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What changed in 908 Devices Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of 908 Devices Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+456 added−481 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-15)

Top changes in 908 Devices Inc.'s 2023 10-K

456 paragraphs added · 481 removed · 363 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

142 edited+29 added−45 removed107 unchanged
Biggest changeThis is enabled through customer trials and partnerships that allows us to further understand the critical applications for our technology and inform our future developments and market expansion. Our MX908 devices often are sold to governmental institutions and other customers that require participation in a tender process that involves preparation of extensive documentation and a lengthy review process.
Biggest changeOur MX908 devices often are sold to governmental institutions and other customers that require participation in a tender process that involves preparation of extensive documentation and a lengthy review process. As a result of these factors, and the budget cycles of our customers, our sales cycle can often be six to twelve months, or longer.
Given the market opportunity, we expect to face substantial competition from large established manufacturers of Mass Spec laboratory-based instruments and from new entrants; however, our proprietary advances have enabled us to manufacture the first truly handheld Mass Spec devices and compact desktops and we believe we are well-positioned to face future competition.
Given the market opportunity, we expect to face substantial competition from large established manufacturers of laboratory-based instruments and from new entrants; however, our proprietary advances have enabled us to manufacture the first truly handheld Mass Spec devices and compact desktops and we believe we are well-positioned to face future competition.
Currently, our Boston manufacturing facility is capable of supporting the production of approximately 2,000 MX908, Rebel and ZipChip Interface units combined per year. When our annual sales exceed 2,000 units, we expect that we would need to either expand our in-house production operations, or transfer some or all aspects of assembly to contract manufacturers, to accommodate larger run-rates.
Currently, our Boston manufacturing facility is capable of supporting the production of approximately 2,000 MX908, Rebel, Maverick and ZipChip Interface units combined per year. When our annual sales exceed 2,000 units, we expect that we would need to either expand our in-house production operations, or transfer some or all aspects of assembly to contract manufacturers, to accommodate larger run-rates.
For instance, forensics customers who do not have access to laboratory-based Mass Spec instruments have at best had access to the field techniques of Ion-mobility spectrometry and Raman/FTIR spectroscopy, each with its own severe limitation of specificity (ability to distinguish one chemical from another) and sensitivity (ability to detect minute amounts), respectively.
For instance, forensics customers who do not have access to laboratory-based Mass Spec instruments have at best had access to the field techniques of Ion-mobility spectrometry and Raman/FTIR spectroscopy, each with its own limitation of specificity (ability to distinguish one chemical from another) and sensitivity (ability to detect minute amounts), respectively.
Our focus has been on increasing U.S. placements, but we also have a meaningful international opportunity and have recently sold Rebels in China, Japan, South Korea and Europe. Cells have been harnessed to serve as microscopic factories producing myriad molecular species large and small.
Our focus has been on increasing U.S. placements, but we also have a meaningful international opportunity and have sold Rebels in China, Japan, South Korea and Europe. Cells have been harnessed to serve as microscopic factories producing myriad molecular species large and small.
University of North Carolina, Chapel Hill In June 2012, we entered into a license agreement, which was subsequently amended in April 2013 and August 2014, and then amended and restated in May 2015, which we refer to in this Annual Report on Form 10-K as the UNC Agreements, with the University of North Carolina, Chapel Hill, or UNC, pursuant to which UNC granted us an exclusive, sublicensable, worldwide license to develop, manufacture, use, and commercialize products, services and methods, covered by certain patent rights owned by UNC, including patents related to a microfabricated ionization source and a microfabricated ionizer chip.
Licensed IP University of North Carolina, Chapel Hill In June 2012, we entered into a license agreement, which was subsequently amended in April 2013 and August 2014, and then amended and restated in May 2015, which we refer to in this Annual Report on Form 10-K as the UNC Agreements, with the University of North Carolina, Chapel Hill, or UNC, pursuant to which UNC granted us an exclusive, sublicensable, worldwide license to develop, manufacture, use, and commercialize products, services and methods, covered by certain patent rights owned by UNC, including patents related to a microfabricated ionization source and a microfabricated ionizer chip.
As our customers continue to prove out new applications in areas such as diagnostics and proteomics, we will look to incorporate select assays investigated by these customers into our handheld and desktop devices where those form factors can accelerate usage.
As our customers continue to prove out new applications in areas such as diagnostics, metabolomics, and proteomics, we will look to incorporate select assays investigated by these customers into our handheld and desktop devices where those form factors can accelerate usage.
The U.S. opioid crisis in particular is driving demand for broadly capable point-of-need measurement devices that can detect a multitude of hazards at trace quantities. The MX908 detects trace quantities of more than 150 named dangerous materials, including fentanyl and its many derivatives, explosives, and hazardous chemical agents with sensitivity comparable to existing field-based technologies, but with much higher specificity.
The U.S. opioid crisis in particular is driving demand for broadly capable point-of-need measurement devices that can detect a multitude of hazards at trace quantities. The MX908 detects trace quantities of more than 160 named dangerous materials, including fentanyl and its many derivatives, explosives, and hazardous chemical agents with sensitivity comparable to existing field-based technologies, but with much higher specificity.
Complementing our mass spec analysis, Trace also brings to us an enzyme-based electrochemical biosensor technology that generates an electrical signal proportional to concentration of targeted analytes enabling real-time monitoring and control of additional analytes, some of which are difficult to measure with mass spec (e.g. glucose and lactate). 11 Table of Contents Aseptic sampling enables on-line automated monitoring and control of bioprocesses.
Complementing our mass spec analysis, Trace Analytics GmbH also brings to us an enzyme-based electrochemical biosensor technology that generates an electrical signal proportional to concentration of targeted analytes enabling real-time monitoring and control of additional analytes, some of which are difficult to measure with mass spec (e.g., glucose and lactate). 11 Table of Contents Aseptic sampling enables on-line automated monitoring and control of bioprocesses.
Competition We have a range of competitors extending from small, privately held companies with single-point solutions to large, publicly-held corporations, including those with a portfolio of Mass Spec products, such as Agilent, Bruker, Danaher, Inficon, Teledyne, PerkinElmer, Shimadzu, Thermo Fisher Scientific, and Waters Corp. Many of these companies have greater resources and market presence than we do.
Competition We have a range of competitors extending from small, privately held companies with single-point solutions to large, publicly-held corporations, including those with a portfolio of Mass Spec products, such as Agilent, Bruker, Danaher, Inficon, Teledyne, Endress & Hauser, PerkinElmer, Shimadzu, Thermo Fisher Scientific, and Waters Corp. Many of these companies have greater resources and market presence than we do.
The MX908 is able to start up in less than a minute, completing analysis of gas and vapor materials in less than ten seconds, and solids and liquids in less than a minute.
The MX908 is able to start up in less than a minute, completing analysis of gas and vapor materials in less than ten seconds, and solids, liquids, and aerosols in less than a minute.
There are no future milestone payments to be made by the Company under the UNC Agreements. 28 Table of Contents We are responsible for all reasonable, documented patent expenses incurred during the life of the UNC Agreements and associated costs associated with the preparation, filing, prosecuting, issuance and maintenance of all patent applications and patents included within the patent rights covered by the UNC Agreements.
There are no future milestone payments to be made by the Company under the UNC Agreements. 25 Table of Contents We are responsible for all reasonable, documented patent expenses incurred during the life of the UNC Agreements and associated costs associated with the preparation, filing, prosecuting, issuance and maintenance of all patent applications and patents included within the patent rights covered by the UNC Agreements.
We also release updates and additions to our library of spectral images enabling identification of additional chemicals. ● Warranty. Our MX908 and ZipChip Interface devices are covered under a return-to-factory warranty model for repairs. Depending on availability, loaner units are made available to minimize downtime with our customers.
We also release updates and additions to our library of spectral images enabling identification of additional chemicals. ● Warranty. Our Maven, Maverick, MX908 and ZipChip Interface devices are covered under a return-to-factory warranty model for repairs. Depending on availability, loaner units are made available to minimize downtime with our customers.
Accordingly, our research and development team possesses functional expertise in critical areas such as: ● chemistry, biochemistry, physics of Mass Spec and separations and sample processing; ● embedded, desktop and mobile software engineering; ● machine learning, high-speed digital signal processing, multivariate statistical learning, algorithms and decision theory; ● user experience design and user interface design; ● mechanical engineering and industrial design; ● analog, digital and mixed signal electronics engineering; ● ultra-efficient pumping and pneumatics engineering; and ● microfluidic design, and volume fabrication at the micro- and meso-scale.
Accordingly, our research and development team possesses functional expertise in critical areas such as: ● chemistry, biochemistry, physics of Mass Spec and separations and sample processing; ● embedded, desktop and mobile software engineering; ● machine learning, high-speed digital signal processing, multivariate statistical learning, algorithms and decision theory; ● user experience design and user interface design; ● mechanical engineering and industrial design; ● analog, digital and mixed signal electronics engineering; 23 Table of Contents ● ultra-efficient pumping and pneumatics engineering; and ● microfluidic design, and volume fabrication at the micro- and meso-scale.
In 2022, we strengthened our core microfluidic technology with the acquisition of Trace, which enables us to provide on-line aseptic sampling technology used in bioprocess monitoring and control. Aseptic sampling allows for highly precise, on-line monitoring without any loss of bioreactor volume.
In 2022, we strengthened our core microfluidic technology with the acquisition of Trace Analytics GmbH, which enables us to provide on-line aseptic sampling technology used in bioprocess monitoring and control. Aseptic sampling allows for highly precise, on-line monitoring without any loss of bioreactor volume.
We have an industry-leading software automation and machine learning team comprised of nine members, each with advanced scientific degrees, who have collective experience working on 30 commercial product launches and have won numerous research and innovation awards.
We have an industry-leading software automation and machine learning team comprised of eleven members, each with advanced scientific degrees, who have collective experience working on 30 commercial product launches and have won numerous research and innovation awards.
As of December 31, 2022, a substantial majority of our employees were located in the United States. None of our employees is represented by a labor union or is subject to a collective bargaining agreement. We consider our relationship with our employees to be good.
As of December 31, 2023, a substantial majority of our employees were located in the United States. None of our employees is represented by a labor union or is subject to a collective bargaining agreement. We consider our relationship with our employees to be good.
Consumables The MX908 incorporates a number of non-proprietary consumables that are commercial-off-the-shelf available and sourced from a number of reputable suppliers. Sampling swabs that are used for the analysis of liquid and solid materials in the MX908 are currently single-sourced from DSA Detection.
Consumables The MX908 incorporates a number of non-proprietary consumables that are commercial-off-the-shelf available and sourced from a number of reputable suppliers. Sampling swabs that are used for the analysis of liquid and solid materials in the MX908 are currently single-sourced.
In addition, we generally control access to our proprietary and confidential information through the use of internal and external controls. Our foundational technology in the area of miniature Mass Spec originated as an effort at Oak Ridge National Laboratories led by our Scientific Founder J. Michael Ramsey, now a Professor of Chemistry at the University of North Carolina.
In addition, we generally control access to our proprietary and confidential information through the use of internal and external controls. Our foundational technology in the area of miniature Mass Spec originated as an effort at Oak Ridge National Laboratories led by our Scientific Founder J. Michael Ramsey, Professor Emeritus of Chemistry at the University of North Carolina.
The TAM for our handhelds was estimated to be $1.3 billion in 2022 with expansion to over $3.9 billion with software application extensions for GxP cleaning validation, and other related quality control assays.
The TAM for our handhelds was estimated to be $1.3 billion in 2022 with expansion to over $3.9 billion with software application extensions for GxP cleaning validation, and other related quality control assays by 2027.
Our desktop devices supporting bioprocess development represented an estimated TAM of $0.8 billion in 2022 expanding significantly to approximately $15 billion with execution of our roadmap and the rapid growth of cell therapy.
Our desktop devices supporting bioprocess development represented an estimated TAM of $0.8 billion in 2022 expanding significantly to approximately $15 billion with execution of our roadmap and the rapid growth of cell therapy by 2027.
These aspects are important to our customers, who previously have had to choose between a slow and thorough analysis by Mass Spec in a laboratory or a point-of-need result that may have been more timely, but provided only a partial 13 Table of Contents measurement picture prone to false-positives.
These aspects are important to our customers, who previously have had to choose between a slow and thorough analysis by Mass Spec in a laboratory or a point-of-need result that may have been more timely, but provided only a partial measurement picture prone to false-positives.
Some potential customers conduct in-depth evaluations of the system, including running experiments at our Boston headquarters and comparing results from alternative systems and technologies. Service and Support We offer warranty and extended warranty service plans, as well as on-site training, in order to improve customer adoption of our products.
Some potential customers conduct in-depth evaluations of the system, including running experiments at our Boston headquarters and comparing results from alternative systems and technologies. 22 Table of Contents Service and Support We offer warranty and extended warranty service plans, as well as on-site training, in order to improve customer adoption of our products.
Our R&D and marketing teams also receive input from two Scientific Advisory Boards (SAB) implemented in 2021, one SAB board with deep expertise in bioprocess development, and cell and gene therapy processes and production, and the other SAB board made up of thought leaders in proteomics who will be invaluable to the continued advancement of our platform mass spec and microfluidic technology and its application to contemporary problems in proteomics-oriented life science research.
Our R&D and marketing teams also receive input from two Scientific Advisory Boards, each an SAB, one SAB with deep expertise in bioprocess development, and cell and gene therapy processes and production, and the other SAB board made up of thought leaders in proteomics who will be invaluable to the continued advancement of our platform mass spec and microfluidic technology and its application to contemporary problems in proteomics-oriented life science research.
We provide our products to customers pursuant to terms and conditions that impose restrictions on use and disclosure. We also seek to avoid disclosure of our intellectual property using contractual obligations, by requiring employees, consultants and contractors with access to our proprietary information to execute nondisclosure, non-competition and assignment of intellectual property agreements.
We provide our products to customers pursuant to terms and conditions that impose restrictions on use and disclosure. We also seek to avoid disclosure of our intellectual property using contractual obligations, by requiring employees, consultants and contractors with access to our proprietary information to execute nondisclosure, non-competition and 24 Table of Contents assignment of intellectual property agreements.
We are seeking to reimagine where Mass Spec technology can be used if it is sufficiently small in size, low in cost, and simple to operate. Our proprietary Mass Spec platform relies on extreme miniaturization of the core of Mass Spec -- the ion trap and its vacuum system.
We are reimagining where Mass Spec technology can be used if it is sufficiently small in size, low in cost, and simple to operate. Our proprietary Mass Spec platform relies on extreme miniaturization of the core of Mass Spec -- the ion trap and its vacuum system.
Enterprise customers range from large government organizations with full fielding potential of more than 1,000 handheld devices to leading biopharma companies with capacity for ten or more desktop devices per site. 7 Table of Contents ● Grow the installed base through expansion of commercial channels .
Enterprise customers range from large government organizations with full fielding potential of more than 1,000 handheld devices to leading biopharma companies with capacity for ten or more desktop devices per site. ● Grow the installed base through expansion of commercial channels .
When a civilian or military first responder, customs agent, or front-line worker is presented with residue on a package, a powder in the ER, pills at a border crossing, an apparent overdosing individual, or a mass casualty event, immediate actionable information is needed.
When a civilian or military first responder, customs agent, or front-line worker is presented with residue on a package, a powder in the emergency room, pills at a border crossing, an apparent overdosing individual, or a mass casualty event, immediate actionable information is needed.
We use our annual demand planning to assess initial device needs for each year, and we update and reassess those estimates as needed, including with respect to the levels of inventory that we believe will be required to support anticipated customer demand.
We use our annual demand planning to assess initial device needs for 21 Table of Contents each year, and we update and reassess those estimates as needed, including with respect to the levels of inventory that we believe will be required to support anticipated customer demand.
As a result, our financial statements and the reported results of operations contained therein may not be directly comparable to those of other public companies. We are also a “smaller reporting company,” as defined in Regulation S-K.
