[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This part presents the unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and notes for the period ended September 30, 2023 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Total Assets | $208,475 | $242,587 | | Total Liabilities | $38,546 | $51,988 | | Total Stockholders' Equity | $169,929 | $190,599 | - Total assets decreased by **$34.1 million** from December 31, 2022, to September 30, 2023, primarily due to a significant reduction in cash and cash equivalents, partially offset by an increase in marketable securities[12](index=12&type=chunk) - Total liabilities decreased by **$13.4 million**, largely driven by the repayment of long-term debt[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section details the company's revenues, expenses, and net loss over specific three and nine-month periods | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Revenue | $14,297 | $15,797 | $35,878 | $35,209 | | Gross Profit | $7,869 | $9,338 | $18,047 | $20,101 | | Loss from Operations | $(9,089) | $(7,154) | $(33,045) | $(25,044) | | Net Loss | $(7,093) | $(6,259) | $(28,970) | $(23,772) | | Net Loss per Share (Basic & Diluted) | $(0.22) | $(0.20) | $(0.90) | $(0.76) | - Total revenue for the three months ended September 30, 2023, decreased by **$1.5 million (9.5%)** compared to the same period in 2022, primarily due to a decrease in product and contract revenue[14](index=14&type=chunk) - Net loss increased for both the three-month and nine-month periods, reaching **$(7.093) million** and **$(28.970) million**, respectively, driven by higher operating expenses and, for the nine-month period, increased cost of revenue[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) This section presents the total comprehensive loss, including net loss and other comprehensive income or loss items | Metric (in thousands) | 3 Months Ended Sep 30, 2023 | 3 Months Ended Sep 30, 2022 | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net Loss | $(7,093) | $(6,259) | $(28,970) | $(23,772) | | Foreign currency translation adjustment | $(404) | $(613) | $(170) | $(613) | | Unrealized gains on marketable securities, net of tax of $0 | $248 | — | $360 | — | | Total other comprehensive (loss) income | $(156) | $(613) | $190 | $(613) | | Comprehensive Loss | $(7,249) | $(6,872) | $(28,780) | $(24,385) | - Comprehensive loss for the three months ended September 30, 2023, was **$(7.249) million**, an increase from **$(6.872) million** in the prior year, primarily due to the higher net loss[16](index=16&type=chunk) - Unrealized gains on marketable securities contributed positively to other comprehensive income in 2023, whereas no such gains were recorded in 2022[16](index=16&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%27%20Equity) This section outlines changes in the company's equity, including common stock, additional paid-in capital, and accumulated deficit | Metric (in thousands) | Sep 30, 2023 | Dec 31, 2022 | | :-------------------- | :----------- | :----------- | | Total Stockholders' Equity | $169,929 | $190,599 | | Common Stock Shares Outstanding | 32,371,428 | 31,859,847 | | Additional Paid-in Capital | $332,080 | $323,969 | | Accumulated Deficit | $(163,171) | $(134,200) | - Total stockholders' equity decreased by **$20.67 million** from December 31, 2022, to September 30, 2023, primarily due to the accumulated net loss[18](index=18&type=chunk) - Additional paid-in capital increased by **$8.11 million**, reflecting stock-based compensation expense and proceeds from stock option exercises and ESPP purchases[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities | Metric (in thousands) | 9 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2022 | | :-------------------- | :-------------------------- | :-------------------------- | | Net Cash Used in Operating Activities | $(23,129) | $(15,814) | | Net Cash Used in Investing Activities | $(31,036) | $(15,195) | | Net Cash (Used in) Provided by Financing Activities | $(16,030) | $768 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | $(70,209) | $(30,264) | - Net cash used in operating activities increased to **$(23.1) million** for the nine months ended September 30, 2023, from **$(15.8) million** in the prior year, driven by a higher net loss and changes in operating assets and liabilities[20](index=20&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Net cash used in investing activities significantly increased to **$(31.0) million**, primarily due to purchases of marketable securities, compared to **$(15.2) million** in the prior year which included an acquisition[20](index=20&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) - Financing activities shifted from providing **$0.8 million** in cash in 2022 to using **$(16.0) million** in 2023, mainly due to the repayment of the 2022 Revolver and contingent consideration payments[20](index=20&type=chunk)[247](index=247&type=chunk)[248](index=248&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations of the company's accounting policies and specific financial line items [1. Nature of the Business and Basis of Presentation](index=11&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) This note describes the company's core business, recent acquisition, and ongoing financial performance challenges - 908 Devices Inc. is a commercial-stage technology company providing handheld and desktop devices for chemical and biochemical analysis in life sciences, bioprocessing, pharma/biopharma, and forensics markets[21](index=21&type=chunk) - The company acquired TRACE Analytics GmbH (now 908 Devices GmbH) in August 2022 to integrate enabling sampling technology into future product offerings[23](index=23&type=chunk) - The company has incurred recurring losses since inception, with a net loss of **$29.0 million** for the nine months ended September 30, 2023, and an accumulated deficit of **$163.2 million**[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=13&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) This note outlines key accounting principles, including revenue recognition and concentration risks - The financial statements are prepared in conformity with GAAP and condensed for interim reporting, requiring estimates and assumptions, particularly for revenue recognition, inventory valuation, and fair value of acquired assets[28](index=28&type=chunk)[29](index=29&type=chunk) - The company faces concentration risk with

Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $12.1 million, a 9% increase compared to $11.1 million in the prior year period [9] - Gross profit was $5.8 million for Q2 2023, down from $6.6 million in the prior year, with a gross margin of 48% compared to 60% [4] - Net loss for Q2 2023 was $9.3 million, compared to $8.1 million in the prior year [6] - Recurring revenues increased 39% to $4 million compared to $2.9 million in the prior year, representing 33% of total revenue [47] Business Line Data and Key Metrics Changes - Desktop revenue decreased to $3.1 million from $3.7 million in the prior year, primarily due to a decrease in device placements [3] - Handheld revenue from the MX908 device was $8.8 million, a 27% increase compared to $6.9 million in the prior year [9] - The company shipped 15 desktop devices during Q2, including five REBEL, four ZipChip interfaces, and six MAVEN devices [3] Market Data and Key Metrics Changes - The company noted ongoing weakness in the bioprocessing market, which is being offset by strong demand for handheld devices in the forensics market [11] - The installed base of devices globally increased to more than 2,500 [17] Company Strategy and Development Direction - The company is focused on revolutionizing chemical detection by expanding its product portfolio to address diverse end markets [7] - A new product, the MX908 Beacon, was introduced for remote air monitoring, leveraging the existing MX908 device [25][96] - The company aims to penetrate new accounts and radiate across existing accounts to drive broader enterprise adoption [34] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the results and highlighted the importance of handheld devices in addressing the growing need for chemical detection [31] - The company expects full-year revenues to be in the range of $49 million to $52 million, representing growth of 4% to 11% over the previous year [52] - Management acknowledged challenges in the bioprocessing space but noted positive engagement and opportunities in the pipeline [58] Other Important Information - The company has approximately $153 million in cash and no debt outstanding [6] - A pilot program with law enforcement agencies in Tennessee aims to enhance drug identification processes using the MX908 device [22] Q&A Session Summary Question: What is the visibility into demand for 2024? - Management indicated that while the environment remains muted for 2023, there are positive conversations and engagement with customers, suggesting potential demand for 2024 [60][64] Question: How is the handheld business performing? - The handheld business has been strong, with international demand contributing positively, and management is tracking several enterprise deals as the U.S. government fiscal year-end approaches [65][66] Question: What is the company's exposure to China? - The company has limited exposure to China, with about 5% of sales coming from that region, focusing primarily on the Americas and Europe [99] Question: How is the MX908 Beacon performing? - Initial feedback on the MX908 Beacon has been positive, and it is expected to drive additional MX908 sales as it can be purchased as an add-on or standalone [90][96]

