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What changed in RAPID MICRO BIOSYSTEMS, INC.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of RAPID MICRO BIOSYSTEMS, INC.'s 2024 and 2025 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 2025 report.

+389 added−386 removedSource: 10-K (2026-03-12) vs 10-K (2025-02-28)

Top changes in RAPID MICRO BIOSYSTEMS, INC.'s 2025 10-K

389 paragraphs added · 386 removed · 313 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

59 edited+6 added−8 removed139 unchanged
Biggest changeThis staff is located in North America, Europe and the Asia-Pacific region, and we also maintain direct customer support teams providing validation and/or field service capabilities in these territories. We intend to regularly evaluate and, as appropriate, adjust or expand our sales, support, and marketing efforts, including in the context of our distribution and collaboration arrangements.
Biggest changeCommercial We have a global commercial team that includes direct sales, commercial operations, validation, field services, strategic marketing, marketing communications and product management. This staff is located in North America, Europe and the Asia-Pacific region, and we also maintain direct customer support teams providing validation and/or field service capabilities in these territories.
Studies of the Growth Direct comparing its vision-based detection and enumeration of colonies against the MQC gold-standard United States Pharmacopeia, or USP, benchmark reference set of microorganisms demonstrate that the Growth Direct delivers the same results or better as traditional, manual verification of colonies. Speed. The Growth Direct is faster than the traditional method.
Studies of the Growth Direct comparing its vision-based detection and enumeration of colonies against the MQC gold-standard United States Pharmacopeia ("USP"), benchmark reference set of microorganisms demonstrate that the Growth Direct delivers the same results or better as traditional, manual verification of colonies. Speed. The Growth Direct is faster than the traditional method.
The initial term of the Distribution Agreement is five years, unless earlier terminated by us or MilliporeSigma in accordance with its terms. 13 Table of Contents The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery.
The initial 13 Table of Contents term of the Distribution Agreement is five years, unless earlier terminated by us or MilliporeSigma in accordance with its terms. The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery.
In the United States, many of our customers’ products are regulated as either medical devices or drugs under the Federal Food, Drug, and Cosmetic Act, or the FDCA, and its implementing regulations, or as biological products under the FDCA and the Public Health Service Act, or the PHSA, and their implementing regulations, each as amended and enforced by the FDA.
In the United States, many of our customers’ products are regulated as either medical devices or drugs under the Federal Food, Drug, and Cosmetic Act (the "FDCA"), and its implementing regulations, or as biological products under the FDCA and the Public Health Service Act (the "PHSA"), and their implementing regulations, each as amended and enforced by the FDA.
On our Investor Relations website, investors.rapidmicrobio.com, we make available free of charge a variety of information for investors, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission, or SEC.
On our Investor Relations website, investors.rapidmicrobio.com, we make available free of charge a variety of information for investors, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission ("SEC").
We intend to capitalize on our first-mover advantage to define the standard of MQC automation in this growing market by moving upstream in the cell and gene therapy manufacturing design practice, creating thought leadership on MQC automation in cell and gene therapy manufacturing, partnering with facility design firms who specialize in manufacturing infrastructure for these modalities, and targeting contract development and manufacturing organizations, or CDMOs, contract manufacturing organizations, or CMOs, and contract research organizations, or CROs, with significant exposure to this segment.
We intend to capitalize on our first-mover advantage to define the standard of MQC automation in this growing market by moving upstream in the cell and gene therapy manufacturing design practice, creating thought leadership on MQC automation in cell and gene therapy manufacturing, partnering with facility design firms who specialize in manufacturing infrastructure for these modalities, and targeting contract development and manufacturing organizations ("CDMOs"), contract manufacturing organizations ("CMOs"), and contract research organizations ("CROs"), with significant exposure to this segment.
This is accomplished through MQC testing, which generally encompasses four specific applications for testing of microbial contamination: • Environmental Monitoring (EM) —tests the manufacturing environment, including circulating air, exposed surfaces, and personnel, and represents approximately 65-70% of global MQC test volume; • Water (W) —tests any purified water used at any stage of the drug production process, including water for injection, or WFI, and represents approximately 15% of global MQC test volume; • In-Process Bioburden (BB) —tests raw materials, drug substance and in-process product, and represents approximately 15% of global MQC test volume; and • Sterility Release (ST) —final testing of finished product to ensure sterility before the product is released for commercial sale, and represents less than 5% of global MQC test volume. 8 Table of Contents MQC testing occurs at high volumes due to its importance across all dimensions of a pharmaceutical manufacturing operation and must be executed daily and implemented across all production lines.
This is accomplished through MQC testing, which generally encompasses four specific applications for testing of microbial contamination: • Environmental Monitoring (EM) —tests the manufacturing environment, including circulating air, exposed surfaces, and personnel, and represents approximately 65-70% of global MQC test volume; • Water (W) —tests any purified water used at any stage of the drug production process, including water for injection, and represents approximately 15% of global MQC test volume; • In-Process Bioburden (BB) —tests raw materials, drug substance and in-process product, and represents approximately 15% of global MQC test volume; and • Sterility Release (ST) —final testing of finished product to ensure sterility before the product is released for commercial sale, and represents less than 5% of global MQC test volume. 8 Table of Contents MQC testing occurs at high volumes due to its importance across all dimensions of a pharmaceutical manufacturing operation and must be executed daily and implemented across all production lines.
Our Growth Direct system is a fully automated, high throughput instrument for daily processing of MQC samples using our proprietary consumables—a microbiology quality control lab "in a box." We have achieved an automated method that is faster and produces more accurate, reliable and accessible data than the traditional method.
Our Growth Direct system is a fully automated, high throughput system for daily processing of MQC samples using our proprietary consumables—a microbiology quality control lab "in a box." We have achieved an automated method that is faster and produces more accurate, reliable and accessible data than the traditional method.
Item 1. Business. Defining the future of pharmaceutical quality control We are leading a global transformation toward fully automated microbial quality control within pharmaceutical manufacturing. Our products safeguard the most complex and critical bioprocessing workflows in the industry, enabling faster, safer, and higher capacity drug production.
Item 1. Business. Defining the future of pharmaceutical quality control We are leading a global transformation toward fully automated microbial quality control ("MQC") within pharmaceutical manufacturing. Our products safeguard the most complex and critical bioprocessing workflows in the industry, enabling faster, safer, and higher capacity drug production.
In addition, in order to further improve our gross margins, we seek to reduce such costs and are actively targeting numerous areas including: • Reducing instrument and consumable product costs (materials and labor) through activities including strategic sourcing and product redesign; • Increasing product manufacturing efficiency through activities including increased throughput of products currently manufactured and reduced variability of uptime on our automated consumables manufacturing line, moving manufacturing of other consumable products on to this automated line and manufacturing process optimization; and • Increasing productivity and efficiency in our service organization.
In addition, in order to further improve our gross margins, we seek to reduce such costs and are actively targeting numerous areas including: • Reducing system and consumable product costs (materials and labor) through activities including strategic sourcing and product redesign; • Increasing product manufacturing efficiency through activities including increased throughput of products currently manufactured and reduced variability of uptime on our automated consumables manufacturing line, moving manufacturing of other consumable products on to this automated line and manufacturing process optimization; and • Increasing productivity and efficiency in our service organization.
In the last several years alone, there have been numerous publicized incidents involving leading pharmaceutical companies that highlight the risk of poorly controlled, manual MQC testing and protocols, resulting in lengthy site closures, and complete response letters, or CRLs, resulting in delays to product approvals. Furthermore, regulatory compliance pressures in the pharmaceutical industry have generally increased over the past decade.
In the last several years alone, there have been numerous publicized incidents involving leading pharmaceutical companies that highlight the risk of poorly controlled, manual MQC testing and protocols, resulting in lengthy site closures, and complete response letters, resulting in delays to product approvals. Furthermore, regulatory compliance pressures in the pharmaceutical industry have generally increased over the past decade.
Our proprietary system detects microcolonies of microorganisms by illuminating them with blue-spectrum light and directing the resulting green-spectrum signal onto a Charged-Coupled Device, or CCD, chip—an array of independent photosensitive pixel elements. Our image analysis software interprets these light signals and counts the clusters of illuminated pixels representing each microcolony.
Our proprietary system detects microcolonies of microorganisms by illuminating them with blue-spectrum light and directing the resulting green-spectrum signal onto a Charged-Coupled Device chip—an array of independent photosensitive pixel elements. Our image analysis software interprets these light signals and counts the clusters of illuminated pixels representing each microcolony.
According to Lonza, the project provided a valuable blueprint for the industry to emulate. Distribution and Collaboration Agreement On February 21, 2025, we entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”).
According to Lonza, the project provided a valuable blueprint for the industry to emulate. Distribution and Collaboration Agreement In February 2025, we entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”).
The Growth Direct platform fully automates and digitizes the process of pharmaceutical MQC and enables our customers to perform this critical testing process more efficiently, accurately, and securely. Our platform comprises the Growth Direct system, proprietary consumables, lab information management system, or LIMS, connection software, and comprehensive customer support and validation services.
The Growth Direct platform fully automates and digitizes the process of pharmaceutical MQC and enables our customers to perform this critical testing process more efficiently, accurately, and securely. Our platform comprises the Growth Direct system, proprietary consumables, lab information management system ("LIMS") connection and other software, and comprehensive customer support and validation services.
The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, 19 Table of Contents installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices, drugs and biological products to ensure that such products distributed domestically are safe and effective for their intended uses and otherwise meet the applicable requirements of the FDCA and the PHSA.
The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices, drugs and biological products to ensure that such products distributed domestically are safe and effective for their intended uses and otherwise meet the applicable requirements of the FDCA and the PHSA.
MQC is a critical component of the bioprocess and pharmaceutical production process and is regulated and mandated by the FDA, under current good manufacturing practices, or cGMP, and by other international regulatory agencies. Current MQC testing methods are manual, laborious, and have lacked innovation over the past several decades.
MQC is a critical component of the bioprocess and pharmaceutical production process and is regulated and mandated by the FDA, under current good manufacturing practices, and by other international regulatory agencies. Current MQC testing methods are manual, laborious, and have lacked innovation over the past several decades.
Growth Direct LIMS connection software Our Growth Direct software allows for two-way integration to a customer's LIMS, enabling a fully paperless workflow. The bi-directional LIMS connection uses the widely supported comma-separated values, or CSV, file format to communicate, delivering compatibility with all existing LIMS.
Growth Direct LIMS connection and other software Our Growth Direct software allows for two-way integration to a customer's LIMS, enabling a fully paperless workflow. The bi-directional LIMS connection uses the widely supported comma-separated values, or CSV, file format to communicate, delivering compatibility with all existing LIMS.
The Growth Direct system Our current, second-generation Growth Direct system, launched in 2017, reflects our deep experience with delivering automation to the MQC market. The Growth Direct system is a fully automated, high throughput system for processing MQC samples—a microbiology quality control lab in a box.
The Growth Direct system Our current, second-generation Growth Direct system reflects our deep experience with delivering automation to the MQC market. The Growth Direct system is a fully automated, high throughput system for processing MQC samples—a microbiology quality control lab in a box.
Moreover, once a Growth Direct system is installed within a customer’s facility, it provides for an opportunity to place additional systems in existing and new facilities, which can be installed and validated in a faster, more efficient manner given the comprehensive validation process for the initial system. • Ability to leverage our extensive regulatory expertise to better serve our customers’ needs — We believe we are a thought-leader with respect to regulatory requirements.
Moreover, once a Growth Direct system is installed within a customer’s facility, it provides for an opportunity to place additional systems in existing and new facilities, 15 Table of Contents which can be installed and validated in a faster, more efficient manner given the comprehensive validation process for the initial system. • Ability to leverage our extensive regulatory expertise to better serve our customers’ needs — We believe we are a thought-leader with respect to regulatory requirements.
We guide these initial sites as they gain experience with the Growth Direct, assisting their validation of initial applications, proving the value of our systems, and establishing a relationship as a trusted and reliable vendor. Our system is specifically designed to absorb the daily 16 Table of Contents MQC testing volume at our customer’s facilities.
We guide these initial sites as they gain experience with the Growth Direct, assisting their validation of initial applications, proving the value of our systems, and establishing a relationship as a trusted and reliable vendor. Our system is specifically designed to absorb the daily MQC testing volume at our customer’s facilities.
Our new rapid sterility test is designed to deliver time to organism detection, or TTD, in as little as 12 hours and final time-to-result, or TTR, in as little as one to three days, enabling faster release of final pharmaceutical product, allowing manufacturers to benefit from faster time to market, less potential waste and reduced inventory and holding costs.
Our new rapid sterility test is designed to deliver time to organism detection in as little as 12 hours and final time-to-result, in as little as one to three days, enabling faster release of final pharmaceutical product, allowing manufacturers to benefit from faster time to market, less potential waste and reduced inventory and holding costs.
In studies of environmental monitoring plates incubated for five days, which compared Growth Direct’s vision-based detection and enumeration to visual counting conducted by technicians, the Growth Direct regularly identified and counted colonies that technicians missed.
In studies of EM plates incubated for five days, which compared Growth Direct’s vision-based detection and enumeration to visual counting conducted by technicians, the Growth Direct regularly identified and counted colonies that technicians missed.
Maintaining these positive gross margins in future periods will depend on our ability to execute on our business objectives, including generating sufficient 17 Table of Contents revenues to cover the costs of producing and delivering our products and services.
Maintaining these positive gross margins in future periods will depend on our ability to execute on our business objectives, including generating sufficient revenues to cover the costs of producing and delivering our products and services.
There is continued focus on concepts such as lean manufacturing and six sigma to drive efficiencies in the manufacturing process and a greater emphasis on automating MQC testing to reduce errors and decrease manufacturing lead times and inventory requirements in supply chains. • Rebuilding of domestic growth supply chain / increasing scrutiny of outsourced materials with focus on reshoring drug development process — We believe the reshoring of manufacturing operations will further necessitate the need for efficient automated MQC testing. • Labor shortages — With labor shortages facing many companies in the global pharmaceutical industry, we believe that automated MQC processes can not only make their manufacturing processes more efficient and cost-effective but also help mitigate worker scarcity.
