965 
Depreciation and amortization1,878 1,851 
Provision for excess and obsolete inventory4,597 1,248 
Impairment of intangible3,526  
Amortization of debt discounts, premiums and issuance costs423 211 
Other non-cash items176 328 
Changes in assets and liabilities:
Accounts receivable, net7,277 9,419 
Inventories, net(6,484)(7,489)
Prepaid expenses and other assets(1,304)(2,593)
Accounts payable(1,712)1,903 
Accrued compensation and related benefits3,598 (5,359)
Deferred revenue(1,557)(619)
Other liabilities(4,602)(3,884)
Net cash used in operating activities(45,578)(27,565)
Investing activities
Purchases of investments(137,302) 
Proceeds from NIH Contract 2,000 
Purchases of property and equipment(1,806)(11,095)
Net cash used in investing activities(139,108)(9,095)
Financing activities
Proceeds from bridge loans25,000  
Proceeds from issuance of Series B Preferred Stock225,000  
Repayment of advances under credit agreement(6,838) 
Repayment of long-term debt (501)
Payment of equity issuance costs(12,547) 
Proceeds from exercise of stock options98 209 
Proceeds from stock issuance of ESPP497 685 
Payments for taxes related to net share settlement of equity awards and other(177)(1,552)
Net cash provided by (used in) financing activities231,033 (1,159)
Effect of foreign exchange rate fluctuations on cash and cash equivalents(437)162 
Net increase (decrease) in cash, cash equivalents and restricted cash45,910 (37,657)
Cash, cash equivalents and restricted cash at beginning of period29,467 69,536 
Cash, cash equivalents and restricted cash at end of period$75,377 $31,879 
Supplemental disclosures of cash flow information
Cash paid for interest$1,679 $1,520 
Cash paid for income taxes, net of refunds$638 $1,418 
Asset retirement obligations$717 $703 
See accompanying notes
6


STANDARD BIOTOOLS INC.
(formerly known as FLUIDIGM CORPORATION)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022
1. Description of Business
Standard BioTools Inc. (Standard BioTools, the Company, we, our or us) is driven by a bold vision – unleashing tools to accelerate breakthroughs in human health. Standard BioTools has an established portfolio of essential, standardized next-generation technologies that help biomedical researchers develop medicines faster and better. As a leading solutions provider, we provide reliable and repeatable insights in health and disease using our proprietary mass cytometry and microfluidics technologies that help transform scientific discoveries into better patient outcomes. Standard BioTools works with leading academic, government, pharmaceutical, biotechnology, plant and animal research, and clinical laboratories worldwide, focusing on the most pressing needs in translational and clinical research, including oncology, immunology, and immunotherapy.
The Company, formerly known as Fluidigm Corporation, changed its name to Standard BioTools Inc. in April 2022, in connection with the completion of the Private Placement Issuance discussed in Note 3. The Company was founded in 1999 and is headquartered in South San Francisco, California.
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (U.S. GAAP) and include the accounts of our wholly owned subsidiaries. As of June 30, 2022, we had wholly owned subsidiaries in Singapore, Canada, the Netherlands, Japan, France, Italy, the United Kingdom, China, Germany and Norway. All subsidiaries, except for Singapore, use their local currency as their functional currency. The Singapore subsidiary uses the U.S. dollar as its functional currency. All intercompany transactions and balances have been eliminated upon consolidation.
In the audited financial statements and the related notes for the year ended December 31, 2021 included in our annual report on Form 10-K, filed with the SEC on March 8, 2022, we disclosed that we had performed an assessment to determine whether there were conditions or events, considered in the aggregate, that raised substantial doubt about our ability to continue as a going concern for at least the twelve-month period following the date the financial statements were issued. We believed that our then-current level of cash and cash equivalents, together with committed financing facilities, were not sufficient to fund ongoing operations for at least the twelve-month period after the financial statements were issued. We subsequently closed the $225 million Series B Preferred Equity Financing, as defined in Note 3. The completion of this financing eliminated the doubt about the Company’s ability to continue as a going concern. See Note 3 for further discussion.