PART I. FINANCIAL INFORMATION [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements and notes for periods ended June 30, 2023, and December 31, 2022 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $210.8 million, driven by reduced cash, while liabilities decreased due to debt repayment Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2023 | December 31, 2022 | | :-------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $132,996 | $188,422 | | Marketable securities | $19,691 | — | | Total current assets | $181,077 | $215,626 | | Total assets | $210,830 | $242,587 | | Total current liabilities | $20,194 | $19,226 | | Long-term debt | — | $15,000 | | Total liabilities | $36,371 | $51,988 | | Total stockholders' equity | $174,459 | $190,599 | - Cash and cash equivalents decreased by **$55.4 million** from December 31, 2022, to June 30, 2023, while marketable securities increased from zero to **$19.7 million**[12](index=12&type=chunk) - Long-term debt was fully repaid, decreasing from **$15.0 million** at December 31, 2022, to zero at June 30, 2023[12](index=12&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue increased, but net loss widened due to higher costs and operating expenses, despite increased interest income Condensed Consolidated Statements of Operations (in thousands, except per share) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenue | $12,094 | $11,106 | $21,581 | $19,412 | | Total cost of revenue | $6,300 | $4,472 | $11,403 | $8,649 | | Gross profit | $5,794 | $6,634 | $10,178 | $10,763 | | Total operating expenses | $16,733 | $15,003 | $34,134 | $28,653 | | Loss from operations | $(10,939) | $(8,369) | $(23,956) | $(17,890) | | Interest income | $1,689 | $293 | $2,706 | $464 | | Net loss | $(9,346) | $(8,099) | $(21,879) | $(17,514) | | Net loss per share (Basic & Diluted) | $(0.29) | $(0.26) | $(0.68) | $(0.56) | - Total revenue increased by **8.9%** for the three months and **11.2%** for the six months ended June 30, 2023, compared to prior year periods[14](index=14&type=chunk) - Gross profit decreased by **12.7%** for the three months and **5.4%** for the six months ended June 30, 2023, due to higher cost of revenue[14](index=14&type=chunk) - Net loss increased by **15.4%** for the three months and **25.0%** for the six months ended June 30, 2023, driven by higher operating expenses and cost of revenue[14](index=14&type=chunk) [Condensed Consolidated Statements of Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss reported, with other comprehensive income from foreign currency and marketable securities gains Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(9,346) | $(8,099) | $(21,879) | $(17,514) | | Foreign currency translation adjustment | $(57) | — | $234 | — | | Unrealized gains on marketable securities, net of tax | $112 | — | $112 | — | | Total other comprehensive income | $55 | — | $346 | — | | Comprehensive loss | $(9,291) | $(8,099) | $(21,533) | $(17,514) | - Total other comprehensive income was **$55 thousand** for the three months and **$346 thousand** for the six months ended June 30, 2023, primarily from foreign currency translation adjustments and unrealized gains on marketable securities[17](index=17&type=chunk) [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity decreased due to net loss, partially offset by stock-based compensation and option exercises Condensed Consolidated Statements of Stockholders' Equity (in thousands, except share amounts) | Metric | December 31, 2022 | June 30, 2023 | | :-------------------------------- | :---------------- | :------------ | | Common Stock Shares | 31,859,847 | 32,326,861 | | Common Stock Amount | $32 | $32 | | Additional Paid-in Capital | $323,969 | $329,361 | | Accumulated Other Comprehensive Income | $798 | $1,144 | | Accumulated Deficit | $(134,200) | $(156,078) | | Total Stockholders' Equity | $190,599 | $174,459 | - Accumulated deficit increased by **$21.9 million** from December 31, 2022, to June 30, 2023, reflecting the net loss for the period[19](index=19&type=chunk) - Additional paid-in capital increased by **$5.4 million**, driven by stock-based compensation expense (**$4.7 million**) and issuance of common stock from options and ESPP (**$0.6 million**)[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash decreased by $55.4 million, primarily from operating and investing activities and debt repayment Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(18,529) | $(10,876) | | Net cash used in investing activities | $(21,121) | $(689) | | Net cash (used in) provided by financing activities | $(15,782) | $597 | | Net decrease in cash, cash equivalents and restricted cash | $(55,426) | $(10,968) | | Cash, cash equivalents and restricted cash at end of period | $133,167 | $213,165 | - Net cash used in operating activities increased to **$18.5 million** for the six months ended June 30, 2023, from **$10.9 million** in the prior year, mainly due to a higher net loss[20](index=20&type=chunk) - Net cash used in investing activities significantly increased to **$21.1 million**, primarily driven by **$19.6 million** in purchases of marketable securities[20](index=20&type=chunk) - Financing activities shifted from providing **$0.6 million** in cash in 2022 to using **$15.8 million** in 2023, largely due to the repayment of **$15.0 million** in long-term debt[20](index=20&type=chunk) [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Detailed explanations of accounting policies, financial line items, and business operations [1. Nature of the Business and Basis of Presentation](index=9&type=section&id=1.%20Nature%20of%20the%20Business%20and%20Basis%20of%20Presentation) 908 Devices Inc. provides chemical/biochemical analysis devices, with recurring losses but sufficient liquidity - The company provides purpose-built handheld and desktop devices for chemical and biochemical analysis in life sciences, bioprocessing, pharma/biopharma, and forensics markets[21](index=21&type=chunk) - Acquired TRACE Analytics GmbH in August 2022, renamed 908 Devices GmbH, to integrate enabling sampling technology into future product offerings[23](index=23&type=chunk) - Incurred net losses of **$21.9 million** for the six months ended June 30, 2023, and had an accumulated deficit of **$156.1 million**, but expects sufficient liquidity for at least the next 12 months[26](index=26&type=chunk) [2. Summary of Significant Accounting Policies](index=11&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Outlines accounting policies, revenue recognition, and disaggregated revenue data by stream, type, end-user, and geography - The unaudited condensed consolidated financial statements are prepared in conformity with GAAP and SEC rules for interim reporting, with certain disclosures condensed or omitted[28](index=28&type=chunk) - Significant estimates include revenue recognition, inventory valuation, fair value of acquired assets/liabilities, and stock-based awards, with ongoing evaluation for global economic uncertainties[29](index=29&type=chunk) - Revenue is recognized when control of products or services transfers to customers, primarily FOB shipping point for products, and over time for extended warranty/support[50](index=50&type=chunk) Disaggregated Revenue by Stream (in thousands) | Revenue Stream | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Device sales revenue | $7,959 | $7,755 | $13,042 | $13,287 | | Recurring revenue | $3,990 | $2,853 | $8,169 | $5,350 | | Contract revenue | $145 | $498 | $370 | $775 | | Total revenue | $12,094 | $11,106 | $21,581 | $19,412 | Disaggregated Revenue by Device Type (in thousands) | Device Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Handheld revenue | $8,822 | $6,937 | $14,994 | $11,407 | | Desktop revenue | $3,127 | $3,671 | $6,217 | $7,230 | Disaggregated Revenue by End-User Entity Type (in thousands) | End-User Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :-------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Government | $8,812 | $7,002 | $14,992 | $11,719 | | Pharmaceutical/Biotechnology | $3,106 | $3,577 | $6,158 | $6,705 | | Academia and other | $31 | $29 | $61 | $213 | Disaggregated Revenue by Geography (in thousands) | Geography | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $7,857 | $9,460 | $14,350 | $15,512 | | Europe, Middle East and Africa | $3,954 | $1,245 | $5,942 | $2,601 | | Asia Pacific | $221 | $391 | $797 | $1,273 | | Americas other | $62 | $10 | $492 | $26 | [3. Fair Value Measurements](index=25&type=section&id=3.