There is continued focus on concepts such as lean manufacturing and six sigma to drive efficiencies in the manufacturing process and a greater emphasis on automating MQC testing to reduce errors and decrease manufacturing lead times and inventory requirements in supply chains. • Rebuilding of domestic supply chain / increasing scrutiny of outsourced materials with focus on reshoring drug manufacturing processes to the U.S. — We believe the reshoring of manufacturing operations to the U.S. will further increase demand for efficient automated MQC testing. • Labor shortages — With labor shortages facing many companies in the global pharmaceutical industry, we believe that automated MQC processes can not only make their manufacturing processes more efficient and cost-effective but also help mitigate worker scarcity.
Our regulatory strategy has benefited our business in several ways, including: 1) by achieving the definition of the Growth Direct Technology as an “automated 15 Table of Contents compendial validation” in key trade group and regulatory issuances, such as the Parenteral Drug Association, or PDA, Technical Report 33, and USP chapter ; 2) by working with industry and regulatory forums to define a fast validation strategy that allows a short timeline routine testing implementation, which is described in a case study written by us and several of our customers and published in the PDA Journal of Pharmaceutical Science and Technology in November 2022; and 3) and by helping our customers obtain regulatory acceptance from the FDA and EMA for the use of our technology and validation strategy for new drug applications with the bioburden application (environmental monitoring and water do not need regulatory license changes).
Our regulatory strategy has benefited our business in several ways, including: 1) by achieving the definition of the Growth Direct Technology as an “automated compendial validation” in key trade group and regulatory issuances, such as the Parenteral Drug Association, or PDA, Technical Report 33, and USP chapter ; 2) by working with industry and regulatory forums to define a fast validation strategy that allows a short timeline routine testing implementation, which is described in a case study written by us and several of our customers and published in the PDA Journal of Pharmaceutical Science and Technology in November 2022; and 3) and by helping our customers obtain regulatory acceptance from the FDA and EMA for the use of our technology and validation strategy for new drug applications with the BB application (EM and W do not need regulatory license changes).
We expect this volatility to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics. Government regulation We provide products and services used for quality-control testing in pharmaceutical product and medical device manufacturing.
We expect this volatility to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics. 19 Table of Contents Government regulation We provide products and services used for quality-control testing in pharmaceutical product and medical device manufacturing.
Talent Recruitment and Retention We strive to attract a pool of diverse and exceptional candidates and support their career growth once they become employees. We emphasize in our evaluation and career development efforts internal mobility opportunities to drive professional development for every employee, which we believe also drives our retention efforts.
Talent Recruitment and Retention We strive to attract a pool of exceptional candidates across a wide range of backgrounds and support their career growth once they become employees. We emphasize in our evaluation and career development efforts internal mobility opportunities to drive professional development for every employee, which we believe also drives our retention efforts.
Our approach begins by placing initial systems within our customers’ global manufacturing network. The majority of our customers, which comprise 70% of the top twenty global pharmaceutical companies as measured by revenue, have global operations with multiple manufacturing facilities.
Our approach begins by placing initial systems within our customers’ global manufacturing network. The majority of our customers, which comprise 75% of the top 20 global pharmaceutical companies as measured by revenue, have global operations with multiple manufacturing facilities.
Our flagship Growth Direct platform automates and modernizes the antiquated, manual microbial quality control, or MQC, testing workflows used in the largest and most complex pharmaceutical manufacturing operations across the globe.
Our flagship Growth Direct platform automates and modernizes the antiquated, manual MQC, testing workflows used in the largest and most complex pharmaceutical manufacturing operations across the globe.
Moreover, we have a strong intellectual property portfolio, with at least 80 granted and pending patents globally, including 10 granted unexpired patents and 17 pending patent applications in the U.S. as of December 31, 2024. • Top-tier customers establishing Growth Direct as an industry standard globally — We have cultivated long-standing and collaborative relationships with our significant and growing customer base.
Moreover, we have a strong intellectual property portfolio, with at least 162 granted and pending patents globally, including 12 granted unexpired patents and 16 pending patent applications in the U.S. as of December 31, 2025. • Top-tier customers establishing Growth Direct as an industry standard globally — We have cultivated long-standing and collaborative relationships with our significant and growing customer base.
Our customer base includes 70% of the top twenty largest pharmaceutical companies as measured by revenue and the manufacturers of approximately 17% of U.S. Food and Drug Administration ("FDA") approved cell and gene therapies, including 86% of approved gene-modified autologous CAR-T cell therapies.
Our customer base includes 75% of the top twenty largest pharmaceutical companies as measured by revenue and the manufacturers of a number of U.S. Food and Drug Administration ("FDA") approved cell and gene therapies, including 86% of approved gene-modified autologous CAR-T cell therapies.
Our manufacturing strategy includes direct manufacturing of certain products, and third-party outsourcing for certain components and subassemblies. We obtain components and subassemblies for our Growth Direct systems from multiple third-party suppliers and contract manufacturers. While some of these components are sourced from a single supplier, we have qualified second sources for most of our parts.
We obtain components and subassemblies for our Growth Direct systems from multiple third-party suppliers and contract manufacturers. While some of these components are sourced from a single supplier, we have qualified second sources for most of our parts.
We strive to provide learning opportunities for all our employees through the development of new learning paths, technical on-the-job training, and leadership training. We also provide our employees career development and career paths through internal promotional opportunities, tuition reimbursement and annual performance management processes. For our global managers and directors, we offer training in leadership essentials.
We strive to provide learning opportunities for all our employees through the development of new learning paths, technical on-the-job training, and leadership training. We also provide our employees career development and career paths through internal promotional opportunities, tuition reimbursement and annual performance management processes.
Employees As of December 31, 2024, we had 163 full-time employees across the globe, of which 34 were engaged in sales and marketing, 31 in research and development, 72 in manufacturing and service, and 26 in general and administrative. None of our employees are covered by a collective bargaining agreement. We consider our relationships with our employees to be good.
Employees As of December 31, 2025, we had 171 full-time employees across the globe, of which 34 were engaged in sales and marketing, 34 in research and development, 74 in manufacturing and service, and 29 in general and administrative. None of our employees are covered by a collective bargaining agreement. We consider our relationships with our employees to be good.
We believe that our Growth Direct platform 14 Table of Contents leads the industry in throughput, accuracy, reliability, security, and data integrity.
We believe that our Growth Direct platform leads the industry in throughput, accuracy, reliability, security, and data integrity.
As of December 31, 2024, we own 10 granted unexpired patents in the United States, 53 issued patents in foreign jurisdictions, including Australia, Canada, China, countries in Europe, India, Japan and Mexico, and 17 pending patent applications in the United States.
As of December 31, 2025, we own 12 granted unexpired patents in the United States, 72 issued patents in foreign jurisdictions, including Australia, Canada, China, countries in Europe, India, Japan and Mexico, and 16 pending patent applications in the United States.
We originally developed our platform in close collaboration with our customers, and our customers’ success in validating our technology constitutes a major driver for platform deployment. Moreover, our comprehensive validation, value-added service, and customer support offerings create a continuous touch point with our customers, cementing the value and integration of our products.
We originally developed our platform in close collaboration with our customers, and our customers’ success in validating our technology constitutes a major driver for platform deployment. Moreover, we believe our well-established comprehensive validation, value-added service, and customer support offerings instill confidence and create a positive experience for our customers, cementing the value and integration of our products.
Department of Health and Human Services Biomedical Advanced Research & Development Authority, or BARDA, which is supporting the development of improvements in vaccine production methods that accelerate the availability of vaccines against viruses with pandemic potential. The contract funding with BARDA ended in December 2021.
Department of Health and Human Services Biomedical Advanced Research & Development Authority ("BARDA"), as part of their support for the development of improvements in vaccine production methods that accelerate the availability of vaccines against viruses with pandemic potential. The contract funding with BARDA ended in December 2021.
Expand implementation of the Growth Direct platform within our existing customer base by deploying additional systems across their global manufacturing site network and driving increased application utilization and consumable pull through on a system-by-system basis — We pursue a land-and-expand strategy to drive broad global adoption of our systems.
Our target geographies include North America, Europe, and the Asia-Pacific region. 16 Table of Contents Expand implementation of the Growth Direct platform within our existing customer base by deploying additional systems across their global manufacturing site network and driving increased application utilization and consumable pull through on a system-by-system basis — We pursue a land-and-expand strategy to drive broad global adoption of our systems.
Drive new customer adoption of the Growth Direct platform by converting the leading manufacturers in our core markets, including top 50 pharmaceutical companies and leading CDMOs — With the launch of our latest generation Growth Direct in 2017, 46 global customers have adopted the Growth Direct platform to automate MQC testing in 98 manufacturing facilities.
Drive new customer adoption of the Growth Direct platform by converting the leading manufacturers in our core markets, including top 50 pharmaceutical companies and leading CDMOs — There are 49 global customers that have adopted the Growth Direct platform to automate MQC testing in 107 manufacturing facilities.
We intend to drive global adoption by broadly seeking new customers in our core pharmaceutical manufacturing end markets. Our primary focus is on influential high-volume top 50 pharmaceutical companies as measured by revenue and global contract manufacturing organizations, which provide manufacturing services directly to pharmaceutical companies. Our target geographies include North America, Europe, and the Asia-Pacific region.
We intend to drive global adoption by broadly seeking new customers in our core pharmaceutical manufacturing end markets. Our primary focus is on influential high-volume top 50 pharmaceutical companies as measured by revenue and global CDMOs, which provide manufacturing services directly to pharmaceutical companies.
The system’s compact 57” x 39” x 95” size delivers these benefits in a footprint that allows customers to place the Growth Direct system directly in manufacturing suites of various sizes compared to the traditional method, where samples are often required to be transferred to a centralized lab. 11 Table of Contents Co-location in manufacturing minimizes delays to incubation and errors introduced by sample transfer to the quality control lab.
The system’s compact 57” x 39” x 95” size delivers these benefits in a footprint that allows customers to place the Growth Direct system directly in manufacturing suites of various sizes compared to the traditional method, where samples are often required to be transferred to a centralized lab.
Through this offering, we help our customers validate their Growth Direct system for full routine use faster, typically in just three to nine months after the Growth Direct system is placed and installed, and develop confidence in the operation of our platform. 12 Table of Contents Support begins prior to system purchase when our sales representative brings in one of our validation experts for consultation about specific application requirements.
Through this offering, we help our customers validate their Growth Direct system for full routine 12 Table of Contents use faster, typically in just three to nine months after the Growth Direct system is placed and installed, and develop confidence in the operation of our platform.
Intellectual property Our success depends in part on our ability to obtain and maintain intellectual property protection for our products and technology, including by seeking and maintaining patent protection, protecting our trade secrets and other proprietary information, obtaining and maintaining our licenses to use intellectual property owned by third parties, and continually evaluating third-party technologies for further licensing opportunities.
We are continually evaluating our supply chain and may proactively optimize certain aspects of our manufacturing and supply chain footprint to meet our business objectives. 18 Table of Contents Intellectual property Our success depends in part on our ability to obtain and maintain intellectual property protection for our products and technology, including by seeking and maintaining patent protection, protecting our trade secrets and other proprietary information, obtaining and maintaining our licenses to use intellectual property owned by third parties, and continually evaluating third-party technologies for further licensing opportunities.
We currently have customers across approximately 98 sites in 18 countries and the majority of our customers have multiple Growth Direct systems and have deployed Growth Direct across multiple facility locations. We launched our current, second generation Growth Direct system in 2017 and have placed 162 systems and sold over 6 million consumables globally.
We currently have customers across approximately 107 sites in 18 countries and the majority of our customers have multiple Growth Direct systems and have deployed Growth Direct across multiple facility locations. We have placed 190 systems and sold approximately 9 million consumables globally.
All types are custom-designed proprietary consumables with specific mechanical and optical features to facilitate automated handling and image processing within our Growth Direct system and have bar codes for sample tracking and data integrity.
Proprietary consumables We offer proprietary consumables plates to capture test samples for analysis on the Growth Direct system. These applications include EM, W, BB and ST. All types are custom-designed proprietary consumables with specific mechanical and optical features to facilitate automated handling and image processing within our Growth Direct system and have bar codes for sample tracking and data integrity.
To support continuous supply for our customers, we have manufacturing redundancies and maintain inventory in multiple locations, including our Lowell facility, a second redundant storage location in the metropolitan Boston area, and at our third-party logistics, or 3PL, warehouses in Schiphol, Netherlands and Frankfurt, Germany.
To support continuous supply for our customers, we have manufacturing redundancies and maintain inventory in multiple locations, including our Lowell facility, a second redundant storage location in the metropolitan Boston area, and at our third-party logistics warehouse in Oss, Netherlands. Our manufacturing strategy includes direct manufacturing of certain products, and third-party outsourcing for certain components and subassemblies.
Competitive strengths We believe our continued growth will be driven by the following competitive strengths. • Our proprietary technology platform offering best-in-class automated and secure MQC testing — Our platform was purpose built to meet the growing demands posed by the increasing scale, complexity, and regulatory scrutiny of global pharmaceutical manufacturing.
Our platform’s reliability is further supported by our 24/7 support infrastructure and extensive regulatory validation services to ensure quick and seamless integration with customer’s facilities and IT systems. 14 Table of Contents Competitive strengths We believe our continued growth will be driven by the following competitive strengths. • Our proprietary technology platform offering best-in-class automated and secure MQC testing — Our platform was purpose built to meet the growing demands posed by the increasing scale, complexity, and regulatory scrutiny of global pharmaceutical manufacturing.
The Growth Direct platform is backed by our comprehensive validation and value-added service offerings, which create a continuous, positive touch point with our customers.
The Growth Direct platform is backed by our well-established comprehensive validation and value-added service offerings, which we believe instill confidence and create a positive experience for our customers.
We increase awareness of our products among our target customers through direct sales calls, trade shows, seminars, academic conferences, web presence, social media and other forms of internet marketing.
We intend to regularly evaluate and, as appropriate, adjust or expand our sales, support, and marketing efforts, including in the context of our distribution and collaboration arrangements. We increase awareness of our products among our target customers through direct sales calls, trade shows, seminars, academic conferences, web presence, social media and other forms of internet marketing.
We have also entered into certain supply and commercial agreements with various vendors and suppliers under which we receive rights to their intellectual property for use in our products.
We also seek trademark protection where appropriate to protect the names that identify us as the source of our products and services. We own certain patents, patent applications and intellectual property. We have also entered into certain supply and commercial agreements with various vendors and suppliers under which we receive rights to their intellectual property for use in our products.
