10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2023

☐ 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 001-33957

HARVARD BIOSCIENCE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	04-3306140
(State or other jurisdiction of Incorporation or organization)	(I.R.S. Employer Identification No.)

84 October Hill Road, Holliston, Massachusetts 01746

(Address of Principal Executive Offices, including zip code)

(508) 893-8999

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HBIO	The Nasdaq Global Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 20, 2023, there were 42,190,043 shares of the registrant’s common stock issued and outstanding.

1

HARVARD BIOSCIENCE, INC.

FORM 10-Q

INDEX

	Page
PART I - FINANCIAL INFORMATION	3
Item 1.    Condensed Consolidated Financial Statements (unaudited)	3
Consolidated Balance Sheets	3
Consolidated Statements of Operations	4
Consolidated Statements of Comprehensive Income (Loss)	5
Consolidated Statements of Stockholders' Equity	6
Consolidated Statements of Cash Flows	7
Notes to Unaudited Consolidated Financial Statements	8
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.     Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.     Controls and Procedures	22
PART II - OTHER INFORMATION	23
Item 1.     Legal Proceedings	23
Item1A.   Risk Factors	23
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.	23
Item 3.     Defaults Upon Senior Securities	23
Item 4.     Mine Safety Disclosures	23
Item 5.     Other Information	23
Item 6.     Exhibits	23
SIGNATURES	24

2

PART I. FINANCIAL INFORMATION

Item 1.         Financial Statements.

HARVARD BIOSCIENCE, INC.

CONSOLIDATED BALANCE SHEETS 

(Unaudited, in thousands, except share and per share data) 

	March 31,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	3,789		$	4,508
Accounts receivable, net		17,737			16,705
Inventories		26,861			26,439
Other current assets		4,062			3,472
Total current assets		52,449			51,124
Property, plant and equipment, net		3,424			3,366
Operating lease right-of-use assets		5,505			5,816
Goodwill		56,618			56,260
Intangible assets, net		19,641			21,014
Other long-term assets		7,941			7,780
Total assets	$	145,578		$	145,360
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	2,970		$	3,811
Current portion of operating lease liabilities		2,130			2,135
Accounts payable		5,978			6,447
Deferred revenue		4,121			3,370
Other current liabilities		8,018			7,486
Total current liabilities		23,217			23,249
Long-term debt, net		41,083			43,013
Deferred tax liability		546			590
Operating lease liabilities		4,938			5,282
Other long-term liabilities		1,454			1,006
Total liabilities		71,238			73,140
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized		-			-
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 42,190,043 shares issued and outstanding at March 31, 2023; 42,081,707 shares issued and outstanding at December 31, 2022		455			454
Additional paid-in-capital		230,108			229,008
Accumulated deficit		(141,568	)		(142,190	)
Accumulated other comprehensive loss		(14,655	)		(15,052	)
Total stockholders' equity		74,340			72,220
Total liabilities and stockholders' equity	$	145,578		$	145,360

See accompanying notes to condensed consolidated financial statements.

3

HARVARD BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data) 

	Three Months Ended March 31,
	2023			2022
Revenues	$	29,975		$	28,778
Cost of revenues		11,629			12,601
Gross profit		18,346			16,177
Sales and marketing expenses		5,978			6,687
General and administrative expenses		6,334			6,325
Research and development expenses		2,897			3,220
Amortization of intangible assets		1,388			1,466
Settlement of litigation, net - Note 14		-			5,191
Total operating expenses		16,597			22,889
Operating income (loss)		1,749			(6,712	)
Other expense:
Interest expense		(974	)		(384	)
Other income, net		432			78
Total other expense		(542	)		(306	)
Income (loss) before income taxes		1,207			(7,018	)
Income tax expense (benefit)		585			(138	)
Net income (loss)	$	622		$	(6,880	)
Income (loss) per share:
Basic income (loss) per share	$	0.01		$	(0.17	)
Diluted income (loss) per share	$	0.01		$	(0.17	)
Weighted-average common shares:
Basic		42,119			41,219
Diluted		42,783			41,219

See accompanying notes to condensed consolidated financial statements.

4

HARVARD BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited, in thousands)

	Three Months Ended March 31,
	2023			2022
Net income (loss)	$	622		$	(6,880	)
Other comprehensive income (loss):
Foreign currency translation adjustments		837			(699	)
Derivatives qualifying as hedges, net of tax		(440	)		-
Other comprehensive income (loss)		397			(699	)
Comprehensive income (loss)	$	1,019		$	(7,579	)

See accompanying notes to condensed consolidated financial statements.

5

HARVARD BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited, in thousands)

												Accumulated
	Number					Additional						Other			Total
	of Shares			Common		Paid-in			Accumulated			Comprehensive			Stockholders’
	Issued			Stock		Capital			Deficit			Loss			Equity
Balance at December 31, 2022		42,082		$	454	$	229,008		$	(142,190	)	$	(15,052	)	$	72,220
Stock option exercises		39			1		103			-			-			104
Vesting of restricted stock units		125			-		-			-			-			-
Shares withheld for taxes		(56	)		-		(156	)		-			-			(156	)
Stock-based compensation expense		-			-		1,153			-			-			1,153
Net income		-			-		-			622			-			622
Other comprehensive income		-			-		-			-			397			397
Balance at March 31, 2023		42,190		$	455	$	230,108		$	(141,568	)	$	(14,655	)	$	74,340
												Accumulated
	Number					Additional						Other			Total
	of Shares			Common		Paid-in			Accumulated			Comprehensive			Stockholders’
	Issued			Stock		Capital			Deficit			Loss			Equity
Balance at December 31, 2021		41,143		$	452	$	225,650		$	(132,674	)	$	(10,027	)	$	83,401
Stock option exercises		11			-		31			-			-			31
Vesting of restricted stock units		151			-		-			-			-			-
Shares withheld for taxes		(64	)		-		(501	)		-			-			(501	)
Stock-based compensation expense		-			-		1,023			-			-			1,023
Net loss		-			-		-			(6,880	)		-			(6,880	)
Other comprehensive loss		-			-		-			-			(699	)		(699	)
Balance at March 31, 2022		41,241		$	452	$	226,203		$	(139,554	)	$	(10,726	)	$	76,375

See accompanying notes to condensed consolidated financial statements.

6

HARVARD BIOSCIENCE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Three Months Ended March 31,
	2023			2022
Cash flows from operating activities:
Net income (loss)	$	622		$	(6,880	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation		333			382
Amortization of intangible assets		1,388			1,466
Amortization of deferred financing costs		70			70
Stock-based compensation expense		1,153			1,023
Deferred income taxes and other		(55	)		(123	)
Gain on sale of product line		(403	)		-
Changes in operating assets and liabilities:
Accounts receivable		(923	)		1,506
Inventories		(292	)		(1,308	)
Other assets		(308	)		(466	)
Accounts payable and accrued expenses		(150	)		2,729
Deferred revenue		741			(300	)
Other liabilities		(364	)		(85	)
Net cash provided by (used in) operating activities		1,812			(1,986	)
Cash flows from investing activities:
Additions to property, plant and equipment		(224	)		(471	)
Proceeds from sale of product line		512			-
Net cash provided by (used in) investing activities		288			(471	)
Cash flows from financing activities:
Borrowing on bank line of credit		1,500			1,500
Repayment on bank line of credit		(2,500	)		-
Repayment of term debt		(1,841	)		(936	)
Proceeds from exercise of stock options and employee stock purchase plan		104			31
Taxes paid related to net share settlement of equity awards		(156	)		(501	)
Net cash (used in) provided by financing activities		(2,893	)		94
Effect of exchange rate changes on cash		74			(25	)
Decrease in cash and cash equivalents		(719	)		(2,388	)
Cash and cash equivalents at beginning of period		4,508			7,821
Cash and cash equivalents at end of period	$	3,789		$	5,433
Supplemental disclosures of cash flow information:
Cash paid for interest	$	1,172		$	383
Cash paid for income taxes, net of refunds	$	(134	)	$	107

See accompanying notes to condensed consolidated financial statements.

7

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Summary of Significant Accounting Policies, and Risks and Uncertainties

Basis of Presentation and Summary of Significant Accounting Policies

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2022, consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of March 31, 2023, results of operations and comprehensive income (loss) and cash flows for the three months ended March 31, 2023 and 2022, as applicable, have been made. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023.

Risks and Uncertainties

The global supply chain has experienced significant disruptions due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. Additionally, the global economy has recently experienced increasing economic uncertainty, including inflationary pressure, rising interest rates, and significant fluctuations in exchange rates. The COVID-19 pandemic has also caused significant economic disruption, including shutdowns that affected various regions in China throughout 2022. These conditions have negatively impacted the Company’s past business, results of operations, and cash flow.

The Company believes that these global economic uncertainties and supply chain trends will continue through 2023. The COVID-19 pandemic continues to evolve, and the future impact of the pandemic is difficult to predict.  If these factors are prolonged or are more severe than anticipated, the Company’s business, results of operations, and cash flow would likely be materially impacted.

2. Recently Issued Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. ASU 2017-04 will be effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 effective January 1, 2023 with no impact to the consolidated financial statements. The Company will perform future goodwill impairment test according to ASU 2017-04.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘ASU 2016-13’), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The FASB issued several ASUs after ASU 2016-13 to clarify implementation guidance and to provide transition relief for certain entities. ASU 2016-13 will be effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2016-13 effective January 1, 2023 which resulted in an immaterial impact to the consolidated financial statements.

8

 

3. Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2023 is as follows:

(in thousands)
Carrying amount at December 31, 2022	$	56,260
Effect of change in currency translation		358
Carrying amount at March 31, 2023	$	56,618

Identifiable intangible assets at March 31, 2023 and December 31, 2022 consist of the following:

			March 31, 2023							December 31, 2022
(in thousands)	Average				Accumulated							Accumulated
Amortizable intangible assets:	Life*		Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships		7.0	$	16,226	$	(9,086	)	$	7,140	$	16,124	$	(8,727	)	$	7,397
Existing technology		3.0		37,365		(27,196	)		10,169		37,549		(26,482	)		11,067
Trade names and patents		3.5		7,558		(5,428	)		2,130		7,523		(5,197	)		2,326
Total amortizable intangible assets			$	61,149	$	(41,710	)	$	19,439	$	61,196	$	(40,406	)	$	20,790
Indefinite-lived intangible assets:									202							224
Total intangible assets								$	19,641						$	21,014

*Weighted average life in years as of March 31, 2023

Intangible asset amortization expense was $1.4 million and $1.5 million for the three months ended March 31, 2023 and 2022, respectively. Estimated amortization expense of existing amortizable intangible assets for each of the five succeeding years and thereafter as of March 31, 2023, is as follows:

(in thousands)
2023 (remainder of the year)	$	4,169
2024		5,260
2025		4,023
2026		2,362
2027		1,265
2028		1,018
Thereafter		1,342
Total	$	19,439

4. Balance Sheet Information

The following tables provide details of selected balance sheet items as of the periods indicated:

Inventories:	March 31,		December 31,
(in thousands)	2023		2022
Finished goods	$	5,144	$	5,223
Work in process		3,660		3,776
Raw materials		18,057		17,440
Total	$	26,861	$	26,439

9

 

Other Current Liabilities:	March 31,		December 31,
(in thousands)	2023		2022
Compensation	$	3,154	$	3,476
Professional fees		589		392
Warranty costs		279		268
Customer credits		2,204		2,368
Accrued income taxes		700		-
Other		1,092		982
Total	$	8,018	$	7,486

5. Related Party Transactions

In connection with the 2014 acquisitions of Multi Channel Systems MCS GmbH (“MCS”), the Company entered into a facility lease agreement with the former principal owner of MCS who became an employee of the Company at the time of the acquisition and subsequently retired in 2021. The MCS agreement expires on December 31, 2024. Pursuant to this lease agreement, the Company made rent payments of approximately $0.1 million for each of the three months ended March 31, 2023 and 2022.

6. Leases

The Company has noncancelable operating leases for offices, manufacturing facilities, warehouse space, automobiles and equipment expiring at various dates through 2030.

