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What changed in Quantum-Si Inc's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Quantum-Si 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.

+554 added−555 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-17)

Top changes in Quantum-Si Inc's 2023 10-K

554 paragraphs added · 555 removed · 388 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

156 edited+51 added−46 removed137 unchanged
Biggest changeIt is unknown at this time how the diversity action plan may affect the planning and timing of medical device investigations or what specific information FDA will expect in such plans, but if FDA objects to a sponsor’s diversity action plan, it may delay trial initiation or review of the pre-market submission. 23 Table of Contents The commencement or completion of any clinical trials may be delayed or halted, or be inadequate to support approval of a PMA application (or FDA’s grant of a De Novo classification request or clearance of a 510(k) notification, as applicable), for numerous reasons, including, but not limited to, the following: ● the FDA, the IRB(s), or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; ● participants do not enroll in clinical trials at the expected rate; ● participants do not comply with trial protocols; ● participant follow-up is not at the expected rate; ● participants experience adverse side effects; ● participants die during a clinical trial, even though their death may not be related to the investigational products; ● third-party clinical investigators decline to participate in a trial or do not perform a trial on the sponsor’s anticipated schedule or consistent with the clinical trial protocol, GCPs or other FDA requirements; ● the sponsor or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; ● third-party clinical investigators have significant financial interests related to the sponsor or the study that the FDA deems to make the study results unreliable, or the sponsor or investigators fail to disclose such interests; ● unfavorable regulatory inspections of the sponsor’s clinical trial sites or manufacturing facilities, which may, among other things, require the sponsor to undertake corrective action or suspend or terminate the sponsor’s clinical trials; ● changes in governmental regulations or administrative actions applicable to the sponsor’s trial protocols; ● the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; and ● the FDA concludes that the results from the sponsor’s trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product.
Biggest changeThe commencement or completion of any clinical trials may be delayed or halted, or be inadequate to support approval of a PMA application (or FDA’s grant of a De Novo classification request or clearance of a 510(k) notification, as applicable), for numerous reasons, including, but not limited to, the following: • the FDA, the IRB(s), or other regulatory authorities do not approve a clinical trial protocol or a clinical trial, or place a clinical trial on hold; • delays in reaching, or failure to reach, agreement with the FDA on a pivotal study’s mandatory diversity action plan; • participants do not enroll in clinical trials at the expected rate; • participants do not comply with trial protocols; • participant follow-up is not at the expected rate; • participants experience adverse side effects; • participants die during a clinical trial, even though their death may not be related to the investigational products; • third-party clinical investigators decline to participate in a trial or do not perform a trial on the sponsor’s anticipated schedule or consistent with the clinical trial protocol, GCPs or other FDA requirements; • the sponsor or third-party organizations do not perform data collection, monitoring and analysis in a timely or accurate manner or consistent with the clinical trial protocol or investigational or statistical plans; • third-party clinical investigators have significant financial interests related to the sponsor or the study that the FDA deems to make the study results unreliable, or the sponsor or investigators fail to disclose such interests; • unfavorable regulatory inspections of the sponsor’s clinical trial sites or manufacturing facilities, which may, among other things, require the sponsor to undertake corrective action or suspend or terminate the sponsor’s clinical trials; • changes in governmental regulations or administrative actions applicable to the sponsor’s trial protocols; • the interim or final results of the clinical trial are inconclusive or unfavorable as to safety or effectiveness; and • the FDA concludes that the results from the sponsor’s trial and/or trial design are inadequate to demonstrate safety and effectiveness of the product. 22 Table of Contents Ongoing Post-Market Regulatory Requirements and FDA Enforcement After a medical device is authorized for marketing and placed in commercial distribution (or, for 510(k)-exempt products, placed into commerce without first obtaining FDA clearance or approval), numerous regulatory requirements apply.
These general controls that must be met for all device classes include: ● establishment registration and device listing; ● the QSR, which requires manufacturers, including third-party manufacturers, to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures; ● labeling regulations, which govern the mandatory elements of the device labels and packaging (including Unique Device Identifier markings for certain categories of products); ● FDA’s prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses and other requirements related to promotional activities; ● the MDR regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; ● voluntary and mandatory device recalls addressing problems when a device is defective and/or could be a risk to health; ● correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and ● post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These general controls that must be met for all device classes include: • establishment registration and device listing; • the QSR, which requires manufacturers, including third-party manufacturers, to follow design, testing, control, storage, supplier/contractor selection, complaint handling, documentation and other quality assurance procedures; • labeling regulations, which govern the mandatory elements of the device labels and packaging (including Unique Device Identifier markings for certain categories of products); • the FDA’s prohibitions against the promotion of products for uncleared, unapproved or “off-label” uses and other requirements related to promotional activities; • the MDR regulations, which require that manufacturers report to the FDA if a device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur; • voluntary and mandatory device recalls addressing problems when a device is defective and/or could be a risk to health; • correction and removal reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; and • post-market surveillance regulations, which apply to certain Class II or III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Our platform is currently intended for RUO applications, and it will continue to be marketed as RUO until regulatory authorizations allowing for clinical or diagnostic uses are obtained. We are targeting customers that will directly benefit from the value of our platform across a number of applications, including basic and discovery research and translational research.
Our platform is currently intended for RUO applications, and it will continue to be marketed as RUO until regulatory authorizations allowing for clinical or diagnostic uses are obtained. We are targeting customers that will directly benefit from the value of our platform across a number of applications, including basic research, biomarker discovery and translational research.
Diversity, Equity and Inclusion . Much of our success is rooted in the diversity of our teams and our commitment to inclusion. We value diversity at all levels. We believe that our business benefits from the different perspectives a diverse workforce brings, and we strive to maintain a strong, inclusive and positive culture based on our shared mission and values.
Much of our success is rooted in the diversity of our teams and our commitment to inclusion. We value diversity at all levels. We believe that our business benefits from the different perspectives a diverse workforce brings, and we strive to maintain a strong, inclusive and positive culture based on our shared mission and values.
Developed to be a true single molecule detection platform, our products are designed to achieve the highest level of resolution for sensitivity by sequencing information at the individual amino acid level, and therefore the specificity to meet fidelity requirements of clinical testing, if our products are ultimately authorized for such use.
Developed to be a true single molecule detection platform, our products are designed to achieve the highest level of resolution for sensitivity by sequencing information at the individual amino acid level, and therefore the specificity to meet the requirements of clinical testing, if our products are ultimately authorized for such use.
Our ability to develop our platform such that it will be offered at a significant discount to many legacy instruments and other proteomic technologies, may allow proteomic analysis to reach new markets and new users, potentially enabling and accelerating innovative discoveries. ● Continue to strengthen our intellectual property portfolio for existing and new technologies.
Our ability to develop our platform such that it will be offered at a discount to many legacy instruments and other proteomic technologies, may allow proteomic analysis to reach new markets and new users, potentially enabling and accelerating innovative discoveries. • Continue to strengthen our intellectual property portfolio for existing and new technologies.
Platinum uses our proprietary semiconductor chip that leverages Time-Domain Sequencing™ with an initial focus on NGPS for an unbiased view of the proteome. We believe the digital nature of the sequencing readout could enable users to answer three key questions: ● What protein is present?
Platinum ® uses our proprietary semiconductor chip that leverages Time-Domain Sequencing™ with an initial focus on NGPS for an unbiased view of the proteome. We believe the nature of the sequencing readout could enable users to answer three key questions: • What protein is present?
Jonathan Rothberg, a serial entrepreneur who received the Presidential Medal of Technology & Innovation in 2016 for inventing next generation DNA sequencing. Dr. Rothberg has founded more than 10 healthcare technology companies, including 454 Life Sciences, Ion Torrent and Butterfly Network.
Jonathan Rothberg, a serial entrepreneur who received the Presidential Medal of Technology & Innovation in 2016 for inventing next generation DNA sequencing. Dr. Rothberg has founded more than 10 healthcare technology companies, including 454 Life Sciences, Ion Torrent, Hyperfine and Butterfly Network.
The laws and regulations govern, among other things, medical device design and development, pre-clinical and clinical testing, pre-market clearance, authorization or approval, establishment registration and product listing, product manufacturing, product packaging and labeling, product storage, advertising and promotion, product distribution, recalls and field actions, servicing and post-market clinical surveillance.
The laws and regulations govern, among other things, medical device design and development, non-clinical and clinical testing, pre-market clearance, authorization or approval, establishment registration and product listing, product manufacturing, product packaging and labeling, product storage, advertising and promotion, product distribution, recalls and field actions, servicing and post-market clinical surveillance.
The federal False Claims Act (FCA) prohibits knowingly presenting or causing to be presented a false claim or the knowing use of false statements or records to obtain payment from the federal government. The FCA also prohibits the knowing retention of overpayments (sometimes referred to as “reverse false claims”).
The federal False Claims Act (“FCA”) prohibits knowingly presenting or causing to be presented a false claim or the knowing use of false statements or records to obtain payment from the federal government. The FCA also prohibits the knowing retention of overpayments (sometimes referred to as “reverse false claims”).
We believe our platform offers the potential for a more practical, affordable, and intuitive end-to-end workflow solution relative to many legacy proteomic technologies. We have specifically developed our platform to be adopted and integrated into any existing lab.
We believe our platform offers the potential for a more practical, affordable, and intuitive workflow solution relative to many legacy proteomic technologies. We have specifically developed our platform to be adopted and integrated into any existing lab.
The federal Anti-Kickback Statute (AKS) prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid.
The federal Anti-Kickback Statute (“AKS”) prohibits persons from knowingly and willfully soliciting, receiving, offering or paying remuneration directly or indirectly to induce either the referral of an individual, or the furnishing, recommending, or arranging of a good or service, for which payment may be made under a federal healthcare program such as Medicare and Medicaid.
Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by a duly-appointed IRB for each clinical trial site. Most clinical studies of IVDs are exempt from the IDE requirements, if certain requirements are met.
Generally, clinical trials for a significant risk device may begin once the IDE application is approved by the FDA and the study protocol and informed consent are approved by a duly-constituted IRB for each clinical trial site. Most clinical studies of IVDs are exempt from the IDE requirements, if certain requirements are met.
In dealing with health information for the development of our technology or for commercial purposes, we will be indirectly affected by HIPAA and state-imposed health information privacy and security laws because these laws regulate the ability of our potential customers and research collaborators to share health information with us.
In dealing with health information for the development of our technology or for commercial purposes, we will be indirectly affected by HIPAA and state-imposed health information privacy and cybersecurity laws because these laws regulate the ability of our potential customers and research collaborators to share health information with us.
We believe in attracting, developing, and retaining diverse talent that is inclusive of every age, gender, gender identity, race, sexual orientation, physical capability, ethnicity, belief and perspective. Each individual , regardless of their role makes a difference and impacts our progress. We continue to focus on seeking diverse candidates for all open opportunities. 17 Table of Contents Employee Engagement .
We believe in attracting, developing, and retaining diverse talent that is inclusive of every age, gender, gender identity, race, sexual orientation, physical capability, ethnicity, belief and perspective. Each individual, regardless of their role makes a difference and impacts our progress. We continue to focus on seeking diverse candidates for all open opportunities. Employee Engagement .
In recent years, the FDA has increased its scrutiny of this issue as part of the review and marketing authorization process for new medical devices; the agency also monitors reports of cybersecurity risks as part of its post-marketing device surveillance activities.
In recent years, the FDA has increased its scrutiny of this issue as part of the review and marketing authorization process for new medical devices; the agency also monitors reports of cybersecurity incidents as part of its post-marketing device surveillance activities.
Metered Launch: In December 2022, we launched Platinum™ for RUO. In our initial launch, we are targeting established academic research centers and pharmaceutical companies in the United States and Europe. During our initial launch phase, we are focusing on driving our technology into research centers.
Controlled Launch: In December 2022, we launched Platinum ® for RUO. In our initial launch, we are targeting established academic research centers and pharmaceutical companies in the United States and Europe. During our initial launch phase, we are focusing on driving our technology into research centers.
With an estimated 16,000 MS instruments installed worldwide specifically for proteomics analysis, we believe the cost of $250,000 to $1,000,000 or more per new instrument, according to research by DeciBio, LLC, limits access to proteomics research and we believe currently limits the size and growth of the overall proteomics industry. 7 Table of Contents Limitations of Legacy Proteomic Techniques ● Limitations of biased approaches.
With an estimated 16,000 MS instruments installed worldwide specifically for proteomics analysis, we believe the cost of $250,000 to $1,000,000 or more per new instrument, according to research by DeciBio, LLC, limits access to proteomics research and we believe currently limits the size and growth of the overall proteomics industry. Limitations of Legacy Proteomic Techniques • Limitations of biased approaches.
Product Updates: As we continue commercialization in 2023 and beyond, we expect to focus on building our installed base and expanding global access to our platform. We expect to make product enhancements to our initial platform and to make them available to our new and then existing customers.
Product Updates: As we continue commercialization in 2024 and beyond, we expect to focus on building our installed base and expanding global access to our platform. We expect to make product enhancements to our initial platform and to make them available to our new and then existing customers.
State Analogs of Federal Fraud and Abuse Laws . Many U.S. states have their own laws intended to protect against fraud and abuse in the health care industry and more broadly. In some cases , these laws prohibit or regulate additional conduct beyond what federal law affects. Penalties for violating these laws can range from fines to criminal sanctions. HIPAA.
Many U.S. states have their own laws intended to protect against fraud and abuse in the health care industry and more broadly. In some cases, these laws prohibit or regulate additional conduct beyond what federal law affects. Penalties for violating these laws can range from fines to criminal sanctions. HIPAA.
Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals (known as “relators” or, more commonly, as “whistleblowers”) may share in any amounts paid by the entity to the government in fines or settlement. 25 Table of Contents Civil Monetary Penalties Law .
Suits filed under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government and such individuals (known as “relators” or, more commonly, as “whistleblowers”) may share in any amounts paid by the entity to the government in fines or settlement. Civil Monetary Penalties Law .
