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What changed in STANDARD BIOTOOLS INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of STANDARD BIOTOOLS 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.

+708 added−430 removedSource: 10-K (2024-03-01) vs 10-K (2023-03-14)

Top changes in STANDARD BIOTOOLS INC.'s 2023 10-K

708 paragraphs added · 430 removed · 209 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

59 edited+226 added−33 removed67 unchanged
Biggest changeIf our operations are found to be in violation of any of applicable laws or any other governmental regulations that apply, we may be subject to penalties, including, without limitation, administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state healthcare programs and imprisonment.
Biggest changeIf our operations are found to be in violation of any of the fraud and abuse laws described above or any other healthcare regulatory laws that apply to us, we may be subject to penalties, including potentially significant criminal and civil and/or administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in government healthcare programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.
In general, the number of protein targets for conventional flow cytometry is less than about 10 with significant reagent optimization often involved. 2 • Our CyTOF technology is similar to traditional flow cytometry but is based primarily on antibodies using heavy metal isotope labels rather than fluorescent labels for detection of proteins, enabling the significant expansion of the number of parameters analyzed per individual cell versus conventional flow cytometry technologies, as well as providing superior data quality.
In general, the number of protein targets for conventional flow cytometry is less than about 10 with significant reagent optimization often involved. • Our CyTOF technology is similar to traditional flow cytometry but is based primarily on antibodies using heavy metal isotope labels rather than fluorescent labels for detection of proteins, enabling the significant expansion of the number of parameters analyzed per individual cell versus conventional flow cytometry technologies, as well as providing superior data quality.
Contemporaneously with the purchase of the Patents, we entered into a license agreement with PerkinElmer pursuant to which we granted PerkinElmer a worldwide, non-exclusive, fully paid-up license to the Patents in fields other than (i) ICP-based mass analysis of atomic elements associated with a biological material, including any elements that are unnaturally bound, directly or indirectly, to such biological material (Mass Analysis) and (ii) the development, design, manufacture, and use of equipment or associated reagents for such Mass Analysis.
Contemporaneously with the purchase of the Patents, we entered into a license agreement with PerkinElmer pursuant to which we granted PerkinElmer a worldwide, non-exclusive, fully paid-up license to the Patents in fields other than (i) ICP-based mass analysis of atomic elements associated with a 10 biological material, including any elements that are unnaturally bound, directly or indirectly, to such biological material (Mass Analysis) and (ii) the development, design, manufacture, and use of equipment or associated reagents for such Mass Analysis.
Spatial Biology, which itself is a sub-segment of the broader Tissue Image Analysis market that includes immunohistochemistry and in-situ hybridization, is the study of single cells in its spatial context to understand the role of heterogeneity in cell function and assess complex phenotypes and tumor-immune interactions in the tissue and tumor microenvironment. • Immunohistochemistry is a method by which cells in a tissue section are stained with antibodies and then imaged with a conventional or fluorescent microscope.
Spatial Biology, which itself is a sub-segment of the broader Tissue Image Analysis market that includes immunohistochemistry and in-situ hybridization, is the study of single cells in its spatial context to understand the role of heterogeneity in cell function and assess complex phenotypes and tumor-immune interactions in the tissue and tumor microenvironment. • Immunohistochemistry is a method by which cells in a tissue section are stained with antibodies and then imaged with a 3 conventional or fluorescent microscope.
In 2022 we launched the Hyperion+ Imaging System, our second-generation imaging platform. 8 In 2019, we launched the Maxpar Direct Immune Profiling Assay, a sample-to-answer workflow for comprehensive human immune profiling for use with our CyTOF systems, which puts pre-titrated antibodies in dry format in a single tube, with automated software that provides data analysis in as few as five minutes.
In 2022 we launched the Hyperion+ Imaging System, our second-generation imaging platform. In 2019, we launched the Maxpar Direct Immune Profiling Assay, a sample-to-answer workflow for comprehensive human immune profiling for use with our CyTOF systems, which puts pre-titrated antibodies in dry format in a single tube, with automated software that provides data analysis in as few as five minutes.
Real-time quantitative PCR (real-time qPCR) is a more advanced form of PCR that makes it possible to quantify the number of copies of DNA present in a sample. 3 • NGS is a process by which researchers are able to determine the particular order of nucleotide bases that comprise all or a portion of a particular gene or genome (in the case of DNA sequencing) or gene transcript or sample transcriptome (in the case of RNA sequencing).
Real-time quantitative PCR (real-time qPCR) is a more advanced form of PCR that makes it possible to quantify the number of copies of DNA present in a sample. • NGS is a process by which researchers are able to determine the particular order of nucleotide bases that comprise all or a portion of a particular gene or genome (in the case of DNA sequencing) or gene transcript or sample transcriptome (in the case of RNA sequencing).
In February 2022, we were granted Emergency Use Authorization (EUA) for our the Advanta Dx COVID-19 EASE Assay, which was authorized for the qualitative detection of nucleic acid from SARS-CoV-2 in nasopharyngeal swab, oropharyngeal swab, mid-turbinate nasal swab, and anterior nasal swab specimens from individuals suspected of COVID-19 by their healthcare provider.
In February 2022, we were granted an Emergency Use Authorization (EUA) for our the Advanta Dx COVID-19 EASE Assay, which was authorized for the qualitative detection of nucleic acid from SARS-CoV-2 in nasopharyngeal swab, oropharyngeal swab, mid-turbinate nasal swab, and anterior nasal swab specimens from individuals suspected of COVID-19 by their healthcare provider.
We believe that the principal competitive factors in our target markets include quality of product, cost of capital equipment and supplies; reputation among customers; innovation in product offerings; flexibility and ease of use; accuracy and reproducibility of results; competition for human resources; and compatibility with existing laboratory processes, tools, and methods.
We believe that the principal competitive factors in our target markets include quality of product, cost of capital equipment and supplies; reputation among customers; innovation in product offerings; flexibility and ease of use; accuracy 9 and reproducibility of results; competition for human resources; and compatibility with existing laboratory processes, tools, and methods.
Certain products sold in these countries are subject to RoHS, REACH and WEEE requirements. If we fail to comply with any present and future regulations, we could be subject to future fines, 11 penalties, and restrictions, such as the suspension of manufacturing of our products or a prohibition on the sale of products we manufacture.
Certain products sold in these countries are subject to RoHS, REACH and WEEE requirements. If we fail to comply with any present and future regulations, we could be subject to future fines, penalties, and restrictions, such as the suspension of manufacturing of our products or a prohibition on the sale of products we manufacture.
We make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
We make available on our website, free of charge, our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (SEC).
We continue to invest in research and development (R&D) to create and launch new products and have adopted best practice approaches to improve our lead generation and funnel management growth, among other things. 1 Improving Operating Discipline Through SBS Our second priority is to improve our operating discipline through the implementation of SBS.
We continue to invest in research and development (R&D) to create and launch new products and have adopted best practice approaches to improve our lead generation and funnel management growth, among other things. Improving Operating Discipline Through SBS Our second priority is to improve our operating discipline through the implementation of SBS.
More recently, we extended the scope of the toolset to include DNA analysis tools. 7 Assays and Reagents We manufacture over 800 metal-conjugated antibodies for use with our mass cytometry and Imaging Mass Cytometry instruments to allow detection of up to 48 protein targets simultaneously in a single cell for a total of more than 50 detected cellular parameters.
More recently, we extended the scope of the toolset to include DNA analysis tools. 6 Assays and Reagents We manufacture over 800 metal-conjugated antibodies for use with our mass cytometry and Imaging Mass Cytometry instruments to allow detection of up to 48 protein targets simultaneously in a single cell for a total of more than 50 detected cellular parameters.
InstruNor provided automated sample preparation solutions for proteomics and flow cytometry instrument markets and became part of Standard BioTool Inc.’s proteomics business. Included in this acquisition were certain intellectual property portfolio assets comprised of patents and/or patent applications directed to various aspects of automated cell pretreatment instruments.
InstruNor provided automated sample preparation solutions for proteomics and flow cytometry instrument markets and became part of Standard BioTools Inc.’s proteomics business. Included in this acquisition were certain intellectual property portfolio assets comprised of patents and/or patent applications directed to various aspects of automated cell pretreatment instruments.
The expiration dates for the issued patents in this patent portfolio extend to March 2033. We recognized a $3.5 million impairment charge on InstruNor’s developed technology intangible asset in the second quarter of 2022 related to our discontinued Flow Conductor product line.
The expiration dates for the issued patents in this patent portfolio extended to March 2033. We recognized a $3.5 million impairment charge on InstruNor’s developed technology intangible asset in the second quarter of 2022 related to our discontinued Flow Conductor product line.
Refer to Note 6 to our consolidated financial statements for additional information regarding geographic areas. Seasonality Our fourth quarter revenues are often the highest, primarily due to seasonality since many of our customers tend to spend budgeted money before the end of their calendar fiscal year-end.
Refer to Note 3 to our consolidated financial statements for additional information regarding geographic areas. Seasonality Our fourth quarter revenues are often the highest, primarily due to seasonality since many of our customers tend to spend budgeted money before the end of their calendar fiscal year-end.
Such disclosures will be included on our website under “About> Investors.” Accordingly, investors should monitor the “Investors” section of our website, in addition to following our press releases, SEC filings, and public conference calls and webcasts. 14
Such disclosures will be included on our website under “About> Investors.” Accordingly, investors should monitor the “Investors” section of our website, in addition to following our press releases, SEC filings, and public conference calls and webcasts. 23
ITEM 1. BUSINESS Overview Standard BioTools Inc. is driven by a bold purpose – unleashing tools to accelerate breakthroughs in human health. We develop, manufacture and sell technologies that help biomedical researchers in their search for developing medicines faster and better.
ITEM 1. B USINESS Overview Standard BioTools Inc. is driven by a bold purpose – unleashing tools to accelerate breakthroughs in human health. We develop, manufacture and sell technologies that help biomedical researchers in their search for developing medicines faster and better.
Subsequently, in February 2023, the FDA granted our request to withdraw the EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay. We submitted our request to withdraw such EUA as we had discontinued commercial distribution of the product. Other U.S.
Subsequently, in February 2023, the FDA granted our request to withdraw the EUA for our Advanta Dx SARS-CoV-2 RT-PCR Assay. We submitted our request to withdraw such EUA as we had discontinued commercial distribution of the product.
IFC Controllers (HX, MX, and RX) Each controller is designed to work with specific IFC formats: (i) IFC Controller MX- for priming and loading the 48.48 Dynamic Array TM IFC, the 12.765 Digital Array TM, IFC, the 48.770 Digital Array IFC, and qdPCR 37K TM , (ii) IFC Controller HX- for priming and loading the Flex Six TM Gene Expression IFC and Flex Six Genotyping IFC, 96.96 Dynamic Array IFC, (iii) IFC Controller RX- for loading the 192.24 Gene Expression IFC, 192.24 Genotyping IFC, and the 24.192 Dynamic Array IFC for gene expression.
Real-time PCR analysis IFC Controllers (HX, MX, and RX) Each controller is designed to work with specific IFC formats: (i) IFC Controller MX- for priming and loading the 48.48 Dynamic Array TM IFC, the 12.765 Digital Array TM, IFC, the 48.770 Digital Array IFC, and qdPCR 37K TM , (ii) IFC Controller HX- for priming and loading the Flex Six TM Gene Expression IFC and Flex Six Genotyping IFC, 96.96 Dynamic Array IFC, (iii) IFC Controller RX- for loading the 192.24 Gene Expression IFC, 192.24 Genotyping IFC, and the 24.192 Dynamic Array IFC for gene expression.
Technology Integrated Fluidic Circuits Our IFCs incorporate several different types of technology that together enable us to use multi-layer soft lithography (MSL) technology to rapidly design and deploy new microfluidic applications with state-of-the-art commercial manufacturing processes.
Real-time PCR analysis Integrated Fluidic Circuits Our IFCs incorporate several different types of technology that together enable us to use multi-layer soft lithography (MSL) technology to rapidly design and deploy new microfluidic applications with state-of-the-art commercial manufacturing processes.
Our primary product offerings are summarized in the table below: Product Product Description Applications Single Cell Proteomics Analytical Systems: Helios™, a CyTOF System The Helios mass cytometry system performs high-parameter (>50) single-cell analysis using antibodies conjugated to metal isotopes.
Our primary instrument offerings are summarized in the table below: Product Product Description Applications Single Cell Proteomics Analytical Systems: CyTOF XT™ System The CyTOF XT mass cytometry system performs highly automated high-parameter (>50) single-cell analysis using antibodies conjugated to metal isotopes.
Intellectual Property Patents We have developed a portfolio of issued patents and patent applications directed towards commercial products and technologies in development. As of December 31, 2022, we owned or licensed more than 400 patents and had approximately 160 pending patent applications worldwide.
Intellectual Property Patents We have developed a portfolio of issued patents and patent applications directed towards commercial products and technologies in development. As of December 31, 2023, we owned or licensed approximately 400 patents and had over 175 pending patent applications worldwide.
Total revenue received from customers outside the United States was $56.9 million, or 58% of our total revenue, in 2022, compared to $70.4 million, or 54% of our total revenue, in 2021. The majority of our long-lived assets are located within the United States, Singapore and Canada.
Total revenue received from customers outside the United States was $62.2 million, or 59% of our total revenue, in 2023, compared to $56.9 million, or 58% of our total revenue, in 2022. The majority of our long-lived assets are located within the United States, Singapore and Canada.
Key components in our products that are supplied by sole or limited source suppliers. The loss of a single or sole source supplier would require significant time and effort to locate and qualify an alternative source of supply, if at all, and could adversely impact our business. For additional information, please refer to “Item 1A.
The loss of a single or sole source supplier would require significant time and effort to locate and qualify an alternative source of supply, if at all, and could adversely impact our business. For additional information, please refer to “Item 1A.
Our core Genomics technology originated at the California Institute of Technology (Caltech) in the laboratory of Professor Stephen Quake, who is a co-founder of Fluidigm (now Standard BioTools Inc.). We license genomics technology from Caltech, Harvard University, and Caliper Life Sciences, Inc.
License Agreements We have entered into licenses for technologies from various companies and academic institutions. Genomics Technologies. Our core genomics technology originated at the California Institute of Technology (Caltech) in the laboratory of Professor Stephen Quake, who is a co-founder of Fluidigm (now Standard BioTools Inc.). We license genomics technology from Caltech, Harvard University, and Caliper Life Sciences, Inc.
Any reference to our website is intended to be an inactive textual reference only. We intend to use our website, www.standardbio.com as a means of disclosing material non-public information and for complying with our disclosure obligations under SEC Regulation FD.
We intend to use our website, www.standardbio.com as a means of disclosing material non-public information and for complying with our disclosure obligations under SEC Regulation FD.
Flow Cytometry Hyperion™ Imaging System The Hyperion Imaging System brings together imaging capability with proven high-parameter mass cytometry technology to enable the simultaneous detection of up to 40 protein markers in the spatial context of the tissue microenvironment.
Flow Cytometry Hyperion XTi™ Imaging System Our third-generation spatial biology instrument, the Hyperion XTi™ Imaging System brings together Tissue Imaging 5 Product Product Description Applications imaging capability with proven high-parameter mass cytometry technology to enable the simultaneous detection of up to 40 protein markers in the spatial context of the tissue microenvironment.
Not for use in diagnostic procedures.” 10 In November 2013, the FDA issued a final guidance document stating that merely including a labeling statement that the product is for research purposes only will not necessarily render the device exempt from the FDA’s clearance, approval, or other regulatory requirements if the totality of circumstances surrounding the distribution of the product indicate that the manufacturer knows its product is being used by customers for diagnostic uses or the manufacturer intends such a use.