Our service team works directly with customers’ IT teams to help integrate Growth Direct software into their LIMS for seamless connectivity. Validation services As part of our customer support experience, we offer full validation support to ensure customer success with the Growth Direct platform.
Validation services As part of our customer support experience, we offer full validation support to ensure customer success with the Growth Direct platform.
In that regard, within six months, the parties intend to negotiate in good faith towards a supply agreement, pursuant to which the parties will explore cost-saving measures within our supply chain focused on accelerating gross margin improvement, particularly with respect to consumables.
In that regard, the parties are negotiating towards a supply agreement, pursuant to which the parties are exploring cost-saving measures within our supply chain focused on accelerating gross margin improvement, particularly with respect to consumables. The focus of such supply agreement may include raw materials and components as well as manufacturing and supply chain services.
We also compete with a limited number of companies that have or are attempting to enter the MQC testing market with alternative automated solutions, such as Interscience, which offers a partially-automated system for MQC testing, and Clever Culture Systems, which offers an environmental monitoring product focused on the pharmaceutical microbiology market.
We also compete with a limited number of companies that have or are attempting to enter the MQC testing market with alternative automated solutions.
Additionally, within one year, the parties intend to negotiate in good faith towards a services agreement to permit us and MilliporeSigma to provide certain services to each other’s customers.
The parties intend to share in any cost savings achieved in the supply of the products through this supply agreement. Additionally, the parties are negotiating towards a services agreement to permit us and MilliporeSigma to provide certain services to each other’s customers.
We maintain high customer satisfaction through a robust service and maintenance offering, including online phone and help desk, remote support and on-site field service. Gross margin improvement The majority of our customers are large global pharmaceutical manufacturers and CDMOs.
We maintain high customer satisfaction through a robust service and maintenance offering, including online phone and help desk, remote support and on-site field service. 17 Table of Contents Gross margin improvement We have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after sales service.
We provide our employees with a competitive employment opportunity through market-based compensation, equity ownership at all levels across the company, competitive health and welfare benefits including: short-term disability, long-term disability insurance, 401k, employee stock purchase plan (ESPP), pet insurance and paid time off.
We provide our employees with competitive employment opportunities through market-based compensation, broad based equity ownership across the company, and a comprehensive benefits program.
In order to meet the expectations of our customers, we have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after sales service. In the third and fourth quarters of 2024, we achieved positive gross margins for the first time in our company's history.
In the third and fourth quarters of 2024, we achieved positive gross margins for the first time in our company's history. Our gross margins remained positive for the 12 months ended December 31, 2025, and increased as compared to the 12 months ended December 31, 2024.
At the appropriate stage, we may consider opportunistic investments, partnerships, and acquisitions which may strengthen our product platform, allow us to enter new markets, and enhance our growth profile. Commercial We have a global commercial team that includes direct sales, commercial operations, validation, field services, strategic marketing, marketing communications and product management.
At the appropriate stage, we may consider opportunistic investments, partnerships, and acquisitions which may strengthen our product platform, allow us to enter new markets, and enhance our growth profile. For example, in February 2025 we entered into the Distribution Agreement with MilliporeSigma, as discussed further in this Business section in this Annual Report on Form 10-K.
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The Growth Direct system brings the lab to the manufacturing floor, for automated MQC testing, anywhere in the facility or manufacturing campus. Proprietary consumables We offer proprietary consumables plates to capture test samples for analysis on the Growth Direct system. These applications include Environmental Monitoring ("EM"), Water ("W"), Bioburden ("BB"), and Sterility ("ST").
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Co-location in manufacturing 11 Table of Contents minimizes delays to incubation and errors introduced by sample transfer to the quality control lab. The Growth Direct system brings the lab to the manufacturing floor, for automated MQC testing, anywhere in the facility or manufacturing campus.
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The focus of such supply agreement may include raw materials and components as well as manufacturing and supply chain services. The parties intend to share in any cost savings achieved in the supply of the products through this supply agreement.
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Our service team works directly with customers’ IT teams to help integrate Growth Direct software into their LIMS for seamless connectivity. We also offer other software to our customers for use with our Growth Direct platform that adds features or expands capabilities, such as our Mold Alarm software.
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Our platform’s reliability is further supported by our 24/7 support infrastructure and extensive regulatory validation services to ensure quick and seamless integration with customer’s facilities and IT systems.
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Support begins prior to system purchase when our sales representative brings in one of our validation experts for consultation about specific application requirements.
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We are continually evaluating our supply chain and may proactively optimize certain aspects of our manufacturing and supply chain footprint to meet our business objectives.
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We expect to make incremental investments in our manufacturing and service organizations as our sales volumes increase over time, including as a result of increased sales volumes related to the Distribution Agreement.
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We also seek trademark protection where appropriate to protect the names that identify us as the source of our products and services. 18 Table of Contents We own certain patents, patent applications and intellectual property.
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These include Interscience, which offers a partially-automated system for MQC testing that is distributed and marketed by bioMerieux, as well as Copan Group and Clever Culture Systems, which offer EM products focused on the pharmaceutical microbiology market.
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We proudly support employee-initiated and -led employee resource groups, or ERGs, to provide business insights, solve unique business problems, build leadership skills, and represent the company within the communities we serve. For example, our Women’s ERG was established in 2021 and focuses on the engagement, empowerment, and elevation of women within the company.
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Our health and welfare benefits include medical, dental and vision coverage, short-term disability, long-term disability insurance, a comprehensive 401k retirement plan with an employer match, an employee stock purchase plan, pet insurance, and paid time off. 20 Table of Contents Additional information Rapid Micro Biosystems, Inc., a Delaware corporation, was incorporated in December 2006.
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Membership is open and encouraged for all employees, of which membership grew by approximately 48% in 2024.
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Examples of program content organized by this ERG include professional career panel discussions with company leaders, attendance sponsorship to leadership conferences such as Massachusetts Conference for Women, company-wide charity drives for local Women’s shelters, and celebration of global events such as International Women’s Day. 20 Table of Contents Additional information Rapid Micro Biosystems, Inc., a Delaware corporation, was incorporated in December 2006.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur Class B common stock cannot be converted if, immediately following such conversion, the holder would beneficially own more than 4.9% of the 48 Table of Contents issued and outstanding Class A common stock. Due to this conversion right, holders of our Class B common stock could, at any time, increase their voting control of us.
Biggest changeThe holders of shares of our Class B common stock have the ability to convert any portion of their Class B common stock into Class A common stock. Our Class B common stock cannot be converted if, immediately following such conversion, the holder would beneficially own more than 4.9% of the issued and outstanding Class A common stock.
In addition, debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
In addition, additional debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Pharmaceutical companies and contract development and manufacturing organizations, or CDMOs, are likely to be particularly sensitive to defects and errors in the use of our platform, including if our platform fails to deliver meaningful improvements in MQC testing with results at least as good as the results generated using the traditional method of MQC testing, or new methods of automated MQC testing being developed and sold by emerging competitors.
Pharmaceutical companies and contract development and manufacturing organizations ("CDMOs"), are likely to be particularly sensitive to defects and errors in the use of our platform, including if our platform fails to deliver meaningful improvements in MQC testing with results at least as good as the results generated using the traditional method of MQC testing, or new methods of automated MQC testing being developed and sold by emerging competitors.
For example, with respect to the collection and processing of personal data relating to our personnel, customers and establishments in Europe, we are subject to the EU General Data Protection Regulation, or EU GDPR, the UK General Data Protection Regulation (UK GDPR), as well as applicable data protection laws in effect in the Member States of the EEA and in the UK (including the UK Data Protection Act 2018) which govern the processing of personal data in connection with (a) our offering of goods or services to/the monitoring of the behavior of individuals in the UK and EEA; or (b) the activities of any of our establishments in the UK or any EEA Member State, such as our German subsidiary.
For example, with respect to the collection and processing of personal data relating to our personnel, customers and establishments in Europe, we are subject to the EU General Data Protection Regulation ("EU GDPR"), the UK General Data Protection Regulation ("UK GDPR"), as well as applicable data protection laws in effect in the Member States of the EEA and in the UK (including the UK Data Protection Act 2018) which govern the processing of personal data in connection with (a) our offering of goods or services to/the monitoring of the behavior of individuals in the UK and EEA; or (b) the activities of any of our establishments in the UK or any EEA Member State, such as our German subsidiary.
To mitigate certain of these risks associated with the manufacture of our consumables at our Lowell facility, our Lexington, Massachusetts facility has been designed to serve as a back-up consumable manufacturing facility if needed.
To mitigate certain of these risks associated with the manufacture of our consumables at our Lowell, Massachusetts facility, our Lexington, Massachusetts facility has been designed to serve as a back-up consumable manufacturing facility if needed.
In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change by value in its equity ownership by one or more stockholders or groups of stockholders owning at least 5% of the corporation’s stock over a rolling three-year period, is subject to limitations on its ability to utilize its pre-ownership change NOLs and tax credits to offset future taxable income or income tax liabilities for U.S. federal income tax purposes.
In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, a corporation that undergoes an “ownership change,” generally defined as a greater than 50 percentage point change by value in its equity ownership by one or more stockholders or groups of stockholders owning at least 5% of the corporation’s stock over a rolling three-year period, is subject to limitations on its ability to utilize its pre-ownership change NOLs and tax credits to offset future taxable income or income tax liabilities for U.S. federal income tax purposes.
These fluctuations may occur due to a variety of factors, many of which are outside of our control, including, but not limited to: • our customers’ tendency to purchase our Growth Direct system, including multiple systems, in a single transaction, resulting in significant variations in sales of our systems over time; • the level of demand for our platform and solutions, which may vary significantly; • the length of time of the sales cycle for purchases of our systems; • seasonality in our business due to our customers’ budgetary cycles and time off during summer vacation and end-of-year periods; • lead time needed for validation prior to our customers’ using and purchasing our consumables; 23 Table of Contents • changes in demand for our consumables; • the timing and cost of, and level of investment in, technology development and commercialization activities, which may change from time to time; • the start, completion, and output of manufacturing runs; • the costs of manufacturing and shipping our products or of providing services to our customers, which may impact our operating gross margin in any given period; • system repairs or replacements that may impact our customers’ confidence in us and our products and our reputation in the market; • the relative reliability and robustness of our platform; • the introduction of new products or product enhancements by us or others in our industry; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • expenditures involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; • future accounting pronouncements or changes in our accounting policies; • the ability of our sales organization to design and execute effective sales processes; • our implementation of cost reduction efforts, and the resulting costs and savings related to these actions; and • general market conditions and other factors, including factors, such as inflation, 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: • our customers’ tendency to purchase our Growth Direct system, including multiple systems, in a single transaction, resulting in significant variations in sales of our systems over time; • the level of demand for our platform and solutions, which may vary significantly; • the length of time of the sales cycle for purchases of our systems; • seasonality in our business due to our customers’ budgetary cycles and time off during summer vacation and end-of-year periods; • lead time needed for validation prior to our customers’ purchasing and using our consumables; 23 Table of Contents • changes in demand for our consumables; • the timing and cost of, and level of investment in, technology development and commercialization activities, which may change from time to time; • the start, completion, and output of manufacturing runs; • the costs of manufacturing and shipping our products or of providing services to our customers, which may impact our operating gross margin in any given period; • system repairs or replacements that may impact our customers’ confidence in us and our products and our reputation in the market; • the relative reliability and robustness of our platform; • the introduction of new products or product enhancements by us or others in our industry; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • expenditures involved in preparing, filing, prosecuting, maintaining, defending and enforcing patent claims; • future accounting pronouncements or changes in our accounting policies; • the ability of our sales organization to design and execute effective sales processes; • our implementation of cost reduction efforts, and the resulting costs and savings related to these actions; and • general market conditions and other factors, including factors, such as inflation and tariffs, unrelated to our operating performance or the operating performance of our competitors.
In addition, as we seek to innovate in and disrupt the current microbial quality control market, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. We are transitioning to a company capable of supporting commercial manufacturing, sales and marketing at scale in the United States and abroad.
In addition, as we seek to innovate in and disrupt the current microbial quality control ("MQC") market, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown challenges. We are transitioning to a company capable of supporting commercial manufacturing, sales and marketing at scale in the United States and abroad.
Except for shares of our Class A common stock that are held by our directors, officers and affiliates, which are subject to certain restrictions on resale under the Securities Act of 1933, as amended, or the Securities Act, and the rules and regulations promulgated thereunder, all other shares of our Class A common stock listed on Nasdaq are generally freely tradable.
Except for shares of our Class A common stock that are held by our directors, officers and affiliates, which are subject to certain restrictions on resale under the Securities Act of 1933, as amended (the "Securities Act"), and the rules and regulations promulgated thereunder, all other shares of our Class A common stock listed on Nasdaq are generally freely tradable.
There is no assurance that any of these measures taken with respect to scale, expansion of personnel, equipment, manufacturing or services will be successfully implemented, or that we will have adequate space, including in our manufacturing facility, to accommodate such required expansion.
There is no assurance that any of these measures taken with respect to scale and expansion of personnel, equipment, manufacturing or services will be successfully implemented, or that we will have adequate space, including in our manufacturing facility, to accommodate such required expansion.
If we are unable to attract qualified personnel and retain our current employees, our ability to develop and sell our products could be limited and our business and customer relationships could be materially harmed. We depend on our information technology systems, and any failure of these systems could harm our business.
If we are unable to attract qualified personnel and retain our current employees, our ability to develop and sell our products could be limited and our business and customer relationships could be materially harmed. We depend on our information technology ("IT") systems, and any failure of these systems could harm our business.
While we believe that we could, if necessary, transfer our manufacturing capabilities to the Lexington facility, there can be no assurance that we would achieve such transfer in a timely manner or at all and mitigate disruption to our overall business.
While we believe that we could, if necessary, transfer our manufacturing capabilities to the Lexington, Massachusetts facility, there can be no assurance that we would achieve such transfer in a timely manner or at all and mitigate disruption to our overall business.
Similar rules may apply under state tax laws. The company has completed a Section 382 study through July 31, 2020 to assess the limitations on use of NOLs and research and development credits due to changes in control.
