Core Viewpoint - Accelerate Diagnostics, Inc. has voluntarily initiated a Chapter 11 restructuring proceeding and will seek to sell its assets through a court-supervised sale process [1]. Group 1: Chapter 11 Filing - The company has filed various "first day" motions with the Bankruptcy Court to ensure a smooth transition into Chapter 11, including requests for debtor-in-possession (DIP) financing and the ability to pay employee wages and benefits [2]. Group 2: DIP Financing - Accelerate has secured a commitment of up to $12.5 million in a multi-draw DIP financing facility to provide necessary funding during the Chapter 11 proceeding, which is expected to ensure liquidity for normal operations and obligations to employees, vendors, and customers [3]. Group 3: Sale Process - Prior to the Chapter 11 filing, the company agreed to terms with Indaba Capital Management to acquire substantially all of its assets, with a "stalking horse" bid that includes a credit bid of $36.9 million of Indaba's existing secured notes and DIP financing facility [4]. - The sale process will comply with Bankruptcy Code Section 363 and will allow for the submission of higher or better offers, with an auction to be conducted if additional qualified bids are received [4]. - The company will manage the bidding process in consultation with its advisors and under the oversight of the Bankruptcy Court [4]. Group 4: Legal and Financial Advisory - Accelerate is represented by Fried, Frank, Harris, Shriver & Jacobson LLP as legal counsel, Solic Capital as financial advisor, and Perella Weinberg Partners L.P. as restructuring investment banker [5].

Preliminary Financial Results Announcement - Accelerate Diagnostics, Inc. announced preliminary results for the quarter and year ending December 31, 2024 on January 10, 2025 [3] - The press release detailing the preliminary results is attached as Exhibit 99.1 and incorporated by reference [3] Regulatory and Filing Information - The information in Item 2.02, including Exhibit 99.1, is not deemed "filed" for purposes of Section 18 of the Exchange Act [4] - The report includes an Interactive Data File (XBRL) as Exhibit 104 [5] Executive Signatory - The report was signed by David Patience, Chief Financial Officer of Accelerate Diagnostics, Inc., on January 10, 2025 [8]

Financial Viability and Concerns - As of December 31, 2024, the company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to fund forecasted operating costs for at least twelve months [106]. - The company has incurred significant losses from operations during the years ended December 31, 2024 and 2023, and expects to continue incurring losses in the future [119]. - The company may need to materially modify operations, sell assets, or pursue strategic alternatives if adequate capital resources are not obtained [108]. - The company may seek protection under Chapter 11 of the Bankruptcy Code, which could adversely affect its business and stockholder value [117]. - The company may face cash shortfalls if it cannot reduce expenditures in response to unexpected events or revenue shortfalls [129]. - The company is exploring additional funding options, but there is no assurance that necessary financing will be available on acceptable terms [107]. Product Development and Commercialization - The successful commercialization of the Accelerate Pheno system and Accelerate Arc system is critical for the company's future profitability and existence [120]. - The company anticipates that its future revenues will depend on the successful commercialization of its products, but there is no assurance of achieving sufficient revenues [118]. - The company has not yet obtained FDA marketing authorization for its future product candidates, including the Accelerate WAVE system, which may hinder revenue generation [127]. - Delays in achieving projected development goals could impact product commercialization timelines and negatively affect stock prices [130]. - The company has made significant investments in research and development, particularly in the Accelerate Pheno, Accelerate Arc, and Accelerate WAVE systems, but there is no guarantee these will result in commercially viable products [183]. - The company has commercialized the Accelerate Pheno system in the United States, Europe, and certain other regions, but there is no assurance of successful commercialization or avoidance of operating losses [232]. Regulatory and Compliance Risks - The company is subject to extensive regulation by the FDA and other governing bodies, which could impact product commercialization and operational costs [190]. - Regulatory processes for the company’s products are expensive and time-consuming, with no assurance of obtaining necessary approvals for commercialization [209]. - The company must comply with CLIA regulations, which could restrict the use of its diagnostic products by customers [199]. - The company is subject to regulatory inspections and must comply with FDA requirements to avoid suspension of its manufacturing process [216]. - The company may face recalls or seizures of products due to regulatory violations, which could harm its reputation and financial resources [198]. Financial Reporting and Internal Controls - The company identified a material weakness in internal control over financial reporting, which could affect the accuracy and timing of financial reporting [163]. - The company has a compliance program in place, but risks remain regarding