The RUO/IUO Guidance explains that merely including a labeling statement that the product is for research purposes only will not necessarily render the device exempt from the FDA’s clearance, approval, or other regulatory requirements if the totality of circumstances surrounding the distribution of the product indicate that the manufacturer knows its product is being used by customers for clinical diagnostic uses or that the manufacturer intends such uses.
These automated systems are used to detect somatic and genomic variations from a range of different sample types which provide cost efficiencies, flexibility and proven analytical performance that customers need to meet the increasing demands of molecular biomarker analysis for diagnostics and research applications. Strategic Investment Transaction On January 23, 2022, we entered into two transactions.
These automated systems are used to detect somatic and genomic variations from a range of different sample types which provide cost efficiencies, flexibility and proven analytical performance that customers need to meet the increasing demands of molecular biomarker analysis for diagnostics and research applications. On January 5, 2024, we completed the merger (the Merger) with SomaLogic, Inc.
Our customers generally do not place purchase orders far in advance. A substantial portion of our products are sold on the basis of standard purchase orders that are cancellable prior to shipment without penalty. Accordingly, backlog at any given time is not a meaningful indicator of future sales.
Our customers generally do not place purchase orders far in advance. A substantial portion of our products are sold on the basis of standard purchase orders that are cancellable prior to shipment without penalty.
The second component of our research and development effort is to continuously develop new manufacturing processes and test methods to drive down manufacturing costs, increase manufacturing throughput, widen fabrication process capability, and support new microfluidic devices and designs.
The second component of our research and development effort is to continuously develop new manufacturing processes and test methods to drive down manufacturing costs, increase manufacturing throughput, widen fabrication process capability, and support new microfluidic devices and designs. Additionally, in connection with the Merger we acquired research and development facilities in Boulder, Colorado and La Jolla, California.
Accordingly, they are not subject to pre- and post-market controls for medical devices by the FDA. In accordance with FDA regulations, our RUO products are labeled, “For Research Use Only.
Accordingly, they are not subject to pre- and post-market controls for medical devices by the FDA, with the exception that we must comply with the agency’s regulations relating to the labeling of IVDs intended for RUO applications. In accordance with such regulations, our RUO products are labeled, “For Research Use Only.
Our core values conceived and developed by our employees are: • Customer commitment • Integrity • Respect • Continuous improvement A Diverse Global Workforce As of December 31, 2022, Standard BioTools had 523 employees worldwide, 45% of whom were female. In the United States, 35% of our employees were female as of December 31, 2022.
Our core values conceived and developed by our employees are: • Customer commitment • Integrity • Respect • Continuous improvement A Diverse Global Workforce As of December 31, 2023, Standard BioTools had a total of 539 employees worldwide of which 534 were full-time employees and 130 were located in the United States.
(collectively, Casdin) and (ii) a Loan Agreement (the Viking Loan Agreement, and together with the Casdin Loan Agreement, the Bridge Loan Agreements) with Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and, together with Casdin, the Purchasers and each, a Purchaser).
(collectively, Casdin) and Viking Global Opportunities Illiquid Investments Sub-Master LP and Viking Global Opportunities Drawdown (Aggregator) LP (collectively, Viking and together with Casdin, the Purchasers).
We offer competitive total reward packages comprising various elements including market-driven base pay, short- and long-term incentives in the form of performance-based cash and equity, as well as comprehensive health and welfare benefits that include medical, dental, vision, group life, disability, and accidental death and dismemberment insurance, as well as our 401(k) or comparable non-U.S. retirement plans, subject to applicable law.
Operating Partner at Ampersand Capital Partners Compensation and Benefits The primary goal of our compensation program is to ensure that we attract, hire, and retain talented and highly skilled team members who are motivated to achieve or exceed our corporate goals. 22 We offer competitive total reward packages comprising various elements including market-driven base pay, short- and long-term incentives in the form of performance-based cash and equity, as well as comprehensive health and welfare benefits that include medical, dental, vision, group life, disability, and accidental death and dismemberment insurance, as well as our 401(k) or comparable non-U.S. retirement plans, subject to applicable law.
Proteomics The market for Proteomics is broadly defined as instruments, consumables and reagents, software, and services for all technologies used in the identification of proteins. Proteins perform a vast array of functions within living organisms, including catalyzing metabolic reactions, replicating DNA, signaling response to stimuli and transporting molecules from one location to another. The proteome varies and is dynamic.
Proteins perform a vast array of functions within living organisms, including catalyzing metabolic reactions, replicating DNA, signaling response to stimuli and transporting molecules from one location to another. The proteome varies and is dynamic.
Risk Factors.” Research and Development We have assembled experienced research and development teams at our South San Francisco, California, Markham, Ontario, Canada, and Singapore locations and have the scientific, engineering, software, bioinformatic, and process talent that we believe is required to grow our business.
We continuously monitor and improve our processes and procedures and believe this high-quality service leads to customer satisfaction and retention. 8 Research and Development We have assembled experienced research and development teams at our South San Francisco, California, Markham, Ontario, Canada, and Singapore locations and have the scientific, engineering, software, bioinformatic, and process talent that we believe is required to grow our business.
To comply with applicable regulations, we have and will continue to incur significant expenses and allocate internal resources to manage compliance-related issues. In addition, such regulations could restrict our ability to expand or equip our facilities or could require us to acquire costly equipment or to incur other significant expenses to comply with the regulations.
In addition, such regulations could restrict our ability to expand or equip our facilities or could require us to acquire costly equipment or to incur other significant expenses to comply with the regulations.
Our mass cytometry instruments and reagents for commercial sale, as well as for internal research and development purposes, are manufactured at our facility in Canada. Our genomics reagent manufacturing was transferred from South San Francisco to Markham, Canada in late 2022. We rely on a limited number of suppliers for certain components and materials used in our products.
Our mass cytometry instruments and reagents for commercial sale, as well as for internal research and development purposes, are manufactured at our facility in Canada. Our genomics reagent manufacturing was transferred from South San Francisco to Markham, Canada in late 2022. Additionally, in connection with the Merger we acquired additional manufacturing operations in Boulder, Colorado.
If we are required to submit our products for pre-market review by the FDA, we may be required to delay marketing and commercialization while we obtain pre-market clearance or approval from the FDA. There would be no assurance that we could ever obtain such clearance or approval.
In the future, certain of our products or related applications could become subject to regulation as medical devices by the FDA. If we are required to submit our products for pre-market review by the FDA, we may be required to delay marketing and commercialization while we obtain pre-market clearance or approval from the FDA.
On April 1, 2022, our stockholders approved the closing of the Private Placement Issuance. On the closing date, April 4, 2022, we sold an aggregate of $225 million worth of Series B-1 Convertible Preferred Stock and Series B-2 Convertible Preferred Stock pursuant to Series B Convertible Preferred Stock Purchase Agreements.
On the closing date, April 4, 2022, we sold an aggregate of $225.0 million worth, and converted $25.0 million of previously issued bridge loans (the Bridge Loans), into shares of Series B-1 Convertible Preferred Stock and Series B-2 Convertible Preferred Stock pursuant to separate Series B Convertible Preferred Stock Purchase Agreements, dated and effective as of January 23, 2022, with each of the Purchasers (the Private Placement Issuance).
Real-time PCR analysis Analytical Instruments: 5 Product Product Description Applications Biomark TM HD System Real-time PCR analytical instrument for microfluidics-based workflows using prepared IFCs. Real-time PCR analysis X9 TM Real-Time PCR System Real-time PCR analytical instrument, including pre-processing steps for microfluidics-based workflows using IFCs. This system is designed to deliver the functionality of both the Juno and Biomark HD systems.
Genomics Analytical and Preparatory Instruments: X9 TM Real-Time PCR System Real-time PCR analytical instrument, including pre-processing steps for microfluidics-based workflows using IFCs. Real-time PCR analysis Biomark TM HD System Real-time PCR analytical instrument for microfluidics-based workflows using prepared IFCs.
Government Regulation Our products are currently labeled and sold for research use only (RUO), and we sell them to academic institutions, life sciences and clinical research laboratories that conduct research, and biopharmaceutical and biotechnology companies for non-diagnostic purposes. Our products are not intended or promoted for use in clinical practice in the diagnosis of disease or other conditions.
Laboratory Technology for Research Use Only Our proteomics, genomics, and analytical instruments, reagents, and other consumables are currently intended for, labeled and sold for research use only (RUO) applications, and we sell them to academic institutions, life sciences and clinical research laboratories that conduct research, and biopharmaceutical and biotechnology companies for non-clinical and non-diagnostic purposes.
These offerings provide low-cost alternatives to other available chemistries and allow customers to use IFCs in more flexible ways with validated assays for their targets of interest Customers We sell our instruments and consumables for research use only to leading academic research institutions, translational research and medicine centers, cancer centers, clinical research laboratories, and biopharmaceutical, biotechnology, and plant and animal research companies.
These offerings provide low-cost alternatives to other available chemistries and allow customers to use IFCs in more flexible ways with validated assays for their targets of interest.
One customer accounted for 11% of our total revenue for the year ended December 31, 2022. No single customer represented more than 10% of our total revenue for 2021.
One genomics customer accounted for 10% and 11% of our total revenue for the years ended December 31, 2023 and 2022, respectively.
Strategic Capital Allocation Our third priority is strategic capital allocation. We are actively pursuing business development opportunities in the life sciences industry with consolidation and synergies expected to be a key growth driver to sustain the longer-term value proposition of the Company. Market Opportunity We participate in growing and emerging market segments within the broader proteomics and genomics markets.
We are actively pursuing business development opportunities in the life sciences industry with consolidation and synergies expected to be a key growth driver to sustain the longer-term value proposition of the Company. The merger with SomaLogic is our latest step forward toward unlocking value in a highly fragmented market through scale, diversification and operational expertise.
We are a values-driven organization. We believe strong shared values are essential for Standard BioTools to evolve and grow and to be successful for the long-term. Our values form our relationships with customers, suppliers, investors and each other. They help us to model respect and inclusiveness in our words and actions.
Our values form our relationships with customers, suppliers, investors and each other. They help us to model respect and inclusiveness in our words and actions.
Our SEC reports can be accessed through the investor relations page of our website located at http://investors.standardbio.com.
Our SEC reports can be accessed through the investor relations page of our website located at http://investors.standardbio.com. The SEC also maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.
Human Resource Capital Our team members share our commitment to improving the human condition and, in turn, Standard BioTools strives to create an environment where our people can do their best work. We know that our employees, who supply the ideas, energy, and innovation that powers our business, are amongst some of Standard BioTools’ valued assets.
Accordingly, backlog at any given time is not a meaningful indicator of future sales. 21 Human Resource Capital Our team members share our commitment to improving the human condition and, in turn, Standard BioTools strives to create an environment where our people can do their best work.
The SEC also maintains an internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. 13 The contents of our website are not a part of, and are not incorporated by reference into, this Annual Report on Form 10-K or any other report or document we file with the SEC.
The contents of our website are not a part of, and are not incorporated by reference into, this Annual Report or any other report or document we file with the SEC. Any reference to our website is intended to be an inactive textual reference only.
Products We market life science tools, including preparatory and analytical instruments, consumables, and software for single cell proteomics analysis via mass cytometry and tissue imaging and for genomics analysis via real-time PCR and NGS library preparation.
Products We market life science tools, including preparatory and analytical instruments, consumables, and software for single cell proteomics analysis via mass cytometry and tissue imaging, and protein detection and analysis technologies and services for genomics analysis via real-time PCR and NGS library preparation. 4 Throughout 2022 and 2023, we have greatly enhanced our proteomics offerings through continuous quality improvements and targeting of our flagship flow cytometry instrument, the CyTOF XT™ System, and the commercial release of our third-generation imaging solution for spatial biology, the Hyperion XTi™ Imaging System.
These circumstances may include, among other things, written or verbal marketing claims regarding a product’s performance in clinical diagnostic applications and a manufacturer’s provision of technical support for such activities. In the future, certain of our products or related applications could become subject to regulation as medical devices by the FDA.
These circumstances may include, among other things, written or verbal marketing claims regarding a product’s performance in clinical diagnostic applications, a manufacturer’s provision of technical support for clinical validation or clinical applications of the product, or solicitation of business from clinical laboratories, all of which FDA may consider evidence of intended uses that conflict with RUO/IUO labeling.
In August 2022, we entered into a 39-month term sublease agreement for approximately 25% of our corporate headquarters location that commenced in October 2022. We expect to recognize sublease rental income of $4.8 million over the lease term. • Right Sizing Our Microfluidics Business.
As of December 31, 2023, we have entered into sublease agreements for approximately 50% of our corporate headquarters location and we expect to recognize future sublease rental income of $11.9 million over approximately 6 years. • Right Sizing Our Microfluidics Business.
On the closing date, the stockholders also approved the name change of our company to “Standard BioTools Inc.” Strategy Our new leadership team has identified three strategic priorities: revenue growth, improving operating discipline through the Standard BioTools Business Systems (SBS) and strategic capital allocation. Revenue Growth One of our top priorities is to grow our instrument, consumables and service revenue.
Future filings, beginning with our Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2024, will reflect the results of the combined company. Strategy Our new leadership team has identified three strategic priorities: revenue growth, improving operating discipline through the Standard BioTools Business Systems (SBS) and strategic capital allocation.
In addition, the Bridge Loans were automatically converted into shares of Series B-1 Preferred Stock and Series B-2 Preferred Stock. The $250 million proceeds from the Bridge Loans and Private Placement Issuance are being used for working capital and general corporate purposes.
The $250.0 million proceeds from the Bridge Loans and Private Placement Issuance are being used for working capital and general corporate purposes. On the closing date, the stockholders also approved the name change of our company to “Standard BioTools Inc.” In connection with the closing of the private placement, Dr.
We have significantly reduced our expenses in microfluidics research and development and marketing while narrowing our commercial focus on high value niche markets for specialized applications. • Portfolio Rationalization. We discontinued certain products including Laser Capture Microdissection (LCM), Flow Conductor, and COVID-19 diagnostic offerings.
We have significantly reduced our expenses in microfluidics research and development and marketing while narrowing our commercial focus to high value niche markets for specialized applications. Gross margin for this business segment improved by over 1,950 basis points in 2023, as compared to 2022. • Rationalizing our Product Portfolio.
A phased restructuring plan, including a reduction in force, was substantially completed in 2022 to improve efficiency, reduce operating costs and better align our workforce with the current needs of our business. As part of the restructuring plan, the following actions have been taken: • Reducing General and Administrative Expenses.
Following the closing of our private placement described above, we implemented a phased restructuring plan designed to improve efficiencies, expand gross margins, reduce operating costs and better align our workforce with the current needs of our business. Key highlights of our restructuring initiatives have included: 2 • Expanding Gross Margins.
Maxpar® antibodies and cell labeling reagents are available for use in flow cytometry. • We continued to deliver the Signature Q100 microfluidics platform to our OEM collaborator, Olink Holding AB.
We continued to deliver the Signature Q100 microfluidics platform to our OEM collaborator, Olink Holding AB. As discussed above, on January 5, 2024, we completed the Merger with SomaLogic, a global leader in proteomics technology.
In some cases, our customers may use our RUO products in their own laboratory-developed tests (LDTs) or in other FDA-regulated products for clinical diagnostic use. The FDA has historically exercised enforcement discretion in not enforcing the medical device regulations against LDTs and LDT manufacturers.