Similar rules may apply under state tax laws. Our company has completed a Section 382 study through July 31, 2020 to assess the limitations on use of NOLs and research and development credits due to changes in control.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, and employees, and cause our stock price to experience periods of volatility or stagnation. 51 Table of Contents Our restated certificate of incorporation designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
In addition, perceived uncertainties as to our future direction, strategy or leadership created as a consequence of activist stockholder initiatives may result in the loss of potential business opportunities, harm our ability to attract new investors, customers, and employees, and cause our stock price to experience periods of volatility or stagnation. 52 Table of Contents Our restated certificate of incorporation designates specific courts as the exclusive forum for certain litigation that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
The inability to manufacture our systems and consumables could develop if our Lowell facility is inoperable or suffers a loss of utilization for even a short period of time and may result in the loss of customers or harm to our reputation.
The inability to manufacture our systems and consumables could develop if our Lowell, Massachusetts facility is inoperable or suffers a loss of utilization for even a short period of time and may result in the loss of customers or harm to our reputation.
In addition, if we enter into a supply agreement or a services agreement as contemplated by our distribution and collaboration agreement, we may become dependent on the distributor in our efforts to service our customers and lower the costs of our products.
In addition, if we enter into a supply agreement or a services agreement as contemplated by our Distribution Agreement, we may become dependent on the distributor in our efforts to service our customers and lower the costs of our products.
We cannot predict the impact of such changes and cannot be certain of our future compliance. 42 Table of Contents Risks Related to Our Intellectual Property If we are unable to obtain and maintain sufficient intellectual property protection for our technology, including the Growth Direct platform, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
We cannot predict the impact of such changes and cannot be certain of our future compliance. 43 Table of Contents Risks Related to Our Intellectual Property If we are unable to obtain and maintain sufficient intellectual property protection for our technology, including the Growth Direct platform, or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize products similar or identical to ours, and our ability to successfully commercialize our products may be impaired.
Our ability to achieve and maintain commercial market acceptance of our Growth Direct platform will depend on a number of factors, including: • significant acceptance by drug manufacturers of automated microbial quality control, or MQC, testing; 22 Table of Contents • our ability to increase awareness of the capabilities of automated MQC testing and our technology and solutions; • our customers’ willingness to adopt new technologies and workflows; • our ability to integrate our platform with our customers’ existing workflows, including related to regulatory validation processes; • whether our platform reliably provides advantages over the conventional, manual method of MQC testing and other automated technologies and is perceived by customers to be cost effective; • the continued growth of the pharmaceutical and biopharmaceutical industry, in particular biologics and cell and gene therapies; • our ability to execute on our business strategy, including continuing to expand in the market for cell and gene therapies; • the rate of adoption of our platform and solutions by drug manufacturers; • prices we charge for our systems and consumables; • the relative reliability and robustness of our platform as a whole and the components of our platform; • our ability to develop new products for existing customers and to expand our capabilities within the MQC testing workflow; • our ability to expand the use of our platform with existing customers; • other competitive automated MQC testing platforms; and • the impact of our investments in product innovation and commercial growth.
Our ability to achieve and maintain commercial market acceptance of our Growth Direct platform will depend on a number of factors, including: • significant acceptance by drug manufacturers of automated MQC testing; • our ability to increase awareness of the capabilities of automated MQC testing and our technology and solutions; • our customers’ willingness to adopt new technologies and workflows; 22 Table of Contents • our ability to integrate our platform with our customers’ existing workflows, including related to regulatory validation processes; • whether our platform reliably provides advantages over the conventional, manual method of MQC testing and other automated technologies and is perceived by customers to be cost effective; • the continued growth of the pharmaceutical and biopharmaceutical industry, in particular biologics and cell and gene therapies; • our ability to execute on our business strategy, including continuing to expand in the market for cell and gene therapies; • the rate of adoption of our platform and solutions by drug manufacturers; • prices we charge for our systems and consumables; • the relative reliability and robustness of our platform as a whole and the components of our platform; • our ability to develop new products for existing customers and to expand our capabilities within the MQC testing workflow; • our ability to expand the use of our platform with existing customers; • other competitive automated MQC testing platforms; and • the impact of our investments in product innovation and commercial growth.
The company has not completed a Section 382 study for post July 31, 2020 transactions which could create an additional limitation although materially all of the current federal NOL carryforwards can be carried forward indefinitely. We have in the past experienced, and we may in the future experience ownership changes, some of which are outside our control.
We have not completed a Section 382 study for post July 31, 2020 transactions which could create an additional limitation although materially all of the current federal NOL carryforwards can be carried forward indefinitely. We have in the past experienced, and we may in the future experience ownership changes, some of which are outside our control.
As a result, our competitors and potential competitors may be able to respond more quickly to changes in customer requirements, devote greater resources to the development, promotion and sale of their platforms or instruments than we can or sell their platforms or instruments, or offer services competitive with our platform and services at prices designed to win significant levels of market share.
As a result, our competitors and potential competitors may be able to respond more quickly to changes in customer requirements, devote greater resources to the development, promotion and sale of their platforms or systems than we can or sell their platforms or systems, or offer services competitive with our platform and services at prices designed to win significant levels of market share.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, tariffs, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us or our distributors to obtain approvals to conduct our business in various countries; • differing intellectual property rights; • complexities and difficulties in obtaining intellectual property protection, enforcing our intellectual property and defending against third-party intellectual property claims; • difficulties in staffing and managing foreign operations; • logistics and regulations associated with shipping systems and parts and components for systems and consumables, as well as transportation delays; • travel restrictions that limit the ability of marketing, presales, sales, services and support teams to service customers; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • international trade disputes that have resulted or could in the future result in tariffs and other protective measures taken by the U.S. or other countries; • natural disasters, the severity and frequency of which may be amplified by global climate change, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks, including severe penalties such as criminal and civil penalties, disgorgement and other remedial measures, that relate to the U.S.
Doing business internationally involves a number of risks, including: • multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, tariffs, economic sanctions and embargoes, employment laws, regulatory requirements and other governmental approvals, permits and licenses; • failure by us or our distributors to obtain approvals to conduct our business in various countries; • differing intellectual property rights; • complexities and difficulties in obtaining intellectual property protection, enforcing our intellectual property and defending against third-party intellectual property claims; • difficulties in staffing and managing foreign operations; • logistics and regulations associated with shipping systems and parts and components for systems and consumables, such as import and export controls that apply or may become applicable to our products, or changes in such controls that impact our ability to source, manufacture and deliver products to our customers, as well as transportation delays; • travel restrictions that limit the ability of marketing, presales, sales, services and support teams to service customers; • financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; • international trade disputes that have resulted or could in the future result in tariffs and other protective measures taken by the U.S. or other countries; • natural disasters, the severity and frequency of which may be amplified by global climate change, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions; and • regulatory and compliance risks, including severe penalties such as criminal and civil penalties, disgorgement and other remedial measures, that relate to the U.S.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts 50 Table of Contents by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts 51 Table of Contents by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
Based on the number of shares of Class A common stock outstanding as of December 31, 2024, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock and their respective affiliates hold, in the aggregate, a majority of our outstanding voting stock.
Based on the number of shares of Class A common stock outstanding as of December 31, 2025, our executive officers, directors and stockholders who owned more than 5% of our outstanding common stock and their respective affiliates hold, in the aggregate, a majority of our outstanding voting stock.
In addition, regardless of merit or eventual outcome, product liability claims may result in: • impairment of our business reputation and significant negative media attention; • withdrawal of customers; • significant costs to defend the litigation; • distraction of management’s attention from our primary business; • substantial monetary awards to claimants; • inability to commercialize a product; • product recalls or withdrawals; • decreased market demand for any product; and • loss of revenue.
In addition, regardless of merit or eventual outcome, product liability claims may result in: • impairment of our business reputation and significant negative media attention; 32 Table of Contents • withdrawal of customers; • significant costs to defend the litigation; • distraction of management’s attention from our primary business; • substantial monetary awards to claimants; • inability to commercialize a product; • product recalls or withdrawals; • decreased market demand for any product; and • loss of revenue.
While we monitor our use of open-source 46 Table of Contents software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred, in part because open source license terms are often ambiguous.
While we monitor our use of open-source software and try to ensure that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach the terms of an open source agreement, such use could inadvertently occur, or could be claimed to have occurred, in part because open source license terms are often ambiguous.
As a result of their combined voting power, if our executive officers, directors and stockholders who own more than 5% of our outstanding common stock choose to act together, they would be able to control all matters submitted to our stockholders for approval that require a majority vote, as well as our management and affairs.
As a result of their combined voting power, if our executive officers, directors 49 Table of Contents and stockholders who own more than 5% of our outstanding common stock choose to act together, they would be able to control all matters submitted to our stockholders for approval that require a majority vote, as well as our management and affairs.
Our competitors and potential competitors may enjoy a number of competitive advantages over us, including: • longer operating histories; • larger customer bases; • greater brand recognition and market penetration; • greater financial resources; • greater technological and research and development resources; • better system reliability, robustness and features; • greater selling and marketing capabilities; and • better established, larger scale and lower cost manufacturing capabilities.
Our competitors and potential competitors may enjoy a number of competitive advantages over us, including: • longer operating histories; • larger customer bases; 30 Table of Contents • greater brand recognition and market penetration; • greater financial resources; • greater technological and research and development resources; • better system reliability, robustness and features; • greater selling and marketing capabilities; and • better established, larger scale and lower cost manufacturing capabilities.
Moreover, despite network security and back-up measures, our servers remain potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Any disruption or loss of information technology or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business and our reputation.
Moreover, despite network security and back-up measures, our servers remain potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. Any disruption or loss of IT or telecommunications systems on which critical aspects of our operations depend could have an adverse effect on our business and our reputation.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial 53 Table of Contents services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems.
Cybersecurity incidents and data breaches, data loss and other disruptions could compromise sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
Cybersecurity incidents and data breaches, data loss and other disruptions could compromise our confidential and/or proprietary information and other sensitive information related to our business or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.
Although we take measures to protect sensitive data from unauthorized access, use or disclosure, our information technology and infrastructure may still be vulnerable to, and we have in the past experienced and may continue to experience in the future, attacks by hackers or viruses or data breaches 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 IT and infrastructure may still be vulnerable to, and we have in the past experienced and may continue to experience in the future, attacks by hackers or viruses or data breaches due to employee error, malfeasance or other malicious or inadvertent disruptions.
These information technology and telecommunications systems support a variety of functions, including manufacturing operations, data analysis, quality control, customer service and support, billing, research and development activities, and general administrative activities. Information technology and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious software, bugs or viruses, human acts and natural disasters.
These IT and telecommunications systems support a variety of functions, including manufacturing operations, data analysis, quality control, customer service and support, billing, research and development activities, and general administrative activities. IT and telecommunications systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious software, bugs or viruses, human acts and natural disasters.
For additional information on our use of NOLs, see the section entitled 52 Table of Contents “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of results of operations—Income tax (benefit) expense ” and Note 11— Income taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For additional information on our use of NOLs, see the section entitled “ Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of results of operations—Income tax (benefit) expense ” and Note 11— Income taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Furthermore, if we make 24 Table of Contents downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors, or other interested parties, we may experience adverse effects on our business and reputation and the price of our common stock could decline.
Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors, or other interested parties, we may experience adverse effects on our business and reputation and the price of our common stock could decline.
This 33 Table of Contents risk extends to the third-party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
This risk extends to the third-party vendors and subcontractors we use to manage this sensitive data or otherwise process it on our behalf. The secure processing, storage, maintenance and transmission of this critical information are vital to our operations and business strategy, and we devote significant resources to protecting such information.
Such laws may add additional complexity, variation in requirements, restrictions and potential legal risk, 34 Table of Contents require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or adverse changes in business data collection and use practices and policies.
Such laws may add additional complexity, variation in requirements, restrictions and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data and could result in increased compliance costs and/or adverse changes in business data collection and use practices and policies.
Furthermore, during the term of the agreement, we are prohibited from engaging other third parties to sell our products so 36 Table of Contents long as a purchase commitment by the distributor is in place. There can be no assurance that our distributor will make additional commitments to purchase our products.
Furthermore, during the term of the agreement, we are prohibited from engaging other third parties to sell our products so long as a purchase commitment by the distributor is in place. There can be no assurance that our distributor will make additional commitments to purchase our products.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because early-stage technology companies have experienced significant stock price volatility in recent years.
In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because early-stage technology companies have 54 Table of Contents experienced significant stock price volatility in recent years.
Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business. We may not realize the anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.
Integration of an acquired company also may disrupt ongoing operations and require management resources that we would otherwise focus on developing our existing business. We may not realize the 36 Table of Contents anticipated benefits of any acquisition, technology license, strategic alliance or joint venture.
We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest thereby harming our competitive position. Our trademarks or trade names may be challenged, infringed, diluted, circumvented, declared generic or determined to be infringing on other marks.
We may not be able to protect and enforce our trademarks and trade names, or build name recognition in our markets of interest thereby harming our competitive position. 45 Table of Contents Our trademarks or trade names may be challenged, infringed, diluted, circumvented, declared generic or determined to be infringing on other marks.
We may not be able to protect our rights in these trademarks or trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of 44 Table of Contents interest. We have not yet registered certain of our trademarks in all of our potential markets.
We may not be able to protect our rights in these trademarks or trade names or may be forced to stop using these names, which we need for name recognition by potential partners or customers in our markets of interest. We have not yet registered certain of our trademarks in all of our potential markets.
Our manufacturing operations are dependent upon third-party suppliers, including single-source suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business. We source the components of our Growth Direct system and consumables from third-party suppliers.
Our manufacturing operations are dependent upon third-party suppliers, including single-source suppliers, making us vulnerable to supply shortages and price fluctuations, which could harm our business. 41 Table of Contents We source the components of our Growth Direct system and consumables from third-party suppliers.
In addition, in February 2025, we entered into a Distribution and Collaboration Agreement with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma, pursuant to which we granted our collaborator the co-exclusive right to distribute certain of our products, as described further under Item 1.
In addition, in February 2025, we entered into a Distribution and Collaboration Agreement (the "Distribution Agreement") with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma, pursuant to which we granted our collaborator the co-exclusive right to distribute certain of our products, as discussed further above under the section Item 1.
We do not have supply agreements with most of our suppliers beyond purchase orders and, although we maintain an inventory of components, forecasted amounts may be inaccurate and we may experience shortages as a result of serious supply 40 Table of Contents problems with these suppliers.
We do not have supply agreements with most of our suppliers beyond purchase orders and, although we maintain an inventory of components, forecasted amounts may be inaccurate and we may experience shortages as a result of serious supply problems with these suppliers.
Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular markets, products or services may not lead to the development of any viable product or service and may divert resources away from better opportunities.