Certain prior period amounts in the condensed consolidated financial statements were reclassified to conform with the current period presentation. These reclassifications were immaterial and did not affect prior period total assets, total liabilities, stockholders’ equity, total revenue, total costs and expenses, loss from operations or net loss.
Unaudited Interim Financial Information
The accompanying interim condensed consolidated financial statements and related disclosures are unaudited, have been prepared on the same basis as the annual financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for a fair statement of the results of operations for the periods presented.
The year-end condensed consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. The condensed consolidated results of operations for the three and six months ended June 30, 2022 is not necessarily indicative of the results to be expected for the full year or for any other year or interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the related notes for the year ended December 31, 2021 included in our annual report on Form 10-K, filed with the SEC on March 8, 2022.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base these estimates on historical experience, the current economic environment and on various other assumptions believed to
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be reasonable, which together form the basis for making judgments about the carrying values of assets and liabilities. The full extent to which the COVID-19 pandemic impacts our business, results of operations and financial condition will depend on numerous evolving factors including, but not limited to, the magnitude and duration of the pandemic, the extent to which it will impact worldwide macroeconomic conditions, including the speed of recovery, and governmental and business reactions to the pandemic. We assessed certain accounting matters that generally require consideration of forecasted financial information, including the unknown impact of COVID-19 and the war in Ukraine. Accounting matters that rely on forecasted financial information included, but were not limited to, our inventory, and related reserves, and the carrying value of goodwill and other long-lived assets and liabilities. Actual results could differ materially from these estimates and could have a material adverse effect on our condensed consolidated financial statements. We also use significant judgment in determining the fair value of financial instruments, including debt and equity instruments.
Foreign Currency
Assets and liabilities of non-U.S. subsidiaries that use the local currency as their functional currency are translated into U.S. dollars at exchange rates in effect on the balance sheet date. Income and expense accounts are translated at monthly average exchange rates during the year. The adjustments resulting from the foreign currency translations are recorded in accumulated other comprehensive loss, a separate component of stockholders’ equity.
Private Placement Issuance
See Note 3 for a detailed discussion of the transactions, including the accounting treatment, and additional information.
Comprehensive Loss
Comprehensive loss is comprised of net loss and other comprehensive income (loss). Other comprehensive income (loss) generally consists of unrealized gains and losses on our investments and foreign currency translation adjustments. Total comprehensive loss for all periods presented has been disclosed in the condensed consolidated statements of comprehensive loss.
The components of accumulated other comprehensive loss, net of tax, for the three and six months ended June 30, 2022 are as follows (in thousands):
Foreign Currency Translation AdjustmentUnrealized Gain (Loss) on InvestmentsAccumulated Other Comprehensive Income (Loss)
Ending balance at December 31, 2021$(907)$ $(907)
Other comprehensive income (loss)(150) (150)
Ending balance at March 31, 2022$(1,057)$ $(1,057)
Other comprehensive income (loss)(485)(711)(1,196)
Ending balance at June 30, 2022$(1,542)$(711)$(2,253)
Net Loss per Share
Our basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of shares of common stock outstanding for the period.
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The following potentially dilutive common shares were excluded from the computations of diluted net loss per share for the periods presented because including them would have been anti-dilutive (in thousands):
 Six Months Ended June 30,
 20222021
Stock options, restricted stock units and performance awards14,955 7,944 
Series B Preferred Stock 75,164  
2019 Convertible Notes18,966 18,966 
2019 Convertible Notes potential make-whole shares4,741 809 
2014 Convertible Notes10 10 
Total113,836 27,729 

Potentially dilutive securities in the above table include the impact of the Series B Preferred Stock defined in Note 3. See Note 3 for further discussion.
Recent Accounting Changes and Accounting Pronouncements
Adoption of New Accounting Guidance
In August 2020, the FASB issued ASU 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance is effective for fiscal years beginning after December 15, 2021. We adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not have an impact on our 2014 and 2019 Convertible Notes.