There would be no assurance that we could ever obtain such clearance or approval. In some cases, our customers may, on their own initiative and without consulting us, use our RUO-labeled products in their own LDTs or in other FDA-regulated products for clinical diagnostic use.
Removed
First, we entered into (i) a Loan Agreement (the Casdin Loan Agreement) with Casdin Private Growth Equity Fund II, L.P. and Casdin Partners Master Fund, L.P.
Added
(SomaLogic), creating a leading provider of differentiated multi-omics tools for research. Strategic Investment Transaction and Business Restructuring On April 1, 2022, our stockholders approved the closing of a private placement of preferred stock to Casdin Private Growth Equity Fund II, L.P. and Casdin Partners Master Fund, L.P.
Removed
Each Bridge Loan Agreement provided for a $12.5 million term loan to us.
Added
Michael Egholm was appointed President and Chief Executive Officer and Alex Kim as Chief Operating Officer of the Company. Between April 2022 and today, Mr. Egholm has rebuilt our entire executive leadership team, assembling a team of disciplined operators that we believe can execute our vision to become a diversified leader in life sciences tools.
Removed
Secondly, we entered into separate Series B Convertible Preferred Stock Purchase Agreements (the Purchase Agreements), including subject to the approval of our stockholders that we issue and sell an aggregate of $225 million of convertible preferred stock, consisting of: (i) 112,500 shares of the Company’s Series B-1 Convertible Preferred Stock, par value $0.001 per share (the Series B-1 Preferred Stock), at a purchase price of $1,000 per share to Casdin; and (ii) 112,500 shares of the Company’s Series B-2 Convertible Preferred Stock, par value $0.001 per share (the Series B-2 Preferred Stock, and together with the Series B-1 Preferred Stock, the Series B Preferred Stock) at a purchase price of $1,000 per share to Viking (collectively, the Private Placement Issuance).
Added
Collectively, the Standard BioTools executive leadership team has over 140 years of combined life sciences experience. We have also reconstituted our board of directors since early 2022, adding significant life sciences operating, technology and capital markets expertise.
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We established new growth strategies for our product lines.
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In only seven quarters since the initiation of our restructuring plans in April 2022, our new management has significantly improved our legacy business performance, as demonstrated by the results of the fiscal year ended December 31, 2023 during which revenues increased 9% year-to-year (including over 40% growth in instrument revenue), gross margins expanded by more than 25% year-to-year, operating expenses declined by approximately 17% year-to-year, and operating cash burn declined by 53% year-to-year.
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We recognized $4.2 million in severance related restructuring expenses and $1.2 million of consulting and legal expenses for the twelve months ended December 31, 2022. Based on actions taken to date, we realized operating expense reductions of approximately $5.5 million in 2022. See Note 16 Restructuring and Other Related Costs within our consolidated financial statements for further details.
Added
On January 5, 2024, we completed the Merger with SomaLogic and Martis Merger Sub, Inc., a Delaware corporation and direct wholly owned subsidiary of the Company (Merger Sub), pursuant to which, at the effective time of the Merger (the Effective Time), among other matters, Merger Sub merged with and into SomaLogic, with SomaLogic surviving as a wholly owned subsidiary of the Company.
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Flow Cytometry CyTOF XT™ System The CyTOF XT mass cytometry system performs highly automated high-parameter (>50) single-cell analysis using antibodies conjugated to metal isotopes.
Added
Upon the terms and subject to the conditions set forth in that certain Agreement and Plan of Merger, dated as of October 4, 1 2023, by and between the Company, SomaLogic and Merger Sub (the Merger Agreement), at the Effective Time, each share of SomaLogic common stock, par value $0.0001 per share (SomaLogic Common Stock), converted into the right to receive 1.11 shares (the Exchange Ratio) of the Company’s common stock, par value $0.001 per share.
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Tissue Imaging Hyperion+™ Imaging System The Hyperion+ Imaging System provides lower limits of detection and twice the speed to results as compared to the Hyperion Imaging System. Tissue Imaging Hyperion™ Tissue Imager The Hyperion Tissue Imager scans tissues at 1 micron resolution.
Added
SomaLogic is catalyzing drug research and development and biomarker identification as a global leader in proteomics technology. With a single 55 microliter plasma or serum sample, SomaLogic can run 11,000 protein measurements, covering more than a third of the approximately 20,000 proteins in the human body and twice as many as other proteomic platforms.
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It can be purchased as an upgrade for the Helios system to enable imaging capability, then referred to as Hyperion Imaging System. Tissue Imaging Hyperion+™ Tissue Imager The Hyperion+ Tissue Imager scans tissues at twice the speed of the Hyperion.
Added
For more than 20 years SomaLogic has supported pharmaceutical companies, and academic and contract research organizations who rely on SomaLogic’s protein detection and analysis technologies to fuel drug, disease, and treatment discoveries in such areas as oncology, diabetes, and cardiovascular, liver and metabolic diseases.
Removed
It can be purchased as an upgrade for the Helios system to enable imaging capability, then referred to as Hyperion+ Imaging System. Tissue Imaging Assays and Reagents: 4 Product Product Description Applications Maxpar® Reagents Maxpar® reagents are included in multiple product lines addressing needs in functional and phenotypic profiling of single cells, as well as nucleic acid detection.
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The combination of Standard BioTools and SomaLogic represents an opportunity for the combined company to leverage this operational expertise and discipline to achieve cost synergies for the combined company and to create new revenue opportunities with the combined platform, which we believe will inure to the benefit of our customers and create long-term value for the combined company’s stockholders.
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The product lines include more than 800 pre-conjugated antibodies, application-specific kits, and custom antibody labeling services. Flow Cytometry and Tissue Imaging Maxpar Direct Immune Profiling Assay The assay enables identification and characterization of 37 immune cell populations with automated software.
Added
Including expected acquired cash and investments, the combined company had a balance of approximately $565.5 million of cash, cash equivalents, short-term investments and restricted cash at December 31, 2023, which amount includes SomaLogic’s unaudited cash, cash equivalents and short-term investments of $449.8 million as of December 31, 2023.
Removed
The kit contains 30 pre-titrated antibodies provided in a dry single-tube format and is also compatible with additional expansion panels focusing on specific cell populations. Flow Cytometry Maxpar On Demand Reagents Made to order conjugated antibodies, pre-verified and available with seven-day turn-around.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

98 edited+200 added−92 removed259 unchanged
Biggest changeIn the past, we have encountered quality issues that have reduced our manufacturing yield or required the use of additional manufacturing processes. • The electron multiplier detector included in the Hyperion/Hyperion+/CyTOF/CyTOF XT systems and certain metal isotopes used with the Hyperion/Hyperion+/CyTOF/CyTOF XT systems are purchased from sole source suppliers. • The raw materials for our Delta Gene and SNP Type assays and Access Array target-specific primers are available from a limited number of sources.
Biggest changeIn the past, we have encountered quality issues that have reduced our manufacturing yield or required the use of additional manufacturing processes. • The electron multiplier detector included in the Hyperion/Hyperion+/CyTOF/CyTOF XT systems and certain metal isotopes used with the Hyperion/Hyperion+/CyTOF/CyTOF XT systems are purchased from sole source suppliers. • The raw materials for our Delta Gene and SNP Type assays and Access Array target-specific primers are available from a limited number of sources. • The microarray readout systems used to complete SomaScan assays, and which are included in assay kits sold to customers, are provided by a sole source supplier. • The supply of streptavidin beads used to complete the SomaScan assay is provided by a sole source supplier. • The Tecan Fluent 780, an automated liquid handling instrument required to perform the SomaScan assay, is sourced from a sole supplier.
During much of the COVID-19 pandemic, travel restrictions have caused significant slowdowns in China, Japan, and other parts of the Asia-Pacific region. These slowdowns, in addition to shipment delays in China due to delays in obtaining VAT and import tax exemptions for our products, have caused our financial results to suffer.
During much of the COVID-19 pandemic, travel restrictions caused significant slowdowns in China, Japan, and other parts of the Asia-Pacific region. These slowdowns, in addition to shipment delays in China due to delays in obtaining VAT and import tax exemptions for our products, have caused our financial results to suffer.
Bribery Act of 2010 and other anticorruption laws, and the RoHS and WEEE directives and REACH regulation, which regulate the use and importation of certain hazardous substances in, and require the collection, reuse, and recycling of waste from, products we manufacture; • required compliance with U.S. laws such as the Foreign Corrupt Practices Act, and other U.S. federal laws and regulations established by the Office of Foreign Assets Control; • export requirements and import or trade restrictions; • laws and business practices favoring local companies; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • changes in social, economic, and political conditions or in laws, regulations and policies governing foreign trade, manufacturing, development, and investment both domestically as well as in the other countries and jurisdictions in which we operate and into which we sell our products, including as a result of the separation of the United Kingdom from the European Union (Brexit) or the Russian invasion of Ukraine; • business interruptions and travel restrictions resulting from global sociopolitical events, including war and terrorism, public health crises (including the ongoing COVID-19 pandemic), and natural disasters including earthquakes, typhoons, floods and fires; • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers; • difficulties and costs of staffing and managing foreign operations; and • difficulties protecting or procuring intellectual property rights.
Bribery Act of 2010 and other anticorruption laws, and the RoHS and WEEE directives and REACH regulation, which regulate the use and importation of certain hazardous substances in, and require the collection, reuse, and recycling of waste from, products we manufacture; 48 • required compliance with U.S. laws such as the Foreign Corrupt Practices Act, and other U.S. federal laws and regulations established by the Office of Foreign Assets Control; • export requirements and import or trade restrictions; • laws and business practices favoring local companies; • longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • changes in social, economic, and political conditions or in laws, regulations and policies governing foreign trade, manufacturing, development, and investment both domestically as well as in the other countries and jurisdictions in which we operate and into which we sell our products, including as a result of the separation of the United Kingdom from the European Union (Brexit) or the Russian invasion of Ukraine; • business interruptions and travel restrictions resulting from global sociopolitical events, including war and terrorism, public health crises (including the ongoing COVID-19 pandemic), and natural disasters including earthquakes, typhoons, floods and fires; • potentially adverse tax consequences, tariffs, customs charges, bureaucratic requirements, and other trade barriers; • difficulties and costs of staffing and managing foreign operations; and • difficulties protecting or procuring intellectual property rights.
Any merger or acquisition we may pursue would involve numerous risks, including but not limited to the following: • difficulties in integrating and managing the operations, technologies, and products of the companies we acquire; • diversion of our management’s attention from normal daily operation of our business; • our inability to maintain the key business relationships and the reputations of the businesses we acquire; • our inability to retain key personnel of the acquired company; • uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market positions; • our dependence on unfamiliar affiliates and customers of the companies we acquire; • insufficient revenue to offset our increased expenses associated with acquisitions; • our responsibility for the liabilities of the businesses we acquire, including those which we may not anticipate; • our inability to generate revenue from acquired technology or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; • the possibility that we may not realize the value of acquired assets recorded as goodwill or intangible assets, and would be required to incur material charges relating to the impairment of those assets; and 21 • our inability to maintain internal standards, controls, procedures, and policies.
Any merger or acquisition we may pursue would involve numerous risks, including but not limited to the following: • difficulties in integrating and managing the operations, technologies, and products of the companies we acquire; • diversion of our management’s attention from normal daily operation of our business; • our inability to maintain the key business relationships and the reputations of the businesses we acquire; • our inability to retain key personnel of the acquired company; • uncertainty of entry into markets in which we have limited or no prior experience and in which competitors have stronger market positions; • our dependence on unfamiliar affiliates and customers of the companies we acquire; • insufficient revenue to offset our increased expenses associated with acquisitions; • our responsibility for the liabilities of the businesses we acquire, including those which we may not anticipate; • our inability to generate revenue from acquired technology or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; • the possibility that we may not realize the value of acquired assets recorded as goodwill or intangible assets, and would be required to incur material charges relating to the impairment of those assets; and • our inability to maintain internal standards, controls, procedures, and policies.
Our future funding requirements will depend on many factors, including: • market acceptance of our products; • the cost of our research and development activities; • the cost of filing and prosecuting patent applications; • the cost of defending any litigation including intellectual property, employment, contractual or other litigation; • the cost and timing of regulatory clearances or approvals, if any; • the cost and timing of establishing additional sales, marketing, and distribution capabilities; • the cost and timing of establishing additional technical support capabilities; • fluctuations in cash demands (e.g., due to interest or principal payments or payouts under existing cash compensation plans); • variability in sales and timing of related cash collections; • the effectiveness of our efficiency, cost-savings and other strategic initiatives (including those contemplated by the restructuring plan that we announced in August 2022); • the impact of any natural disasters or public health crises (including the COVID-19 pandemic); • the effect of competing technological and market developments; and • the extent to which we acquire, license or otherwise invest in businesses, products, and technologies.
Our future funding requirements will depend on many factors, including: • market acceptance of our products; • the cost of our research and development activities; • the cost of filing and prosecuting patent applications; • the cost of defending any litigation including intellectual property, employment, contractual or other litigation; • the cost and timing of regulatory clearances or approvals, if any; 50 • the cost and timing of establishing additional sales, marketing, and distribution capabilities; • the cost and timing of establishing additional technical support capabilities; • fluctuations in cash demands (e.g., due to interest or principal payments or payouts under existing cash compensation plans); • variability in sales and timing of related cash collections; • the effectiveness of our efficiency, cost-savings and other strategic initiatives (including those contemplated by the restructuring plan that we announced in August 2022); • the impact of any natural disasters or public health crises (including the COVID-19 pandemic); • the effect of competing technological and market developments; and • the extent to which we acquire, license or otherwise invest in businesses, products, and technologies.
Potential disputes between us and one of our existing licensors concerning the terms or 38 conditions of the applicable license agreement could result, among other risks, in substantial management distraction; increased expenses associated with litigation or efforts to resolve disputes; substantial customer uncertainty concerning the direction of our product lines; potential infringement claims against us and/or our customers, which could include efforts by a licensor to enjoin sales of our products; customer requests for indemnification by us; and, in the event of an adverse determination, our inability to operate our business as currently operated.
Potential disputes between us and one of our existing licensors concerning the terms or conditions of the applicable license agreement could result, among other risks, in substantial management distraction; increased expenses associated with litigation or efforts to resolve disputes; substantial customer uncertainty concerning the direction of our product lines; potential infringement claims against us and/or our customers, which could include efforts by a licensor to enjoin sales of our products; customer requests for indemnification by us; and, in the event of an adverse determination, our inability to operate our business as currently operated.
This significant amount of debt has important risks to us and our investors, including: • requiring a portion of our cash flow from operations to make interest payments on this debt; • increasing our vulnerability to general adverse economic and industry conditions; • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise.
This significant amount of debt has important risks to us and our investors, including: • requiring a portion of our cash flow from operations to make interest payments on this debt; • increasing our vulnerability to general adverse economic and industry conditions; • reducing the cash flow available to fund capital expenditures and other corporate purposes and to grow our business; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry; and 53 • limiting our ability to borrow additional funds as needed or take advantage of business opportunities as they arise.
Labor, tariff, or World Trade Organization-related disputes, piracy, physical damage to shipping facilities or equipment caused by severe weather or terrorist incidents, congestion at shipping facilities, complications related to public health crises (including the ongoing COVID-19 pandemic), inadequate equipment to load, dock, and offload our products, energy-related tie-ups, or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.