Our decisions concerning the allocation of research, development, collaboration, management and financial resources toward particular markets, products or services may not lead to the development of any viable product or service 31 Table of Contents and may divert resources away from better opportunities.
We may not be able to attract and retain personnel or be able to build an efficient and effective sales organization, which could 28 Table of Contents negatively impact sales and market acceptance of our products and limit our revenue growth and potential profitability.
We may not be able to attract and retain personnel or be able to build an efficient and effective sales organization, which could negatively impact sales and market acceptance of our products and limit our revenue growth and potential profitability.
Unlike traditional “small molecule” drug manufacturing, the manufacture of biologics, and cell and gene therapies in particular, is more time sensitive and subject to increased risk of contamination due to material handling and process change-over. There are also currently a small number of cell and gene therapies approved by the FDA.
Unlike traditional “small molecule” drug manufacturing, the manufacture of biologics, and cell and gene therapies in particular, is more time sensitive and subject to increased risk of contamination due to material handling and process change-over. There are also currently a small number of cell and gene therapies approved by the U.S. Food and Drug Administration ("FDA").
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or 25 Table of Contents licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, future revenue streams or products or grant licenses on terms that may not be favorable to us.
If we raise additional funds through collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may be required to relinquish valuable rights to our technologies, intellectual property, future revenue streams or products or grant licenses on terms that may not be favorable to us.
If there are delays in delivering our products to our customers, or if our products fail to perform as well as or better than traditional MQC testing and competitive products or fail to generate reliable results for our customers, our revenue could be reduced or delayed, which could adversely affect our business, financial condition, results of operations and prospects.
If there are delays in delivering our products to our customers, or if our products fail to perform as well as or better than traditional MQC testing and competitive products or fail to generate reliable results for our customers, or our products otherwise fail to meet our customers’ expectations our revenue could be reduced or delayed, which could adversely affect our business, financial condition, results of operations and prospects.
In addition, in certain geographies, we may need to rely on distributors, partners and other collaborators to penetrate those markets, and there can be no assurance that we will be able to secure relationships with such parties or that such parties will comply with legal and regulatory standards that are applicable to our business.
In addition, in certain geographies, we may need to rely on distributors, partners and other collaborators to penetrate those markets, and there can be no assurance that we will be able to secure relationships with such parties or that such parties will comply with legal and regulatory standards that are 39 Table of Contents applicable to our business.
Our actual business results may vary significantly from such guidance due to a number of factors, many of which are outside of our control, including our customers’ demand for our Growth Direct systems, the length of the sales cycle for purchases of our systems, customer site readiness and the lead time needed for validation of our systems prior to customers using and purchasing our consumables, the costs of manufacturing and shipping our products or of providing services to our customers, as well as the impact of global economic uncertainty and financial market conditions, geopolitical events, such as conflicts in Ukraine and the Middle East, rising inflation, rising interest rates, and public health crises, all of which have in the past and may in the future adversely affect our business and operating results.
Our actual business results may vary significantly from such guidance due to a number of factors, many of which are outside of our control, including our customers’ demand for our Growth Direct systems, the length of the sales cycle for purchases of our systems, customer site readiness and the lead time needed for validation of our systems prior to customers purchasing and using our consumables, the costs of manufacturing and shipping our products or of providing services to our customers, as well as the impact of global economic uncertainty and financial market conditions, such as recently imposed and potential future tariffs, geopolitical events, rising inflation, rising interest rates, and public health crises, all of which have in the past and may in the future adversely affect our business and operating results.
Social and cultural norms in 38 Table of Contents certain countries may not support compliance with our corporate policies, including those that require compliance with substantive laws and regulations. Also, changes in general economic and political conditions in countries where we may operate are a risk to our financial performance and future growth.
Social and cultural norms in certain countries may not support compliance with our corporate policies, including those that require compliance with substantive laws and regulations. Also, changes in general economic and political conditions in countries where we may operate are a risk to our financial performance and future growth.
We will need to continue to hire, train and manage additional qualified engineers, client and account services personnel, sales and marketing staff, software, manufacturing, distribution and quality assurance personnel in order to develop and launch new products, innovate and 29 Table of Contents improve our existing products and successfully commercialize our platform and solutions.
We will need to continue to hire, train and manage additional qualified engineers, client and account services personnel, sales and marketing staff, software, manufacturing, distribution and quality assurance personnel in order to develop and launch new products, innovate and improve our existing products and successfully commercialize our platform and solutions.
In an inflationary environment, we may be unable to raise the sales prices of our products and services at or above the rate at which our costs increase, which could/would reduce our profit margins and have a material adverse effect on our financial results and net income.
In a volatile economic environment, we may be unable to raise the sales prices of our products and services at or above the rate at which our costs increase, which could/would reduce our profit margins and have a material adverse effect on our financial results and net income.
We have been, and may continue to be, subject to the actions of activist stockholders or unsolicited acquisition proposals, which could cause us to incur substantial costs, divert management’s and the board’s attention and resources, and have an adverse effect on our business and stock price.
We have been, and may again in the future be, subject to the actions of activist stockholders or unsolicited acquisition proposals, which could cause us to incur substantial costs, divert management’s and the board’s attention and resources, and have an adverse effect on our business and stock price.
Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of operations.
Any changes in political, trade, regulatory, and economic conditions, including U.S. trade policies, could have a material adverse effect on our financial condition or results of 40 Table of Contents operations.
The market price for our Class A common stock may be influenced by many factors, including: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • the introduction of new products or product enhancements by us or others in our industry; • variances in product and system reliability; • overall conditions in our industry and the markets in which we operate; • disputes or other developments with respect to our or others’ intellectual property rights; • actual or anticipated changes in our operating results or growth rate as a result of our competitors’ operating results; • our ability to develop and market new and enhanced products and expand into new markets on a timely basis; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • product liability claims or other litigation; • announcement or expectation of additional financing effort; • sales of our common stock by us or our stockholders; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • media exposure of our products or of those of others in our industry; • changes in earnings estimates or recommendations by securities analysts; • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and • the other factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K. 47 Table of Contents If our Class A common stock is delisted from the Nasdaq Stock Market, the liquidity of our Class A common stock would be adversely affected and the market price of our common stock could decrease.
The market price for our Class A common stock may be influenced by many factors, including: • actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; • the introduction of new products or product enhancements by us or others in our industry; • variances in product and system reliability; • overall conditions in our industry and the markets in which we operate; • disputes or other developments with respect to our or others’ intellectual property rights; • actual or anticipated changes in our operating results or growth rate as a result of our competitors’ operating results; • our ability to develop and market new and enhanced products and expand into new markets on a timely basis; • fluctuations in the valuation of companies perceived by investors to be comparable to us; • product liability claims or other litigation; • announcement or expectation of additional financing effort; • sales of our common stock by us or our stockholders; • share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; • media exposure of our products or of those of others in our industry; • changes in earnings estimates or recommendations by securities analysts; • general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and 48 Table of Contents • the other factors described in this “Risk Factors” section and elsewhere in this Annual Report on Form 10-K.
The Growth Direct platform may contain undetected errors or defects or may not otherwise meet the expectations of our customers, which means our business, financial condition, results of operations and prospects could suffer. Our Growth Direct platform includes the Growth Direct system, proprietary consumables and our LIMS connection software.
The Growth Direct platform may contain undetected errors or defects or may not otherwise meet the expectations of our customers, which means our business, financial condition, results of operations and prospects could suffer. Our Growth Direct platform includes the Growth Direct system, proprietary consumables and our laboratory information management system ("LIMS") connection and other software.
Additionally, we may be subject to legal claims arising from any defects or errors in our platform, and in the systems, consumables and software that comprise our platform. In the past, we have repaired, and in exceptional cases, replaced or reacquired Growth 31 Table of Contents Direct systems under warranty.
Additionally, we may be subject to legal claims arising from any defects or errors in our platform, and in the systems, consumables and software that comprise our platform. In the past, we have repaired, and in exceptional cases, replaced or reacquired Growth Direct systems under warranty.
This reduced disclosure in our SEC filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict whether investors will find our Class A common stock less attractive if we rely on these exemptions.
This reduced disclosure in our Securities and Exchange Commission (“SEC") filings due to our status as a smaller reporting company may make it harder for investors to analyze our results of operations and financial prospects. We cannot predict whether investors will find our Class A common stock less attractive if we rely on these exemptions.
Substantial amounts of warranty claims could have a material adverse effect on our business, financial condition and results of operations. Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.
Our warranty activity could have a material adverse effect on our business, financial condition and results of operations. Our insurance policies are expensive and protect us only from some business risks, which leaves us exposed to significant uninsured liabilities.
We may not be able to compete effectively against these organizations. 30 Table of Contents In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies.
We may not be able to compete effectively against these organizations. In addition, competitors may be acquired by, receive investments from or enter into other commercial relationships with larger, well-established and well-financed companies.
In addition, we could encounter delays and incur significant costs, in product or service introductions while we attempt to develop alternative products or services, or redesign our products or services, to avoid infringing third party patents or proprietary rights.
In addition, we could encounter delays and incur significant costs, in product or service introductions while we attempt to develop alternative products or services, or redesign our products or services, to avoid infringing third party patents or 46 Table of Contents proprietary rights.
Further, attacks upon information technology systems, including ransomware attacks and digital extortion, business email compromises, social engineering, including phishing attacks, denial of service attacks, computer malware, malicious codes, viruses, wrongful intrusions, wrongful conduct by insider employees or vendors, data breaches, and other malicious internet-based activity are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives, capabilities, and expertise.
Further, attacks upon IT systems, including ransomware attacks and digital extortion, business email compromises, social engineering, including phishing attacks, denial of service attacks, computer malware, malicious codes, viruses, wrongful intrusions, wrongful conduct by insider employees or vendors, data breaches, and other malicious internet-based activity are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives, capabilities, and expertise, and may be enhanced or facilitated by AI.
For these reasons, we are not able to utilize a material portion of the NOLs and tax credits even if we attain profitability.
For these reasons, we are not able to utilize a material portion of the NOLs and tax credits 53 Table of Contents even if we attain profitability.
The global credit and financial markets have also generally experienced severe volatility and disruptions in the past several years. A severe or prolonged economic downturn, 39 Table of Contents such as the global financial crisis, could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.
The global credit and financial markets have also generally experienced severe volatility and disruptions. A severe or prolonged economic downturn, such as the global financial crisis, could result in a variety of risks to our business, including our ability to raise additional capital when needed on acceptable terms, if at all.
We have devoted substantially all of our resources to the development and commercialization of our Growth Direct platform and to development activities related to advancing and expanding our technological capabilities. While we implemented our Operational Efficiency Program with the goal of achieving positive cash flow without additional financing, there can be no assurance that we will attain this goal.
We have devoted substantially all of our resources to the development and commercialization of our Growth Direct platform and to development activities related to advancing and expanding our technological capabilities. While we have a goal of achieving positive cash flow without additional financing, there can be no assurance that we will attain this goal.
Our goal also depends on our ability to realize additional cost savings that we believe are reasonably achievable, but are not guaranteed.
Attaining our cash flow goal also depends on our ability to realize additional cost savings that we believe are reasonably achievable, but are not guaranteed.
The United States government may exercise certain rights with regard to certain of our inventions developed using government funding. 43 Table of Contents The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act, or the Bayh-Dole Act.
The United States government may exercise certain rights with regard to certain of our inventions developed using government funding. 44 Table of Contents The United States federal government retains certain rights in inventions produced with its financial assistance under the Patent and Trademark Law Amendments Act.
These NOLs may be available to offset future taxable income, if any, that begin to expire in 2038 and 2032, respectively. Additionally, we had federal NOLs of $255.6 million generated since 2018, which do not expire.
These NOLs begin to expire in 2038 and 2032, respectively, and may be available to offset future taxable income, if any. Additionally, we had federal NOLs of $308.1 million generated since 2018, which do not expire.
Even if we are successful in identifying distributors, such distributors may engage in sales practices that violate federal, state, local or foreign laws or our internal policies.
Even if we are successful in identifying distributors, such distributors may engage in sales 29 Table of Contents practices that violate federal, state, local or foreign laws or our internal policies.
In that event, we may suffer significant and adverse consequences to our business operations, sales, revenue, product margins and customer experience in the event our collaboration is terminated.
In that event, we may suffer significant and 37 Table of Contents adverse consequences to our business operations, sales, revenue, product margins and customer experience in the event our collaboration is terminated.
High inflation rates could negatively impact our revenues and profitability if increases in the prices of our Growth Direct systems or a decrease in customer spending results in lower sales.
High inflation rates, and the potential for a change in macroeconomic conditions, could negatively impact our revenues and profitability if increases in the prices of our Growth Direct systems or a decrease in customer spending results in lower sales.
Our Operational Efficiency Program and intention to reach positive cash flow are based on our expectations of business performance that are generally consistent with our historical performance, including with respect to revenue and gross margins, which may not be replicated in future periods.
Our goal to reach positive cash flow is based on our expectations of business performance that are generally consistent with our historical performance, including with respect to revenue and gross margins, which may not be replicated in future periods.
Our reliance on these suppliers subjects us to a number of risks that could harm our business, including: • interruption of supply resulting from modifications to or discontinuation of a supplier’s operations; • delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component; • a lack of long-term supply arrangements for key components with our suppliers; • inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms; • difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner; • a modification or change in a manufacturing process or part that unknowingly or unintentionally negatively impacts the operation of our products; • production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications; • delay in delivery due to our suppliers prioritizing other customer orders over ours; • damage to our brand reputation caused by defective components produced by our suppliers; • increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and • fluctuation in delivery by our suppliers due to changes in demand from us or their other customers.
Our reliance on these suppliers subjects us to a number of risks that could harm our business, including: • interruption of supply resulting from modifications to or discontinuation of a supplier’s operations; • delays in product shipments resulting from uncorrected defects, reliability issues, or a supplier’s variation in a component; • a lack of long-term supply arrangements for key components with our suppliers; • inability to obtain adequate supply in a timely manner, or to obtain adequate supply on commercially reasonable terms; • difficulty and cost associated with locating and qualifying alternative suppliers for our components in a timely manner; • a modification or change in a manufacturing process or part that unknowingly or unintentionally negatively impacts the operation of our products; • production delays related to the evaluation and testing of products from alternative suppliers, and corresponding regulatory qualifications; • delay in delivery due to our suppliers prioritizing other customer orders over ours; • damage to our brand reputation caused by defective components produced by our suppliers; • increased cost of our warranty program due to product repair or replacement based upon defects in components produced by our suppliers; and • fluctuation in delivery by our suppliers due to changes in demand from us or their other customers. 42 Table of Contents Any interruption in the supply of components or materials, or our inability to obtain substitute components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers, which would have an adverse effect on our business.