As a 27 Table of Contents result, our financial statements and the reported results of operations contained therein may not be directly comparable to those of other public companies. We are also a “smaller reporting company,” as defined in Regulation S-K.
Leveraging our Mass Spec platform, we have developed a portfolio of desktop and handheld devices that are reinventing the Mass Spec industry by accessing a variety of point-of-need market segments that were historically considered 6 Table of Contents impossible for conventional Mass Spec manufacturers.
Leveraging our Mass Spec platform, we have developed a portfolio of desktop and handheld devices that are reinventing the Mass Spec industry by accessing a variety of point-of-need market segments that were historically considered impossible for conventional Mass Spec manufacturers.
As a result of the Trace acquisition, we also have in-house manufacturing facilities in Braunschweig, Germany. Devices The MX908, Rebel and ZipChip Interface are manufactured, tested and shipped from our Boston facility. The Maven and related sampling devices are manufactured, tested and shipped from our Braunschweig facility.
As a result of the acquisition of Trace Analytics GmbH, we also have in-house manufacturing facilities in Braunschweig, Germany. Devices The MX908, Rebel, Maverick and ZipChip Interface are manufactured, tested and shipped from our Boston facility. The Maven and related sampling devices are manufactured, tested and shipped from our Braunschweig facility.
These customers have validated our platform through the collective purchase of more than 2,300 devices, with more than 9,000 users trained on our devices. As we continue to grow our installed base, we expect to increase our recurring revenue derived from the sale of consumables and support services. ● Talented team with significant domain expertise.
These customers have validated our platform through the collective purchase of more than 2,800 devices, with more than 14,000 users trained on our devices. As we continue to grow our installed base, we expect to increase our recurring revenue derived from the sale of consumables and support services. ● Talented team with significant domain expertise.
We anticipate growing our network of international distributors focused in regions with a concentrated and rapidly expanding life sciences presence, specifically, Europe, China, Japan, India, and South Korea. We look to have local application and support specialists and sales managers supporting our distribution partners. ● Deepen our footprint into the rapidly growing bioprocessing market.
We anticipate growing our network of international channel partners focused in regions with a concentrated and rapidly expanding life sciences presence, specifically, Europe, China, Japan, India, and South Korea. We look to have local application and support specialists and sales managers supporting our channel partners. ● Deepen our footprint in the bioprocessing market.
As our primary point of contact in the marketplace, our sales force focuses on delivering a consistent marketing message and high level of customer service, while also attempting to help us better understand the evolving market and customer needs. As of December 31, 2022, we had 79 people employed in sales, sales support and marketing.
As our primary point of contact in the marketplace, our sales force focuses on delivering a consistent marketing message and high level of customer service, while also attempting to help us better understand the evolving market and customer needs. As of December 31, 2023, we had 70 people employed in sales, sales support and marketing.
More than 8,000 operators, including in numerous domestic and foreign government agencies, have been trained to use the MX908.
More than 10,000 operators, including in numerous domestic and foreign government agencies, have been trained to use the MX908.
Not for use in diagnostic procedures.” Products that are intended for RUO and are properly labeled as RUO are exempt from compliance with the FDA’s requirements applicable to medical devices more generally, 29 Table of Contents including the requirements for clearance or approval and compliance with manufacturing requirements known as the Quality System Regulation.
Not for use in diagnostic procedures.” Products that are intended for RUO and are properly labeled as RUO are exempt from compliance with the FDA’s requirements applicable to medical devices more generally, including the requirements for clearance or approval and compliance with manufacturing requirements known as the Quality System Regulation.
These results are possible as our handheld and desktop devices are designed for extreme convenience and speed, requiring minimal training and maintenance. Our platform uses proprietary microscale Mass Spec and microfluidic technologies to prepare, separate, and characterize species at the molecular level, with integrated machine learning and analytics to automatically provide answers regarding identity, purity, and quantity.
These results are possible as our handheld and desktop devices are designed for extreme convenience and speed, requiring minimal training and maintenance. Our platform is centered around using proprietary microscale Mass Spec and microfluidic technologies to prepare, separate, and characterize species at the molecular level, with integrated machine learning and analytics to automatically provide answers regarding identity, purity, and quantity.
Users do not need to take a risk on a completely unknown technology. We bring laboratory-grade capability to handhelds and desktops. We have developed a proprietary Mass Spec platform and approach that allow us to move the capabilities of conventional Mass Spec beyond the central laboratory.
Mass Spec is already ubiquitous in the laboratory. Users do not need to take a risk on a completely unknown technology. We bring laboratory-grade capability to handhelds and desktops. We have developed a proprietary Mass Spec platform and approach that allow us to move the capabilities of conventional Mass Spec beyond the central laboratory.
Maven™ and Trace C2 The Maven, launched in January 2023, is our first on-line device for bioprocess monitoring and control. Connecting directly to a single bioreactor, Maven provides real-time continuous monitoring and control of glucose and lactate in cell culture and fermentation processes.
Maven and Trace C2 The Maven, launched in January 2023, to complement our Mass Spec technology, is our first on-line device for bioprocess monitoring and control. Connecting directly to a single bioreactor, Maven provides real-time continuous monitoring and control of glucose and lactate in cell culture and fermentation processes.
As we democratize the extraordinary power of Mass Spec, we believe our technology platform can expand in future opportunities far beyond the conventional central laboratory market for Mass Spec and associated front-end separations. We estimate our total addressable market, or TAM, for our devices was $5.7 billion in 2022 and is growing to an estimated $27 billion by 2027.
We believe our technology platform can expand in future opportunities far beyond the conventional central laboratory market for Mass Spec and associated front-end separations. We estimate our total addressable market, or TAM, for our devices was $5.7 billion in 2022 and is growing to an estimated $27 billion by 2027.
It is an agile, multi-purpose device utilized by a wide spectrum of user segments for a variety of forensic field applications such as chemical, explosive, priority drug and HazMat operations, detecting materials at the trace level. We have sold approximately 2,000 MX908s into every U.S. state, in over 45 countries and across five continents.
It is an agile, multi-purpose device utilized by a wide spectrum of user segments for a variety of forensic field applications such as chemical, explosive, priority drug and HazMat operations, detecting materials at the trace level. We have sold 2,422 MX908s into every U.S. state, in 56 countries and across five continents.
Using semiconductor microfabrication techniques, we design and produce components that are more than a thousand fold smaller in volume when compared with most laboratory Mass Spec instruments and costs only dollars to manufacture.
Using semiconductor microfabrication techniques, we design and produce components that are more than a thousand-fold smaller in volume when compared with most laboratory Mass Spec instruments and costs only 5 Table of Contents dollars to manufacture.
The core elements of our technology platform include: ● Our High-Pressure Mass Spec, or HPMS, approach enables Mass Spec at the point-of-need; ● microfluidics enable convenient sample preparations and fast separations; and ● analytics and machine learning technology provide actionable answers versus raw data.
The core elements of our technology platform include: ● Our High-Pressure Mass Spec, or HPMS, approach, which enables Mass Spec at the point-of-need; ● microfluidics enable convenient sample preparations, fast separations, and aseptic sampling; and ● analytics and machine learning technology, which provides actionable answers versus raw data.
Products such as ours that are marketed for RUO are not intended for use in a clinical investigation or for clinical diagnostic use outside an investigation and must be labeled “For Research Use Only.
Products such as ours that are marketed for RUO are not intended for use in a clinical investigation or for clinical diagnostic use outside an investigation and must be labeled “For 26 Table of Contents Research Use Only.
Our proprietary High-Pressure Mass Spec, or HPMS, technology enables us to produce significantly smaller, purpose-built Mass Spec devices that are much more ideal for use in point-of-need settings, in contrast to conventional mainframe Mass Spec solutions.
Our proprietary High-Pressure Mass Spec, or HPMS, technology enables us to produce significantly smaller, purpose-built Mass Spec devices that are better suited for use in point-of-need settings, in contrast to conventional mainframe Mass Spec solutions.
MX908 Settings/Configuration Laboratory Mass Spec Settings/Configuration ​ Machine learning/embedded analytics: The integrated analysis of our platform’s data is also critical to our customers’ success. Conventional platforms may give the user basic tools to view data, and some limited analysis functionality, but they fall far short of completing the analysis loop.
Machine learning/embedded analytics: The integrated analysis of our platform’s data is also critical to our customers’ success. Conventional platforms may give the user basic tools to view data, and some limited analysis functionality, but they fall far short of completing the analysis loop.
All these added capabilities are aimed to address gaps in responders’ workflows, increase engagement, and drive utilization. We are currently working to expand the MX908’s mission add-ons to support the detection of adulterated and counterfeit pharmaceuticals and have a roadmap of applications in quality control and quality assurance, including GxP cleaning validation.
All these added capabilities are aimed to address gaps in responders’ workflows, increase engagement, and drive utilization. 14 Table of Contents We have a roadmap to continue to expand the MX908’s mission add-ons to support the detection of adulterated and counterfeit pharmaceuticals and to develop applications in quality control and quality assurance, including GxP cleaning validation.
In North America, we use distribution partners to provide our products to end customers where a contract vehicle is required. Since the commercial launch of our first handheld, the installed base of our devices has grown to more than 2,300 devices across more than 45 countries.
In North America, we use channel partners to provide our products to end customers where a contract vehicle is required. Since the commercial launch of our first handheld, the installed base of our devices has grown to more than 2,800 devices across more than 56 countries.
We see additional future opportunity to address an estimated $3.6 billion in 2022 across the laboratory chromatography market space growing to more than $8.1 billion with further market growth and roadmap expansion into metabolomics and complex proteomics.
We see additional future opportunity to service an estimated TAM of $3.6 billion in 2022 across the laboratory chromatography market space growing to more than $8.1 billion with further market growth and roadmap expansion into metabolomics and complex proteomics by 2027.
In addition to providing real-time measurements, Maven comes with integrated PID and on/off controllers that enable out-of-the-box feeding automation. The Maven is GMP compliant, takes up a small footprint, and in keeping with our focus on simplicity, is easy to use.
In addition to providing real-time measurements, Maven comes with integrated proportional-integral-derivative, or PID, and on/off controllers that enable out-of-the-box feeding automation. The Maven is Good Manufacturing Practices, or GMP, compliant, takes up a small footprint, and in keeping with our focus on simplicity, is easy to use.
We see additional opportunity to address the estimated $3.6 billion in 2022 across the research chromatography market space growing to more than $8.1 billion with further market growth and roadmap expansion into complex metabolomics and proteomics.
We see additional opportunity to service the estimated TAM of $3.6 billion in 2022 across the research chromatography market space growing to more than $8.1 billion with further market growth and roadmap expansion into complex metabolomics and proteomics by 2027.
HPMS Approach Enables Mass Spec at the Point-of-Need A key component of our technology is our proprietary microscale ion trap, which we estimate is 1,000 times smaller than those in conventional laboratory Mass Spec instruments. These microfabricated traps are able to operate a million times closer to atmospheric pressures than conventional Mass Spec instruments.
A key component of our technology is our proprietary microscale ion trap, which we estimate is 1,000 times smaller than those in conventional laboratory Mass Spec instruments. These microfabricated traps are able to operate a million times closer to atmospheric pressures than conventional Mass Spec instruments.
As of December 31, 2022, our owned patent assets included approximately 19 U.S. patents, no pending U.S. patent applications, 41 foreign patents and five pending foreign patent applications in various foreign jurisdictions, including Australia, Austria, Canada, China, France, Germany, the European Union, Hong Kong, Israel, Japan, South Korea, Singapore, Switzerland and Taiwan.
As of December 31, 2023, our owned patent assets included approximately 19 U.S. patents, no pending U.S. patent applications, 45 foreign patents and four pending foreign patent applications in various foreign jurisdictions, including Australia, Austria, Canada, China, France, Germany, the European Union, or EU, Hong Kong, Israel, Japan, South Korea, Singapore, Switzerland and Taiwan.
We have over 550 customers, including all 20 of the top 20 pharmaceutical companies by revenue, academic and major government institutions, including the Department of Homeland Security, the U.S. Army and the U.S. Marine Corps and other international, federal and state agencies.
We have over 700 customers, including all 20 of the top 20 pharmaceutical companies by revenue, academic and major government institutions, including the Department of Homeland Security, the U.S. Army and the U.S. Air Force and other international, federal and state agencies.
Sales and Marketing We distribute our devices and consumables via direct field sales and support organizations located in North America and through a combination of our own sales force and more than 40 third party distributors in domestic and international markets which include Australia, Canada, China, Czech Republic, Germany, Japan, Singapore, Turkey, and the United Kingdom.
Sales and Marketing We distribute our devices and consumables via direct field sales and support organizations located in North America and through a combination of our own sales force and more than 42 third party channel partners in domestic and international markets which include Australia, Canada, China, Czech Republic, Germany, Japan, Saudi Arabia, Singapore, Turkey, and the United Kingdom, or UK.
Currently, customers of Rebel who are actively utilizing the device are consuming on average approximately half of a 200-sample kit per month. With continuous operation, the Rebel is capable of consuming approximately one 200-sample kit a day. We also offer an annual certification kit and service plan.
Currently, customers of Rebel who are actively utilizing the device are consuming on average approximately half of a 200-sample kit per month. With continuous operation, the Rebel is capable of consuming approximately one 200-sample kit a day. 17 Table of Contents We also offer an annual certification kit for the Rebel.
Customers are using Rebel in environments subject to U.S. Food and Drug Administration, or FDA, and other regulatory guidelines regarding biological and pharmaceutical product quality, or GxP environments, to evaluate fresh media for conformity to standards, track the extracellular environment and metabolic flux during growth cycles, monitor performance during stress experiments, and characterize spent media.
Food and Drug Administration, or FDA, and other regulatory guidelines regarding biological and pharmaceutical product quality, or GxP environments, to evaluate fresh media for conformity to standards, track the extracellular environment and metabolic flux during growth cycles, monitor performance during stress experiments, and characterize spent media.
Our Mass Spec devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, quality assurance/quality control, forensics and adjacent markets.
Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, pharma/biopharma, forensics and adjacent markets.
Our devices need to manage themselves autonomously for maximum value to the customer. They can manage themselves by adapting to environmental factors like elevation, humidity, temperature, and vibration, and by optimizing themselves for the analytical objectives of the user, such as looking for traces of potent drug substances or sniffing for airborne hazards.
They can manage themselves by adapting to environmental factors like elevation, humidity, temperature, and vibration, and by optimizing themselves for the analytical objectives of the user, such as looking for traces of potent drug substances or sniffing for airborne hazards.
Our ZipChip platform is compatible with market-leading conventional Mass Spec instruments found in laboratories worldwide. As an open-access discovery platform that can interface with more than 10,000 conventional Mass Spec instruments, ZipChip provides us the ability to leverage the growing list of newly established applications and publications from customers who have incorporated the device into their projects.
As an open-access discovery platform that can interface with more than 10,000 conventional Mass Spec instruments, ZipChip provides us the ability to leverage the growing list of newly established applications and publications from customers who have incorporated the device into their projects.
Our desktop devices supporting bioprocess development represented a total addressable market of $0.8 billion in 2022 expanding significantly to approximately $15 billion with execution of our roadmap and the rapid growth of cell therapy.
Our desktop devices supporting bioprocess development represented a TAM of $0.8 billion in 2022 expanding significantly to approximately $15 billion with execution of our roadmap and the rapid growth of cell therapy by 2027.
Since the launch of the Rebel in November 2019, we have sold 150 units and 49 of those units have been placed with the top-20 pharmaceutical companies by revenue and 23 organizations have purchased multiple units.
Since the launch of the Rebel in November 2019, we have sold 165 units and 52 of those units have been placed with the top-20 pharmaceutical companies by revenue and 25 organizations have purchased multiple units.
This ability to automatically control the system reduces or eliminates the user’s responsibility and opportunity for error in set up, optimization, and troubleshooting. Our 12 Table of Contents product’s “settings” screen shown below on the left looks very simple, but the embedded analytics and machine learning system controls and optimizes more than a hundred parameters continuously in real-time.