In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendment is effective for annual periods beginning after December 15, 2021. The amendment establishes financial disclosure requirements for business entities that receive government assistance that the entities account for by analogizing to a grant or contribution model because there is no specific authoritative guidance under U.S. GAAP that applies to the transaction. Entities that receive this type of assistance should include the following information in their annual report: (1) the nature of the transaction, (2) the significant terms and conditions, (3) the accounting treatment, (4) the line items on the balance sheet and income statement that are affected along with (5) the respective amounts that have been recorded. We adopted ASU 2021-10 effective January 1, 2022. The adoption of ASU 2021-10 did not have a material impact on our financial statements.
Recent Accounting Pronouncements
None.
3. Private Placement Issuance
Overview of Transactions
On January 23, 2022, we entered into (i) a Loan Agreement (the Casdin Bridge Loan Agreement) with Casdin Private Growth Equity Fund II, L.P. and Casdin Partners Master Fund, L.P. (collectively, Casdin) and (ii) a Loan Agreement (the Viking Bridge Loan Agreement, and together with the Casdin Bridge Loan Agreement, the Bridge Loan Agreements) with Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers and each, a Purchaser). Each Bridge Loan Agreement provided for a $12.5 million term loan (the Bridge Loans) to the Company. The Bridge Loans were fully drawn on January 24, 2022. The Bridge Loans automatically converted into Series B Preferred Stock, defined below, upon the completion of the Preferred Equity Financing, defined below.
Also on January 23, 2022, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements) with each of Casdin and Viking pursuant to which at the closing of the transactions contemplated thereby, and on the terms and subject to the conditions set forth therein, including the approval of our stockholders, we issued and sold an aggregate of $225 million of convertible preferred stock on April 4, 2022, consisting of: (i) 112,500 shares of the Company’s Series B-1 Convertible Preferred Stock, par value $0.001 per share (the Series B-1 Preferred Stock), at a purchase price of $1,000 per share to Casdin; and (ii) 112,500 shares of the Company’s Series B-2 Convertible Preferred Stock, par value
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$0.001 per share (the Series B-2 Preferred Stock, and together with the Series B-1 Preferred Stock, the Series B Preferred Stock) at a purchase price of $1,000 per share to Viking (the Preferred Equity Financing, and together with the issuance of shares of Series B Preferred Stock in connection with the conversion of the Bridge Loans, the Private Placement Issuance).
The rights, preferences and privileges of the Series B Preferred Stock are set forth in the Series B-1 Certificate of Designations and Series B-2 Certificate of Designations (collectively, the Series B Certificates of Designations), each as defined in the respective Purchase Agreements. The Series B Preferred Stock ranks senior to our common stock with respect to dividend rights, redemption rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. The holders of Series B Preferred Stock are entitled to participate in all dividends declared on our common stock on an as-converted basis, on the terms and subject to the conditions set forth in the Series B Certificates of Designations.
Our board of directors (the Board) called a meeting (Special Meeting) to ask our stockholders to consider, vote upon and approve (i) a proposal to amend our Eighth Amended and Restated Certificate of Incorporation (the Charter) to, among other things, increase the number of shares of common stock, par value $0.001 per share, that we are authorized to issue from two hundred million (200,000,000) shares to four hundred million (400,000,000) shares and to change the Company’s name to Standard BioTools Inc. (the Charter Amendment Proposal); (ii) a proposal to approve, in accordance with Nasdaq Listing Rule 5635, the issuance of (A) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock pursuant to the Purchase Agreements, (B) the Series B-1 Preferred Stock and the Series B-2 Preferred Stock issuable pursuant to the terms of the Bridge Loan Agreements and (C) the common stock issuable upon the conversion of the Series B Preferred Stock (the Private Placement Issuance Proposal); and (iii) a proposal to adjourn the Special Meeting if the Special Meeting were convened and a quorum were present, but there were not sufficient votes to approve the Charter Amendment Proposal and the Private Placement Issuance Proposal (the Adjournment Proposal, and, together with the Private Placement Issuance Proposal and the Charter Amendment Proposal, the Stockholder Proposals). Each of the Private Placement Issuance Proposal and Charter Amendment Proposal were conditioned on the approval of the other proposal, and neither proposal would take effect unless both were approved by our stockholders.