Until such time, if ever, as we can generate sufficient cash flow, we may finance our cash needs through a combination of equity offerings and debt financings or other sources. We do not currently have any committed external source of funds.
Until such time, if ever, as we can generate sufficient cash flow, we may finance our cash needs through a combination of equity offerings and additional debt financings or other sources. We do not currently have any committed external source of funds that are not subject to conditions to access.
For example, in July 2024, many industries and businesses were disrupted globally by a software glitch associated with Crowdstrike's cybersecurity software. While we did not experience material downtime in our information technology systems, similar events in the future may disrupt our operations.
For example, in July 2024, many industries and businesses were disrupted globally by a software glitch associated with Crowdstrike's cybersecurity 33 Table of Contents software. While we did not experience material downtime in our IT systems, similar events in the future may disrupt our operations.
We have recently expanded our sales organization and implemented measures designed to improve the effectiveness of our salesforce, but there can be no assurance that those efforts will translate into improved commercial outcomes. Competition for employees capable of selling expensive instruments into the pharmaceutical industry is intense.
We have recently expanded our sales organization and implemented measures designed to improve the effectiveness of our salesforce, but there can be no assurance that those efforts will translate into improved commercial outcomes. Competition for employees capable of selling capital equipment such as the Growth Direct system into the pharmaceutical industry is intense.
Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions, including as a result of an economic downturn and geopolitical events, such as changes in U.S. federal policy that affect the geopolitical landscape. Changes to policy implemented by the U.S.
Our business could be adversely affected by unstable economic and political conditions within the United States and foreign jurisdictions, including as a result of severe or prolonged economic downturn and geopolitical events, such as changes in U.S. federal policy that affect the geopolitical landscape and the shutdown of the federal government.
If we are unable to expand or continue to expand our customers in growing areas of drug manufacturing, such as biologics and cell and gene therapies, continue to grow market adoption of our Growth Direct platform, and maintain our position as the industry leader in automated MQC testing, our business, prospects, financial condition and results of operation could be adversely affected.
If we are unable to expand or continue to expand our customers in growing areas of drug manufacturing, such as biologics and cell and gene therapies, continue to grow market adoption of our Growth Direct platform, and maintain our position as the industry leader in automated MQC testing, our business, prospects, financial condition and results of operation could be adversely affected. 26 Table of Contents We may not be successful in expanding our business with existing customers and driving adoption of our solutions with new customers.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also leverage third-party providers to augment our internal security resources, including to support our ongoing monitoring and threat detection capabilities.
Biggest changeIn addition, we collaborate with third-party advisory firms to periodically review and evaluate our security measures, which informs our ongoing strategy and execution of our cybersecurity program. We also leverage third-party providers to augment our internal security resources, including to support our ongoing monitoring and threat detection capabilities.
For more information, please see our Risk Factors. Governance Related to Cybersecurity Risks Our board of directors considers cybersecurity risk as part of its risk oversight and has delegated the Audit Committee of the board of directors oversight of cybersecurity risks. The Audit Committee oversees management’s implementation of the cybersecurity program.
For more information, please see our Risk Factors. Governance Related to Cybersecurity Risks 55 Table of Contents Our board of directors considers cybersecurity risk as part of its risk oversight and has delegated the Audit Committee of the board of directors oversight of cybersecurity risks. The Audit Committee oversees management’s implementation of the cybersecurity program.
In addition, we have assembled an IT Steering Committee, or ITSC, which is comprised of the 54 Table of Contents Executive Leadership Team as well as IT management, to support management and to maintain visibility of the status and ongoing strategy of our cybersecurity program.
In addition, we have assembled an IT Steering Committee, which is comprised of the Executive Leadership Team as well as IT management, to support management and to maintain visibility of the status and ongoing strategy of our cybersecurity program.
We have also established incident response policies and procedures, overseen by our Information Technology, or IT, Director, to review and classify cybersecurity incidents and to define roles and responsibilities for response and remediation in the event of a cyber incident.
We have also established incident response policies and procedures, overseen by our Information Technology ("IT") Director, to review and classify cybersecurity incidents and to define roles and responsibilities for response and remediation in the event of a cyber incident. We also have implemented a process to provide cybersecurity awareness training to employees during onboarding and on an annual basis thereafter.
Removed
We also have implemented a process to provide cybersecurity awareness training to employees during onboarding and on an annual basis thereafter. In addition, we collaborate with third-party advisory firms to periodically review and evaluate our security measures, which informs our ongoing strategy and execution of our cybersecurity program.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe lease this space under a lease agreement, as amended, which expires in July 2029. Further, we maintain inventory at storage a warehouse in Noord-Brabant, Netherlands as well as various offsite warehouses in the United States and Europe. We believe that our facilities are sufficient to meet our current needs.
Biggest changeWe lease this space under a lease agreement, as amended, which expires in July 2029. Further, we maintain inventory storage at a warehouse in Oss, Netherlands as well as various offsite warehouses in the United States and Europe. We believe that our facilities are sufficient to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures. Not Applicable. 55 Table of Contents PART II
Biggest changeRegardless of outcome, litigation can have an adverse impact on our business, financial condition, results of operations and prospects because of defense and settlement costs, diversion of management resources and other factors. Item 4. Mine Safety Disclosures. Not Applicable. 56 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeRecent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser None. Use of Proceeds On July 14, 2021, the registration statement on Form S-1 (File No. 333-257431) relating to our IPO was declared effective by the SEC.
Biggest changeUse of Proceeds On July 14, 2021, the registration statement on Form S-1 (File No. 333-257431) relating to our initial public offering (“IPO”) was declared effective by the Securities and Exchange Commission (“SEC”).
There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act and other periodic reports previously filed with the SEC. Item 6. Reserved. 56 Table of Contents
There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) of the Securities Act of 1933, as amended, and other periodic reports previously filed with the SEC. Item 6. Reserved. 57 Table of Contents
On August 5, 2024, our Class A common stock was transferred to the Nasdaq Capital Market. There is no established public trading market for our Class B common stock. Holders As of February 24, 2025, there were 35 holders of record of our Class A common stock and 1 holder of record of our Class B common stock.
On August 5, 2024, our Class A common stock was transferred to The Nasdaq Capital Market. There is no established public trading market for our Class B common stock. Holders As of March 6, 2026, there were 28 holders of record of our Class A common stock and one holder of record of our Class B common stock.
Added
In addition, our loan and security agreement with Trinity Capital contains restrictions on our ability pay dividends on our common stock. Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser None.

Item 7. Management's Discussion & Analysis

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

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Biggest changeWe have recorded a full valuation allowance against our net deferred tax assets at each balance sheet date because of uncertainty about future taxable income to permit use of the assets. 64 Table of Contents Results of operations Comparison of the years ended December 31, 2024 and 2023 Year Ended December 31, 2024 December 31, 2023 Change Amount % (dollars in thousands) Revenue: Product revenue $ 18,728 $ 14,805 $ 3,923 26.5 % Service revenue 9,323 7,714 1,609 20.9 % Total revenue $ 28,051 $ 22,519 $ 5,532 24.6 % Revenue Product revenue increased by $3.9 million, or 26.5%, with the increase primarily attributable to an increase in Growth Direct system placements in 2024 as well as higher consumable shipment volumes due to an increase in cumulative validated Growth Direct systems.
Biggest changeResults of operations Comparison of the years ended December 31, 2025 and 2024 Year Ended December 31, Change 2025 2024 Amount % (dollars in thousands) Revenue: Product revenue $ 23,426 $ 18,728 $ 4,698 25.1 % Service revenue 10,161 9,323 838 9.0 % Total revenue $ 33,587 $ 28,051 $ 5,536 19.7 % 65 Table of Contents Revenue Product revenue increased by $4.7 million, or 25.1%, with the increase primarily attributable to an increase in system placements in 2025 as well as higher consumable shipment volumes due mainly to an increase in cumulative validated systems.
Emerging growth company status The Jumpstart Our Business Startups Act of 2012, or the JOBS Act, permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.
Emerging growth company status The Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies.
Further, even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
If our expectations and underlying assumptions of business performance, including revenue growth, gross margin improvements, and/or control of operating costs, are not realized, we may need to raise additional funding, which could be through equity offerings, debt financings or a combination thereof.
However, if our expectations and underlying assumptions of business performance, including revenue growth, gross margin improvements, and/or control of operating costs are not realized, we may need to raise additional funding, which could be through equity offerings, debt financings or a combination thereof.
We expect consumable revenue to increase in future periods as our base of cumulative validated Growth Direct systems grows and those systems enter routine use and utilize our consumables on a recurring, ongoing basis. LIMS Connection Software Our LIMS connection software is a non-recurring product revenue stream.
We expect consumable revenue to increase in future periods as our base of cumulative validated Growth Direct systems grows and those systems enter routine use and utilize our consumables on a recurring, ongoing basis. LIMS connection and other software Our LIMS connection software is a non-recurring product revenue stream.
Research and development Research and development expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering and consultant services and other costs associated with our technology Growth Direct platform and products, which include: • employee-related expenses, including costs for salaries, bonuses and other personnel costs including stock-based compensation expense, for employees engaged in research and development functions; • the cost of developing, maintaining and improving new and existing product designs; • the cost of hardware and software engineering; • research materials and supplies; • external costs of outside consultants engaged to conduct research and development associated with our technology and products; and • allocated information technology and facility-related costs, which include headcount-related costs for those functions as well as expenses for information technology systems and services, software, rent, facilities maintenance, and insurance as well as related depreciation and amortization.
Research and development Research and development expenses consist primarily of costs incurred for our research activities, product development, hardware and software engineering and consultant services and other costs associated with our technology Growth Direct platform and products, which include: • employee-related expenses, including costs for salaries, bonuses and other personnel costs including non-cash stock-based compensation expense, for employees engaged in research and development functions; • the cost of developing, maintaining and improving new and existing product designs; • the cost of hardware and software engineering; • research materials and supplies; • external costs of outside consultants engaged to conduct research and development associated with our technology and products; and • allocated information technology and facility-related costs, which include headcount-related costs for those functions as well as expenses for information technology systems and services, software, rent, facilities maintenance, and insurance as well as related non-cash depreciation and amortization.
Multiple performance obligations Our contracts may include multiple performance obligations when customers purchase a combination of products and services such as Growth Direct system sold together with the LIMS connection software, proprietary consumables or services.
Multiple performance obligations Our contracts may include multiple performance obligations when customers purchase a combination of products and services such as Growth Direct system sold together with the LIMS connection and other software, proprietary consumables or services.
Overview We are an innovative life sciences technology company that enables the safe and efficient manufacture of pharmaceutical products through our rapid automated microbial quality control, or MQC, detection platform.
Overview We are an innovative life sciences technology company that enables the safe and efficient manufacture of pharmaceutical products through our rapid automated microbial quality control ("MQC"), detection platform.
We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources.” Effects of inflation and interest rates The current inflationary environment and rising interest rates could have a negative impact on our results of operations, cash flows and overall financial condition.
We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “Liquidity and Capital Resources.” Effects of inflation and interest rates The current inflationary and interest rate environment could have a negative impact on our results of operations, cash flows and overall financial condition.
We expect this volatility to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics. Critical accounting policies and significant judgments and estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States.
We expect this variability to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics. Critical accounting policies and significant judgments and estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States.
Income tax expense Income tax expense was less than $0.1 million for each of the years ended December 31, 2024 and 2023. The expense recorded related to our German and Swiss subsidiaries. Liquidity and capital resources Since our inception, we have incurred operating losses.
Income tax expense Income tax expense was less than $0.1 million for each of the years ended December 31, 2025 and 2024. The expense recorded related to our German and Swiss subsidiaries. Liquidity and capital resources Since our inception, we have incurred operating losses.
Since inception, we have devoted a majority of our resources to designing, developing, and building our proprietary Growth Direct platform and associated products, launching our Growth Direct platform commercially, expanding our sales and marketing infrastructure to grow our sales, building a global customer support team to deliver our value-added services, investing in robust manufacturing and supply chain operations to serve our customers globally, and providing general and administrative support for these operations.
Since our inception, we have devoted a majority of our resources to designing, developing, and building our proprietary Growth Direct platform and associated products, launching our Growth Direct platform commercially, expanding our sales and marketing infrastructure to grow our sales, building global customer service and support teams to deliver our value-added services, investing in robust manufacturing and supply chain operations to serve our customers globally, and providing general and administrative support for these operations.
On February 21, 2025, we entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”).
In February 2025, we entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”).
Our ability to successfully address these opportunities and challenges is subject to various risks and uncertainties, including those described under the heading “Risk Factors.” New customer adoption of the Growth Direct platform Our financial performance has largely been driven by, and a key factor to our future success will be, our ability to increase the global adoption of our Growth Direct platform in our key markets.
Our ability to successfully address these opportunities and challenges is subject to various risks and uncertainties, including those described under the heading “Risk Factors.” 59 Table of Contents New customer adoption of the Growth Direct platform Our financial performance has largely been driven by, and a key factor to our future success will be, our ability to increase the global adoption of our Growth Direct platform in our key markets.
Concurrent with entering into the sublease agreement, we executed an option agreement with the property owner which provides us the option to enter into a new direct lease for the Lexington facility for an additional five years following expiration of the sublease.
Concurrent with entering into the sublease agreement, we executed an option agreement with the property owner which provides us the option to enter into a new direct lease for our Lexington, Massachusetts facility for an additional five years following expiration of the sublease.
During the term of the Distribution Agreement, MilliporeSigma will receive tier-based transfer pricing on such products. We will continue to directly market, sell, 57 Table of Contents manufacture and distribute our products and provide all services to customers, including in respect of system installation, validation, maintenance and support.
During the term of the Distribution Agreement, MilliporeSigma will receive tier-based transfer pricing on such products. We will continue to directly market, sell, manufacture and distribute our products and provide all services to customers, including in respect of system installation, validation, maintenance and support.
We are making targeted investments in these organizations and expect to continue to do so in the future. Examples of these investments include new tools and training for our sales organization, targeted marketing, expanding lead generation capabilities and hosting customer-related Growth Direct demonstrations and other customer-focused events.
