0001411690-21-000024.txt : 20210804 0001411690-21-000024.hdr.sgml : 20210804 20210804161333 ACCESSION NUMBER: 0001411690-21-000024 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 59 CONFORMED PERIOD OF REPORT: 20210630 FILED AS OF DATE: 20210804 DATE AS OF CHANGE: 20210804 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Bionano Genomics, Inc CENTRAL INDEX KEY: 0001411690 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 261756290 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38613 FILM NUMBER: 211144167 BUSINESS ADDRESS: STREET 1: 9540 TOWNE CENTRE DRIVE STREET 2: SUITE 100 CITY: SAN DIEGO STATE: CA ZIP: 92121 BUSINESS PHONE: (858) 888-7600 MAIL ADDRESS: STREET 1: 9540 TOWNE CENTRE DRIVE STREET 2: SUITE 100 CITY: SAN DIEGO STATE: CA ZIP: 92121 FORMER COMPANY: FORMER CONFORMED NAME: BioNano Genomics, Inc DATE OF NAME CHANGE: 20120703 FORMER COMPANY: FORMER CONFORMED NAME: BioNanomatrix Inc DATE OF NAME CHANGE: 20070906 10-Q 1 bngo-20210630.htm 10-Q bngo-20210630
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________________
FORM 10-Q
_________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2021
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: 001-38613
_________________________________________________________
Bionano Genomics, Inc.
(Exact name of registrant as specified in its charter)
Delaware 26-1756290
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)
9540 Towne Centre Drive, Suite 100,
San Diego, CA
 
 
92121
(Address of Principal Executive Offices) (Zip Code)
(858) 888-7600
(Registrant’s Telephone Number, Including Area Code)
_________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 par value per shareBNGOThe Nasdaq Stock Market, LLC
Warrants to purchase Common StockBNGOWThe Nasdaq Stock Market, LLC

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  x 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  x   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 registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   No x

As of July 31, 2021, the registrant had 279,140,015 shares of Common Stock ($0.0001 par value) outstanding.




BIONANO GENOMICS, INC.
TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2

PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIONANO GENOMICS, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
 June 30,
2021
December 31,
2020
Assets  
Current assets:  
Cash and cash equivalents$332,554,000 $38,449,000 
Accounts receivable, net of allowance for doubtful accounts of $2,068,000 and $2,119,000 as of June 30, 2021 and December 31, 2020, respectively
2,838,000 2,775,000 
Inventory, net4,890,000 3,316,000 
Prepaid expenses and other current assets1,683,000 2,250,000 
Total current assets341,965,000 46,790,000 
Property and equipment, net6,084,000 4,910,000 
Intangible assets, net1,317,000 1,475,000 
Goodwill7,173,000 7,173,000 
Other long-term assets270,000 103,000 
Total assets$356,809,000 $60,451,000 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$3,745,000 $2,930,000 
Accrued expenses6,540,000 5,599,000 
Contract liabilities445,000 416,000 
Total current liabilities10,730,000 8,945,000 
Long-term debt 16,326,000 
Long-term contract liabilities213,000 98,000 
Total liabilities10,943,000 25,369,000 
Commitments and contingencies (Note 7)
Stockholders’ equity:
Preferred stock, $0.0001 par value; 10,000,000 shares authorized and no shares issued or outstanding as of June 30, 2021 and December 31, 2020
  
Common stock, $0.0001 par value, 400,000,000 shares authorized at June 30, 2021 and December 31, 2020; 279,054,000 and 189,953,000 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
28,000 19,000 
Additional paid-in capital
518,255,000 178,747,000 
Accumulated deficit
(172,417,000)(143,684,000)
Total stockholders’ equity
345,866,000 35,082,000 
Total liabilities and stockholders’ equity
$356,809,000 $60,451,000 
See accompanying notes to the condensed consolidated financial statements
3

BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
 2021202020212020
Revenue:  
Product revenue$2,496,000 $940,000 $4,545,000 $1,923,000 
Service and other revenue1,360,000 242,000 2,479,000 395,000 
Total revenue3,856,000 1,182,000 7,024,000 2,318,000 
Cost of revenue:
Cost of product revenue1,869,000 515,000 3,383,000 1,289,000 
Cost of service and other revenue548,000 88,000 1,159,000 170,000 
Total cost of revenue2,417,000 603,000 4,542,000 1,459,000 
Operating expenses:
Research and development4,086,000 2,401,000 6,765,000 5,075,000 
Selling, general and administrative13,829,000 5,613,000 23,357,000 12,981,000 
Total operating expenses17,915,000 8,014,000 30,122,000 18,056,000 
Loss from operations(16,476,000)(7,435,000)(27,640,000)(17,197,000)
Other income (expense):
Interest expense, net(210,000)(561,000)(748,000)(1,322,000)
Gain on forgiveness of Paycheck Protection Program loan  1,775,000  
Loss on debt extinguishment(2,076,000) (2,076,000) 
Other income (expense)(15,000)(73,000)(29,000)(55,000)
Total other income (expense)(2,301,000)(634,000)(1,078,000)(1,377,000)
Loss before income taxes(18,777,000)(8,069,000)(28,718,000)(18,574,000)
Provision for income taxes(9,000)(5,000)(15,000)(10,000)
Net loss$(18,786,000)$(8,074,000)$(28,733,000)$(18,584,000)
Net loss per share, basic and diluted$(0.07)$(0.09)$(0.11)$(0.29)
Weighted-average common shares outstanding basic and diluted
278,898,000 90,907,000 271,460,000 63,238,000 
See accompanying notes to the condensed consolidated financial statements.
4

BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit) (Unaudited)
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total Stockholders’ Equity (Deficit)
 SharesAmount
Balance at January 1, 202034,274,000 $3,000 $106,188,000 $(102,577,000)$3,614,000 
Stock-based compensation expense— — 328,000 — 328,000 
Issue stock for warrant exercises3,478,000 — 2,355,000 — 2,355,000 
Net loss— — — (10,510,000)(10,510,000)
Balance at March 31, 202037,752,000 $3,000 $108,871,000 $(113,087,000)$(4,213,000)
Stock-based compensation expense— — 328,000 — 328,000 
Issue common stock, net of issuance costs16,896,0002,000 16,364,000 — 16,366,000 
Issue stock for employee stock purchase plan44,000 — 21,000 — 21,000 
Issue stock for covenant waiver873,000 — 300,000 — 300,000 
Issue stock for warrant exercises36,410,000 4,000 1,105,000 — 1,109,000 
Net loss— — — (8,074,000)(8,074,000)
Balance at June 30, 202091,975,000 $9,000 $126,989,000 $(121,161,000)$5,837,000 
Balance at January 1, 2021189,953,000 $19,000 $178,747,000 $(143,684,000)$35,082,000 
Stock option exercises102,000 — 333,000 — 333,000 
Stock-based compensation expense— — 371,000 — 371,000 
Issue common stock, net of issuance costs78,000,000 8,000 327,478,000 — 327,486,000 
Issue stock for warrant exercises10,739,000 1,000 9,392,000 — 9,393,000 
Net loss— — — (9,947,000)(9,947,000)
Balance at March 31, 2021278,794,000 $28,000 $516,321,000 $(153,631,000)$362,718,000 
Stock option exercises60,000 — 89,000 — 89,000 
Stock-based compensation expense— — 1,758,000 — 1,758,000 
Issue stock for warrant exercises50,000 — 22,000 — 22,000 
Issue stock for employee stock purchase plan150,000 — 65,000 — 65,000 
Net loss— — — (18,786,000)(18,786,000)
Balance at June 30, 2021279,054,000 $28,000 $518,255,000 $(172,417,000)$345,866,000 
See accompanying notes to the condensed consolidated financial statements
5

BIONANO GENOMICS, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
  Six Months Ended
June 30,
 20212020
Operating activities:  
Net loss
$(28,733,000)$(18,584,000)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization expense
964,000 591,000 
Non-cash interest
383,000 651,000 
Stock-based compensation
2,129,000 656,000 
Provision for bad debt expense 1,290,000 
Gain on forgiveness of PPP Loan(1,775,000) 
Loss on debt extinguishment2,076,000  
Changes in operating assets and liabilities:
Accounts receivable
(63,000)1,795,000 
Inventory
(3,605,000)(1,037,000)
Prepaid expenses and other current assets
400,000 244,000 
Accounts payable
816,000 150,000 
Accrued expenses and contract liabilities
1,085,000 (1,006,000)
Net cash used in operating activities
(26,323,000)(15,250,000)
Investing Activities:
Purchases of property and equipment
(76,000) 
Sale of property and equipment126,000  
Net cash used in investing activities50,000  
Financing activities:
Repayment of term-loan debt
(17,010,000)(5,000,000)
 Proceeds from PPP Loan 1,775,000 
Proceeds from borrowing from line of credit
 760,000 
Repayments of borrowing from line of credit
 (2,258,000)
Proceeds from sale of common stock328,635,000 17,963,000 
Offering expenses on sale of common stock(1,149,000)(1,597,000)
 Proceeds from sale of common stock under employee stock purchase plan65,000 21,000 
Proceeds from warrant and option exercises
9,837,000 3,469,000 
Net cash provided by financing activities320,378,000 15,133,000 
Net increase in cash and cash equivalents294,105,000 (117,000)
Cash and cash equivalents at beginning of period
38,449,000 17,311,000 
Cash and cash equivalents at end of period
$332,554,000 $17,194,000 
Supplemental cash flow disclosures:
Cash paid for interest
$487,000 $715,000 
Supplemental disclosure of non-cash investing and financing activities:
Transfer of instruments and servers from inventory to property and equipment$2,035,000 $1,191,000 
Forgiveness of PPP Loan$1,775,000 $ 
Issue stock for covenant waiver$ $300,000 
Warrant exercise pursuant to cashless exercise$129,000 $ 
See accompanying notes to the condensed consolidated financial statements
6