Labor, tariff, or World Trade Organization-related disputes, piracy, physical damage to shipping facilities or equipment caused by severe weather or terrorist incidents, congestion at shipping facilities, complications related to public health crises (including the COVID-19 pandemic), inadequate equipment to load, dock, and offload our products, energy-related tie-ups, or other factors could disrupt or delay shipping or off-loading of our products domestically and internationally.
In addition, a significant amount of our operating expenses is relatively fixed due to our manufacturing, research and development, and sales and general administrative efforts. Any 17 failure to adjust spending quickly enough to compensate for a shortfall relative to our anticipated revenue could magnify the adverse impact of such shortfalls on our results of operations.
In addition, a significant amount of our operating expenses is relatively fixed due to our manufacturing, research and development, and sales and general administrative efforts. Any failure to adjust spending quickly enough to compensate for a shortfall relative to our anticipated revenue could magnify the adverse impact of such shortfalls on our results of operations.
These policies may be based on a wide variety of factors, including concerns regarding any future federal government budget sequestrations, the availability of resources to make purchases, the spending priorities among various types of equipment, policies regarding spending during recessionary periods, tariffs and trade restrictions, and changes in the political climate.
These policies may be based on a wide variety of factors, including concerns regarding any future federal government budget sequestrations, the availability of resources to make purchases, the spending priorities among various types of equipment, policies 34 regarding spending during recessionary periods, tariffs and trade restrictions, and changes in the political climate.
Additionally, in response to a surge in COVID-19 infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains. We may not be able to convert our orders in backlog into revenue.
Additionally, in response to a surge in COVID-19 infections in the first half of 2022, the Chinese government imposed lockdowns in certain parts of the country that have negatively impacted and continue to negatively impact manufacturing and/or supply chains. 36 We may not be able to convert our orders in backlog into revenue.
In addition, third parties may assert 37 that we are employing their proprietary technology without authorization, and if they are successful in making such claims, we may be forced to enter into license agreements, pay additional royalties or license fees, or enter into settlements that include monetary obligations or restrictions on our business.
In addition, third parties may assert that we are employing their proprietary technology without authorization, and if they are successful in making such claims, we may be forced to enter into license agreements, pay additional royalties or license fees, or enter into settlements that include monetary obligations or restrictions on our business.
Risks Related to our Capital Structure • The holders of our Series B Preferred Stock (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions. • The market value of our common stock could decline if the holders of our Series B Preferred Stock sell their shares. • The holders of our Series B Preferred Stock may exercise influence over us, including through their ability to designate members of our board of directors. 16 RISKS RELATED TO OUR BUSINESS, INDUSTRY, AND STRATEGY Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year due to a number of factors, and a significant variance in our operating results or rates of growth from our financial guidance or market expectations, if any, could lead to substantial volatility in our stock price.
Risks Related to our Capital Structure • The holders of our Series B Preferred Stock (as defined below) own a significant portion of our total outstanding voting securities and may prevent other stockholders from influencing material corporate decisions. • The market value of our common stock could decline if the holders of our Series B Preferred Stock sell their shares. • The holders of our Series B Preferred Stock may exercise influence over us, including through their ability to designate members of our board of directors. 25 RISKS RELATED TO OUR BUSINESS, INDUSTRY, AND STRATEGY Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year due to a number of factors, and a significant variance in our operating results or rates of growth from our financial guidance or market expectations, if any, could lead to substantial volatility in our stock price.
Operations at our manufacturing facilities and our subcontractors, as well as our other operations and those of our customers, are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises, fire, earthquake, volcanic eruptions, energy shortages, flooding, or other natural disasters.
Operations at our manufacturing facilities and our subcontractors, as well as our other operations and those of our customers, 35 are subject to disruption for a variety of reasons, including work stoppages, acts of war, terrorism, public health crises, fire, earthquake, volcanic eruptions, energy shortages, flooding, or other natural disasters.
Any costs incurred or loss of business that occurs as a result of compliance or other liabilities under these laws or regulations could harm our business and operating results. Adverse conditions in the domestic and global economy and disruption of financial markets may significantly harm our revenue, profitability, and results of operations.
Any costs incurred or loss of business that occurs as a result of compliance or other liabilities under these laws or regulations could harm our business and operating results. 49 Adverse conditions in the domestic and global economy and disruption of financial markets may significantly harm our revenue, profitability, and results of operations.
For example, if the value of the U.S. dollar increases relative to foreign currencies, our products could become more costly to the international consumer and therefore less competitive in international markets, or if the value of the U.S. dollar decreases relative to the Singapore dollar or the Canadian dollar, it would become more costly in U.S. dollars for us to manufacture our products in Singapore 32 and/or in Canada.
For example, if the value of the U.S. dollar increases relative to foreign currencies, our products could become more costly to the international consumer and therefore less competitive in international markets, or if the value of the U.S. dollar decreases relative to the Singapore dollar or the Canadian dollar, it would become more costly in U.S. dollars for us to manufacture our products in Singapore and/or in Canada.
Our products are technically complex and used for highly specialized applications. As a result, we believe it is necessary to continue to develop a direct sales force that includes people with specific scientific backgrounds and expertise, and a marketing group with technical sophistication.
Our products are technically complex and used for highly specialized 37 applications. As a result, we believe it is necessary to continue to develop a direct sales force that includes people with specific scientific backgrounds and expertise, and a marketing group with technical sophistication.
You should not rely on our operating results for any prior quarterly or annual period as an indication of our future operating performance. If we are unable to achieve adequate revenue growth, our operating results could suffer and our stock price could decline.
You should not rely on our operating results for any prior quarterly or annual period as an indication of our future operating performance. If we are unable to achieve adequate revenue growth, our operating results could suffer and our stock price could 26 decline.
If we finance acquisitions by issuing equity or convertible debt securities, our existing stockholders will likely experience dilution, and if we finance future acquisitions with debt funding, we will incur interest expense and may have to comply with financial covenants and secure that debt obligation with our assets.
If we finance acquisitions by issuing equity or convertible debt securities, our existing stockholders will likely experience dilution, and if we 30 finance future acquisitions with debt funding, we will incur interest expense and may have to comply with financial covenants and secure that debt obligation with our assets.
Supreme Court decision held, among other things, that claims to isolated genomic DNA occurring in nature are not patent eligible, while claims relating to synthetic DNA may be patent eligible. We expect the ruling will result in additional litigation in our industry.
Supreme Court decision held, among other things, that claims to isolated genomic DNA occurring in nature are not patent eligible, while claims relating 54 to synthetic DNA may be patent eligible. We expect the ruling will result in additional litigation in our industry.
If our products contain defects, we may experience: • a failure to achieve market acceptance or expansion of our product sales; • loss of customer orders and delay in order fulfillment; • damage to our brand reputation; • increased cost of our warranty program due to product repair or replacement; 27 • product recalls or replacements; • inability to attract new customers; • diversion of resources from our manufacturing and research and development departments into our service department; and • legal claims against us, including product liability claims, which could be costly and time consuming to defend and result in substantial damages.
If our products contain defects, we may experience: • a failure to achieve market acceptance or expansion of our product sales; • loss of customer orders and delay in order fulfillment; • damage to our brand reputation; 39 • increased cost of our warranty program due to product repair or replacement; • product recalls or replacements; • inability to attract new customers; • diversion of resources from our manufacturing and research and development departments into our service department; and • legal claims against us, including product liability claims, which could be costly and time consuming to defend and result in substantial damages.
The Certificates of Designations for the Series B Preferred Stock also provide that for so long as the Casdin Preferred Percentage or Viking Preferred Percentage, as applicable, is equal to or greater than 7.5%, the director designated by the holders of the Series B-1 Preferred Stock or the Series B-2 Preferred Stock, as applicable, will have certain consent rights over, among other things: (i) any increase in the number of directors on our board of directors beyond seven; (ii) the hiring, promotion, demotion, or termination of the Company’s Chief Executive Officer; (iii) entering into or modifying (including by waiver) any transaction, agreement or arrangement with any Related Person (as defined in the Certificates of Designations for the Series B Preferred Stock), subject to certain exceptions; (iv) any voluntary petition under any applicable federal or state bankruptcy or insolvency law effected by the Company; (v) any change in the principal business of the Company or entry by the Company into any material new line of business; and (vi) for a period of three years after the closing date of the Private Placement Issuance, (A) any acquisition (including by merger, consolidation or acquisition of stock or assets) of any assets, securities or property of any other person or (B) any sale, lease, license, transfer or other disposition of any assets of the Company or any of its subsidiaries, in each case, other than acquisitions or dispositions of inventory or equipment in the ordinary course of business consistent with past practice, for consideration in excess of $50,000,000 in the aggregate in any six month period.
The Certificates of Designations for the Series B Preferred Stock also provide that for so long as the Casdin Preferred Percentage or Viking Preferred Percentage, as applicable, is equal to or greater than 7.5%, the director designated by the holders of the Series B-1 Preferred Stock or the Series B-2 Preferred Stock, as applicable, will have certain consent rights over, among other things: (i) any increase in the number 57 of directors on our board of directors beyond seven; (ii) the hiring, promotion, demotion, or termination of the Company’s Chief Executive Officer; (iii) entering into or modifying (including by waiver) any transaction, agreement or arrangement with any Related Person (as defined in the Certificates of Designations for the Series B Preferred Stock), subject to certain exceptions; (iv) any voluntary petition under any applicable federal or state bankruptcy or insolvency law effected by the Company; (v) any change in the principal business of the Company or entry by the Company into any material new line of business; and (vi) for a period of three years after the closing date of the Private Placement Issuance, (A) any acquisition (including by merger, consolidation or acquisition of stock or assets) of any assets, securities or property of any other person or (B) any sale, lease, license, transfer or other disposition of any assets of the Company or any of its subsidiaries, in each case, other than acquisitions or dispositions of inventory or equipment in the ordinary course of business consistent with past practice, for consideration in excess of $50.0 million in the aggregate in any six month period.
The United 31 States has commenced certain trade actions, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China. In addition, the United States has commenced certain trade actions as a result of the Russian invasion of Ukraine, which has resulted in retaliatory measures by Russia.
The United States has commenced certain trade actions, including imposing increased tariffs on certain goods imported into the United States from China, which has resulted in retaliatory tariffs by China. In addition, the United States has commenced certain trade actions as a result of the Russian invasion of Ukraine, which has resulted in retaliatory measures by Russia.
Risks Related to Operations and Reliance on Third Parties • We may experience development or manufacturing problems or delays. • Our business depends on research and development spending levels of our customers. • Disruption of our manufacturing facilities or other operations, or in the operations of our customers or business partners, could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers. • We rely on single and sole source suppliers for some of the components and materials used in our products. • We may not be able to convert our orders in backlog into revenue. • Any disruption or delay in the shipping or off-loading of our products may have an adverse effect on our financial condition and results of operations. • Our business operations depend upon the continuing efforts of our management team and other skilled and experienced personnel. • Our distribution capabilities and direct sales, field support, and marketing forces must be sufficient to meet our customers’ needs. • To use our analytical systems, customers typically need to purchase specialized reagents. • Security breaches, loss of data, cyberattacks, and other IT failures could adversely affect our business. 15 Risks Related to Quality and the Regulatory Environment • Our products could have defects or errors. • To the extent we elect to label and promote any of our products as medical devices, we would be required to obtain prior approval or clearance by the U.S.
Risks Related to Operations and Reliance on Third Parties • We may experience development or manufacturing problems or delays. • Our business depends on research and development spending levels of our customers. • Disruption of our manufacturing facilities or other operations, or in the operations of our customers or business partners, could result in cancellation of orders, delays in deliveries or other business activities, or loss of customers. • We rely on single and sole source suppliers for some of the components and materials used in our products. • We may not be able to convert our orders in backlog into revenue. • Any disruption or delay in the shipping or off-loading of our products may have an adverse effect on our financial condition and results of operations. • Our business operations depend upon the continuing efforts of our management team and other skilled and experienced personnel. • Our distribution capabilities and direct sales, field support, and marketing forces must be sufficient to meet our customers’ needs. • To use our analytical systems, customers typically need to purchase specialized reagents. • Security incidents, loss of data, cyberattacks, and other IT failures could adversely affect our business. 24 Risks Related to Quality and the Regulatory Environment • Our products could have defects or errors. • To the extent we elect to label and promote any of our products as medical devices, we would be required to obtain prior approval or clearance by the U.S.
From 35 time to time, we may review our corporate structure and tax positions in the various international jurisdictions in which we operate and such review may result in changes to how we structure our international business operations, which may adversely impact our effective income tax rate.
From time to time, we may review our corporate structure and tax positions in the various international jurisdictions in which we operate and such review may result in changes to how we structure our international business operations, which may adversely impact our effective income tax rate.
We also may have to reduce marketing, customer support, research and 33 development, or other resources devoted to our products, or cease operations. Any of these factors could harm our operating results.
We also may have to reduce marketing, customer support, research and development, or other resources devoted to our products, or cease operations. Any of these factors could harm our operating results.
Furthermore, many such reactions take place within the confines of single cells, which have also demonstrated unexpected behavior when grown and manipulated within microfluidic environments. As a result, research 19 and development efforts may be required to transfer certain reactions and cell handling techniques to our systems.
Furthermore, many such reactions take place within the confines of single cells, which have also demonstrated unexpected behavior when grown and manipulated within microfluidic environments. As a result, research and development efforts may be required to transfer certain reactions and cell handling techniques 28 to our systems.
Risks associated with implementing a company-wide enterprise resource planning (ERP) system could adversely affect our business and results of operations or the effectiveness of internal control over financial reporting. We are preparing to implement a new company-wide ERP system in 2023 to handle the business and financial processes within our operations and corporate functions.
Risks associated with implementing a company-wide enterprise resource planning (ERP) system could adversely affect our business and results of operations or the effectiveness of internal control over financial reporting. We are preparing to implement a new company-wide ERP system in 2024 to handle the business and financial processes within our operations and corporate functions.
Additionally, the imposition of tariffs and delays in issuing VAT and import tax exemptions have adversely 22 affected the sales of our products in China.
Additionally, the imposition of tariffs and delays in issuing VAT and import tax exemptions have adversely affected the sales of our products in China.
As of December 31, 2022, we had outstanding $0.6 million aggregate principal amount of our 2.75% Convertible Senior Notes due 2034 that were issued in February 2014 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% Convertible Senior Notes due 2024 that were issued in November 2019 (2019 Notes and, together with the 2014 Notes, the Convertible Notes).
As of December 31, 2023, we had outstanding $0.6 million aggregate principal amount of our 2.75% Convertible Senior Notes due 2034 that were issued in February 2014 (2014 Notes) and $55.0 million aggregate principal amount of our 5.25% Convertible Senior Notes due 2024 that were issued in November 2019 (2019 Notes and, together with the 2014 Notes, the Convertible Notes).
The Credit Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.
The Term Loan Facility contains customary affirmative and negative covenants which, unless waived by the bank, limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets, enter into affiliate transactions, undergo a change of control, or engage in merger and acquisition activity, including merging or consolidating with a third party.
These losses have resulted principally from costs incurred in our research and development programs, and from our manufacturing costs and selling, general, and administrative expenses. To date, we have funded our operations primarily through equity offerings, the issuance of debt instruments, and from sales of our products.
These losses have resulted principally from costs incurred in our research and development programs, and from our manufacturing costs and selling, general, and administrative (SG&A) expenses. To date, we have funded our operations primarily through equity offerings, the issuance of debt instruments, and from sales of our products.
While we have implemented security controls, updated our policies, and augmented our information security training program to reduce the risk of cyberattacks and security breaches, there is no guarantee that these measures will be adequate to safeguard all systems with the increased number of employees working remotely.