We are making targeted investments in these organizations and expect to continue to do so in the future. Examples of these investments include new tools and training for the sales organization, targeted marketing initiatives, expanding lead generation capabilities and hosting Growth Direct demonstrations and other customer-focused events.
As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies, and our financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates.
As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies, and our financial statements may not be comparable to other public companies that comply with new or revised accounting 70 Table of Contents pronouncements as of public company effective dates.
The initial term of the Distribution Agreement is five years, unless earlier terminated by us or MilliporeSigma in accordance with its terms. The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery.
The initial 58 Table of Contents term of the Distribution Agreement is five years, unless earlier terminated by us or MilliporeSigma in accordance with its terms. The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery.
We plan to drive global customer adoption through both direct and indirect sales and marketing organizations in North America, Europe, and the Asia-Pacific region. We are focused on enhancing customer engagement and experience and continuing to improve the efficiency and effectiveness of our sales team.
We plan to drive global customer adoption through both direct and indirect sales and marketing organizations in North America, Europe, and the Asia-Pacific region. We are focused on enhancing customer engagement and experience and improving the efficiency and effectiveness of our sales team.
We expect our Growth Direct system revenue to continue to grow over time as we increase system placements in our existing customers and markets and expand into new customers and markets.
We expect our Growth Direct system revenue to continue to grow over time as we increase system placements into our existing customers and markets and expand into new customers, markets and products.
For additional information, see the risk factor entitled “ Our ability to use our net operating losses and research and development tax credits to offset future taxable income or income tax liabilities are subject to certain limitations ” and Note 11— Income taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For additional information, see the risk factor entitled “ Our ability to use our NOLs and research and development tax credits to offset future taxable income or income tax liabilities are subject to certain limitations ” and Note 11— Income taxes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Components of results of operations Revenue We generate revenue from sales of our Growth Direct system (including our LIMS connection and other software), consumables, validation services, service contracts and field service. We primarily sell our products and services through direct sales representatives. The arrangements are noncancellable and nonrefundable after ownership passes to the customer.
Components of results of operations Revenue We generate revenue from sales of our Growth Direct system (including our LIMS connection and other software), consumables, validation services, service contracts and field service. We have historically primarily sold our products and services through direct sales representatives. Our sales arrangements are noncancellable and nonrefundable after ownership passes to the customer.
We believe that our cash, cash equivalents and investments as of December 31, 2024 will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months following the date these consolidated financial statements were issued.
We believe that our cash, cash equivalents and investments as of December 31, 2025 will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months following the date these consolidated financial statements were issued.
Consumables Our consumable revenue is a recurring product revenue stream composed of three proprietary consumables to capture test samples for analysis on the Growth Direct system, an Environmental Monitoring ("EM") consumable, a Water/Bioburden ("W/BB") consumable, and a Sterility ("ST") consumable.
Consumables Our consumable revenue is a recurring product revenue stream composed of three proprietary consumables to capture test samples for analysis on the Growth Direct system, an Environmental Monitoring ("EM") consumable, consumables for use in Water or Bioburden ("W/BB") applications, and a Sterility ("ST") consumable.
The terms of the amendment include options for a one-time, five-year extension of the lease and early termination of the lease in July 2026 (subject to an early termination fee). Monthly rent payments are fixed and future minimum lease payments under the lease (as amended) are $3.0 million as of December 31, 2024, including $0.6 million in short-term obligations.
The terms of the amendment include options for a one-time, five-year extension of the lease and early termination of the lease in July 2026 (subject to an early termination fee). Monthly rent payments are fixed and future minimum lease payments under the lease (as amended) are $2.4 million as of December 31, 2025, including $0.6 million in short-term obligations.
For additional information on our contractual obligation and commitments please see Note 14 — Commitments and Contingencies to our consolidated financial statements.
For additional information on our contractual obligation and commitments please see Note 15 — Commitments and Contingencies to our consolidated financial statements.
We plan to further invest in research and development to support the expansion of our Growth Direct platform through development and launch of new applications, such as our rapid sterility application, to capture greater share of customer testing volume, new product formats to broaden our ability to serve different market segments and launch of new products and technologies to address adjacent segments of the overall MQC workflow.
We plan to further invest in research and development to support the expansion of our Growth Direct platform through development and launch of new applications, to capture greater share of customer testing volume, new product formats to broaden our ability to serve different market segments and launch of new products and technologies to address adjacent segments of the overall MQC workflow.
Seasonality Our revenues can vary from quarter to quarter as a result of factors such as our customers’ budgetary cycles and extended summer vacation periods that can impact our ability to deliver products and provide onsite services to our customers during those periods.
Seasonality Our revenues vary from quarter to quarter as a result of factors such as our customers’ budgetary cycles and extended summer vacation periods that can impact our ability to progress system sale processes, deliver products and provide onsite services to our customers during those periods.
Prior to our IPO, we funded our operations primarily with proceeds from sales of preferred stock, borrowings under loan agreements and product and service sales as well as our cost-reimbursement contract with the U.S. Department of Health and Human Services Biomedical Advanced Research & Development Authority, or BARDA.
Prior to our initial public offering ("IPO"), we funded our operations primarily with proceeds from sales of preferred stock, borrowings under loan agreements and product and service sales, as well as our cost-reimbursement contract with the U.S. Department of Health and Human Services Biomedical Advanced Research & Development Authority.
Our recurring revenue as a percentage of the total product and service revenue will generally vary based upon the number of Growth Direct systems placed and the cumulative number of systems validated and in routine use in the period, as well as other variables such as the volume of tests being conducted, and the test application(s) being used on those Growth Direct systems.
Our recurring revenue as a percentage of the total product and service revenue will generally vary based upon the cumulative number of validated Growth Direct systems in the period as well as other variables such as the volume of tests being conducted and the test application(s) being used on customers' Growth Direct systems.
These additional systems will allow our existing customers to convert more of their test volume at existing locations, to support multiple locations, to meet redundancy requirements, or to increase capacity. As of December 31, 2024, approximately 41% of our customers have purchased Growth Direct systems for multiple sites, and approximately 57% of our customers have purchased multiple Growth Direct systems.
These additional systems will allow our existing customers to convert more of their test volume at existing locations, to support multiple locations, to meet redundancy requirements, or to increase capacity. As of December 31, 2025, 41% of our customers have purchased Growth Direct systems for multiple sites, and 59% of our customers have purchased multiple Growth Direct systems.
The number of validated Growth Direct systems and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system order volume and timing, whether customers have previously validated Growth Direct systems within their site or network, access to customer sites, customer site readiness and the time to install and validate each individual system.
The number of validated Growth Direct systems and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system placement volume and timing, whether customers have previously validated Growth Direct systems within their site or global network, access to customer sites, customer site readiness, availability of required customer personnel and the time to install and validate each individual system.
In order to meet the expectations of our customers, we have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after-sales service. Given our current business scale, our revenues are not yet sufficient to fully cover these costs, impacting our current gross margin profile. For additional information, see Item 1.
Gross margin improvement We have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after-sales service. Given our current business scale, our revenues are not yet sufficient to fully cover these costs, impacting our current gross margin profile. For additional information, see Item 1.
If we are unable to raise capital or enter into such agreements as, if and when, needed, we may have to significantly delay, scale back or discontinue our expansion plans including the further development and commercialization efforts of one or more of our products.
If we are unable to raise capital as, if and when, needed, we may have to significantly delay, scale back or discontinue our expansion plans including further development and commercialization efforts of one or more of our products.
Once a validation has been completed, we generally expect our customers to transition from their legacy manual method to our automated method and begin regular utilization of consumables over a period of up to three months after we complete our validation. However, the timeline for such transition may be longer depending on the needs of individual customers.
Once a validation has been completed, we generally expect our customers to transition from their legacy manual method to our automated method and begin regular utilization of consumables over a period of up to three months after the validation is completed. However, the timeline for such transition may be longer depending on the specific circumstances of each individual customer.
Business - Gross margin improvement included in this Annual Report on Form 10-K. We have experienced positive trends in gross margin, improving from (49.8)% to (24.4)% to (0.4)% for the years ended December 31, 2022, 2023 and 2024, respectively.
Business - Gross margin improvement included in this Annual Report on Form 10-K. We have experienced positive trends in gross margin, improving from (24.4)% to (0.4)% to 3.1% for the years ended December 31, 2023, 2024 and 2025, respectively.
To date, we have funded our operations primarily through proceeds from sales of redeemable convertible preferred stock, borrowings under loan agreements, revenue from sales of our products and services, and proceeds from our IPO.
To date, we have funded our operations primarily through proceeds from sales of redeemable convertible preferred stock, borrowings under loan agreements, revenue from sales of our products and services, proceeds from our IPO, and proceeds from our "at-the-market" ("ATM") facility.
While we expect gross margins to continue to trend positively, expansion in gross margins in future periods may not be linear and may be subject to variability from period to period.
While we expect gross margins to continue to trend positively in the 60 Table of Contents future, expansion in gross margins in future periods may not be linear and may be subject to variability from period to period.
Expansion within our existing customer base There is an opportunity to increase broader adoption and utilization of our Growth Direct platform throughout our existing customers’ organizations by existing customers purchasing more systems.
Expansion within our existing customer base There is an opportunity to broaden adoption and increase utilization of our Growth Direct platform throughout our existing customers’ organizations as our existing customers purchase more systems.
The number of Growth Direct system placements and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system order volume and timing, and access to customer sites (including coronavirus related restrictions in 2022 and the timing of customer site construction activities).
The number of Growth Direct system placements and rate of growth varies from period-to-period due to factors including, but not limited to, Growth Direct system order volume and timing as well as, access to customer sites (including the timing of customer site construction activities).
Monthly rent payments are fixed and future minimum lease payments over the term of the sublease are $3.4 million as of December 31, 2024, including $0.7 million in short-term obligations.
Monthly rent payments are fixed and future minimum lease payments over the term of the sublease are $2.7 million as of December 31, 2025, including $0.8 million in short-term obligations.
However, the related financial impact cannot be reasonably estimated at this time. Factors affecting our performance We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described below, each of which presents growth opportunities and challenges for our business.
Factors affecting our performance We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by multiple factors as described below, each of which presents growth opportunities and challenges for our business.
We made the Growth Direct Rapid Sterility application available for commercial sale and placed the first Rapid Sterility system at one of our existing customers in the second quarter of 2024.
We made the Growth Direct rapid sterility application available for commercial sale and placed the first rapid sterility system at one of our existing customers in the second quarter of 2024. We are continuing our efforts to scale our manufacturing capabilities for the rapid sterility application.
As of December 31, 2024, we also had U.S. federal and state research and development tax credit carryforwards of $2.8 million and $3.2 million, respectively. These tax credits may be available to offset future tax liabilities and begin to expire in 2038 and 2025, respectively.
As of December 31, 2025, we also had U.S. federal and state research and development tax credit carryforwards of $3.2 million and $3.5 million, respectively, which may be available to offset future tax liabilities. The federal credits begin to expire in 2039 and the state tax credits began to expire in 2025.
In June 2021, we entered into a sublease agreement for office and back-up manufacturing space in Lexington, Massachusetts, which expires in June 2029. The sublease agreement includes an option to terminate the sublease in July 2026, subject to an early termination fee.
In June 2021, we entered into a sublease agreement for our Lexington, Massachusetts headquarters, which expires in June 2029 (the "sublease agreement"). The sublease agreement includes an option to terminate the sublease in July 2026, subject to an early termination fee.
Sales and marketing Sales and marketing expenses consist primarily of salaries, commissions, benefits and other personnel costs including stock-based compensation expense as well as costs relating to travel, consulting, public relations and allocated information technology and facility-related costs for our employees engaged in sales and marketing activities.
Sales and marketing Sales and marketing expenses consist primarily of salaries, commissions, benefits and other personnel costs including non-cash stock-based compensation expense as well as costs relating to travel, consulting, trade shows, customer events and demonstrations, information services, advertising and allocated information technology and facility-related costs for our employees engaged in sales and marketing activities.
Year Ended December 31, 2024 Percentage of total revenue Year Ended December 31, 2023 Percentage of total revenue (in thousands) (in thousands) Product revenue $ 18,728 66.8 % $ 14,805 65.7 % Service revenue 9,323 33.2 % 7,714 34.3 % Total revenue $ 28,051 100.0 % $ 22,519 100.0 % Product revenue We derive product revenue primarily from the sale of our Growth Direct systems and related consumables as well as our LIMS connection software, which the majority of our customers purchase.
Year Ended December 31, 2025 Percentage of total revenue Year Ended December 31, 2024 Percentage of total revenue (in thousands) (in thousands) Product revenue $ 23,426 69.7 % $ 18,728 66.8 % Service revenue 10,161 30.3 % 9,323 33.2 % Total revenue $ 33,587 100.0 % $ 28,051 100.0 % Product revenue We derive product revenue primarily from the sale of our Growth Direct systems and related consumables as well as our LIMS connection software, which the majority of our customers purchase.
Although optional, the majority of our customers elect to purchase this software, which allows Growth Direct systems to export result reports and securely link to a customer’s two-way LIMS connection software to completely eliminate manual data entry and drive productivity. Service revenue We derive service revenue from validation services, field service including installations, and service contracts sold to our customers.
Although optional, the majority of our customers elect to purchase this software, which allows Growth Direct systems to export result reports and securely link to a customer’s two-way LIMS connection software to completely eliminate manual data entry and drive productivity.
Any write-down of inventory to net realizable value creates a new cost basis. 69 Table of Contents Recently issued accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
Recently issued accounting pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position, results of operations or cash flows is disclosed in Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.
While our significant accounting policies are described in more detail in Note 2 — Summary of Significant Accounting Policies — to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies are those most important to the judgments and estimates used in the preparation of our consolidated financial statements. 68 Table of Contents Revenue recognition Product revenue We derive product revenue primarily from the sale of Growth Direct systems and related consumables.
While our significant accounting policies are described in more detail in Note 2 — Summary of Significant Accounting Policies — to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, we believe that the following critical accounting policies are those most important to the judgments and estimates used in the preparation of our consolidated financial statements.
The parties also intend to explore additional opportunities for collaboration, such as joint development efforts for the enhancement of our products or introducing new products to be covered by the distribution arrangement. Since our inception, we have incurred net losses in each year.
The parties also intend to explore additional opportunities for collaboration, such as joint development efforts for the enhancement of our products or introducing new products to be covered by the distribution arrangement.