Our stockholders approved the Charter Amendment Proposal and Private Placement Issuance Proposal on April 1, 2022. The Private Placement Issuance closed on April 4, 2022. Upon closing, 225,000 shares of Series B Preferred Stock were issued in accordance with the Purchase Agreements and the Bridge Loans converted into 30,559 shares of Series B Preferred Stock, for a total of 255,559 shares of Series B Preferred Stock. The proceeds of the Private Placement Issuance have been and will be used to fund expenses related to the Private Placement Issuance, as well as working capital, general corporate purposes and potential future merger and acquisition opportunities that we may identify from time to time.
Series B Redeemable Preferred Stock
Preferred stock is classified as debt, equity or mezzanine equity based on its redemption features. Preferred stock with redemption features outside of the control of the issuer, such as contingent redemption features, is classified as mezzanine equity. We recorded the Series B Preferred Stock as mezzanine equity at its fair value upon issuance, net of any issuance costs, on the condensed consolidated balance sheet as of June 30, 2022 because it had features, such as change of control and liquidation preference, which are outside of the issuer’s control. Subsequent adjustment of the amount presented within mezzanine equity to its redemption amount is unnecessary as it is not probable that the instrument will become redeemable.
Upon closing, the value of the Bridge Loans and the Purchase Agreements, discussed in detail below, were reclassified and included in the carrying value of the Series B Redeemable Preferred Stock. The carrying value of the Series B Redeemable Preferred Stock as of April 4, 2022 was $311.3 million and was unchanged as of June 30, 2022. The components of the carrying value of the Series B Redeemable Preferred Stock are as follows (in thousands):

 June 30, 2022
Proceeds from Purchase Agreements$225,000 
Proceeds from Bridge Loans25,000 
Loss on Forward Purchase Agreements60,081 
Loss on Bridge Loans13,719 
Less equity issuance costs(12,547)
Total Series B Redeemable Preferred Stock$311,253 
The Series B Preferred Stock Certificates of Designations contain several conversion rights, redemption features and other key provisions described below.
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Holder Voluntary Conversion Rights
The Series B Preferred Stock is convertible at the option of the holders thereof at any time into a number of shares of common stock equal to the Conversion Rate (as defined in the Series B Certificates of Designations), which is initially 294.1176 shares of common stock per share of Series B Preferred Stock, in each case subject to certain adjustments and certain limitations on conversion.
Issuer Call Provision
At any time after the fifth anniversary of the closing of the Private Placement Issuance, if the last reported sale price of the common stock is greater than 250% of the Conversion Price (as defined in the Series B Certificates of Designations) as of such time for at least 20 consecutive trading days, we may elect to convert all of the outstanding shares of Series B Preferred Stock into shares of common stock.
Issuer Redemption Provision
After the seventh anniversary of the closing of the Private Placement Issuance, subject to certain conditions, we may, at our option, redeem all of the outstanding shares of Series B Preferred Stock at a redemption price per share of Series B Preferred Stock, payable in cash, equal to the Liquidation Preference (as defined in the Series B Certificates of Designations).
Change of Control Provisions
If we undergo certain change of control transactions, each holder of outstanding shares of Series B Preferred Stock will have the option, subject to the holder’s right to convert all or a portion of the shares of Series B Preferred Stock held by such holder into common stock, to require us to purchase all or a portion of such holder’s outstanding shares of Series B Preferred Stock that have not been converted into common stock at a purchase price per share of Series B Preferred Stock, payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series B Preferred Stock, and (B) the amount of cash and/or other assets that such holder would have been entitled to receive if such holder had converted such share of Series B Preferred Stock into common stock immediately prior to the change of control transaction (Change of Control Put).