For example, the U.S. Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for employers in the United States. This includes requirements to develop and implement multi-faceted programs to protect workers from exposure to blood-borne pathogens, including preventing or minimizing any exposure through needle stick injuries.
Occupational Safety and Health Administration (“OSHA”) has established extensive requirements relating specifically to workplace safety for employers in the United States. This includes requirements to develop and implement multi-faceted programs to protect workers from exposure to blood-borne pathogens, including preventing or minimizing any exposure through needle stick injuries.
The California Consumer Privacy Act (“CCPA”) that went into effect January 1, 2020, is one of the most restrictive state privacy laws, protecting a wide variety of personal information and granting significant rights to California residents with respect to their personal information. Regulations under CCPA have been modified several times.
The California Consumer Privacy Act (“CCPA”) went into effect January 1, 2020, and is one of the most restrictive state privacy laws, protecting a wide variety of personal information and granting significant rights to California residents with respect to their personal information. Regulations under CCPA have been modified several times and continue to be modified.
Proteomic discovery provides insight into what is immediately happening biologically. This insight may be based on both genetic as well as environmental factors that influence protein structure and function. Proteins, while they are complex structures, given their dynamic nature are an excellent indicator that we believe can be used to track therapeutic response, disease progression and person’s overall health.
Proteomic discovery provides insight into what is immediately happening biologically. This insight may be based on both genetic and environmental factors that influence protein structure and function. Given their dynamic nature, proteins, while complex structures, are an excellent indicator that we believe can be used to track therapeutic response, disease progression and a person’s overall health.
Typical workflows rely on analyte-specific reagents (ASRs) for protein detection. ASRs comprise a variety of molecules, such as antibodies or aptamers, which bind to specific regions, rather than individual amino acids, and therefore may not detect the presence of a known protein variants.
Typical workflows rely on a specific reagent for protein detection. ASRs comprise a variety of molecules, such as antibodies or aptamers, which bind to specific regions, rather than individual amino acids, and therefore may not detect the presence of a known protein variants.
However, we do not have long-term supply or manufacturing commitments from our suppliers or manufacturers, as our products and components are currently supplied on a purchase order basis. In addition, we will need to increase the supply and manufacturing of our products as we continue to commercialize our platform.
However, we do not have long-term supply or manufacturing commitments from our suppliers or manufacturers, as our products and components are currently supplied on a purchase order basis. In addition, we will need to increase the supply and manufacturing of our products as we continue to grow.
Employees are encouraged to take advantage of our Learning Management System which has a plethora of online learning courses. We conduct monthly seminars to update employees on what is happening throughout our Company. Compensation and Benefits. Healthcare technology companies , both large and small compete for a limited number of qualified applicants to fill specialized positions.
Employees are encouraged to take advantage of our training platform which has a plethora of online learning courses. We conduct monthly seminars to update employees on what is happening throughout our Company. Compensation and Benefits. Healthcare technology companies, both large and small compete for a limited number of qualified applicants to fill specialized positions.
In total, we owned 115 patent families generally directed to our sample preparation, peptide sequencing and nucleic acid sequencing devices. These issued patents and pending patent applications (if they were to issue as patents) have expected expiration dates ranging between 2025 and 2042. Trademark Portfolio We also protect important marks through trademark registrations.
In total, we owned 118 patent families generally directed to our sample preparation, peptide sequencing and nucleic acid sequencing devices. These issued patents and pending patent applications (if they were to issue as patents) have expected expiration dates ranging between 2025 and 2043. Trademark Portfolio We also protect important marks through trademark registrations.
Many of the companies with which we compete have substantially greater resources than we have. 18 Table of Contents The life science instrumentation industry is highly competitive and expected to grow more competitive with the increasing knowledge gained from ongoing research and development.
Many of the companies with which we compete have substantially greater resources than we have. The life science instrumentation industry is highly competitive and expected to grow more competitive with the increasing knowledge gained from ongoing research and development.
U.S. and European Data Security and Data Privacy Laws HIPAA, as well as a number of other federal and state privacy-related laws, extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information” or “PHI”.
U.S. and European Data Security and Data Privacy Laws HIPAA, as well as a number of other federal and state privacy-related laws, extensively regulate the use and disclosure of individually identifiable health information, known as “protected health information” or “PHI” when regulated under HIPAA.
The information contained in our website does not constitute a part of this report or our other filings with the SEC. 28 Table of Contents
The information contained in our website does not constitute a part of this report or our other filings with the SEC. 27 Table of Contents
ITEM 1. BUSINESS Overview Prior to June 10, 2021, we were a blank check company incorporated as a Delaware corporation and formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
ITEM 1. BUSINESS Overview Prior to June 10, 2021, we were a blank check company, incorporated in Delaware, formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Suppliers and Manufacturing Our products are built using both custom-made and off-the-shelf components supplied by outside manufacturers and vendors located in Asia, Europe, and the United States. One key custom-made component is the disposable semiconductor chip. Others include the proprietary mode-locked laser and enzymes, and buffers used for protein sequencing. The majority of other components for the instruments are off-the-shelf.
Suppliers and Manufacturing Our products are built using both custom-made and off-the-shelf components supplied by outside manufacturers and vendors located in Asia, Europe, and the United States. One key custom-made component is the disposable semiconductor chip. Others include the proprietary mode-locked laser and enzymes, recognizers and buffers used for protein sequencing.
The need to build and maintain a robust compliance program with different compliance and/or reporting requirements increases the possibility that a healthcare company may violate one or more of the requirements, resulting in fines and penalties.
The need to build and maintain a robust compliance program and the differing compliance and/or reporting requirements increases the possibility that a healthcare company may violate one or more of the requirements, resulting in fines and penalties.
We believe this experience will allow us to introduce our platform in a structured manner to demonstrate its use, value and practicality, while working directly with our key customers, to help ensure a positive experience. 5 Table of Contents We were founded in 2013 by Dr.
We believe this experience will allow us to introduce our platform in a structured manner to demonstrate its use, value and practicality, while working directly with our key customers, to help ensure a positive experience. We were founded in 2013 by Dr.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, will be available to you free of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, will be available to you free of charge through the Investor Relations section of our website as soon as reasonably practicable after such materials have been electronically filed with, or furnished to the SEC.
The ability to also identify PTMs could provide novel insights into how pathways are turned on/off to improve our understanding of the estimated 1 million + proteoforms. ● Real-time data processing and Cloud platform provides fast, simple data analysis.
The ability to also identify PTMs could provide novel insights into how pathways are turned on/off to improve our understanding of the estimated 1 million + proteoforms. • Real-time data processing and the Platinum Analysis Software platform provide fast, simple data analysis.
After we commercialize our initial products, we aim to continually innovate and develop new products, product enhancements, applications, workflows, and other tools to enable our customers to generate unbiased proteomic information at scale on a benchtop platform. ● Accessibility and Enablement: Enable broad adoption of protein sequencing.
After we commercialize our initial products, we aim to continually innovate and develop new products, product enhancements, applications, workflows, and other tools to enable our customers to generate unbiased proteomic information at scale. • Accessibility and Enablement: Enable broad adoption of protein sequencing.
The CJEU is the highest court in Europe and the Schrems II decision heightens the burden on data importers to assess U.S. national security laws on their business and future actions of European Union data protection authorities are difficult to predict. Consequently, there is some risk of data transfers from the EU being halted.
The CJEU is the highest court in Europe and the Schrems II decision heightens the burden on data importers to assess U.S. national security laws on their business and future actions of EU data protection authorities are difficult to predict. Consequently, there is some risk of data transfers from the EU being halted. While the recently-adopted EU-U.S.
While our genomes contain approximately 20,000 genes, current estimates are that these genes ultimately code for more than 1,000,000 different protein variants called proteoforms. Thus, the majority of diversity that exists in our cells comes from proteins. Proteins are organic compounds made up of amino acids. Aside from water, proteins make up the majority of the molecules in our bodies.
While our genomes contain approximately 20,000 genes, current estimates are that these genes ultimately code for more than 1,000,000 different protein variants called proteoforms. Thus, the majority of diversity that exists in our cells comes from proteins. Proteins are organic compounds made up of amino acids.
The Civil Monetary Penalties Law (CMPL) authorizes the imposition of substantial civil money penalties and the possibility of exclusion against an entity that engages in certain prohibited activities including but not limited to violations of the Stark Law or Anti-Kickback Statute, knowing submission of a false or fraudulent claim, employment of an excluded individual, and the provision or offer of anything of value to a Medicare or Medicaid beneficiary that the transferring party knows or should know is likely to influence beneficiary selection of a particular provider for which payment may be made in whole or part by a federal health care program, commonly known as the Beneficiary Inducement CMP.
The Civil Monetary Penalties Law (“CMPL”) authorizes the imposition of substantial civil money penalties and the possibility of exclusion against an entity that engages in certain prohibited activities including but not limited to violations of the Stark Law or Anti-Kickback Statute, knowing submission of a false or fraudulent claim, employment of an excluded individual, and the provision or offer of anything of value to a Medicare or Medicaid beneficiary that the transferring party knows or should know is likely to influence beneficiary selection of a particular provider for which payment may be made in whole or part by a federal health care program, commonly known as the Beneficiary Inducement CMP. 24 Table of Contents State Analogs of Federal Fraud and Abuse Laws .
Protein microarrays apply small amounts of sample to a “glass chip” where specific antibodies are used to capture target proteins to measure the expression levels and binding affinities of proteins. The most common way researchers currently analyze proteins is through the use of MS.
Protein microarrays apply small amounts of sample to a glass semiconductor chip where specific antibodies are used to capture target proteins to measure the expression levels and binding affinities of proteins. The most common way researchers currently analyze proteins is through the use of MS.
We have a broad and deep patent protection strategy, which includes 214 issued patents and over 797 pending applications as of December 31, 2022. Protection of our intellectual property is a strategic priority for the business. We have taken, and will continue to take, steps to protect our current and future intellectual property and proprietary technology.
We have a broad and deep patent protection strategy, which includes 293 issued patents and over 666 pending applications as of December 31, 2023. Protection of our intellectual property is a strategic priority for the business. We have taken, and will continue to take, steps to protect our current and future intellectual property and proprietary technology.
In addition, we owned 153 issued patents in foreign jurisdictions, including Australia, Europe, Japan, China, Brazil, Hong Kong, Mexico, Taiwan, Korea, and India, and 673 pending patent applications in foreign jurisdictions, including Australia, Canada, Europe, Japan, China, Brazil, Hong Kong, Mexico, Taiwan, Korea, India, Malaysia, Singapore, and Thailand, 16 of which were allowed.
In addition, we owned 212 issued patents in foreign jurisdictions, including Australia, Brazil, China, Europe, Hong Kong, India, Japan, Korea, Mexico, and Taiwan, and 546 pending patent applications in foreign jurisdictions, including Australia, Brazil, Canada, China, Europe, Hong Kong, India, Israel, Japan, Korea, Malaysia, Singapore, Taiwan, and Thailand, 16 of which were allowed.
Our core leadership team has decades of cumulative experience working directly in the life sciences industry with many of the companies and research centers that have the potential to become key customers and that we will seek to build into our prospective customer pipeline. ● B uild our commercial infrastructure to help ensure successful initial commercial launch in the U.S.
Our core leadership team has decades of cumulative experience working directly in the life sciences industry with many of the companies and research centers that have the potential to become key customers and that we will seek to build into our prospective customer pipeline. • Build our commercial infrastructure to help ensure successful initial commercial launch in the U.S., Europe and limited areas in the rest of the world.
Further, we expect users within the analyte testing segment to adopt our technologies for a variety of clinical research and translational applications. The analyte testing market comprises multiple technologies ranging from basic ELISA tests for interrogating a small number of targets to more complex, high throughput protein analyzers.
Further, we expect users within the analyte testing segment to adopt our technologies for a variety of clinical research and translational applications. The analyte testing market comprises multiple technologies ranging from basic enzyme-linked immunosorbent assay (“ELISA”) tests for interrogating a small number of targets to more complex, high throughput protein analyzers.
In a sense, DNA tells us “what could happen,” and proteins tell us “what is happening.” 6 Table of Contents Proteomics tools have been broadly used across a wide range of applications, including: ● Personalized medicine: tailoring of disease treatment based real-time proteomic data; ● Biomarker discovery: identification of protein markers for disease identification; ● Drug discovery and development: identification of potential drug candidates and aid in the development of the drug; ● Systems biology: system-wide investigations of disease pathways to identify biomarkers, drug action, toxicity, efficacy and resistance; ● Industry / agriculture: bioproduction and study of plant-pathogen interaction (e.g. crop engineering for drought resistance); and ● Food science: identification of allergies, understanding an improvement of nutritional values and food quality and safety control.
In a sense, DNA tells us “what could happen” and proteins tell us “what is happening.” Proteomics tools have been broadly used across a wide range of applications, including: • Personalized medicine : tailoring of disease treatment based real-time proteomic data; • Biomarker discovery : identification of protein markers for disease identification; • Drug discovery and development : identification of potential drug candidates and aid in the development of the drug; • Systems biology : system-wide investigations of disease pathways to identify biomarkers, drug action, toxicity, efficacy and resistance; • Industry / agriculture : bioproduction and study of plant-pathogen interaction (e.g. crop engineering for drought resistance); and • Food science : identification of allergies, understanding an improvement of nutritional values and food quality and safety control. 7 Table of Contents Legacy Proteomic Technologies There is higher diversity and level of complexity related to proteins than genes.
In November 2021, we acquired Majelac, a semiconductor packaging company based in Garnet Valley, Pennsylvania. The acquisition brought our semiconductor chip assembly and packaging capabilities in-house to secure our supply chain and support our commercialization efforts. Human Capital Our people are the reason for our success, and we have structured our organization to maximize productivity and performance.
In November 2021, we acquired Majelac, a semiconductor packaging company based in Garnet Valley, Pennsylvania. The acquisition brought our semiconductor chip assembly capabilities in-house to simplify our supply chain and support our commercialization efforts. 15 Table of Contents Human Capital Management Our people are the reason for our success, and we have structured our organization to maximize productivity and performance.