This ability to automatically control the system reduces or eliminates the user’s responsibility and opportunity for error in set up, optimization, and troubleshooting. Our product’s screen shown above right looks very simple, but the embedded analytics and machine learning system controls and optimizes more than a hundred parameters continuously in real-time.
We designed our first desktop device to accelerate development and enhance production by identifying and quantifying extracellular species critical to cell health and productivity. They sit alongside bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products.
Our desktop devices are designed to accelerate development and enhance production by identifying and quantifying extracellular species critical to cell health and productivity. They sit alongside or are directly connected to bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products.
Our ability to compete successfully will depend on a number of factors including our ability to: ● offer differentiated point-of-need Mass Spec devices; ● translate market requirements into an engineering roadmap of new software and hardware features to remain competitive; ● demonstrate the value of employing our products at the point-of-need through accelerated workflows; and ● provide pro-active support and service that delights our customers. 26 Table of Contents Intellectual Property Protection of our intellectual property is fundamental to the long-term success of our business.
Our ability to compete successfully will depend on a number of factors including our ability to: ● offer differentiated point-of-need Mass Spec devices; ● translate market requirements into an engineering roadmap of new software and hardware features to remain competitive; ● demonstrate the value of employing our products at the point-of-need through accelerated workflows; and ● provide pro-active support and service that delights our customers.
The team possesses deep expertise in Mass Spec, system design and engineering, usability and ergonomics, thermal and mechanical engineering, software development, artificial intelligence and optical spectroscopy, as well as microfluidics and separations science. We had 68 full-time employees dedicated to research and development as of December 31, 2022. Of these, approximately 40% have advanced degrees in science and engineering.
The team possesses deep expertise in Mass Spec, system design and engineering, usability and ergonomics, thermal and mechanical engineering, software development, artificial intelligence, and optical spectroscopy, as well as microfluidics and separations science. We had 71 full-time employees dedicated to research and development as of December 31, 2023.
As of December 31, 2022, we owned eight registered trademarks in the United States, nine registered foreign trademarks, and two U.S. pending trademark applications. Our registered trademarks and pending trademark applications include trademarks for 908 Devices, Rebel, MX908, ZipChip, MAVEN, and our logo.
As of December 31, 2023, we owned six registered trademarks in the United States, 17 registered foreign trademarks, three U.S. pending trademark applications, and two pending foreign trademark applications. Our registered trademarks and pending trademark applications include trademarks for 908 Devices, Rebel, MX908, ZipChip, Maven, Maverick, and our logo.
We believe there are numerous domestic and international contract manufacturers that could be qualified to produce the MX908, Rebel and/or ZipChip Interface when third party demand for our products outpace our current manufacturing capacity.
We believe there are numerous domestic and international contract manufacturers that could be qualified to produce the MX908, Rebel, Maverick and/or ZipChip Interface when third party demand for our products outpace our current manufacturing capacity. The autosampler subassembly of the Rebel and ZipChip are supplied by a single supplier.
We must determine whether ITAR or EAR governs each of our products, services, and technologies. We may assume the risk of making these determinations on our own, or we may decide to request formal governmental jurisdictional rulings.
We must determine whether ITAR or EAR governs each of our products, services, and technologies. We may assume the risk of making these determinations on our own, or we may decide to request formal governmental jurisdictional rulings. Prior to 2023, none of our products were subject to ITAR registration or other related requirements.
Component reagents and standards are widely available from multiple suppliers. Our microfluidic chips are produced and assembled in our Boston cleanroom facilities. The substrate is supplied by Micronit Microtechnologies B.V.
Component reagents and standards are widely available from multiple suppliers. Our microfluidic chips are produced and assembled in our Boston cleanroom facilities. The substrate is supplied by a single supplier.
Since the commercial launch of our first handheld, the installed base of our handheld and desktop devices has grown to more than 2,300 devices over 45 countries.
Since the commercial launch of our first handheld, the installed base of our handheld and desktop devices has grown to more than 2,800 devices in 56 countries.
We rely primarily on a combination of trade secret, patent, copyright and trademark laws, as well as contractual provisions with employees and third parties, to establish and protect our intellectual property rights.
We regard our products and the internally developed software embedded in our products as proprietary. We rely primarily on a combination of trade secret, patent, copyright and trademark laws, as well as contractual provisions with employees and third parties, to establish and protect our intellectual property rights.
There are thousands of variants of these highly potent opioids, and other emerging classes such as cathinones and cannabinoids that will further exacerbate the problem. ​ In addition to controlled substances, point-of-need Mass Spec instruments can address a wide variety of other use cases, including: ● first responders and local, state, and federal law enforcement; ● U.S. and international defense and homeland security; ● forensic laboratories’ case management and triage; ● package inspection for postal services, couriers, customs agencies, and corporate mail rooms; ● facility safety for hotels, local, state and federal government facilities, and private enterprises; and ● quality assurance and control.
In addition to controlled substances, point-of-need Mass Spec instruments can address a wide variety of other use cases, including: ● first responders and local, state, and federal law enforcement; ● U.S. and international defense and homeland security; ● forensic laboratories’ case management and triage; ● package inspection for postal services, couriers, customs agencies, and corporate mail rooms; ● facility safety for hotels, local, state and federal government facilities, and private enterprises; and ● quality assurance and control.
As of December 31, 2022, we had 68 full-time employees dedicated to research and development. Of these, approximately 40% have advanced degrees in engineering or the sciences. We have made substantial investments in product and technology development since our inception. Research and development expense totaled $17.5 million in the year ended December 31, 2022.
As of December 31, 2023, we had 71 full-time employees dedicated to research and development. Of these, approximately 40% have advanced degrees in engineering or the sciences. We have made substantial investments in product and technology development since our inception.
The TAM for our handhelds was estimated to be $1.3 billion in 2022 with expansion to over $3.9 billion with software application extensions for GxP cleaning validation, and other related quality control assays.
We estimate our TAM for our devices was $5.7 billion in 2022, and is growing to an estimated $27 billion by 2027. The TAM for our handhelds was estimated to be $1.3 billion in 2022 with expansion to over $3.9 billion with software application extensions for GxP cleaning validation, and other related quality control assays by 2027.
The markets for cellular-derived products include therapeutics, including cell therapy and personalized medicine, new and sustainable foods and beverages, and industrial materials. Many of these products, such as protein-based 16 Table of Contents therapeutics, can only be economically produced by cells in a bioreactor.
The markets for cellular-derived products include therapeutics, including cell therapy and personalized medicine, new and sustainable foods and beverages, and industrial materials. Many of these products, such as protein-based therapeutics, can only be economically produced by cells in a bioreactor. Making these products in an efficient and reproducible way remains a challenge to our customers in bioprocessing.
This validated technology provides cell-free and sterile bioreactor sampling with no volume or prep required. We expect this technology to serve as the interface for future on-line devices, those directly connected to a bioreactor. Lastly, it is imperative that a point-of-need solution is operable by the widest possible user base.
We expect this technology to serve as the interface for future on-line devices, those directly connected to a bioreactor. Lastly, it is imperative that a point-of-need solution is operable by the widest possible user base.
As runs are completed, users can access the report either as a PDF print out or a laboratory information system compatible file exported to the network. The Rebel software is compliant for operation in GxP environments.
As runs are completed, users can access the report either as a PDF print out or a laboratory information system compatible file exported to the network.
The certification kit is shipped to the customer, who loads the provided samples, and executes a certification protocol. The system is remotely qualified and certified based on the data acquired meeting factory specifications. Annual and extended warranty and service plans are available for the Rebel.
The certification kit is shipped to the customer, who loads the provided samples, and executes a certification protocol. The system is remotely qualified and certified based on the data acquired meeting factory specifications. Calibration kits are required for the Maverick.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere can be no certainty that such policies will continue, or that new or similar restrictions will not be imposed to address the continued spread of COVID-19 or any of its variants, or to address other outbreaks, epidemics, pandemics or public health crises, and the extent of the impact on our business and financial condition from measures to counteract the effects of a public health crisis, such as the COVID-19 pandemic, will depend on numerous evolving factors that we may not be able to accurately predict. 32 Table of Contents In particular, the COVID-19 pandemic, including resurgences and the emergence of new variants, and efforts to control its spread, has generally disrupted the operations of our customers and prospective customers, and may continue to disrupt their operations, including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets or other harm to their business and financial results.
Biggest changeFuture outbreaks of infectious disease, such as COVID 19, and any future variants or subvariants that may emerge, may disrupt operations of our customers and prospective customers including as a result of travel restrictions and/or business shutdowns, uncertainty in the financial markets or other harm to their business and financial results.
On August 3, 2022, we entered into a share purchase and transfer agreement and completed our acquisition of 100% of the registered share capital of TRACE Analytics GmbH, a German limited liability company located in Braunschweig, Germany (Trace), for total potential purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment plus (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace.
On August 3, 2022, we entered into a share purchase and transfer agreement and completed our acquisition of 100% of the registered share capital of Trace Analytics GmbH, a German limited liability company located in Braunschweig, Germany, for total potential purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment plus (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace Analytics GmbH.
The 2022 Revolver subjects us to various customary covenants, including requirements as to financial reporting and financial covenants (including a requirement that the amount of unrestricted and unencumbered cash minus advances under the 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn), and restrictions on our ability to change the principal nature of our business, dispose of our business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem our capital stock, engage in transactions with affiliates or otherwise encumber our intellectual property, in each case, subject to customary exceptions.
The Amended 2022 Revolver subjects us to various customary covenants, including requirements as to financial reporting and financial covenants (including a requirement that the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn), and restrictions on our ability to change the principal nature of our business, dispose of our business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem our capital stock, engage in transactions with affiliates or otherwise encumber our intellectual property, in each case, subject to customary exceptions.
An event of default will occur if, among other things, we fail to make required payments under the 2022 Revolver; we breach any of our covenants under the 2022 Revolver, subject to specified cure periods with respect to certain breaches; the Lender determines that a material adverse change (as defined in the 2022 Revolver) has occurred; we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings; we are unable to pay our debts as they become due; or we default on contracts with third parties which would permit the third party to accelerate the maturity of such indebtedness above certain thresholds or that could have a material adverse effect on our business or operations.
An event of default will occur if, among other things, we fail to make required payments under the Amended 2022 Revolver; we breach any of our covenants under the Amended 2022 Revolver, subject to specified cure periods with respect to certain breaches; the Lender determines that a material adverse change (as defined in the Amended 2022 Revolver) has occurred; we or our assets become subject to certain legal proceedings, such as bankruptcy proceedings; we are unable to pay our debts as they become due; or we default on contracts with third parties which would permit the third party to accelerate the maturity of such indebtedness above certain thresholds or that could have a material adverse effect on our business or operations.
The Trace acquisition, and any future acquisitions we make could subject us to a number of risks, including: • the purchase price we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in dilution to our existing stockholders; • we may find that the acquired company, assets or technology does not further improve our financial and strategic position as planned; • we may find that we overpaid for the company, asset or technology, or that the economic conditions underlying our acquisition have changed; • we may have difficulty integrating the operations and personnel of the acquired company; • we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired assets or technologies; • the acquisition may be viewed negatively by customers, financial markets, or investors; • we may have difficulty incorporating the acquired technologies or products with our existing products; • we may encounter difficulty entering and competing in new product or geographic markets; • we may encounter a competitive response, including price competition or intellectual property litigation; • we may have product liability, customer liability or intellectual property liability associated with the sale of the acquired company’s products; • we may be subject to litigation by terminated employees or third parties; • we may be subject to additional liabilities that are not possible to be known at the time of the acquisition; • we may incur debt and restructuring charges; • we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; • our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and • our due diligence process may fail to identify significant existing issues with the target company’s product quality, product architecture, financial disclosures, accounting practices, internal controls, legal contingencies, intellectual property and other matters.
Any prior acquisitions we have made or future acquisitions we make could subject us to a number of risks, including: • the purchase price we pay could significantly deplete our cash reserves, impair our future operating flexibility or result in dilution to our existing stockholders; • we may find that the acquired company, assets or technology does not further improve our financial and strategic position as planned; • we may find that we overpaid for the company, asset or technology, or that the economic conditions underlying our acquisition have changed; • we may have difficulty integrating the operations and personnel of the acquired company; • we may have difficulty retaining the employees with the technical skills needed to enhance and provide services with respect to the acquired assets or technologies; • the acquisition may be viewed negatively by customers, financial markets, or investors; • we may have difficulty incorporating the acquired technologies or products with our existing products; • we may encounter difficulty entering and competing in new product or geographic markets; • we may encounter a competitive response, including price competition or intellectual property litigation; • we may have product liability, customer liability or intellectual property liability associated with the sale of the acquired company’s products; • we may be subject to litigation by terminated employees or third parties; • we may be subject to additional liabilities that are not possible to be known at the time of the acquisition; • we may incur debt and restructuring charges; • we may acquire goodwill and other intangible assets that are subject to impairment tests, which could result in future impairment charges; • our ongoing business and management’s attention may be disrupted or diverted by transition or integration issues and the complexity of managing geographically or culturally diverse enterprises; and • our due diligence process may fail to identify significant existing issues with the target company’s product quality, product architecture, financial disclosures, accounting practices, internal controls, legal contingencies, intellectual property and other matters.
Our headquarters in Boston, Massachusetts contains nearly all of our corporate and administrative functions, the majority of our research, and all of our in-house manufacturing. A natural or other disaster, such as a fire or flood, could cause substantial delays in our operations, damage or destroy our manufacturing equipment or inventory, and cause us to incur additional expenses.
Our headquarters in Boston, Massachusetts contains nearly all of our corporate and administrative functions, the majority of our research, and substantially all of our in-house manufacturing. A natural or other disaster, such as a fire or flood, could cause substantial delays in our operations, damage or destroy our manufacturing equipment or inventory, and cause us to incur additional expenses.
These provisions: • establish a classified board of directors so that not all members of our board are elected at one time; • place limitations on the removal of directors; • eliminate the ability of our stockholders to call special meetings of stockholders; • prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting of stockholders; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and • enable our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.
These provisions: • establish a classified board of directors so that not all members of our board are elected at one time; • place limitations on the removal of directors; • eliminate the ability of our stockholders to call special meetings of stockholders; 54 Table of Contents • prohibit stockholder action by written consent, which has the effect of requiring all stockholder actions to be taken at a meeting of stockholders; • establish advance notice requirements for nominations for election to our board of directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and • enable our board of directors to designate the terms of and issue new series of preferred stock without stockholder approval, which could be used to institute a rights plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile acquirer, likely preventing acquisitions that have not been approved by our board of directors.
Pursuant to our fourth amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for state law claims for (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders; (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our sixth amended and restated certificate of incorporation or fourth amended and restated bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine, or the Delaware Forum Provision.
Pursuant to our fourth amended and restated bylaws, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for state law claims for (1) any derivative action or proceeding brought on our behalf; (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or other employees to us or our stockholders; (3) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our sixth amended and restated certificate 55 Table of Contents of incorporation or fourth amended and restated bylaws; (4) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws; or (5) any action asserting a claim governed by the internal affairs doctrine, or the Delaware Forum Provision.
Our information technology systems and infrastructure are potentially vulnerable to breakdown or damage or interruption or otherwise may sustain damage from malicious intrusion and computer viruses, data breaches, phishing attacks, cybercriminals, system 41 Table of Contents malfunction, natural disasters and catastrophes (including hurricanes and earthquakes), terrorism, war and telecommunication and electrical failures, or other disruptive events.
Our information technology systems and infrastructure are potentially vulnerable to breakdown or damage or interruption or otherwise may sustain damage from malicious intrusion and computer viruses, data breaches, phishing attacks, cybercriminals, system 37 Table of Contents malfunction, natural disasters and catastrophes (including hurricanes and earthquakes), terrorism, war and telecommunication and electrical failures, or other disruptive events.
We do not accept any responsibility for any projections or reports published by any such third parties. 55 Table of Contents Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results.