The components of lease expense for the three months ended March 31, 2023 and 2022, are as follows:

	Three Months Ended March 31,
(in thousands)	2023			2022
Operating lease cost	$	543		$	504
Short-term lease cost		67			64
Sublease income		(25	)		(25	)
Total lease cost	$	585		$	543

Supplemental cash flow information related to the Company's operating leases was as follows:

	Three Months Ended March 31,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:	$	653	$	594
Right-of-use assets obtained in exchange for lease obligations:	$	-	$	39

Supplemental balance sheet information related to the Company’s operating leases are as follows:

	March 31,			December 31,
(in thousands)	2023			2022
Operating lease right-of-use assets	$	5,505		$	5,816
Current portion, operating lease liabilities	$	2,130		$	2,135
Operating lease liabilities, long-term		4,938			5,282
Total operating lease liabilities	$	7,068		$	7,417
Weighted average remaining lease term (years)		6.1			6.2
Weighted average discount rate		9.4	%		9.4	%

10

 

Future minimum lease payments for operating leases, with initial terms in excess of one year at March 31, 2023, are as follows:

Year Ending December 31,
(in thousands)
2023 (remainder of the year)	$	1,605
2024		1,803
2025		1,065
2026		1,022
2027		1,035
Thereafter		2,965
Total lease payments		9,495
Less imputed interest		(2,427	)
Total operating lease liabilities	$	7,068

7. Long-Term Debt

As of March 31, 2023 and December 31, 2022, the Company’s borrowings were as follows: 

	March 31,			December 31,
(in thousands)	2023			2022
Long-term debt:
Term loan	$	32,973		$	34,814
Revolving line		11,850			12,850
Less: unamortized deferred financing costs		(770	)		(840	)
Total debt		44,053			46,824
Less: current portion of long-term debt		(3,250	)		(4,091	)
Current unamortized deferred financing costs		280			280
Long-term debt	$	41,083		$	43,013

On December 22, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A., Wells Fargo Bank, National Association, and Silicon Valley Bank (together, the “Lenders”). All commitments and obligations under the Credit Agreement previously held by Silicon Valley Bank have now been assumed by Silicon Valley Bridge Bank, N. A. The Credit Agreement provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub facility) (collectively, the “Credit Facility”). The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s direct, domestic wholly-owned subsidiaries; none of the Company’s direct or indirect foreign subsidiaries has guaranteed the Credit Facility. The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of Harvard Bioscience, Inc., and each guarantor (including all or a portion of the equity interests in certain of the Company’s domestic and foreign subsidiaries). The Credit Facility matures on December 22, 2025. Issuance costs of $1.4 million are amortized over the contractual term to maturity date on a straight-line basis, which approximates the effective interest method. Available and unused borrowing capacity under the revolving line of credit was $10.5 million as of March 31, 2023 based on the Credit Agreement, as amended, pursuant to the April 2022 Amendment  and November 2022 Amendment (both described below). Total revolver borrowing capacity is limited by the consolidated net leverage ratio as defined under the amended Credit Agreement.

Borrowings under the amended Credit Facility will, at the option of the Company, bear interest at either (i) a rate per annum based on the Secured Overnight Financing Rate (“SOFR”) for an interest period of one, two, three or six months, plus an applicable interest rate margin determined as provided in the Credit Agreement, as amended (a “SOFR Loan”), or (ii) an alternative base rate plus an applicable interest rate margin, each as determined as provided in the Credit Agreement (an “ABR Loan”). SOFR interest under the Credit Agreement is subject to applicable market rates and a floor of 0.50%. The alternative base rate is based on the Citizens Bank prime rate or the federal funds effective rate of the Federal Reserve Bank of New York and is subject to a floor of 1.0%. The applicable interest rate margin varies from 2.0% per annum to 3.25% per annum for SOFR Loans, and from 1.5% per annum to 3.0% per annum for ABR Loans, in each case depending on the Company’s consolidated leverage ratio and is determined in accordance with a pricing grid set forth in the Credit Agreement. Interest on SOFR Loans is payable in arrears on the last day of each applicable interest period, and interest on ABR Loans is payable in arrears at the end of each calendar quarter. There are no prepayment penalties in the event the Company elects to prepay and terminate the Credit Facility prior to its scheduled maturity date, subject to SOFR Loan breakage and redeployment costs in certain circumstances.

11

 

The effective interest rate on the Company borrowings for the three months ended March 31, 2023 and 2022, was 7.9 % and 3.1%, respectively, and the weighted average interest rate as of March 31, 2023, net of the effect of the Company’s interest rate swaps, was 8.0%. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments.

The term loans amortize in quarterly installments of $0.75 million per quarter for each of the next three quarters and $1.0 million per quarter during the next seven quarters thereafter, with a balloon payment at maturity. Furthermore, within ninety days after the end of the Company’s fiscal year, the term loans may be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, as defined in the agreement; provided that, in any fiscal year, any voluntary prepayments of the term loans shall be credited against the Company’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis for such fiscal year. As of December 31, 2022, the current portion of long-term debt included an excess cash flow sweep of $1.1 million which was paid on March 31, 2023. Amounts outstanding under the revolving credit facility can be repaid at any time but are due in full at maturity.

The Credit Agreement, as amended, includes customary affirmative, negative, and financial covenants binding on the Company. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets and pay dividends on its capital stock. The financial covenants include a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio. The Credit Agreement, as amended, also includes customary events of default.

On April 28, 2022, the Company entered into an amendment to the Credit Agreement (the “April 2022 Amendment”) pursuant to which the Lenders and administrative agent, among other things, modified the financial covenant relating to the consolidated net leverage ratio, and consented to the Biostage Settlement (as defined below), including without limitation the receipt by the Company of convertible preferred stock in Biostage Inc. (“Biostage”) and the securities issuable upon conversion thereof, as partial payment for Biostage’s indemnification obligations in connection with the Biostage Settlement. See Note 14 for information regarding the Biostage Settlement. In consideration for the April 2022 Amendment, the Company paid fees of $0.2 million to the Lenders and administrative agent.

On November 8, 2022, the Company entered into a subsequent amendment to the Credit Agreement (the “November 2022 Amendment”) pursuant to which, among other things the Lenders and administrative agent modified the financial covenant relating to the consolidated net leverage ratio, and the definition of Consolidated EBITDA used in the calculation of certain financial covenants, including to exclude non-cash inventory charges related to the Company’s decision to discontinue non-strategic products. In consideration for the November 2022 Amendment, the Company paid fees of $0.2 million to the Lenders and administrative agent.

The Company was in compliance with the covenants of the Credit Agreement, as amended, as of March 31, 2023.

8. Derivatives

The Company monitors interest rate risk attributable to both its outstanding and forecasted debt obligations by the use of cash flow sensitivity analysis which estimates the expected impact of changes in interest rates on the Company’s future cash. The Company uses interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments. The Company does not enter into derivative instruments for any purpose other than cash flow hedging.

By using derivative financial instruments to hedge exposure to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with carefully selected major financial institutions based upon their credit profile.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Company monitors interest rate risk attributable to both its outstanding and forecasted debt obligations by the use of cash flow sensitivity analysis which estimates the expected impact of changes in interest rates on the Company’s future cash flows.

12

 

On February 28, 2023, the Company entered into an interest rate swap contract to improve the predictability of cash flows from interest payments related to its variable, SOFR based debt. The swap contract has a notional amount of $31.8 million as of March 31, 2023 and matures on December 22, 2025. This swap contract effectively converts the SOFR-based variable portion of the interest payable under the Credit Agreement into fixed-rate debt at an annual rate of 4.75%. The swap contract does not impact the additional interest related to the applicable interest rate margin as discussed above in Note 7 Long-Term Debt. The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis unless facts and circumstances indicate that the hedge may no longer be highly effective.

The following table presents the notional amount and fair value of the Company’s derivative instruments as of March 31, 2023:

(in thousands)		March 31, 2023
Derivatives instruments	Balance sheet classification	Notional Amount		Fair Value (a)
Interest rate swaps	Other long term liabilities	$	31,841	$	(440	)

(a) See Note 9 for the fair value measurements related to these financial instruments.

The portion of the interest rate swap that was reclassified to interest expense from accumulated other comprehensive loss for the three months ended March 31, 2023 was not significant. 

9. Fair Value Measurements

The following tables present the fair value hierarchy for those assets or liabilities measured at fair value on a recurring basis:

	Fair Value as of March 31, 2023
Assets (Liabilities) (in thousands)	Level 1		Level 2			Level 3		Total
Equity securities - common stock	$	206	$	-		$	-	$	206
Interest rate swap agreements	$	-	$	(440	)	$	-	$	(440	)

The Company uses the market approach technique to value its financial liabilities. The Company’s financial assets and liabilities carried at fair value include, when applicable, investments in common stock and derivative instruments used to hedge the Company’s interest rate risks. The fair value of the Company’s investment in common stock was based on the closing price per the OTCQB Marketplace at the reporting date. The fair value of the Company’s interest rate swap agreements was based on SOFR yield curves at the reporting date.

10. Capital Stock and Stock-Based Compensation

Stock-Based Payment Awards

Stock-based awards consist of stock options, time-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”) and shares issued under the Company’s employee stock purchase plan (the “ESPP”). Activity under the Company’s equity incentive plans for the three months ended March 31, 2023 was as follows:

				Weighted
	Stock			Average
	Options			Exercise		RSUs			Grant Date		PRSUs		Grant Date
	Outstanding			Price		Outstanding			Fair Value		Outstanding		Fair Value
Balance at December 31, 2022		1,238,776		$	3.15		1,093,801		$	3.94		646,235	$	4.51
Granted		-			-		1,177,391			2.51		558,958		2.61
Exercised		(39,618	)		2.63		-			-		-		-
Vested (RSUs)		-			-		(125,036	)		1.93		-		-
Cancelled/Forfeited		(29,201	)		2.99		(3,122	)		5.54		-		-
Balance at March 31, 2023		1,169,957		$	3.17		2,143,034		$	3.27		1,205,193	$	3.63

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Stock-based compensation expense related to stock options, RSUs, PRSUs, and the ESPP for the three months ended March 31, 2023 and 2022 was allocated as follows:

	Three Months Ended March 31,
(in thousands)	2023		2022
Cost of revenues	$	69	$	36
Sales and marketing expenses		145		154
General and administrative expenses		869		791
Research and development expenses		70		42
Total stock-based compensation expenses	$	1,153	$	1,023

As of March 31, 2023, the total compensation costs related to unvested awards not yet recognized is $8.4 million and the weighted average period over which it is expected to be recognized is approximately 2.1 years. The Company did not capitalize any stock-based compensation.

The weighted average estimated fair value of PRSUs that were granted during the three months ended March 31, 2023 was $2.61 per unit. The following assumptions were used to estimate the fair value of PRSUs granted during the three months ended March 31, 2023 using a Monte-Carlo valuation simulation:

	2023
Volatility		56.8	%
Risk-free interest rate		4.6	%
Correlation coefficient		41.7	%
Dividend yield		-	%

Earnings (Loss) Per Share

Basic earnings (loss) per share (EPS) is calculated by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. The calculation of diluted earnings per share assumes conversion of stock options, RSUs, and PRSUs into common stock using the treasury method. The weighted average number of shares used to compute basic and diluted EPS consists of the following:

	Three Months Ended March 31,
(in thousands)	2023		2022
Weighted average shares outstanding - basic		42,119		41,219
Dilutive effect of equity awards		664		-
Weighted average shares outstanding - diluted		42,783		41,219
Shares excluded from diluted loss per share due to their anti-dilutive effect		1,167		3,505

11. Revenues

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands)	2023		2022
Instruments, equipment, software and accessories	$	28,493	$	27,538
Service, maintenance and warranty contracts		1,482		1,240
Total revenues	$	29,975	$	28,778

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The following tables represent a disaggregation of revenue by geographic destination for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands)	2023		2022
United States	$	12,302	$	12,239
Europe		7,441		7,823
Hong Kong		3,508		1,706
Rest of Asia		5,273		5,027
Rest of the world		1,451		1,983
Total revenues	$	29,975	$	28,778

Concentrations

No customer accounted for more than 10% of revenues for the three months ended March 31, 2023 and 2022. At March 31, 2023 and December 21, 2022, no customer accounted for more than 10% of net accounts receivable.

Deferred Revenue

The following tables provide details of deferred revenue as of the periods indicated:

	March 31,		December 31,
(in thousands)	2023		2022
Service contracts	$	2,179	$	1,530
Customer advances		1,942		1,840
Total deferred revenue	$	4,121	$	3,370

During the three months ended March 31, 2023 and 2022, the Company recognized revenue of $1.0 million and $0.7 million from deferred revenue existing at December 31, 2022 and 2021, respectively.

Allowance for Expected Credit Losses on Receivables

The allowance for expected credit losses on receivables is used to present accounts receivable, net at an amount that represents the Company’s estimate of the related transaction price recognized as revenue. The allowance represents an estimate of expected credit losses over the lifetime of the receivables, even if the loss is considered remote, and reflects expected recoveries of amounts previously written-off. The Company estimates the allowance on the basis of specifically identified receivables that are evaluated individually for impairment and an analysis of the remaining receivables determined by reference to past default experience. The Company considers the need to adjust historical information to reflect the extent to which current conditions and reasonable forecasts are expected to differ from the conditions that existed for the historical period considered. Losses on receivables have not historically been significant.

Management judgments are used to determine when to charge off uncollectible trade accounts receivable. The Company bases these judgments on the age of the receivable, credit quality of the customer, current economic conditions, and other factors that may affect a customer’s ability and intent to pay. Customers are generally not required to provide collateral for purchases.