BIONANO GENOMICS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Basis of Presentation
Description of Business

Bionano Genomics, Inc. (collectively, with its consolidated subsidiaries, the “Company”) is a life sciences instrumentation company in the genome analysis space that provides tools and services based on its Saphyr system to scientists and clinicians conducting genetic research and patient testing, and provides diagnostic testing for those with autism spectrum disorder (“ASD”) and other neurodevelopmental disabilities through newly acquired Lineagen, Inc., a wholly owned subsidiary of the Company (“Lineagen”). The Company currently develops and markets the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that is designed to enable researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics. The Saphyr system is comprised of an instrument, chip consumables, reagents and a suite of data analysis tools, and genome analysis services to provide access to data generated by the Saphyr system for researchers who want to evaluate Saphyr data quickly and with a low up-front investment.
Basis of Presentation
The accompanying financial information has been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") for interim reporting purposes. The condensed consolidated financial statements are unaudited. The unaudited condensed consolidated financial statements reflect, in the opinion of the Company’s management, all adjustments, consisting of only normal recurring adjustments, necessary for a fair presentation of financial position, results of operations, changes in equity, and comprehensive loss and cash flows for each period presented in accordance with United States generally accepted accounting principles (“U.S. GAAP”). All intercompany transactions and balances have been eliminated. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
    
Liquidity

As of June 30, 2021, the Company had approximately $332.6 million in cash and cash equivalents, and working capital of $331.2 million as a result of common stock offerings executed in the quarters ended December 31, 2020 and March 31, 2021. In February 2021, we applied for forgiveness of our Paycheck Protection Program (“the PPP”) Loan, and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full for $1.8 million. As of June 30, 2021, the outstanding term loan with Innovatus was paid in full, including all accrued interest, an end of term fee, and a prepayment fee for a total of $17.0 million.

The Company believes its available cash balance will be sufficient to fund operations, obligations as they become due and capital investments for at least the next twelve months. However, the Company expects to continue to incur net losses for the foreseeable future. The Company plans to continue to fund its losses from operations and capital funding needs through a combination of equity offerings, debt financings or other sources, including potential collaborations, licenses and other similar arrangements. If the Company is not able to secure adequate additional funding, the Company may be forced to make reductions in spending, potentially harming the Company’s business.

COVID-19

The Company is subject to additional risks and uncertainties as a result of the continued spread of COVID-19 and uncertain market conditions, which could continue to have a material impact on the Company’s business and financial results. The Company closely monitors and complies with various applicable guidelines and legal requirements in the jurisdictions in which it operates, which may continue to result in reduced business operations in response to new or existing stay-at-home orders, travel restrictions and other social distancing measures. The Company’s manufacturing partners, suppliers, and customers, have implemented similar operational restrictions. Despite reporting an increase in revenue for the three and six months ended June 30, 2021 when compared to the same period in 2020, the Company believes travel restrictions and overall reduced activity has negatively impacted the Company’s second quarter 2021 financial results. The future effects of COVID-19 are unknown and the Company’s financial results may continue to be negatively affected in the future.

7

There may be long-term negative effects of the COVID-19 pandemic, even after it has subsided. Specifically, product demand may be reduced due to an economic recession, a decrease in corporate capital expenditures, prolonged unemployment, reduction in consumer confidence, or any similar negative economic condition. These negative effects could have a material impact on the Company’s operations, business, earnings, and liquidity.
Significant Accounting Policies
During the three and six months ended June 30, 2021, there were no changes to the Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Recently Issued But Not Yet Adopted Accounting Pronouncements
As of June 30, 2021, the market value of the Company’s common stock held by non-affiliates exceeded $700.0 million. Accordingly, the Company will be a large accelerated filer and therefore will cease to be an emerging growth company effective December 31, 2021.
In February 2015, the FASB issued Accounting Standards Update ("ASU") 2016-2, Leases (Topic 842), which amends the accounting guidance for leases and increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and requires disclosures of key information about leasing arrangements. ASU 2016-2 initially mandated a modified retrospective transition method, however, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which amends ASU 2016-2, permitting entities the option to adopt this standard prospectively with a cumulative-effect adjustment to opening equity in the year of adoption and include required disclosures for prior periods but will not restate prior periods. The Company anticipates implementing the accounting guidance for leases using the alternative method beginning with the annual reporting period ending December 31, 2021 and interim reporting periods in 2022. The Company is in the process of evaluating the impact of adoption of the lease accounting guidance on the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses: 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 to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The standard is effective for the company beginning in the first quarter of 2023, with early adoption permitted. The Company is currently evaluating the expected impact of ASU 2016-13 on its financial statements.