In the event of a change of control in which we are not expected to be the surviving corporation or if the common stock will no longer be listed on a U.S. national securities exchange, we will have a right to redeem, subject to the holder’s right to convert into common stock prior to such redemption, all of such holder’s shares of Series B Preferred Stock, or if a holder exercises the Change of Control Put in part, the remainder of such holder’s shares of Series B Preferred Stock, at a redemption price per share payable in cash, equal to the greater of (A) the Liquidation Preference of such share of Series B Preferred Stock, and (B) the amount of cash and/or other assets that the holder would have received if such holder had converted such share of Series B Preferred Stock into common stock immediately prior to the change of control transaction.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, the Series B Preferred Stock has a liquidation preference equal to the greater of (i) the Liquidation Preference (as defined in the Series B Certificates of Designations, currently $3.40) and (ii) the amount per share of Series B Preferred Stock that such holder would have received had all holders of Series B Preferred Stock, immediately prior to such voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, converted all shares of Series B Preferred Stock into common stock pursuant to the terms of the Series B Certificates of Designations (without regard to any limitations on conversion contained therein).
Series B Convertible Preferred Stock Purchase Agreements
The Purchase Agreements for the issuance of 225,000 shares of Series B Preferred Stock for $225 million at a future date, were accounted for as forward sales contracts at fair value in accordance with ASC 480 Distinguishing Liabilities from Equities because the Series B Preferred Stock included certain contingent redemption features which created an obligation for the Company to repurchase its shares. The fair value of the Series B Preferred Stock payable portion of the forward sales contracts was determined using a Monte Carlo Simulation (MCS). The MCS analysis used a random-walk process to simulate the value of our common stock and the resulting impact on the value of our Series B Preferred Stock, given the convertibility of the Series B Preferred Stock into cash or our common stock under several scenarios, as well as various provisions discussed above.
The fair value of the 225,000 shares of Series B Preferred Stock was determined to be $262.8 million as of March 31, 2022 and $285.1 million as of April 4, 2022. The $22.3 million increase in the fair value of the Series B Preferred Stock from March 31, 2022 to April 4, 2022 is included in the loss on forward sale of Series B Preferred Stock on the condensed consolidated statement of operations for the three months ended June 30, 2022. The loss is primarily due to the increase in our common share price from $3.59 per share on March 31, 2022 to $3.99 per share on April 4, 2022. The $60.1 million loss on
11


forward sales of Series B Preferred Stock for the six months ended June 30, 2022 reflected the increase in the share price of our common stock from $2.84 at the inception of the contracts to $3.99 per share value as of April 4, 2022 and the value of the various conversion rights and key provisions discussed above.
Bridge Loans
Prior to their conversion, the Bridge Loans bore interest (i) from and including the effective date of the Bridge Loan Agreements to but excluding March 1, 2022, at 10%, (ii) from and including March 1, 2022 to but excluding June 1, 2022, at 12%, (iii) from and including June 1, 2022 to but excluding September 1, 2022, at 14%, and (iv) from and including September 1, 2022 and thereafter, at 16%. Interest accrued daily and was payable in kind by adding the accrued interest to the outstanding principal amount. Unless earlier converted, the outstanding principal amount of the Bridge Loans (inclusive of principal and accrued and unpaid interest) was due and payable in cash on the maturity date.
The Bridge Loans automatically converted into Series B Preferred Stock upon the closing of the Private Placement Issuance, in accordance with the terms of the Bridge Loan Agreements. The Bridge Loans converted into a number of shares of Series B Preferred Stock equal to (i) the then outstanding principal amount of the applicable Bridge Loan (including any interest added to the original principal amount thereof) plus accrued and unpaid interest (together, the Conversion Amount) on the Bridge Loans divided by $1,000 multiplied by (ii) the Conversion Price (as defined in the Series B Certificates of Designations) divided by $2.84.
If the Series B Preferred Stock had not been approved for issuance by our stockholders, or the Purchase Agreements were terminated, then the Bridge Loans would have become convertible, at each lender’s option, into common stock, par value $0.001 per share, of the Company at an initial conversion rate of 352.1126 shares of common stock per $1,000 of the Conversion Amount, subject to the cap set forth in the Bridge Loan Agreements.
Applying the guidance in ASC 825 Financial Instruments, we elected to record the Bridge Loans at their fair value. We employed a probability‐weighted expected return method in our valuation analysis of the Bridge Loans. Specifically, our analysis contemplated two scenarios: 1) our stockholders approve the transaction (Approval Scenario) and 2) our stockholders do not approve the transaction (Disapproval Scenario). To estimate the fair value of the Bridge Loans pursuant to the Approval Scenario, we employed a Monte Carlo Simulation (MCS) analysis, discussed above, based on the underlying Series B Preferred Stock into which the Bridge Loans were convertible.