Activity in the allowance for expected losses on receivables is as follows:

	Three Months Ended March 31,
(in thousands)	2023			2022
Balance, beginning of period	$	191		$	136
Bad debt (credit)		(3	)		(6	)
Charge-offs and other		(21	)		6
Balance, end of period	$	167		$	136

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12. Income Tax

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which the Company operates and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

Income tax expense (benefit) was $0.6 million and $(0.1) million for the three months ended March 31, 2023 and 2022, respectively. The effective tax rates for the three months ended March 31, 2023 and 2022 were 48.5% and 2.0%, respectively. The difference between the Company’s effective tax rates in 2023 and 2022 compared to the U.S. statutory tax rate of 21% is primarily due to a Global Intangible Low-Taxed Income (“GILTI”) inclusion to taxable income and changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.

13. Commitments and Contingent Liabilities

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs in the Biostage Litigation (as defined below) which resolved all claims relating to the litigation as described in Note 14 – Litigation Settlement.

The Company is involved in various other claims and legal proceedings arising in the ordinary course of business. After consultation with legal counsel, the Company has determined that the ultimate disposition of such proceedings is not likely to have a material adverse effect on its business, financial condition, results of operations or cash flows. Although unfavorable outcomes in the proceedings are possible, the Company has not accrued loss contingencies relating to any such matters as they are not considered to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations and cash flows could be material.

In addition, the Company has entered into indemnification agreements with its directors. It is not possible to determine the maximum potential liability amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company has not recorded any liability for costs related to contingent indemnification obligations as of March 31, 2023.

The Company is also subject to unclaimed property laws in the ordinary course of its business.  State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. The Company is currently undergoing unclaimed property audits conducted by three states. Based on the current stage of the audits, the Company has not accrued any loss contingencies related to these audits as of March 31, 2023.

14. Litigation Settlement

On April 14, 2017, representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against the Company and other defendants, including Biostage, a former subsidiary of the Company that was spun off in 2013, as well as another third party (the “Biostage Litigation”). The complaint sought payment for an unspecified amount of damages and alleged that the plaintiff sustained terminal injuries allegedly caused by products, including one synthetic trachea scaffold and two bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in Europe in 2012 and 2013.

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs of the Biostage Litigation and Biostage’s products liability insurance carriers (the “Biostage Settlement”), which resolved all claims by and between the parties and Biostage’s product liability insurance carriers and resulted in the dismissal with prejudice of the wrongful death claim and all claims between the Company, Biostage and the insurance carriers. The Biostage Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company or Biostage. Biostage has indemnified the Company for all losses and expenses, including legal expenses that the Company incurred in connection with the Biostage Litigation and the Biostage Settlement.

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During the three months ended March 31, 2022, the Company accrued $5.2 million of costs related to legal fees and the Biostage Settlement. Due to the financial condition of Biostage, the Company determined that it was uncertain as to whether Biostage would be able to meet its indemnification obligation and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022 and September 30, 2022, the Company recorded credits of $4.9 million and $0.5 million, respectively, to the reserve against the indemnification receivable from Biostage. These adjustments reflected: i) the issuance by Biostage of 4,000 shares of its Series E Convertible Preferred Stock (the “Series E Preferred Stock”) to the Company on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligation, ii) the payment by Biostage of the legal fees associated with the Biostage Settlement, and iii) other accrual adjustments. The Series E Preferred Stock was initially recorded at an estimated fair value of $3.9 million using a Monte Carlo valuation simulation incorporating information from selected guideline companies.

The Series E Preferred Stock ranks senior to all classes of common stock of Biostage and all classes of preferred stock of Biostage (unless the Company consents to Biostage’s issuance of other preferred stock that is senior to or pari passu with the Series E Preferred Stock) and accrues dividends at a rate of 8% per annum that are payable in additional shares of Series E Preferred Stock. Each share of Series E Preferred Stock is convertible at any time at the option of the Company into such number of shares of Biostage common stock determined by dividing (a) the $1,000 face value of the Series E Preferred Stock plus all accrued and unpaid dividends thereon by (b) the average of the volume weighted average trading prices of Biostage’s common stock, which is currently quoted on the OTCQB Marketplace, for the 60 consecutive trading days prior to the conversion. In the event Biostage has a subsequent qualified offering of its common stock, (which is defined as an offering of Biostage common stock that coincides with its uplisting onto Nasdaq, the first subsequent public offering by Biostage, or the first subsequent private placement by Biostage resulting in gross proceeds to Biostage of at least $4,000,000), the Series E Preferred Stock is mandatorily converted into Biostage common stock at the applicable qualified offering price.

During the three months ended March 31, 2023, the Company converted 200 shares of its Series E Preferred Stock into 31,933 shares of Biostage common stock. The market value of this Biostage common stock was $0.2 million at March 31, 2023.

The book value of the shares of Series E Preferred Stock, inclusive of accrued dividends, as of March 31, 2023 is $4.0 million and is included in the consolidated balance sheet as a component of Other long-term assets. The Company has elected the provisions within ASC 321 Investment Securities to subsequently measure the Series E Preferred Stock at its original cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Biostage. As of March 31, 2023, there have been no observable price changes or indicators of impairment and therefore, there have been no measurement adjustments to the carrying value of the Series E Preferred Stock.

15. Product Line Disposition

On February 17, 2023, the Company completed the disposition of its Hoefer product line for cash consideration of $0.5 million. The carrying value of assets sold was $0.1 million resulting in a gain on disposition of $0.4 million which is recorded in Other income, net in the consolidated statement of operations for the three months ended March 31, 2023. Revenue and gross profit of this disposed product line included in the condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 are not significant.

16. Subsequent Event - Conversion of Biostage Series E Preferred Stock to Common Stock

On April 6, 2023, Biostage disclosed that it had completed a private placement with certain investors to purchase shares of Biostage common stock for the aggregate purchase price of approximately $6.0 million at a purchase price of $6.00 per share. As the proceeds of the private placement are in excess of $4.0 million, the transaction triggered a mandatory conversion of the Series E Preferred Stock, plus all accrued dividends, into Biostage common stock as discussed in Note 14 above.

On April 6, 2023, all of the Company’s remaining Series E Preferred Stock, plus all accrued dividends, were converted into approximately 675,000 shares of Biostage common stock at the applicable qualified offering price of $6.00 per share. Immediately after the conversion, the Company owned approximately 5% of Biostage’s total common shares outstanding. Due to Biostage’s limited operating history, their overall financial condition and the limited trading volumes and liquidity of their common stock, the value of the Company’s investment in  Biostage’s common stock could fluctuate considerably or become worthless.

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Item 2.        Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in “Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, and our plans, objectives, expectations, and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “seek,” “expects,” “plans,” “aim,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “think,” “potential,” “objectives,” “optimistic,” “strategy,” “goals,” “sees,” “new,” “guidance,” “future,” “continue,” “drive,” “growth,” “long-term,” “projects,” “develop,” “possible,” “emerging,” “opportunity,” “pursue” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in detail in our Annual Report on Form 10-K for the year ended December 31, 2022 and our other filings with the SEC. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Harvard Bioscience, Inc. is referred to herein as “we,” “our,” “us,” and “the Company.”

Recent Developments

Global Supply Chain and Economic Environment

The global supply chain has experienced significant disruptions due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. Additionally, the global economy has recently experienced increasing economic uncertainty, including inflationary pressure, rising interest rates, and significant fluctuations in exchange rates. The COVID-19 pandemic has also caused significant economic disruption, including shutdowns that affected various regions in China throughout 2022. These conditions have negatively impacted our past business, results of operations, and cash flow.

We believe that these global economic uncertainties and supply chain trends will continue through 2023. The COVID-19 pandemic continues to evolve, and the future impact of the pandemic is difficult to predict.  If these factors are prolonged or are more severe than anticipated, our business, results of operations, and cash flow may be materially impacted.

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Selected Results of Operations

Three months ended March 31, 2023 compared to three months ended March 31, 2022.

	Three Months Ended March 31,
(dollars in thousands)	2023		% of revenue			2022			% of revenue
Revenues	$	29,975				$	28,778
Gross profit		18,346		61.2	%		16,177			56.2	%
Sales and marketing expenses		5,978		19.9	%		6,687			23.2	%
General and administrative expenses		6,334		21.1	%		6,325			22.0	%
Research and development expenses		2,897		9.7	%		3,220			11.2	%
Amortization of intangible assets		1,388		4.6	%		1,466			5.1	%
Settlement of litigation, net		-		-			5,191			18.0	%
Interest expense		974		3.2	%		384			1.3	%
Income tax expense (benefit)		585		2.0	%		(138	)		-0.5	%

Revenue

Revenues increased $1.2 million, or 4.2%, to $30.0 million for the three months ended March 31, 2023, compared to $28.8 million for the three months ended March 31, 2022. The increase in revenue was primarily due to growth in preclinical products, which was partially offset by reduced revenue from the discontinuation of non-strategic cellular and molecular products and unfavorable currency impacts.

Gross profit

Gross profit increased $2.2 million, or 13.4%, to $18.3 million for the three months ended March 31, 2023 compared with $16.2 million for the three months ended March 31, 2022. Gross margin increased to 61.2% for the three months ended March 31, 2023, compared with 56.2% for the three months ended March 31, 2022. The increase in gross margin was due primarily to the increase in revenue, a higher mix of preclinical products which carries a higher gross margin than our other product lines, and the discontinuation in the second half of 2022 of lower margin non-strategic products.

The global supply chain has experienced significant disruptions due to electronic components and labor shortages and other macroeconomic factors, leading to increased costs. We expect that these supply chain trends will continue through the rest of 2023.

Sales and marketing expenses

Sales and marketing expenses decreased $0.7 million, or 10.6%, to $6.0 million for the three months ended March 31, 2023, compared to $6.7 million during the same period in 2022. The decrease was primarily due to reduced salaries and travel expenses partially offset by increases in variable compensation.

General and administrative expenses

General and administrative expenses were $6.3 million for each of the three months ended March 31, 2023 and 2022. This includes decreases in consulting costs associated with enterprise-level operational improvement initiatives offset by increases in variable compensation.

Research and development expenses

Research and development expenses decreased $0.3 million, or 10.0%, to $2.9 million for the three months ended March 31, 2023, compared with $3.2 million for the three months ended March 31, 2022. The decrease was primarily due to reduced salaries and consulting costs partially offset by increases in variable compensation.

Amortization of intangible assets

Amortization of intangible asset expenses were $1.4 million for the three months ended March 31, 2023, compared with $1.5 million for the three months ended March 31, 2022. Amortization expense decreased as we completed the amortization of certain intangible assets discontinued during 2022.

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Settlement of litigation

During the three months ended March 31, 2022, we accrued $5.2 million of costs related to legal fees in connection with the Biostage Litigation and the Biostage Settlement.  Due to the financial condition of Biostage, we determined that it was uncertain as to whether Biostage would be able to meet its indemnification obligation and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022 and September 30, 2022, we recorded credits of $4.9 million and $0.5 million, respectively consisting of adjustments to the reserve against an indemnification receivable from Biostage to reflect: i) the issuance by Biostage of Series E Preferred Stock to us on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligations, ii) the payment by Biostage of legal fees associated with the Biostage Settlement, and iii) other accrual adjustments. The Series E Preferred Stock was initially recorded at an estimated fair value of $3.9 million using a Monte Carlo valuation simulation incorporating information from selected guideline companies.

Interest expense

Interest expense increased $0.6 million, or 153.6%, to $1.0 million for the three months ended March 31, 2023, compared with $0.4 million for the three months ended March 31, 2022. The increase was the result of higher interest costs in a rising rate environment.

Income tax

Income tax expense (benefit) for the three months ended March 31, 2023 was $0.6 million and was $(0.1) million for the three months ended March 31, 2022. The effective tax rates for the three months ended March 31, 2023 and 2022 were 48.5% and 2.0%, respectively. The difference between our effective tax rates in 2023 and 2022 compared to the U.S. statutory tax rate of 21% is primarily due to a Global Intangible Low-Taxed Income (“GILTI”) inclusion to taxable income and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of our deferred tax assets. We have valuation allowances against substantially all of our net operating loss carryforwards and tax credit carryforwards.

Liquidity and Capital Resources

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our revolving credit facility. Our expected cash outlays relate primarily to cash payments due under our Credit Agreement described below as well as capital expenditures and payments associated with business improvement initiatives.

As of March 31, 2023, we held cash and cash equivalents of $3.8 million, compared with $4.5 million at December 31, 2022. Borrowings outstanding were $44.8 million and $47.7 million as of March 31, 2023 and December 31, 2022, respectively.

On December 22, 2020, we entered into a Credit Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility both maturing on December 22, 2025. As of March 31, 2023, the weighted average interest rate on our borrowings, net of the effect of the interest rate swaps, was 8.0%, and the available and unused borrowing capacity was $10.5 million. Total revolver borrowing capacity is limited by our consolidated net leverage ratio as defined under the Credit Agreement, as amended. As of March 31, 2023, we are in compliance with the covenants of the Credit Agreement, as amended.