While we have implemented security controls, updated our policies, and augmented our information security training program to reduce the risk of cyberattacks and cybersecurity incidents, there is no guarantee that these measures will be adequate to safeguard all systems with the increased number of employees working remotely.
Many events can cause an order to be delayed or not completed at all, some of which may be out of our control, including the potential impacts from the COVID-19 pandemic and our suppliers not being able to provide us with products or components.
Many events can cause an order to be delayed or not completed at all, some of which may be out of our control, including, for example, the impacts from the COVID-19 pandemic and our suppliers not being able to provide us with products or components.
Our revenue, results of operations, and revenue growth rates have varied in the past and may continue to vary significantly from quarter-to-quarter or year-to-year. We may experience substantial variability in our product mix from period-to-period as revenue from sales of our instruments relative to sales of our consumables may fluctuate or deviate significantly from expectati ons.
Our revenue, results of operations, and revenue growth rates have varied in the past and may continue to vary significantly from quarter-to-quarter or year-to-year. We may experience substantial variability in our product mix from period-to-period as revenue from sales of our instruments relative to sales of our consumables may fluctuate or deviate significantly from expectations.
Additionally, all of our integrated fluidic circuits (IFCs) for commercial sale are manufactured at our facility in Singapore. Production of the elastomeric block that is at the core of our IFCs is a complex process requiring advanced clean rooms, sophisticated equipment, and strict adherence to procedures.
Additionally, all of our IFCs for commercial sale are manufactured at our facility in Singapore. Production of the elastomeric block that is at the core of our IFCs is a complex process requiring advanced clean rooms, sophisticated equipment, and strict adherence to procedures.
If we fail to comply with the covenants and our other obligations under the Credit Facility, the lending bank would be able to accelerate the required repayment of amounts due under the Credit Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Credit Facility.
If we fail to comply with the covenants and our other obligations under the Term Loan Facility, the lending bank would be able to accelerate the required repayment of amounts due under the Term Loan Facility and, if they are not repaid, could foreclose upon the assets securing our obligations under the Term Loan Facility.
In recent years, there has been significant volatility in the global capital markets, increasing the cost of—and adversely impacting access to—capital. If we raise additional funds by issuing equity securities, our stock holders will experience dilution.
In recent years, there has been significant volatility in the global capital markets, increasing the cost of—and adversely impacting access to—capital. If we raise additional funds by issuing equity securities, our stockholders will experience dilution.
Item 1A. Risk Factors We operate in a rapidly changing environment that involves numerous uncertainties and risks. The following risks and uncertainties may have a material and adverse effect on our business, financial condition, or results of operations.
Item 1A. R isk Factors We operate in a rapidly changing environment that involves numerous uncertainties and risks. The following risks and uncertainties may have a material and adverse effect on our business, financial condition, or results of operations.
Summary of Risk Factors Risks Related to our Business, Industry, and Strategy • Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year, and may not be consistent with expectations. • If we engage in future acquisitions or strategic collaborations, our capital requirements may increase, our stockholders may be diluted, we may incur debt or assume contingent liabilities, and we may be subject to other risks. • We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future. • The ongoing COVID-19 pandemic, a potential domestic and global recession, and related supply chain issues may adversely affect our business operations. • Market opportunities may not develop as we expect. • The life science markets are highly competitive and subject to rapid technological change. • If our research and product development efforts do not result in commercially viable products within anticipated timelines, if at all, our business and results of operations will be adversely affected. • Our future success is dependent upon our ability to expand our customer base and introduce new applications. • If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected. • If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed. • The planned implementation of a new company-wide enterprise resource planning (ERP) system could adversely affect our business. • Our business growth strategy involves the potential for significant acquisitions, and our operating results and prospects could be harmed if we are unable to integrate future acquisitions successfully.
Summary of Risk Factors Risks Related to our Business, Industry, and Strategy • Our financial results and revenue growth rates have varied significantly from quarter-to-quarter and year-to-year, and may not be consistent with expectations. • If we engage in future acquisitions or strategic collaborations, our capital requirements may increase, our stockholders may be diluted, we may incur debt or assume contingent liabilities, and we may be subject to other risks. • We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future. • We are subject to risks associated with natural disasters and global events. • Market opportunities may not develop as we expect. • The life science markets are highly competitive and subject to rapid technological change. • If our research and product development efforts do not result in commercially viable products within anticipated timelines, if at all, our business and results of operations will be adversely affected. • Our future success is dependent upon our ability to expand our customer base and introduce new applications. • If our products fail to achieve and sustain sufficient market acceptance, our revenue will be adversely affected. • If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed. • The planned implementation of a new company-wide enterprise resource planning (ERP) system could adversely affect our business. • Our business growth strategy involves the potential for significant acquisitions, and our operating results and prospects could be harmed if we are unable to integrate future acquisitions successfully.
Security breaches, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results.
Security incidents, loss of data, cyberattacks, and other information technology failures could disrupt our operations, damage our reputation, and adversely affect our business, operations, and financial results.
For example, our Canadian subsidiary (SB Canada) was party to an interim license agreement, now expired, under which the licensor granted SB Canada a worldwide, non-exclusive, research use only, royalty bearing license to certain cytometric reagents, instruments, and other products.
For example, our Canadian subsidiary (SB Canada) was party to an interim license agreement, now expired, under which the licensor granted SB Canada a worldwide, non-exclusive, RUO, royalty bearing license to certain cytometric reagents, instruments, and other products.
Our obligations to the holders of our Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. 44 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Our obligations to the holders of our Series B Preferred Stock could also limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition. ITEM 1B. UNRES OLVED STAFF COMMENTS None.
We are dependent upon our data and information technology systems for the effective operation of our business and for the secure maintenance and storage of confidential data relating to our business and third-party businesses.
We are dependent upon our data and information technology systems for the effective operation of our business and for the secure maintenance and storage of confidential data, personal data, and trade secret information relating to our business and third-party businesses.
You should consider these risks and uncertainties carefully, together with all of the other information included or incorporated by reference in this annual report on Form 10-K. The risks described below are not the only ones we face.
You should consider these risks and uncertainties carefully, together with all of the other information included or incorporated by reference in this Annual Report. The risks described below are not the only ones we face.
Any such compromise of our information technology systems could result in the unauthorized publication of our confidential business or proprietary information and unauthorized release of customer, supplier or employee data, any of which could expose us to a risk of legal claims or proceedings, liability under privacy or other laws, disruption of our operations and damage to our reputation, which could divert our management’s attention from the operation of our business and materially and adversely affect our business, revenues and competitive position.
Any such compromise of our information technology systems could result in the unauthorized access to, or acquisition or publication of our 38 confidential business or proprietary information, customer, supplier or employee data, or other personal data or trade secrets information, any of which could expose us to a risk of legal claims or proceedings, liability under privacy or other laws, disruption of our operations and damage to our reputation, which could divert our management’s attention from the operation of our business and materially and adversely affect our business, revenues, and competitive position.
Additionally, we are required to maintain a minimum Adjusted Quick Ratio (as defined in the Credit Facility) of at least 1.25 to 1.00.
Additionally, we are required to maintain a minimum Adjusted Quick Ratio (as defined in the Term Loan Facility) of at least 1.25 to 1.00.
Even if we successfully implement some or all of these planned improvements, we cannot guarantee that our current and potential customers will find our enhanced systems to be an attractive alternative to existing technologies, including our current products. 20 If we fail to achieve the expected financial and operational benefits of our recently announced restructuring plan and other strategic initiatives, our business and financial results may be harmed.
Even if we successfully implement some or all of these planned improvements, we cannot guarantee that our current and potential customers will find our enhanced systems to be an attractive alternative to existing technologies, including our current products. 29 If we fail to achieve the expected financial and operational benefits of our previously announced or future restructuring plans and other strategic initiatives, our business and financial results may be harmed.
In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related breaches. The cost and operational consequences of implementing further data protection measures, either as a response to 26 specific breaches or as a result of evolving risks, could be significant.
In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security incidents, cyberattacks, and other related cybersecurity incidents. The cost and operational consequences of implementing further data protection measures, either as a response to specific cybersecurity incidents or as a result of evolving risks, could be material.
If, however, confidential data were determined to have been released in the course of any future event, it is possible that we could be the subject of actions by governmental authorities or claims from persons alleging they suffered damages from such a release.
If, however, confidential or personal data were determined to have been accessed, acquired, or released in the course of any future event, it is possible that we could be the subject of actions by governmental authorities or claims from persons alleging they suffered damages from such access, acquisition, or release.
Engaging in international business inherently involves a number of difficulties and risks, including: • required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation, the California Consumer Privacy Act, and other data privacy requirements, labor and employment regulations, anticompetition regulations, the U.K.
Engaging in international business inherently involves a number of difficulties and risks, including: • required compliance with existing and changing foreign regulatory requirements and laws that are or may be applicable to our business in the future, such as the European Union’s General Data Protection Regulation, comprehensive U.S. state privacy laws such as the California Consumer Privacy Act, and similar laws in Colorado, Connecticut, Utah, and Virginia, and other data privacy requirements, labor and employment regulations, anticompetition regulations, the U.K.
The Credit Facility is secured by substantially all of our assets, other than intellectual property.
The Term Loan Facility is secured by substantially all of our assets, other than intellectual property.
We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future. We have incurred significant losses in each fiscal year since our inception, including net losses of $190.1 million and $59.2 million during the years 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $926.1 million.
We have incurred losses since inception, and we may continue to incur substantial losses for the foreseeable future. We have incurred significant losses in each fiscal year since our inception, including net losses of $74.7 million and $190.1 million during the years 2023 and 2022, respectively. As of December 31, 2023, we had an accumulated deficit of $1.0 billion.
While we were able to secure a license under a new license agreement with the licensor, we cannot provide assurances that we will always be able to obtain suitable license rights to technologies or intellectual property of other third parties on acceptable terms, if at all.
While we were able to secure a license under a new license agreement with the licensor, we cannot provide assurances that we will always be able to obtain suitable license rights to technologies or intellectual property of other third parties on acceptable terms, if at all. In December 2021, SomaLogic entered into the Collaboration Agreement with Illumina, Inc.
During the years 2022 and 2021 approximately 59% and 56%, respectively, of our product and service revenue was generated from sales to customers located outs ide of the United States. We believe that a significant percentage of our future revenue will continue to come from international sources as we expand our international operations and develop opportunities in other countries.
During the years ended December 31, 2023 and 2022 approximately 59% of our product and service revenue was generated from sales to customers located outside of the United States. We believe that a significant percentage of our future revenue will continue to come from international sources as we expand our international operations and develop opportunities in other countries.
We also assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.
We assess the realizability of goodwill and indefinite-lived intangible assets annually as well as whenever events or changes in circumstances indicate that these assets may be impaired. We also assess the realizability of definite-lived intangible assets whenever events or changes in circumstances indicate that these assets may be impaired.
We make estimates and assumptions in valuing such intangible assets that affect our consolidated financial statements. As of December 31, 2022 , we had approximately $119.4 million of goodwill and net intangible assets, including approximately $106.3 million of goodwill and $13.2 million of net intangible assets.
We make estimates and assumptions in valuing such intangible assets that affect our consolidated financial statements. As of December 31, 2023, we had approximately $107.7 million of goodwill and net intangible assets, including approximately $106.3 million of goodwill and $1.4 million of net intangible assets.
Any of the foregoing could adversely affect our business, financial condition, or results of operations. RISKS RELATED TO ECONOMIC CONDITIONS AND OPERATING A GLOBAL BUSINESS We generate a substantial portion of our revenue internationally and our international business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.
RISKS RELATED TO ECONOMIC CONDITIONS AND OPERATING A GLOBAL BUSINESS We generate a substantial portion of our revenue internationally and our international business exposes us to business, regulatory, political, operational, financial, and economic risks associated with doing business outside of the United States.
If our orders in backlog do not result in sales, our operating results may suffer. 24 Any disruption or delay in the shipping or off-loading of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations. We rely on shipping providers to deliver products to our customers globally.
Any disruption or delay in the shipping or off-loading of our products, whether domestically or internationally, may have an adverse effect on our financial condition and results of operations. We rely on shipping providers to deliver products to our customers globally.
If we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
If we undertake acquisitions or pursue strategic mergers, such as the Merger with SomaLogic, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
While we plan to reduce our general and administrative spend and levels of investment in microfluidics research and development and marketing as part of the restructuring plan that we announced in August 2022, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, and there is no guarantee that our post-restructuring focus will be sufficient for us to achieve success.
While we plan to reduce our operating expenses as part of ongoing restructuring initiatives, our cost restructuring efforts may not result in the anticipated savings or other economic benefits, or could result in total costs and expenses that are greater than expected, and there is no guarantee that our post-restructuring focus will be sufficient for us to achieve success.
For example, all or a portion of the license rights granted may be limited for research use only, and in the event we attempt to expand into diagnostic applications, we would be required to negotiate additional rights, which may not be available to us on commercially reasonable terms, if at all.
For example, all or a portion of the license rights granted may be limited for RUO, and in the event we attempt to expand into diagnostic applications, we would be required to negotiate additional rights, which may not be available to us on commercially reasonable terms, if at all. 55 Our rights to use the technology we license are also subject to the negotiation and continuation of those licenses.
Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the directors designated by the holders of Series B Preferred Stock may differ from the interests of our security holders as a whole or of our other directors. 43 These significant stockholders may be able to determine or significantly influence matters requiring stockholder approval.
Notwithstanding the fact that all directors will be subject to fiduciary duties to us and to applicable law, the interests of the directors designated by the holders of Series B Preferred Stock may differ from the interests of our security holders as a whole or of our other directors.
If we delay fulfilling customer orders or if customers reconsider their orders, those customers may seek to cancel or modify their orders with us. Customers may otherwise seek to cancel or delay their orders even if we are prepared to fulfill them.
If we delay fulfilling customer orders or if customers reconsider their orders, those customers may seek to cancel or modify their orders with us. Customers may otherwise seek to cancel or delay their orders even if we are prepared to fulfill them. If our orders in backlog do not result in sales, our operating results may suffer.
Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt. 36 RISKS RELATED TO INTELLECTUAL PROPERTY Our ability to protect our intellectual property and proprietary technology through patents and other means is uncertain.
Our cash flow from operations may not be sufficient to repay all of the outstanding debt as it becomes due, and we may not be able to borrow money, sell assets or otherwise raise funds on acceptable terms, or at all, to refinance our debt.
However, we may fail to apply for patents on important products and technologies in a timely fashion or at all. Our pending U.S. and foreign patent applications may not issue as patents or may not issue in a form that will be sufficient to protect our proprietary technology and gain or keep our competitive advantage.
Our pending U.S. and foreign patent applications may not issue as patents or may not issue in a form that will be sufficient to protect our proprietary technology and gain or keep our competitive advantage.
As a result, we may have increased cyber security and data security risks, due to increased use of home wi-fi networks and virtual private networks, as well as increased disbursement of physical machines.
Since the beginning of the COVID-19 pandemic, a significant percentage of our employees has been working remotely. As a result, we may have increased cyber security and data security risks, due to increased use of home wi-fi networks and virtual private networks, as well as increased disbursement of physical machines.
Such disruption could cause delays in, among other things, shipments of products to our customers, our ability to perform services requested by our customers, or the installation of our products at customer sites. 23 We cannot provide any assurance that alternate means of conducting our operations (whether through alternate production capacity or service providers or otherwise) would be available if a major disruption were to occur or that, if such alternate means were available, they could be obtained on favorable terms.