In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges for Freestanding Equity-Classified Written Call Options to clarify the accounting for modifications or exchanges of equity-classified warrants. The standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is in the process of evaluating the expected impact of ASU 2021-04 on its financial statements.
Recently Adopted Accounting Pronouncements
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. The revised guidance eliminates step two of the goodwill impairment test, which requires a hypothetical purchase price allocation to measure goodwill impairment. A goodwill impairment loss will instead be measured at the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of goodwill. All other goodwill impairment guidance will remain largely unchanged. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Public business entities that meet the definition of an U.S. SEC filer, excluding entities eligible to be smaller reporting companies, should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. All other entities should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2022. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company’s early adoption of this accounting standard on January 1, 2020, did not have a material impact on the Company’s consolidated financial statements and related disclosures.
8

In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU 2020-06"), which simplifies accounting for convertible instruments by removing major separation models required under current U.S. GAAP. ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exceptions and also simplifies the diluted earnings per share calculation in certain areas. The standard is effective for public business entities, excluding entities eligible to be smaller reporting companies as defined by the SEC, for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. For all other entities, the standard will be effective for fiscal years beginning after December 15, 2023. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, and adoption must be as of the beginning of the Company’s annual fiscal year. The Company’s early adoption of this accounting standard on January 1, 2021, did not have a material impact on the Company’s consolidated financial statements and related disclosures.
2. Net Loss Per Share
Basic net loss per share is calculated by dividing the net loss by the weighted-average number of common shares outstanding for the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities which include warrants and outstanding stock options under the Company’s equity incentive plan have been excluded from the computation of diluted net loss per share as they would be anti-dilutive to the net loss per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding.
Potentially dilutive securities not included in the calculation of diluted net loss per share attributable to common stockholders because to do so would be anti-dilutive are as follows (in common stock equivalent shares):
June 30,
2021
June 30,
2020
Stock options9,550,000 2,988,000 
Warrants4,361,000 79,914,000 
RSUs820,000  
Total14,731,000 82,902,000 
3. Revenue Recognition
Revenue by Source
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Instruments$1,158,000 $229,000 $2,040,000 $763,000 
Consumables1,338,000 711,000 2,505,000 1,160,000 
Total product revenue2,496,000 940,000 4,545,000 1,923,000 
Service and other1,360,000 242,000 2,479,000 395,000 
Total revenue$3,856,000 $1,182,000 $7,024,000 $2,318,000 

Revenue by Geographic Location
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
$%$%$%$%
North America$2,365,000 61 %$788,000 67 %$3,872,000 55 %$1,514,000 65 %
EMEIA940,000 25 %315,000 26 %2,518,000 36 %705,000 31 %
Asia Pacific551,000 14 %79,000 7 %634,000 9 %99,000 4 %
Total$3,856,000 100 %$1,182,000 100 %$7,024,000 100 %$2,318,000 100 %

9

The table above provides revenue from contracts with customers by source and geographic region (based on the customer’s billing address) on a disaggregated basis. North America consists of the United States and Canada. EMEIA consists of Europe, the Middle East, India and Africa. Asia Pacific includes China, Japan, South Korea, Singapore and Australia. For the three months ended June 30, 2021 and 2020, the United States represented 59.5% and 60.0% of total revenue, respectively. For the six months ended June 30, 2021 and 2020, the United States represented 53.1% and 63.0% of total revenue, respectively.
Remaining Performance Obligations

As of June 30, 2021, the estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied was $658,000. These remaining performance obligations primarily relate to extended warranty and support and maintenance obligations. The Company expects to recognize approximately 45.3% of this amount as revenue during the remainder of 2021, 38.1% in 2022, and 16.6% in 2023 and thereafter. Warranty revenue is included in Service and other revenue.
The Company recognized revenue of $90,000 and $106,000 during the three months ended June 30, 2021 and 2020, respectively, and revenue of $247,000 and $232,000 during the six months ended June 30, 2021 and 2020, respectively, which was included in the contract liability balance at the end of the previous year.
4. Balance Sheet Account Details
Accounts Receivable
June 30,
2021
December 31,
2020
Accounts receivable, net:
Accounts receivable, trade$4,906,000 $4,894,000 
Less allowance for doubtful accounts(2,068,000)(2,119,000)
$2,838,000 $2,775,000 

The Company extends credit to its customers in the normal course of business. For diagnostic testing services, receivables are based on either contractual rates with third-party payors, plus the amounts expected to be collected for any patient-responsibility portion, or for non-contracted arrangements, using the amounts expected to be collected from third-party payors and/or the patient-customer based on historical collection experience. The Company does not perform credit evaluations and therefore subsequent adjustments to the amount expected to be collected are recorded to revenue. The balance of our Lineagen accounts receivable balance as of June 30, 2021 was $606,000.