We do not accept any responsibility for any projections or reports published by any such third parties. 52 Table of Contents Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the guidance furnished by us will not materialize or will vary significantly from actual results.
If we fail to maintain significant market acceptance in existing markets or fail to successfully increase our penetration in new and expanding markets, we will not generate expected revenue and our prospects may be harmed. In 2022, a majority of our product and service revenue was derived from sales of our handheld products, mainly the MX908.
If we fail to maintain significant market acceptance in existing markets or fail to successfully increase our penetration in new and expanding markets, we will not generate expected revenue and our prospects may be harmed. In 2023, a majority of our product and service revenue was derived from sales of our handheld products, mainly the MX908.
In addition to an adverse impact on demand for our products, uncertainty about, or a decline in, global or regional economic conditions can have a significant impact on our suppliers, manufacturers, logistics providers, distributors, and other partners. Potential effects include financial instability; inability to obtain credit to finance operations; and insolvency.
In addition to an adverse impact on demand for our products, uncertainty about, or a decline in, global or regional economic conditions can have a significant impact on our suppliers, manufacturers, logistics providers, channel partners, and other partners. Potential effects include financial instability; inability to obtain credit to finance operations; and insolvency.
In addition, if any securities or industry analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price to decline. 54 Table of Contents The market price of our common stock has been volatile and could continue to be volatile.
In addition, if any securities or industry analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which could cause our stock price to decline. 51 Table of Contents The market price of our common stock has been volatile and could continue to be volatile.
For example, factors that may cause our operating results to fluctuate include: • our dependence on a limited number of large orders from U.S. government agencies for a substantial portion of our revenue in any quarterly period, whereby the loss of or delay in a customer order, or any delay in our fulfillment of deliverables under a customer order, could significantly reduce our revenue for that quarter; • market volatility or downturns caused by outbreaks, epidemics, pandemics, geopolitical tensions or conflicts, or other macroeconomic dynamics; • the addition of new customers or the loss of existing customers; • the rates at which customers purchase additional products or consumables from us; • our ability to enhance our products with new and better functionality that meets customer requirements; • the length and unpredictability of our product sales cycle; • the productivity and growth of our sales force and customer service team; • the effectiveness of our distributors in securing new orders and fulfilling existing orders; • service interruptions with any of our single source suppliers or subassembly manufacturers; • our ability to attain and maintain production volumes and quality levels for our products, and to accurately forecast customer demand for our products and consumables; • the timing of our product releases or upgrades or related announcements by us or our competitors; • the possibility of seasonality in demand for our products; • changes in pricing by us or our competitors; • the timing of investments in research and development related to new product releases or upgrades; • our ability to control costs, including operating expenses and the costs of the components used in our products; • future accounting pronouncements and changes in accounting policies; • costs related to the acquisition and integration of companies, assets, or technologies; and • general economic, political, or stock market conditions. ​ Our operating expenses are heavily based on our anticipated product revenue growth, especially as we continue to invest significant resources in building out our sales and marketing channels and the development of future products.
For example, factors that may cause our operating results to fluctuate include: • our dependence on a limited number of large orders from U.S. government agencies for a substantial portion of our revenue in any quarterly period, whereby the loss of or delay in a customer order, including as a result of delays in Federal budget approval, or any delay in our fulfillment of deliverables under a customer order, could significantly reduce our revenue for that quarter; • market volatility or downturns caused by outbreaks, epidemics, pandemics, geopolitical tensions or conflicts, or other macroeconomic dynamics; • the addition of new customers or the loss of existing customers; • the rates at which customers purchase additional products or consumables from us; • our ability to enhance our products with new and better functionality that meets customer requirements; • the length and unpredictability of our product sales cycle; • the productivity and growth of our sales force and customer service team; • the effectiveness of our channel partners in securing new orders and fulfilling existing orders; • service interruptions with any of our single source suppliers or subassembly manufacturers; • our ability to attain and maintain production volumes and quality levels for our products, and to accurately forecast customer demand for our products and consumables; • the timing of our product releases or upgrades or related announcements by us or our competitors; • the possibility of seasonality in demand for our products; • changes in pricing by us or our competitors; • the timing of investments in research and development related to new product releases or upgrades; • our ability to control costs, including operating expenses and the costs of the components used in our products; • future accounting pronouncements and changes in accounting policies; • costs related to the acquisition and integration of companies, assets, or technologies; and • general economic, political, or stock market conditions. ​ Our operating expenses are heavily based on our anticipated product revenue growth, especially as we continue to invest significant resources in building out our sales and marketing channels and the development of future products.
For example, we have historically derived, and expect to continue to derive, a significant portion of our revenue from sales to agencies of the U.S. federal government, either directly by us or through other distribution partners. Sales to such government agencies are subject to a number of challenges and risks.
For example, we have historically derived, and expect to continue to derive, a significant portion of our revenue from sales to agencies of the U.S. federal government, either directly by us or through other channel partners. Sales to such government agencies are subject to a number of challenges and risks.
We derive a significant portion of our revenue from contracts that we have, either directly or through distribution partners, with federal, state, local and foreign governments and government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts.
We derive a significant portion of our revenue from contracts that we have, either directly or through channel partners, with federal, state, local and foreign governments and government agencies, and we believe that the success and growth of our business will continue to depend on our successful procurement of government contracts.
We generally recognize revenue from our extended warranty and service plans ratably over the contract terms, which typically range from one additional year to four additional years and could in 65 Table of Contents some cases be subject to an early termination right.
We generally recognize revenue from our extended warranty and service plans ratably over the contract terms, which typically range from one additional year to four additional years and could in 61 Table of Contents some cases be subject to an early termination right.
Any such claims or litigation could: • be time-consuming and expensive to defend, whether meritorious or not; • require us to stop selling, incorporating or using our products that use the other party’s intellectual property; • divert the attention of our technical and managerial resources; • require us to enter into royalty or licensing agreements with third parties, which may not be available on terms that we deem acceptable, if at all; • prevent us from operating all or a portion of our business or force us to redesign our products, which could be difficult and expensive and may degrade performance of our products, or withdraw one or more of our products altogether; • subject us to significant liability for damages or result in significant settlement payments; • require us to indemnify our customers, distribution partners or suppliers; and • refund deposits and other amounts received for allegedly infringing technology or products.
Any such claims or litigation could: • be time-consuming and expensive to defend, whether meritorious or not; • require us to stop selling, incorporating or using our products that use the other party’s intellectual property; • divert the attention of our technical and managerial resources; • require us to enter into royalty or licensing agreements with third parties, which may not be available on terms that we deem acceptable, if at all; • prevent us from operating all or a portion of our business or force us to redesign our products, which could be difficult and expensive and may degrade performance of our products, or withdraw one or more of our products altogether; 49 Table of Contents • subject us to significant liability for damages or result in significant settlement payments; • require us to indemnify our customers, channel partners or suppliers; and • refund deposits and other amounts received for allegedly infringing technology or products.
We make our platform and devices, including our MX908, Rebel, and ZipChip Interface, available to customers as research-use-only, or RUO, products. Products that are labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or approval, manufacturing requirements, and others.
We make our platform and devices, including our Maven, Maverick, MX908, Rebel and ZipChip Interface, available to customers as research-use-only, or RUO, products. Products that are labeled as RUO are exempt from compliance with most FDA requirements, including premarket clearance or approval, manufacturing requirements, and others.
Although we believe our tax estimates are reasonable, if the United States 66 Table of Contents Internal Revenue Service or other taxing authority disagrees with the positions taken on our tax returns, we could have additional tax liability, including interest and penalties.
Although we believe our tax estimates are reasonable, if the United States 62 Table of Contents Internal Revenue Service or other taxing authority disagrees with the positions taken on our tax returns, we could have additional tax liability, including interest and penalties.
In addition, the time and cost of establishing a specialized sales, marketing and customer service force for a particular product or service may be difficult to justify in light of the revenue projected to be generated by such additional personnel and resources.
In addition, the time and cost of maintaining a specialized sales, marketing and customer service force for a particular product or service may be difficult to justify in light of the revenue projected to be generated by such additional personnel and resources.
Locating, qualifying and engaging additional distribution partners with local industry experience and knowledge will be necessary in at least the short to mid-term to effectively market and sell our platform in certain countries outside the United States.
Locating, qualifying and engaging additional channel partners with local industry experience and knowledge will be necessary in at least the short to mid-term to effectively market and sell our platform in certain countries outside the United States.
Third parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products or services, and could result in the award of substantial damages against us, including treble damages, attorneys’ fees, costs and expenses if we are found to have willfully infringed.
Third parties making claims against us may be able to obtain injunctive or other relief, which could block our ability to develop, commercialize and sell products or services, and could result in the 50 Table of Contents award of substantial damages against us, including treble damages, attorneys’ fees, costs and expenses if we are found to have willfully infringed.
Further, many of our current and potential competitors are substantially larger than we are and have the ability to dedicate substantially greater resources to defending any claims by us that they have breached our intellectual property rights. 50 Table of Contents Failure to protect our intellectual property could affect our ability to secure additional contracts or preserve market advantages when we commercialize our products.
Further, many of our current and potential competitors are substantially larger than we are and have the ability to dedicate substantially greater resources to defending any claims by us that they have breached our intellectual property rights. Failure to protect our intellectual property could affect our ability to secure additional contracts or preserve market advantages when we commercialize our products.
Absent license authorization from the appropriate agency, some technical information related to our products and technologies cannot be discussed with or otherwise disclosed to our foreign national employees, or with our foreign distributors. Export licensing requirements may delay product development and other engineering activities. Violations of export control requirements are subject to criminal, civil and administrative penalties.
Absent license authorization from the appropriate agency, some technical information related to our products and technologies cannot be discussed with or otherwise disclosed to our foreign national employees, or with our foreign channel partners. Export licensing requirements may delay product development and other engineering activities. Violations of export control requirements are subject to criminal, civil and administrative penalties.
If we do not diversify our sales channels and effectively utilize our direct sales force, we will continue to be susceptible to risks associated with having a large percentage of revenue concentrated with a limited number of distributors. Competition for employees capable of selling expensive instruments within the pharmaceutical and biotechnology industries is intense.
If we do not diversify our sales channels and effectively utilize our direct sales force, we will continue to be susceptible to risks associated with having a large percentage of revenue concentrated with a limited number of channel partners. Competition for employees capable of selling expensive instruments within the pharmaceutical and biotechnology industries is intense.
If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended 58 Table of Contents and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.
If a court were to find these types of provisions to be inapplicable or unenforceable, and if a court were to find the exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could materially adversely affect our business.
As a result, the market price of our common stock could be materially adversely affected. We may need additional capital in the future, which may not be available to us, and if it is available, may dilute your ownership of our common stock and have a material adverse effect on our business, operating results and financial condition.
As a result, the market price of our common stock could be materially adversely affected. 59 Table of Contents We may need additional capital in the future, which may not be available to us, and if it is available, may dilute your ownership of our common stock and have a material adverse effect on our business, operating results and financial condition.
If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also 63 Table of Contents require us to fund additional interest expense, which could harm our profitability.
If we raise additional funds by obtaining loans from third parties, the terms of those financing arrangements may include negative covenants or other restrictions on our business that could impair our operational flexibility and would also require us to fund additional interest expense, which could harm our profitability.
We have experienced a period of significant growth in recent years, and our inability to manage this growth could have a material adverse effect on our business, the quality of our products and services and our ability to retain key personnel. We have experienced a period of significant growth in recent years.
We have experienced growth of our business in recent years, and our inability to manage this growth could have a material adverse effect on our business, the quality of our products and services and our ability to retain key personnel. We have experienced growth of our business in recent years.
Our international operations are subject to a variety of risks that we do not face in the United States, including: • adverse or uncertain macroeconomic conditions, including a global economic downturn or recession; • global impacts of inflation and actions taken by central banks to counter inflation; • the rising cost of labor in the foreign countries in which we and our suppliers operate, resulting in increases in our costs of doing business internationally; 42 Table of Contents • geopolitical conditions, including changes in a specific country's or region's political or economic conditions, including the ongoing military conflict between Russia and Ukraine and the threat that such conflict could spread to other parts of Europe; • the difficulty of increased travel, infrastructure and legal compliance costs associated with developing international revenue; • difficulties in enforcing contracts, collecting accounts receivable and longer payment cycles, especially in emerging markets; • many, if not most, foreign governments are investing less in safety and security and in technology to detect dangerous chemicals than the U.S. government; • additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment; • compliance with privacy and data security requirements in foreign jurisdictions in which we operate; • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those in the United States; • costs and delays associated with developing products or technology in multiple languages, such as the software embedded in our products and the products’ built-in library of chemical substances; • compliance with foreign technical standards; • increased length of time for shipping and acceptance of our products; • increased exposure to foreign currency exchange rate risk; • reduced protection for intellectual property rights in some countries; and • political unrest, war, incidents of terrorism , natural disasters, and public health concerns or epidemics, such as the COVID-19 pandemic , or responses to such events.
Our international operations are subject to a variety of risks that we do not face in the United States, including: • adverse or uncertain macroeconomic conditions, including a global economic downturn or recession; • global impacts of inflation and actions taken by central banks to counter inflation; • the rising cost of labor in the foreign countries in which we and our suppliers operate, resulting in increases in our costs of doing business internationally; • geopolitical conditions, including changes in a specific country's or region's political or economic conditions, including the ongoing military conflict between Russia and Ukraine, and the ongoing hostilities in Israel and the Gaza Strip, and the threat that such conflicts could spread to other parts of Europe and the Middle East; • the difficulty of increased travel, infrastructure and legal compliance costs associated with developing international revenue; • difficulties in enforcing contracts, collecting accounts receivable and longer payment cycles, especially in emerging markets; • many, if not most, foreign governments are investing less in safety and security and in technology to detect dangerous chemicals than the U.S. government; • additional withholding taxes or other taxes on our foreign income, and tariffs or other restrictions on foreign trade or investment; • compliance with privacy and data security requirements in foreign jurisdictions in which we operate; • imposition of, or unexpected adverse changes in, foreign laws or regulatory requirements, many of which differ from those in the United States; • costs and delays associated with developing products or technology in multiple languages, such as the software embedded in our products and the products’ built-in library of chemical substances; 40 Table of Contents • compliance with foreign technical standards; • increased length of time for shipping and acceptance of our products; • increased exposure to foreign currency exchange rate risk; • reduced protection for intellectual property rights in some countries; and • political unrest, war, incidents of terrorism , natural disasters, and public health concerns or epidemics, or responses to such events.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid, even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.
Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in United States federal courts necessary to 46 Table of Contents invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid, even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action.
Under these escrow agreements, the know-how and source code to the applicable product may be released to the customer, typically for its use to further develop, maintain, modify and enhance the product, upon the occurrence of specified events, such as our filing for bankruptcy and breaching our representations, warranties or covenants of our agreements with our customers.
Under these escrow agreements, the know-how and source code to the applicable product may be released to the customer, typically for its use to further develop, maintain, modify and enhance the product, upon the occurrence of specified events, such as our filing for bankruptcy and breaching our representations, warranties or 48 Table of Contents covenants of our agreements with our customers.
We are permitted to make interest-only payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness shall be immediately due and payable. However, we may be required to repay the outstanding indebtedness under the revolving line of credit if an event of default occurs under the 2022 Revolver.
We are permitted to make interest-only payments on the revolving line of credit through November 3, 2025, at which time all outstanding indebtedness shall be immediately due and payable. However, we may be required to repay the outstanding indebtedness under the revolving line of credit if an event of default occurs under the Amended 2022 Revolver.
Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from 52 Table of Contents the initiation and continuation of any litigation could significantly limit our ability to continue our operations.
Some of our competitors may be able to sustain the costs of complex intellectual property litigation more effectively than we can because they have substantially greater resources. In addition, any uncertainties resulting from the initiation and continuation of any litigation could significantly limit our ability to continue our operations.