%20Fair%20Value%20Measurements) Fair value measurements for cash equivalents, marketable securities, and acquisition-related contingent consideration Fair Value Measurements at June 30, 2023 (in thousands) | Asset/Liability | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :------ | :------ | :------ | | Cash equivalents - Money market funds | $90,527 | — | — | $90,527 | | Cash equivalents - U.S. Treasury securities | — | $9,969 | — | $9,969 | | Marketable securities - U.S. Treasury securities | — | $19,691 | — | $19,691 | | Acquisition-related contingent consideration (current) | — | — | $973 | $973 | | Acquisition-related contingent consideration (long-term) | — | — | $156 | $156 | - The total maximum payments for acquisition-related contingent consideration is approximately **$2 million**, with a fair value of **$1.1 million** as of June 30, 2023[80](index=80&type=chunk) - The **$0.9 million** pension liability contingent consideration from the Trace acquisition was released and paid out in April 2023[81](index=81&type=chunk) [4. Marketable Securities](index=27&type=section&id=4.%20Marketable%20Securities) Company held $29.7 million in available-for-sale marketable securities as of June 30, 2023 Marketable Securities at June 30, 2023 (in thousands) | Security Type | Amortized Cost | Gross Unrealized Gain | Fair Value | | :-------------------------------- | :------------- | :-------------------- | :--------- | | Cash equivalents - U.S. Treasury securities | $9,932 | $37 | $9,969 | | Marketable securities - U.S. Treasury securities | $19,616 | $75 | $19,691 | | Total | $29,548 | $112 | $29,660 | - The company did not have marketable securities as of December 31, 2022, indicating a new investment strategy in the first half of 2023[83](index=83&type=chunk) [5. Inventory](index=27&type=section&id=5.%20Inventory) Total inventory increased to $14.1 million, with increases across raw materials, work-in-progress, and finished goods Inventory (in thousands) | Inventory Component | June 30, 2023 | December 31, 2022 | | :------------------ | :------------ | :---------------- | | Raw materials | $9,579 | $8,343 | | Work-in-progress | $2,916 | $2,722 | | Finished goods | $1,640 | $1,448 | | Total | $14,135 | $12,513 | - Raw materials increased by **$1.2 million**, work-in-progress by **$0.2 million**, and finished goods by **$0.2 million** from December 31, 2022, to June 30, 2023[84](index=84&type=chunk) [6. Goodwill and Intangible Assets, net](index=28&type=section&id=6.%20Goodwill%20and%20Intangible%20Assets,%20net) Goodwill increased due to foreign currency, while net intangible assets decreased due to amortization Goodwill Roll Forward (in thousands) | Metric | Six Months Ended June 30, 2023 | | :---------------------- | :----------------------------- | | Balances at beginning of period | $10,050 | | Foreign currency impact | $135 | | Balances at end of period | $10,185 | Intangible Assets, net (in thousands) | Intangible Asset | June 30, 2023 Net Book Value | December 31, 2022 Net Book Value | | :----------------- | :--------------------------- | :------------------------------- | | Customer Relationships | $2,962 | $3,129 | | Developed Technology | $4,964 | $5,073 | | Software | $200 | $235 | | Trade Name | $36 | $51 | | Total | $8,162 | $8,488 | - Amortization expense for intangible assets was **$219 thousand** for the three months and **$437 thousand** for the six months ended June 30, 2023, recorded in product cost of revenue and selling, general and administrative expenses[86](index=86&type=chunk) [7. Accrued Expenses](index=30&type=section&id=7.%20Accrued%20Expenses) Total accrued expenses decreased to $6.0 million, mainly from lower employee compensation and contingent consideration Accrued Expenses (in thousands) | Accrued Expense Category | June 30, 2023 | December 31, 2022 | | :----------------------- | :------------ | :---------------- | | Accrued employee compensation and benefits | $2,506 | $4,909 | | Accrued warranty | $854 | $1,119 | | Contingent consideration | $973 | $1,243 | | Total Accrued Expenses | $6,034 | $8,847 | - Accrued employee compensation and benefits decreased by **$2.4 million**, and contingent consideration decreased by **$0.3 million**[87](index=87&type=chunk) - The product warranty obligation decreased from **$1.1 million** at the beginning of the six-month period to **$0.9 million** at June 30, 2023, due to settlements exceeding new provisions[87](index=87&type=chunk) [8. Long-Term Debt](index=30&type=section&id=8.%20Long-Term%20Debt) Company repaid $15.0 million debt, defaulted on covenants, and entered an amended $10.0 million credit line - The 2021 Revolver was voluntarily terminated on November 2, 2022, with no outstanding amounts[90](index=90&type=chunk) - The **$15.0 million** outstanding principal balance under the 2022 Revolver was fully repaid on January 4, 2023[94](index=94&type=chunk) - The company defaulted on its 2022 Revolver covenants by transferring cash away from SVB after its closure in March 2023, resulting in a **$0.5 million** loss on extinguishment of debt[98](index=98&type=chunk) - An Amended 2022 Revolver, effective August 4, 2023, reduced the line of credit to **$10.0 million**, waived prior defaults, and requires maintaining **$20.0 million** at SVB and a minimum unrestricted cash level[99](index=99&type=chunk)[102](index=102&type=chunk) [9. Equity and Net Income (Loss) per Share](index=34&type=section&id=9.%20Equity%20and%20Net%20Income%20(Loss)%20per%20Share) Common shares outstanding were 32.3 million, with anti-dilutive securities excluded from net loss per share - The company had **32,326,861** common shares outstanding as of June 30, 2023[12](index=12&type=chunk) Net Loss Per Share (Basic and Diluted) | Metric | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :-------------------------------- | :------------------------------- | :----------------------------- | | Net loss per share (Basic and Diluted) | $(0.29) | $(0.68) | - Potential dilutive securities totaling **4,513,853 shares** (warrants, options, PSUs, RSUs) were excluded from diluted EPS calculations for the six months ended June 30, 2023, due to the net loss making their effect anti-dilutive[105](index=105&type=chunk) [10. Stock-Based Compensation](index=35&type=section&id=10.%20Stock-Based%20Compensation) Stock-based compensation expense increased, with $17.7 million unrecognized cost for unvested RSUs Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenue | $140 | $86 | $255 | $149 | | Research and development expenses | $732 | $421 | $1,327 | $681 | | Selling, general and administrative expenses | $1,706 | $1,387 | $3,162 | $2,353 | | Total | $2,578 | $1,894 | $4,744 | $3,183 | - Unrecognized compensation cost for unvested RSUs was **$17.7 million** as of June 30, 2023, with a weighted average recognition period of **3.0 years**[106](index=106&type=chunk) - **53,794** performance-based restricted stock units (PSUs) were granted in March 2023, with vesting contingent on stock price levels and valued using the Monte Carlo simulation model[107](index=107&type=chunk)[108](index=108&type=chunk) [11. Leases](index=35&type=section&id=11.%20Leases) Operating lease expenses reported, with new leases in North Carolina and Germany for R&D and manufacturing Lease Expense (in thousands) | Lease Expense Component | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $485 | $583 | $969 | $1,165 | | Short-term lease cost | $16 | $11 | $32 | $20 | | Variable lease cost | $27 | $2 | $54 | $4 | | Total Lease Cost | $528 | $596 | $1,055 | $1,189 | - A new operating lease in Morrisville, North Carolina, for **13,300 sq ft** commenced in March 2023, with total costs of approximately **$4.0 million** over 88 months[110](index=110&type=chunk) - A new operating lease in Braunschweig, Germany, for **7,500 sq ft** commenced in January 2023, with total costs of approximately **$0.4 million** over 60 months[111](index=111&type=chunk) - The weighted-average remaining lease term for operating leases was **4.25 years** at June 30, 2023, with a weighted-average discount rate of **8.5%**[112](index=112&type=chunk) [12. Commitments and Contingencies](index=36&type=section&id=12.