For optical genome mapping (“OGM”) products and services, credit is extended based upon an evaluation of each customer’s credit history, financial condition, and other factors. Estimates of allowances for doubtful accounts are determined by evaluating individual customer circumstances, historical payment patterns, length of time past due, and economic and other factors. Bad debt expense is recorded as necessary to maintain an appropriate level of allowance for doubtful accounts in selling, general and administrative expense. During the three and six months ended June 30, 2021, the Company recorded a recovery of bad debt expense of $(15,000) and $(40,000), respectively, which is included in selling, general and administrative expenses. Amounts are charged to the allowance for doubtful accounts when collection efforts have been exhausted and are deemed uncollectible.

Concentrations

Accounts receivable is subject to concentration risk whenever a customer has a balance that meets or exceeds 10.0% of the Company’s total accounts receivable balance. As of June 30, 2021, one customer balance represented 10.1% of the Company’s total accounts receivable balance. As of December 31, 2020, two customer balances represented 27.4% of the Company’s total accounts receivable balance.

Inventory

Inventory is stated at the lower of cost or net realizable value, on a first-in, first-out basis. Inventory includes raw materials and finished goods that may be used in the research and development process and such items are expensed as consumed or expired.

10

Provisions for slow-moving, excess, and obsolete inventories are estimated based on product life cycles, historical experience, and usage forecasts.

The components of inventories are as follows:
 June 30,
2021
December 31,
2020
Inventory:
Raw materials$954,000 $2,283,000 
Finished goods3,936,000 1,033,000 
$4,890,000 $3,316,000 
5. Debt
Paycheck Protection Program

On April 17, 2020, the Company received loan proceeds of approximately $1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (“the PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration (the “SBA”).

The PPP Loan accrued interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act. In February 2021, the Company applied for forgiveness of the PPP Loan, and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full. A gain on forgiveness of Paycheck Protection Program loan of $1.8 million was recognized during the six months ended June 30, 2021. No gain on forgiveness of Paycheck Protection Program loan was recognized during the three months ended June 30, 2021.

Innovatus LSA

In March 2019, the Company entered into a Loan and Security Agreement (the “LSA”) by and among Innovatus Life Sciences Lending Fund I, LP, a Delaware limited partnership (“Innovatus”), as collateral agent and the lenders listed on Schedule 1.1 thereto, including East West Bank. The LSA provided a first term loan of $17.5 million, a second term loan of $2.5 million and a third term loan of $5.0 million (collectively, the “Term Loans”) if the Company satisfied certain funding conditions. Interest on the Term Loans is due on the first of each month at a rate of 10.25% per annum in cash or a discounted rate of 7.25% in cash with 3.0% of the 10.25% per annum rate added to the principal of the loan and subject to accruing interest through the end of the interest only payment period, which ends March 1, 2022. At inception, the Company elected to pay interest in cash at a rate of 7.25% per annum and have 3.0% per annum of the interest added back to the outstanding principal. As of May 14, 2021 (the effective date of the loan payoff), the effective interest rate, including debt issuance costs, for the Term Loans was 16.7%.
The LSA provided for prepayment fees of 3.0% of the outstanding balance of the loan if the loan is repaid on or prior to March 14, 2020, 2.0% of the amount prepaid if the prepayment occurs after March 14, 2020 but prior to March 14, 2021, 1.0% of the amount prepaid after March 14, 2021 but prior to March 14, 2022 and 0% of the amount prepaid if the prepayment occurs thereafter. In addition, upon the final repayment of the total amounts borrowed, the Company is required to pay an end of term fee of $0.8 million. This end of term fee was being recognized as interest expense over the term of the LSA. As of June 30, 2021, the outstanding term loan with Innovatus was paid in full, including all accrued interest, the end of term fee, and a prepayment fee for a total of $17.0 million.
The LSA also provides for a revolving line of credit in an amount not to exceed $5.0 million (the “Revolver”), which was terminated effectively upon payment in full of the above term loan.

11


Summary of Debt Obligations
The carrying value of the Company’s debt for the periods presented was as follows:
December 31,
2020
Term Loans$15,981,000 
PPP Loan1,775,000 
Total principal17,756,000 
Less unamortized debt issuance costs(1,430,000)
Total carrying value of debt$16,326,000 


6. Stockholders’ Equity and Stock-Based Compensation
Follow-on Public Offerings
On January 12, 2021, the Company completed an underwritten public offering of 33,368,851 shares of common stock, including 4,352,458 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares. The price to the public in the offering was $3.05 per share and the underwriters purchased the shares from the Company pursuant to the underwriting agreement at a price of $2.867 per share. The gross proceeds were approximately $101.8 million before deducting underwriting discounts and commissions and other offering expenses of $293,000.