We cannot provide any assurance that alternate means of conducting our operations (whether through alternate production capacity or service providers or otherwise) would be available if a major disruption were to occur or that, if such alternate means were available, they could be obtained on favorable terms.
Our rights under the licenses are subject to our continued compliance with the terms of the license, including the payment of royalties due under the license.
Certain of our licenses contain provisions that allow the licensor to terminate the license upon specific conditions. Our rights under the licenses are subject to our continued compliance with the terms of the license, including the payment of royalties due under the license.
We are subject to risks related to taxation in multiple jurisdictions and our effective income tax rate could be adversely affected and we could have additional tax liability if existing tax laws or regulations change or if taxing authorities disagree with our interpretations of tax laws or regulations.
Adoption of a tax benefit preservation plan could make it more difficult for a third party to acquire, or could discourage a third party from acquiring, us or a large block of our common stock. 52 We are subject to risks related to taxation in multiple jurisdictions and our effective income tax rate could be adversely affected and we could have additional tax liability if existing tax laws or regulations change or if taxing authorities disagree with our interpretations of tax laws or regulations.
There is considerable uncertainty regarding the duration, scope and severity of the pandemic and the impacts on our business and the global economy from the effects of the ongoing pandemic and response measures. 18 Market opportunities may not develop as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.
Market opportunities may not develop as we expect, limiting our ability to successfully sell our products, or our product development and strategic plans may change and our entry into certain markets may be delayed, if it occurs at all.
Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business. Any of the foregoing may materially harm our business, financial condition, results of operations, stock price and prospects.
Moreover, we may not be able to locate suitable acquisition opportunities and this inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business. In addition, the Merger was financed by the issuance of shares of our common stock to stockholders of SomaLogic.
A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions. Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls.
Additionally, the adoption of new or revised accounting principles may require that we make significant changes to our systems, processes and controls.
In addition, we must provide reasonable assistance to the government in obtaining similar licenses from third parties required in connection with the use of its intellectual property. Instances in which the government of the Province of Ontario has exercised similar “march-in” rights are rare; however, the exercise of such rights could materially adversely affect our business, operations and financial condition.
Instances in which the government of the Province of Ontario has exercised similar 56 “march-in” rights are rare; however, the exercise of such rights could materially adversely affect our business, operations and financial condition.
The final guidance states that merely including a labeling statement that the product is for research purposes only will not necessarily render the device exempt from the FDA’s clearance, approval, and other regulatory requirements if the circumstances surrounding the distribution, marketing and promotional practices indicate that the manufacturer knows its products are, or intends for its products to be, used for clinical diagnostic purposes.
It further states that merely including a labeling statement that a product is intended for RUO will not necessarily render the device exempt from the FDA’s 510(k) clearance, PMA, or other requirements, if the circumstances surrounding the distribution of the product indicate that the manufacturer intends for its product to be offered for clinical diagnostic use.
We prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles.
We prepare our consolidated financial statements in accordance with U.S. GAAP. These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles. A change in these principles can have a significant effect on our reported results and may even retroactively affect previously reported transactions.
Our information technology systems may be damaged, disrupted or shut down due to attacks by experienced programmers or hackers who may be able to penetrate our security controls and deploy computer viruses, cyberattacks, phishing schemes, or other malicious software programs, or due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.
Cyberattacks may also be due to employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events, and our system redundancy and other disaster recovery planning may be ineffective or inadequate in preventing or responding to any of these circumstances.
Our future success will depend largely on our ability to recruit, retain, and motivate the skilled sales and marketing force necessary to support our business activities, and any failure to maintain competitive levels of compensation will negatively impact our ability to so. 25 Because competition for such employees is intense, we can provide no assurance that we will be able to retain them on favorable or commercially reasonable terms, if at all.
Our future success will depend largely on our ability to recruit, retain, and motivate the skilled sales and marketing force necessary to support our business activities, and any failure to maintain competitive levels of compensation will negatively impact our ability to so.
These circumstances may include written or verbal sales and marketing claims or links to articles regarding a product’s performance in clinical applications and a manufacturer’s provision of technical support for clinical applications.
These circumstances may include written or verbal marketing claims or links to articles regarding a product’s performance in clinical applications, a manufacturer’s provision of technical support for clinical validation or clinical applications, or solicitation of business from clinical laboratories, all of which could be considered evidence of intended uses that conflict with RUO labeling.
In addition, if in the future we acquire additional businesses, technologies, or other intangible assets, a substantial portion of the value of such assets may be recorded as goodwill or intangible assets. We assess the realizability of goodwill and indefinite-lived intangible assets annually as well as whenever events or changes in circumstances indicate that these assets may be impaired.
These assets represent a significant portion 51 of the assets recorded on our consolidated balance sheet. In addition, if in the future we acquire additional businesses, technologies, or other intangible assets, a substantial portion of the value of such assets may be recorded as goodwill or intangible assets.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn August 2022, we entered into an operating agreement to sublease approximately 25% of our corporate headquarters facility in South San Francisco, California for $4.8 million over a 39 month term. On February 28, 2023, we entered into a separate agreement with an unrelated party to sublease an additional 25% of the headquarters facility.
Biggest changeAs of December 31, 2023, we also lease office space in Japan, China, and France under short-term arrangements that expire through November 2026. 59 In August 2022, we entered into an operating agreement to sublease approximately 25% of our corporate headquarters facility in South San Francisco, California for $4.8 million over a 39-month term.
ITEM 2. PROPERTIES We lease approximately 78,000 square feet of office and laboratory space at our headquarters in South San Francisco, California under a 10 year operating lease that commenced in March 2020.
ITEM 2. P ROPERTIES We lease approximately 78,000 square feet of office and laboratory space at our headquarters in South San Francisco, California under a 10-year operating lease that commenced in March 2020.
In Singapore, we lease approximately 40,000 square feet of office, laboratory and manufacturing space that expires in June 2027 and 5,000 square feet of similar mixed use space that expires at the end of March 2023.
In Singapore, we lease approximately 40,000 square feet of office, laboratory and manufacturing space that expires in June 2027 and 5,000 square feet of similar mixed-use space that expires at the end of April 2024.
In Ontario, Canada, we lease a 9,000 square foot property that expires in February 2025, a 44,500 square feet property that that expires in March 2026 and a 19,000 square feet property that expires in March 2027. As of December 31, 2022, we also lease office space in Japan, China, and France under short-term arrangements that expire through February 2026.
In Ontario, Canada, we lease a 9,000 square foot property that expires in February 2025, a 44,500 square feet property that that expires in March 2026 and a 19,000 square feet property that expires in March 2027.
We expect to recognize $9.1 million in sublease income over the 77-month term of the agreement, which commences in December 2023 and expires concurrent with the expiration of the head-lease in April 2030. We believe that all of our leased properties are in good condition and are adequate and suitable to use for their intended purpose.
On February 28, 2023, we entered into a separate agreement with an unrelated party to sublease an additional 25% of the headquarters facility. We expect to recognize $9.1 million in sublease income over the 77-month term of the agreement, which commenced in December 2023 and expires concurrent with the expiration of the head-lease in April 2030.
Removed
Refer to Note 10 of our consolidated financial statements for additional information about leased properties in this Form 10-K.
Added
In connection with the Merger, on January 5, 2023, we assumed leases for office and laboratory space in Boulder, Colorado and La Jolla, California. We lease approximately 60,000 square feet of space under two leases in Boulder, Colorado, and approximately 10,000 square feet under one lease in La Jolla, California. All leases serve as both office and laboratory space.
Added
We believe that all of our leased properties are in good condition and are adequate and suitable to use for their intended purpose, and that suitable additional space would be available on commercially reasonable terms if required. Refer to Note 7 of our consolidated financial statements for additional information about leased properties in this Annual Report.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeFollowing the Circuit Court appellate hearing on February 6, 2023, the Circuit Court granted defendants’ motion to dismiss on February 21, 2023. In the normal course of business, we are from time to time involved in legal proceedings or potential legal proceedings, including matters involving employment, intellectual property, or others.
Biggest changeIf additional similar complaints are filed, absent new or different allegations that are material, we will not necessarily announce such additional filings. In the normal course of business, we are from time to time involved in legal proceedings or potential legal proceedings, including matters involving employment, intellectual property, or others.
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 45 PART II
Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 60 PART II
Removed
ITEM 3. LEGAL PROCEEDINGS In September 2020, a putative class action complaint alleging violations of the federal securities laws was filed against the Company (also naming our Chief Financial Officer and our former Chief Executive Officer as defendants) in the U.S. District Court for the Northern District of California (Reena Saintjermain, et al. v. Fluidigm Corporation, et al).
Added
ITEM 3. LEG AL PROCEEDINGS Shareholder Litigation On November 28, 2023, a purported stockholder filed a complaint against us and the members of our Board in the United States District Court for the Northern District of California. The complaint has since been voluntarily dismissed.
Removed
The Court appointed a lead plaintiff and lead counsel in December 2020, and an amended complaint was filed on February 19, 2021.
Added
On December 12, 2023 two separate shareholder complaints were filed in the District of Delaware, The complaints asserted claims under Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder and Section 20(a) of the Exchange Act for allegedly causing the filing with the SEC on November 14, 2023 of a materially deficient registration statement on Form S-4.
Removed
The complaint, as amended, seeks unspecified damages on behalf of a purported class of persons and entities who acquired our common stock between February 7, 2019 and November 5, 2019 and alleges securities laws violations based on statements and alleged omissions made by the Company during such period.
Added
Among other remedies, the plaintiffs sought to enjoin a stockholder vote on the proposed Merger. We are reviewing the complaints and have not yet formally responded to them.
Removed
The Company filed a motion to dismiss the complaint on April 5, 2021 and, on August 4, 2021, the Court granted defendants’ motion to dismiss with leave to amend. A second amended complaint was filed on September 14, 2021.
Added
On December 13, 2023, a complaint was filed in the Delaware Court of Chancery against SomaLogic and certain officers and directors alleging Breach of Fiduciary Duty and Aiding and Abetting Breach of Fiduciary Duty. This complaint also sought an injunction postponing the proposed transaction, which was denied by the Court on January 4, 2024.
Removed
The Company filed a motion to dismiss the second amended complaint on October 29, 2021 and, on February 14, 2022, the Court granted defendants’ motion and dismissed the second amended complaint with prejudice. On March 15, 2022, the lead plaintiff filed a notice of appeal of the District Court’s decision.
Added
The non-injunctive claims, including breach of fiduciary duty, are still being litigated. Litigation is inherently uncertain and there can be no assurance regarding the outcome. Whether or not any plaintiffs’ claim is successful, this type of litigation may result in significant costs and divert management’s attention and resources, which could adversely affect the operation of our business.
Added
Between October 24, 2023 and January 3, 2024, SomaLogic received 16 letters from purported shareholders demanding that SomaLogic allow the inspection of its books and records and/or make corrective disclosures to its registration statement. Additional lawsuits against us and certain of our officers or directors may be filed in the future.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+2 added−0 removed2 unchanged
Biggest changeThe following table provides information with respect to the shares of common stock repurchased by us during the three months ended December 31, 2022: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program October 1 - 31, 2022 $— $— November 1 - 30, 2022 $— $— December 1 - 31, 2022 422,309 $1.33 422,309 $19.4 million -------------- 1 Average price paid per share includes related expenses.
Biggest changeThe following table provides information with respect to the shares of common stock repurchased by us during the year ended December 31, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program January 1, 2023 - March 31, 2023 1,250,484 $ 1.97 1,250,484 $17.0 million April 1, 2023 - June 30, 2023 1,208,200 $ 1.96 1,208,200 $14.6 million July 1, 2023 - September 30, 2023 175,910 $ 2.27 175,910 $14.2 million October 1, 2023 - December 31, 2023 75,109 $ 2.32 75,109 — 1 Average price paid per share includes related expenses.
Issuer Purchases of Equity Securities On November 23, 2022, our Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company may repurchase up to $20.0 million of the Company’s common stock through open market or privately negotiated transactions until December 31, 2023.
Issuer Purchases of Equity Securities On November 23, 2022, our board of directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which we may repurchase up to $20.0 million of our common stock through open market or privately negotiated transactions until December 31, 2023.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock; Dividends Our common stock began trading on the Nasdaq Global Select Market under the symbol “FLDM” on February 10, 2011.
ITEM 5. MARKET FOR REGIST RANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market for Our Common Stock; Dividends Our common stock began trading on the Nasdaq Global Select Market under the symbol “FLDM” on February 10, 2011.
We had 79 stockholders of record as of January 31, 2023; however, because many of our outstanding shares are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by the holders of record.
We had 267 stockholders of record as of February 21, 2024; however, because many of our outstanding shares are held by brokers or other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners represented by the holders of record.
The repurchases are contingent upon favorable market and business conditions and are funded by cash on hand. The program does not obligate the Company to acquire any specific number of shares.
The repurchases are contingent upon favorable market and business conditions and are funded by cash on hand. The program does not obligate us to acquire any specific number of shares. On October 4, 2023, we terminated the share repurchase program.
Added
On February 6, 2024, our board of directors authorized a new share repurchase program (the 2024 Share Repurchase Program) pursuant to which we may repurchase up to $50.0 million of shares of our common stock in the open market, in one or more Rule 10b5-1 trading plans, or in negotiated transactions through March 1, 2026.
Added
The repurchases are contingent upon favorable market and business conditions and are funded by cash on hand. The program does not obligate us to acquire any specific number of shares. As of the date of this Annual Report on Form 10-K, we have not repurchased any shares of our common stock under the 2024 Share Repurchase Program. ITEM 6.

Item 7. Management's Discussion & Analysis

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

40 edited+63 added−90 removed8 unchanged
Biggest changeRecent Accounting Pronouncements None. 49 Results of Operations The following table presents our historical consolidated statements of operations for the years ended December 31, 2022 and 2021, and as a percentage of total revenue for the respective years (in thousands): Year Ended December 31, 2022 2021 Revenue: Total revenue $ 97,948 100 % $ 130,581 100 % Costs and expenses: Cost of product revenue 52,555 54 53,315 41 Cost of service revenue 8,342 9 7,893 6 Research and development 38,498 39 37,944 29 Selling, general and administrative 114,758 117 98,888 76 Total costs and expenses 214,153 219 198,040 152 Loss from operations (116,205) (119) (67,459) (52) Interest expense (4,331) (4) (3,823) (3) Loss on forward sale of Series B Preferred Stock (60,081) (61) — — Loss on bridge loans (13,719) (14) — — Surplus funding from NIH Contract 153 — 7,140 7 Other income, net 1,255 1 482 — Loss before income taxes (192,928) (197) (63,660) (48) Income tax benefit 2,830 3 4,423 3 Net loss $ (190,098) (194) % $ (59,237) (45) % Strategic Financing and Business Improvement Actions Our operating results for the year ended December 31, 2022 include certain items related to the strategic financing transaction and subsequent business improvement actions taken by the new management team, including the rationalization of our product portfolio and the restructuring plan announced in August 2022.