We also offer our customers field service which primarily consists of services provided by our field service engineers to install Growth Direct systems at customer sites. We recognize revenue from field service over time as these services are provided to the customer.
These service contracts generally have fixed fees and a term of one year. We recognize revenue from the sale of service contracts over time as these services are provided over the respective contract term. We also offer our customers field service which primarily consists of services provided by our field service engineers to install Growth Direct systems at customer sites.
As of December 31, 2024, we had U.S. federal and state NOL carryforwards of $268.4 million and $114.8 million, respectively. These NOLs may be available to offset future taxable income and begin to expire in 2038 and 2032, respectively. Additionally, we had a U.S. federal NOL carryforward of $255.6 million generated since 2018, which do not expire.
These NOLs may be available to offset future taxable income and begin to expire in 2038 and 2032, respectively. Additionally, we had a U.S. federal NOL carryforward of $308.1 million generated since 2018, which do not expire.
We generated revenue of $28.1 million and $22.5 million for the years ended December 31, 2024 and 2023, respectively, and incurred net losses of $46.9 million and $52.5 million for those same years. As of December 31, 2024, we had an accumulated deficit of $475.3 million.
We generated revenue of $33.6 million and $28.1 million for the years ended December 31, 2025 and 2024, respectively, and incurred net losses of $47.1 million and $46.9 million for those same years. As of December 31, 2025, we had an accumulated deficit of $522.4 million.
Product revenue is recognized when control of the promised systems and consumables is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or consumables (the transaction price). For Growth Direct systems and consumables sold by us, control transfers to the customer at a point in time.
Revenue recognition Product revenue We derive product revenue primarily from the sale of Growth Direct systems and related consumables. Product revenue is recognized when control of the promised systems and consumables is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those products or consumables (the transaction price).
Year Ended December 31, Change Amount % 2024 2023 (dollars in thousands) Systems placed: Systems placed in period 21 16 5 31.3 % Cumulative systems placed 162 141 21 14.9 % Systems validated: Systems validated in period 16 18 (2) (11.1 %) Cumulative systems validated 137 121 16 13.2 % Product and service revenue — total $ 28,051 $ 22,519 $ 5,532 24.6 % Product and service revenue — recurring $ 15,451 $ 13,546 $ 1,905 14.1 % Growth Direct system placements We consider a Growth Direct system to be “placed” upon transfer of control of the system to the customer, at which point the revenue for that system is recognized.
Year Ended December 31, Change Amount % 2025 2024 (dollars in thousands) Systems placed: Systems placed in period 28 21 7 33.3 % Cumulative systems placed 190 162 28 17.3 % Systems validated: Systems validated in period 18 16 2 12.5 % Cumulative systems validated 155 137 18 13.1 % Product and service revenue — total $ 33,587 $ 28,051 $ 5,536 19.7 % Product and service revenue — recurring $ 17,841 $ 15,451 $ 2,390 15.5 % Growth Direct system placements We consider a Growth Direct system to be “placed” upon transfer of control of the system to the customer, at which point the revenue for that system is recognized.
Cost of service revenue primarily consists of salaries and other personnel costs including stock-based compensation expense, travel costs, materials consumed when performing installations, validations and other services, allocated information technology and facility-related costs, costs associated with training, and other expenses related to service revenue recognized in the period.
Cost of service revenue primarily consists of salaries and other personnel costs including non-cash stock-based compensation expense, travel costs, materials consumed when performing installations, validations and other services, allocated information technology and facility-related costs, costs associated with training, and other expenses related to service revenue recognized in the period. 63 Table of Contents For future periods, we expect our costs of revenue to increase or decrease commensurate with product and service volumes.
Service revenue We derive service revenue primarily from the sale of validation services, service contracts and field service (including installation). Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services (the transaction price).
Revenue is recognized when services are provided to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services (the transaction price).
Our Growth Direct platform comprises the Growth Direct system, optional laboratory information management system, or LIMS, connection software (which the majority of our customers purchase), proprietary consumables, and comprehensive field service, validation services and post-warranty service contracts.
Our Growth Direct platform comprises the Growth Direct system, optional laboratory information management system ("LIMS"), connection software (which the majority of our customers purchase), proprietary consumables, and comprehensive field service, validation services and post-warranty service contracts. Once embedded and validated in our customers’ facilities, our Growth Direct platform provides for recurring revenues through ongoing sales of consumables and service contracts.
Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2024 2023 Net cash used in operating activities $ (44,153) $ (45,081) Net cash provided by investing activities 36,657 42,153 Net cash provided by financing activities 203 149 Net decrease in cash and cash equivalents and restricted cash $ (7,293) $ (2,779) Operating activities During the year ended December 31, 2024, net cash used in operating activities was $44.2 million, a decrease of $0.9 million compared to the prior year.
Cash flows The following table summarizes our sources and uses of cash for each of the periods presented: Year Ended December 31, 2025 2024 Net cash used in operating activities $ (31,062) $ (44,153) Net cash provided by investing activities 14,329 36,657 Net cash provided by financing activities 19,771 203 Net increase (decrease) in cash and cash equivalents and restricted cash $ 3,038 $ (7,293) Operating activities During the year ended December 31, 2025, net cash used in operating activities was $31.1 million, a decrease of $13.1 million compared to the year ended December 31, 2024.
Performance obligations A performance obligation is a promise in a contract to transfer a distinct product or service to a customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the product or service is separately identifiable from other promises in the contract.
Service revenue is recognized over time using an input method based on time lapsed for service contracts and using an output method based on milestones achieved for validation services and field service. 69 Table of Contents Performance obligations A performance obligation is a promise in a contract to transfer a distinct product or service to a customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available, and are distinct in the context of the contract, whereby the transfer of the product or service is separately identifiable from other promises in the contract.
We expect service revenue to increase in future periods as the number of placed and validated Growth Direct systems grows and we are able to generate increasing non-recurring revenue from validation services and field service for newly placed systems and increasing recurring revenue from service contracts for validated systems. 62 Table of Contents Costs and operating expenses Costs of revenue Cost of product revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, salaries and other personnel costs including stock-based compensation expense, contract manufacturer costs, scrap, warranty cost, inventory reserves, depreciation and amortization expense, allocated information technology and facility-related costs, overhead and other costs related to those sales recognized as product revenue in the period.
Costs and operating expenses Costs of revenue Cost of product revenue primarily consists of costs for raw material parts and associated freight, shipping and handling costs, salaries and other personnel costs including non-cash stock-based compensation expense, contract manufacturer costs, scrap, warranty cost, inventory reserves, non-cash depreciation and amortization expense, allocated information technology and facility-related costs, overhead and other costs related to those sales recognized as product revenue in the period.
Our proprietary consumables support the growth-based compendial method for MQC testing mandated by global regulators and provide results that are comparable to traditional consumables. Our consumables are designed with features that enable automation on the Growth Direct system, with bar coding for tracking and data integrity, and physical characteristics for robotic handling, to support vision detection, and to prevent counterfeiting.
Our consumables are designed with features that enable automation on the Growth 62 Table of Contents Direct system, with bar coding for tracking and data integrity, and physical characteristics for robotic handling, to support vision detection, and to prevent counterfeiting.
Revenue from validation services and field service are non-recurring service revenue streams, while revenue from service contracts is a recurring service revenue stream. We offer our customers validation services (including related documentation) that enable them to replace their existing manual testing method and utilize their Growth Direct systems in compliance with relevant MQC regulations.
We offer our customers validation services (including related documentation) that enable them to replace their existing manual testing method and utilize their Growth Direct systems in compliance with relevant MQC regulations. Validation services are recognized as revenue over time as these services are provided to the customer.
For future periods, we expect sales and marketing expenses to increase in future periods as the number of sales and marketing personnel grows and we continue to expand our geographic reach and capabilities, broaden our customer base and introduce new products. 63 Table of Contents General and administrative General and administrative expenses consist primarily of salaries, bonuses and other personnel costs including stock-based compensation expense for our executive, finance, legal, human resources and general management employees, as well as director and officer insurance costs and professional fees for legal, patent, accounting, audit, investor relations, recruiting, consulting, regulatory, compliance, board of directors' fees and other services.
General and administrative General and administrative expenses consist primarily of salaries, bonuses and other personnel costs including non-cash stock-based compensation expense for our executive, finance, legal, human resources and general management employees, as well as director and officer insurance costs and professional fees for legal, patent, accounting, audit, investor relations, recruiting, consulting, regulatory, compliance, board of directors' fees and other services.
Growth Direct system revenue involves a capital selling process and tends to be somewhat concentrated within a relatively small (but varied) group of customers each year, so it is subject to variability from quarter to quarter. Gross margin improvement The majority of our customers are large global pharmaceutical manufacturers and CDMOs.
Revenue mix Our revenue is derived from sales of our Growth Direct systems, our LIMS connection and other software, proprietary consumables, and services. Growth Direct system revenue involves a capital selling process and tends to be somewhat concentrated within a relatively small (but varied) group of customers each year, so it is subject to variability from quarter to quarter.
In March 2022, we amended the lease to increase the amount of facility space subject to the lease and extend the expiration of the lease from July 2026 to July 2029.
Contractual obligations and commitments In October 2013, we entered into an operating lease for office and manufacturing space in Lowell, Massachusetts. In March 2022, we amended the lease to increase the amount of facility space subject to the lease and extend the expiration of the lease from July 2026 to July 2029.
The Growth Direct system is fully functional for use by the customer upon delivery as we do not require our customers to use our installation and validation services, however it is unusual for our customers to not purchase those services. As such, transfer of control occurs at shipment or delivery depending on contractual terms.
Although we do not require our customers to use our installation and validation services, our customers typically elect to purchase those services from us. As such, transfer of control occurs at shipment or delivery depending on contractual terms.
Other (expense) income, net Other (expense) income, net primarily consists of other miscellaneous income and expense unrelated to our core operations. Income tax expense We generated significant taxable losses during the years ended December 31, 2024 and 2023, and, therefore, have not recorded any U.S. federal or state income tax expense during those periods.
Income tax expense We generated significant taxable losses during the years ended December 31, 2025 and 2024, and, therefore, have not recorded any U.S. federal or state income tax expense during those periods. However, we did record an immaterial amount of foreign income tax expense during each of those periods.
We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
We may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies. We will cease to be an emerging growth company on December 31, 2026, at the latest.
Validation services are recognized as revenue over time as these services are provided to the customer. We offer our customers service contracts that can be purchased after the expiration of the one-year assurance warranty that all of our customers receive with the purchase of a Growth Direct system.
We offer our customers service contracts that can be purchased after the expiration of the one-year assurance warranty that all of our customers receive with the purchase of a Growth Direct system. Under these contracts, they are entitled to receive phone support, emergency on-site maintenance support and preventative maintenance visits.
For future periods, we expect our research and development expenses to increase or decrease commensurate with the size, scope and complexity of our research and development activities.
Our research and development costs are expensed as incurred. We believe that our continued investment in research and development is essential to our long-term competitive position. For future periods, we expect our research and development expenses to increase or decrease commensurate with the size, scope and complexity of our research and development activities.
However, we did record an immaterial amount of foreign income tax expense during each of those periods. We have not recorded any U.S. federal or state income tax benefits for the net operating losses, or NOLs, we have incurred in each year or for the research and development tax credits we have generated in the United States.
We have not recorded any U.S. federal or state income tax benefits for the net operating losses ("NOLs"), we have incurred in each year or for the research and development tax credits we have generated in the United States. As of December 31, 2025, we had U.S. federal and state NOL carryforwards of $320.9 million and $133.0 million, respectively.
We expect our validated Growth Direct systems to continue to grow over time as we increase our base of cumulative systems placed and then validate those systems. After a Growth Direct system is placed with a customer and installed, we work with the customer to validate the system, which typically takes anywhere from three to nine months.
After a Growth Direct system is placed with a customer and installed, we work with the customer to validate the system, which typically has taken anywhere from three to nine months.
Once embedded and validated in our customers’ facilities, our Growth Direct platform provides for recurring revenues through ongoing sales of consumables and service contracts. Our technology fully automates and digitizes the process of pharmaceutical MQC and is designed to enable our customers to perform this critical testing process more efficiently, accurately, and securely.
Our technology fully automates and digitizes the process of pharmaceutical MQC and is designed to enable our customers to perform this critical testing process more efficiently, accurately, and securely.
Such costs may be further impacted by our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity.
Such costs may be further impacted by our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity. In addition, our product costs may be adversely impacted by recently enacted and potential future tariffs by the U.S. and other jurisdictions in which we conduct business.
If we are unable to raise capital as, if and when, needed, we may have to significantly delay, scale back or discontinue our expansion plans including further development and commercialization efforts of one or more of our products. 66 Table of Contents We believe that our cash, cash equivalents and short-term investments will enable us to fund our operating expenses and capital expenditure requirements for at least twelve months following the date the consolidated financial statements contained in this Annual Report on Form 10-K for the year ended December 31, 2024 were issued.
We believe that our cash, cash equivalents and investments will enable us to fund our operating expenses and capital expenditure requirements for at least 12 months following the date the consolidated financial statements contained in this Annual Report on Form 10-K for the year ended December 31, 2025 were issued.
Investing activities During the year ended December 31, 2024, net cash provided by investing activities was $36.7 million, a decrease of $5.5 million compared to the year ended December 31, 2023.
Financing activities During the year ended December 31, 2025, net cash provided by financing activities was $19.8 million, an increase of $19.6 million compared to the year ended December 31, 2024.
We may experience inflationary pressures on significant cost 58 Table of Contents categories including labor, materials and freight. We continue to monitor the impact of inflation on these costs in order to minimize its effects through productivity improvements and cost reductions. There can be no assurance, however, that our operating results will not be affected by inflation in the future.
As a result, due to tariffs and other macroeconomic factors, we have and may continue to experience inflationary pressures on significant cost categories including labor, materials and freight. We continue to monitor the impact of inflation on these costs in order to minimize its effects through productivity improvements and cost reductions.

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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 changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk As of December 31, 2024, we had cash, cash equivalents and short-term investments of $50.7 million, which consisted of cash, money market funds, U.S. treasury bills, and U.S. treasury notes.
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk. Interest rate risk As of December 31, 2025, we had cash, cash equivalents and short-term investments of $38.3 million, which consisted of cash, money market funds, U.S. treasury bills, and U.S. treasury notes.

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