potential misconduct by employees and partners, which could lead to significant penalties and reputational harm [1]. Market and Economic Conditions - The company faces challenges in obtaining additional capital due to current macroeconomic conditions, which may affect customer spending on products [244]. - Market opportunity estimates and growth forecasts are subject to significant uncertainty, which may lead to overestimation of potential market opportunities [148]. - The company is facing unprecedented cost increases from suppliers, primarily due to labor and supply disruptions, which may materially reduce gross profit margins [162]. Legal and Intellectual Property Risks - There is a risk of litigation arising from allegations of intellectual property infringement, which could result in substantial costs and distract management [176]. - The company may face challenges in defending its patents against third-party claims, which could affect its ability to commercialize products [170]. - The lifespan of patents is limited, generally expiring 20 years after filing, which could impact long-term competitive advantages [172]. Stock and Shareholder Considerations - The company received a notice from Nasdaq indicating that its Market Value of Listed Securities was below the minimum requirement of $35 million for continued listing [225]. - The company has until July 28, 2025, to regain compliance with the Nasdaq listing requirements [226]. - If compliance is not regained, the company may face delisting, which could adversely affect its ability to attract new investors and reduce liquidity [227]. - The company increased the total number of authorized shares of common stock by 250 million, totaling 450 million shares, which may cause significant dilution [229]. - A reverse stock split was completed in July 2023, resulting in an increase in the number of authorized and unissued shares [229]. - The company has a significant number of options, warrants, and RSUs outstanding, which could further dilute stockholders if exercised [231]. - The market value of the company's common stock may rise or fall sharply due to volatility and significant short positions taken by investors [240]. Operational Risks - The company relies on third-party manufacturers for key components, which introduces risks related to regulatory compliance and quality assurance [161]. - Manufacturing processes for the company's products are complex, and any unforeseen issues could lead to delays or shortfalls in production, adversely affecting revenue growth [185]. - The company operates a single research and development facility in Tucson, Arizona, and any disruption to this facility could materially harm its ability to conduct research and development activities [184]. - The company relies heavily on key personnel, and failure to retain qualified employees could hinder its ability to achieve strategic goals [139]. Impact of COVID-19 - The company has experienced significant adverse impacts from the COVID-19 pandemic, affecting access to customers and sales capabilities, particularly in hospitals [157].

Financial Data and Key Metrics - Net sales for Q3 2024 were approximately $3 million, a decrease from $3.3 million in the same period last year, driven by lower instrument sales [22] - Gross margin improved to 29% in Q3 2024, up from 3% in the prior year, due to product mix and an inventory write-down in the previous period [24] - Selling, general, and administrative (SG&A) expenses decreased to $5.6 million from $7.8 million, primarily due to lower employee-related expenses [25] - Research and development (R&D) expenses declined to $3.8 million from $7 million, driven by reduced third-party development costs for the WAVE program [26] - Net loss for the quarter was $14.6 million, resulting in a loss per share of $0.59 [27] - Cash used in the quarter was $5.5 million, with a target cash burn rate of $5 million per quarter [27][40] Business Line Updates - The WAVE system's clinical trial for Gram-Negative testing is on track, with external site enrollments meeting expectations and strong reliability demonstrated [7] - FDA 510(k) clearance was obtained for the Accelerate Arc system, which automates microbial identification from positive blood cultures, reducing diagnostic turnaround times [9][10] - The company is focusing on converting its existing Pheno customers to WAVE, with ongoing education and long-term contracts in place [32][33] - The Arc system is expected to complement WAVE by automating MALDI-based rapid ID workflows, with high customer receptivity [15][36] Market and Strategic Direction - The company is strengthening its leadership in the rapid positive blood culture AST market and disrupting the isolate susceptibility testing landscape, which is a $1 billion market [11][18] - WAVE is positioned to consolidate lab testing volumes on a single platform, addressing customer demand for unified AST solutions [17] - Future plans include expanding WAVE to new markets and exploring applications of holographic imaging technology in other diagnostic fields [19] Management Commentary on Operating Environment and Outlook - Management is encouraged by the progress in the WAVE clinical trial and the commercial launch of Arc, with growing market interest in WAVE [20] - The company anticipates having sufficient operating cash through year-end 2025, contingent on receiving contractual payments from third-party partnerships [28] - Management emphasized