[Part I - Financial Information](index=8&type=section&id=Part%20I%20Financial%20Information) This section details the company's unaudited financial statements and management's analysis of its financial condition and operations [Item 1. Financial Statements](index=8&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements for the periods ended June 30, 2021 and 2020 [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20consolidated%20balance%20sheets) As of June 30, 2021, total assets increased to **$129.2 million** from **$70.0 million**, driven by a significant increase in cash and cash equivalents to **$100.0 million** Condensed Consolidated Balance Sheet Highlights (in millions) | | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $100.0 | $30.1 | | Total current assets | $118.0 | $62.2 | | Total assets | $129.2 | $70.0 | | **Liabilities and Stockholders' Deficit** | | | | Total current liabilities | $16.0 | $15.5 | | Preferred stock warrant liability | $15.6 | $4.1 | | Total liabilities | $57.9 | $45.2 | | Accumulated deficit | $(275.5) | $(241.6) | | Total stockholders' deficit | $(164.5) | $(127.0) | [Condensed Consolidated Statements of Operations](index=10&type=section&id=Condensed%20consolidated%20statements%20of%20operations) For the three months ended June 30, 2021, total revenue increased to **$6.1 million**, but net loss widened to **$11.8 million**, while for the six-month period, net loss increased to **$33.9 million** Statement of Operations Summary (in millions) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :--- | :--- | :--- | | | **2021** | **2020** | **2021** | **2020** | | Total revenue | $6.1 | $2.6 | $11.1 | $5.6 | | Loss from operations | $(10.9) | $(6.0) | $(20.6) | $(13.2) | | Net loss | $(11.8) | $(9.3) | $(33.9) | $(17.3) | | Net loss per share | $(20.01) | $(31.93) | $(57.17) | $(59.13) | - Product revenue for Q2 2021 was **$4.1 million**, a **146% increase** from **$1.7 million** in Q2 2020, and for the six months ended June 30, 2021, it was **$7.8 million**, up **174%** from **$2.9 million** in the same period of 2020[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20consolidated%20statements%20of%20cash%20flows) For the six months ended June 30, 2021, net cash used in operating activities was **$22.8 million**, while financing activities provided **$78.7 million**, resulting in a net increase in cash of **$70.2 million** Cash Flow Summary for Six Months Ended June 30 (in millions) | | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22.8) | $(17.0) | | Net cash provided by (used in) investing activities | $14.2 | $(25.4) | | Net cash provided by financing activities | $78.7 | $64.2 | | Net increase in cash, cash equivalents and restricted cash | $70.2 | $21.8 | | Cash, cash equivalents and restricted cash at end of period | $100.3 | $34.4 | [Notes to Condensed Consolidated Financial Statements](index=16&type=section&id=Notes%20to%20condensed%20consolidated%20financial%20statements) These notes detail the company's accounting policies, significant financial events like its IPO and reverse stock split, and provide insights into its accumulated deficit and liquidity position - On July 19, 2021, the company closed its IPO, selling 7,920,000 shares of Class A common stock at $20.00 per share, resulting in net proceeds of approximately **$143.6 million**[37](index=37&type=chunk)[172](index=172&type=chunk) - A **one-for-five reverse stock split** was effected on July 9, 2021, with all share and per-share amounts retroactively adjusted[36](index=36&type=chunk)[170](index=170&type=chunk) - As of June 30, 2021, the company had an accumulated deficit of **$275.5 million**, but management expects existing cash to fund operations for at least the next twelve months[40](index=40&type=chunk)[42](index=42&type=chunk) Significant Customer Revenue Concentration (Six Months Ended June 30) | Customer | 2021 (% of Total Revenue) | 2020 (% of Total Revenue) | | :--- | :--- | :--- | | Customer A | 13.7% | * | | Customer B | * | 28.2% | | Customer C | * | 19.6% | *less than 10% [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting revenue growth, continued net losses from strategic investments, and strong liquidity post-IPO [Overview](index=62&type=section&id=Overview) The company provides an automated microbial quality control platform, the Growth Direct system, for pharmaceutical manufacturing, and despite revenue growth, it continues to incur significant net losses - The company develops and sells the **Growth Direct system**, an automated platform for rapid microbial quality control (MQC) testing in pharmaceutical manufacturing[177](index=177&type=chunk) - The company incurred a net loss of **$33.9 million** for the six months ended June 30, 2021, and had an accumulated deficit of **$275.5 million** as of that date[182](index=182&type=chunk) - The company closed its IPO on July 19, 2021, raising total net proceeds of approximately **$163.8 million** including the overallotment option[180](index=180&type=chunk)[181](index=181&type=chunk) [Key Business Metrics](index=68&type=section&id=Key%20business%20metrics) The company tracks system placements, validated systems, and recurring revenue, showing significant year-over-year increases in all key business metrics for the six months ended June 30, 2021 Key Business Metrics Comparison (Six Months Ended June 30, in millions) | Metric | 2021 | 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Systems placed in period | 16 | 5 | 11 | 220.0% | | Cumulative systems placed | 103 | 66 | 37 | 56.1% | | Systems validated in period | 12 | 6 | 6 | 100.0% | | Cumulative systems validated | 63 | 33 | 30 | 90.9% | | Product and service revenue — total | $10.5 | $4.0 | $6.5 | 160.9% | | Product and service revenue — recurring | $3.4 | $1.9 | $1.5 | 81.4% | [Results of Operations](index=80&type=section&id=Results%20of%20operations) For the six months ended June 30, 2021, total revenue