Biggest changeResults of Operations The following table presents our consolidated statements of operations and as a percentage of total revenue for the years ended December 31, 2023 and 2022 ($ in thousands): Year Ended December 31, 2023 2022 Revenue $ 106,340 100 % $ 97,948 100 % Cost of revenue: Cost of product revenue 44,942 42 % 52,555 54 % Cost of service and other revenue 10,948 11 % 8,342 9 % Total cost of revenue 55,890 53 % 60,897 63 % Gross profit 50,450 47 % 37,051 37 % Operating expenses: Research and development 25,948 24 % 37,382 38 % Selling, general and administrative 87,541 82 % 102,285 104 % Restructuring and related charges 7,076 7 % 9,732 10 % Transaction-related expenses 6,485 6 % 3,857 4 % Total operating expenses 127,050 119 % 153,256 156 % Loss from operations (76,600 ) (72 )% (116,205 ) (119 )% Interest expense (4,567 ) (4 )% (4,331 ) (4 )% Loss on forward sale of Series B Preferred Stock — — % (60,081 ) (61 )% Loss on Bridge Loans — — % (13,719 ) (14 )% Other income (expense), net 6,963 6 % 1,408 1 % Loss before income taxes (74,204 ) (70 )% (192,928 ) (197 )% Income tax benefit (expense) (452 ) — % 2,830 3 % Net loss $ (74,656 ) (70 )% $ (190,098 ) (194 )% Revenue Revenue by product type and as a percentage of total revenue were as follows ($ in thousands): Year Ended December 31, Year-over- 2023 2022 Year Change Product revenue: Instruments $ 37,459 36 % $ 25,664 26 % 46 % Consumables 41,739 39 % 46,790 48 % (11 )% Total product revenue 79,198 75 % 72,454 74 % 9 % Service revenue 25,980 24 % 23,712 24 % 10 % Other revenue 1,162 1 % 1,782 2 % (35 )% Total revenue $ 106,340 100 % $ 97,948 100 % 9 % 64 Total revenue grew 9% to $106.3 million for the year ended December 31, 2023, compared to 2022.
In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty, provisions for slow-moving and obsolete inventory, and stock-based compensation expense.
In addition, cost of product revenue includes amortization of developed technology and intangibles, royalty costs for licensed technologies included in our products, warranty costs, provisions for slow-moving excess and obsolete inventory and stock-based compensation expense.
In addition, some of our future purchasing needs are not current contractual obligations and are therefore not included in the commitment amounts above because they are not handled through binding contracts or are not fulfilled by vendors on a purchase order basis within short time horizons.
In addition, some of our future purchasing needs are not current contractual obligations and are therefore not included in the commitment amounts above as they are not handled through binding contracts or are not fulfilled by vendors on a purchase order basis within short time horizons.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of Standard BioTools Inc.
ITEM 7. MANAGEMENT’S DISCUSSIO N AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to help the reader understand the results of operations and financial condition of Standard BioTools.
Our research and development efforts have focused primarily on enhancing our technologies and supporting the development and commercialization of new and existing products and services. Research and development expense also includes costs incurred in conjunction with research grants and development arrangements.
Our R&D efforts have focused primarily on enhancing our technologies and supporting development and commercialization of new and existing products and services. R&D expense also includes costs incurred in conjunction with research grants and product development arrangements.
Mezzanine equity which has characteristics of both liabilities and shareholders’ equity (deficit) is presented separately on the consolidated balance sheets between these two items because it has some characteristics of both. Refer to Note 3 to the consolidated financial statements for additional informatio n.
Mezzanine equity which has characteristics of both liabilities and shareholders’ equity (deficit) is presented separately on the consolidated balance sheets between these two items because it has some characteristics of both. Refer to Note 9 to the consolidated financial statements for additional information.
Goodwill and Long-Lived Assets Assessing goodwill and long-lived assets for i mpairment requires significant judgment as it involves selecting an appropriate valuation method, identifying reporting units, assigning assets and liabilities to the reporting units, and estimating future cash flows, remaining service lives, reve nue growth rates, terminal values and discount rates.
Goodwill and Long-Lived Assets Assessing goodwill and long-lived assets for impairment requires significant judgment as it involves selecting an appropriate valuation method, identifying reporting units, assigning assets and liabilities to the reporting units, and estimating future cash flows, remaining service lives, revenue growth rates, terminal values and discount rates.
Series B Redeemable Preferred Stock The Purchase Agreements (as defined in Note 3 to the consolidated financial statements) for the issuance of shares of Series B Preferred Stock were accounted for as forward sales contracts at fair value in accordance with ASC 480, Distinguishing Liabilities from Equities .
Refer to Note 4 to the consolidated financial statements for additional information. Series B Redeemable Preferred Stock The Purchase Agreements (as defined in Note 9 to the consolidated financial statements) for the issuance of shares of Series B Preferred Stock were accounted for as forward sales contracts at fair value in accordance with ASC 480, Distinguishing Liabilities from Equities .
Product and Service Cost, Product and Service Gross Profit, and Product and Service Margin Cost of product revenue includes manufacturing costs incurred in the production process, including component materials, labor and overhead, installation, packaging, and delivery costs.
Cost of Revenue Cost of product revenue includes manufacturing costs incurred in the production process, including component materials, labor and overhead, installation, packaging and delivery costs.
Purchase Obligations and Commitments Purchase obligations consist of contractual and legally binding commitments to purchase goods and services. Our purchase obligations with suppliers specify all significant terms, including fixed, minimum or variable price provisions , and the approximate timing of the transaction The majority of our contracts are cancellable with little or no notice or penalty.
Our purchase obligations with suppliers specify all significant terms, including fixed, minimum or variable price provisions, and the approximate timing of the transaction The majority of our contracts are cancellable with little or no notice or penalty.
On or after December 1, 2021 to December 1, 2022, if the price of the Company’s common stock has equaled or exceeded 150% of the Conversion Price (as defined in the indenture, currently $2.90 per share, subject to adjustment) for a specified number of days (Issuer’s Conversion Option), we may, at our option, elect to convert the 2019 Notes in whole but not in part into shares of the Company.
If the price of our common stock has equaled or exceeded 130% of the conversion price then in effect for a specified number of days as defined in the indenture, (currently $2.90 per share, subject to adjustment), we may, at our option, elect to convert the 2019 Notes in whole but not in part into our shares.
We distribute our systems through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries. Our manufacturing operations are located in Singapore and Canada. Our total revenue was $97.9 million in 2022 compared to $130.6 million in 2021.
We distribute our systems through our direct sales force and support organizations located in North America, Europe, and Asia-Pacific, and through distributors or sales agents in several European, Latin American, Middle Eastern, and Asia-Pacific countries. Our manufacturing operations are located in Singapore and Canada.
Standalone selling prices (SSP) are generally determined using observable data from recent transactions. In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus margin approach or by applying a discount to the product’s list price.
In cases where sufficient data is not available, we estimate a product’s SSP using a cost plus margin approach or by applying a discount to the product’s list price.
Pursuant to the Indenture governing the 2014 Notes, holders of the 2014 Notes have the right, subject to certain conditions specified in such indenture, to require the Company to repurchase all or a portion of their 2014 Notes on each of February 6, 2021, February 6, 2024, and February 6, 2029, at a repurchase price in cash equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest.
In addition, holders may require the Company to repurchase all or a portion of their 2014 Notes on each of February 6, 2024 and February 6, 2029, at a repurchase price in cash equal to 100% of the principal amount of the 2014 Notes plus accrued and unpaid interest.
See Note 10 Leases for additional information. • Additional information on our obligations under license and patent agreements, and indemnification agreements entered into in the ordinary course of business is provided in Note 17 Commitments and Contingencies. The expected timing of payments of our obligations is estimated based on current information.
Refer to Note 7 of the consolidated financial statements for additional information. • Additional information on our obligations under license and patent agreements, and indemnification agreements entered into in the ordinary course of business is provided in Note 7 to the consolidated financial statements . The expected timing of payments of our obligations is estimated based on current information.
Significant judgment is required in determining provisions for slow-moving, excess, and obsolete inventories which are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues. Right-of-Use Assets and Lease Liabilities We determine if an arrangement is a lease, or contains a lease, at inception.
Significant judgment is required in determining provisions for slow-moving, excess, and obsolete inventories which are recorded when required to reduce inventory values to their estimated net realizable values based on product life cycle, development plans, product expiration, and quality issues.
The maturity date of the Term Loan Facility is July 1, 2025, subject to the following condition: in the event the principal amount of our convertible debt exceeds $0.6 million as of June 1, 2024 or if the maturity date of our 2019 Notes has not been extended beyond January 1, 2026 by that date, then the maturity date of the Term Loan Facility will be June 1, 2024.
However, if the principal amount of the Company’s convertible debt exceeds $0.6 million as of June 1, 2024 or if the maturity date of the 2019 Notes has not been extended beyond January 1, 2026 by June 1, 2024, then the Term Loan will be due in full on June 1, 2024.
However, once a vendor has incurred costs to fulfill a contract with us, and which costs cannot be otherwise deployed, we are liable for those costs upon cancellation.
However, once a vendor has incurred costs to fulfill a contract with us, and which costs cannot be otherwise deployed, we are liable for those costs upon cancellation. As of December 31, 2023, these purchase commitments totaled $9.7 million. Capital expenditure commitments as of December 31, 2023 were immaterial.
We have an established portfolio of essential, standardized next-generation high resolution technologies that help biomedical researchers develop medicines faster and better. Our tools are designed to provide reliable and repeatable insights in health and disease using our proprietary mass cytometry and microfluidics technologies, which serve applications in proteomics and genomics that help transform scientific discoveries into better patient outcomes.
Our tools are designed to provide reliable and repeatable insights in health and disease using our proprietary mass cytometry and microfluidics technologies, which are useful in proteomics and genomics that help transform scientific discoveries into better patient outcomes.
Our future capital needs will depend upon many factors, including the market acceptance of our products and services; the effectiveness of our business improvement initiatives and restructuring program launched in August 2022; the costs and pace of developing new products; the costs of supporting sales growth; product quality; and the costs and timing of acquiring other businesses, assets or technologies.
Our liquidity and capital requirements depend upon many factors, including market acceptance of our products and services; effectiveness of our business improvement initiatives and restructuring programs; costs of supporting sales growth, product quality, R&D and capital expenditures, including our ERP upgrade; and costs and timing of acquiring other businesses, assets or technologies.
We expect these sources will be sufficient to support the operations of our business and any debt maturities for at least the next 12 months from the date of filing this Annual Report.
We continually evaluate our liquidity requirements considering our operating needs, growth initiatives and capital resources. We expect that our existing liquidity and sources of capital will be sufficient to support our operations for at least the next 12 months from the filing date of this Annual Report.
We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure domestically and internationally.
Our cash flows from operating activities are also significantly influenced by our use of cash for operating expenses and working capital to support the business. We have historically experienced negative cash flows from operating activities as we have expanded our business and built our infrastructure, domestically and internationally.
Liquidity and Capital Resources Sources of Liquidity As of December 31, 2022, our principal sources of liquidity consisted of $165.8 million of cash and cash equivalents, and short-term investments.
Sources of Liquidity Our principal sources of liquidity are cash, cash equivalents and short-term investments. Our collective balances of cash, cash equivalents and short-term investments were $114.9 million at December 31, 2023 and $165.8 million at December 31, 2022. Our working capital was $48.9 million at December 31, 2023.
Actual results may differ materially from these estimates and judgments. Accounts that rely heavily on estimated information to determine their values include revenue, trade receivables, inventories, right-of-use assets, goodwill, long-lived intangible assets, lease liabilities, and preferred equity. Refer to Note 2 to our consolidated financial statements for further information on our most significant accounting policies.
We develop these estimates after considering historical transactions, the current economic environment and various other assumptions considered reasonable under the circumstances. Actual results may differ materially from these estimates and judgments. Accounts that rely heavily on estimated information to determine their values include revenue, trade receivables, inventories, right-of-use assets, goodwill, long-lived intangible assets, lease liabilities, and preferred equity.
See Note 9 Debt for additional information. • Future payments for operating lease obligations at December 31, 2022 totaled $37.8 million, of which $3.7 million is expected to be paid in 2023.
Refer to Note 6 of the consolidated financial statements for additional information. • Leases . Future payments for operating lease obligations (net of sublease income) at December 31, 2023 totaled $36.8 million, of which $5.2 million is expected to be paid in 2024.
Revenue We recognize revenue based on the amount of consideration we expect to receive in exchange for the goods and services we transfer to the customer. Our commercial arrangements typically include multiple, distinct products and services, and we allocate purchase consideration to the products and services based on each item’s relative standalone selling price.
Our commercial arrangements typically include multiple, distinct products and services, and we allocate purchase 69 consideration to the products and services based on each item’s relative standalone selling price. Standalone selling prices (SSP) are generally determined using observable data from recent transactions.
Our product revenue consists of sales of instruments and consumables. Consumables revenue is largely driven by the size of our active installed base and the level of usage per instrument. Service revenue is also linked to the size of our active installed base as it is primarily comprised of post-warranty service contracts for instruments.
Financial Operations Overview Revenue We generate revenue primarily from sales of our products and services. Other revenue consists of revenue from product development and license agreements. Our product revenue consists of sales of instruments and consumables. Consumables revenue is largely driven by the size of our active installed base of instruments and the level of usage per instrument.
MD&A is provided as a supplement to, and should be read together with our consolidated financial statements and the notes to those statements included elsewhere in this Form 10-K. This discussion contains forward-looking statements based on our current expectations, assumptions, estimates and projections about Standard BioTools Inc. and our industry. These forward-looking statements involve risks and uncertainties.
This MD&A is provided as a supplement to, and should be read together with, our consolidated financial statements and the notes to those statements included elsewhere in this Annual Report.
We recorded a tax benefit of $2.8 million, or an effective tax rate benefit of 1.5%, for the year ended December 31, 2022 compared to a tax benefit of $4.4 million, o r an effective tax rate benefit of 6.9%, for the year ended December 31, 2021.
Income Tax Benefit (Expense) We recorded income tax expense of $0.5 million for the year ended December 31, 2023 and an income tax benefit of $2.8 million for the year ended December 31, 2022.
Selling, General and Administrative Selling, general and administrative (SG&A) expense consists primarily of personnel costs for, sales, marketing, business development, finance, legal, human resources, information technology, and general management, as well as professional services, including legal and accounting. SG&A expense increased by $15.9 million, or 16%, to $114.8 million in 2022 compared to $98.9 million in 2021.
Selling, General, and Administrative SG&A expense consists primarily of personnel costs for our sales and marketing, business development, finance, legal, human resources, information technology and general management teams, as well as professional services, including legal and accounting services. 63 Restructuring and Related Charges Restructuring and related charges primarily consist of severance costs and facilities costs for floors we have subleased or have the intent to sublease (net of sublease income) under our facility lease in South San Francisco.
GAAP). Preparing U.S. GAAP financial statements requires the use of estimates and assumptions to determine the value of the assets, liabilities, revenues and expenses reported on the consolidated balance sheets and statements of operations. We develop these estimates after considering historical transactions, the current economic environment and various other assumptions considered reasonable under the circumstances.
Critical Accounting Estimates The consolidated financial statements and related notes included in this Annual Report are prepared in accordance with U.S. GAAP. Preparing U.S. GAAP financial statements requires the use of estimates and assumptions to determine the value of the assets, liabilities, revenues and expenses reported on the consolidated balance sheets and statements of operations.
The $60.1 million loss on the forward sales of Series B Preferred Stock for the twelve months ended December 31, 2022 reflects the increase in the share price of our common stock from $2.84 per share at the inception of the Agreements to $3.99 per share on April 4, 2022.
In the year ended December 31, 2022 the $60.1 million loss on the forward sales of Series B Preferred Stock and the loss on the Bridge Loans of $13.7 million reflected the increase in the price of our common stock from January 23, 2022 (the date of the Purchase Agreements and the Bridge Loan agreements) to the Private Placement Closing Date.