%20Commitments%20and%20Contingencies) Royalty arrangements, 401(k) contributions, acquisition earnouts, and no material legal proceedings - The company has royalty arrangements with future minimum payments of **$0.1 million** per year through the end of the patents' lives[115](index=115&type=chunk) - Contributions to the 401(k) savings plan were **$0.3 million** for the six months ended June 30, 2023[116](index=116&type=chunk) - Contingent consideration for the Trace acquisition includes up to **$2.0 million** for milestone-based earnouts through June 30, 2024[117](index=117&type=chunk) - The **$0.9 million** pension liability from the Trace acquisition was released and paid out to sellers in April 2023[118](index=118&type=chunk) - The company is not currently involved in any material legal proceedings[120](index=120&type=chunk) [13. Acquisition](index=37&type=section&id=13.%20Acquisition) Acquired TRACE Analytics GmbH for $17.3 million, allocating $9.6 million to goodwill for synergies - Acquired **100%** of TRACE Analytics GmbH on August 3, 2022, for a total purchase price of **$17.3 million**[121](index=121&type=chunk) - The purchase consideration included a **$14.4 million** initial cash payment, up to **$2.0 million** in contingent cash consideration, and a **$0.9 million** contingent pension liability holdback[121](index=121&type=chunk) - The acquisition was accounted for as a business purchase, with **$9.6 million** allocated to goodwill, representing cost and revenue synergies[123](index=123&type=chunk)[124](index=124&type=chunk) Allocation of Purchase Consideration (in thousands) | Item | Amount | | :-------------------------------- | :----- | | Cash paid | $14,400 | | Net cash and working capital adjustment | $113 | | Contingent consideration - pension liability | $900 | | Contingent consideration - earnout | $737 | | Total consideration transferred | $16,150 | | Goodwill | $9,566 | | Intangible assets (Customer Relationships, Developed Technology, Software, Trade Name) | $8,424 | [14. Segment Reporting and Geographic Data](index=40&type=section&id=14.%20Segment%20Reporting%20and%20Geographic%20Data) Company operates in a single segment, with most long-lived assets located in the United States - The company operates in one segment[126](index=126&type=chunk) Long-Lived Assets by Geography (in thousands) | Geography | June 30, 2023 | December 31, 2022 | | :---------- | :------------ | :---------------- | | United States | $9,555 | $7,852 | | All other countries | $521 | $63 | | Total long-lived assets | $10,076 | $7,915 | - Long-lived assets in the United States increased by **$1.7 million**, and in other countries by **$0.5 million**, from December 31, 2022, to June 30, 2023[126](index=126&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management's analysis of financial condition, operational results, liquidity, and critical accounting policies [Overview](index=40&type=section&id=Overview) 908 Devices Inc. develops analysis devices, with revenue growth but increased net losses and accumulated deficit - The company's devices are used for point-of-need chemical and biochemical analysis in life sciences, bioprocessing, pharma/biopharma, and forensics[128](index=128&type=chunk) - Revenue for the six months ended June 30, 2023, was **$21.6 million**, with a net loss of **$21.9 million**, leading to an accumulated deficit of **$156.1 million**[133](index=133&type=chunk) - The company expects to continue incurring net losses due to investments in commercial sales, manufacturing, and R&D, and is monitoring macroeconomic conditions like inflation and interest rates[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk) - The company believes existing cash, cash equivalents, and revenue will fund operations for at least the next 12 months[135](index=135&type=chunk) [Factors Affecting Our Performance](index=44&type=section&id=Factors%20Affecting%20Our%20Performance) Performance driven by device sales, recurring revenue, revenue mix, gross margin, and product adoption stages - Device sales are a key indicator of business success and future recurring revenue, with growth strategies including sales expansion and technology enhancements[146](index=146&type=chunk)[147](index=147&type=chunk) - Handheld device sales are often large government orders with long sales cycles, leading to period-to-period fluctuations and customer concentration[148](index=148&type=chunk) - Recurring revenue, including consumables and services, was **39%** of total product and service revenue for the six months ended June 30, 2023, up from **29%** in the prior year[151](index=151&type=chunk) - Recurring revenue is expected to increase as the device installed base expands, with desktop devices having a higher recurring revenue percentage than handheld devices[151](index=151&type=chunk)[152](index=152&type=chunk) - Gross margins are higher for direct sales compared to distributor sales, and the company aims to mitigate downward pressure on selling prices by expanding applications and improving data quality[153](index=153&type=chunk)[154](index=154&type=chunk) [Device sales](index=44&type=section&id=Device%20sales) Device sales growth driven by expanded efforts and technology, with varied sales cycles and customer concentration - Handheld device sales are often large government orders with long sales cycles and can be concentrated in a small number of customers[148](index=148&type=chunk) - Desktop device sales cycles typically range from three to twelve months, varying by customer size[149](index=149&type=chunk) [Recurring revenue](index=46&type=section&id=Recurring%20revenue) Recurring revenue grew to 39% of total, expected to increase with installed base, especially for desktop devices - Recurring revenue was **39%** of total product and service revenue for the six months ended June 30, 2023, compared to **29%** in the prior year[151](index=151&type=chunk) - Rebel and ZipChip Interface devices require consumables kits for all operations, driving higher recurring revenue compared to MX908 handheld devices[152](index=152&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) [Revenue mix and gross margin](index=46&type=section&id=Revenue%20mix%20and%20gross%20margin) Revenue mix fluctuates, with consumables growing; gross margins higher for direct sales, aiming for improvement - Consumables revenue is expected to constitute a larger percentage of product and service revenue over time as the device installed base grows[153](index=153&type=chunk) - Gross margins are higher for direct sales compared to sales through distributors[153](index=153&type=chunk) - The company aims to mitigate downward pressure on average selling prices and improve gross margins by increasing the value proposition of its devices and consumables[154](index=154&type=chunk) [Product adoption](index=46&type=section&id=Product%20adoption) Customer product adoption stages (testing, trials, pilot, deployment) are monitored for financial projections - Product adoption stages include testing (internal/external evaluation), trials (assessing functionality in operational environment), pilot (initial quantity purchase for broader opportunity), and deployment (enterprise-wide rollout)[155](index=155&type=chunk)[157](index=157&type=chunk) [Key Business Metrics](index=48&type=section&id=Key%20Business%20Metrics) Product placements and cumulative placements are key metrics, showing units recognized as revenue Product Placements (Units Recognized as Revenue) | Device Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Handheld | 107 | 102 | 169 | 165 | | Desktop | 15 | 22 | 31 | 42 | Cumulative Product Placements | Device Type | June 30, 2023 | June 30, 2022 | | :------------ | :------------ | :------------ | | Handheld | 2,189 | 1,815 | | Desktop | 401 | 327 | - Handheld product placements increased by **5 units** QoQ and **4 units** YoY for the respective periods, while desktop placements decreased by **7 units** QoQ and **11 units** YoY[159](index=159&type=chunk) [Components of Our Results of Operations](index=48&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Details revenue, cost of revenue, gross profit, operating expenses, and other income/expense components - Device sales accounted for **61%** of product and service revenue for the six months ended June 30, 2023, while recurring revenue accounted for **39%**[161](index=161&type=chunk) - Product cost of revenue includes raw materials, freight, royalties, manufacturing costs, and personnel, while service cost of revenue includes personnel, travel, and warranty costs[169](index=169&type=chunk)[170](index=170&type=chunk) - Gross profit margin is influenced by market pricing, sales mix, inventory, manufacturing costs, and warranty obligations, with expectations for long-term improvement due to economies of scale[172](index=172&type=chunk)[173](index=173&type=chunk) - Research and development expenses are expected to increase due to continued investment in product development, hardware/software engineering, and consultant services[174](index=174&type=chunk) - Selling, general and administrative expenses are projected to rise with increased sales, marketing, and administrative personnel, new product introductions, and public company operating