In the context of performance claims for products such as our goods and services, compliance with the FTC Act includes ensuring that there is scientific data to substantiate the claims being made, that the advertising is neither false nor misleading, and that any user testimonials or endorsements we or our agents disseminate related to the goods or services comply with disclosure and other regulatory requirements.
In the context of performance claims for products, compliance with the FTC Act includes ensuring that there is scientific data to substantiate the claims being made, that the advertising is neither false nor misleading, and that any user testimonials or endorsements disseminated related to the goods or services comply with disclosure and other regulatory requirements.
We may be subject to GDPR if we undertake operations in the EU, offer products or services to individuals in the EU or monitor the behavior of individuals within the EU. We could also be subject to evolving European Union laws on data export, for transfers of data outside the European Union to us, group companies or third parties.
We are be subject to GDPR as we undertake and expand operations in the EU, offer products or services to individuals in the EU, or monitor the behavior of individuals within the EU. We could also be subject to evolving European Union laws on data export, for transfers of data outside the EU to us, group companies or third parties.
The power of our approach is that rather than analyzing proteins one at a time, our chip is designed to enable parallel sequencing across millions of independent chambers, and the number of parallel sequencing reactions to scale rapidly.
The power of our approach is that rather than analyzing proteins one at a time, our semiconductor chip is designed to enable parallel sequencing across millions of independent chambers, and for the number of parallel sequencing reactions to be rapidly scalable.
As part of the 510(k) notification process for Class II devices that have an existing classification regulation available for purposes of the regulatory filing, the FDA may require the following: ● Development of comprehensive product description and indications for use. ● Completion of extensive nonclinical tests and/or animal studies, performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations, as well as any performance standards or other testing requirements established by the FDA through regulations or device-specific guidance. ● Comprehensive review of one or more predicate devices and development of data supporting the new product’s substantial equivalence to such predicate devices. 21 Table of Contents Assuming successful completion of all required testing, a detailed 510(k) notification is submitted to the FDA requesting clearance to market the product.
As part of the 510(k) notification process for Class II devices that have an existing classification regulation available for purposes of the regulatory filing, the FDA may require the following: • Development of comprehensive product description and indications for use. • Completion of extensive nonclinical tests and/or animal studies, performed in accordance with the FDA’s Good Laboratory Practice (“GLP”) regulations, as well as any performance standards or other testing requirements established by the FDA through regulations or device-specific guidance. • Comprehensive review of one or more predicate devices and development of data supporting the new product’s substantial equivalence to such predicate devices.
The GDPR only permits exports of data outside the European Union to jurisdictions that ensure an adequate level of data protection.
The GDPR only permits exports of data outside the EU to jurisdictions that ensure an adequate level of data protection.
Among other things, the CPRA established a new regulatory authority, the California Privacy Protection Agency, which will be enacting new regulations and will have expanded enforcement authority. Other states in the U.S. are considering privacy laws similar to CCPA.
Among other things, the CPRA established a new regulatory authority, the California Privacy Protection Agency, which is enacting new regulations and has expanded enforcement authority. Other states in the U.S. have implemented or are considering privacy laws similar to CCPA.
The EU General Data Protection Regulation (“GDPR”) applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
The GDPR applies across the European Union and includes, among other things, a requirement for prompt notice of data breaches to data subjects and supervisory authorities in certain circumstances and significant fines for non-compliance.
De Novo classification requests are subject to user fees, unless a specific exemption applies (over $132,000 in fiscal year 2023).
De Novo classification requests are subject to user fees, unless a specific exemption applies (over $145,000 in fiscal year 2024).
While traditional instruments like mass spectrometers may cost anywhere from $250,000 to over $1,000,000 per new instrument, our Platinum device retails for approximately $70,000 . Platinum is designed to provide a streamlined rapid workflow compared to legacy MS workflows.
While traditional instruments like mass spectrometers may cost anywhere from $250,000 to over $1,000,000 per new instrument, our Platinum ® device is currently priced at approximately $85,000. Platinum ® is designed to provide a streamlined rapid workflow compared to legacy MS workflows.
We believe that our universal unbiased single molecule detection platform will enable a proteomics solution at an affordable cost and provide users the opportunity to perform proteomics studies. Our launch product consists of Platinum™, Quantum-Si Cloud™ and consumables.
We believe that our universal unbiased single molecule detection platform will enable a proteomics solution at an affordable cost and provide users the opportunity to perform proteomics studies. Our launched product consists of Platinum ® , the Platinum Analysis Software and consumables.
Portfolio Expansion: Ultimately, we plan to advance and develop new products and key applications designed to “scale up” our Platinum instrument to provide higher throughput and enable greater levels of data output and broader coverage of the proteome.
Portfolio Expansion: Ultimately, we plan to advance and develop new products and key applications designed to “scale up” our Platinum ® instrument to provide higher throughput and enable greater levels of data output and broader coverage of the proteome, as well as deeper analysis capabilities, including onboard analysis capabilities.
We believe this leadership team positions us as a potentially disruptive force in creating a new market of next generation protein sequencing. 14 Table of Contents Our Strategies Our strategies include the following: ● Systematic and phased approach to broad commercialization and adoption. In December 2022, we launched Platinum™ for RUO.
We believe this leadership team positions us as a potentially disruptive force in creating a new market of next generation protein sequencing. 12 Table of Contents Our Strategies Our strategies include the following: • Systematic and phased approach to broad commercialization and adoption.
Our team has similarly devoted its efforts to revolutionizing unbiased proteomic analysis using a similar scientific and technical validation approach since our founding in 2013. ● Experienced Life Science Management team combined with a visionary founder and experienced financial partners with deep experience in healthcare.
Our team has similarly devoted its efforts to revolutionizing unbiased proteomic analysis using a similar scientific and technical validation approach since our founding in 2013. • Experienced Life Science Management team with significant experience in healthcare.
Our team has decades of cumulative experience in developing, commercializing and scaling tools in the life sciences industry. Our management team has employed a similar approach at other companies previously to launch other disruptive technologies, including market leading single molecule proteomics and genomics technology including next generation DNA sequencing technologies.
Our team has decades of cumulative experience in developing, commercializing and scaling tools in the life sciences industry. Our management team has previously employed similar approaches at other companies to launch other disruptive technologies, including market leading next generation DNA sequencing technologies.
The United States has not been deemed to offer an adequate level of protection, so in order for us to transfer personal data from the EU to the United States, we must identify a legal basis for data transfer (e.g., the European Union Commission approved Standard Contractual Clauses).
The United States has not been deemed to offer an adequate level of protection, so in order for us to transfer personal data from the EU to the United States, we must identify a legal basis for data transfer (e.g., the European Union Commission approved Standard Contractual Clauses or certification under the recently-adopted EU-U.S. Data Privacy Framework).
Our commercial strategy is designed to place our instruments initially with a wide variety of customer types, and ultimately to improve our products by increasing throughput and developing additional applications to expand our users and increase the consumable utilization by our installed base. In December 2022, we launched Platinum™ for RUO.
Our commercial strategy is designed to place our instruments initially with a wide variety of customer types, and ultimately to improve our products by increasing throughput and developing additional applications to expand our users and increase the consumable utilization by our installed base.
In addition to appealing to users of existing proteomics tools, we believe that our proteomics platform will appeal to users of DNA sequencing technologies who seek to augment their research and discovery of biomarkers and further deepen their understanding of biology. 13 Table of Contents ● Business model that leverages growing installed base of instruments.
In addition to appealing to users of existing proteomics tools, we believe that our proteomics platform will appeal to users of DNA sequencing technologies who seek to augment their research and discovery of biomarkers and further deepen their understanding of biology. • Business model that leverages growing installed base of instruments. In December 2022, we launched Platinum ® for RUO.
These companies include Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck KGaA (and its subsidiary MilliporeSigma) and Thermo Fisher Scientific. We also may compete with a number of emerging growth companies that have developed, or are developing, proteomic products and solutions, such as Nautilus Biotechnology, Olink Proteomics, Quanterix, Seer and SomaLogic. We believe there are currently no commercially available NGPS platforms.
These companies include Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck KGaA (and its subsidiary MilliporeSigma) and Thermo Fisher Scientific. We also may compete with a number of emerging growth companies that have developed, or are developing, proteomic products and solutions, such as Nautilus Biotechnology, Olink Proteomics, Quanterix, Seer and Standard BioTools.
We have developed and optimized processes with the third-party foundry that supplies our chips, which allows us to make integrated chips using standard foundry processes with sufficient performance for our commercial needs and to scale to meet our customer demand. We believe that our proprietary chip is a core component in our ability to scale.
We have developed and optimized processes with the third-party foundry that supplies our wafers, allowing us to manufacture integrated semiconductor chips using standard foundry processes with sufficient and scalable performance for our commercial needs and customer demand. We believe our proprietary semiconductor chip is a core component in our ability to scale.
We aim for our technology platform to be broadly available across pharmaceutical and academic research centers, basic research labs, and other healthcare centers and clinical laboratories (for RUO until appropriate regulatory authorization is secured to allow clinical or diagnostic uses) at a price point that is a significant discount to most legacy technologies.
We aim for our technology platform to be broadly available across pharmaceutical and academic research centers, basic research labs, and other healthcare centers and RUO clinical laboratories at a price point that is a significant discount to most legacy technologies.
Our end-to-end workflow solution, at launch, will be comprised of instruments, consumables, and software and has been designed at a favorable price point relative to legacy technologies to promote easy adoption, while simplifying and automating the single molecule proteomics workflow.
Our workflow solution is comprised of our Platinum ® instrument, consumables, and software and has been designed at a favorable price point relative to legacy technologies to promote easy adoption, while simplifying and automating the single molecule proteomics workflow.
As of December 31, 2022, we owned 43 trademark registrations and 56 trademark applications, of which 14 are U.S. trademark applications. 12 of the U.S. trademark applications have been allowed. 19 Table of Contents Other Intellectual Property In addition to patents, we also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.
As of December 31, 2023, we owned 56 trademark registrations and 44 trademark applications, of which 13 are U.S. trademark applications. Four of the U.S. trademark applications have been allowed. Other Intellectual Property In addition to patents, we also rely on trade secrets, technical know-how and continuing innovation to develop and maintain our competitive position.
A digital quantification provides precise protein abundance, not an analog theoretical abundance based on a colorimetric or mass abundance readout. ● How has the protein been modified? Single-molecule sensitivity could show how the protein has been post-translationally modified thus providing greater insights to its role in the context of biological processes within the cell.
A quantification provides precise protein abundance based on a colorimetric or mass abundance readout. • How has the protein been modified? Single-molecule sensitivity could show how the protein has been post-translationally modified thus providing greater insights to its role in the context of biological processes within the cell. Our semiconductor chip is the core of our technology.
We believe the principal competitive factors in our target markets include: ● resolution and sensitivity; ● cost of instruments and consumables; ● efficiency and speed of workflows; ● the scale required to address the complexity and dynamic range of the proteome; ● throughput to meet lab testing volume; ● reputation among customers and key thought leaders; ● innovation in product offerings; ● accuracy and reproducibility of results; ● strength of intellectual property portfolio; ● operational and manufacturing footprint; ● customer support infrastructure; and ● a leadership and commercial team with extensive execution and scientific background.
We believe the principal competitive factors in our target markets include: • resolution and sensitivity; • cost of instruments and consumables; • efficiency and speed of workflows; • the scale required to address the complexity and dynamic range of the proteome; • throughput to meet lab testing volume; • reputation among customers and key thought leaders; • innovation in product offerings; • accuracy and reproducibility of results; • strength of intellectual property portfolio; • operational and manufacturing footprint; • customer support infrastructure; and • a leadership and commercial team with extensive execution and scientific background. 17 Table of Contents We believe that there are currently no other commercially available products that provide the same level of analysis at the same scale and sensitivity that we expect our platform will provide.
An increase in the complexity of the proteome is facilitated by post translational modifications (PTMs) where pieces of the protein are modified to either activate or inactivate the protein as part of a signaling pathway to localize the protein to a certain cellular compartment.
Second is translation, where a cell’s ribosomes read the RNA instructions to assemble the protein. An increase in the complexity of the proteome is facilitated by post translational modifications (“PTMs”) where pieces of the protein are modified to either activate or inactivate the protein as part of a signaling pathway to localize the protein to a certain cellular compartment.
Users are therefore forced to choose between breadth with MS or scalability with other biased technologies, or limited alternatives that can address both needs. ● Low levels of resolution and sensitivity.
Biased approaches lack the capabilities necessary to catalog new protein variants. Users are therefore forced to choose between breadth with MS or scalability with other biased technologies, or limited alternatives that can address both needs. • Low levels of resolution and sensitivity.
Such products must bear the statement: “For Research Use Only. Not for Use in Diagnostic Procedures.” RUO products also cannot make any claims related to safety, effectiveness or diagnostic utility, and they cannot be intended for human clinical diagnostic use.
RUO products may therefore be used or distributed for research use without first obtaining FDA clearance, authorization, or approval. Such products must bear the statement: “For Research Use Only. Not for Use in Diagnostic Procedures.” RUO products also cannot make any claims related to safety, effectiveness or diagnostic utility, and they cannot be intended for human clinical diagnostic use.
Within our initial focus market of proteomics we will focus on applications such as protein/proteoform identification as our workflow is designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state.
Within our initial focus market of proteomics, our workflow is designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state.
Our semiconductor chip is the core of our technology. By leveraging developments in the semiconductor industry, we are developing our scalable single-molecule next generation protein sequencer. Similar to the camera in a mobile phone, our chip is produced in standard semiconductor foundries and has been designed to provide insight into biology.
By leveraging developments in the semiconductor industry, we are developing our scalable single-molecule next-generation protein sequencer. Our semiconductor chip is produced in standard semiconductor foundries and is designed to provide insight into biology.
In addition, with respect to any of our future products that are marketed as in vitro diagnostic or clinical products, FDA’s regulations applicable to medical device products prohibit them from being promoted for uses not within the scope of a given product’s intended use(s), among other promotional and labeling rules applicable to products subject to the FDCA. 20 Table of Contents When our products are marketed for clinical or diagnostic uses, they will be regulated by the FDA as IVD medical devices.