The change in fair value of the Bridge Loans from inception to conversion on April 4, 2022 is included as a non-operating loss on Bridge Loans in the condensed consolidated statement of operations. The loss on Bridge Loans was $3.1 million for the three months ended June 30, 2022 and $13.7 million for the six months ended June 30, 2022. The losses were attributable to the increases in our share price from the prior quarter end and from inception of the Bridge Loans to the April 4, 2022 closing date, respectively. In addition, as required under the fair value option, issuance costs associated with the Bridge Loans of $0.2 million were recognized in selling, general and administrative expenses in the first quarter of 2022.
4. NIH Contract
In 2020, we were awarded the NIH Contract under the RADx program to support the expansion of our production capacity and throughput capabilities for COVID-19 testing with our microfluidics technology. We completed the required milestones in 2021 and received the total NIH Contract value of $34.0 million. Proceeds from the NIH Contract have been used primarily for capital expenditures to expand production capacity and, to a lesser extent, to offset applicable operating costs. Grant proceeds that exceed the cost of the capital expenditures and expenses that have been and are expected to be incurred are recorded in other non-operating income on the condensed consolidated statement of operations.
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The following table summarizes the activity under the NIH Contract as of June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022December 31, 2021
Cash receipts from milestones achieved$34,016 $34,016 
Cumulative amounts applied against operating costs (excluding depreciation)(4,526)(4,522)
Cumulative amounts applied against depreciation expense for assets placed in service(2,358)(703)
Cumulative amounts recognized as non-operating income(7,140)(7,140)
Total deferred grant income$19,992 $21,651 
Assets placed in service, gross$20,776 $16,890 
Construction-in-progress1,044 3,909 
Cumulative amounts applied against depreciation expense for assets placed in service(2,358)(703)
Carrying value of property and equipment, net19,46220,096
Estimated future capital expenditures530 1,555 
Total deferred grant income$19,992 $21,651 
Deferred grant income, current$3,729 $3,535 
Deferred grant income, non-current16,263 18,116 
Total deferred grant income$19,992 $21,651 
Deferred grant income, current on our condensed consolidated balance sheet represents the amounts expected to be offset against depreciation expense over the next twelve months. Deferred grant income, non-current includes amounts expected to be offset against depreciation expense in future later periods.
We expect to spend $22.4 million on capital expenditures associated with the NIH Contract. As of June 30, 2022, we have placed $20.8 million of assets in service and expect to place the remaining assets in service by the end of 2022.
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5. Revenue
Disaggregation of Revenue
The following table presents our revenue based upon the geographic location of our customers’ facilities and by source for the three and six months ended June 30, 2022 and 2021 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Geographic Markets
Americas$9,433 $16,120 $22,363 $34,643 
EMEA5,669 9,220 14,278 18,362 
Asia-Pacific3,675 5,678 8,640 10,807 
Total revenue$18,777 $31,018 $45,281 $63,812 
Three Months Ended June 30,Six Months Ended June 30,
202220212022 2021
Source
Instruments$2,661 $10,179 $10,184 $17,887 
Consumables9,558 12,448 22,039 29,468 
Product revenue12,219 22,627 32,223 47,355 
Service revenue5,806 6,627 11,950 12,913 
Development revenue356 850 444 2,330 
Other revenue:
  License and royalty revenue396 93 664 93 
  Grant revenue 821  1,121 
Total other revenue396 914 664 1,214 
Total revenue$18,777 $31,018 $45,281 $63,812 

Unfulfilled Performance Obligations
We reported $17.9 million of deferred revenue on our December 31, 2021 consolidated balance sheet. During the six months ended June 30, 2022, $7.1 million of the opening balance was recognized as revenue and $5.7 million of net additional advance payments were received from customers, primarily associated with instrument service contracts. At June 30, 2022, we reported $16.5 million of deferred revenue.