If current or future distributors do not perform adequately or we are unable to enter into effective arrangements with distributors in particular geographic areas, we may not realize long-term international revenue growth. We face intense and growing competition from leading technology companies as well as from emerging companies.
If current or future channel partners do not perform adequately or we are unable to enter into effective arrangements with channel partners in particular geographic areas, we may not realize long-term international revenue growth. We face intense and growing competition from leading technology companies as well as from emerging companies.
In addition, the continued development of 39 Table of Contents complementary software tools, such as our analysis tools and visualization software, requires us to compete for highly trained software engineers in the Boston area and for highly trained customer service personnel globally. We do not have fixed term employment contracts with any of our employees.
In addition, the continued development of complementary software tools, such as our analysis tools and visualization software, requires us to compete for highly trained software engineers in the Boston area and for highly trained customer service personnel globally. We do not have fixed term employment contracts with any of our employees.
Any of the current plans we have for future developments or enhancements are strategic in nature and not commitments to develop such capabilities for our customers. If we fail to develop products that satisfy customer requirements, our ability to create or increase demand for our products will be harmed.
Any of the current plans we have for future developments or enhancements are strategic in nature and not commitments to 31 Table of Contents develop such capabilities for our customers. If we fail to develop products that satisfy customer requirements, our ability to create or increase demand for our products will be harmed.
While we believe our assumptions and the data underlying our estimates of the total annual addressable market for our solutions are reasonable, these assumptions and 37 Table of Contents estimates may not be correct and the conditions supporting our assumptions or estimates, or those underlying the third party data we have used, may change at any time, thereby reducing the accuracy of our estimates.
While we believe our assumptions and the data underlying our estimates of the total annual addressable market for our solutions are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates, or those underlying the third party data we have used, may change at any time, thereby reducing the accuracy of our estimates.
These rights and remedies have the potential to limit our sales to, and increase our costs of, doing business with both government and commercial customers, which could materially adversely affect our growth prospects and operating results. We are subject to audits by the U.S. government which could adversely affect our business.
These rights and remedies have the potential to limit our sales to, and increase our costs of, doing business with both government and commercial customers, which could materially adversely affect our growth prospects and operating results. 43 Table of Contents We are subject to audits by the U.S. government which could adversely affect our business.
Any successful third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such 51 Table of Contents patents, which may lead to increased competition to our business, which could harm our business. In addition, in patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
Any successful third party challenge to our patents in this or any other proceeding could result in the unenforceability or invalidity of such patents, which may lead to increased competition to our business, which could harm our business. In addition, in patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace.
The markets for our products are rapidly evolving, making it difficult to predict with any accuracy the sizes of the markets for our current and future solutions. Our estimates of the annual total addressable market for our current and future solutions are based on a number of internal and third party estimates and assumptions.
The markets for our innovative new class of products are rapidly evolving, making it difficult to predict with any accuracy the sizes of the markets for our current and future solutions. Our estimates of the annual total addressable market for our current and future solutions are based on a number of internal and third party estimates and assumptions.
In addition, as we continue to grow our operations and reach a global customer base, we need to be able to provide efficient customer service that meets our customers’ needs globally at scale. In geographies where we sell through distributors, we rely on those distributors to provide customer service.
In addition, as we continue to grow our operations and reach a global customer base, we need to be able to provide efficient customer service that meets our customers’ needs globally at scale. In geographies where we sell through channel partners, we rely on those channel partners to provide customer service.
Any change in export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations or change in the countries, persons or technologies targeted by these regulations could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.
Any change in export regulations or related legislation, shift in approach to the enforcement or scope of existing regulations or change in the countries, persons or technologies targeted by these regulations could result in 57 Table of Contents decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations.
These disruptions have caused reduced capital spend by our existing customers and potential new customers, and could result in further reductions to capital expenditure budgets, delayed purchasing decisions, longer sales cycles, extended payment terms or missed payments, and postponed or canceled projects, any of which would negatively impact our business and operating results, including sales and cash flows.
These disruptions could reduce capital spend by our existing customers and potential new customers, and could result in further reductions to capital expenditure budgets, delayed purchasing decisions, longer sales cycles, extended payment terms or missed payments, and postponed or canceled projects, any of which would negatively impact our business and operating results, including sales and cash flows.
If our customers experienced a shortage or delay in consumables, such as swab samplers, microfluidic chips, or assay kits, or if these 40 Table of Contents consumables do not perform at the levels our customers expect, our business could be materially and adversely impacted. In addition, we maintain relatively low inventory and acquire components based upon anticipated annual demand.
If our customers experienced a shortage or delay in consumables, such as swab samplers, microfluidic chips, or assay kits, or if these consumables do not perform at the levels our customers expect, our business could be materially and adversely impacted. In addition, we maintain relatively low inventory and acquire components based upon anticipated annual demand.
We may not be able to find additional suitable acquisition candidates and we may not be able to complete 64 Table of Contents additional acquisitions on favorable terms, if at all.
We may not be able to find additional suitable acquisition candidates and we may not be able to complete 60 Table of Contents additional acquisitions on favorable terms, if at all.
Our business, financial condition, results of operations, and prospects could be materially adversely affected as a result of any of these events. The majority of our operations are currently conducted at a single location and any disruption at our facility could negatively impact our operations and increase our expenses.
Our business, financial condition, results of operations, and prospects could be materially adversely affected as a result of any of these events. 41 Table of Contents The majority of our operations are currently conducted at a single location and any disruption at our facility could negatively impact our operations and increase our expenses.
Customers utilize our service teams and online content for help with a variety of topics, including how to use our products efficiently, how to integrate our products into existing workflows, and how to resolve technical, analysis, and 59 Table of Contents operational issues if and when they arise.
Customers utilize our service teams and online content for help with a variety of topics, including how to use our products efficiently, how to integrate our products into existing workflows, and how to resolve technical, analysis, and operational issues if and when they arise.
Our products are or may be subject to U.S. export controls, including the International Traffic in Arms Regulations, or ITAR, the Export Administration Regulations, or EAR, the Office of Foreign Assets Control, or OFAC, and other 60 Table of Contents similar laws and regulations of our products and associated technology.
Our products are or may be subject to U.S. export controls, including the International Traffic in Arms Regulations, or ITAR, the Export Administration Regulations, or EAR, the Office of Foreign Assets Control, or OFAC, and other similar laws and regulations of our products and associated technology.
Our reliance on independent distributors to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these distributors could be deemed to be our agents and we could be held responsible for their actions.
Our reliance on independent channel partners to sell our products internationally demands a high degree of vigilance in maintaining our policy against participation in corrupt activity, because these channel partners could be deemed to be our agents and we could be held responsible for their actions.
Generally accepted accounting principles in the United States, or GAAP, are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, or AICPA, the SEC and various other bodies formed to promulgate and interpret appropriate accounting principles.
Generally accepted accounting principles in the United States of America (“GAAP”), are subject to interpretation by the Financial Accounting Standards Board, or FASB, the American Institute of Certified Public Accountants, or AICPA, the SEC and various other bodies formed to promulgate and interpret appropriate accounting principles.
In particular, Dr. Knopp, our Chief Executive Officer and one of our co-founders, and Dr. Brown, our Chief Technology Officer and one of our co-founders, are critical to our vision, strategic direction, culture and products.
In particular, Dr. Knopp, our Chief Executive Officer and one of our co-founders, and Dr. Brown, our Chief Product Officer and one of our co-founders, are critical to our vision, strategic direction, culture and products.
In addition, the patent position of companies in the biotechnology field is particularly uncertain. Various courts, including the United States Supreme Court have rendered decisions that affect the scope of patentability of certain 49 Table of Contents inventions or discoveries relating to biotechnology.
In addition, the patent position of companies in the biotechnology field is particularly uncertain. Various courts, including the United States Supreme Court have rendered decisions that affect the scope of patentability of certain inventions or discoveries relating to biotechnology.
Our continued growth will depend, in part, on attracting, retaining and motivating highly-trained sales personnel with the necessary scientific background and technical ability to understand our systems and effectively identify and sell to potential new customers. Identifying, recruiting and training additional qualified personnel will require significant time, expense and attention.
Our continued growth will depend, in part, on attracting, retaining and motivating highly-trained sales personnel with the necessary scientific background and technical ability to understand 35 Table of Contents our systems and effectively identify and sell to potential new customers. Identifying, recruiting and training additional qualified personnel will require significant time, expense and attention.
The government may also change its procurement practices or adopt new contracting rules and regulations that could be costly to satisfy or that could impair our ability to obtain new contracts. Risks related to litigation and our intellectual property We rely on in-bound licenses granted to us from third parties.
The government may also change its procurement practices or adopt new contracting rules and regulations that could be costly to satisfy or that could impair our ability to obtain new contracts. 44 Table of Contents Risks related to litigation and our intellectual property We rely on in-bound licenses granted to us from third parties.
As a result, any shortfall in product revenue in relation to our expectations could cause significant changes in our operating results from period-to-period and could result in negative cash flow from operations and a decrease in the price of our common stock.
As a result, any shortfall in product revenue in relation to our expectations could cause significant changes in our operating 30 Table of Contents results from period-to-period and could result in negative cash flow from operations and a decrease in the price of our common stock.
We exert limited control over existing distributors under our agreements with them, and if their sales and marketing efforts for our products in their particular region are not successful, our business would be materially and adversely affected.
We exert limited control over existing channel partners under our agreements with them, and if their sales and marketing efforts for our products in their particular region are not successful, our business would be materially and adversely affected.
The ultimate determination by the USPTO or by a court or other trier of fact in the U.S., or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be assured.
The ultimate determination 47 Table of Contents by the USPTO or by a court or other trier of fact in the U.S., or corresponding foreign national patent offices or courts, on whether a claim meets all requirements of patentability cannot be assured.
For example, Federal customers may divert funds to address their own supply chain or other challenges, which could delay the progression of customer trials and pilots of our products into larger enterprise-wide justification, purchase and deployment of both of our devices and consumables .
Federal customers may divert funds to address their own supply chain or other challenges, which could delay the progression of customer trials and pilots of our products into larger enterprise-wide adoption, and could delay the purchase and deployment of both of our devices and consumables.
The U.S. government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, 46 Table of Contents estimating, compensation and management information systems.
The U.S. government also may review the adequacy of, and a contractor’s compliance with, its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems.
We may not be successful in finding, attracting and retaining distribution partners, or we may not be able to enter into such arrangements on favorable terms. Most of our distribution relationships are non-exclusive and permit such distributors to distribute competing products.
We may not be successful in finding, attracting and retaining channel partners, or we may not be able to enter into such arrangements on favorable terms. Most of our channel partner relationships are non-exclusive and permit such channel partners to distribute competing products.
We face substantial competition from very large and experienced enterprises, both public and privately held, including Agilent Technologies, Bruker Corporation, Danaher Corporation, Inficon, Flir Systems, PerkinElmer, Shimadzu Corporation, Thermo Fisher Scientific, and Waters Corp. Our competitors also include many smaller companies, including companies established to pursue new and emerging technologies.
We face substantial competition from very large and experienced enterprises, both public and privately held, including Agilent Technologies, Bruker Corporation, Danaher Corporation, Inficon, Teledyne, Endress & Hauser, PerkinElmer, Shimadzu Corporation, Thermo Fisher Scientific, and Waters Corp. Our competitors also include many smaller companies, including companies established to pursue new and emerging technologies.
At such time, our independent registered public 62 Table of Contents accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.
We intend to continue to grow our business internationally and to do so we must attract additional distributors and retain existing distributors to maximize the commercial opportunity for our products.
We intend to continue to grow our business internationally and to do so we must attract additional channel partners and retain existing channel partners to maximize the commercial opportunity for our products.
Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts, including hiring additional accounting and financial staff with appropriate public company experience and technical accounting knowledge.
Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts, including hiring additional accounting and financial staff with appropriate public company experience and technical accounting 53 Table of Contents knowledge.
We also derive a significant and growing portion of our revenue from our desktop devices, primarily in the life science market, specifically the antibody therapeutics, cell and gene therapy and synthetic biology markets, including sales to biopharmaceutical companies and research institutions.
We also are seeking to grow and derive a significant portion of our revenue from our desktop devices in the life science market, specifically the antibody therapeutics, cell and gene therapy and synthetic biology markets, including sales to biopharmaceutical companies and research institutions.
If, for any reason, our access to these swab samplers is limited or delayed, we would need to quickly identify and qualify an alternate source of swab samplers. Identifying and qualifying an alternate source may take time and involve additional expense, and there is no guarantee that the alternate source will perform as expected.
If, for any reason, our access to these products is limited or delayed, we would need to quickly identify and qualify an alternate source of products. Identifying and qualifying an alternate source may take time and involve 36 Table of Contents additional expense, and there is no guarantee that the alternate source will perform as expected.
For example, we have entered into agreements regarding a specific government program opportunity to develop an aerosol vapor detector, and more recently we entered into several engagements related to the evaluation of our products within the cell therapy and gene therapy markets.
For example, we have entered into agreements regarding a specific government program opportunity to develop an aerosol vapor detector, and several engagements 34 Table of Contents related to the evaluation of our products within the cell therapy and gene therapy markets.
We seek to continue to prioritize opportunities and allocate our resources among our programs to maintain a 38 Table of Contents balance between advancing near-term opportunities and exploring additional markets for our technology.
We seek to continue to prioritize opportunities and allocate our resources among our programs to maintain a balance between advancing near-term opportunities and exploring additional markets for our technology.
We have engaged independent distributors in the past and currently use independent distributors to sell our products outside of the United States.
We have engaged independent channel partners in the past and currently use independent channel partners to sell our products outside of the United States.
The insurance we maintain against fires, floods and other natural disasters may not be 44 Table of Contents adequate to cover our losses in any particular case.
The insurance we maintain against fires, floods and other natural disasters may not be adequate to cover our losses in any particular case.
We may be an “emerging growth company” until December 31, 2025, though we may cease to be an “emerging growth company” earlier under certain circumstances, including if (i) we have more than $1.07 billion in annual revenue in any fiscal year, (ii) the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30, or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.
We may be an “emerging growth company” until December 31, 2025, though we may cease to be an “emerging growth company” earlier under certain circumstances, including if (i) we have more than $1.235 billion in annual revenue in any fiscal year, (ii) we become a “large accelerated filer” as a result of the market value of our common stock that is held by non-affiliates being greater than or equal to $700 million as of any June 30, or (iii) we issue more than $1.0 billion of non-convertible debt over a three-year period.
Managing our growth effectively will involve, among other things: • continuing to retain, motivate, and manage our existing employees and attract and integrate new employees, particularly qualified sales personnel; • continuing to provide a high level of service to an increasing number of customers; 34 Table of Contents • maintaining the quality of product and services offerings while controlling our expenses; • growing our direct sales force and channel partners; and • developing, implementing, and improving our operational, financial, accounting, and other internal systems and controls on a timely basis.
Managing our growth effectively will involve, among other things: • continuing to retain, motivate, and manage our existing employees and attract and integrate new employees, particularly qualified sales personnel; • continuing to provide a high level of service to an increasing number of customers; • maintaining the quality of product and services offerings while controlling our expenses; • meeting end-user requirements for functional performance and product robustness; • growing our direct sales force and channel partners; and • developing, implementing, and improving our operational, financial, accounting, and other internal systems and controls on a timely basis.
We also expect additional 36 Table of Contents competition in the future from new and existing companies with whom we do not currently compete directly.
We also expect additional competition in the future from new and existing companies with whom we do not currently compete directly.
If these third party distributors do not provide a high quality customer experience, our business operations and reputation may suffer. If we were to be sued for product liability, we could face substantial liabilities that exceed our resources.
If these third party channel partners do not provide a high quality customer experience, our business operations and reputation may suffer. 56 Table of Contents If we were to be sued for product liability, we could face substantial liabilities that exceed our resources.
U.S. government agency and department purchases are often strategic in nature and large in size. Therefore, reductions in federal funding levels that impact our customers could negatively affect the size of our customers’ orders or lead to cancellation of orders. Government contracts are often subject to more extensive scrutiny and publicity than commercial contracts.