In addition, with respect to products that are marketed as in vitro diagnostic or clinical products, FDA’s regulations applicable to medical device products prohibit them from being promoted for uses not within the scope of a given product’s intended use(s), among other promotional and labeling rules applicable to products subject to the FDCA.
Our platform aims to address many of the key challenges and bottlenecks of legacy proteomic solutions, such as mass spectrometry (“MS”), which are complicated and often limited by complex manual sample preparation workflows, and high instrument costs, both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad adoption.
Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as mass spectrometry (“MS”), which include high instrument costs both in terms of acquisition and ownership, and complexity with data analysis, which together limit broad adoption.
For more than a decade, MS has been the dominant tool for an unbiased approach to protein analysis. Shotgun proteomics, or studying pieces of proteins that have been broken apart, typically utilizes MS and MS workflows, allowing for the interrogation of individual peptides and protein sequences. However, these techniques are generally complex, lengthy, expensive, laborious and require extensive data analysis.
For more than a decade, MS has been the dominant tool for an unbiased approach to protein analysis. Shotgun proteomics, the studying of pieces of proteins that have been broken apart, typically utilizes MS and MS workflows, allowing for the interrogation of individual peptides and protein sequences.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf our suppliers fail to produce our products and components to specification or provide defective products to us and our quality control tests and procedures fail to detect such errors or defects, or if we or our suppliers use defective materials or workmanship in the manufacturing process, the reliability and performance of our products will be compromised. 38 Table of Contents If our products contain defects, we may experience: ● a failure to achieve market acceptance for our products or expansion of our product sales; ● loss of customer orders and delay in order fulfillment; ● damage to our brand reputation; ● loss of revenue; ● increased warranty and customer service and support costs 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 team into our service team; and ● legal claims against us, including product liability claims, which could be costly and time consuming to defend and result in substantial damages.
Biggest changeIf our products contain defects, we may experience: • a failure to achieve market acceptance for our products or expansion of our product sales; • loss of customer orders and delay in order fulfillment; • damage to our brand reputation; • loss of revenue; • increased warranty and customer service and support costs 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 team into our service team; and • legal claims against us, including product liability claims, which could be costly and time consuming to defend and result in substantial damages. 37 Table of Contents The life sciences technology market is highly competitive.
Our products are and will be subject to market forces and adoption curves common to other new technologies. The market for proteomics and genomics technologies and products is in its early stages of development. If widespread adoption of our products takes longer than anticipated, we will continue to experience operating losses.
Our products are and will be subject to market forces and adoption curves common to other new technologies. The market for proteomics and genomics technologies and products is in its early stages of development and if widespread adoption of our products takes longer than anticipated, we will continue to experience operating losses.
We expect that substantially all of our sales revenue in the near term will be generated from sales of RUO protein sequencing products to academic institutions and other research institutions. Much of these customers’ funding will be, in turn, provided by various state, federal and international government agencies.
We expect that substantially all of our revenue in the near term will be generated from sales of RUO protein sequencing products to academic institutions and other research institutions. Much of these customers’ funding will be, in turn, provided by various state, federal and international government agencies.
An inability to manufacture products and components that consistently meet specifications, in necessary quantities, at commercially acceptable costs and without significant delays, may have a material adverse effect on our business, results of operations, financial condition and prospects. We rely on third party foundries to produce wafers, which when packaged and tested internally, lead to our supply of chips.
An inability to manufacture products and components that consistently meet specifications, in necessary quantities, at commercially acceptable costs and without significant delays, may have a material adverse effect on our business, results of operations, financial condition and prospects. We rely on third-party foundries to produce wafers, which when packaged and tested internally, lead to our supply of semiconductor chips.
In the event it becomes necessary to utilize other equipment for our chip manufacturing, we would experience additional costs, delays and difficulties in manufacturing our chips, and our business would suffer. There can be no assurance that we would be able to obtain alternative equipment on a timely basis on acceptable terms, if at all.
In the event it becomes necessary to utilize other equipment for our semiconductor chip manufacturing, we would experience additional costs, delays and difficulties in manufacturing our semiconductor chips, and our business would suffer. There can be no assurance that we would be able to obtain alternative equipment on a timely basis on acceptable terms, if at all.
If these third party foundries should fail or not perform satisfactorily, our ability to supply chips would be negatively and adversely affected. We currently rely on third-party foundries for the production of wafers, and we may not be able to obtain adequate supplies in a timely manner or on commercially reasonable terms.
If these third-party foundries should fail or not perform satisfactorily, our ability to supply semiconductor chips would be negatively and adversely affected. We currently rely on third-party foundries for the production of wafers, and we may not be able to obtain adequate supplies in a timely manner or on commercially reasonable terms.
An interruption in our ability to sell and deliver chips to customers could occur if we encounter delays or difficulties in securing these wafers, if the quality of the wafers supplied do not meet specifications, or if we cannot then obtain an acceptable substitute. If any of these events occur, our business and operating results could be harmed.
An interruption in our ability to sell and deliver semiconductor chips to customers could occur if we encounter delays or difficulties in securing these wafers, if the quality of the wafers supplied do not meet specifications, or if we cannot then obtain an acceptable substitute. If any of these events occur, our business and operating results could be harmed.
As a result, our stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our common stock.
As a result, our stockholders may be limited in their ability to obtain a premium for their shares. If prospective takeovers are not consummated for any reason, we may experience negative reactions from the financial markets, including negative impacts on the price of our Class A common stock.
If these pieces of equipment were to stop working and be unable to be repaired in a timely manner or at all, our ability to manufacturer our chips would be adversely affected. Our internal manufacturing equipment is specialized with limited vendor options and long lead times.
If these pieces of equipment were to stop working and be unable to be repaired in a timely manner or at all, our ability to manufacturer our semiconductor chips would be adversely affected. Our internal manufacturing equipment is specialized with limited vendor options and long lead times.
We may in the future register with the FDA as a specification developer and list ancillary products such as customized reagents with the FDA as Class I general purpose laboratory equipment and reagents. A clinical laboratory could potentially use our custom-manufactured reagents to create what is called a LDT.
We may in the future register with the FDA as a specification developer and list ancillary products such as customized reagents with the FDA as Class I general purpose laboratory equipment and reagents. A clinical laboratory could potentially use our custom-manufactured reagents to create what is called an LDT.
These provisions provide for, among other things: ● the ability of our board of directors to issue one or more series of preferred stock; ● stockholder action by written consent only until the first time when Dr.
These provisions provide for, among other things: • the ability of our Board to issue one or more series of preferred stock; • stockholder action by written consent only until the first time when Dr.
Any future design issues, unforeseen manufacturing problems, such as contamination of our or our manufacturers’ facilities, equipment malfunctions, aging components, quality issues with components and materials sourced from third-party suppliers, or failures to strictly follow procedures or meet specifications, may have a material adverse effect on our brand, business, results of operations and financial condition and could result in our or our third-party manufacturers losing International Organization for Standardization (ISO) quality management certifications.
Any future design issues, unforeseen manufacturing problems, such as contamination of our or our manufacturers’ facilities, equipment malfunctions, aging components, quality issues with components and materials sourced from third-party suppliers, or failures to strictly follow procedures or meet specifications, may have a material adverse effect on our brand, business, results of operations and financial condition and could result in our or our third-party manufacturers losing International Organization for Standardization (“ISO”) quality management certifications.
As cybersecurity incidents and regulatory requirements continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities.
As cybersecurity incidents and regulatory requirements continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any security vulnerabilities.
Further, the FDA may disagree that such products are Class 1 medical devices and require us to obtain pre-market clearance or approval before we can continue to sell our reagent products to certain customers. 44 Table of Contents We may be subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and physician payment transparency laws, which, if violated, could subject us to substantial penalties.
Further, the FDA may disagree that such products are Class 1 medical devices and require us to obtain pre-market clearance or approval before we can continue to sell our reagent products to certain customers. 43 Table of Contents We may be subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and physician payment transparency laws, which, if violated, could subject us to substantial penalties.
If these pieces of equipment were to stop working and be unable to be repaired in a timely manner or at all, our ability to manufacturer our chips could be adversely affected.
If these pieces of equipment were to stop working and be unable to be repaired in a timely manner or at all, our ability to manufacturer our semiconductor chips could be adversely affected.
Our suppliers have also been impacted by the COVID-19 pandemic, and we have experienced supply delays for critical hardware and instrumentation as a result. If any of these events occur, our business, results of operations, financial condition and prospects could be harmed. Our internal manufacturing equipment is specialized with limited vendor options and long lead times.
Our suppliers have also been impacted by the COVID-19 pandemic, and in the past, we have experienced supply delays for critical hardware and instrumentation as a result. If any of these events occur, our business, results of operations, financial condition and prospects could be harmed. Our internal manufacturing equipment is specialized with limited vendor options and long lead times.
We cannot predict how these various efforts will be resolved, how Congress or the FDA will regulate LDTs in the future, or how that regulatory system will impact our business.
We cannot predict how these various efforts will be resolved, how Congress or the FDA will regulate LDTs in the future, or how that modernized regulatory system will impact our business.
We cannot predict how these various efforts will be resolved, how Congress or the FDA will regulate LDTs in the future, or how that regulatory system will impact our business.
We cannot predict how these various efforts will be resolved, how Congress or the FDA will regulate LDTs in the future, or how that modernized regulatory system will impact our business.
We have limited experience producing and supplying our products, and we may be unable to consistently manufacture or source our instruments and consumables to the necessary specifications or in quantities necessary to meet demand on a timely basis and at acceptable performance and cost levels. Our products provide an end-to-end solution with many different components that work together.
We have limited experience producing and supplying our products, and we may be unable to consistently manufacture or source our instruments and consumables to the necessary specifications or in quantities necessary to meet demand on a timely basis and at acceptable performance and cost levels. Our products provide a solution with many different components that work together.
For example, Kevin Rakin, a member of our board of directors, was named as a defendant in United States ex rel. Webb v. Advanced BioHealing, Inc. (“ABH”), a whistleblower suit relating to sales methods employed by sales representatives of ABH, a biotechnology company for which Mr. Rakin served as its chief executive officer.
For example, Kevin Rakin, a member of our board of directors (the “Board”), was named as a defendant in United States ex rel. Webb v. Advanced BioHealing, Inc. (“ABH”), a whistleblower suit relating to sales methods employed by sales representatives of ABH, a biotechnology company for which Mr. Rakin served as its chief executive officer.
If any of these third parties were not able to supply our wafers, our chip supply would be negatively impacted and our business would be harmed.
If any of these third parties were not able to supply our wafers, our semiconductor chip supply would be negatively impacted and our business would be harmed.
Rothberg may have interests that differ from yours and may vote in a way with which you disagree , and which may be adverse to your interests.
Dr. Rothberg may have interests that differ from yours and may vote in a way with which you disagree, and which may be adverse to your interests.
In addition, once our products are authorized for use by the FDA as medical devices, we will need to contract with FDA-registered device establishments that are able to comply with current Good Manufacturing Practice requirements that are set forth in the QSR, unless explicitly exempted by regulation.
In addition, if our products are authorized for use by the FDA as medical devices, we will need to contract with FDA-registered device establishments that are able to comply with current Good Manufacturing Practice requirements that are set forth in the QSR, unless explicitly exempted by regulation.
We have entered into Technology and Services Exchange Agreements (the “TSEAs”) by and among us and other participant companies controlled by the Rothberg family, consisting of Butterfly Network, Inc., AI Therapeutics, Inc., Hyperfine, Inc., 4Bionics LLC, identifeye HEALTH Inc. (f/k/a Tesseract Health, Inc.), Liminal Sciences, Inc. and Detect, Inc.
We have entered into Technology and Services Exchange Agreements (the “TSEAs”) by and among us and other participant companies controlled by the Rothberg family, consisting of Butterfly Network, Inc., OrphAI Therapeutics, Inc., Hyperfine, Inc., 4Bionics LLC, identifeye HEALTH Inc. (f/k/a Tesseract Health, Inc.), Liminal Sciences, Inc. and Detect, Inc.
To the extent our commercial launch plan is delayed or unsuccessful, our financial results will be adversely impacted. Our success depends on broad scientific and market acceptance, which we may fail to achieve. Our ability to achieve and maintain scientific and commercial market acceptance of our products depends and will depend on a number of factors.
To the extent our commercial launch plan is unsuccessful, our financial results will be adversely impacted. Our success depends on broad scientific and market acceptance, which we may fail to achieve. Our ability to achieve and maintain scientific and commercial market acceptance of our products depends and will depend on a number of factors.
Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which may complicate compliance efforts.
Certain state laws may be more stringent or broader in scope, or offer greater individual rights, with respect to personal information than federal, international or other state laws, and such laws may differ from each other, all of which complicates compliance efforts.
Although we take measures to protect sensitive data from unauthorized access, use or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or breached due to employee error, malfeasance or other malicious or inadvertent disruptions.
Although we take measures to protect sensitive data from unauthorized access, use or disclosure, our information technology and infrastructure may be vulnerable to attacks by hackers or viruses or accessed due to employee error, malfeasance or other malicious or inadvertent disruptions.
Over the next several years, we expect to continue to devote substantially all of our resources towards continuing development and future commercialization of our products and research and development efforts for additional products. These efforts may prove more costly than we currently anticipate.
Over the next several years, we expect to continue to devote substantially all of our resources towards development and commercialization of our products and research and development efforts for additional products. These efforts may prove more costly than we currently anticipate.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license intellectual property or develop or commercialize current or future products. 49 Table of Contents We may not be aware of all third-party intellectual property rights potentially relating to our products.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license intellectual property or develop or commercialize current or future products. We may not be aware of all third-party intellectual property rights potentially relating to our products.
As a result, we are a “controlled company” within the meaning of the Nasdaq corporate governance standards and are not subject to the requirements that would otherwise require us to have: (i) a majority of independent directors; (ii) a compensation committee comprised solely of independent directors; and (iii) director nominees selected, or recommended for our board of director’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors.