disciplined financial management to maintain market leadership and support future innovation [44] Q&A Session Question: Transition from Pheno to WAVE - The company has a plan in place to transition existing Pheno customers to WAVE, with ongoing education and long-term contracts. The majority of Pheno customers are expected to convert to WAVE post-launch [31][32][33] Question: Commercial Roadmap for Arc - The Arc system has been well-received, with high customer interest. The sales force is trained, and marketing plans are in place, but it is too early to provide financial guidance for 2025 [35][36][37] Question: Cash Usage Outlook - The company is targeting a cash burn rate of $5 million per quarter, with strong working capital gains in Q3 2024. Future cash usage will focus on delivering key milestones while maintaining financial discipline [39][40][41]

Sales Performance - Net sales for Q3 2024 decreased by $324 thousand (10%) compared to Q3 2023, primarily due to lower sales of Accelerate PhenoTest instruments[236] - Net sales for the nine months ended September 30, 2024, decreased by $150 thousand (2%) compared to the same period in 2023[236] Product Development and Innovation - The Accelerate WAVE system is in clinical trials, aiming to deliver AST results within 4.5 hours, with potential to process both PBC and Isolate samples[231] - The Accelerate WAVE system is expected to have lower production costs compared to the Accelerate PhenoTest BC Kit, potentially improving the company's margin profile[233] - The company continues to invest in R&D, focusing on enhancing existing products and developing the next-generation AST platform, Accelerate WAVE[234] Regulatory Approvals and Collaborations - The company received FDA approval for the Accelerate Arc Products in September 2024 as a 510(k) IVD Class II Device[226] - The company announced a collaboration with Bruker Corporation in November 2023 to validate the use of the Accelerate Arc system with Bruker's MALDI Biotyper system[229] - The Accelerate Arc Products received CE IVDR registration for use in Europe in June 2022[225] - The company entered into a sales and marketing agreement with BD in August 2022 to leverage BD's global sales team and reduce sales and marketing expenses[223] - The Accelerate Pheno system and Accelerate PhenoTest BC Kit received FDA de novo classification in February 2017[221] Financial Performance and Cost Management - Cost of sales decreased by $1.07 million (34%) for the three months and $0.49 million (7%) for the nine months ended September 30, 2024, primarily due to an inventory write-down in the prior year[237] - Gross profit increased by $0.75 million (700%) for the three months and $0.34 million (18%) for the nine months ended September 30, 2024, with gross margins of 29% and 25% respectively[239] - Research and development expenses decreased by $3.16 million (45%) for the three months and $6.87 million (35%) for the nine months ended September 30, 2024, mainly due to reduced third-party costs for the Accelerate WAVE system[240] - Sales, general and administrative expenses decreased by $2.13 million (27%) for the three months and $8.71 million (34%) for the nine months ended September 30, 2024, driven by lower legal and professional fees[243] - Loss from operations decreased by $6.03 million (41%) for the three months and $15.92 million (37%) for the nine months ended September 30, 2024, primarily due to increased gross profit and reduced expenses[245] - Total other income (expense), net decreased by $21.71 million (138%) for the three months and increased by $8.04 million (160%) for the nine months ended September 30, 2024, influenced by a fair-value adjustment of derivative liability[247] Financial Position and Liquidity - The company had a net loss of $40.5 million and negative cash flows from operations of $19.1 million for the nine months ended September 30, 2024, with an accumulated deficit of $709.3 million[249] - The company entered into a Forbearance Agreement and completed Restructuring Transactions in 2023 to address capital structure issues[250] - The company completed a public offering in January 2024, raising net proceeds of $11.0 million, with an additional $2.7 million raised in May 2024 from the Schuler Trust[251] - In August 2024, the company issued $15.0 million in 16.00% Super-Priority Senior Secured PIK Notes due 2025[252] - As of September 30, 2024, the company had $20.9 million in cash and cash equivalents, an increase of $7.7 million from December 31, 2023, driven by proceeds from unit sales and debt issuance[253] - The company's primary use of capital is for the development and commercialization of the Accelerate Pheno® system and the next-generation Accelerate WAVE™ system[254] - The company's contractual cash obligations as of September 30, 2024, total $119.1 million, including $69.2 million in 5.00% Notes due 2026 and $15.0 million in 16.00% Notes due 2025[263] - Net cash used in operating activities for the nine months ended September 30, 2024, was $19.1 million, a decrease from $32.4 million in the same period in 2023[268] - Net cash provided by financing activities for the nine months ended September 30, 2024, was $27.6 million, primarily from unit sales and debt issuance[272] - The company issued $66.9 million in 5.00% Convertible Senior Notes in June 2023, maturing in December 2026, with interest payable in kind[274] - The company has substantial doubt about its ability to