Therefore, reductions in federal funding levels that impact our customers could negatively affect the size of our customers’ orders or lead to cancellation of orders. Government contracts are often subject to more extensive scrutiny and publicity than commercial contracts.
Accordingly, our business, financial condition, results of operations, and prospects may be adversely affected by certain events or activities, including, but not limited to: • changes in fiscal or contracting policies or decrease in available government funding; • changes in government programs or applicable requirements; • changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding; • appeals, disputes or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government; • the adoption of new laws or regulations or changes to existing laws or regulations; • budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by lapses in appropriations for the federal government or certain of its departments and agencies; • influence by, or competition from, third parties with respect to pending, new or existing contracts with government customers; • potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics, such as the COVID-19 pandemic; and • increased or unexpected costs or unanticipated delays caused by other factors outside of our control, such as performance failures of our partners and subcontractors.
Accordingly, our business, financial condition, results of operations, and prospects may be adversely affected by certain events or activities, including, but not limited to: • changes in fiscal or contracting policies or decrease in available government funding; • changes in government programs or applicable requirements; • changes in the political environment, including before or after a change to the leadership within the government administration, and any resulting uncertainty or changes in policy or priorities and resultant funding; • appeals, disputes or litigation relating to government procurement, including but not limited to bid protests by unsuccessful bidders on potential or actual awards of contracts to us or our partners by the government; • the adoption of new laws or regulations or changes to existing laws or regulations; • budgetary constraints, including automatic reductions as a result of “sequestration” or similar measures and constraints imposed by lapses in appropriations for the federal government or certain of its departments and agencies; • influence by, or competition from, third parties with respect to pending, new or existing contracts with government customers; • potential delays or changes in the government appropriations or procurement processes, including as a result of events such as war, incidents of terrorism, natural disasters, and public health concerns or epidemics; and • increased or unexpected costs or unanticipated delays caused by other factors outside of our control, such as performance failures of our partners and subcontractors. 42 Table of Contents Any such event or activity, among others, could cause governments and governmental agencies to delay or refrain from purchasing our products and services in the future, reduce the size or payment amounts of purchases from existing or new government customers, or otherwise have an adverse effect on our business, results of operations, financial condition and prospects.
We recently introduced our Rebel product line and our future success will partially depend on our ability to successfully commercialize this product line. The life sciences scientific community is comprised of a small number of early adopters and key opinion leaders who significantly influence the rest of the community.
We recently introduced our Maverick and Maven 33 Table of Contents product lines and our future success will partially depend on our ability to successfully commercialize these product lines. The life sciences scientific community is comprised of a small number of early adopters and key opinion leaders who significantly influence the rest of the community.
As such, our distributors may not commit the necessary resources to market our products to the level of our expectations or may choose to favor marketing the products of our competitors.
As such, our channel partners may not commit the necessary resources to market our products to 32 Table of Contents the level of our expectations or may choose to favor marketing the products of our competitors.

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Item 2. Properties

Properties — owned and leased real estate

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We have an office located in Chapel Hill, North Carolina that is approximately 2,000 square feet and supports assay development for Rebel and ZipChip. The lease for this facility expires on June 30, 2023.
Added
We have an approximately 13,300 square foot facility in Morrisville, North Carolina to expand the Company’s research and development activities focused on its desktop offerings, and to serve as an additional manufacturing site for the Company as needed. The lease for this facility expires in July 2030.
Removed
We have signed a seven-year lease for an approximately 13,300 square foot facility in Morrisville, North Carolina, and we expect to begin occupying that space in the first half of 2023. We believe that our current and expected facilities meet our current and future anticipated needs for the foreseeable future. ​ ​
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We believe that our current facilities meet our anticipated needs for the foreseeable future. ​ ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeNot applicable. ​ 67 Table of Contents PART II
Biggest changeNot applicable. ​ 64 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePrior to that time, there was no established public market for our common stock. Holders of Our Common Stock As of March 13, 2023, there were approximately 24 holders of record of our common stock.
Biggest changePrior to that time, there was no established public market for our common stock. Holders of Our Common Stock As of March 5, 2024, there were approximately 22 holders of record of our common stock.
Our ability to pay cash dividends is currently restricted by the terms of our 2022 Revolver with Silicon Valley Bank. In addition, the terms of any future debt instruments may also materially restrict our ability to pay dividends on our common stock.
Our ability to pay cash dividends is currently restricted by the terms of our Amended 2022 Revolver with Silicon Valley Bank. In addition, the terms of any future debt instruments may also materially restrict our ability to pay dividends on our common stock.
Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2023 Annual Meeting of Stockholders and is incorporated herein by reference.
Securities Authorized for Issuance Under Equity Compensation Plans Information about our equity compensation plans will be included in our definitive proxy statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders and is incorporated herein by reference.
The actual number of holders of our common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in “street name” by brokers or held by other “nominees”. The number of holders of record also does not include stockholders whose shares may be held in trust by other entities.
The actual number of holders of our common stock is greater than this number of record holders and includes stockholders who are beneficial owners, but whose shares are held in “street name” by brokers or held by other “nominees.” The number of holders of record also does not include stockholders whose shares may be held in trust by other entities.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following tables set forth our results of operations for the periods presented: Comparison of the Years ended December 31, 2022 and 2021 The following table summarizes our results of operations for the years ended December 31, 2022 and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2022 2021 Change ​ ​ (in thousands) Revenue: ​ ​ ​ ​ ​ ​ Product and service revenue ​ $ 44,475 ​ $ 41,108 ​ $ 3,367 License and contract revenue ​ 2,377 ​ 1,098 ​ 1,279 Total revenue ​ 46,852 ​ 42,206 ​ 4,646 Cost of revenue: ​ ​ ​ Product and service cost of revenue ​ 20,430 ​ 18,654 ​ 1,776 License and contract cost of revenue ​ 399 ​ 319 ​ 80 Total cost of revenue ​ 20,829 ​ 18,973 ​ 1,856 Gross profit ​ 26,023 ​ 23,233 ​ 2,790 Operating expenses: ​ ​ ​ Research and development ​ 17,526 ​ 13,067 ​ 4,459 Selling, general and administrative ​ 43,879 ​ 32,235 ​ 11,644 Total operating expenses ​ 61,405 ​ 45,302 ​ 16,103 Loss from operations ​ (35,382) ​ (22,069) ​ (13,313) Other income (expense): ​ ​ ​ Interest income ​ ​ 2,031 ​ ​ 548 ​ ​ 1,483 Interest expense ​ (129) ​ (486) ​ 357 Other income, net ​ ​ (83) ​ (162) ​ 79 Total other income (expense), net ​ 1,819 ​ (100) ​ 1,919 Net loss ​ $ (33,563) ​ $ (22,169) ​ $ (11,394) ​ Revenue, Cost of revenue and Gross profit Product and service ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % ​ ​ (dollars in thousands) Product and service revenue ​ $ 44,475 ​ $ 41,108 ​ $ 3,367 8 % Product and service cost of revenue ​ 20,430 ​ 18,654 ​ 1,776 10 % Gross profit ​ $ 24,045 ​ $ 22,454 ​ $ 1,591 7 % Gross profit margin ​ 54 % 55 % (1) % ​ ​ 77 Table of Contents Our product and service revenue is comprised of revenue from sales of devices and related consumables and service as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % ​ ​ (dollars in thousands) Device sales revenue ​ $ 28,757 ​ $ 33,287 ​ $ (4,530) (14) % Consumables and service revenue ​ ​ 15,718 ​ 7,821 ​ 7,897 101 % Total product and service revenue ​ $ 44,475 ​ $ 41,108 ​ $ 3,367 8 % ​ Product and service revenue increased by $3.4 million, or 8%, for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Biggest changeThe following tables set forth our results of operations for the periods presented: 73 Table of Contents Comparison of the Years ended December 31, 2023 and 2022 The following table summarizes our results of operations for the years ended December 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ 2023 2022 Change ​ ​ (in thousands) Revenue: ​ ​ ​ ​ ​ ​ Product revenue ​ $ 40,214 ​ $ 37,499 ​ $ 2,715 Service revenue ​ ​ 9,645 ​ ​ 6,976 ​ ​ 2,669 Contract revenue ​ 370 ​ 2,377 ​ (2,007) Total revenue ​ 50,229 ​ 46,852 ​ 3,377 Cost of revenue: ​ ​ ​ Product cost of revenue ​ 18,428 ​ 16,010 ​ 2,418 Service cost of revenue ​ ​ 6,380 ​ ​ 4,420 ​ ​ 1,960 Contract cost of revenue ​ 99 ​ 399 ​ (300) Total cost of revenue ​ 24,907 ​ 20,829 ​ 4,078 Gross profit ​ 25,322 ​ 26,023 ​ (701) Operating expenses: ​ ​ ​ Research and development ​ 21,904 ​ 17,526 ​ 4,378 Selling, general and administrative ​ 46,176 ​ 43,879 ​ 2,297 Total operating expenses ​ 68,080 ​ 61,405 ​ 6,675 Loss from operations ​ (42,758) ​ (35,382) ​ (7,376) Other income, net: ​ ​ ​ Interest income ​ ​ 6,480 ​ ​ 2,031 ​ ​ 4,449 Interest expense ​ (201) ​ (129) ​ (72) Other expense, net ​ ​ (131) ​ (83) ​ (48) Total other income, net ​ 6,148 ​ 1,819 ​ 4,329 Loss from operations before income taxes ​ ​ (36,610) ​ ​ (33,563) ​ ​ (3,047) Benefit for income taxes ​ ​ 211 ​ ​ — ​ ​ 211 Net loss ​ $ (36,399) ​ $ (33,563) ​ $ (2,836) ​ Revenue, Cost of revenue and Gross profit Product Our product revenue is comprised of revenue from sales of devices and related accessories and consumables and service as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (dollars in thousands) Product revenue ​ $ 40,214 ​ $ 37,499 ​ $ 2,715 7 % Product cost of revenue ​ 18,428 ​ 16,010 ​ 2,418 15 % Gross profit ​ $ 21,786 ​ $ 21,489 ​ $ 297 1 % Gross profit margin ​ 54 % 57 % (3) % ​ ​ Product revenue increased by $2.7 million, or 7%, for the year ended December 31, 2023, compared to the year ended December 31, 2022.
We review other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or an asset group may not be recoverable. In evaluating long-lived assets for recoverability, we estimate the future cash flows that are expected from the use of each assets.
We review other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or an asset group may not be recoverable. In evaluating long-lived assets for recoverability, we estimate the future cash flows that are expected from the use of each asset.
This may include an onsite or virtual demonstration with a salesperson, a customer submitting samples for testing in one of our facilities or testing by a third party. ● Trials—a customer has committed to a trial of one of our products, which may include a defined period to assess functionality of the device in their operational environment (in the field or onsite within the customer’s facility). ● Pilot—a customer commits to the purchase of an initial quantity of devices to deploy in their operational environment to assess a broader opportunity that may grow to tens or hundreds of devices. ● Deployment—a customer has completed testing, a trial, and/or a pilot and intends to roll out the technology across their enterprise (either at a site or throughout the entire organization). 72 Table of Contents Key Business Metrics We regularly review the number of product placements and cumulative product placement as key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.
This may include an onsite or virtual demonstration with a salesperson, a customer submitting samples for testing in one of our facilities or testing by a third party. ● Trials—a customer has committed to a trial of one of our products, which may include a defined period to assess functionality of the device in their operational environment (in the field or onsite within the customer’s facility). ● Pilot—a customer commits to the purchase of an initial quantity of devices to deploy in their operational environment to assess a broader opportunity that may grow to tens or hundreds of devices. ● Deployment—a customer has completed testing, a trial, and/or a pilot and intends to roll out the technology across their enterprise (either at a site or throughout the entire organization). 69 Table of Contents Key Business Metrics We regularly review the number of product placements and cumulative product placement as key metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections, and make strategic decisions.
Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement. License and Contract Revenue We generate revenue from short and long-term contracts associated with the design and development and delivery of detection devices or related design and support services.
Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement. Contract Revenue We generate revenue from short and long-term contracts associated with the design and development and delivery of detection devices or related design and support services.
We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for life sciences research related to our Rebel, ZipChip Interface, Maven and related sampling devices.
We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for life sciences research related to our Maverick, Rebel, ZipChip Interface, and Maven and related sampling devices.
During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. 86 Table of Contents Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our audited consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.
During the measurement period, which is up to one year from the acquisition date, adjustments to the assets acquired and liabilities assumed may be recorded, with the corresponding offset to goodwill. 84 Table of Contents Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our audited consolidated financial statements appearing in Part II, Item 8 of this Annual Report on Form 10-K.
Our future funding requirements will depend on many factors, including: ● market uptake of our products and growth into new and existing markets: ● the cost of our research and development efforts to expand the applications of our current devices and to create enhanced products with our platform of technologies; ● the cost of expanding our commercial operations, including distribution capabilities, and accelerating planned investments, such as hiring additional support, service, and sales management in Europe, Asia Pacific, and Latin America, bolstering our infrastructure in these regions; ● the cost of acquiring complementary businesses, products, services, or technologies, when and if required; ● the success of our existing collaborations and our ability to enter additional collaborations in the future; ● the effect of competing technological and market developments; and ● the level of our selling, general and administrative expenses.
Our future funding requirements will depend on many factors, including: ● market uptake of our products and growth into new and existing markets: 77 Table of Contents ● the cost of our research and development efforts to expand the applications of our current devices and to create enhanced products with our platform of technologies; ● the cost of expanding our commercial operations, including distribution capabilities, and accelerating planned investments, such as hiring additional support, service, and sales management in Europe, Asia Pacific, and Latin America, bolstering our infrastructure in these regions; ● the cost of acquiring complementary businesses, products, services, or technologies, when and if required; ● the success of our existing collaborations and our ability to enter additional collaborations in the future; ● the effect of competing technological and market developments; and ● the level of our selling, general and administrative expenses.
The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the MX908, Rebel, ZipChip Interface, Maven and related sampling devices.
The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the Maverick, MX908, Rebel, ZipChip Interface, and Maven and related sampling devices.
We estimate the fair value of the contingent consideration earnouts using the Monte Carlo Simulation or probability weighted scenario depending on the nature of the contingent consideration and updates the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments.
We estimate the fair value of the contingent consideration earnouts using the Monte Carlo Simulation or probability weighted scenario depending on the nature of the contingent consideration and update the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments.
We expect that our gross profit margin for license and contract will remain consistent for our contracts that are cost reimbursement contracts. 75 Table of Contents Operating Expenses Research and development expenses Research and development expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering and consultant services and other costs associated with our technology platform and products, which include: ● employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and hardware and software development functions; ● the cost of maintaining and improving our product designs, including third party development costs for new products and materials for prototypes; ● research materials and supplies; and ● facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance.
We expect that our gross profit margin for contract will remain consistent for our contracts that are cost reimbursement contracts. ​ Operating Expenses Research and development expenses Research and development expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering and consultant services and other costs associated with our technology platform and products, which include: ● employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and hardware and software development functions; ● the cost of maintaining and improving our product designs, including third party development costs for new products and materials for prototypes; ● research materials and supplies; and ● facilities, depreciation and other expenses, which include direct and allocated expenses for rent and maintenance of facilities and insurance.
To date, we have funded our operations primarily with proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and license and contract revenue, proceeds from our IPO in December 2020, and, most recently, with proceeds from our underwritten public offering in November 2021.
To date, we have funded our operations primarily with proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and license and contract revenue, proceeds from our IPO in December 2020, and our underwritten public offering in November 2021.
Distribution Channels A majority of our revenue is generated by sales in conjunction with our distribution partners, such as our international distributors and in the United States for end customers where a government contract is required or a customer has a pre-existing relationship.
Distribution Channels A majority of our revenue is generated by sales in conjunction with our channel partners, such as our international channel partners and in the United States for end customers where a government contract is required or a customer has a pre-existing relationship.