Based on our current operating plans, we expect that our available cash, cash generated from current operations and debt capacity will be sufficient to finance current operations, any costs associated with business improvement initiatives and capital expenditures for at least the next 12 months. This assessment includes consideration of our best estimates of the impact of macroeconomic conditions and the COVID-19 pandemic on our financial results described above. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary as a result of a number of factors.

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CONDENSED CONSOLIDATED CASH FLOW STATEMENTS

	Three Months Ended March 31,
(in thousands)	2023			2022
Cash provided by (used in) operating activities	$	1,812		$	(1,986	)
Cash provided by (used in) investing activities		288			(471	)
Cash (used in) provided by financing activities		(2,893	)		94
Effect of exchange rate changes on cash		74			(25	)
Decrease in cash and cash equivalents	$	(719	)	$	(2,388	)

Cash provided by (used in) operating activities was $1.8 million and $(2.0) million for the three months ended March 31, 2023 and 2022, respectively. Cash flow from operations for the three months ended March 31, 2023 was greater than the comparable period in the prior year primarily as a result of improved operating profits.

Cash provided by investing activities was $0.3 million for the three months ended March 31, 2023, and primarily consisted of $0.5 million from proceeds of the sale our Hoefer product line partially offset by $0.2 million of capital expenditures in manufacturing and information technology infrastructure. Cash used in investing activities was $(0.5) million for the three months ended March 31, 2022, and primarily consisted of capital expenditures in manufacturing and information technology infrastructure.

Cash (used in) provided by financing activities was $(2.9) million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, debt outstanding under our credit facility decreased by $2.8 million, consisting of net payments against our revolver of $1.0 million, and payments of $1.8 million against the term loan. During the three months ended March 31, 2022, we increased total debt outstanding under our credit facility by $0.6 million. This increase included $0.9 million paid under the term loan and an increase in revolver borrowings of $1.5 million. We also paid $0.5 million for taxes related to net share settlement of equity awards.

Impact of Foreign Currencies

Our international operations in some instances operate in a natural hedge, as we sell our products in many countries and a substantial portion of our revenues, costs and expenses are denominated in foreign currencies, primarily the euro and British pound.

During the three months ended March 31, 2023, changes in foreign currency exchange rates resulted in an unfavorable translation effect on our consolidated revenues of approximately $0.5 million and a favorable effect on expense of approximately $0.5 million. The gain associated with the translation of foreign equity into U.S. dollars included as a component of comprehensive income during the three months ended March 31, 2023 was $0.8 million, compared to a loss of approximately $0.7 million for the three months ended March 31, 2022. Currency exchange rate fluctuations included as a component of net income (loss) during the three months ended March 31, 2023, and March 31, 2022 were not significant.

Critical Accounting Policies

The critical accounting policies underlying the accompanying unaudited consolidated financial statements are those set forth in Part II, Item 7 included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Recent Accounting Pronouncements

For information on recent accounting pronouncements impacting our business, see “Recently Issued Accounting Pronouncements” included in Note 2 to our Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” of this report.

21

Item 3.       Quantitative and Qualitative Disclosures about Market Risk

Not Applicable.

Item 4.       Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

As of March 31, 2023, the end of the period covered by this report, our management, including our Chief Executive Officer and our Interim Chief Financial Officer, reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based upon management's review and evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC and is accumulated and communicated to management, including the Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the first quarter of fiscal 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud within the Company have been detected.

22

PART II. OTHER INFORMATION

Item 1        Legal Proceedings.

The information included in Note 13 and Note 14 to the Condensed Consolidated Financial Statements (Unaudited) included in “Part I, Item 1 Financial Statements” of this quarterly report is incorporated herein by reference.

Item 1A.    Risk Factors.

You should carefully consider the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, which could materially affect our business, financial position, or future results of operations. The risks described in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial position, or future results of operations.

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds.

There were no unregistered sales of equity securities during the period covered by this report.

Item 3.       Defaults Upon Senior Securities.

None.

Item 4.       Mine Safety Disclosures.

Not applicable.

Item 5.        Other Information.

None.

Item 6.       Exhibits

10.1	Separation Agreement and Release between the Company and Michael Rossi, dated January 18, 2023 (previously filed as an exhibit to the Company’s Current Report on Form 8-K on January 19, 2023 and incorporated by reference thereto).
31.1	Certification of Interim Chief Financial Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Interim Chief Financial Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Executive Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
*	This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by undersigned thereunto duly authorized.

	HARVARD BIOSCIENCE, INC.
Date: April 26, 2023
	By:	/s/ JAMES GREEN
		James Green
		Chief Executive Officer
	By:	/s/ JENNIFER COTE
		Jennifer Cote
		Interim Chief Financial Officer

24

EX-31.1

EXHIBIT 31.1

Certification

I, Jennifer Cote, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Harvard Bioscience, Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date April 26, 2023	/s/ JENNIFER COTE
	Jennifer Cote
	Interim Chief Financial Officer

EX-31.2

EXHIBIT 31.2

Certification

I, James Green, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Harvard Bioscience, Inc.
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: April 26, 2023	/s/ JAMES GREEN
	James Green
	Chief Executive Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned officer of Harvard Bioscience, Inc. (the “Company”) hereby certifies to her knowledge that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Report”) to which this certification is being furnished as an exhibit, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350 and Item 601(b) (32) of Regulation S-K (Item 601(b)(32)) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (A) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and (B) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Date: April 26, 2023	/s/ JENNIFER COTE
	Name: Jennifer Cote
	Title: Interim Chief Financial Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF PERIODIC FINANCIAL REPORT PURSUANT TO 18 U.S.C. SECTION 1350

The undersigned officer of Harvard Bioscience, Inc. (the “Company”) hereby certifies to his knowledge that the Company’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2023 (the “Report”) to which this certification is being furnished as an exhibit, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is provided solely pursuant to 18 U.S.C. Section 1350 and Item 601(b)(32) of Regulation S-K (Item 601(b)(32)) promulgated under the Securities Act of 1933, as amended (the “Securities Act”), and the Exchange Act. In accordance with clause (ii) of Item 601(b)(32), this certification (A) shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and (B) shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.

Date: April 26, 2023	/s/ JAMES GREEN
	Name: James Green
	Title: Chief Executive Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2023	Apr. 20, 2023
Document Information [Line Items]
Entity Central Index Key	0001123494
Entity Registrant Name	HARVARD BIOSCIENCE INC
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
Document Transition Report	false
Entity File Number	001-33957
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	04-3306140
Entity Address, Address Line One	84 October Hill Road
Entity Address, City or Town	Holliston
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01746
City Area Code	508
Local Phone Number	893-8999
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	HBIO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		42,190,043

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 3,789	$ 4,508
Accounts receivable, net	17,737	16,705
Inventories	26,861	26,439
Other current assets	4,062	3,472
Total current assets	52,449	51,124
Property, plant and equipment, net	3,424	3,366
Operating lease right-of-use assets	5,505	5,816
Goodwill	56,618	56,260
Intangible assets, net	19,641	21,014
Other long-term assets	7,941	7,780
Total assets	145,578	145,360
Current liabilities:
Current portion of long-term debt	2,970	3,811
Current portion of operating lease liabilities	2,130	2,135
Accounts payable	5,978	6,447
Deferred revenue	4,121	3,370
Other current liabilities	8,018	7,486
Total current liabilities	23,217	23,249
Long-term debt, net	41,083	43,013
Deferred tax liability	546	590
Operating lease liabilities	4,938	5,282
Other long-term liabilities	1,454	1,006
Total liabilities	71,238	73,140
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized	0	0
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 42,190,043 shares issued and outstanding at March 31, 2023; 42,081,707 shares issued and outstanding at December 31, 2022	455	454
Additional paid-in-capital	230,108	229,008
Accumulated deficit	(141,568)	(142,190)
Accumulated other comprehensive loss	(14,655)	(15,052)
Total stockholders' equity	74,340	72,220
Total liabilities and stockholders' equity	$ 145,578	$ 145,360

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares	Mar. 31, 2023	Dec. 31, 2022
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	80,000,000	80,000,000
Common stock, shares issued (in shares)	42,190,043	42,081,707
Common stock, shares outstanding (in shares)	42,190,043	42,081,707

XML

Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues	$ 29,975	$ 28,778
Cost of revenues	11,629	12,601
Gross profit	18,346	16,177
Sales and marketing expenses	5,978	6,687
General and administrative expenses	6,334	6,325
Research and development expenses	2,897	3,220
Amortization of intangible assets	1,388	1,466
Settlement of litigation, net - Note 14	0	5,191
Total operating expenses	16,597	22,889
Operating income (loss)	(1,749)	6,712
Other expense:
Interest expense	(974)	(384)
Other income, net	432	78
Total other expense	(542)	(306)
Income (loss) before income taxes	1,207	(7,018)
Income tax expense (benefit)	585	(138)
Net income (loss)	$ 622	$ (6,880)
Income (loss) per share:
Basic income (loss) per share (in dollars per share)	$ 0.01	$ (0.17)
Diluted income (loss) per share (in dollars per share)	$ 0.01	$ (0.17)
Weighted-average common shares:
Basic (in shares)	42,119	41,219
Diluted (in shares)	42,783	41,219

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net income (loss)	$ 622	$ (6,880)
Other comprehensive income (loss):
Foreign currency translation adjustments	837	(699)
Derivatives qualifying as hedges, net of tax	(440)	0
Other comprehensive income (loss)	397	(699)
Comprehensive income (loss)	$ 1,019	$ (7,579)

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Treasury Stock, Common [Member]	Total
Balance (in shares) at Dec. 31, 2021	41,143,000
Balance at Dec. 31, 2021	$ 452	$ 225,650	$ (132,674)	$ (10,027)	$ 83,401
Stock option exercises (in shares)	11,000
Stock option exercises	$ 0	31	0	0	31
Vesting of restricted stock units (in shares)	151,000
Vesting of restricted stock units	$ 0	0	0	0	0
Shares withheld for taxes (in shares)	64,000
Shares withheld for taxes	$ 0	(501)	0	0	(501)
Stock-based compensation expense	0	1,023	0	0	1,023
Net income (loss)	0	0	(6,880)	0	(6,880)	$ (6,880)
Other comprehensive income	$ 0	0	0	(699)	(699)	(699)
Shares withheld for taxes (in shares)	(64,000)
Balance (in shares) at Mar. 31, 2022	41,241,000
Balance at Mar. 31, 2022	$ 452	226,203	(139,554)	(10,726)	76,375
Balance (in shares) at Dec. 31, 2022	42,082,000
Balance at Dec. 31, 2022	$ 454	229,008	(142,190)	(15,052)	72,220	$ 72,220
Stock option exercises (in shares)	39,000					39,618
Stock option exercises	$ 1	103	0	0	104
Vesting of restricted stock units (in shares)	125,000
Vesting of restricted stock units	$ 0	0	0	0	0
Shares withheld for taxes (in shares)	(56,000)
Shares withheld for taxes	$ 0	(156)	0	0	(156)
Stock-based compensation expense	0	1,153	0	0	1,153
Net income (loss)	0	0	622	0	622	$ 622
Other comprehensive income	$ 0	0	0	397	397	397
Shares withheld for taxes (in shares)	56,000
Balance (in shares) at Mar. 31, 2023	42,190,000
Balance at Mar. 31, 2023	$ 455	$ 230,108	$ (141,568)	$ (14,655)	$ 74,340	$ 74,340

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash flows from operating activities:
Net income (loss)	$ 622	$ (6,880)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation	333	382
Amortization of intangible assets	1,388	1,466
Amortization of deferred financing costs	70	70
Stock-based compensation expense	1,153	1,023
Deferred income taxes and other	(55)	(123)
Gain on sale of product line	(403)	0
Changes in operating assets and liabilities:
Accounts receivable	(923)	1,506
Inventories	(292)	(1,308)
Other assets	(308)	(466)
Accounts payable and accrued expenses	(150)	2,729
Deferred revenue	741	(300)
Other liabilities	(364)	(85)
Net cash provided by (used in) operating activities	1,812	(1,986)
Cash flows from investing activities:
Additions to property, plant and equipment	(224)	(471)
Proceeds from sale of product line	512	0
Net cash provided by (used in) investing activities	288	(471)
Cash flows from financing activities:
Borrowing on bank line of credit	1,500	1,500
Repayment on bank line of credit	(2,500)	0
Repayment of term debt	(1,841)	(936)
Proceeds from exercise of stock options and employee stock purchase plan	104	31
Taxes paid related to net share settlement of equity awards	(156)	(501)
Net cash (used in) provided by financing activities	(2,893)	94
Effect of exchange rate changes on cash	74	(25)
Decrease in cash and cash equivalents	(719)	(2,388)
Cash and cash equivalents at beginning of period	4,508	7,821
Cash and cash equivalents at end of period	3,789	5,433
Supplemental disclosures of cash flow information:
Cash paid for interest	1,172	383
Cash paid for income taxes, net of refunds	$ (134)	$ 107

XML

Note 1 - Basis of Presentation and Summary of Significant Accounting Policies, and Risks and Uncertainties

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block]

1. Basis of Presentation and Summary of Significant Accounting Policies, and Risks and Uncertainties

Basis of Presentation and Summary of Significant Accounting Policies

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2022, consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of March 31, 2023, results of operations and comprehensive income (loss) and cash flows for the three months ended March 31, 2023 and 2022, as applicable, have been made. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023.