continue as a going concern due to insufficient financial resources to fund operations for the next twelve months[259][260] - The company is exploring strategic alternatives, including potential equity or debt financing, to address its funding needs[257] Debt and Equity Transactions - The company issued $171.5 million aggregate principal amount of 2.50% Notes in March and April 2018, with $65.0 million exchanged for 1.7 million shares of common stock in 2021 and 2022[278] - In August 2022, the company exchanged $49.9 million of 2.50% Notes for a $34.9 million Secured Note and a warrant to acquire 0.2 million shares at $21.20 per share[279] - Approximately $55.9 million of 2.50% Notes were exchanged for $56.9 million of 5.00% Notes, with an additional $0.8 million paid to settle the remaining balance[280] - As of September 30, 2024, $69.2 million aggregate principal amount of 5.00% Notes were outstanding[281] - The company completed the January 2024 Public Units Offering, raising $10.2 million from 6.8 million units at $1.50 per unit[285] - The company sold 1.2 million units to the Schuler Trust at $1.73 per unit, raising $2.0 million in a private placement offering[288] - The company issued $15.0 million aggregate principal amount of 16.00% Notes on August 8, 2024, with interest payable quarterly at 16.00% per annum[292] - The 16.00% Notes are secured by a super-priority security interest in the same collateral as the 5.00% Notes and contain an Exit Premium of 30.00% if repaid before June 30, 2025[294][298] - Aggregate net proceeds from the January 2024 Public Units Offering and private placement offering were approximately $13.7 million for the nine months ended September 30, 2024[291] - Aggregate net proceeds from the issuance of the 16.00% Notes were approximately $14.2 million for the nine months ended September 30, 2024[299]

Revenue and Sales Performance - Net sales for Q3 2024 were $3.0 million, a decrease from $3.3 million in the same quarter of the prior year, driven by lower instrument sales but partially offset by a 9% increase in consumable products[5] - Year-to-date net sales for 2024 were $8.9 million, slightly down from $9.0 million in the same period of the prior year, with a gross margin improvement to 25% from 21%[10] - Net sales for the nine months ended September 30, 2024, were $8.9 million, a slight decrease from $9.0 million in the same period in 2023[29] Gross Margin and Profitability - Gross margin for Q3 2024 improved to 29%, up from 3% in the same quarter of the prior year, reflecting a better product sales mix and an inventory write-down in the prior year[6] - Gross profit for the nine months ended September 30, 2024, was $2.3 million, up from $1.9 million in the same period in 2023, a growth of 17.6%[29] Operating Expenses - SG&A costs for Q3 2024 decreased to $5.6 million from $7.8 million in the same quarter of the prior year, primarily due to lower employee-related expenses[7] - Year-to-date SG&A costs for 2024 were $16.7 million, down from $25.4 million in the same period of the prior year, primarily due to lower employee-related expenses[11] - R&D costs for Q3 2024 were $3.8 million, down from $7.0 million in the same quarter of the prior year, mainly due to lower third-party development costs for the WAVE system[8] - Year-to-date R&D costs for 2024 were $12.9 million, down from $19.8 million in the same period of the prior year, due to lower employee-related and third-party development costs[12] - Research and development expenses decreased to $12.9 million for the nine months ended September 30, 2024, from $19.8 million in the same period in 2023, a reduction of 34.7%[29] Net Loss and Financial Performance - Net loss for Q3 2024 was $14.6 million, resulting in a net loss per share of $0.59[8] - Net loss for the nine months ended September 30, 2024, was $40.5 million, compared to $48.6 million in the same period in 2023, an improvement of 16.7%[29] Cash and Investments - Total cash, cash equivalents, and investments at the end of Q3 2024 were $20.9 million, up from $9.7 million at the start of the quarter, driven by a $15 million debt issuance and other proceeds[9] - Cash and cash equivalents increased to $19.7 million in September 2024 from $12.1 million in December 2023, a growth of 62.3%[26] - Cash and cash equivalents at the end of the period were $19,691 thousand in 2024 and $20,162 thousand in 2023[32] Assets and Liabilities - Total current assets rose to $27.4 million in September 2024, up from $24.5 million in December 2023, an increase of 12.1%[26] - Total liabilities increased to $80.8 million in September 2024 from $51.3 million in December 2023, a significant rise of 57.5%[26] - Total stockholders' deficit increased to $48.5 million in September 2024 from $19.9 million in December 2023, a rise of 143.8%[27] Financing Activities - Net cash provided by financing activities increased to $27,639 thousand in 2024 from $8,912 thousand in 2023[32] - Proceeds from issuance of 16.00% Notes amounted to $15,000 thousand in 2024[32] - Proceeds from issuance of Units totaled $10,232 thousand in 2024[32] - Units offering issuance costs were $1,234 thousand in 2024[32] - Proceeds from issuance of common stock to related party were $4,000 thousand in 2023[32] - Payments on finance leases decreased to $683 thousand in 2024 from $1,357 thousand in 2023[32] - Transaction costs related to debt and equity issuances were $202 thousand in 2024 compared to $3,731 thousand in 2023[32] - Proceeds from issuance of 5.00% Notes were $10,000 thousand in 2023[32] Cash Flow - Net cash used in operating activities for the nine months ended September 30, 2024, was $19.1 million, compared to $32.4 million in the same period in 2023, a reduction of 41.0%[31] - Cash and cash equivalents decreased by $7,553 thousand in 2024 compared to a decrease of $14,743 thousand in 2023[32] Instrument Deployment and Contracts - The company added five new contracted Pheno instruments in the U.S. during Q3 2024, ending the quarter with 352 clinically live revenue-generating instruments and 77 contracted instruments in implementation[4] Share Issuance - Common shares outstanding increased to 24.9 million in September 2024 from 14.6 million in December 2023, a growth of 70.8%[27]