As a result, we are a “controlled company” within the meaning of the Nasdaq corporate governance standards and are not subject to the requirements that would otherwise require us to have: (i) a majority of independent directors; (ii) a compensation committee comprised solely of independent directors; and (iii) director nominees selected, or recommended for our Board’s selection, either by a majority of the independent directors or a nominating committee comprised solely of independent directors.
Social media practices in the medical device and biopharmaceutical industries are evolving, which creates uncertainty and risk of noncompliance with regulations applicable to our business. For example, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us or our products on any social networking website.
Social media practices in the medical device and biopharmaceutical industries are evolving, which creates uncertainty and risk of non-compliance with regulations applicable to our business. For example, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us or our products on any social networking website.
Rothberg owns less than a majority of the outstanding shares of our capital stock. 58 Table of Contents These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
Rothberg owns less than a majority of the outstanding shares of our capital stock. These anti-takeover provisions as well as certain provisions of Delaware law could make it more difficult for a third party to acquire us, even if the third party’s offer may be considered beneficial by many of our stockholders.
For example, our customers may independently elect to use our RUO labeled products in their own “LDTs” for clinical diagnostic uses, which could subject our products to government regulation, and regulatory requirements related to marketing, selling, and distribution of RUO products could change or be uncertain, even if clinical uses of our RUO products by our customers were done without our consent.
For example, our customers may independently elect to use our RUO labeled products in their own lab-developed tests (“LDTs”) for clinical diagnostic uses, which could subject our products to government regulation, and regulatory requirements related to marketing, selling, and distribution of RUO products could change or be uncertain, even if clinical uses of our RUO products by our customers were done without our consent.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: ● the timing and amount of expenditures that we may incur to develop, commercialize or acquire additional products and technologies or for other purposes, such as the expansion of our facilities; ● changes in governmental funding of life sciences research and development or changes that impact budgets or budget cycles ● seasonal spending patterns of our customers; ● the timing of when we recognize any revenues; ● future accounting pronouncements or changes in our accounting policies; ● the outcome of any future litigation or governmental investigations involving us, our industry or both ● higher than anticipated service, replacement and warranty costs; ● the impact of the COVID-19 pandemic on the economy, investment in life sciences and research industries, our business operations, and resources and operations of our suppliers, distributors and potential customers; an ● general industry, economic and market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • the timing and amount of expenditures that we may incur to develop, commercialize or acquire additional products and technologies or for other purposes, such as the expansion of our facilities; • changes in governmental funding of life sciences research and development or changes that impact budgets or budget cycles; • seasonal spending patterns of our customers; • the timing of when we recognize any revenues; • future accounting pronouncements or changes in our accounting policies; • the outcome of any future litigation or governmental investigations involving us, our industry or both; • higher than anticipated service, replacement and warranty costs; • the impact of past or future epidemics or pandemics on the economy, investment in life sciences and research industries, our business operations, and resources and operations of our suppliers, distributors and potential customers; and • general industry, economic and market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.
Any failure to compete effectively could materially and adversely affect our business, financial condition, results of operations and cash flows. 39 Table of Contents We are party to Technology and Services Exchange Agreements by and among us and certain affiliated companies, pursuant to which the parties agreed to share personnel and certain non-core technologies.
Any failure to compete effectively could materially and adversely affect our business, financial condition, results of operations and cash flows. We are party to Technology and Services Exchange Agreements by and among us and certain affiliated companies, pursuant to which the parties agreed to share personnel and certain non-core technologies.
The America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Various courts, including the U.S.
The America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects. 47 Table of Contents Various courts, including the U.S.
If any of our trade secrets were to be disclosed to or independently discovered by a competitor or other third party, it could materially and adversely affect our business, financial condition, results of operations and prospects. 50 Table of Contents We may be subject to claims challenging the inventorship of our patents and other intellectual property.
If any of our trade secrets were to be disclosed to or independently discovered by a competitor or other third party, it could materially and adversely affect our business, financial condition, results of operations and prospects. We may be subject to claims challenging the inventorship of our patents and other intellectual property.
For example, the California Consumer Privacy Act (CCPA), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020.
For example, the California Consumer Privacy Act (“CCPA”), which increases privacy rights for California residents and imposes obligations on companies that process their personal information, came into effect on January 1, 2020.
Determining HIPAA applicability to our operations as they evolve, obligations under applicable privacy standards and our contractual obligations can require complex factual and regulatory analyses and may be subject to differing or changing interpretations.
Determining HIPAA applicability to our operations as our operations evolve, obligations under applicable privacy standards and our contractual obligations may require complex factual and regulatory analyses and may be subject to differing or changing interpretations.
There can be no assurance that our defenses of non-infringement, invalidity or unenforceability will succeed. 52 Table of Contents Third parties, including our competitors, could be infringing, misappropriating or otherwise violating our solely owned and/or in-licensed intellectual property rights. Monitoring unauthorized use of intellectual property is difficult and costly.
There can be no assurance that our defenses of non-infringement, invalidity or unenforceability will succeed. Third parties, including our competitors, could be infringing, misappropriating or otherwise violating our solely owned and/or in-licensed intellectual property rights. Monitoring unauthorized use of intellectual property is difficult and costly.
The life sciences technology market is highly competitive. If we fail to compete effectively, our business and results of operations will suffer. We face significant competition in the life sciences technology market. We currently compete with life sciences technology and the diagnostic companies that are supplying components, products and services that serve customers engaged in proteomics analysis.
If we fail to compete effectively, our business and results of operations will suffer. We face significant competition in the life sciences technology market. We currently compete with life sciences technology and the diagnostic companies that are supplying components, products and services that serve customers engaged in proteomics analysis.
Geopolitical conflicts, including the ongoing war in Ukraine, could adversely impact our operations or those of our suppliers, manufacturers or customers. The extent to which these events impact our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
Geopolitical conflicts, including the ongoing conflicts in Ukraine and Israel and Gaza, could adversely impact our operations or those of our suppliers, manufacturers or customers. The extent to which these events impact our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence.
Any future legislative or administrative rule making or oversight of LDTs, if and when finalized, could decrease demand for our reagents by affecting how customers can use those products. Additionally, compliance with additional regulatory burdens could be time consuming and costly for our customers.
Any legislative or administrative rule making or new federal oversight of LDTs, if and when finalized, could decrease demand for our reagents by affecting how customers can use those products. Additionally, compliance with additional regulatory burdens could be time consuming and costly for our customers.
Any such breach or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, publicly disclosed, lost or stolen.
Any such breach, incident or interruption could compromise our networks and the information stored there could be accessed by unauthorized parties, manipulated, acquired, publicly disclosed, lost or stolen.
An interruption in our ability to sell and deliver instruments to customers could occur if we encounter delays or difficulties in securing these components, or if the quality of the components supplied do not meet specifications, or if we cannot then obtain an acceptable substitute.
An interruption in our ability to sell and deliver instruments or consumable offerings to customers could occur if we encounter delays or difficulties in securing these components or consumables, or if the quality of the components or consumables supplied do not meet specifications, or if we cannot then obtain an acceptable substitute.
Any future legislative or administrative rule making or oversight of LDTs, if and when finalized, may impact the sales of our products and how customers use our products, and may require us to change our business model in order to maintain compliance with these laws.
Any legislative or administrative rule making or new federal oversight of LDTs, if and when finalized, may impact the sales of our products and how customers use our products, and may require us to change our business model in order to maintain compliance with these laws.
Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition, results of operations and cash flows and result in a diversion of the time and resources of our management and board of directors. 59 Table of Contents ITEM 1B.
Alternatively, if a court were to find these provisions of our certificate of incorporation inapplicable or unenforceable with respect to one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could materially adversely affect our business, financial condition, results of operations and cash flows and result in a diversion of the time and resources of our management and Board. 58 Table of Contents
We may seek to enlist one or more third parties to assist with sales, distribution and customer service and support globally or in certain regions of the world.
We may seek to enlist certain third parties to assist with sales, distribution and customer service and support globally or in certain regions of the world.
In the event it becomes necessary to utilize a different contract manufacturer for our products, we would experience additional costs, delays and difficulties in doing so as a result of identifying and entering into an agreement with a new manufacturer as well as preparing such new manufacturer to meet the logistical requirements associated with manufacturing our instruments, and our business would suffer.
In the event it becomes necessary to utilize a different contract manufacturer for our products or components of our products, we would experience additional costs, delays and difficulties in doing so as a result of identifying and entering into an agreement with a new manufacturer as well as preparing such new manufacturer to meet the logistical requirements associated with manufacturing our instruments and consumable offerings, and our business would suffer.
If sales of our instruments fail to materialize, so will the related consumable sales and associated revenue. In our development and commercialization plans for our products, we may forego other opportunities that may provide greater revenue or be more profitable.
If sales of our instruments fail to materialize, so will the related consumable sales and associated revenue. 33 Table of Contents In our development and commercialization plans for our products, we may forego other opportunities that may provide greater revenue or be more profitable.
There can be no assurance that the warrants will be in the money prior to their expiration, and they may expire worthless. The exercise price for our outstanding warrants is $11.50 per share of our Class A common stock.
The exercise price for our outstanding warrants is $11.50 per share of our Class A common stock. There can be no assurance that the warrants will be in the money prior to their expiration, and as such, the warrants may expire worthless.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition, results of operations and cash flows could be adversely affected. 29 Table of Contents Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
If our assumptions regarding these risks and uncertainties, which we use to plan and operate our business, are incorrect or change, or if we do not address these risks successfully, our results of operations could differ materially from our expectations, and our business, financial condition, results of operations and cash flows could be adversely affected. 28 Table of Contents Our operating results may fluctuate significantly in the future, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we or other third parties may provide.
Our commercial launch plan may not progress as planned due to: ● the inability to establish the capabilities and value proposition of our products with key opinion leaders in a timely fashion; ● the potential need or desire to modify aspects of our products prior to entering into the second or third phases of our commercial launch plan; ● changing industry or market conditions, customer requirements or competitor offerings over the span of our commercial launch plan; ● delays in building out our sales, customer support and marketing organization as needed for each of the phases of our commercial launch plan; and ● delays in ramping up manufacturing, either internally or through our suppliers to meet the expected demand in each of the phases of our commercial launch plan.
Our commercial launch plan may not progress as planned due to: • the inability to establish the capabilities and value proposition of our products with key opinion leaders in a timely fashion; • the potential need or desire to modify aspects of our products throughout our commercial launch plan; • changing industry or market conditions, customer requirements or competitor offerings over the span of our commercial launch plan; • delays in building out our sales, customer support and marketing organization as needed for each of the phases of our commercial launch plan; and • delays in ramping up manufacturing, either internally or through our suppliers to meet the expected demand in each of the phases of our commercial launch plan.
We expect to be dependent upon revenue generated from the sales of our initial products from the time they are commercialized through the foreseeable future. In December 2022, we launched Platinum™ for RUO. Prior to that, in 2021 we initiated our early access limited release to enable key thought leaders early access to our platform.
We expect to be dependent upon revenue generated from the sales of our initial products from the time they are commercialized through the foreseeable future. In December 2022, we initiated a controlled launch of Platinum ® for RUO. Prior to that, in 2021 we initiated our early access limited release to enable key thought leaders early access to our platform.
There is no guarantee, if we do seek to enter into such arrangements, that we will be successful in attracting desirable sales and distribution partners or that we will be able to enter into such arrangements on favorable terms.
There is no guarantee, if we do seek to enter into such arrangements, that we will be successful in attracting desirable sales and distribution partners or that we will be able to enter into such arrangements on an ongoing basis on favorable terms.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. 33 Table of Contents Geopolitical conflicts could potentially affect our sales and disrupt our operations and could have a material adverse impact on the Company.
Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business. Geopolitical conflicts could potentially affect our sales and disrupt our operations and could have a material adverse impact on our business.
Any investigations, prosecutions, convictions or settlements involving members of our management and companies with which they are or have been affiliated may be detrimental to our reputation and could negatively affect our business, financial condition, results of operations and cash flows. 45 Table of Contents We are currently subject to, and may in the future become subject to additional, U.S. federal and state laws and regulations imposing obligations on how we collect, store and process personal information.
Any investigations, prosecutions, convictions or settlements involving members of our management and companies with which they are or have been affiliated may be detrimental to our reputation and could negatively affect our business, financial condition, results of operations and cash flows. 44 Table of Contents We are currently subject to, and may in the future become subject to, both U.S. federal and state laws and regulations as well as international laws imposing obligations on how we collect, store and process personal information.
Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. We have not yet produced our products at scale, established a sales model, or conducted sales and marketing activities necessary for successful product commercialization.
Our prospects must be considered in light of the uncertainties, risks, expenses, and difficulties frequently encountered by companies in their early stages of operations. We have not yet produced our products at scale, established sales models, or conducted sales and marketing activities necessary for widespread product commercialization.
In addition, such requirements may require us to modify our data processing practices and policies, distract management or divert resources from other initiatives and projects, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
In addition, such requirements may require us to modify our data processing and cybersecurity practices and any policies that we have implemented, distract management or divert resources from other initiatives and projects, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
Additionally, a new privacy law, the California Privacy Rights Act (CPRA), was approved by California voters in the election of November 3, 2020 and went into effect in January of 2023 modifying the CCPA significantly, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
Additionally, the California Privacy Rights Act (“CPRA”), was approved by California voters in the election of November 3, 2020 and went into effect in January of 2023 modifying the CCPA significantly, potentially resulting in further uncertainty and requiring us to incur additional costs and expenses in an effort to comply.
As such, you cannot rely upon our historical operating performance to make an investment or voting decision regarding us. We recently commercialized our first product and have not generated revenue to date. Our operations to date have been primarily limited to developing our technology and products.
As such, you cannot rely upon our historical operating performance to make an investment or voting decision regarding us. We recently commercialized our first product and have generated limited revenue to date. Even with our Platinum ® product launch, our operations to date have been primarily limited to developing our technology and products.