Risks and Uncertainties

The global supply chain has experienced significant disruptions due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. Additionally, the global economy has recently experienced increasing economic uncertainty, including inflationary pressure, rising interest rates, and significant fluctuations in exchange rates. The COVID-19 pandemic has also caused significant economic disruption, including shutdowns that affected various regions in China throughout 2022. These conditions have negatively impacted the Company’s past business, results of operations, and cash flow.

The Company believes that these global economic uncertainties and supply chain trends will continue through 2023. The COVID-19 pandemic continues to evolve, and the future impact of the pandemic is difficult to predict.  If these factors are prolonged or are more severe than anticipated, the Company’s business, results of operations, and cash flow would likely be materially impacted.

XML

Note 2 - Recently Issued Accounting Pronouncements

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

2. Recently Issued Accounting Pronouncements

In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (“ASU 2017-04”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. ASU 2017-04 will be effective for the Company for fiscal years beginning after December 15, 2022. The Company adopted ASU 2016-13 effective January 1, 2023 with no impact to the consolidated financial statements. The Company will perform future goodwill impairment test according to ASU 2017-04.

In September 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (‘ASU 2016-13’), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The FASB issued several ASUs after ASU 2016-13 to clarify implementation guidance and to provide transition relief for certain entities. ASU 2016-13 will be effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company adopted ASU 2016-13 effective January 1, 2023 which resulted in an immaterial impact to the consolidated financial statements.

XML

Note 3 - Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

3. Goodwill and Intangible Assets

The change in the carrying amount of goodwill for the three months ended March 31, 2023 is as follows:

(in thousands)
Carrying amount at December 31, 2022	$	56,260
Effect of change in currency translation		358
Carrying amount at March 31, 2023	$	56,618

Identifiable intangible assets at March 31, 2023 and December 31, 2022 consist of the following:

			March 31, 2023							December 31, 2022
(in thousands)	Average				Accumulated							Accumulated
Amortizable intangible assets:	Life*		Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships		7.0	$	16,226	$	(9,086	)	$	7,140	$	16,124	$	(8,727	)	$	7,397
Existing technology		3.0		37,365		(27,196	)		10,169		37,549		(26,482	)		11,067
Trade names and patents		3.5		7,558		(5,428	)		2,130		7,523		(5,197	)		2,326
Total amortizable intangible assets			$	61,149	$	(41,710	)	$	19,439	$	61,196	$	(40,406	)	$	20,790
Indefinite-lived intangible assets:									202							224
Total intangible assets								$	19,641						$	21,014

*Weighted average life in years as of March 31, 2023

Intangible asset amortization expense was $1.4 million and $1.5 million for the three months ended March 31, 2023 and 2022, respectively. Estimated amortization expense of existing amortizable intangible assets for each of the five succeeding years and thereafter as of March 31, 2023, is as follows:

(in thousands)
2023 (remainder of the year)	$	4,169
2024		5,260
2025		4,023
2026		2,362
2027		1,265
2028		1,018
Thereafter		1,342
Total	$	19,439

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Note 4 - Balance Sheet Information

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Supplemental Balance Sheet Disclosures [Text Block]

4. Balance Sheet Information

The following tables provide details of selected balance sheet items as of the periods indicated:

Inventories:	March 31,		December 31,
(in thousands)	2023		2022
Finished goods	$	5,144	$	5,223
Work in process		3,660		3,776
Raw materials		18,057		17,440
Total	$	26,861	$	26,439

Other Current Liabilities:	March 31,		December 31,
(in thousands)	2023		2022
Compensation	$	3,154	$	3,476
Professional fees		589		392
Warranty costs		279		268
Customer credits		2,204		2,368
Accrued income taxes		700		-
Other		1,092		982
Total	$	8,018	$	7,486

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Note 5 - Related Party Transactions

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

5. Related Party Transactions

In connection with the 2014 acquisitions of Multi Channel Systems MCS GmbH (“MCS”), the Company entered into a facility lease agreement with the former principal owner of MCS who became an employee of the Company at the time of the acquisition and subsequently retired in 2021. The MCS agreement expires on December 31, 2024. Pursuant to this lease agreement, the Company made rent payments of approximately $0.1 million for each of the three months ended March 31, 2023 and 2022.

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Note 6 - Leases

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

6. Leases

The Company has noncancelable operating leases for offices, manufacturing facilities, warehouse space, automobiles and equipment expiring at various dates through 2030.

The components of lease expense for the three months ended March 31, 2023 and 2022, are as follows:

	Three Months Ended March 31,
(in thousands)	2023			2022
Operating lease cost	$	543		$	504
Short-term lease cost		67			64
Sublease income		(25	)		(25	)
Total lease cost	$	585		$	543

Supplemental cash flow information related to the Company's operating leases was as follows:

	Three Months Ended March 31,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:	$	653	$	594
Right-of-use assets obtained in exchange for lease obligations:	$	-	$	39

Supplemental balance sheet information related to the Company’s operating leases are as follows:

	March 31,			December 31,
(in thousands)	2023			2022
Operating lease right-of-use assets	$	5,505		$	5,816
Current portion, operating lease liabilities	$	2,130		$	2,135
Operating lease liabilities, long-term		4,938			5,282
Total operating lease liabilities	$	7,068		$	7,417
Weighted average remaining lease term (years)		6.1			6.2
Weighted average discount rate		9.4	%		9.4	%

Future minimum lease payments for operating leases, with initial terms in excess of one year at March 31, 2023, are as follows:

Year Ending December 31,
(in thousands)
2023 (remainder of the year)	$	1,605
2024		1,803
2025		1,065
2026		1,022
2027		1,035
Thereafter		2,965
Total lease payments		9,495
Less imputed interest		(2,427	)
Total operating lease liabilities	$	7,068

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Note 7 - Long-term Debt

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Long-Term Debt [Text Block]

7. Long-Term Debt

As of March 31, 2023 and December 31, 2022, the Company’s borrowings were as follows: 

	March 31,			December 31,
(in thousands)	2023			2022
Long-term debt:
Term loan	$	32,973		$	34,814
Revolving line		11,850			12,850
Less: unamortized deferred financing costs		(770	)		(840	)
Total debt		44,053			46,824
Less: current portion of long-term debt		(3,250	)		(4,091	)
Current unamortized deferred financing costs		280			280
Long-term debt	$	41,083		$	43,013

On December 22, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A., Wells Fargo Bank, National Association, and Silicon Valley Bank (together, the “Lenders”). All commitments and obligations under the Credit Agreement previously held by Silicon Valley Bank have now been assumed by Silicon Valley Bridge Bank, N. A. The Credit Agreement provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub facility) (collectively, the “Credit Facility”). The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s direct, domestic wholly-owned subsidiaries; none of the Company’s direct or indirect foreign subsidiaries has guaranteed the Credit Facility. The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of Harvard Bioscience, Inc., and each guarantor (including all or a portion of the equity interests in certain of the Company’s domestic and foreign subsidiaries). The Credit Facility matures on December 22, 2025. Issuance costs of $1.4 million are amortized over the contractual term to maturity date on a straight-line basis, which approximates the effective interest method. Available and unused borrowing capacity under the revolving line of credit was $10.5 million as of March 31, 2023 based on the Credit Agreement, as amended, pursuant to the April 2022 Amendment  and November 2022 Amendment (both described below). Total revolver borrowing capacity is limited by the consolidated net leverage ratio as defined under the amended Credit Agreement.

Borrowings under the amended Credit Facility will, at the option of the Company, bear interest at either (i) a rate per annum based on the Secured Overnight Financing Rate (“SOFR”) for an interest period of one, two, three or six months, plus an applicable interest rate margin determined as provided in the Credit Agreement, as amended (a “SOFR Loan”), or (ii) an alternative base rate plus an applicable interest rate margin, each as determined as provided in the Credit Agreement (an “ABR Loan”). SOFR interest under the Credit Agreement is subject to applicable market rates and a floor of 0.50%. The alternative base rate is based on the Citizens Bank prime rate or the federal funds effective rate of the Federal Reserve Bank of New York and is subject to a floor of 1.0%. The applicable interest rate margin varies from 2.0% per annum to 3.25% per annum for SOFR Loans, and from 1.5% per annum to 3.0% per annum for ABR Loans, in each case depending on the Company’s consolidated leverage ratio and is determined in accordance with a pricing grid set forth in the Credit Agreement. Interest on SOFR Loans is payable in arrears on the last day of each applicable interest period, and interest on ABR Loans is payable in arrears at the end of each calendar quarter. There are no prepayment penalties in the event the Company elects to prepay and terminate the Credit Facility prior to its scheduled maturity date, subject to SOFR Loan breakage and redeployment costs in certain circumstances.

The effective interest rate on the Company borrowings for the three months ended March 31, 2023 and 2022, was 7.9 % and 3.1%, respectively, and the weighted average interest rate as of March 31, 2023, net of the effect of the Company’s interest rate swaps, was 8.0%. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments.

The term loans amortize in quarterly installments of $0.75 million per quarter for each of the next three quarters and $1.0 million per quarter during the next seven quarters thereafter, with a balloon payment at maturity. Furthermore, within ninety days after the end of the Company’s fiscal year, the term loans may be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, as defined in the agreement; provided that, in any fiscal year, any voluntary prepayments of the term loans shall be credited against the Company’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis for such fiscal year. As of December 31, 2022, the current portion of long-term debt included an excess cash flow sweep of $1.1 million which was paid on March 31, 2023. Amounts outstanding under the revolving credit facility can be repaid at any time but are due in full at maturity.

The Credit Agreement, as amended, includes customary affirmative, negative, and financial covenants binding on the Company. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets and pay dividends on its capital stock. The financial covenants include a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio. The Credit Agreement, as amended, also includes customary events of default.

On April 28, 2022, the Company entered into an amendment to the Credit Agreement (the “April 2022 Amendment”) pursuant to which the Lenders and administrative agent, among other things, modified the financial covenant relating to the consolidated net leverage ratio, and consented to the Biostage Settlement (as defined below), including without limitation the receipt by the Company of convertible preferred stock in Biostage Inc. (“Biostage”) and the securities issuable upon conversion thereof, as partial payment for Biostage’s indemnification obligations in connection with the Biostage Settlement. See Note 14 for information regarding the Biostage Settlement. In consideration for the April 2022 Amendment, the Company paid fees of $0.2 million to the Lenders and administrative agent.

On November 8, 2022, the Company entered into a subsequent amendment to the Credit Agreement (the “November 2022 Amendment”) pursuant to which, among other things the Lenders and administrative agent modified the financial covenant relating to the consolidated net leverage ratio, and the definition of Consolidated EBITDA used in the calculation of certain financial covenants, including to exclude non-cash inventory charges related to the Company’s decision to discontinue non-strategic products. In consideration for the November 2022 Amendment, the Company paid fees of $0.2 million to the Lenders and administrative agent.

The Company was in compliance with the covenants of the Credit Agreement, as amended, as of March 31, 2023.

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Note 8 - Derivatives

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

8. Derivatives

The Company monitors interest rate risk attributable to both its outstanding and forecasted debt obligations by the use of cash flow sensitivity analysis which estimates the expected impact of changes in interest rates on the Company’s future cash. The Company uses interest-rate-related derivative instruments to manage its exposure related to changes in interest rates on its variable-rate debt instruments. The Company does not enter into derivative instruments for any purpose other than cash flow hedging.

By using derivative financial instruments to hedge exposure to changes in interest rates, the Company exposes itself to credit risk and market risk. Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, the Company is not exposed to the counterparty’s credit risk in those circumstances. The Company minimizes counterparty credit risk in derivative instruments by entering into transactions with carefully selected major financial institutions based upon their credit profile.

Market risk is the adverse effect on the value of a derivative instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The Company monitors interest rate risk attributable to both its outstanding and forecasted debt obligations by the use of cash flow sensitivity analysis which estimates the expected impact of changes in interest rates on the Company’s future cash flows.

On February 28, 2023, the Company entered into an interest rate swap contract to improve the predictability of cash flows from interest payments related to its variable, SOFR based debt. The swap contract has a notional amount of $31.8 million as of March 31, 2023 and matures on December 22, 2025. This swap contract effectively converts the SOFR-based variable portion of the interest payable under the Credit Agreement into fixed-rate debt at an annual rate of 4.75%. The swap contract does not impact the additional interest related to the applicable interest rate margin as discussed above in Note 7 Long-Term Debt. The interest rate swap is considered an effective cash flow hedge, and as a result, the net gains or losses on such instrument are reported as a component of other comprehensive income (loss) in the consolidated financial statements and are reclassified as net income when the underlying hedged interest impacts earnings. A qualitative and quantitative assessment over the hedge effectiveness is performed on a quarterly basis unless facts and circumstances indicate that the hedge may no longer be highly effective.