Financial Data and Key Metrics Changes - Net sales for Q2 2024 were approximately $3 million, an increase from approximately $2.9 million in the same period last year, driven by low double-digit growth in recurring consumable net sales [15] - Gross margin decreased to approximately 23% from approximately 27% year-over-year, attributed to product mix [15] - Selling, general and administrative (SG&A) expenses were approximately $5.4 million, down from $7.6 million in the prior year, reflecting lower employee-related expenses [15] - Research and development (R&D) expenses were $3.9 million, down from $5.8 million, due to lower third-party development expenses for the Wave program [15] - The net loss for the quarter was approximately $11.6 million, resulting in a net loss per share of $0.50 [15] Business Line Data and Key Metrics Changes - The Wave program is positioned to disrupt the antimicrobial susceptibility testing market, with a focus on both positive blood culture and traditional isolated colony testing [5][6] - The preclinical trial for the Wave platform showed approximately 95% essential and categorical agreement across 20 antibiotics, indicating strong clinical performance [8] Market Data and Key Metrics Changes - The combined global antimicrobial susceptibility testing (AST) market is estimated at $2 billion, with Wave offering a competitive cost structure and faster results [6] Company Strategy and Development Direction - The company aims to leverage its position in the positive blood culture market, expand into isolate susceptibility testing, and apply holographic imaging technology to other diagnostic areas [10][12] - The strategic roadmap includes launching Wave with regulatory clearances, expanding assay offerings, and focusing on operational and development milestones to maximize value [10][12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Wave platform's potential to address significant healthcare issues related to bacterial antimicrobial resistance, with a focus on rapid susceptibility testing [30][31] - The company has secured additional capital to fund operations through 2025, allowing for continued development and clinical trials [13][31] Other Important Information - The preclinical trial success has set the stage for an imminent clinical trial, with systems installed at four external sites [9] - Approximately 75% of the U.S. customer base is signed to longer-term contracts ahead of the Wave commercial launch [10] Q&A Session Summary Question: What levels of essential agreement and categorical agreement are needed for the clinical trial? - Management indicated that the FDA requires performance above 89.9% for approval, and the preclinical trial results were in the mid-90s, providing confidence for the upcoming clinical trial [20][21] Question: What led to the decision to focus on achieving milestones before working with strategic partners? - Management noted that securing funding and demonstrating the platform's capabilities through preclinical results would maximize value for stakeholders before engaging with strategic partners [22][24] Question: Can you help bridge the cash balance to your target of funding through 2025? - Management confirmed a pro forma cash balance in the mid-$25 million range and highlighted significant cost-cutting initiatives that have reduced cash burn, aiming for an operating cash burn target of about $5 million [25][28]

Sales Performance - For the three months ended June 30, 2024, net sales increased to $2,986,000, a 2% increase from $2,921,000 in the same period of 2023, primarily due to higher sales of Accelerate PhenoTest consumables[226]. - For the six months ended June 30, 2024, net sales reached $5,907,000, reflecting a 3% increase from $5,733,000 in the same period of 2023[226]. Product Development and Launches - The Accelerate Pheno system and Accelerate PhenoTest BC Kit have been marketed since 2017, generating revenue primarily from instrument sales and single-use consumable test kits[215]. - The Accelerate Arc system and BC Kit were launched in 2022, with ongoing discussions with the FDA regarding U.S. commercialization as Class I devices exempt from 510(k) clearance requirements[218][219]. - A collaboration with Bruker Corporation was announced in November 2023 to validate the use of the Accelerate Arc system with Bruker's MALDI Biotyper system for microbial identification[222]. - The Accelerate WAVE system, currently in development, aims to deliver AST results within an average of 4.5 hours, enhancing the speed of diagnostics[223]. - The Accelerate WAVE system is expected to process five PBC assays or ten Isolated Colony assays per module, addressing the