Moreover, there could be public announcements regarding any cybersecurity incidents and any steps we take to respond to or remediate such incidents, and if securities analysts or investors perceive these announcements to be negative, it could, among other things, have a material adverse effect on the price of our Class A common stock.
Moreover, we may be required to make public announcements regarding any cybersecurity incidents involving the Company and any steps we take to respond to or remediate such incidents, and if securities analysts or investors perceive these announcements to be negative, it could, among other things, have a material adverse effect on the price of our Class A common stock.
The cost of protecting against, investigating, mitigating and responding to potential breaches of information technology systems and data security breaches and complying with applicable breach notification obligations to individuals, regulators, partners and others can be significant.
The cost of protecting against, investigating, mitigating and responding to potential breaches of information technology systems and cybersecurity incidents and complying with applicable breach notification obligations to individuals, regulators, partners and others can be significant.
We are an early-stage life sciences technology company and have incurred significant losses since Legacy Quantum-Si was formed in 2013, and expect to continue to incur losses in the future. We incurred net losses of $132.4 million, $95.0 million and $36.6 million in the years ended December 31, 2022, 2021 and 2020, respectively.
We are an early-stage life sciences technology company and have incurred significant losses since Quantum-Si was formed in 2013, and expect to continue to incur losses in the future. We incurred net losses of $96.0 million, $132.4 million and $95.0 million in the years ended December 31, 2023, 2022 and 2021, respectively.
There is no assurance that we will be able to continue to manufacture our instruments so that we consistently achieve the product specifications and produce results with acceptable quality. Our kits, chips, and other consumables have a limited shelf life, after which their performance is not ensured. We have not completed accelerated stability testing for our consumables.
There is no assurance that we will be able to continue to manufacture our instruments so that we consistently achieve the product specifications and produce results with acceptable quality. Our kits, semiconductor chips, and other consumables have a limited shelf life, after which their performance is not ensured.
In addition, data breaches could result in legal claims or proceedings, including class action lawsuits, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personal information, including federal, state and foreign data protection and privacy regulations, violations of which could result in significant penalties and fines.
In addition, cybersecurity incidents could result in legal claims or proceedings, including class action lawsuits, regulatory investigations or actions, and other types of liability under laws that protect the privacy and security of personal information, including federal, state and foreign data protection and privacy rules and regulations, violations of which could result in material penalties and fines.
Following the Business Combination, there were 3,833,319 outstanding warrants issued in connection with the initial public offering of HighCape (the “Public Warrants”) to purchase 3,833,319 shares of our Class A common stock at an exercise price of $11.50 per share, which warrants became exercisable on September 9, 2021, 12 months from the closing of HighCape’s initial public offering, which occurred on September 9, 2020.
Following the Business Combination, there were 3,833,319 outstanding warrants issued in connection with the initial public offering of HighCape (the “Public Warrants”) to purchase 3,833,319 shares of our Class A common stock at an exercise price of $11.50 per share, which warrants became exercisable on September 9, 2021.
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 (“GDPR”) and other data privacy requirements, labor and employment regulations, anti-competition 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 GDPR and other data privacy requirements, labor and employment regulations, anti-competition regulations, the U.K.
Environmental, social and governance matters may impact our business and reputation. Increasingly, in addition to the importance of their financial performance, companies are being judged by their performance on a variety of environmental, social and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance.
Increasingly, in addition to the importance of their financial performance, companies are being judged by their performance on a variety of environmental, social and governance (“ESG”) matters, which are considered to contribute to the long-term sustainability of companies’ performance.
The laws of some foreign countries do not offer intellectual property rights to the same extent as the laws of the United States, and we and our licensors may encounter difficulties in obtaining, enforcing and defending such rights in foreign jurisdictions.
We may not be able to protect our intellectual property rights throughout the world. The laws of some foreign countries do not offer intellectual property rights to the same extent as the laws of the United States, and we and our licensors may encounter difficulties in obtaining, enforcing and defending such rights in foreign jurisdictions.
Accordingly, we cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability. We have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance.
Accordingly, we cannot assure you that we will achieve profitability or positive cash flow production in the future or that, if we do become profitable and cash flow positive, we will sustain these levels. We have a limited operating history, which may make it difficult to evaluate the prospects for our future viability and predict our future performance.
In addition, although we seek to detect and investigate all data security incidents, threat actors have become increasingly proficient at operating undetected within an information system, making security breaches and other incidents of unauthorized access to our information technology systems and data difficult to detect and any delay in identifying such breaches or incidents may lead to increased harm and legal exposure of the type described above.
In addition, although we seek to detect and investigate all cybersecurity incidents, bad actors have become increasingly proficient at operating undetected within an information system, making cybersecurity incidents involving unauthorized access to our information technology systems and data difficult to detect and any delay in identifying such incidents may lead to increased harm and legal exposure of the type described above.
The success of our products depends, in part, on our ability to design and deploy our Quantum-Si Cloud™ software service in a manner that enables the integration with potential customers’ systems and accommodates potential customers’ needs.
The success of our products depends, in part, on our ability to design and deploy our Platinum Analysis Software service in a manner that enables the integration with potential customers’ systems and accommodates potential customers’ needs.
Shares of our Class B common stock have 20 votes per share, while shares of our Class A common stock have one vote per share. Dr. Rothberg and his affiliates hold all of the issued and outstanding shares of our Class B common stock, and as of March 1, 2023, Dr.
Shares of our Class B common stock have 20 votes per share, while shares of our Class A common stock have one vote per share. Dr. Rothberg and his affiliates hold all of the issued and outstanding shares of our Class B common stock, and as of February 20, 2024, Dr.
If we are held to have breached the terms of an open - source software license, we could be subject to damages, required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects. 55 Table of Contents Intellectual property rights do not necessarily address all potential threats.
If we are held to have breached the terms of an open-source software license, we could be subject to damages, required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to re-engineer our products, to discontinue the sale of our products if re-engineering could not be accomplished on a timely basis, or to make generally available, in source code form, our proprietary code, any of which could adversely affect our business, financial condition, results of operations and prospects.
We rely, and will continue to rely on, information technology systems to keep financial and employment records, facilitate our research and development initiatives, manage our manufacturing operations, maintain quality control, fulfill customer orders, maintain corporate records, communicate with staff and external parties and operate other critical functions.
We rely, and will continue to rely on, information technology systems to keep financial and employment records, facilitate our research and development initiatives, manage our manufacturing operations, maintain quality control, fulfill customer orders, maintain corporate records, communicate with staff, provide our Platinum Analysis Software services and operate other critical functions.
If our third-party manufacturers fail to maintain ISO quality management certifications, customers might choose not to purchase products from us. In addition, as we commercialize our Quantum-Si Cloud™ software service, we will also need to make corresponding improvements to other operational functions, such as our customer support, service and billing systems, compliance programs and our internal quality assurance programs.
If our third-party manufacturers fail to maintain ISO quality management certifications, customers might choose not to purchase products from us. 36 Table of Contents In addition, as we commercialize our Platinum Analysis Software service, we will also need to make corresponding improvements to other operational functions, such as our customer support, service and billing systems, compliance programs and our internal quality assurance programs.
These companies include Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck (and its subsidiary MilliporeSigma) and Thermo Fisher Scientific. We also compete with a number of emerging growth companies that have developed, or are developing, proteomic products and solutions, such as Nautilus Biotechnology, Olink Proteomics, Quanterix, Seer and SomaLogic.
These companies include but are not limited to: Agilent Technologies, Bio-Rad Laboratories, Danaher, Luminex, Merck (and its subsidiary MilliporeSigma) and Thermo Fisher Scientific. We also compete with a number of emerging growth companies that have developed, or are developing, proteomic products and solutions, such as: Nautilus Biotechnology, Olink Proteomics, Quanterix, Seer and Standard BioTools (including its recent acquisition of SomaLogic).
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
Intellectual property rights do not necessarily address all potential threats. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage.
Our facilities in Guilford, San Diego and those of our third-party manufacturers are vulnerable to natural disasters, public health crises, including the impact of the COVID-19 pandemic, and catastrophic events. If any disaster, public health crisis or catastrophic event were to occur, our ability to operate our business would be seriously, or potentially completely, impaired.
Our facilities in Branford, San Diego and those of our third-party manufacturers are vulnerable to natural disasters, public health crises and catastrophic events. If any disaster, public health crisis or catastrophic event were to occur, our ability to operate our business would be seriously, or potentially completely, impaired.

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Item 2. Properties

Properties — owned and leased real estate

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ITEM 2. PROPERTIES We currently maintain our executive offices at 530 Old Whitfield Street, Guilford, Connecticut 06437.
Added
ITEM 2. PROPERTIES We currently lease our executive office at 29 Business Park Drive, Branford, Connecticut 06405. We also lease office, laboratory and manufacturing space in San Diego, California and office space in Santa Clara, California and New Haven, Connecticut. Our semiconductor chip assembly and packaging business is located in Garnet Valley, Pennsylvania.
Removed
We also occupy office and laboratory space at 485 Old Whitfield Street, Guilford, Connecticut, 351 New Whitfield Street, Guilford, Connecticut, 5107 Pegasus Court (Suites F-M), Frederick, Maryland, 3000 El Camino Real (Suite 100), Palo Alto, California, 27 E 28 th Street, New York, New York, 5510 Morehouse Drive, San Diego, California, 115 Munson Street, New Haven, Connecticut and 29 Business Park Drive, Branford, CT.
Added
Our leases expire at various dates through 2032. We believe that our current office, laboratory and assembly and packaging locations are sufficient to meet our needs at existing volume levels for the foreseeable future. For further information, please refer to Note 9.
Removed
We have our semiconductor chip assembly and packaging business at 3070 McCann Farm Drive, Garnet Valley, Pennsylvania.
Added
Leases, in the accompanying notes to our Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Prior to the Closing of the Business Combination on June 10, 2021, HighCape’s units, Class A common stock and public warrants were listed on the Nasdaq under the symbols “CAPAU,” “CAPA,” and “CAPAW,” respectively.
Biggest changeITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our Class A common stock and warrants to purchase Class A common stock are listed on Nasdaq under the symbols “QSI” and “QSIAW”, respectively.
There is no public market for our Class B common stock. Dividends We have not paid any cash dividends on our Class A common stock to date , and we do not anticipate paying any cash dividends in the foreseeable future.
There is no public market for our Class B common stock. Dividends We have not paid any cash dividends on our Class A common stock or Class B common stock to date, and we do not anticipate paying any cash dividends in the foreseeable future.
The payment of cash dividends is subject to the discretion of our board of directors and may be affected by various factors, including our future earnings, financial condition, capital requirements, share repurchase activity, current and future planned strategic growth initiatives, levels of indebtedness, and other considerations our board of directors deem relevant.
The payment of cash dividends is subject to the discretion of our board of directors and may be affected by various factors, including our future earnings, financial condition, capital requirements, share repurchase activity, current and future planned strategic growth initiatives, levels of indebtedness, and other considerations our board of directors deem relevant. Unregistered Sales of Equity Securities Not applicable.
Stockholders As of March 1, 2023, we had approximately 120,006,757 shares of Class A common stock issued and outstanding held of record by 86 holders, approximately 19,937,500 shares of Class B common stock issued and outstanding held of record by 2 holders, approximately 3,833,319 public warrants held of record by 1 holder and 135,000 private placement warrants issued in connection with HighCape’s initial public offering held of record by 1 holder, each exercisable for one share of Class A Common Stock at a price of $11.50 per share.
Stockholders As of February 20, 2024, we had approximately 121,832,417 shares of Class A common stock issued and outstanding held of record by 75 holders, approximately 19,937,500 shares of Class B common stock issued and outstanding held of record by two holders, 3,833,319 public warrants held of record by two holders and 135,000 private placement warrants issued in connection with HighCape’s initial public offering held of record by three holders, each exercisable for one share of Class A Common Stock at a price of $11.50 per share.
Removed
Upon the Closing of the Business Combination, we changed our name to “Quantum-Si Incorporated” and our Class A common stock and warrants to purchase Class A common stock began trading on the Nasdaq under the symbols “QSI” and “QSIAW”, respectively.
Removed
Unregistered Sales of Equity Securities In connection with an Asset Purchase Agreement, we entered into with Majelac and certain other parties thereto (the “Majelac Agreement”), on November 5, 2021, as partial consideration for the purchase price, we issued 535,715 shares of Class A common stock to Majelac, which are subject to certain restrictions.
Removed
The issuance of these shares was pursuant to a private placement exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 of Regulation D thereunder. We completed the acquisition to secure semiconductor chip assembly and packaging capabilities in-house and secure our supply chain and support our commercialization efforts.
Removed
An additional 59,523 shares of Class A common stock were issued to Majelac 12 months after November 5, 2021. Issuer Purchases of Equity Securities We did not repurchase any of our equity securities during the three months ended December 31, 2022.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYears Ended December 31, (in thousands, except for % changes) 2022 2021 % Change Operating expenses: Research and development $ 72,062 $ 46,575 54.7 % Selling, general and administrative 42,296 50,333 (16.0 )% Goodwill impairment 9,483 - nm Total operating expenses 123,841 96,908 27.8 % Loss from operations (123,841 ) (96,908 ) 27.8 % Interest expense - (5 ) (100.0 )% Dividend income 5,301 2,549 108.0 % Change in fair value of warrant liabilities 6,243 4,379 42.6 % Other (expense), net (20,145 ) (5,004 ) 302.6 % Loss before provision for income taxes (132,442 ) (94,989 ) 39.4 % Provision for income taxes - - nm Net loss and comprehensive loss $ (132,442 ) $ (94,989 ) 39.4 % Research and development Years Ended December 31, Change (in thousands, except for % changes) 2022 2021 Amount % Research and development $ 72,062 $ 46,575 $ 25,487 54.7 % Research and development expenses increased by $25.5 million, or 54.7%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Biggest changeSummary of Significant Accounting Policies, in the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K. 65 Table of Contents Results of Operations for the year ended December 31, 2023 as compared with the year ended December 31, 2022 The following table presents the Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2023 and 2023 (dollars in thousands): 2023 2022 % Change Revenue Product $ 1,031 $ - nm Service 51 - nm Total revenue 1,082 - nm Cost of revenue 594 - nm Gross profit 488 - nm Operating expenses: Research and development 67,025 72,062 (7.0 )% Selling, general and administrative 44,634 42,296 5.5 % Goodwill impairment - 9,483 (100.0 )% Total operating expenses 111,659 123,841 (9.8 )% Loss from operations (111,171 ) (123,841 ) (10.2 )% Dividend income 9,536 5,301 79.9 % Gain (loss) on marketable securities, net 5,587 (20,603 ) (127.1 )% Change in fair value of warrant liabilities (278 ) 6,243 (104.5 )% Other income, net 366 458 (20.1 )% Loss before provision for income taxes (95,960 ) (132,442 ) (27.5 )% Provision for income taxes - - nm Net loss and comprehensive loss $ (95,960 ) $ (132,442 ) (27.5 )% Revenue, Cost of Revenue and Gross Profit Revenue is derived from sales of products and services.