On January 25, 2021, the Company completed an underwritten public offering of 38,333,352 shares of common stock, including 5,000,002 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares. The price to the public in the offering was $6.00 per share and the underwriters purchased the shares from the Company pursuant to the underwriting agreement at a price of $5.64 per share. The gross proceeds were approximately $230.0 million before deducting underwriting discounts and commissions and other offering expenses of $435,000.
Shelf Registration Statement and Ladenburg At-the-Market Facility

In August 2020, the Company filed a shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $125.0 million of the Company’s securities, including up to $40.0 million of common stock pursuant to the Ladenburg ATM, with Ladenburg Thalmann & Co. Inc. acting as sales agent. During October through December 2020, the Company sold 27,025,384 shares of common stock under the Ladenburg ATM at an average share price of $0.82, and received gross proceeds of approximately $22.1 million before deducting offering costs of $573,000. In January 2021, the Company sold an additional 6,298,152 shares of common stock under the ATM at an average share price of $2.68, and received gross proceeds of approximately $16.9 million before deducting offering costs of $422,000. The Company terminated the Ladenburg ATM in March 2021.

On March 23, 2021, the Company entered into the Cowen ATM which provides for the sale, in the Company’s sole discretion, of shares of common stock having an aggregate offering price of up to $350.0 million through or to Cowen, acting as sales agent or principal. The Company will pay Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights. As of the date of this filing, no shares have been issued pursuant to the Cowen ATM.

12

Stock Warrants
A summary of the Company’s warrant activity during the six months ended June 30, 2021 was as follows:
Shares of Stock under WarrantsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding at January 1, 202115,174,000 $2.34 3.76$26,841,000 
Granted 
Exercised(10,789,000)0.88 58,175,000 
Canceled(24,000)
Outstanding at June 30, 2021
4,361,000 $5.95 2.27$6,904,000 

Stock Options
A summary of the Company’s stock option activity during the six months ended June 30, 2021 was as follows:   
Shares of Stock under Stock OptionsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term
Aggregate
Intrinsic
Value
Outstanding at January 1, 20215,290,000 $1.91 8.7$10,178,000 
Granted5,067,000 7.48 
Exercised(162,000)2.55 $1,102,000 
Canceled(645,000)2.64 
Outstanding at June 30, 2021
9,550,000 $4.81 9.16$27,042,000 
Vested and exercisable at June 30, 2021
1,896,000 $3.86 8.02$7,555,000 

For the three months ended June 30, 2021 and 2020, the weighted-average grant date fair value of stock options granted was $5.06 and $0.30 per share, respectively. For the six months ended June 30, 2021 and 2020, the weighted-average grant date fair value of stock options granted was $5.13 and $0.55 per share, respectively.
Stock-Based Compensation
The Company recognized stock-based compensation expense for the periods presented as follows: 
 Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Research and development$384,000 $66,000 $465,000 $133,000 
General and administrative1,374,000 262,000 1,664,000 523,000 
Total stock-based compensation expense$1,758,000 $328,000 $2,129,000 $656,000 
13

The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants during the periods presented were as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
2021202020212020
Risk-free interest rate1.1 %0.4 %1.1 %1.1 %
Expected volatility80.4 %77.9 %80.4 %72.2 %
Expected term (in years)6.05.56.05.9
Expected dividend yield0.0 %0.0 %0.0 %0.0 %
Restricted Stock Units
On May 12, 2021, the compensation committee of the Company’s board of directors granted 580,000 restricted stock units (“RSUs”) to R. Erik Holmlin, Ph.D., the Company’s President and Chief Executive Officer (the “Holmlin Grant”), and 240,000 RSUs to Mark Oldakowski, the Company’s Chief Operating Officer (the “Oldakowski Grant”), in each case with an effective grant date and vesting commencement date of May 12, 2021.
290,000 RSUs under the Holmlin Grant are subject to time-based vesting, with 50% of the shares vesting on each of the first and second anniversaries of the vesting commencement date, subject to continued service through the vesting date, and 18 months vesting acceleration upon a termination without cause or resignation with good reason.
290,000 RSUs under the Holmlin Grant are subject to vesting upon the satisfaction of certain specified revenue targets within four years following the vesting commencement date. If Dr. Holmlin’s employment with the Company is terminated without cause or he resigns with good reason, then the shares will continue to be eligible for vesting upon satisfaction of the revenue targets within a period that is the shorter of 18 months following termination or four years following the vesting commencement date.

The RSUs comprising the Oldakowski Grant are subject to time-based vesting, with 50% of the shares vesting on each of the first and second anniversaries of the vesting commencement date, subject to continued service through the vesting date.

7. Litigation
From time to time, the Company may be subject to potential liabilities under various claims and legal actions that are pending or may be asserted. These matters arise in the ordinary course and conduct of the business. The Company regularly assesses contingencies to determine the degree of probability and range of possible loss for potential accrual in the financial statements. An estimated loss contingency is accrued in the financial statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Based on the Company’s assessment, it currently does not have any material loss exposure as it is not a defendant in any claims or legal actions.
8. Income Taxes
The Company is subject to taxation in the United States, United Kingdom and various state jurisdictions. The Company computes its quarterly income tax provision by using a forecasted annual effective tax rate and adjusts for any discrete items arising during the quarter. The primary difference between the effective tax rate and the federal statutory tax rate relates to the full valuation allowance on the Company’s U.S. net operating losses.
9. Acquisition of Lineagen