majority of microbiology lab volumes and workflows[225]. - The company anticipates significant workflow benefits for microbiology labs by offering consolidated PBC and Isolate susceptibility testing on a single rapid AST diagnostic[225]. - The company believes that the cost to produce Accelerate WAVE assays will be significantly lower than the standard costing for the Accelerate PhenoTest BC Kit, potentially improving the company's margin profile[225]. Financial Performance - For the three months ended June 30, 2024, cost of sales increased by $188, or 9%, compared to the same period in 2023, primarily due to higher manufacturing costs and increased volume of consumables sold[228]. - Gross profit for the three months ended June 30, 2024, decreased by $123, or 15%, compared to the same period in 2023, with gross margins of 23% in 2024 versus 27% in 2023[230]. - Research and development expenses for the three months ended June 30, 2024, decreased by $1,917, or 33%, compared to the same period in 2023, mainly due to lower third-party costs for the development of the Accelerate WAVE system[231]. - Sales, general and administrative expenses for the three months ended June 30, 2024, decreased by $2,185, or 29%, compared to the same period in 2023, attributed to lower legal and professional service fees[236]. - Loss from operations for the three months ended June 30, 2024, improved by $3,979, or 32%, compared to the same period in 2023, driven by reduced sales, general and administrative expenses[238]. - The company reported a net loss of $25.8 million and negative cash flows from operations of $16.0 million for the six months ended June 30, 2024[242]. - The accumulated deficit totaled $694.7 million as of June 30, 2024[242]. - Non-cash equity-based compensation as a component of gross profit decreased by $64, or 65%, for the three months ended June 30, 2024, compared to the same period in 2023[230]. - Total other expense, net, decreased by $17,012, or 85%, for the three months ended June 30, 2024, compared to the same period in 2023, primarily due to the completion of restructuring transactions[240]. Restructuring and Financing - The company completed restructuring transactions in June 2023, which included a loss on extinguishment of debt totaling $6.6 million[243]. - The Company completed a public offering in January 2024, generating net proceeds of $11.0 million, with an additional $2.7 million from the Schuler Trust's purchase of Units[244]. - As of June 30, 2024, the Company had $9.7 million in cash and cash equivalents, a decrease of $3.5 million from $13.2 million at December 31, 2023, primarily due to cash used in operations[245]. - The Company has a total contractual material cash requirement of $92.8 million, with $1.1 million due in 2024 and $78.8 million due in 2026[254]. - Net cash used in operating activities for the six months ended June 30, 2024, was $16.0 million, an improvement from $24.2 million in the same period of 2023[258]. - The Company provided $12.8 million in net cash from financing activities for the six months ended June 30, 2024, primarily from the sale and issuance of Units and Pre-Funded Units[262]. - The Company issued $66.9 million in 5.00% Notes on June 9, 2023, which mature on December 15, 2026, and bear interest payable in kind[263]. - The Company is actively exploring additional funding options to secure necessary capital for operations, with substantial doubt about its ability to continue as a going concern within the next twelve months[251]. - The Company has a purchase obligation of $11.9 million for raw materials, with delivery required by March 15, 2027[255]. - The Company has experienced significant increases in federal fund rates, impacting the cost of debt financing and overall financial conditions[248]. - The Company exchanged approximately $55.9 million of 2.50% Notes for approximately $56.9 million of 5.00% Notes, including accrued interest, and settled the outstanding balance of 2.50% Notes for approximately $0.8 million[267]. - As of June 30, 2024, $69.2 million of 5.00% Notes were outstanding[267]. - In January 2024, the Company completed a Public Units Offering consisting of 6.8 million units at a public offering price of $1.50, generating gross proceeds of approximately $10.2 million[271]. - The Schuler Trust purchased 1.2 million Units at a price of $1.73 per Unit, satisfying a purchase obligation and generating additional gross proceeds of approximately $2.0 million[274]. - Aggregate net proceeds from the January 2024 Public Units Offering and private placement offering for the six months ended June 30, 2024, were approximately $13.7 million[275]. - The Company amended the Schuler Purchase Obligation in December 2023, extending the investment deadline to February 15, 2024, with a commitment for the Schuler Trust to purchase $2.0 million at the public offering price if gross proceeds exceeded $10.0 million[270]. - The Company issued approximately 0.5 million shares of common stock to the Schuler Trust for proceeds of $4.0 million in June 2023[268]. - The exercise price for Common Warrants issued in the January 2024 Public Units Offering is $1.65 per share, and they are exercisable for five years[273]. - The Schuler Trust agreed to purchase an additional 1.6 million Units at a price of $1.73 per Unit on or before May 20, 2024, generating approximately $2.7 million[275]. - The Company had no off-balance sheet arrangements as of June 30, 2024[276].