The following table presents the notional amount and fair value of the Company’s derivative instruments as of March 31, 2023:

(in thousands)		March 31, 2023
Derivatives instruments	Balance sheet classification	Notional Amount		Fair Value (a)
Interest rate swaps	Other long term liabilities	$	31,841	$	(440	)

(a) See Note 9 for the fair value measurements related to these financial instruments.

The portion of the interest rate swap that was reclassified to interest expense from accumulated other comprehensive loss for the three months ended March 31, 2023 was not significant. 

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Note 9 - Fair Value Measurements

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

9. Fair Value Measurements

The following tables present the fair value hierarchy for those assets or liabilities measured at fair value on a recurring basis:

	Fair Value as of March 31, 2023
Assets (Liabilities) (in thousands)	Level 1		Level 2			Level 3		Total
Equity securities - common stock	$	206	$	-		$	-	$	206
Interest rate swap agreements	$	-	$	(440	)	$	-	$	(440	)

The Company uses the market approach technique to value its financial liabilities. The Company’s financial assets and liabilities carried at fair value include, when applicable, investments in common stock and derivative instruments used to hedge the Company’s interest rate risks. The fair value of the Company’s investment in common stock was based on the closing price per the OTCQB Marketplace at the reporting date. The fair value of the Company’s interest rate swap agreements was based on SOFR yield curves at the reporting date.

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Note 10 - Capital Stock and Stock-based Compensation

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

10. Capital Stock and Stock-Based Compensation

Stock-Based Payment Awards

Stock-based awards consist of stock options, time-based restricted stock units (“RSUs”), performance-based RSUs (“PRSUs”) and shares issued under the Company’s employee stock purchase plan (the “ESPP”). Activity under the Company’s equity incentive plans for the three months ended March 31, 2023 was as follows:

				Weighted
	Stock			Average
	Options			Exercise		RSUs			Grant Date		PRSUs		Grant Date
	Outstanding			Price		Outstanding			Fair Value		Outstanding		Fair Value
Balance at December 31, 2022		1,238,776		$	3.15		1,093,801		$	3.94		646,235	$	4.51
Granted		-			-		1,177,391			2.51		558,958		2.61
Exercised		(39,618	)		2.63		-			-		-		-
Vested (RSUs)		-			-		(125,036	)		1.93		-		-
Cancelled/Forfeited		(29,201	)		2.99		(3,122	)		5.54		-		-
Balance at March 31, 2023		1,169,957		$	3.17		2,143,034		$	3.27		1,205,193	$	3.63

Stock-based compensation expense related to stock options, RSUs, PRSUs, and the ESPP for the three months ended March 31, 2023 and 2022 was allocated as follows:

	Three Months Ended March 31,
(in thousands)	2023		2022
Cost of revenues	$	69	$	36
Sales and marketing expenses		145		154
General and administrative expenses		869		791
Research and development expenses		70		42
Total stock-based compensation expenses	$	1,153	$	1,023

As of March 31, 2023, the total compensation costs related to unvested awards not yet recognized is $8.4 million and the weighted average period over which it is expected to be recognized is approximately 2.1 years. The Company did not capitalize any stock-based compensation.

The weighted average estimated fair value of PRSUs that were granted during the three months ended March 31, 2023 was $2.61 per unit. The following assumptions were used to estimate the fair value of PRSUs granted during the three months ended March 31, 2023 using a Monte-Carlo valuation simulation:

	2023
Volatility		56.8	%
Risk-free interest rate		4.6	%
Correlation coefficient		41.7	%
Dividend yield		-	%

Earnings (Loss) Per Share

Basic earnings (loss) per share (EPS) is calculated by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. The calculation of diluted earnings per share assumes conversion of stock options, RSUs, and PRSUs into common stock using the treasury method. The weighted average number of shares used to compute basic and diluted EPS consists of the following:

	Three Months Ended March 31,
(in thousands)	2023		2022
Weighted average shares outstanding - basic		42,119		41,219
Dilutive effect of equity awards		664		-
Weighted average shares outstanding - diluted		42,783		41,219
Shares excluded from diluted loss per share due to their anti-dilutive effect		1,167		3,505

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Note 11 - Revenues

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

11. Revenues

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands)	2023		2022
Instruments, equipment, software and accessories	$	28,493	$	27,538
Service, maintenance and warranty contracts		1,482		1,240
Total revenues	$	29,975	$	28,778

The following tables represent a disaggregation of revenue by geographic destination for the three months ended March 31, 2023 and 2022:

	Three Months Ended March 31,
(in thousands)	2023		2022
United States	$	12,302	$	12,239
Europe		7,441		7,823
Hong Kong		3,508		1,706
Rest of Asia		5,273		5,027
Rest of the world		1,451		1,983
Total revenues	$	29,975	$	28,778

Concentrations

No customer accounted for more than 10% of revenues for the three months ended March 31, 2023 and 2022. At March 31, 2023 and December 21, 2022, no customer accounted for more than 10% of net accounts receivable.

Deferred Revenue

The following tables provide details of deferred revenue as of the periods indicated:

	March 31,		December 31,
(in thousands)	2023		2022
Service contracts	$	2,179	$	1,530
Customer advances		1,942		1,840
Total deferred revenue	$	4,121	$	3,370

During the three months ended March 31, 2023 and 2022, the Company recognized revenue of $1.0 million and $0.7 million from deferred revenue existing at December 31, 2022 and 2021, respectively.

Allowance for Expected Credit Losses on Receivables

The allowance for expected credit losses on receivables is used to present accounts receivable, net at an amount that represents the Company’s estimate of the related transaction price recognized as revenue. The allowance represents an estimate of expected credit losses over the lifetime of the receivables, even if the loss is considered remote, and reflects expected recoveries of amounts previously written-off. The Company estimates the allowance on the basis of specifically identified receivables that are evaluated individually for impairment and an analysis of the remaining receivables determined by reference to past default experience. The Company considers the need to adjust historical information to reflect the extent to which current conditions and reasonable forecasts are expected to differ from the conditions that existed for the historical period considered. Losses on receivables have not historically been significant.

Management judgments are used to determine when to charge off uncollectible trade accounts receivable. The Company bases these judgments on the age of the receivable, credit quality of the customer, current economic conditions, and other factors that may affect a customer’s ability and intent to pay. Customers are generally not required to provide collateral for purchases.

Activity in the allowance for expected losses on receivables is as follows:

	Three Months Ended March 31,
(in thousands)	2023			2022
Balance, beginning of period	$	191		$	136
Bad debt (credit)		(3	)		(6	)
Charge-offs and other		(21	)		6
Balance, end of period	$	167		$	136

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Note 12 - Income Tax

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

12. Income Tax

The determination of the annual effective tax rate is based upon a number of significant estimates and judgments, including the estimated annual pretax income in each tax jurisdiction in which the Company operates and the development of tax planning strategies during the year. In addition, as a global commercial enterprise, the Company’s tax expense can be impacted by changes in tax rates or laws, the finalization of tax audits and reviews and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

Income tax expense (benefit) was $0.6 million and $(0.1) million for the three months ended March 31, 2023 and 2022, respectively. The effective tax rates for the three months ended March 31, 2023 and 2022 were 48.5% and 2.0%, respectively. The difference between the Company’s effective tax rates in 2023 and 2022 compared to the U.S. statutory tax rate of 21% is primarily due to a Global Intangible Low-Taxed Income (“GILTI”) inclusion to taxable income and changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.

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Note 13 - Commitments and Contingent Liabilities

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

13. Commitments and Contingent Liabilities

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs in the Biostage Litigation (as defined below) which resolved all claims relating to the litigation as described in Note 14 – Litigation Settlement.

The Company is involved in various other claims and legal proceedings arising in the ordinary course of business. After consultation with legal counsel, the Company has determined that the ultimate disposition of such proceedings is not likely to have a material adverse effect on its business, financial condition, results of operations or cash flows. Although unfavorable outcomes in the proceedings are possible, the Company has not accrued loss contingencies relating to any such matters as they are not considered to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations and cash flows could be material.

In addition, the Company has entered into indemnification agreements with its directors. It is not possible to determine the maximum potential liability amount under these indemnification agreements due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement. The Company has not recorded any liability for costs related to contingent indemnification obligations as of March 31, 2023.

The Company is also subject to unclaimed property laws in the ordinary course of its business.  State escheat laws generally require entities to report and remit abandoned and unclaimed property to the state. Failure to timely report and remit the property can result in assessments that could include interest and penalties, in addition to the payment of the escheat liability itself. The Company is currently undergoing unclaimed property audits conducted by three states. Based on the current stage of the audits, the Company has not accrued any loss contingencies related to these audits as of March 31, 2023.

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Note 14 - Litigation Settlement

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Legal Matters and Contingencies [Text Block]

14. Litigation Settlement

On April 14, 2017, representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against the Company and other defendants, including Biostage, a former subsidiary of the Company that was spun off in 2013, as well as another third party (the “Biostage Litigation”). The complaint sought payment for an unspecified amount of damages and alleged that the plaintiff sustained terminal injuries allegedly caused by products, including one synthetic trachea scaffold and two bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in Europe in 2012 and 2013.

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs of the Biostage Litigation and Biostage’s products liability insurance carriers (the “Biostage Settlement”), which resolved all claims by and between the parties and Biostage’s product liability insurance carriers and resulted in the dismissal with prejudice of the wrongful death claim and all claims between the Company, Biostage and the insurance carriers. The Biostage Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company or Biostage. Biostage has indemnified the Company for all losses and expenses, including legal expenses that the Company incurred in connection with the Biostage Litigation and the Biostage Settlement.

During the three months ended March 31, 2022, the Company accrued $5.2 million of costs related to legal fees and the Biostage Settlement. Due to the financial condition of Biostage, the Company determined that it was uncertain as to whether Biostage would be able to meet its indemnification obligation and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022 and September 30, 2022, the Company recorded credits of $4.9 million and $0.5 million, respectively, to the reserve against the indemnification receivable from Biostage. These adjustments reflected: i) the issuance by Biostage of 4,000 shares of its Series E Convertible Preferred Stock (the “Series E Preferred Stock”) to the Company on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligation, ii) the payment by Biostage of the legal fees associated with the Biostage Settlement, and iii) other accrual adjustments. The Series E Preferred Stock was initially recorded at an estimated fair value of $3.9 million using a Monte Carlo valuation simulation incorporating information from selected guideline companies.

The Series E Preferred Stock ranks senior to all classes of common stock of Biostage and all classes of preferred stock of Biostage (unless the Company consents to Biostage’s issuance of other preferred stock that is senior to or pari passu with the Series E Preferred Stock) and accrues dividends at a rate of 8% per annum that are payable in additional shares of Series E Preferred Stock. Each share of Series E Preferred Stock is convertible at any time at the option of the Company into such number of shares of Biostage common stock determined by dividing (a) the $1,000 face value of the Series E Preferred Stock plus all accrued and unpaid dividends thereon by (b) the average of the volume weighted average trading prices of Biostage’s common stock, which is currently quoted on the OTCQB Marketplace, for the 60 consecutive trading days prior to the conversion. In the event Biostage has a subsequent qualified offering of its common stock, (which is defined as an offering of Biostage common stock that coincides with its uplisting onto Nasdaq, the first subsequent public offering by Biostage, or the first subsequent private placement by Biostage resulting in gross proceeds to Biostage of at least $4,000,000), the Series E Preferred Stock is mandatorily converted into Biostage common stock at the applicable qualified offering price.

During the three months ended March 31, 2023, the Company converted 200 shares of its Series E Preferred Stock into 31,933 shares of Biostage common stock. The market value of this Biostage common stock was $0.2 million at March 31, 2023.

The book value of the shares of Series E Preferred Stock, inclusive of accrued dividends, as of March 31, 2023 is $4.0 million and is included in the consolidated balance sheet as a component of Other long-term assets. The Company has elected the provisions within ASC 321 Investment Securities to subsequently measure the Series E Preferred Stock at its original cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Biostage. As of March 31, 2023, there have been no observable price changes or indicators of impairment and therefore, there have been no measurement adjustments to the carrying value of the Series E Preferred Stock.

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Note 15 - Product Line Disposition

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

15. Product Line Disposition

On February 17, 2023, the Company completed the disposition of its Hoefer product line for cash consideration of $0.5 million. The carrying value of assets sold was $0.1 million resulting in a gain on disposition of $0.4 million which is recorded in Other income, net in the consolidated statement of operations for the three months ended March 31, 2023. Revenue and gross profit of this disposed product line included in the condensed consolidated statement of operations for the three months ended March 31, 2023 and 2022 are not significant.