Interest is payable monthly. The principal amount of the term loan advances is repayable beginning on August 1, 2023, in twenty-four equal monthly installments. The $2.1 million current portion of the term-loan represents principal repayments that will be made in 2023.
The principal amount of the term loan advances was repayable beginning on August 1, 2023, in twenty-four equal monthly installments. Principal amounts due under the Term Loan, including end-of-term fees, totaled $8.4 million at December 31, 2023, of which $5.0 million is due and payable in 2024.
The following table presents our cash flow summary for each year presented (in thousands): Year Ended December 31, 2022 2021 Cash flow summary: Net cash used in operating activities $ (89,370) $ (44,061) Net cash used in investing activities (88,127) (11,946) Net cash provided by financing activities 230,758 15,959 Effect of foreign exchange rate fluctuations on cash and cash equivalents (404) (21) Net increase (decrease) in cash, cash equivalents and restricted cash $ 52,857 $ (40,069) Net Cash Used in Operating Activities.
Cash Flow Activity Our cash flow summary was as follows ($ in thousands): 68 Year Ended December 31, 2023 2022 Cash flow summary: Net cash used in operating activities $ (43,287 ) $ (89,370 ) Net cash provided by (used in) investing activities 20,237 (88,127 ) Net cash provided by (used in) financing activities (6,809 ) 230,758 Effect of foreign exchange rate fluctuations on cash and cash equivalents 34 (404 ) Net increase (decrease) in cash, cash equivalents and restricted cash $ (29,825 ) $ 52,857 We derive cash flows from operations primarily by collecting amounts due from sales of our products and services, and fees earned under our product development and license agreements.
An increase in OEM revenue was offset by a decline in sales to other customers. We expect the average selling prices of our products to fluctuate over time based on market conditions, product mix, and currency fluctuations.
Service revenue is linked to the sales and active installed base of our instruments as our service revenue primarily consists of post-warranty service contracts, preventive maintenance plans, instrument parts, installation and training for our instruments. We expect the average selling prices of our products and services to fluctuate over time based on market conditions, product mix and currency fluctuations.
In addition, we have certain non-cancellable commitments with service providers that are not material in the aggregate. We have additional obligations beyond the purchase of goods and services, including the following: • Contingent obligations to our Series B Redeemable Preferred Stockholders.
We have additional obligations beyond the purchase of goods and services, including the following: • Series B . Contingent obligations to our Series B Redeemable Preferred Stockholders. Refer to Note 9 to the consolidated financial statements for additional information. • Convertible Notes. The 2019 Notes mature on December 1, 2024.
Proteomics product and service revenue declined by $16.0 million, or 24%, for the year ended December 31, 2022, compared to the year ended December 31, 2021. The year-over-year decline is primarily attributable to lower unit sales of instruments. Genomics.
The increase was primarily attributable to increased proteomics revenue of $11.4 million as well as improved manufacturing efficiencies driven by higher unit sales of instruments. Genomics gross profit improved by 42% for the year ended December 31, 2023, compared to 2022.
The Purchase Agreements for the issuance of 225,000 shares of Series B Redeemable Preferred Stock for $225 million were accounted for as forward sales contracts and recorded at fair value in accordance with ASC 480, Distinguishing Liabilities from Equities .
The Series B Convertible Preferred Stock Purchase Agreements entered into with various investors were accounted for as forward sales contracts and recorded at fair value. The loan agreements (collectively, the Bridge Loans) that we entered into on January 23, 2022 with various investors for a $25.0 million term loan were also recorded at fair value.
Net Cash Provided by Financing Activities. Net cash provided by financing activities totaled $230.8 million in 2022. The principal sources of cash were $25.0 million of proceeds from the receipt of the Bridge Loans in January 2022 and $225 million of proceeds from the issuance of Series B Preferred Stock in April 2022.
Net proceeds from the Private Placement issuance and the Bridge Loans were used to purchase short-term investments of $137.3 million during the year ended December 31, 2022. Financing Activities Financing activities used cash of $6.8 million for the year ended December 31, 2023 and provided cash of $230.8 million in the same period of 2022.
However, we may choose to decrease or defer certain capital expenditures and development activities, while further optimizing our organization. Net cash used in investing activities in 2022 was $88.1 million, which primarily consists of $137.3 million for the purchase of investments in short-term securities, partially offset by $53.0 million of cash receipts from maturities of such securities.
Investing Activities Net cash provided by investing activities for the year ended December 31, 2023 was $20.2 million compared to $88.1 million used in the year ended December 31, 2022. The year ended December 31, 2023 primarily reflects $23.1 million of proceeds from sales and maturities of short-term investments, net of purchases.
Removed
Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described in “Risk Factors” in Item 1A of this Form 10-K, in this Item 7, and elsewhere in this Form 10-K.
Added
This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), that are based on our management’s beliefs and assumptions and on information currently available to our management.
Removed
Except as may be required by law, we undertake no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. __________________________ Unless the context requires otherwise, references in this Form 10-K to “Standard BioTools” the “Company,” “we,” “us,” and “our” refer to Standard BioTools Inc. and its subsidiaries.
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Forward-looking statements include information concerning our possible or assumed future cash flow, revenue, sources of revenue and results of operations, cost of product revenue and product margin, operating and other income and expenses, unit sales and the selling prices of our products, business strategies and strategic priorities, changes in commercial and strategic focus, restructuring plan, reduction-in-force and real estate footprint reduction plans, microfluidics research and development and marketing investment reduction plans, other cost reduction initiatives, portfolio rationalization initiatives, operating discipline improvement plans, implementation of Standard BioTools Business Systems, expected costs and cost savings associated with such plans and initiatives, future product offerings, financing plans, capital allocation plans, expansion of our business, merger and acquisition opportunities, competitive position, industry environment, potential growth opportunities and drivers, market growth expectations, the effects of competition and public health crises on our business, the global supply chain, and our customers, suppliers and other business partners, and our expectations with respect to the Merger with SomaLogic , the anticipated financial impact and potential benefits to us related to the Merger, and integration of the businesses and other matters related to the Merger;.
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Our MD&A is organized in the following sections: • Overview • Fiscal 2022 Highlights • Critical Accounting Estimates • Recent Accounting Changes and Accounting Pronouncements • Results of Operations • Liquidity and Capital Resources Overview Standard BioTools Inc. is driven by a bold purpose – unleashing tools to accelerate breakthroughs in human health.
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Forward-looking statements include statements that are not historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms.
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We have incurred significant net losses since our inception in 1999 and our accumulated deficit was $926.1 million as of December 31, 2022.
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Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We discuss these risks in greater detail in Part I, Item 1A, “Risk Factors” in this Annual Report.
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Fiscal 2022 Highlights • Received $250 million in cash proceeds from the issuance of convertible preferred stock in a private placement transaction • Following the private placement, changed our name to Standard BioTools Inc. and our stock trading symbol to LAB • Made significant changes to our leadership team, including the appointment of Dr.
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Given these uncertainties, you should not place undue reliance on these forward-looking statements. Also, forward-looking statements represent our management’s beliefs and assumptions only as of the date of this Annual Report.
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Michael Egholm as Chief Executive Officer in April 2022 • Launched a new corporate business strategy based upon three pillars: 1) revenue growth, 2) improving operating discipline through Standard BioTools Business Systems (SBS), and 3) strategic capital allocation • Implemented a phased restructuring program aimed at improving efficiency, reducing operating costs, and aligning our workforce with the current needs of our business • Reduced headcount by 15% 47 • Signed a 39-month sublease agreement for 25% of our corporate headquarters in South San Francisco, California • Began operating under two reportable segments: Proteomics and Genomics.
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Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.
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Each segment is identified by its unique portfolio of products • Rationalized our product portfolio by discontinuing our laser capture microdissection (LCM), Flow Conductor and COVID-19 products • Optimized our Genomics manufacturing operations by returning instrument manufacturing to our own facility in Singapore and relocating reagent manufacturing from South San Francisco, California to our facility in Canada • Announced a $20 million Share Repurchase Program in November 2022 and repurchased 422,309 shares of common stock for $0.6 million at an average cost per share of $1.33 Critical Accounting Estimates The consolidated financial statements and related notes included in this Form 10-K are prepared in accordance with generally accepted accounting principles in the United States (U.S.
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Unless otherwise stated, our forward-looking statements do not reflect the potential impact of the Merger or any other future acquisitions, mergers, dispositions, joint ventures or investments we may make. You should read this Annual Report completely and with the understanding that our actual future results may be materially different from what we expect.
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Trade Receivables Trade accounts receivable are recorded at net invoice value. We review our exposure to accounts receivable and provide allowances for uncollectible specific amounts if collectability is no longer reasonably assured. We evaluate such allowances on a regular basis and adjust them as needed. Significant judgment is required in determining the amounts of any such allowances.
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Overview Standard BioTools Inc. is driven by a bold purpose – unleashing tools to accelerate breakthroughs in human health. We have an established portfolio of essential, standardized next-generation high resolution technologies that assist biomedical researchers develop medicines faster and better.
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Operating leases are included in operating lease right-of-use (ROU) assets, and operating lease liabilities in our consolidated balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the 48 lease.
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On January 5, 2024, we completed the Merger with SomaLogic, creating a leading provider of differentiated multi-omics tools for research. 62 Recent Developments Reductions in Headcount and Sub-Leases We took additional actions in the year ended December 31, 2023 under our strategic initiative to improve operating discipline, including reductions to our headcount in Europe and additional reductions to our real estate footprint in the U.S.
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Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term.
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On February 28, 2023, we signed an agreement to sublease an additional 25% of our corporate headquarters for a period of 77 months. As a result, 50% of the space at our headquarters was subleased as of December 31, 2023.
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As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Significant judgment is required in determining the incremental collateralized borrowing rate.
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We expect to recognize $9.1 million of sublease income over the term of this new agreement, and payments commenced on December 1, 2023.
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Lease expense for lease payments is recognized on a straight-line basis over the lease term.
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Merger On January 5, 2024, we completed the Merger pursuant to the Merger Agreement by and among us, SomaLogic and Merger Sub, pursuant to which Merger Sub merged with and into SomaLogic, with SomaLogic surviving as a wholly owned subsidiary of Standard BioTools.
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Recent Accounting Changes and Accounting Pronouncements Adoption of New Accounting Guidanc e In August 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-06 Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
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Upon the terms and subject to the conditions set forth in the Merger Agreement, at the Effective Time, each share of SomaLogic common stock converted into the right to receive 1.11 shares of our common stock.
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The amendment to this ASU reduces the number of accounting models for convertible instruments and allows more contracts to qualify for equity classification, which is expected to result in more convertible instruments being accounted for as a single unit, rather than being bifurcated between debt and equity. The new guidance was effective for fiscal years beginning after December 15, 2021.
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In addition, as of the Effective Time, we assumed each SomaLogic stock incentive plan, outstanding option to purchase shares of SomaLogic Stock and outstanding restricted stock units convertible into shares of SomaLogic common stock, whether vested or unvested. In addition, as of the Effective Time, each SomaLogic warrant was treated in accordance with its terms.
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We adopted ASU 2020-06 effective January 1, 2022. The adoption of ASU 2020-06 did not have an impact on our financial results. In November 2021, the FASB issued ASU 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. The amendment was effective for annual periods beginning after December 15, 2021.
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Our cost of service revenue and related service margin may fluctuate depending on the variability in material and labor costs of servicing. Research and Development (R&D) R&D expense consists primarily of compensation-related costs, product development and material expenses and other allocated facilities and information technology expenses.
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The amendment established financial disclosure requirements for business entities that receive government assistance they account for by analogizing to a grant or contribution model due to a lack of specific GAAP guidance for such transactions.
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These costs, including a reduction in force, are incurred to improve operational efficiency, achieve cost savings and align our workforce to the future needs of the business. In addition to the reduction in force, we are reducing leased office space, optimizing our manufacturing footprint and streamlining support functions.
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Entities that receive this type of assistance are required to include the following information in the notes to their financial statements: (1) the nature of the transaction, (2) the significant terms and conditions, (3) the accounting treatment, (4) the line items on the balance sheet and income statement that are affected along with (5) the respective amounts that have been recorded.
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Transaction-related expenses Transaction-related expenses consist of costs incurred during the year ended December 31, 2023 in connection with the Merger Agreement, including legal, advisory, accounting and other transaction-related costs. We expect to continue incurring these costs through the first quarter of 2024.
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We adopted ASU 2021-10 effective January 1, 2022.
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The costs incurred during the year ended December 31, 2022 relate to the private placement whereby the Company issued and sold an aggregate of $225.0 million of convertible preferred stock in connection with the conversion of the bridge loans, which closed on April 4, 2022.
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These items increased our loss from operations by $29.8 million for the year ended December 31, 2022 as shown below (in thousands): 50 Year Ended December 31, 2022 Revenue: Portfolio rationalization (1) $ (1,588) Cost of product and service revenue: Portfolio rationalization (1) 3,350 Business improvement initiatives (2) 2,183 Retention bonuses 84 Restructuring (see Note 16) 63 Total cost of product and service revenue items 5,680 Research and development: Portfolio rationalization (1) 3,526 Restructuring (Note 16) 1,116 Retention bonuses 756 Total research and development items 5,398 Selling, general and administrative: Restructuring and other related costs (4) (see Note 16) 4,229 Retention bonuses 3,830 Strategic financing support (3) 3,800 Severance costs (4) 2,733 Business improvement initiatives (2) 2,197 Enterprise resource planning upgrade 391 Total selling, general and administrative items 17,180 Total $ 29,846 _______ (1) Costs related to the exit/de-emphasis of the LCM, Flow Conductor and COVID-19 product lines, including $3.5 million impairment of intangible assets (2) Costs related to returning instrument manufacturing to our Singapore facility; also includes strategic advisory and consulting expenses in support of our restructuring plan (3) Costs to prepare the Private Placement Issuance, including legal and consulting expenses (4) Termination benefits for members of the former management team, including the former CEO 51 Revenue We generate revenue primarily from sales of our products and services.
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The growth was primarily attributable to increased instrument placements, primarily in our proteomics end user markets, offset by declines in our genomics end user markets as the result of our decision to reorganize, simplify and reposition our business over the past year.
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Revenue by product type and as a percentage of total revenue are as follows ($ in thousands): Year Ended December 31, Change 2022 2021 2022 Revenue: Instruments $ 25,664 26 % $ 42,498 33 % (40) % Consumables 46,790 48 57,878 44 (19) % Product revenue 72,454 74 100,376 77 (28) % Service revenue 23,712 24 25,917 20 (9) % Product and service revenue 96,166 98 126,293 97 (24) % Development revenue 818 1 2,559 2 (68) % Grant revenue — — 1,582 1 (100) % License revenue 964 1 147 — 556 % Total revenue $ 97,948 100 % $ 130,581 100 % (25) % Revenue by the geographic location of our customers and as a percentage of total revenue are as follows ($ in thousands): Year Ended December 31, Change 2022 2021 2022 Americas $ 43,982 45 % $ 63,877 49 % (31) % EMEA 33,136 34 42,722 33 (22) % Asia-Pacific 20,830 21 23,982 18 (13) % Total revenue $ 97,948 100 % $130,581 100 % (25) % Americas revenue includes United States revenue of $41.0 million and $60.2 million for the years ended December 31, 2022, and 2021, respectively.
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Revenue reported for the year ended December 31, 2022 includes a $1.6 million instrument revenue reduction for a one-time reserve recorded for our discontinued LCM product line in the genomics segment. Instrument revenue grew 46% to $37.5 million for the year ended December 31, 2023, compared to 2022.

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Other LAB 10-K year-over-year comparisons