Financial Performance - Net sales for Q2 2024 were $3.0 million, a 3.4% increase from $2.9 million in Q2 2023, with revenues from consumable products rising by 12% year-over-year[3] - Year-to-date net sales reached $5.9 million, a slight increase from $5.7 million in the same period of the prior year, driven by higher consumable product sales[6] - Net sales for the six months ended June 30, 2024, were $5,907 million, compared to $5,733 million for the same period in 2023, representing an increase of 3.0%[23] Profitability - Gross margin for Q2 2024 was approximately 23%, down from 27% in Q2 2023, attributed to a lower sales mix of capital instruments[3] - Gross profit for the six months ended June 30, 2024, was $1,399 million, down from $1,810 million in 2023, a decrease of 22.7%[23] - The net loss for Q2 2024 was $11.6 million, resulting in a net loss per share of $0.50[5] - The net loss for the six months ended June 30, 2024, was $25,818 million, compared to a net loss of $49,530 million for the same period in 2023, a reduction of 47.9%[23] - The company reported a basic and diluted net loss per share of $1.16 for the six months ended June 30, 2024, compared to $4.75 in 2023[23] Expenses - SG&A costs decreased to $5.4 million in Q2 2024 from $7.6 million in Q2 2023, reflecting lower employee-related expenses[3] - R&D costs for Q2 2024 were $3.9 million, down from $5.8 million in Q2 2023, due to reduced third-party development costs for the WAVE system[4] - Research and development expenses for the six months ended June 30, 2024, were $9,076 million, down from $12,788 million in 2023, a decrease of 29.0%[23] Cash and Liquidity - The company ended Q2 2024 with total cash and cash equivalents of $9.7 million, down from $15.8 million at the beginning of the quarter[5] - Total current assets decreased from $24,466 million in December 2023 to $17,170 million in June 2024, a decline of approximately 29.9%[19] - The company had cash and cash equivalents of $8,588 million as of June 30, 2024, down from $12,138 million in December 2023, a decrease of 29.5%[19] - Cash flows used in operating activities for the six months ended June 30, 2024, were $16,035 million, compared to $24,188 million in 2023, a decrease of 33.8%[25] Liabilities and Stockholders' Equity - Total liabilities increased from $51,254 million in December 2023 to $57,754 million in June 2024, an increase of approximately 12.3%[19] - Total stockholders' deficit increased from $19,888 million in December 2023 to $34,887 million in June 2024[21] Financing Activities - The company raised $15 million from existing noteholders, which is expected to fund operations through 2025[3] - Net cash provided by financing activities was $12,835 million, an increase from $9,729 million in the previous period[27] - Proceeds from the issuance of Units amounted to $10,232 million, while issuance costs were $884 million[27] - The capital contribution from the exchange of secured notes and accrued interest was $25,363 million[27] - The company incurred transaction costs related to debt and equity issuances amounting to $3,731 million[27] Operational Highlights - The WAVE program achieved a 95% overall Essential and Categorical Agreement in pre-clinical trials, demonstrating strong analytical performance[2] - Five new contracted Pheno instruments were added in the U.S. during Q2 2024, bringing the total to 350 clinically live revenue-generating instruments[2]

Financial Performance - For the three months ended March 31, 2024, net sales increased to $2,921,000, representing a 4% increase compared to $2,812,000 for the same period in 2023, primarily due to higher sales of Accelerate PhenoTest consumables[236]. - Cost of sales for the three months ended March 31, 2024, rose to $2,198,000, a 22% increase from $1,801,000 in the same period in 2023, driven by increased manufacturing costs and higher sales volume of consumables[237]. - Gross profit for the three months ended March 31, 2024, decreased to $723,000, down 28% from $1,011,000 in the same period in 2023, with a gross margin of 25% compared to 36% in 2023[239]. - Loss from operations improved to $(10,156,000) for the three months ended March 31, 2024, a reduction of 37% from $(16,062,000) in 2023[245]. - The company reported a net loss of $14.2 