On August 21, 2020, the Company, Alta Merger Sub, Inc., a wholly owned subsidiary of the Company (“Merger Sub”), Lineagen, a Delaware corporation, and Michael S. Paul, Ph.D., solely in his capacity as exclusive agent and attorney-in-fact of the security-holders of Lineagen, entered into an Agreement and Plan of Merger (the “Merger Agreement”). Pursuant to the terms and conditions of the Merger Agreement, Merger Sub merged with and into Lineagen whereupon the separate corporate existence of Merger Sub ceased, with Lineagen continuing as the surviving corporation of the Merger as a wholly owned subsidiary of the Company. Lineagen’s expertise in development, commercialization and reimbursement of laboratory-developed tests provides a platform for accelerating sales growth for the Company’s Saphyr system.

14

Pursuant to the terms of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), the shares of capital stock of Lineagen and all options of Lineagen that were issued and outstanding immediately prior to the Effective Time were automatically cancelled and extinguished without any payment with respect thereto. Certain holders of convertible notes and other indebtedness of Lineagen at the closing of the Merger (the “Closing”) received common stock of the Company. The total number of shares of the Company’s common stock issued or reserved for issuance as consideration for the Merger was 6,167,510 shares, subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen (the “Merger Shares”). 925,126 of the Merger Shares (the “Escrowed Shares”) will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Merger Agreement.

Also as consideration for the Merger, pursuant to the Merger Agreement, the Company paid approximately $1.9 million in cash to certain creditors and assumed certain liabilities of Lineagen totaling approximately $2.9 million, reflective of the Company’s preliminary estimate of the post-closing purchase price adjustment (which adjustment is subject to finalization pursuant to the terms of the Merger Agreement). In addition, on August 21, 2020, concurrent with the Closing, the Company paid approximately $1.1 million to satisfy all outstanding principal and accrued interest amounts due pursuant to that certain Promissory Note, dated April 22, 2020, by and between Lineagen and Silicon Valley Bank (the “Lineagen PPP Loan”), issued pursuant to the CARES Act administered by the SBA. The Lineagen PPP Loan was repaid by the Company prior to maturity without penalty.

The Company accounted for its acquisition of Lineagen using the acquisition method of accounting pursuant to ASC 805. The tangible and identifiable intangible assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date, and the excess of the purchase price over the estimated fair value assigned to the tangible and identifiable intangible assets acquired and liabilities assumed was recorded to goodwill. Goodwill relates to the expected synergies from combining the operations of the companies. The acquisition was structured as a stock sale and therefore goodwill is non-tax deductible.

As permitted under ASC 805, the Company is allowed a measurement period, which may not exceed one year, in which to complete its accounting for the acquisition. The Company has recognized provisional amounts for tax assets and liabilities, and subsequent adjustments during the measurement period to any of these items may affect the amount of goodwill recognized. During the fourth quarter of 2020, the Company recorded a $232,000 adjustment to the original purchase price allocation to reduce the estimated fair value of accounts receivable, with the offsetting amount recorded to goodwill. There were no additional purchase price adjustments made during the second quarter of 2021. The Company is still finalizing working capital adjustments with the seller.
As discussed above, the purchase price for the acquisition of Lineagen is subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen. The following is the estimated purchase price for the acquisition of Lineagen:
Cash (a)$1,940,000 
Cash transferred for repayment of Lineage PPP Loan (b)$1,105,000 
Shares common stock issued as consideration (c)6,167,510 
Estimated shares of common stock to be returned to the Company (c)(138,247)
Stock price per share on closing date $0.68 
Value of estimated common stock consideration (c)$4,100,000 
Total estimated purchase price (c)$7,144,000 
(a) The Company paid approximately $1.9 million in cash to certain creditors of Lineagen.
(b) The Company paid approximately $1.1 million to satisfy all outstanding principal and accrued interest amounts due pursuant to the Lineagen PPP Loan.
(c) The total number of shares of the Company’s common stock issued or reserved for issuance as consideration for the Merger was 6,167,510 shares. 925,126 of the Merger Shares will be held in an escrow fund for purposes of satisfying any post-closing purchase price adjustments and indemnification claims under the Merger Agreement. The total number of Merger Shares is subject to adjustment for cash, accounts receivable, unpaid indebtedness, unpaid transaction expenses and certain other liabilities of Lineagen. The value of the estimated common stock consideration and the total estimated purchase price incorporate the return of an estimated 138,247 Escrowed Shares to the Company based on a preliminary estimate of this adjustment.
15

The total estimated purchase price was allocated to Lineagen’s tangible and identifiable intangible assets acquired and liabilities assumed on based on their estimated fair values as of the acquisition date, with the excess recorded as goodwill, as follows:
Cash and cash equivalents$596,000 
Accounts receivable337,000 
Other assets209,000 
Property and equipment, net111,000 
Intangible assets1,580,000 
Goodwill7,173,000 
Accounts payable and other accrued liabilities(2,862,000)
Net assets acquired$7,144,000 
The acquisition date fair values of identifiable intangible assets acquired are as following:
Customer relationships$950,000 
Trade name630,000
Fair value of identifiable intangible assets$1,580,000 
The customer relationships and trade name intangibles are both being amortized on a straight-line basis over their estimated useful lives of five years. Straight-line amortization was determined to be materially consistent with the pattern of expected use of the intangible assets.
The unaudited pro forma financial information in the table below summarizes the combined results of operations for the Company and Lineagen as if the companies had been combined as of January 1, 2019. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as of January 1, 2019.
 