increased by **98.9%** to **$11.1 million**, driven by product revenue growth, while the net loss widened to **$33.9 million** due to increased operating expenses and a significant non-cash charge Comparison of Six Months Ended June 30, 2021 and 2020 (in millions) | | 2021 | 2020 | Change (%) | | :--- | :--- | :--- | :--- | | **Total revenue** | **$11.1** | **$5.6** | **98.9%** | | Product revenue | $7.8 | $2.9 | 173.7% | | Service revenue | $2.7 | $1.2 | 129.4% | | Non-commercial revenue | $0.6 | $1.6 | (59.0)% | | **Total costs and operating expenses** | **$31.7** | **$18.8** | **68.1%** | | Cost of product revenue | $11.6 | $6.1 | 90.1% | | Research and development | $4.5 | $2.7 | 67.2% | | Sales and marketing | $5.4 | $2.7 | 99.7% | | **Loss from operations** | **$(20.6)** | **$(13.2)** | **55.1%** | | **Net loss** | **$(33.9)** | **$(17.3)** | **96.4%** | - The increase in net loss for the first six months of 2021 was primarily driven by an **$11.5 million** loss from the change in fair value of the preferred stock warrant liability, compared to a **$0.5 million** gain in the same period of 2020[273](index=273&type=chunk) [Liquidity and Capital Resources](index=87&type=section&id=Liquidity%20and%20capital%20resources) As of June 30, 2021, the company had **$100.0 million** in cash and cash equivalents, with its recent IPO providing approximately **$163.8 million** in net proceeds, expected to fund operations for at least the next twelve months - As of June 30, 2021, the company had cash and cash equivalents of **$100.0 million**[274](index=274&type=chunk) - The company received total net proceeds of approximately **$163.8 million** from its IPO and the exercise of the underwriters' overallotment option in July and August 2021[274](index=274&type=chunk) - The company has a **$60.0 million** term loan facility, with **$25.0 million** drawn and additional tranches available upon meeting system sales milestones[283](index=283&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company has limited exposure to market risks, with minimal interest rate risk due to fixed-rate debt and no significant foreign currency or inflation impact - The company's 2020 Term Loan has fixed interest rate options, so a 10% change in the prime rate would not materially impact it[303](index=303&type=chunk) - The company is not currently exposed to significant market risk from changes in foreign currency exchange rates or inflation[304](index=304&type=chunk)[305](index=305&type=chunk) [Item 4. Controls and Procedures](index=94&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of June 30, 2021, the company's disclosure controls and procedures were effective at the reasonable assurance level[309](index=309&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2021[310](index=310&type=chunk) [Part II - Other Information](index=97&type=section&id=Part%20II%20Other%20Information) This section provides other required information, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=97&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not subject to any material legal proceedings - The company is not a party to any material legal proceedings[313](index=313&type=chunk) [Item 1A. Risk Factors](index=97&type=section&id=Item%201A.%20Risk%20Factors) This section details significant financial, business, manufacturing, and intellectual property risks facing the company, including its history of losses and reliance on key suppliers - **Financial Risks:** The company has a history of significant losses (**$275.4 million** accumulated deficit as of June 30, 2021) and may not achieve profitability, with revenue concentrated among a small number of customers[316](index=316&type=chunk)[328](index=328&type=chunk) - **Business & Strategy Risks:** The COVID-19 pandemic may continue to disrupt operations, and the business relies heavily on market acceptance of its automated MQC testing platform while facing competition[335](index=335&type=chunk)[342](index=342&type=chunk)[365](index=365&type=chunk) - **Manufacturing & Supply Risks:** The company operates from a single manufacturing facility and relies on third-party, sometimes single-source, suppliers for critical components, increasing vulnerability to shortages[413](index=413&type=chunk)[416](index=416&type=chunk) - **Intellectual Property Risks:** The ability to protect technology is critical, but some U.S. patents covering the Growth Direct system are scheduled to expire in 2024, increasing reliance on trade secrets and exposing the company to infringement claims[429](index=429&type=chunk)[437](index=437&type=chunk)[442](index=442&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=173&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company granted stock options and issued shares during Q2 2021, and following its IPO, invested the approximately **$163.8 million** net proceeds into liquid assets - From April 1 to June 30, 2021, the company granted stock options to purchase **444,281 shares** of Class A common stock[528](index=528&type=chunk) - The company completed its IPO on July 19, 2021, raising net proceeds of approximately **$143.6 million**, with an additional **$20.2 million** from the underwriters' option exercise in August 2021[531](index=531&type=chunk) - The net proceeds from the IPO have been invested in cash and a highly liquid money market fund for liquidity and capital preservation[534](index=534&type=chunk) [Item 3. Defaults Upon Senior Securities](index=175&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[535](index=535&type=chunk) [Item 4. Mine Safety Disclosures](index=175&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[537](index=537&type=chunk) [Item 5. Other Information](index=175&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company - Not applicable[538](index=538&type=chunk) [Item 6. Exhibits](index=175&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate documents and various certifications