million and negative cash flows from operations of $8.5 million for the three months ended March 31, 2024[249]. Cash and Financing - As of March 31, 2024, the company had $15.8 million in cash and cash equivalents, an increase of $2.6 million from $13.2 million at December 31, 2023[252]. - The company completed an underwritten public offering in January 2024, generating net proceeds of $11.0 million[251]. - Net cash used in operating activities for the three months ended March 31, 2024, was $8.5 million, an improvement of $4.9 million compared to $13.4 million in the same period of 2023[266]. - Net cash provided by financing activities increased to $11.4 million in Q1 2024, compared to a net cash used of $0.1 million in Q1 2023, primarily due to proceeds from the sale and issuance of Units[266][269]. - The Company issued $66.9 million in 5.00% Notes in June 2023, which mature on December 15, 2026, and bear interest at 5.00% per annum, payable in kind[270]. - The January 2024 Public Units Offering generated gross proceeds of approximately $10.2 million, with an additional private placement raising about $2.0 million[281][282]. - The Schuler Trust has a forward contract to purchase an additional 1.6 million Units at a price of $1.73 per unit, expected to generate approximately $2.7 million in gross proceeds[283]. - The Company has a non-cancellable purchase obligation for raw materials totaling $11.9 million, with delivery required by March 15, 2027[261][264]. - As of March 31, 2024, approximately $0.7 million of 2.50% Notes remains outstanding and in default, accruing interest at 2.5% per annum[276]. - The Company plans to finance future cash requirements through equity offerings, debt financings, or collection of exclusivity fees from BD[264]. - The 5.00% Notes Indenture includes customary events of default, allowing for immediate payment upon certain conditions[271]. Operational Developments - The Accelerate Wave system, currently in development, aims to deliver antibiotic susceptibility testing results within 4.5 hours, significantly faster than traditional methods[232]. - The Accelerate Arc system and BC Kit were launched in 2022, with ongoing discussions with the FDA regarding commercialization in the U.S. as Class I devices exempt from 510(k) clearance requirements[228]. - A collaboration with Bruker Corporation was announced in November 2023 to validate the use of the Accelerate Arc system with Bruker's MALDI Biotyper system for microbial identification[231]. - The company anticipates significant workflow benefits for microbiology labs by offering consolidated testing for positive blood cultures and isolates with the Accelerate Wave system[233]. - The Accelerate Wave system is expected to have a lower production cost compared to the Accelerate PhenoTest BC Kit, potentially improving the company's margin profile[234]. - The company continues to invest in research and development to enhance existing products and develop new applications for the Accelerate Arc Products[231]. Financial Health and Concerns - The company has expressed the need to secure additional funds to continue operations and meet financial obligations, indicating insufficient financial resources for at least the next twelve months[218]. - The company has substantial doubt about its ability to continue as a going concern due to inadequate financial resources to fund forecasted operating costs for at least twelve months[259]. - The primary use of capital has been for the development and commercialization of the Accelerate Pheno® system and the next generation Accelerate Wave™ system[253]. - As of March 31, 2024, total cash requirements amount to $94.2 million, with significant obligations including $67.6 million in 5.00% Notes and $11.9 million in purchase obligations[261][276]. - The company's accumulated deficit totaled $683.1 million as of March 31, 2024[249]. Accounting and Reporting - The financial statements are prepared in accordance with U.S. GAAP, requiring estimates and assumptions that may affect reported amounts[285]. - There have been no material changes to critical accounting policies and estimates, except for the accounting of warrants issued in January 2024[285]. - As of March 31, 2024, the company reported no off-balance sheet arrangements[284].