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Note 16 - Subsequent Event - Conversion of Biostage Series E Preferred Stock to Common Stock

3 Months Ended

Mar. 31, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

16. Subsequent Event - Conversion of Biostage Series E Preferred Stock to Common Stock

On April 6, 2023, Biostage disclosed that it had completed a private placement with certain investors to purchase shares of Biostage common stock for the aggregate purchase price of approximately $6.0 million at a purchase price of $6.00 per share. As the proceeds of the private placement are in excess of $4.0 million, the transaction triggered a mandatory conversion of the Series E Preferred Stock, plus all accrued dividends, into Biostage common stock as discussed in Note 14 above.

On April 6, 2023, all of the Company’s remaining Series E Preferred Stock, plus all accrued dividends, were converted into approximately 675,000 shares of Biostage common stock at the applicable qualified offering price of $6.00 per share. Immediately after the conversion, the Company owned approximately 5% of Biostage’s total common shares outstanding. Due to Biostage’s limited operating history, their overall financial condition and the limited trading volumes and liquidity of their common stock, the value of the Company’s investment in  Biostage’s common stock could fluctuate considerably or become worthless.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2023

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation and Summary of Significant Accounting Policies

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, the “Company”) as of March 31, 2023 and for the three months ended March 31, 2023 and 2022, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2022, consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of March 31, 2023, results of operations and comprehensive income (loss) and cash flows for the three months ended March 31, 2023 and 2022, as applicable, have been made. The results of operations for the three months ended March 31, 2023, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, 2023.

Risks and Uncertainties Policy [Policy Text Block]

Risks and Uncertainties

The global supply chain has experienced significant disruptions due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. Additionally, the global economy has recently experienced increasing economic uncertainty, including inflationary pressure, rising interest rates, and significant fluctuations in exchange rates. The COVID-19 pandemic has also caused significant economic disruption, including shutdowns that affected various regions in China throughout 2022. These conditions have negatively impacted the Company’s past business, results of operations, and cash flow.

The Company believes that these global economic uncertainties and supply chain trends will continue through 2023. The COVID-19 pandemic continues to evolve, and the future impact of the pandemic is difficult to predict.  If these factors are prolonged or are more severe than anticipated, the Company’s business, results of operations, and cash flow would likely be materially impacted.

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Note 3 - Goodwill and Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Goodwill [Table Text Block]

(in thousands)
Carrying amount at December 31, 2022	$	56,260
Effect of change in currency translation		358
Carrying amount at March 31, 2023	$	56,618

Schedule of Intangible Assets and Goodwill [Table Text Block]

			March 31, 2023							December 31, 2022
(in thousands)	Average				Accumulated							Accumulated
Amortizable intangible assets:	Life*		Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships		7.0	$	16,226	$	(9,086	)	$	7,140	$	16,124	$	(8,727	)	$	7,397
Existing technology		3.0		37,365		(27,196	)		10,169		37,549		(26,482	)		11,067
Trade names and patents		3.5		7,558		(5,428	)		2,130		7,523		(5,197	)		2,326
Total amortizable intangible assets			$	61,149	$	(41,710	)	$	19,439	$	61,196	$	(40,406	)	$	20,790
Indefinite-lived intangible assets:									202							224
Total intangible assets								$	19,641						$	21,014

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

(in thousands)
2023 (remainder of the year)	$	4,169
2024		5,260
2025		4,023
2026		2,362
2027		1,265
2028		1,018
Thereafter		1,342
Total	$	19,439

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Note 4 - Balance Sheet Information (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Inventory, Current [Table Text Block]

Inventories:	March 31,		December 31,
(in thousands)	2023		2022
Finished goods	$	5,144	$	5,223
Work in process		3,660		3,776
Raw materials		18,057		17,440
Total	$	26,861	$	26,439

Other Current Liabilities [Table Text Block]

Other Current Liabilities:	March 31,		December 31,
(in thousands)	2023		2022
Compensation	$	3,154	$	3,476
Professional fees		589		392
Warranty costs		279		268
Customer credits		2,204		2,368
Accrued income taxes		700		-
Other		1,092		982
Total	$	8,018	$	7,486

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Note 6 - Leases (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Lease, Cost [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023			2022
Operating lease cost	$	543		$	504
Short-term lease cost		67			64
Sublease income		(25	)		(25	)
Total lease cost	$	585		$	543

Supplemental Cash Flow Information Related to Operating Leases [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:	$	653	$	594
Right-of-use assets obtained in exchange for lease obligations:	$	-	$	39

Supplemental Balance Sheet Informaton Related to Operating Leases [Table Text Block]

	March 31,			December 31,
(in thousands)	2023			2022
Operating lease right-of-use assets	$	5,505		$	5,816
Current portion, operating lease liabilities	$	2,130		$	2,135
Operating lease liabilities, long-term		4,938			5,282
Total operating lease liabilities	$	7,068		$	7,417
Weighted average remaining lease term (years)		6.1			6.2
Weighted average discount rate		9.4	%		9.4	%

Lessee, Operating Lease, Liability, to be Paid, Maturity [Table Text Block]

Year Ending December 31,
(in thousands)
2023 (remainder of the year)	$	1,605
2024		1,803
2025		1,065
2026		1,022
2027		1,035
Thereafter		2,965
Total lease payments		9,495
Less imputed interest		(2,427	)
Total operating lease liabilities	$	7,068

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Note 7 - Long-term Debt (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Debt [Table Text Block]

	March 31,			December 31,
(in thousands)	2023			2022
Long-term debt:
Term loan	$	32,973		$	34,814
Revolving line		11,850			12,850
Less: unamortized deferred financing costs		(770	)		(840	)
Total debt		44,053			46,824
Less: current portion of long-term debt		(3,250	)		(4,091	)
Current unamortized deferred financing costs		280			280
Long-term debt	$	41,083		$	43,013

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Note 8 - Derivatives (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Derivative Instruments [Table Text Block]

(in thousands)		March 31, 2023
Derivatives instruments	Balance sheet classification	Notional Amount		Fair Value (a)
Interest rate swaps	Other long term liabilities	$	31,841	$	(440	)

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Note 9 - Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	Fair Value as of March 31, 2023
Assets (Liabilities) (in thousands)	Level 1		Level 2			Level 3		Total
Equity securities - common stock	$	206	$	-		$	-	$	206
Interest rate swap agreements	$	-	$	(440	)	$	-	$	(440	)

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Note 10 - Capital Stock and Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Schedule Of Stock Options And Restricted Stock Units Activity Roll forward [Table Text Block]

				Weighted
	Stock			Average
	Options			Exercise		RSUs			Grant Date		PRSUs		Grant Date
	Outstanding			Price		Outstanding			Fair Value		Outstanding		Fair Value
Balance at December 31, 2022		1,238,776		$	3.15		1,093,801		$	3.94		646,235	$	4.51
Granted		-			-		1,177,391			2.51		558,958		2.61
Exercised		(39,618	)		2.63		-			-		-		-
Vested (RSUs)		-			-		(125,036	)		1.93		-		-
Cancelled/Forfeited		(29,201	)		2.99		(3,122	)		5.54		-		-
Balance at March 31, 2023		1,169,957		$	3.17		2,143,034		$	3.27		1,205,193	$	3.63

Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023		2022
Cost of revenues	$	69	$	36
Sales and marketing expenses		145		154
General and administrative expenses		869		791
Research and development expenses		70		42
Total stock-based compensation expenses	$	1,153	$	1,023

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023		2022
Weighted average shares outstanding - basic		42,119		41,219
Dilutive effect of equity awards		664		-
Weighted average shares outstanding - diluted		42,783		41,219
Shares excluded from diluted loss per share due to their anti-dilutive effect		1,167		3,505

Black Scholes Option Pricing Model [Member]

Notes Tables

Schedule of Share-Based Payment Award, Stock Options, Valuation Assumptions [Table Text Block]

	2023
Volatility		56.8	%
Risk-free interest rate		4.6	%
Correlation coefficient		41.7	%
Dividend yield		-	%

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Note 11 - Revenues (Tables)

3 Months Ended

Mar. 31, 2023

Notes Tables

Disaggregation of Revenue [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023		2022
Instruments, equipment, software and accessories	$	28,493	$	27,538
Service, maintenance and warranty contracts		1,482		1,240
Total revenues	$	29,975	$	28,778

Revenue from External Customers by Geographic Areas [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023		2022
United States	$	12,302	$	12,239
Europe		7,441		7,823
Hong Kong		3,508		1,706
Rest of Asia		5,273		5,027
Rest of the world		1,451		1,983
Total revenues	$	29,975	$	28,778

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	March 31,		December 31,
(in thousands)	2023		2022
Service contracts	$	2,179	$	1,530
Customer advances		1,942		1,840
Total deferred revenue	$	4,121	$	3,370

Schedule of Product Warranty Liability [Table Text Block]

	Three Months Ended March 31,
(in thousands)	2023			2022
Balance, beginning of period	$	191		$	136
Bad debt (credit)		(3	)		(6	)
Charge-offs and other		(21	)		6
Balance, end of period	$	167		$	136

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Note 3 - Goodwill and Intangible Assets (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Amortization of Intangible Assets	$ 1,388	$ 1,466

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Note 3 - Goodwill and Intangible Assets - Change in Carrying Amount of Goodwill (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($)
Carrying amount at December 31, 2022	$ 56,260
Effect of change in currency translation	358
Carrying amount at March 31, 2023	$ 56,618

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Note 3 - Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands		Mar. 31, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets, Gross		$ 61,149	$ 61,196
Total amortizable intangible assets		(41,710)	(40,406)
Finite-Lived Intangible Assets, Net		19,439	20,790
Indefinite-lived intangible assets:		202	224
Total intangible assets, Net		$ 19,641	21,014
Distribution Agreements/Customer Relationships [Member]
Finite-Lived Intangible Assets, Weighted Average Useful Life (Year)	[1]	7 years
Finite-Lived Intangible Assets, Gross		$ 16,226	16,124
Total amortizable intangible assets		(9,086)	(8,727)
Finite-Lived Intangible Assets, Net		$ 7,140	7,397
Existing Technology [Member]
Finite-Lived Intangible Assets, Weighted Average Useful Life (Year)	[1]	3 years
Finite-Lived Intangible Assets, Gross		$ 37,365	37,549
Total amortizable intangible assets		(27,196)	(26,482)
Finite-Lived Intangible Assets, Net		$ 10,169	11,067
Trade Names and Patents [Member]
Finite-Lived Intangible Assets, Weighted Average Useful Life (Year)	[1]	3 years 6 months
Finite-Lived Intangible Assets, Gross		$ 7,558	7,523
Total amortizable intangible assets		(5,428)	(5,197)
Finite-Lived Intangible Assets, Net		$ 2,130	$ 2,326

[1] Weighted average life in years as of September 30, 2022

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Note 3 - Goodwill and Intangible Assets - Future Amortization Expense of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
2024	$ 5,260
2025	4,023
2026	2,362
2027	1,265
2028	1,018
Thereafter	1,342
Total	$ 19,439	$ 20,790

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Note 4 - Balance Sheet Information - Inventories (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Finished goods	$ 5,144	$ 5,223
Work in process	3,660	3,776
Raw materials	18,057	17,440
Total	$ 26,861	$ 26,439

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Note 4 - Balance Sheet Information - Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Compensation	$ 3,154	$ 3,476
Professional fees	589	392
Warranty costs	279	268
Customer credits	2,204	2,368
Accrued income taxes	700	0
Other	1,092	982
Total	$ 8,018	$ 7,486

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Note 5 - Related Party Transactions (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
The Multi Channel Systems Facility and Triangle BioSystems Lease Agreements [Member]
Operating Lease, Expense	$ 0.1	$ 0.1

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Note 6 - Leases - Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating lease cost	$ 543	$ 504
Short-term lease cost	67	64
Sublease income	(25)	(25)
Total lease cost	$ 585	$ 543

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Note 6- Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Cash paid for amounts included in the measurement of lease liabilities:	$ 653	$ 594
Right-of-use assets obtained in exchange for lease obligations:	$ 0	$ 39

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Note 6 - Leases - Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Operating lease right-of-use assets	$ 5,505	$ 5,816
Current portion, operating lease liabilities	2,130	2,135
Operating lease liabilities, long-term	4,938	5,282
Total operating lease liabilities	$ 7,068	$ 7,417
Weighted average remaining lease term (years) (Year)	6 years 1 month 6 days	6 years 2 months 12 days
Weighted average discount rate	9.40%	9.40%

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Note 6 - Leases - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
2023 (remainder of the year)	$ 1,605
2024	1,803
2025	1,065
2026	1,022
2027	1,035
Thereafter	2,965
Total lease payments	9,495
Less imputed interest	(2,427)
Total operating lease liabilities	$ 7,068	$ 7,417