When we transact with a distribution partner, our contractual arrangement is with the partner and not with the end-use customer. Whether we transact business with and receive the order from a distribution partner or directly from an end-use customer, our revenue recognition policy and resulting pattern of revenue recognition for the order are the same.
When we transact with a channel partner, our contractual arrangement is with the partner and not with the end-use customer. Whether we transact business with and receive the order from a channel partner or directly from an end-use customer, our revenue recognition policy and resulting pattern of revenue recognition for the order are the same.
The outstanding principal amount of any advance shall accrue interest at a floating rate per annum equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%).
The outstanding principal amount of any advance accrued interest at a floating rate per annum equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%).
If as a result of the quantitative assessment, it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be 85 Table of Contents required. The quantitative goodwill impairment test requires the management to estimate and compare the fair value of the reporting unit with its carrying value.
If as a result of the quantitative assessment, it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required. The quantitative goodwill impairment test requires the management to estimate and compare the fair value of the reporting unit with its carrying value.
We test goodwill for impairment at the reporting unit level, which is the operating segment, in the fourth quarter of every year. We have the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment.
We test goodwill for impairment at the reporting unit level, which is the operating segment, in the fourth quarter of every year. We have the option of performing a qualitative assessment to determine whether further impairment testing 83 Table of Contents is necessary before performing the quantitative assessment.
Our consumables consist of: ● MX908—accessories and swabs; ● Rebel—consumables kit with a microfluidic chip and standards; 73 Table of Contents ● ZipChip Interface—microfluidic chip, reagent and assay kits; and ● Maven and related sampling devices—probes, tubing sets and accessories. ​ Rebel and ZipChip Interface consumables can only be used with our devices and there are no alternative after-market options that can be used as a substitute.
Our consumables consist of: ● MX908—accessories and swabs; ● Rebel—consumables kit with a microfluidic chip and standards; ● ZipChip Interface—microfluidic chip, reagent and assay kits; ● Maverick—calibration kits and accessories; and ● Maven and related sampling devices—probes, tubing sets and accessories. ​ 70 Table of Contents Rebel and ZipChip Interface consumables can only be used with our devices and there are no alternative after-market options that can be used as a substitute.
Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal, audit and accounting services.
Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as 72 Table of Contents professional services, such as legal, audit and accounting services.
For a contract with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation on a relative standalone selling price basis using our best estimate of the standalone selling price of each distinct product or service in the contract.
For a contract with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation on a relative standalone selling price basis using our best estimate of the standalone selling price 81 Table of Contents of each distinct product or service in the contract.
Recurring revenue We regularly assess trends relating to recurring revenue which includes consumables and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 35% and 19% of total product and service revenue for the years ended December 31, 2022 and 2021, respectively.
Recurring revenue We regularly assess trends relating to recurring revenue which includes consumables and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 33% and 35% of total product and service revenue for the years ended December 31, 2023 and 2022, respectively.
However, we evaluate the proper revenue recognition on a contract by contract basis, as each contract generally contains terms specific to the underlying agreement which result in differing performance obligations and payment terms (cost plus, fixed price agreements among others).
However, we evaluate the proper revenue recognition on a contract by contract basis, as each contract generally contains terms 82 Table of Contents specific to the underlying agreement which result in differing performance obligations and payment terms (cost plus, fixed price agreements among others).
We are also closely monitoring increased economic uncertainty in the United States and abroad, including volatility in the global markets and the rise and fluctuations in inflation and interest rates. These developments and the potential worsening of other macro-economic conditions present risks for us and our suppliers.
We are closely monitoring continued economic uncertainty in the United States and abroad, including volatility in the global markets and the rise and fluctuations in inflation and interest rates. These developments and the potential worsening of other macro-economic conditions present risks for us, and our suppliers and customers.
While we expect the mix of direct sales as compared to sales through distributors to remain relatively constant in the near term, we are currently evaluating increasing our direct sales capabilities in certain geographies.
While we expect the mix of direct sales as compared to sales through channel partners to remain relatively constant in the near term, we are currently evaluating increasing our direct sales capabilities in certain geographies.
Investing Activities During the year ended December 31, 2022, net cash used in investing activities was $15.8 million, due primarily to $13.8 million used with the acquisition of Trace that occurred in August, 2022 and purchases of other property and equipment.
During the year ended December 31, 2022, net cash used in investing activities was $15.8 million, due primarily to $13.8 million used with the acquisition of Trace Analytics GmbH that occurred in August 2022 and $2.0 million in purchases of other property and equipment.
They sit alongside bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products. We believe the insights and answers our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users.
They sit alongside or are directly connected to bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products. We believe the insights and answers our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users.
For example, general inflation in the United States, Europe, EMEA and other geographies has risen to levels not experienced in recent decades, which has led to rising prices for our raw materials and other inputs, as well as rising salaries and travel expenses, which could continue to negatively impact our business by increasing our cost of sales and operating expenses.
For example, general inflation in the United States, EMEA and other geographies has recently been at levels not experienced in recent decades, which has led to higher prices for our raw materials and other inputs, as well as higher salaries and travel expenses, which could continue to negatively impact our business by increasing our cost of sales and operating expenses.
We include the unconstrained amount of consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur.
The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur.
Our current device offerings include: ● Handheld devices—MX908; and ● Desktop devices—Rebel, ZipChip Interface, Maven and related sampling devices. ​ We sell our devices directly to customers and through distributors. Each of our device sales drives various streams of recurring revenue comprised of consumable product sales and service revenue.
Our current device offerings include: ● Handheld devices—MX908 and AVCAD components; and ● Desktop devices—Rebel, ZipChip Interface, Maverick, and Maven and related sampling devices. ​ We sell our devices directly to customers and through channel partners. Each of our device sales drives various streams of recurring revenue comprised of consumable product sales and service revenue.
Our Mass Spec devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, industrial biotech, forensics and adjacent markets.
Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, pharma/biopharma, forensics and adjacent markets.
In time, we expect Rebel consumables kits sales to become more consistent as our installed base grows and our customers establish usage patterns. At maximum potential capacity, with continuous operation, the Rebel can consume approximately one 200-sample kit per day. Maven and related sampling devices require consumable sets of buffers, probes and biosensors for all areas of operations.
In time, we expect Rebel consumables kits sales to become more consistent as our installed base grows and our customers establish usage patterns. At maximum potential capacity, with continuous operation, the Rebel can consume approximately one 200-sample kit per day. Maverick devices require consumables, probes and standards for all areas of operations.
Other Income (Expense) Interest expense Interest expense consists of interest expense associated with outstanding borrowings under our loan and security agreements and the amortization of deferred financing costs and debt discounts associated with such arrangements.
Other Income (Expense) Interest income Interest income consists of interest earned on our invested cash balances. ​ Interest expense ​ Interest expense consists of interest expense associated with outstanding borrowings under our loan and security agreements and the amortization of deferred financing costs and debt discounts associated with such arrangements.
While we sell single-use swab samplers for MX908 to be used in liquid and solid materials analysis, there are a number of other applications that the MX908 can be used for that do not require consumables.
While we sell single-use swab samplers for MX908 to be used in liquid and solid materials analysis, there are a number of other applications that the MX908 can be used for that do not require consumables. Rebel and ZipChip Interface require consumables kits for all areas of operations.
The 2022 Revolver also contains certain financial covenants, including a requirement that the amount of unrestricted and unencumbered cash minus advances under the 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn.
The Amended 2022 Revolver also contains certain financial covenants, including a requirement that the Company maintain $20.0 million on account at or through the Lender and that the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn.
The 2022 Revolver contains customary representations and warranties, as well as certain non-financial covenants, including limitations on, among other things, our ability to change the principal nature of our business, dispose of our business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem our capital stock, engage in transactions with affiliates or otherwise encumber our intellectual property, maintain no more than $3.6 million in non-SVB accounts at any point in time, in each case, subject to customary exceptions.
The Amended 2022 Revolver contains customary representations and warranties, as well as certain non-financial covenants, including limitations on, among other things, the Company’s ability to change the principal nature of its business, dispose of the Company’s business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem the Company’s capital stock, engage in transactions with affiliates or otherwise encumber the Company’s intellectual property, in each case, subject to customary exceptions.
The 2022 Revolver provides for a revolving line of credit of up to $35.0 million. We are permitted to make interest-only payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness shall be immediately due and payable.
The Amended 2022 Revolver provides for a revolving line of credit of up to $10.0 million. The Company is permitted to make interest-only payments on the revolving line of credit through November 3, 2025, at which time all outstanding indebtedness shall be immediately due and payable.
For revenue recognized under the cost-to-cost measure of progress basis, we 84 Table of Contents continually assess total costs expected to be incurred and if such costs require adjustment to the measure of progress, we record such adjustment as a change in estimate on a cumulative catch-up basis in the period of adjustment.
For revenue recognized under the cost-to-cost measure of progress basis, we continually assess total costs expected to be incurred and if such costs require adjustment to the measure of progress, we record such adjustment as a change in estimate on a cumulative catch-up basis in the period of adjustment. We include the unconstrained amount of consideration in the transaction price.
As of December 31, 2022, the outstanding principal balance under the 2022 Revolver was $15.0 million, which was repaid in full on January 4, 2023. The interest rate applicable to borrowing under the 2022 Revolver was 7.0% as of December 31, 2022.
As of December 31, 2022, the outstanding principal balance under the 2022 Revolver was $15.0 million, which was repaid in full on January 4, 2023.
Revenue from the sales of consumables will vary by type of device. We expect that recurring revenue as a percentage of the original device price to be higher for our desktop devices (Rebel, ZipChip Interface, Maven and related sampling devices) than for our handheld device (MX908).
We expect that recurring revenue as a percentage of the original device price to be higher for our desktop devices (Rebel, ZipChip Interface, Maverick, Maven and related sampling devices) than for our handheld device (MX908).
Device sales accounted for 65% and 81% of our product and service revenue for the years ended December 31, 2022 and 2021, respectively. Consumables and service revenue accounted for 35% and 19% of our product and service revenue for the years ended December 31, 2022 and 2021, respectively.
Device sales accounted for 67% and 65% of our product and service revenue for the years ended December 31, 2023 and 2022, respectively. Consumables and service revenue accounted for 33% and 35% of our product and service revenue for the years ended December 31, 2023 and 2022, respectively.
As of December 31, 2022, we also had U.S. federal and state research and development tax credit carryforwards of $5.9 million and $2.8 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2032 and 2029, respectively.
As of December 31, 2023, we also had U.S. federal and state research and development tax credit carryforwards of $7.2 million and $3.4 million, respectively, which may be available to offset future tax liabilities and begin to expire in 2032 and 2030, respectively.
Contractual Obligations We have operating lease obligations for office space and certain equipment, which have remaining lease terms ranging from less than one year to approximately seven years. The total future minimum payments under such leases are $9.1 million as of December 31, 2022, of which $2.2 million is expected to be paid in 2023.
Contractual Obligations We have operating lease obligations for office space and certain equipment, which have remaining lease terms ranging from two to seven years. The total future minimum payments under such leases are $7.0 million as of December 31, 2023, of which $2.4 million is expected to be paid in 2024.
We expect that our cost of revenue will increase or decrease to the extent that our revenue increases and decreases and depending on how many contracts we have ongoing at any given point in time and the stage of those contracts. Gross profit is calculated as revenue less cost of revenue.
The contract cost of revenue will vary based upon the type of contract, including whether it is primarily for development services or for both materials and development services. ​ We expect that our cost of revenue will increase or decrease to the extent that our revenue increases and decreases and depending on how many contracts we have ongoing at any given point in time and the stage of those contracts. ​ Gross profit is calculated as revenue less cost of revenue.
Our purchase orders are based on our current procurement or development needs and are fulfilled by our vendors within short time horizons. We have also entered into license agreements under which we are obligated to make royalty payments in the 2% to 5% range, subject to a minimum royalty fee of $0.1 million annually.
Our purchase orders are based on our current procurement or development needs and are fulfilled by our vendors within short time horizons. We have also entered into a license agreement under which we are obligated to make royalty payments in the low single digit percent range.
Overview We have developed an innovative suite of purpose-built handheld and desktop mass spectrometry, or Mass Spec, devices for the point-of-need. Leveraging our proprietary platform technology, we make the extraordinary analytical power of Mass Spec available in devices that are significantly smaller and more accessible than conventional laboratory instruments.
Overview We have developed an innovative suite of purpose-built handheld and desktop devices for point-of-need chemical and biochemical analysis. Leveraging our proprietary mass spectrometry, or Mass Spec, microfluidics, and analytics and machine learning technologies, we make devices that are significantly smaller and more accessible than conventional laboratory instruments.
Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our license and contract revenue was primarily related to one customer during the years ended December 31, 2022 and 2021.
Our contract agreements are with the U.S. government and commercial entities (who may be contracting with the government). Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our license and contract revenue was primarily related to one customer during the years ended December 31, 2023 and 2022.
Device orders from a government customer are typically large orders and can be impacted by the timing of their capital budgets. As a result, the revenue for our handheld devices can vary significantly from period-to-period and has been and may continue to be concentrated in a small number of customers in any given period.
As a result, the revenue for our handheld devices can vary significantly from period-to-period and has been and may continue to be concentrated in a small number of customers in any given period. Our desktop devices are typically used by the pharmaceutical, biotechnology and academia markets.
Our obligations under the 2022 Revolver are secured by substantially all of our assets, excluding our intellectual property, which is subject to a negative pledge. The revolving line of credit under the 2022 Revolver terminates on November 2, 2025.
The Company’s obligations under the Amended 2022 Revolver are secured by substantially all of the Company’s assets, excluding its intellectual property, which is subject to a negative pledge. The revolving line of credit under the Amended 2022 Revolver terminates on November 3, 2025. As of December 31, 2023, there were no balances outstanding under the Amended 2022 Revolver.
During the years ended December 31, 2022 and 2021, our revenue was comprised of revenue from the following sources: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 ​ ​ (in thousands) Product and service revenue: ​ ​ ​ ​ Device sales revenue ​ $ 28,757 ​ $ 33,287 Consumables and service revenue ​ 15,718 ​ 7,821 Total product and service revenue ​ 44,475 ​ 41,108 License and contract revenue ​ 2,377 ​ 1,098 Total revenue ​ $ 46,852 ​ $ 42,206 ​ Our product and service revenue is comprised of sales of our handheld and desktop devices and related consumables and service contracts to end-users in the government, pharmaceuticals/biotechnology and academia markets as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 ​ ​ (in thousands) Product and Service Revenue by Device: ​ ​ ​ ​ Handheld ​ $ 29,536 ​ $ 29,160 Desktop ​ ​ 14,939 ​ 11,948 Total product and service revenue ​ $ 44,475 ​ $ 41,108 ​ 74 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 ​ ​ (in thousands) Product and Service Revenue by Market: ​ ​ ​ ​ Government ​ $ 29,964 ​ $ 29,755 Pharmaceutical/Biotechnology ​ ​ 14,241 ​ 11,264 Academia ​ ​ 270 ​ 89 Total product and service revenue ​ $ 44,475 ​ $ 41,108 ​ We sell our products primarily in the United States; however, we are expanding our global sales efforts as we see traction in our products and assess global market needs.
During the years ended December 31, 2023 and 2022, our revenue was comprised of revenue from the following sources (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Product and service revenue: ​ ​ ​ ​ Device sales revenue ​ $ 33,379 ​ $ 28,757 Consumables and service revenue ​ 16,480 ​ 15,718 Total product and service revenue ​ 49,859 ​ 44,475 Contract revenue ​ 370 ​ 2,377 Total revenue ​ $ 50,229 ​ $ 46,852 ​ Our product and service revenue is comprised of sales of our handheld and desktop devices and related consumables and service contracts to end-users in the government, pharmaceuticals/biotechnology and academia markets as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Government ​ $ 37,862 ​ $ 29,964 Pharmaceutical/Biotechnology ​ ​ 11,340 ​ 14,241 Academia and other ​ ​ 657 ​ 270 Total product and service revenue ​ $ 49,859 ​ $ 44,475 ​ We sell our products primarily in the United States; however, we are continuing to expand our global sales efforts as we see traction in our products and assess global market needs.