The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as expenses incurred during the reporting periods.
GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as expenses incurred during the reporting periods.
We believe our platform, which is designed to streamline sample preparation, sequencing, and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome.
We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome.
Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones; (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization; (iii) changes we may make in our business or commercialization strategy; (iv) the impact of the COVID-19 pandemic; (v) costs of running a public company; (vi) other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions; and (vii) increased product and service costs.
Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones; (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization; (iii) changes we may make in our business or commercialization strategy; (iv) costs of running a public company; (v) other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions; and (vi) increased product and service costs.
Licenses related to certain intellectual property We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, there are minimum annual fixed royalty payments of approximately $0.2 million.
Licenses related to certain intellectual property We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, there are minimum annual fixed royalty payments of approximately $0.1 million. 70 Table of Contents
We have developed a proprietary universal single-molecule detection platform that we are first applying to proteomics to enable Next-Generation Protein Sequencing (“NGPS”), the ability to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), that can be used for the study of nucleic acids.
We have developed a proprietary universal single-molecule detection platform that we are first applying to proteomics to enable NGPS, the ability to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), that can be used for the study of nucleic acids.
We have not incurred any impairment losses in the carrying values of our assets as a result of the COVID-19 pandemic and are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in our consolidated financial statements.
We have not incurred significant impairment losses in the carrying values of our assets as a result of the COVID-19 pandemic and are not aware of any specific related event or circumstance that would require us to revise our estimates reflected in the Consolidated Financial Statements. We will continue to evaluate the impact of the COVID-19 pandemic on our industry.
To date, our business has not been materially impacted by the conflict, however, as the conflict continues or worsens, it may impact our business, financial condition or results of operations. Business Combination On June 10, 2021, we consummated the previously announced Business Combination. The Business Combination was approved by HighCape’s stockholders at its special meeting held on June 9, 2021.
To date, our business has not been materially impacted by the conflicts, however, as the conflicts continue or worsen, it may impact our business, financial condition or results of operations. Business Combination On June 10, 2021, we consummated the Business Combination. The Business Combination was approved by HighCape’s stockholders at its special meeting held on June 9, 2021.
Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such time that we can successfully commercialize our products that are currently under development.
Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such time that we can successfully reach commercial scale of our current products and products under development.
Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Our estimates are based on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about items not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Revenue Recognition Revenue is derived from sales of products and services.
All of our research and development expenses are related to developing new products and services. Selling, general and administrative Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.
Selling, General and Administrative Expenses Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.
As a result of the Business Combination, we received proceeds of approximately $511.2 million on the day of the Closing. See Note 3 “Business Combination” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding the business combination.
As a result of the Business Combination, we received proceeds of approximately $511.2 million on the day of the Closing. For further details on the impact of the Business Combination, please refer to Note 3. Business Combination, in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as mass spectrometry (“MS”), which are complicated and often limited by manual sample preparation workflows, high instrument costs both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad adoption.
Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as MS, high instrument costs both in terms of acquisition and ownership and complexity with data analysis, which together prevent broad adoption.
Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries.
Unless the context otherwise requires, references to “we”, “us”, “our”, the “Company” or “Quantum-Si” are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries.
Net cash provided by (used in) investing activities The net cash provided by investing activities of $137.2 million in the year ended December 31, 2022 was due primarily to sales of marketable securities of $148.8 million, partially offset by purchases of property and equipment of $10.7 million and marketable securities of $0.8 million.
Net cash provided by investing activities The net cash provided by investing activities of $143.4 million in the year ended December 31, 2023 was due primarily to sales of marketable securities of $272.5 million, partially offset by purchases of marketable securities of $123.8 million and purchases of property and equipment of $4.5 million.
COVID-19 The outbreak of the novel coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization on March 11, 2020 and declared a National Emergency by the President of the United States on March 13, 2020, has led to adverse impacts on the United States and global economies and created uncertainty regarding potential impacts on our operating results, financial condition and cash flows.
For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, quality assurance and quality control, among other applications. 62 Table of Contents COVID-19 The outbreak of the novel coronavirus (“COVID-19”), which was declared a pandemic by the World Health Organization on March 11, 2020 and declared a National Emergency by the President of the United States on March 13, 2020, has led to adverse impacts on the United States and global economies and created uncertainty regarding potential impacts on our operating results, financial condition and cash flows.
We intend to follow a systematic, phased approach to successfully launch our platform, for research use only (“RUO”). We believe we are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity —single-molecule detection.
We believe we are the first company to successfully enable NGPS on a semiconductor chip, thus digitizing a massive proteomics opportunity, which allows for a massively parallel solution at the ultimate level of sensitivity -single-molecule detection. We believe that our platform offers a differentiated workflow solution in a rapidly evolving proteomics tools market.
We believe that our platform will offer a differentiated end-to-end workflow solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our workflow will be designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state.
Within our initial focus market of proteomics, our workflow is designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state.
In addition, the global economy has experienced and is continuing to experience high levels of inflation and global supply chain disruptions. We continue to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.
We continue to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.
In addition, although we have no operations in or direct exposure to Russia or Ukraine, we have experienced some constraints in product and material availability and increasing costs required to obtain some materials and supplies as a result of the Russia-Ukraine military conflict on the global economy.
Although we do not expect to be significantly impacted by the conflicts in Ukraine or Israel and Gaza, we have experienced some constraints in product and material availability and increasing costs required to obtain some materials and supplies as a result of these conflicts on the global economy.
However, we can provide no assurance that such products will be successfully developed and commercialized in the future. We expect that the funds raised in connection with the Business Combination will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months.
We expect that our cash and cash equivalents and investments in marketable securities as of December 31, 2023, which includes the funds raised in connection with the Business Combination, will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months.
Net cash provided by financing activities The net cash provided by financing activities of $1.9 million in the year ended December 31, 2022 was due primarily from $2.8 million from proceeds from exercise of stock options, offset by $0.5 million from payment of deferred consideration and $0.3 million from payment of contingent consideration related to the Majelac acquisition.
Net cash provided by financing activities The net cash provided by financing activities of $0.1 million in the year ended December 31, 2023 was due primarily to approximately $0.4 million of proceeds from the exercise of stock options.
We expect to use the funds raised in connection with the Business Combination to invest in the commercial launch of our products, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes.
We expect to use the funds on hand to continue to invest in the commercial launch of our products, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes. As of December 31, 2023, we had cash and cash equivalents and investments in marketable securities totaling $257.7 million.
In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all.
To date, we have not issued or sold any shares of our Class A common stock under the ATM Offering. In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all.
As of December 31, 2022, we had cash and cash equivalents and investments in marketable securities totaling $351.3 million. Our future capital requirements may vary from those currently planned and will depend on various factors including the pace and success of product commercialization.
Our future capital requirements may vary from those currently planned and will depend on various factors including the pace and success of product commercialization. We launched the Platinum ® instrument and started to take orders in December 2022 and we began commercial shipments of Platinum ® in January 2023.
We launched the Platinum TM instrument and started to take orders in December 2022 and we began commercial shipments of Platinum™ in January 2023. We plan to launch Carbon TM in 2023. Our business will require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development, and build inventory.
Our business will require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development, and build inventory.
Once we commercialize and begin to generate revenue, there will be royalties based on the current anticipated utilization. Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. GAAP.
To date, we have not issued or sold any shares of our Class A common stock under the ATM Offering. 63 Table of Contents Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S.
The early access program introduced the Platinum single-molecule sequencing system to key opinion leaders across the globe, for both expansion and development of applications and workflows. We launched the Platinum TM instrument and started to take orders in December 2022 and we began commercial shipments of Platinum™ in January 2023.
In 2021, we introduced our Platinum ® early access program to sites with participation from leading academic centers and key industry partners. The early access program introduced the Platinum ® single-molecule sequencing system to key opinion leaders across the globe, for both expansion and development of applications and workflows.
Goodwill was recorded as part of the Majelac acquisition in 2021 and was fully impaired in the fourth quarter of 2022.
Goodwill was recorded as part of the Majelac Technologies LLC (“Majelac”) acquisition in 2021 and was fully impaired in the fourth quarter of 2022. Dividend Income Dividend income primarily consists of dividends earned on fixed income mutual funds classified as marketable securities.
See Note 2 “Summary of Significant Accounting Policies” in our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information regarding our significant accounting policies and estimates.
There were no such reserves recorded against inventory for the years ended December 31, 2022 or 2021. For further information regarding our significant accounting policies and estimates, please refer to Note 2. Summary of Significant Accounting Policies, in the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Traditionally, proteomic workflows to sequence proteins required days or weeks to complete. Our platform is designed to offer a single-day workflow including both sample preparation and sequencing. Our platform is comprised of the Carbon™ automated sample preparation instrument, the Platinum™ NGPS instrument, the Quantum-Si Cloud™ software service, and reagent kits and chips for use with our instruments.
Our platform, as originally planned, was designed to offer an end-to-end workflow including both sample preparation and sequencing and was comprised of Carbon TM , our automated sample preparation instrument, our Platinum ® NGPS instrument, the Platinum Analysis Software service, and reagent kits and proprietary semiconductor chips for use with our Platinum ® instrument.
Other Global Developments In 2022, various central banks around the world (including the Federal Reserve in the United States) raised interest rates. While these rate increases have not had a significant adverse impact on us to date, the impact of such rate increases on the overall financial markets and the economy may adversely impact us in the future.
While these rate increases have not had a significant adverse impact to date, the impact of such rate increases on the overall financial markets and the economy may adversely impact us in the future. In addition, the global economy has experienced, and is continuing to experience, high levels of inflation and global supply chain disruptions.
Selling, general and administrative Years Ended December 31, Change (in thousands, except for % changes) 2022 2021 Amount % Selling, general and administrative $ 42,296 $ 50,333 $ (8,037 ) (16.0 )% Selling, general and administrative expenses decreased by $8.0 million, or 16.0% for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Selling, general and administrative expenses for the years ended December 31, 2023 and 2022 are as follows (dollars in thousands): 2023 2022 $ Change % Change Selling, general and administrative $ 44,634 $ 42,296 $ 2,338 5.5 % Selling, general and administrative expenses increased by $2.3 million, or 5.5%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.
Change in fair value of warrant liabilities Years Ended December 31, Change (in thousands, except for % changes) 2022 2021 Amount % Change in fair value of warrant liabilities $ 6,243 $ 4,379 $ 1,864 42.6 % The fair value of warrant liabilities decreased, which resulted in a gain of $1.9 million, or 42.6% for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Change in warrant liabilities for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Change in fair value of warrant liabilities $ (278 ) $ 6,243 $ (6,521 ) (104.5 )% The fair value of warrant liabilities decreased $6.5 million, or 104.5%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Stock-based compensation The fair values of stock option grants are estimated using a Black-Scholes option-pricing model. Key inputs and assumptions include the expected term of the option, stock price volatility, risk-free interest rate, dividend yield, stock price and exercise price.
The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The Black-Scholes and Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield.
Dividend income Years Ended December 31, Change (in thousands, except for % changes) 2022 2021 Amount % Dividend income $ 5,301 $ 2,549 $ 2,752 108.0 % Dividend income increased by $2.8 million for the year ended December 31, 2022 compared to the year ended December 31, 2021 as a result of higher dividends earned on invested balances in marketable securities.
Dividend income for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Dividend income $ 9,536 $ 5,301 $ 4,235 79.9 % Dividend income increased by $4.2 million for the year ended December 31, 2023 compared to the year ended December 31, 2022 as a result of higher dividends earned on invested balances in marketable securities. 67 Table of Contents Gain (Loss) on Marketable Securities, Net Gain (loss) on marketable securities, net, for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Gain (loss) on marketable securities, net $ 5,587 $ (20,603 ) $ 26,190 (127.1 )% Realized and unrealized gain (loss) on marketable securities, net, was a gain of $5.6 million for the year ended December 31, 2023 as compared to a loss of $20.6 million for the year ended December 31, 2022.
If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating results and cash flows. 69 Table of Contents Cash flows The following table summarizes our cash flows for the periods indicated: Years Ended December 31, (in thousands) 2022 2021 2020 Net cash (used in) provided by: Net cash used in operating activities $ (90,560 ) $ (66,813 ) $ (32,573 ) Net cash provided by (used in) investing activities 137,185 (450,937 ) (461 ) Net cash provided by financing activities 1,909 516,625 37,014 Net increase (decrease) in cash and cash equivalents $ 48,534 $ (1,125 ) $ 3,980 Net cash used in operating activities The net cash used in operating activities represents the cash receipts and disbursements related to our activities other than investing and financing activities.
If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating results and cash flows.
Dividend income Dividend income primarily consists of dividends earned on fixed income mutual funds classified as marketable securities. Change in fair value of warrant liabilities Change in fair value of warrant liabilities primarily consists of the change in the fair value of our publicly traded warrants (the “Public Warrants”) and our warrants sold in a private placement (the “Private Warrants”).
Change in fair value of warrant liabilities primarily consists of the change in the fair value of our Public Warrants and Private Warrants.
We expect that the cash provided by financing activities in 2021 will continue to be our primary source of funds to support operating needs and capital expenditures for the foreseeable future.