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Note 7 - Long-term Debt (Details Textual) - USD ($) $ in Thousands			3 Months Ended		12 Months Ended
	Nov. 08, 2022	Apr. 28, 2022	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022	Mar. 31, 2021	Dec. 22, 2020
Debt Issuance Costs, Net, Total			$ 770		$ 840
The Credit Agreement [Member]
Debt Issuance Costs, Net, Total							$ 1,400
Line of Credit Facility, Interest Rate During Period			7.90%	3.10%
Line of Credit Facility, Interest Rate at Period End			8.00%
Debt Instrument Quarterly Payment Next Eight Years			$ 750
Debt Instrument, Quarterly Payment, Thereafter			1,000
Percentage of Consolidated Excess Cash Flow						50.00%
Debt Instrument, Current Maturities, Excess Cash Flow Sweep					$ 1,100
Payments of Debt Restructuring Costs		$ 200
Payments for Debt Fees	$ 200
The Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) [Member]
Debt Instrument, Interest Rate, State Floor Percentage					0.50%
The Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate					3.25%
The Credit Agreement [Member] | Base Rate [Member]
Debt Instrument, Interest Rate, State Floor Percentage					1.00%
The Credit Agreement [Member] | The ABR Loan [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate					1.50%
The Credit Agreement [Member] | The ABR Loan [Member] | Maximum [Member]
Debt Instrument, Basis Spread on Variable Rate					3.00%
The Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Remaining Borrowing Capacity			10,500
Term Loan [Member]
Long-term Debt, Gross			$ 32,973		$ 34,814
The SOFR Loan and Pricing Grid Credit Agreement [Member] | The Credit Agreement [Member] | Secured Overnight Financing Rate (SOFR) [Member] | Minimum [Member]
Debt Instrument, Basis Spread on Variable Rate					2.00%
The Lenders [Member] | The Credit Agreement [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity							25,000
The Lenders [Member] | The Credit Agreement [Member] | Letter of Credit [Member]
Line of Credit Facility, Maximum Borrowing Capacity							10,000
The Lenders [Member] | The Credit Agreement [Member] | Swingline Loan Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity							10,000
The Lenders [Member] | Term Loan [Member] | The Credit Agreement [Member]
Long-term Debt, Gross							$ 40,000

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Note 7 - Long-term Debt - Breakdown of Borrowings (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Less: unamortized deferred financing costs	$ (770)	$ (840)
Total debt	44,053	46,824
Less: current portion of long-term debt	(3,250)	(4,091)
Current unamortized deferred financing costs	280	280
Long-term debt	41,083	43,013
Term Loan [Member]
Long-term debt, gross	32,973	34,814
Line of Credit [Member]
Long-term debt, gross	$ 11,850	$ 12,850

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Note 8 - Derivatives (Details Textual) $ in Thousands	Mar. 31, 2023 USD ($)
The Credit Agreement [Member]
Debt Instrument, Interest Rate, Stated Percentage	4.75%
Interest Rate Swap [Member]
Derivative, Notional Amount	$ 31,841

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Note 8 - Derivatives - Derivative Instruments (Details) - Interest Rate Swap [Member] $ in Thousands	Mar. 31, 2023 USD ($)
Interest rate swaps, notional amount	$ 31,841
Interest rate swaps, fair value	$ (440)

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Note 9 - Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - Fair Value, Recurring [Member] $ in Thousands	Mar. 31, 2023 USD ($)
Equity securities - common stock	$ 206
Interest Rate Swap [Member]
Derivative liabilities	(440)
Fair Value, Inputs, Level 1 [Member]
Equity securities - common stock	206
Fair Value, Inputs, Level 1 [Member] | Interest Rate Swap [Member]
Derivative liabilities	0
Fair Value, Inputs, Level 2 [Member]
Equity securities - common stock	0
Fair Value, Inputs, Level 2 [Member] | Interest Rate Swap [Member]
Derivative liabilities	(440)
Fair Value, Inputs, Level 3 [Member]
Equity securities - common stock	0
Fair Value, Inputs, Level 3 [Member] | Interest Rate Swap [Member]
Derivative liabilities	$ 0

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Note 10 - Capital Stock and Stock-based Compensation (Details Textual) $ / shares in Units, $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total | $	$ 8.4
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)	2 years 1 month 6 days
Share-Based Compensation Arrangement by Share-Based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value (in dollars per share) | $ / shares	$ 2.61

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Note 10 - Capital Stock and Stock-based Compensation - Stock Option and Restricted Stock Unit Activity (Details)	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Opening Balance, Stock Options Outstanding (in shares) | shares	1,238,776
Options, Outstanding, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 3.15
Options, Granted in Period (in shares) | shares	0
Options, Granted in Period, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 0
Options, exercised (in shares) | shares	(39,618)
Options, exercised, weighted average exercise price (in dollars per share) | $ / shares	$ 2.63
Options, Cancelled / Forfeited in Period (in shares) | shares	(29,201)
Options, Cancelled / Forfeited, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 2.99
Opening Balance, Stock Options Outstanding (in shares) | shares	1,169,957
Options, Outstanding, Weighted Average Exercise Price (in dollars per share) | $ / shares	$ 3.17
Restricted Stock Units (RSUs) [Member]
Restricted Stock Units Outstanding , Balance (in shares) | shares	1,093,801
Restricted Stock Units Outstanding , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 3.94
Restricted Stock Units, Granted in Period (in shares) | shares	1,177,391
Restricted Stock Units Granted , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 2.51
Restricted Stock Units, Vested in Period (in shares) | shares	(125,036)
Restricted Stock Units, Vested , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 1.93
Restricted Stock Units, Cancelled / Forfeited in Period (in shares) | shares	(3,122)
Restricted Stock Units, Cancelled/ Forfeited , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 5.54
Restricted Stock Units Outstanding , Balance (in shares) | shares	2,143,034
Restricted Stock Units Outstanding , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 3.27
Market Condition Restricted Stock Units [Member]
Restricted Stock Units Outstanding , Balance (in shares) | shares	646,235
Restricted Stock Units Outstanding , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 4.51
Restricted Stock Units, Granted in Period (in shares) | shares	558,958
Restricted Stock Units Granted , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 2.61
Restricted Stock Units, Vested in Period (in shares) | shares	0
Restricted Stock Units, Vested , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 0
Restricted Stock Units, Cancelled / Forfeited in Period (in shares) | shares	0
Restricted Stock Units, Cancelled/ Forfeited , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 0
Restricted Stock Units Outstanding , Balance (in shares) | shares	1,205,193
Restricted Stock Units Outstanding , Grant Date Fair Value, Balance (in dollars per share) | $ / shares	$ 3.63

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Note 10 - Capital Stock and Stock-based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Share-based compensation	$ 1,153	$ 1,023
Continuing Operations [Member] | Cost of Sales [Member]
Share-based compensation	69	36
Continuing Operations [Member] | Selling and Marketing Expense [Member]
Share-based compensation	145	154
Continuing Operations [Member] | General and Administrative Expense [Member]
Share-based compensation	869	791
Continuing Operations [Member] | Research and Development Expense [Member]
Share-based compensation	$ 70	$ 42

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Note 10 - Capital Stock and Stock-based Compensation - Black Scholes Assumptions (Details) - Black Scholes Option Pricing Model [Member] - Share-Based Payment Arrangement, Option [Member]	3 Months Ended
	Mar. 31, 2023
Volatility	56.80%
Risk-free interest rate	4.60%
Correlation coefficient	41.70%
Dividend yield	0.00%

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Note 10 - Capital Stock and Stock-based Compensation - Earnings (Loss) Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Weighted average shares outstanding - basic (in shares)	42,119	41,219
Dilutive effect of equity awards (in shares)	664	0
Weighted average shares outstanding - diluted (in shares)	42,783	41,219
Shares excluded from diluted loss per share due to their anti-dilutive effect (in shares)	1,167	3,505

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Note 11 - Revenues (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Contract with Customer, Liability, Revenue Recognized	$ 1.0	$ 0.7

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Note 11 - Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues	$ 29,975	$ 28,778
Instruments, Equipment, Software, and Accessories [Member]
Revenues	28,493	27,538
Service, Maintenance, and Warranty Contracts [Member]
Revenues	$ 1,482	$ 1,240

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Note 11 - Revenues - Revenue by Geographic Destination (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Total revenues	$ 29,975	$ 28,778
UNITED STATES
Total revenues	12,302	12,239
Europe [Member]
Total revenues	7,441	7,823
HONG KONG
Total revenues	3,508	1,706
Rest of Asia [Member]
Total revenues	5,273	5,027
Rest of the World [Member]
Total revenues	$ 1,451	$ 1,983

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Note 11 - Revenues - Deferred Revenue (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Deferred revenue	$ 4,121	$ 3,370
Service [Member]
Deferred revenue	2,179	1,530
Customer Advances [Member]
Deferred revenue	$ 1,942	$ 1,840

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Note 11 - Revenues - Warranties (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Balance	$ 191	$ 136
Bad debt (credit)	(3)	(6)
Charge-offs and other	(21)	6
Balance	$ 167	$ 136

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Note 12 - Income Tax (Details Textual) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Income Tax Expense (Benefit)	$ 585	$ (138)
Effective Income Tax Rate Reconciliation, Percent	48.50%	2.00%

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Note 13 - Commitments and Contingent Liabilities (Details Textual) $ in Thousands	Mar. 31, 2023 USD ($)
Director [Member] | Indemnification Agreements [Member]
Liability for Contingent Indemnification Obligations	$ 0

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Note 14 - Litigation Settlement (Details Textual) - USD ($)		3 Months Ended			12 Months Ended
	Jun. 10, 2022	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2022	Sep. 30, 2022
Litigation Settlement, Expense		$ 0		$ 5,191,000
Biostage [Member] | Series E Convertible Preferred Stock into Common Stock [Member]
Conversion of Stock, Shares Converted (in shares)		200
Conversion of Stock, Shares Issued (in shares)		31,933
Conversion of Stock, Amount Issued		$ 200,000
Series E Preferred Stock in Biostage [Member]
Equity Securities without Readily Determinable Fair Value, Amount	$ 3,900,000
Preferred Stock, Book Value, Inclusive of Accrued Dividends		$ 4,000,000.0
Convertible Preferred Stock [Member] | Biostage [Member]
Preferred Stock, Dividend Rate, Percentage					8.00%
Preferred Stock, Par or Stated Value Per Share (in dollars per share)					$ 1,000
Preferred Stock, Mandatory Conversion, Minimum Qualified Offering Amount					$ 4,000,000
Case in Suffolk Superior Court [Member]
Loss Contingency, Estimate of Possible Loss				$ 5,200,000
Litigation Settlement, Expense			$ (4,900,000)
Case in Suffolk Superior Court [Member] | Convertible Preferred Stock [Member]
Estimated Litigation Liability						$ 500,000
Stock Issued During Period, Shares, Issued For Settlement (in shares)	4,000
Stock Issued During Period, Value, Issued for Settlement	$ 4,000,000.0

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Note 15 - Product Line Disposition (Details Textual) - USD ($) $ in Thousands		3 Months Ended
	Feb. 17, 2023	Mar. 31, 2023	Mar. 31, 2022
Gain (Loss) on Disposition of Business		$ 403	$ (0)
Hoefer Product Line [Member] | Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member]
Disposal Group, Including Discontinued Operation, Consideration	$ 500
Disposal Group, Including Discontinued Operation, Assets	100
Gain (Loss) on Disposition of Business	$ 400

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Note 16 - Subsequent Event - Conversion of Biostage Series E Preferred Stock to Common Stock (Details Textual) - USD ($)			3 Months Ended
	Apr. 07, 2023	Apr. 05, 2023	Mar. 31, 2023	Dec. 31, 2022
Biostage [Member] | Series E Convertible Preferred Stock into Common Stock [Member]
Conversion of Stock, Amount Issued			$ 200,000
Conversion of Stock, Shares Issued (in shares)			31,933
Biostage [Member] | Convertible Preferred Stock [Member]
Preferred Stock, Mandatory Conversion, Minimum Qualified Offering Amount				$ 4,000,000
Subsequent Event [Member] | Biostage [Member]
Subsidiary, Ownership Percentage, Noncontrolling Owner	5.00%
Subsequent Event [Member] | Biostage [Member] | Series E Convertible Preferred Stock into Common Stock [Member]
Conversion of Stock, Shares Issued (in shares)	675,000
Subsequent Event [Member] | Biostage [Member] | Convertible Preferred Stock [Member]
Preferred Stock, Convertible, Conversion Price (in dollars per share)	$ 6.00
Subsequent Event [Member] | Private Placement [Member] | Biostage [Member]
Conversion of Stock, Amount Issued		$ 6,000,000.0
Shares Issued, Price Per Share (in dollars per share)		$ 6.00
Subsequent Event [Member] | Private Placement [Member] | Biostage [Member] | Convertible Preferred Stock [Member]
Preferred Stock, Mandatory Conversion, Minimum Qualified Offering Amount		$ 4,000,000.0