We expect to recognize revenue from unfulfilled performance obligations associated with service contracts that were partially completed on June 30, 2022 in the following periods (in thousands):
Fiscal Year
Expected Revenue (1)
2022 remainder of the year$7,819 
20237,759 
20243,887 
Thereafter2,478 
Total$21,943 
_______
(1) Expected revenue includes both billed amounts included in deferred revenue and unbilled amounts that are not reflected in our condensed consolidated financial statements and are subject to change if our customers decide to cancel or modify their contracts. Purchase orders for instrument service contracts can generally be canceled before the service period begins without penalty.
We apply the practical expedient that permits us not to disclose information about unsatisfied performance obligations for service contracts with an expected term of one year or less.
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Customer Concentration
We had an outstanding trade accounts receivable of $1.1 million from one customer which represented more than 10% of our total accounts receivable, net as of June 30, 2022. No customer had an outstanding trade accounts receivable balance that represented more than 10% of total accounts receivable, net as of December 31, 2021.
6. Goodwill and Intangible Assets, net
In connection with our acquisition of DVS in February 2014, we recognized goodwill of $104.1 million and $112.0 million of developed technology. In the first quarter of 2020, we recognized $2.2 million (Euro 2.0 million) of goodwill from the InstruNor acquisition and $5.4 million (Euro 4.9 million) of developed technology.
Goodwill and intangible assets with indefinite lives are not subject to amortization but are tested for impairment on an annual basis during the fourth quarter or whenever events or changes in circumstances indicate the carrying amount of these assets may not be recoverable. Qualitative assessment includes assessing significant events and circumstances such as our current results, assumptions regarding future performance, strategic initiatives and overall economic factors, including the ongoing global COVID-19 pandemic and macroeconomic developments to determine the existence of potential indicators of impairment and assess if it is more likely than not that the fair value of our reporting unit or intangible assets is less than their carrying value. If indicators of impairment are identified, a quantitative impairment test is performed. Due to the significant decline in our share price since the prior quarter end, we performed an analysis of our goodwill as of June 30, 2022 and concluded that no impairment charge was necessary.
In June 2022, the decision was made to discontinue further development on the product lines supported by the InstruNor developed technology. As there are no future cash flows attributable to this asset group, an impairment charge of $3.5 million was recognized, representing the remaining carrying value of the intangible asset.
Intangible assets also include other patents and licenses, which are included in other non-current assets. Intangible assets, net, were as follows (in thousands):
June 30, 2022
Gross AmountAccumulated Amortization and ImpairmentNetWeighted-Average Amortization Period
Developed technology$117,070 $(98,870)$18,200 10.0 years
Patents and licenses$11,254 $(10,337)$917 7.0 years
December 31, 2021
Gross AmountAccumulated AmortizationNetWeighted-Average Amortization Period
Developed technology$117,503 $(89,576)$27,927 9.9 years
Patents and licenses$11,257 $(10,000)$1,257 7.0 years
Total amortization expense was $3.2 million for both the three months ended June 30, 2022 and 2021. Total amortization expense for the six months ended June 30, 2022 and 2021 was $6.3 million and $6.4 million, respectively. The $3.5 million impairment charge on InstruNor’s developed technology intangible asset was recorded in research and development expense and is reflected in accumulated amortization in the above table.
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Based on the carrying value of intangible assets as of June 30, 2022, our estimated future amortization expense is as follows (in thousands):
Fiscal YearDeveloped Technology Amortization ExpensePatents and Licenses Amortization ExpenseTotal
2022 remainder of the year$5,600 $338 $5,938 
202311,200 572 11,772 
20241,400 7 1,407 
Total$18,200 $917 $19,117 

7. Balance Sheet Details
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022 December 31, 2021
Cash and cash equivalents$74,361 $28,451 
Restricted cash1,016 1,016 
Total cash, cash equivalents and restricted cash$75,377 $29,467 
Short-term restricted cash of approximately $16 thousand is included in prepaid expenses and other current assets and $1.0 million of non-current restricted cash is included in other non-current assets in the condensed consolidated balance sheet as of June 30, 2022 and December 31, 2021.
Inventories, net
Inventories, net consisted of the following as of June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022December 31, 2021
Raw materials$12,353 $9,345