costs[175](index=175&type=chunk)[178](index=178&type=chunk) - The company has a full valuation allowance against its net deferred tax assets due to recurring net operating losses and tax credits[182](index=182&type=chunk) [Revenue](index=48&type=section&id=Revenue) Revenue categorized into product/service (device, recurring) and contract, with expected growth in recurring - Product and service revenue includes sales of handheld (MX908) and desktop (Rebel, ZipChip Interface, Maven) devices, and recurring revenue from consumables and extended warranty/service plans[162](index=162&type=chunk)[163](index=163&type=chunk)[165](index=165&type=chunk) - Contract revenue is generated from short and long-term agreements, primarily with the U.S. government, for design, development, and delivery of detection devices or related services[167](index=167&type=chunk) [Cost of Revenue, Gross Profit and Gross Margin](index=51&type=section&id=Cost%20of%20Revenue,%20Gross%20Profit%20and%20Gross%20Margin) Cost of revenue components detailed; long-term gross profit margin improvement expected from economies of scale - Product cost of revenue includes raw materials, freight, royalties, contract manufacturer costs, and personnel[169](index=169&type=chunk) - Service cost of revenue includes salaries, travel, facility costs, and warranty expenses[170](index=170&type=chunk) - Gross profit margin is expected to increase over the long term as sales and production volumes rise, leading to cost efficiencies[173](index=173&type=chunk) [Operating Expenses](index=51&type=section&id=Operating%20Expenses) R&D and SG&A expenses expected to increase with continued investment and business expansion - R&D expenses include employee-related costs, product design, third-party development, research materials, and facilities expenses[174](index=174&type=chunk)[176](index=176&type=chunk) - SG&A expenses primarily cover salaries, stock-based compensation for sales, marketing, and administrative personnel, as well as professional services and public company operating costs[175](index=175&type=chunk)[178](index=178&type=chunk) [Other Income (Expense)](index=53&type=section&id=Other%20Income%20(Expense)) Includes interest income from cash, interest expense from borrowings, and debt extinguishment losses - Interest income is derived from invested cash balances[179](index=179&type=chunk) - Interest expense includes costs from loan agreements, amortization of deferred financing costs, and losses on debt extinguishment[180](index=180&type=chunk) [Provision for Income Taxes](index=53&type=section&id=Provision%20for%20Income%20Taxes) No U.S. income tax benefits recognized due to net operating losses and full valuation allowance - A full valuation allowance has been recorded against net deferred tax assets due to the unlikelihood of realizing net operating loss carryforwards and tax credits[182](index=182&type=chunk) - As of December 31, 2022, the company had **$92.3 million** in federal and **$64.0 million** in state operating loss carryforwards, and **$5.9 million** in federal and **$2.8 million** in state R&D tax credit carryforwards[182](index=182&type=chunk) [Results of Operations](index=54&type=section&id=Results%20of%20Operations) Detailed comparison of financial performance for three and six months ended June 30, 2023 and 2022 Summary of Results of Operations (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Total revenue | $12,094 | $11,106 | $988 | 8.9% | | Total cost of revenue | $6,300 | $4,472 | $1,828 | 40.9% | | Gross profit | $5,794 | $6,634 | $(840) | (12.7)% | | Total operating expenses | $16,733 | $15,003 | $1,730 | 11.5% | | Loss from operations | $(10,939) | $(8,369) | $(2,570) | (30.7)% | | Interest income | $1,689 | $293 | $1,396 | 476.5% | | Net loss | $(9,346) | $(8,099) | $(1,247) | (15.4)% | [Comparison of the three months ended June 30, 2023 and 2022](index=54&type=section&id=Comparison%20of%20the%20three%20months%20ended%20June%2030,%202023%20and%202022) Revenue increased, but gross profit decreased, and net loss widened due to higher costs and operating expenses [Revenue, Cost of Revenue and Gross Profit (Product)](index=54&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Product)) Product revenue increased, but cost of revenue surged, leading to decreased gross profit and margin Product Revenue, Cost, and Gross Profit (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Product revenue | $9,595 | $9,082 | $513 | 6% | | Product cost of revenue | $4,800 | $3,304 | $1,496 | 45% | | Gross profit | $4,795 | $5,778 | $(983) | (17)% | | Gross profit margin | 50% | 64% | (14)% | | - Product revenue increase was primarily due to **$1.1 million** higher handheld device revenues (5 additional placements and higher ASP) and **$0.3 million** increase in consumable and accessory revenue, partially offset by **$0.8 million** decrease in desktop device sales (9 fewer Rebel placements)[185](index=185&type=chunk)[186](index=186&type=chunk) - Product cost of revenue increased due to **$0.5 million** higher unabsorbed overhead from lower production builds, **$0.5 million** higher materials/supplies for warranty/production, **$0.2 million** from higher volume, **$0.2 million** from product mix, and **$0.1 million** in intangible amortization[187](index=187&type=chunk) [Revenue, Cost of Revenue and Gross Profit (Service)](index=56&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Service)) Service revenue and gross profit increased significantly, with improved gross profit margin from leverage Service Revenue, Cost, and Gross Profit (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Service revenue | $2,354 | $1,526 | $828 | 54% | | Service cost of revenue | $1,448 | $1,057 | $391 | 37% | | Gross profit | $906 | $469 | $437 | 93% | | Gross profit margin | 38% | 31% | 7% | | - Increase in service revenue was primarily from handheld extended service contracts and training, and desktop service arrangements[189](index=189&type=chunk) - Service gross profit margin improved due to leveraging fixed infrastructure across handheld and desktop services[191](index=191&type=chunk) [Revenue, Cost of Revenue and Gross Profit (Contract)](index=57&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Contract)) Contract revenue and gross profit decreased due to completion of prior year government contracts Contract Revenue, Cost, and Gross Profit (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Contract revenue | $145 | $498 | $(353) | (71)% |\n| Contract cost of revenue | $52 | $111 | $(59) | (53)% | | Gross profit | $93 | $387 | $(294) | (76)% | | Gross profit margin | 64% | 78% | (14)% | | - The decrease in contract revenue was primarily due to the completion of work in 2022 related to a prime contract with the U.S. government and a subcontract with a commercial entity holding a U.K. government prime contract[192](index=192&type=chunk) [Operating Expenses (Research and development)](index=57&type=section&id=Operating%20Expenses%20(Research%20and%20development)) R&D expenses increased due to higher headcount, stock-based compensation, and occupancy costs Research and Development Expenses (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Research and development expenses | $5,525 | $4,293 | $1,232 | 29% | - The increase was driven by a **$0.5 million** increase in salaries and related costs, a **$0.3 million** increase in stock-based compensation, and a **$0.2 million** increase in occupancy expenses[195](index=195&type=chunk) [Operating Expenses (Selling, general and administrative expenses)](index=57&type=section&id=Operating%20Expenses%20(Selling,%20general%20and%20administrative%20expenses)) SG&A expenses increased due to higher personnel, stock-based compensation, and acquisition costs Selling, General and Administrative Expenses (Three Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Selling, general and administrative expenses | $11,208 | $10,710 | $498 | 5% | - Key drivers of the increase included a **$0.3 million** rise in stock-based compensation, **$0.2 million** in acquisition-related costs, **$0.2 million** in personnel costs, and **$0.1 million** in credit loss provision[196](index=196&type=chunk) - These increases were partially offset by a **$0.4 million** decrease in insurance costs, particularly director and officer insurance premiums[198](index=198&type=chunk) [Other Income (Interest income)](index=59&type=section&id=Other%20Income%20(Interest%20income)) Interest income significantly increased due to higher interest rates on invested cash balances - Interest income increased by **$1.4 million** to **$1.7 million** for the three months ended June 30, 2023, from **$0.3 million** in the prior year, driven by higher interest rates[199](index=199&type=chunk) [Other Income (Other income (expense), net)](index=59&type=section&id=Other%20Income%20(Other%20income%20(expense),%20net)) Other income (expense), net, remained stable