Going forward, we anticipate debt or equity offerings will be the primary source of funds to support our operating needs and capital expenditures until we reach scale of our commercial operations.
The net cash used in operating activities of $90.6 million for the year ended December 31, 2022 was due primarily to a net loss of $132.4 million and a change in fair value of warrant liabilities of $6.2 million, partially offset by losses on marketable securities (realized and unrealized) of $20.6 million, stock-based compensation of $11.2 million, goodwill impairment of $9.5 million, net cash inflows from changes in operating assets and liabilities of $4.3 million and depreciation and amortization of $2.6 million.
The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2023 and 2022, as well as the period ending cash and cash equivalents and working capital (in thousands): 2023 2022 Net cash (used in) provided by: Net cash used in operating activities $ (94,036 ) $ (90,560 ) Net cash provided by investing activities 143,428 137,185 Net cash provided by financing activities 149 1,909 Net increase in cash and cash equivalents $ 49,541 $ 48,534 68 Table of Contents Net cash used in operating activities The net cash used in operating activities of $94.0 million for the year ended December 31, 2023 was primarily due to our net loss of $96.0 million, which primarily resulted from continued spend on research and development efforts and commercialization ramp up, stock-based compensation of $8.5 million, net cash outflows from changes in operating assets and liabilities of $6.6 million, realized and unrealized gain (loss) on marketable securities, net, of $5.6 million and depreciation and amortization of $4.2 million.
Treasury yield curve in effect at the time of the grant; ● Expected dividend yield: We have never declared or paid any cash dividends and do not expect to pay any cash dividends in the foreseeable future; ● Expected term: For awards, we calculate the expected term using the “simplified” method, which is the simple average of the vesting period and the contractual term; and ● Expected volatility: We determined expected annual equity volatility to be 70% based on the historical volatility of guideline public companies for the year ended December 31, 2020 and from January to June 10, 2021.
Treasury yield curve in effect at the time of the grant. • Expected Stock Price Volatility : We determined expected annual equity volatility based on the combination of the historical volatility of our common stock and the historical volatility of the common stock comparable to our common stock. • Dividend Yield : Because we have never paid a dividend and do not expect to begin doing so in the foreseeable future, we assume no dividend yield in valuing the stock-based awards. • Exercise Price : The exercise price is taken directly from the grant notice issued to employees and nonemployees.
Description of Certain Components of Financial Data Research and development Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, facilities costs, software, and other outsourced expenses. Research and development expenses are expensed as incurred.
There was no such revenue or cost of revenue recognized, or gross profit for the year ended December 31, 2022. 66 Table of Contents Research and Development Expenses Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, charges related to product without an alternative future use, facilities costs, software, and other outsourced expenses.
After June 10, 2021, the volatility is calculated by a third-party professional services firm and reviewed by the Company. The fair value of awards with market conditions is primarily estimated using the Monte Carlo simulation method. Stock options granted to non-employees are accounted for based on their fair value on the measurement date using the Black-Scholes option-pricing model.
Stock options granted to non-employees are accounted for based on their fair value on the measurement date using the Black-Scholes option-pricing model. For further information regarding our stock-based compensation and equity incentive plans, please refer to Note 2. Summary of Significant Accounting Policies, and Note 12.
Interest expense Years Ended December 31, Change (in thousands, except for % changes) 2022 2021 Amount % Interest expense $ - $ (5 ) $ 5 (100.0 %) Interest expense on the PPP loan decreased for the year ended December 31, 2022 compared to the year ended December 31, 2021 as a result of us repaying the loan in full in June 2021 in connection with the Business Combination.
Goodwill Impairment Goodwill impairment for the years ended December 31, 2023 and 2022 is as follows (dollars in thousands): 2023 2022 $ Change % Change Goodwill impairment $ - $ 9,483 $ (9,483 ) (100.0 )% Goodwill impairment decreased for the year ended December 31, 2023 compared to the year ended December 31, 2022.
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The consolidated financial statements for the years ended December 31, 2022, 2021 and 2020, respectively, present the financial position and results of operations of Quantum-Si Incorporated and its consolidated subsidiaries.
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Actual results may differ materially from those contained in any forward-looking statements. For a discussion on forward-looking statements, see the information set forth in the introductory note to this Annual Report under the caption “Cautionary Note Regarding Forward Looking Statements,” which information is incorporated herein by reference.
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For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, and vaccine development, among other applications. In 2021, we introduced our Platinum early access program to sites with participation from leading academic centers and key industry partners.
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For discussion and analysis pertaining to the year ended December 31, 2022 overview and highlights as compared to the year ended December 31, 2021, please refer to the Company’s Annual Report on Form 10-K, as filed with the SEC on March 17, 2023.
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The COVID-19 pandemic had, and is expected to continue to have, an adverse impact on our operations, particularly as a result of preventive and precautionary measures that we, other businesses, and governments are taking.
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Traditionally, proteomic workflows to sequence proteins required days or weeks to complete.
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Governmental mandates related to COVID-19 or other infectious diseases, or public health crises, have impacted, and we expect them to continue to impact, our personnel and personnel at third-party manufacturing facilities in the United States and other countries, and the availability or cost of materials, which would disrupt or delay our receipt of instruments, components and supplies from the third parties we rely on to, among other things, produce our products currently under development.
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We began a controlled launch of the Platinum ® instrument and started to take orders in December 2022, and subsequently began limited commercial shipments of Platinum ® in January 2023.
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To the extent that any governmental authority imposes additional regulatory requirements or changes existing laws, regulations, and policies that apply to our business and operations, such as additional workplace safety measures, our product development plans may be delayed, and we may incur further costs in bringing our business and operations into compliance with changing or new laws, regulations, and policies.
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Since our initial launch of the Platinum ® instrument, we have found that, consistent with other proteomics detection technologies, customers select the biological sample type and sample preparation method they use.
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The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including expenses and research and development costs, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impacts, including inflation on product and service costs. 62 Table of Contents The estimates of the impact on our business may change based on new information that may emerge concerning COVID-19 and the actions to contain it or address its impact and the economic impact on local, regional, national and international markets as well as other changes in macroeconomic factors.
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The range of sample types and sample preparation methods utilized in proteomics is extensive and often some level of optimization is required to make them compatible with the downstream detection technology. Our initial platform contemplated Carbon TM as an automated sample preparation instrument.
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The COVID-19 pandemic and related economic disruptions have not had a material adverse impact on our operations to date.
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While Carbon TM could help reduce sample preparation variation and streamline the end-to-end workflow in utilizing our Platinum ® protein sequencing instrument, it is not an absolute requirement, and may not be the best solution long-term.
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While we are unable to predict the full impact that the COVID-19 pandemic will have on our future results of operations, liquidity and financial condition due to numerous uncertainties, including the duration of the pandemic, the actions that may be taken by government authorities across the United States, adverse changes in macroeconomic conditions, if sustained or recurrent, could result in significant changes in costs going forward with material adverse effect on our operating results, financial condition, and cash flows.
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To this end, in October 2023, we completed an evaluation of Carbon TM as it relates to the workflow and in comparison to other potential liquid handler and sample preparation solutions.
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Recent Developments Restructuring On January 30, 2023, we announced that we committed to an organizational restructuring designed to decrease our costs and create a more streamlined organization to support our business. As a result, we are terminating approximately 12% of our workforce, effective in the first quarter of 2023.
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This evaluation concluded that pursuing efforts to continue development of Carbon TM was not the most effective use of our research and development efforts and therefore, we paused development related to Carbon TM to focus efforts on Platinum ® , our reagent kits and semiconductor chips for use on Platinum ® , and our Platinum Analysis Software environment as our go forward platform to maximize value.
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In connection with the restructuring, we currently estimate we will incur up to $1.0 million of costs, consisting primarily of cash severance costs and other severance benefits. We expect to substantially complete the restructuring in the first quarter of 2023.
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Now that our Platinum ® and Platinum Analysis Software system has launched, we intend to follow a systematic, phased approach to continue to successfully launch updates to our platform.
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The estimates of costs and expenses that we expect to incur in connection with the restructuring are subject to a number of assumptions and actual results may differ materially. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring.
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On May 11, 2023, the federal public health emergency for COVID-19, declared under Section 319 of the Public Health Service Act, expired.
Removed
Partnership Agreements On January 9, 2023, we announced that we entered into a partnership and license agreement with Biovista Inc. effective as of December 16, 2022 to provide our customers greater proteomic insights beyond their protein sequence output. We believe the partnership enhances our offering by making proteomic-to-drug workflows more efficient for researchers.
Added
We have concluded that, while it is possible that the virus could have a future negative effect on our financial position, results of operations and cash flows in the Consolidated Financial Statements, the specific future impact is not readily determinable as of the date of the filing of this Annual Report on Form 10-K.
Removed
Biovista’s VIZIT™ exploration tool will be integrated into our cloud-based suite of analytic tools enabling researchers to visualize the connections of their protein sequences identified during their experiment to diseases, other proteins, and post-translational modifications. 63 Table of Contents Additionally, on January 9, 2023, we announced that we entered into a partnership with Aviva Systems Biolog effective as of December 16, 2022.
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The Consolidated Financial Statements do not include any adjustments that might result from the outcome of this uncertainty. Other Global Developments Throughout 2022 and 2023, various central banks around the world, including the Federal Reserve in the United States, raised interest rates.
Removed
This partnership seeks to co-develop protein enrichment kits to enable deep interrogation of proteins of interest and their variants (proteoforms) through protein sequencing. The co-developed products will include immunoprecipitation kits that fit into existing research workflows to conveniently enrich target proteins prior to amino acid mutation or post-translational modification (“PTM”) analysis with our Platinum TM protein sequencing platform.
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Recent Developments In April 2023, we informed the contract manufacturer that had manufactured our Platinum ® and Carbon TM instruments that we intended to wind down the relationship and transition to a different contract manufacturer.
Removed
Goodwill impairment Goodwill was recorded as part of the Majelac Technologies LLC (“Majelac”) acquisition in 2021 and it was fully impaired in the fourth quarter of 2022. Interest expense Interest expense primarily consists of interest that was paid on our Paycheck Protection Program (“PPP”) loan.
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In October 2023, we were informed the contract manufacturer had filed a complaint in the state of Texas alleging breach of contract and made claims for economic damage under the contract as well as attorney costs. In January 2024 the suit was withdrawn and refiled in the state of Minnesota alleging similar claims.
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Other (expense), net Other (expense), net primarily consists of realized and unrealized losses on fixed income mutual funds in marketable securities.
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Although it is not possible to determine the potential financial exposure associated with the alleged claim at this time given its early stage, we believe we have a meritorious defense and intend to vigorously defend against all claims asserted in the complaint.
Removed
Provision for income taxes We utilize the asset and liability method of accounting for income taxes where deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using the enacted statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.
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In August 2023, we filed a universal shelf registration statement on Form S-3 (the “Shelf Registration Statement”), which became effective on August 22, 2023, covering the offering of Class A common stock, preferred stock, debt securities, warrants, rights and units.
Removed
A valuation allowance is established against net deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the net deferred tax assets will not be realized. We recorded a full valuation allowance as of December 31, 2022 and 2021.
Added
In August 2023, we also entered into an Equity Distribution Agreement (“EDA”) with an outside placement agent (the “Agent”), under which we may, from time to time, sell shares of our Class A common stock having an aggregate offering price of up to $75.0 million in “at-the-market” offerings through the Agent (the “ATM Offering”).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThis limited foreign currency translation risk is not expected to have a material impact on our consolidated financial statements. To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to managing our risk relating to fluctuations in currency rates.
Biggest changeDollar may grow in the future, at which point it is possible foreign current translation will have a material effect on our operations. To date, we have not entered into any hedging arrangements with respect to foreign currency risk.
Nonetheless, to the extent our costs are impacted by general inflationary pressures, we may not be able to fully offset such higher costs through price increases or manufacturing efficiencies. Our inability or failure to do so could harm our business, financial condition and results of operations.
To the extent our costs are impacted by general inflationary pressures, we may not be able to fully offset such higher costs through price increases or manufacturing efficiencies. Our inability or failure to do so could harm our business, financial condition, results of operations or cash flows.
Interest rate risk Our cash and cash equivalents, and marketable securities are comprised primarily of cash and investments in fixed income mutual funds. The primary objective of our investments is the preservation of capital to fulfill liquidity needs. We do not enter into investments for trading or speculative purposes.
Interest rate risk As of December 31, 2023, our marketable securities are comprised primarily of investments in money market funds backed by U.S. government issued securities, U.S. treasury bills, and high-quality corporate commercial paper. The primary objective of our investments is the preservation of capital to fulfill liquidity needs. We do not enter into investments for trading or speculative purposes.
Due to the short-term nature of these investments, we do not expect cash flows to be affected to any significant degree by a sudden change in market interest rates. Foreign Currency Risk We operate our business primarily within the United States and currently execute the majority of our transactions in U.S. dollars.
Based on the short-term nature of our holdings, future interest rate changes are not expected to have a material impact on our marketable securities. Foreign currency risk Presently, we operate our business primarily within the United States, with limited sales outside the United States. To date, we have executed the majority of our transactions in U.S. dollars.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inflation risk We do not believe that inflation has had a material effect on our business, financial condition or results of operations, other than its impact on the general economy.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Inflation risk Inflation rates in the United States increased significantly during the year ended December 31, 2023. We believe inflation can and has had an impact on the underlying cost of our supplies and manufacturing components related to our business.
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In the future, we anticipate expanding into Europe and other locations outside the United States. This expansion may include transacting business in currencies other than the U.S. Dollar. Despite this, we anticipate conducting limited activity outside the U.S.
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Dollar in the near term, and therefore foreign currency translation risk is not expected to have a material impact on our Consolidated Financial Statements. However, the growth of our operations, scope of transactions outside the United States, and the use of currencies other than the U.S.
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As our international operations grow, we will continue to reassess our approach to managing our risk relating to fluctuations in currency rates. 71 Table of Contents

Other QSI 10-K year-over-year comparisons