On August 3, 2022, we completed our acquisition of 100% of the registered share capital of Trace pursuant to a share purchase and transfer agreement, for a total purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment, (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty-four-month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace.
On August 3, 2022, we completed our acquisition of 100% of the registered share capital of Trace Analytics GmbH, renamed 908 Devices GmbH, pursuant to a share purchase and transfer agreement, for a total purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment, (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty-four-month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from 908 Devices GmbH. 908 Devices GmbH is a leading provider of online analysis systems for biotech applications in research, development and production. 908 Devices GmbH’s products are used for monitoring and control of complex processes in industrial pharmaceutical productions under continuous measurement conditions.
If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products.
If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations.
As of December 31, 2022, we had gross federal and state operating loss carryforwards of $92.3 million and $64.0 million, respectively, 76 Table of Contents which may be available to offset future taxable income and begin to expire in 2032 and 2025, respectively, of which $57.9 million of federal gross operating losses do not expire.
As of December 31, 2023, we had gross federal and state operating loss carryforwards of $108.2 million and $77.4 million, respectively, which may be available to offset future taxable income and begin to expire in 2032 and 2025, respectively, of which $73.8 million of federal gross operating losses do not expire.
While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.
Factors affecting our performance We believe that our financial performance has been and in the foreseeable future will continue to be primarily driven by the following factors. While each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations.
The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available, we may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management. 83 Table of Contents Allocation of the transaction price is determined at the contract’s inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied.
The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available, we may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management.
Our gross profit in future periods will vary based upon our channel mix and may decrease based upon our distribution channels and the potential to establish original equipment manufacturing channels for certain components of our technology platform which would have a lower gross margin.
Our gross profit in future periods will vary based upon our channel mix and may decrease based upon our distribution channels and the potential to establish original equipment manufacturing channels for certain components of our technology platform which would have a lower gross margin. ​ We expect that our gross profit margin for product and service will increase over the long term as our sales and production volumes increase and our cost per unit decreases due to efficiencies of scale.
Our recurring revenue as a percentage of total product and service revenue will vary based upon new device placements 71 Table of Contents in the period. As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.
As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue. 68 Table of Contents Revenue from the sales of consumables will vary by type of device.
During the years ended December 31, 2022 and 2021, our product placements (units recognized as revenue) by device type were as follows: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2022 2021 Product Placements: ​ ​ MX908 370 492 Rebel 50 54 ZipChip Interface 30 28 Total Product Placements 450 574 ​ The number of product placements vary considerably from period-to-period due to the type and size of our customers and concentrations among larger government customers as described above.
During the years ended December 31, 2023 and 2022, our product placements (units recognized as revenue) were as follows: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 Product s: ​ ​ Handheld 402 370 Desktop 66 80 ​ The number of product placements vary considerably from period-to-period due to the type and size of our customers and concentrations among larger government customers as described above.
Revenue mix and gross margin Our revenue is derived from sales of our devices, consumables and services. There will be fluctuations in mix between devices and consumables from period-to-period. Over time, as our device installed base grows and we see adoption of Rebel, we expect consumables revenue to constitute a larger percentage of product and service revenue.
Over time, as our device installed base grows and we see adoption of Rebel, we expect consumables revenue to constitute a larger percentage of product and service revenue. However, the percentage will be subject to fluctuation based upon our handheld sales in a period.
During the year ended December 31, 2021, net cash used in investing activities was $0.7 million, due to purchases of laboratory and demonstration equipment. Financing Activities Cash provided by financing activities during the year ended December 31, 2022, was $1.2 million, consisting primarily of proceeds from the issuance of common stock upon option exercises.
Cash provided by financing activities during the year ended December 31, 2022, was $1.2 million, consisting primarily of proceeds from the issuance of common stock upon option exercises. We also paid off and drew down $60.0 million under the 2022 Revolver and 2021 Revolver, resulting in no net proceeds during the year ended December 31, 2022.
As a result, we may need additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research and development expenses. 69 Table of Contents Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.
Because of the numerous risks and uncertainties associated with product development and commercialization, we are unable to accurately predict the timing or amount of increased expenses or when, or if, we will be able to achieve or maintain profitability.
Net cash used in changes in our operating assets and liabilities for the year ended December 31, 2021 consisted primarily of an increase in account receivable of $11.3 million and an increase in inventory of $4.5 million and an increase in prepaid expenses and other current assets of $4.1 million, partially offset by a $5.4 million increase in deferred revenue and a $2.8 million increase in account payable and accrued expenses.
Net cash used in changes in our operating assets and liabilities for the year ended December 31, 2023, consisted primarily of a $3.9 million decrease from changes in inventory and a $1.6 million decrease from changes in operating lease liabilities, partially offset by a $1.7 million increase from changes in right-of-use operating lease assets, a $2.0 million increase from changes in accounts payable and accrued expenses and a $0.7 million increase from changes in account receivable.
We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations. 81 Table of Contents Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2022 2021 ​ ​ (in thousands) Cash used in operating activities ​ $ (20,930) ​ $ (29,082) Cash used in investing activities ​ (15,807) ​ (737) Cash provided by financing activities ​ 1,179 ​ 94,725 Effect of foreign exchange rate changes on cash and cash equivalents ​ ​ 18 ​ ​ — Net decrease in cash, cash equivalents and restricted cash ​ $ (35,540) ​ $ 64,906 ​ Operating Activities During the year ended December 31, 2022, net cash used in operating activities was $21.0 million, primarily resulting from our net loss of $33.6 million, partially offset by net cash provided by changes in our operating assets and liabilities of $3.3 million and noncash charges of $9.3 million.
Cash Flows The following table summarizes our sources and uses of cash for each of the periods presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 ​ ​ (in thousands) Cash used in operating activities ​ $ (25,059) ​ $ (20,930) Cash used in investing activities ​ (26,400) ​ (15,807) Cash (used in) provided by financing activities ​ (15,935) ​ 1,179 Effect of foreign exchange rate changes on cash and cash equivalents ​ ​ 13 ​ ​ 18 Net decrease in cash, cash equivalents and restricted cash ​ $ (67,381) ​ $ (35,540) ​ Operating Activities During the year ended December 31, 2023, net cash used in operating activities was $25.1 million, primarily resulting from our net loss of $36.4 million and net cash used in changes in our operating assets and liabilities of $1.6 million, partially offset by noncash charges of $12.9 million.
Our cumulative product placements consist of the following number of devices: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2022 2021 Cumulative Product Placements: ​ ​ MX908 2,020 1,650 Rebel 150 100 ZipChip Interface 215 185 Cumulative Product Placements 2,385 1,935 ​ Components of Our Results of Operations Revenue Product and Service Revenue We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables and services.
Our cumulative product placements consist of the following number of devices: ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 Cumulative Product Placements: ​ ​ Handheld 2,422 2,020 Desktop 431 365 ​ Components of Our Results of Operations Revenue Product and Service Revenue We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables and services.
However, the percentage will be subject to fluctuation based upon our handheld sales in a period. In addition, our selling price and, consequently, our margins, are higher for those devices and consumables that we sell directly to customers as compared to those that we sell through distributors.
In addition, our selling price and, consequently, our margins, are higher for those devices and consumables that we sell directly to customers as compared to those that we sell through channel partners.
We do not believe that the events that have impacted SVB and Signature Bank will impact our ability to operate for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
We believe that our existing cash and cash equivalents will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.
License and contract cost of revenue primarily consists of salaries and other personnel costs, materials, travel and other direct costs related to the revenue recognized in the period. The license and contract cost of revenue will vary based upon the type of contract, including whether it is primarily for development services or for both materials and development services.
Contract cost of revenue primarily consists of salaries and other personnel costs, materials, travel and other direct costs related to the revenue recognized in the period.
The increase in license and contract revenue was primarily related to activities under our subcontract agreement with a commercial entity that holds a U.S. government prime contract resulting in $0.9 million higher contract revenue in the year ended December 31, 2022 compared to the year ended December 31, 2021.
The majority of contract revenue, for the years ended December 31, 2023 and 2022, was related to activities under our subcontract agreement with a commercial entity that holds a U.S. government prime contract, which was concluded in the second quarter of 2023 and represented a decrease of $1.3 million in contract revenue for the year ended December 31, 2023.
See “ Liquidity and Capital Resources .” Global Economic Conditions Including COVID-19 We are continuing to closely monitor macroeconomic impacts, including, but not limited to, developments affecting financial institutions and the COVID-19 pandemic and potential recessionary pressures, on our business, results of operations and financial results.
See “ Liquidity and Capital Resources .” Global Economic Conditions We are continuing to closely monitor macroeconomic factors, including, but not limited to, continued inflationary and interest rate pressures, challenging capital market conditions and the limited availability of financing alternatives, which may have an impact on our business, results of operations and financial results.
While it is difficult to predict all of the impacts these global economic events, including the COVID-19 pandemic 70 Table of Contents and developments affecting financial institutions, and rising inflation and interest rates will have on our business and to predict the effects of these factors on our customers’ spending in the near term, we believe the long-term opportunity that we see for our products and services remain unchanged.
While it is difficult to predict all of the impacts these global economic events and continued inflationary and interest rate pressures will have on our business and to predict the effects of these factors on our customers’ spending in the near term, we believe the long-term opportunity that we see for our products and services remain unchanged. 67 Table of Contents Additional information regarding these global impacts on our business is set forth within this Part I, Item 1A, Risk Factors of this Annual Report on Form 10-K.
Our shortest sales cycles are typically for small laboratories and individual researchers where, in some cases, we receive purchase orders from these customers within three months. Our sales process with other institutions can be longer with most customers submitting purchase orders within six to twelve months.
Our sales cycles within these markets tend to vary based on the size of the customer and the number of devices they purchase. Our shortest sales cycles are typically for small laboratories and individual researchers where, in some cases, we receive purchase orders from these customers within three months.
Other Income (Expense) Interest income Interest income increased by $1.5 million from $0.5 million for the year ended December 31, 2021. The increase was due to an increase in interest earned from our higher cash and cash equivalent balances from the proceeds from the November 2021 Offering, as well as higher interest rates on our interest bearing accounts.
The increase was due primarily to higher interest rates on our interest bearing accounts and interest earned on our marketable securities, which were purchase during the year ended December 31, 2023. ​ Interest expense Interest expense increased by $0.1 million for the year ended December 31, 2023 from $0.1 million for the year ended December 31, 2022.
Accordingly, on March 11, 2021, we used $14.5 million of proceeds from the revolving line of credit to repay all amounts then due on the existing term loan. We also borrowed an additional $0.5 million from the 2021 Revolver in March 2021. On November 2, 2022, we satisfied in full all of our obligations and voluntarily terminated 2021 Revolver.
The terms of the 2021 Revolver required that the existing term loan outstanding under the 2019 Loan be repaid with an advance under the line of credit. Accordingly, on March 11, 2021, we used $14.5 million of proceeds from the revolving line of credit to repay all amounts then due on the existing term loan.
Licenses and contract revenue License and contract agreements are arrangements whereby we provide engineering services for the development of our technology platform for specific programs or new and expanding applications of our technologies for future commercial endeavors. Our license and contract agreements are with the U.S. government and commercial entities (who may be contracting with the government).
We expect consumables and service revenue to increase in future periods as our installed base grows and we are able to generate recurring sales. Contract revenue Contract agreements are arrangements whereby we provide engineering services for the development of our technology platform for specific programs or new and expanding applications of our technologies for future commercial endeavors.
Upon the occurrence of an event of default and until such event of default is no longer continuing, the annual interest rate will be 5.0% above the otherwise applicable rate. The terms of the 2021 Revolver required that the existing term loan outstanding under the 2019 Loan be repaid with an advance under the line of credit.
Events of default under the 2021 Revolver include failure to make payments when due, insolvency events, failure to comply with covenants or material adverse events with respect to us. Upon the occurrence of an event of default and until such event of default is no longer continuing, the annual interest rate will be 5.0% above the otherwise applicable rate.
Cost of Revenue, Gross Profit and Gross Margin Product cost of revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, royalties, contract manufacturer costs, salaries and other personnel costs, overhead, amortization of intangibles and other direct costs related to those sales recognized as product revenue in the period.
The majority of our international sales are through channel partners and to a lesser extent, starting in 2023, through our 908 Devices GmbH subsidiary for our desktop sales in Europe and the United Kingdom. 71 Table of Contents Cost of Revenue, Gross Profit and Gross Margin Product cost of revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, royalties, contract manufacturer costs, salaries and other personnel costs, overhead, amortization of intangibles and other direct costs related to those sales recognized as product revenue in the period. ​ Cost of revenue for services primarily consists of salaries and other personnel costs, travel related to services provided, facility costs associated with training, warranties and other costs of servicing equipment on a return-to-factory basis and at customer sites.
Other income (expense), net did not change materially from other income (expense), net of $0.2 million for the year ended December 31, 2021. Liquidity and Capital Resources Since our inception, we have incurred significant operating losses.
Other income (expense), net ​ Other expense, net was $0.1 million for the year ended December 31, 2023 and did not change materially from $0.1 million for the year ended December 31, 2022.
Our sales process varies considerably depending upon the type of customer to whom we are selling. Historically, our handheld devices have been used by state, federal and foreign governments and governmental agencies. Our sales process with government customers is often long and involves multiple levels of approvals, testing and, in some cases, trials.
Our sales process varies considerably depending upon the type of customer to whom we are selling. Our handheld device orders relate to our MX908 as well as components for the Aerosol and Vapor Chemical Agent Detectors (“AVCAD”) sold to our channel partner. Historically, our handheld devices have been used by state, federal and foreign governments and governmental agencies.
We did not incur any early termination penalties in connection with the termination of the 2021 Revolver. No amounts were outstanding upon termination of the 2021 Revolver. On November 2, 2022, we entered into a Loan and Security Agreement with Silicon Valley Bank (the “2022 Revolver”).
We also borrowed an additional $0.5 million from the 2021 Revolver in March 2021. On November 2, 2022, we satisfied in full all of our obligations and voluntarily terminated 2021 Revolver. We did not incur any early termination penalties in connection with the termination of the 2021 Revolver. No amounts were outstanding upon termination of the 2021 Revolver.
Interest expense Interest expense decreased by $0.4 million for the year ended December 31, 2022, from $0.5 million for the year ended December 31, 2021.
Benefit for Income Taxes Benefit for income taxes increased by $0.2 million for the year ended December 31, 2023, from $0.0 million for the year ended December 31, 2022.
Selling, general and administrative expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2022 2021 Amount % ​ ​ (dollars in thousands) Selling, general and administrative expenses ​ $ 43,879 ​ $ 32,235 ​ $ 11,644 36 % Percentage of total revenue ​ 94 % 76 % ​ ​ Our selling, general and administrative expenses were $43.9 million for the year ended December 31, 2022, an increase of $11.6 million from selling, general and administrative expenses of $32.2 million for the year ended December 31, 2021.
The increase was due primarily to a $2.2 million increase in salaries and related costs from growing our headcount in 2023, a $1.0 million increase in stock-based compensation, and a $1.0 million increase in occupancy related expenses, mainly related to our new facility in North Carolina. ​ Selling, general and administrative expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ Change ​ 2023 2022 Amount % ​ ​ (dollars in thousands) Selling, general and administrative expenses ​ $ 46,176 ​ $ 43,879 ​ $ 2,297 5 % Percentage of total revenue ​ 93 % 94 % ​ ​ 76 Table of Contents Our selling, general and administrative expenses were $46.2 million for the year ended December 31, 2023, an increase of $2.3 million from selling, general and administrative expenses of $43.9 million for the year ended December 31, 2022.
We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution.
If we raise additional funds by issuing equity or equity-linked 79 Table of Contents securities, our stockholders may experience dilution.

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