with no material change from the prior year period - Other income (expense), net, was **$0.2 million** for the three months ended June 30, 2023, showing no material change from the prior year[200](index=200&type=chunk) [Comparison of the six months ended June 30, 2023 and 2022](index=59&type=section&id=Comparison%20of%20the%20six%20months%20ended%20June%2030,%202023%20and%202022) Revenue increased, but gross profit decreased, and net loss widened due to higher costs and operating expenses Summary of Results of Operations (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Total revenue | $21,581 | $19,412 | $2,169 | 11.2% | | Total cost of revenue | $11,403 | $8,649 | $2,754 | 31.8% | | Gross profit | $10,178 | $10,763 | $(585) | (5.4)% | | Total operating expenses | $34,134 | $28,653 | $5,481 | 19.1% | | Loss from operations | $(23,956) | $(17,890) | $(6,066) | (33.9)% | | Interest income | $2,706 | $464 | $2,242 | 483.2% | | Net loss | $(21,879) | $(17,514) | $(4,365) | (25.0)% | [Revenue, Cost of Revenue and Gross Profit (Product)](index=60&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Product)) Product revenue increased, but cost of revenue surged, leading to decreased gross profit and margin Product Revenue, Cost, and Gross Profit (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Product revenue | $16,617 | $15,589 | $1,028 | 7% | | Product cost of revenue | $8,586 | $6,276 | $2,310 | 37% | | Gross profit | $8,031 | $9,313 | $(1,282) | (14)% | | Gross profit margin | 48% | 60% | (12)% | | - Product revenue increase was driven by **$1.2 million** higher consumable and accessory revenue, offset by a **$0.2 million** decrease in device sales (desktop sales down **$1.7 million**, handheld sales up **$1.5 million**)[202](index=202&type=chunk) - Product cost of revenue increased due to **$0.7 million** higher unabsorbed overhead, **$0.6 million** higher materials/supplies for warranty/production, **$0.3 million** from higher volume, **$0.2 million** in intangible amortization, and **$0.2 million** in shipping costs[203](index=203&type=chunk) [Revenue, Cost of Revenue and Gross Profit (Service)](index=60&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Service)) Service revenue and gross profit increased significantly, with improved gross profit margin from leverage Service Revenue, Cost, and Gross Profit (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Service revenue | $4,594 | $3,048 | $1,546 | 51% | | Service cost of revenue | $2,718 | $2,126 | $592 | 28% | | Gross profit | $1,876 | $922 | $954 | 103% | | Gross profit margin | 41% | 30% | 11% | | - Increase in service revenue was primarily from handheld extended service contracts and training, and desktop service arrangements[205](index=205&type=chunk) - Service gross profit margin improved due to leveraging fixed infrastructure across handheld and desktop services[208](index=208&type=chunk) [Revenue, Cost of Revenue and Gross Profit (Contract)](index=62&type=section&id=Revenue,%20Cost%20of%20Revenue%20and%20Gross%20Profit%20(Contract)) Contract revenue and gross profit decreased due to completion of prior year government contracts Contract Revenue, Cost, and Gross Profit (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :------------------ | :----- | :----- | :------------ | :------- | | Contract revenue | $370 | $775 | $(405) | (52)% | | Contract cost of revenue | $99 | $247 | $(148) | (60)% | | Gross profit | $271 | $528 | $(257) | (49)% | | Gross profit margin | 73% | 68% | 5% | | - The decrease in contract revenue was primarily due to the completion of work in 2022 related to a prime contract with the U.S. government and a subcontract with a commercial entity holding a U.K. government prime contract[209](index=209&type=chunk) [Operating Expenses (Research and development)](index=62&type=section&id=Operating%20Expenses%20(Research%20and%20development)) R&D expenses increased due to higher headcount, stock-based compensation, occupancy, and program spend Research and Development Expenses (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Research and development expenses | $10,923 | $8,198 | $2,725 | 33% | - The increase was driven by a **$1.2 million** increase in salaries and related costs, **$0.6 million** in stock-based compensation, **$0.4 million** in occupancy expenses, and **$0.2 million** in program spend[212](index=212&type=chunk) [Operating Expenses (Selling, general and administrative expenses)](index=64&type=section&id=Operating%20Expenses%20(Selling,%20general%20and%20administrative%20expenses)) SG&A expenses increased due to higher personnel, stock-based compensation, acquisition, travel, and marketing Selling, General and Administrative Expenses (Six Months Ended June 30, in thousands) | Metric | 2023 | 2022 | Change Amount | Change % | | :-------------------------------- | :----- | :----- | :------------ | :------- | | Selling, general and administrative expenses | $23,211 | $20,455 | $2,756 | 13% | - Key drivers of the increase included a **$1.5 million** rise in salaries and related costs, **$0.8 million** in stock-based compensation, **$0.3 million** in acquisition-related costs, and **$0.2 million** in travel and marketing spend[213](index=213&type=chunk) - These increases were partially offset by a **$0.7 million** decrease in insurance costs[213](index=213&type=chunk) [Other Income (Interest income)](index=64&type=section&id=Other%20Income%20(Interest%20income)) Interest income significantly increased due to higher interest rates on invested cash balances - Interest income increased by **$2.2 million** to **$2.7 million** for the six months ended June 30, 2023, from **$0.5 million** in the prior year, driven by higher interest rates[214](index=214&type=chunk) [Other Income (Interest expense)](index=64&type=section&id=Other%20Income%20(Interest%20expense)) Interest expense increased due to a $0.5 million loss on extinguishment of debt related to the 2022 Revolver - Interest expense increased by **$0.5 million** for the six months ended June 30, 2023, primarily due to a **$0.5 million** loss on extinguishment of debt related to the 2022 Revolver[215](index=215&type=chunk) [Other Income (Other expense, net)](index=64&type=section&id=Other%20Income%20(Other%20expense,%20net)) Other expense, net, remained stable with no material change from the prior year period [Liquidity and Capital Resources](index=64&type=section&id=Liquidity%20and%20Capital%20Resources) Company had $152.7 million in liquidity, repaid debt, defaulted on covenants, and secured an amended credit line - As of June 30, 2023, the company had **$152.7 million** in cash, cash equivalents, and marketable securities, expected to fund operations for at least 12 months[217](index=217&type=chunk) - The **$15.0 million** outstanding balance under the 2022 Revolver was fully repaid on January 4, 2023[225](index=225&type=chunk) - The company defaulted on its 2022 Revolver covenants by transferring cash from SVB in March 2023[230](index=230&type=chunk) - An Amended 2022 Revolver, effective August 4, 2023, reduced the credit line to **$10.0 million**, waived prior defaults, and requires maintaining **$20.0 million** at SVB and a minimum unrestricted cash level[231](index=231&type=chunk)[233](index=233&type=chunk) [Cash Flows](index=70&type=section&id=Cash%20Flows) Net cash decreased by $55.4 million, primarily from operating, investing, and financing activities Summary of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2023 | 2022 | | :-------------------------------- | :----- | :----- | | Cash used in operating activities | $(18,529) | $(10,876) | | Cash used in investing activities | $(21,121) | $(689) | | Cash (used in) provided by financing activities | $(15,782) | $597 | | Net decrease in cash, cash equivalents and restricted cash | $(55,426) | $(10,968) | [Operating Activities](index=70&type=section&id=Operating%20Activities) Net cash used in operating activities increased due to net loss and changes in operating assets/liabilities - Net cash used in operating activities was **$18.5 million** for the six months ended June 30, 2023, primarily from a **$21.9 million** net loss and **$3.4 million** used in changes in operating assets and liabilities[237](index=237&type=chunk) - Changes in operating assets and liabilities included a **$1.7 million** decrease from inventory and a **$0.9 million** decrease from accounts payable and accrued expenses[237](index=237&type=chunk) [Investing Activities](index=70&type=section&id=Investing%20Activities) Net cash used in investing activities significantly increased due to marketable securities and equipment purchases - Net cash used in investing activities was **$21.1 million** for the six months ended June 30, 2023, driven by **$19.6 million** in marketable securities purchases and **$1.5 million** in property and equipment purchases[239](index=239&type=chunk) [Financing Activities](index=70&type=section&id=Financing%20Activities) Cash used in financing activities due to debt repayment and pension liability payment - Cash used in financing activities was **$15.8 million** for the six months ended June 30, 2023, mainly from the **$15.0 million** repayment of the 2022 Revolver and a **$0.9 million** pension liability payment[240](index=240&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=70&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Financial statements require estimates and judgments; no significant changes to critical accounting policies - Financial statements require estimates and judgments for revenue recognition, inventory valuation, fair value of acquired assets/liabilities, and stock-based awards[242](index=242&type=chunk) - No significant changes to critical accounting policies were made for the six months ended June 30, 2023[244](index=244&type=chunk) [Recently Issued Accounting Pronouncements](index=72&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Details on recently issued accounting pronouncements are provided in Note 2 of the financial statements - Details on recently issued accounting pronouncements are provided in Note 2 of the financial statements[245](index=245&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=72&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, market risk disclosures are not required for this period - The company is a smaller reporting company and is not required to provide market risk disclosures[246](index=246&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective; no material changes in internal control over financial reporting - Disclosure controls and procedures were deemed effective at a reasonable assurance level as of June 30, 2023[247](index=247&type=chunk) - No material changes in internal control over financial reporting occurred during the most recently completed fiscal quarter[248](index=248&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=47&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently party to any material legal proceedings[251](index=251&type=chunk) [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors occurred during the three months ended June 30, 2023 - No material changes to risk factors occurred during the three months ended June 30, 2023[252](index=252&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities or use of proceeds to report for this period - No unregistered sales of equity securities or use of proceeds[253](index=253&type=chunk) [Item 3. Defaults Upon Senior Securities](index=47&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities to report for this period - No defaults upon senior securities[254](index=254&type=chunk) [Item 4. Mine Safety Disclosures](index=47&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) No mine safety disclosures to report for this period - No mine safety disclosures[255](index=255&type=chunk) [Item 5. Other Information](index=47&type=section&id=Item%205.%20Other%20Information) No other information to report for this period - No other information to report[256](index=256&type=chunk) [Item 6. Exhibits](index=48&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Quarterly Report, including certifications and loan agreement amendments - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1, 32.2), a Default Waiver and First Amendment to Loan and Security Agreement (10.18), and Inline XBRL documents[258](index=258&type=chunk) Signatures [Signatures](index=49&type=section&id=Signatures) The report was signed by the CEO and CFO on August 8, 2023 - The report was signed by Kevin J. Knopp, Ph.D., CEO, and Joseph H. Griffith IV, CFO, on August 8, 2023[263](index=263&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 001-39815 908 DEVICES INC. (Exact name of registrant as specified in its charter) Delaware 45-4524096 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number: 001-39815 908 DEVICES INC. (Exact name of registrant as specified in its charter) | Delaware | 45-4524096 | | --- | -- ...

Financial Data and Key Metrics Changes - Total revenue for Q4 2022 was $11.6 million, down from $15.8 million in the prior year period, with a notable shipment of MX-908 devices to the U.S. Army in Q4 2021 contributing to this decline [30] - Total revenue for the full year 2022 was $46.9 million, an 11% increase from $42.2 million in 2021 [11][59] - Gross profit for Q4 2022 was $5.9 million, with a gross margin of 51%, down from 58% in the prior year period [31] - Net loss for the full year 2022 was $33.6 million, compared to $22.2 million in the prior year [62] Business Line Data and Key Metrics Changes - Desktop revenue grew by more than 25% year-over-year, significantly outpacing overall growth [11] - Handheld revenue from the MX-908 product for Q4 2022 was $7.1 million, including 55 device shipments [30] - Recurring revenue for the full year was $15.7 million, representing a 101% increase year-over-year, driven primarily by handheld accessories and consumables [60] Market Data and Key Metrics Changes - The company has 17 enterprise accounts with over 800 devices of additional opportunity, up 15% compared to year-end 2021 [7][118] - There are currently 2,220 active clinical trials for advanced therapies, indicating a growing market for the company's products [5] Company Strategy and Development Direction - The company is focused on developing and launching new products to meet the growing demand for robust analytics at the point of need, with a strategy to broaden its bio-analytics platform [45][54] - The acquisition of TRACE Analytics has strengthened the company's core microfluidics technology, enhancing its product offerings [8][49] - The company aims to maintain a disciplined approach to capital deployment, with a focus on profitability and efficient spending [33][105] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued industry headwinds through the first half of 2023, with protracted capital purchasing cycles affecting sales [4] - Despite challenges, management remains confident in the long-term trajectory and the value of the technology platform [25][67] - The company expects revenue for 2023 to be in the range of $48 million to $52 million, representing growth of 2% to 11% over 2022 [66] Other Important Information - Operating expenses for the full year 2022 were $61.4 million, up from $45.3 million in the prior year, primarily due to increased personnel costs [29] - The company ended 2022 with $188 million in cash and cash equivalents, providing a strong cash runway [64] Q&A Session Summary Question: What challenges are being seen within bioprocess? - Management noted that customers are under pressure, leading to slower deal velocity and more thoughtful cash investments [37] Question: What are customers looking for in purchasing decisions? - Management indicated that consumables and service revenue for desktops were up about 55% for Q4, suggesting positive indicators for future purchases [40] Question: What is the outlook for 2023? - Management expressed cautious optimism, noting that while there are macro headwinds, there are also signs of recovery and strong demand for advanced therapeutics [108][110] Question: How is the company addressing the reduction in workforce? - The company implemented a 6% reduction in headcount to maintain a disciplined approach to capital deployment and ensure expenses do not outpace revenue growth [105][106]

24 0 Flexible integrations for Process Development & GMP Easy to operate & Real-time (data up to every 2 min) Native protein analysis Peptide mapping Diagnostics Intact mass verification Oligonucleotide QC mAb PTM characterization 26 40+ DEVICES COMPATIBLE 'MAINFRAMES' Growth catalysts Market Trends Support Long Term Growth 3 of 5 fentanyl-laced fake prescription pills contain a lethal dose Drive to Bioprocessing 4.0 FORENSICS Our ADVANCED THERAPIES SARTORIUS AMBR 15 Adjust Controls Temperature Feed rate Sp ...

908 Devices Inc. (NASDAQ:MASS) Q3 2022 Results Conference Call November 14, 2022 8:30 AM ET Company Participants Kelly Gura - IR Kevin Knopp - CEO and Co-Founder Joe Griffith - CFO Conference Call Participants Max Masucci - Cowen Daniel Arias - Stifel Puneet Souda - Leerink Madeline Mollman - William Blair Operator Good day and thank you for standing by. Welcome to the 908 Devices Third Quarter 2022 Financial Results Conference Call. [Operator Instructions] I would now like to hand the conference over to yo ...

908 Devices Inc. (NASDAQ:MASS) Q2 2022 Earnings Conference Call August 9, 2022 8:30 AM ET Company Participants Kelly Gura - Investor Relations Kevin Knopp - Chief Executive Officer & Co-Founder Joe Griffith - Chief Financial Officer Conference Call Participants Dan Arias - Stifel Max Masucci - Cowen Operator Hello, thank you for standing by. And welcome to the 908 Devices' Second Quarter 2022 Financial Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] ...

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for 908 Devices Inc., detailing financial position, performance, cash flows, and significant accounting policies [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2022, total assets decreased to **$247.0 million** from **$260.9 million** at year-end 2021, primarily due to reduced cash and cash equivalents Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $212,994 | $224,073 | | Inventory | $11,178 | $7,918 | | Total current assets | $238,678 | $252,893 | | Total assets | $246,995 | $260,906 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $15,434 | $14,836 | | Long-term debt | $15,000 | $15,000 | | Total liabilities | $45,880 | $46,302 | | Accumulated deficit | $(118,151) | $(100,637) | | Total stockholders' equity | $201,115 | $214,604 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the six months ended June 30, 2022, total revenue increased to **$19.4 million**, but net loss widened to **$17.5 million** due to higher operating expenses Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Total revenue | $11,106 | $8,277 | $19,412 | $13,820 | | Gross profit | $6,634 | $4,379 | $10,763 | $7,287 | | Loss from operations | $(8,369) | $(7,455) | $(17,890) | $(13,265) | | Net loss | $(8,099) | $(7,424) | $(17,514) | $(13,519) | | Net loss per share (basic and diluted) | $(0.26) | $(0.27) | $(0.56) | $(0.49) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Total stockholders' equity decreased to **$201.1 million** as of June 30, 2022, primarily due to a **$17.5 million** net loss Changes in Stockholders' Equity (Six Months Ended June 30, 2022, in thousands) | Description | Amount | | :--- | :--- | | Balance at December 31, 2021 | $214,604 | | Net loss | $(17,514) | | Stock-based compensation expense | $3,183 | | Issuance of common stock (options/ESPP) | $1,382 | | Balance at June 30, 2022 | $201,115 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities improved to **$10.9 million** for the six months ended June 30, 2022, with overall cash and equivalents decreasing by **$11.0 million** Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(10,876) | $(16,938) | | Net cash used in investing activities | $(689) | $(625) | | Net cash provided by (used in) financing activities | $597 | $(290) | | **Net decrease in cash** | **$(10,968)** | **$(17,853)** | | Cash at end of period | $213,165 | $141,374 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's business, accounting policies, customer concentration, disaggregated revenue, and the subsequent acquisition of TRACE Analytics GmbH - One customer accounted for **19% of total revenue** and **13% of gross accounts receivable** for the six months ended June 30, 2022[35](index=35&type=chunk) Disaggregated Revenue (Six Months Ended June 30, in thousands) | Revenue Stream | 2022 | 2021 | | :--- | :--- | :--- | | **By Type** | | | | Device sales revenue | $13,287 | $10,092 | | Consumables and service revenue | $5,350 | $3,180 | | License and contract revenue | $775 | $548 | | **Total Revenue** | **$19,412** | **$13,820** | | **By Geography** | | | | Americas | $15,538 | $10,489 | | Europe, Middle East and Africa | $2,601 | $2,171 | | Asia Pacific | $1,273 | $1,160 | - The company acquired TRACE Analytics GmbH on August 3, 2022, for an initial **$15.3 million** cash payment and up to **$2.0 million** in contingent consideration[84](index=84&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting **40% revenue growth** in H1 2022, widening net losses due to strategic investments, and a sufficient liquidity position [Overview](index=26&type=section&id=Overview) The company develops and sells mass spectrometry devices, reporting **$19.4 million** in revenue and a **$17.5 million** net loss for H1 2022, with continued losses expected due to growth investments - The company manufactures purpose-built handheld (MX908) and desktop (Rebel, ZipChip) mass spectrometry devices for point-of-need analysis[89](index=89&type=chunk)[91](index=91&type=chunk) - For the six months ended June 30, 2022, the company generated **$19.4 million** in revenue and incurred a net loss of **$17.5 million**, with an accumulated deficit of **$118.2 million**[93](index=93&type=chunk) [Factors Affecting Our Performance](index=28&type=section&id=Factors%20Affecting%20Our%20Performance) Performance is driven by device sales, recurring revenue, and revenue mix, with recurring revenue representing **29%** of product and service revenue in H1 2022 - Device sales are a primary performance driver, with varying sales cycles depending on customer type, such as long cycles for government and variable cycles for pharma/biotech[100](index=100&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - Recurring revenue from consumables and services, a key focus, represented **29%** of product and service revenue for the six months ended June 30, 2022, up from **24%** in the prior year[104](index=104&type=chunk) [Key Business Metrics](index=31&type=section&id=Key%20Business%20Metrics) Product placements, a key business metric, totaled **207 units** for the six months ended June 30, 2022, contributing to **2,142 cumulative placements** Product Placements (Units) | Device | Q2 2022 | Q2 2021 | Six Months 2022 | Six Months 2021 | | :--- | :--- | :--- | :--- | :--- | | MX908 | 102 | 84 | 165 | 137 | | Rebel | 14 | 12 | 29 | 21 | | ZipChip Interface | 8 | 7 | 13 | 11 | | **Total** | **124** | **103** | **207** | **169** | Cumulative Product Placements (Units) | Device | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | MX908 | 1,815 | 1,295 | | Rebel | 129 | 67 | | ZipChip Interface | 198 | 168 | | **Total** | **2,142** | **1,530** | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section details financial results, showing **34% revenue growth** in Q2 2022 and **40%** for H1 2022, alongside increased operating expenses leading to wider losses Q2 2022 vs Q2 2021 Comparison (in thousands) | Metric | Q2 2022 | Q2 2021 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $11,106 | $8,277 | $2,829 | 34% | | Gross Profit | $6,634 | $4,379 | $2,255 | 51.5% | | Product & Service Gross Margin | 59% | 51% | 8 p.p. | - | | R&D Expenses | $4,293 | $3,055 | $1,238 | 41% | | SG&A Expenses | $10,710 | $8,779 | $1,931 | 22% | | Loss from Operations | $(8,369) | $(7,455) | $(914) | 12% | Six Months 2022 vs 2021 Comparison (in thousands) | Metric | H1 2022 | H1 2021 | Change $ | Change % | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $19,412 | $13,820 | $5,592 | 40% | | Gross Profit | $10,763 | $7,287 | $3,476 | 47.7% | | Product & Service Gross Margin | 55% | 52% | 3 p.p. | - | | R&D Expenses | $8,198 | $6,020 | $2,178 | 36% | | SG&A Expenses | $20,455 | $14,532 | $5,923 | 41% | | Loss from Operations | $(17,890) | $(13,265) | $(4,625) | 35% | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2022, the company held **$213.0 million** in cash, deemed sufficient for the next twelve months, with **$10.9 million** net cash used in operations for H1 2022 - The company held **$213.0 million** in cash and cash equivalents as of June 30, 2022[153](index=153&type=chunk) - Net cash used in operating activities for the six months ended June 30, 2022, was **$10.9 million**, an improvement from **$16.9 million** in the prior year[159](index=159&type=chunk)[160](index=160&type=chunk) - The company maintains a **$25.0 million** revolving line of credit, maturing in March 2024, subject to covenants including a **$10.0 million** minimum cash level[156](index=156&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk[169](index=169&type=chunk) [Item 4. Controls and Procedures](index=47&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2022, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of the report period end[170](index=170&type=chunk) - No material changes occurred in internal control over financial reporting during the most recently completed fiscal quarter[171](index=171&type=chunk) [PART II. OTHER INFORMATION](index=48&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any material legal proceedings - The Company is not currently party to any material legal proceedings[174](index=174&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's 2021 Annual Report on Form 10-K - There are no material changes to the risk factors discussed in the company's 2021 Annual Report on Form 10-K[175](index=175&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=48&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities and no material change in the planned use of IPO proceeds - There has been no material change in the planned use of IPO proceeds from that described in the final prospectus filed on December 18, 2020[179](index=179&type=chunk) [Item 3. Defaults Upon Senior Securities](index=48&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - No defaults upon senior securities were reported[181](index=181&type=chunk) [Item 4. Mine Safety Disclosures](index=48&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is not applicable[182](index=182&type=chunk) [Item 5. Other Information](index=49&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - No other information is reported for this item[183](index=183&type=chunk) [Item 6. Exhibits](index=50&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including CEO and CFO certifications and XBRL data - Exhibits filed include CEO and CFO certifications pursuant to Sarbanes-Oxley Act of 2002 and Inline XBRL documents[186](index=186&type=chunk)