Six Months Ended June 30,
(Unaudited)
2020
Revenue$4,931,000 
Net loss(20,468,000)
Basic and diluted net loss per share
$(0.30)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited consolidated financial statements and related notes included in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2020 and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations, both of which are contained in our Annual Report on Form 10-K, or our Annual Report, filed with the Securities and Exchange Commission, or the SEC, on March 23, 2021. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” and “our” refer to Bionano Genomics, Inc. and its subsidiaries or, as the context may require, Bionano Genomics, Inc. only.
Forward-Looking Statements
The information in this discussion contains forward-looking statements and information within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which are subject to the “safe harbor” created by those sections. These forward-looking statements include, but are not limited to any statements concerning the potential effects of the COVID-19 pandemic on our business, statements concerning our strategy, future operations, future financial position, future revenues, projected costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without limitation, the risks set forth in our
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filings with the SEC. The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.
Overview
We are a life sciences instrumentation company in the genome analysis space that provides tools and services based on our Saphyr system to scientists and clinicians conducting genetic research and patient testing, and provides diagnostic testing for those with autism spectrum disorder (“ASD”) and other neurodevelopmental disabilities through Lineagen, Inc., our wholly owned subsidiary (“Lineagen”). We develop and market the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics. Our Saphyr system comprises an instrument, chip consumables, reagents and a suite of data analysis tools, and genome analysis services to provide access to data generated by the Saphyr system for researchers who want to evaluate Saphyr data quickly and with a low up-front investment. Lineagen has been providing genetic testing services to families and their healthcare providers for over nine years and has performed over 65,000 tests for those with neurodevelopmental concerns.
We have incurred losses in each year since our inception. Our net loss was $18.8 million and $28.7 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, we had an accumulated deficit of $172.4 million.
We expect to continue to incur significant expenses and operating losses as we:
expand our sales and marketing efforts to further commercialize our products;
continue research and development efforts to improve our existing products;
hire additional personnel;
enter into collaboration arrangements, if any;
add operational, financial and management information systems; and
incur increased costs as a result of operating as a public company.

Recent Highlights
We shipped 13 Saphyr systems during the quarter ended June 30, 2021, compared to 6 systems shipped in the same quarter in 2020. The installed base of Saphyr systems was 121 as of June 30, 2021, compared to 87 as of June 30, 2020.

We sold 2,742 nanochannel array flow cells during the quarter ended June 30, 2021, which represents an increase of 118% over the same period in 2020.

We analyzed 190 samples in our Saphyr service lab during the quarter ended June 30, 2021, compared to 77 samples analyzed in the same quarter in 2020.

COVID-19 Overview

The COVID-19 pandemic, and the measures imposed to contain this pandemic in areas where we operate our business and elsewhere have disrupted and are expected to continue to impact our business. For example, to comply with applicable regulations and to safeguard the health and safety of our employees and customers, we temporarily reduced our on-site business operations, implemented work-from-home practices, and modified other business practices, including those related to employee travel and physical participation in meetings, events, and conferences. Limited access to our facilities or customer sites has adversely affected, and is expected to continue to adversely affect, our operations.

Disruptions resulting from the COVID-19 pandemic may continue to impact our operations and overall business. The impact of COVID-19 is evolving rapidly and its future effects remain uncertain. As a result of such uncertainties, the duration of the disruption and the related impact on our business, operating results and financial condition cannot be reasonably estimated at this time. We are continuing to closely monitor the impact of the COVID-19 pandemic on our business and are taking proactive efforts designed to protect the health and safety of our workforce, continue our business operations and advance our corporate objectives.
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Financial Overview
Revenue
We generate product revenue from sales of our instruments and consumables. We currently sell our products for research use only applications and our customers are primarily laboratories associated with academic and governmental research institutions, as well as pharmaceutical, biotechnology and contract research companies. Consumable revenue consists of sales of complete assays which are developed internally by us, plus sales of kits which contain all the elements necessary to run tests. We also generate service revenue from the sale of diagnostic testing services for those with autism spectrum disorder and other neurodevelopmental disabilities through our wholly owned subsidiary Lineagen. Other revenue consists of warranty and other service-based revenue.
The following table presents our revenue for the periods indicated:
Three Months Ended June 30,Six Months Ended June 30,
 2021202020212020
Product revenue$2,496,000 $940,000 $4,545,000 $1,923,000 
Service and other revenue1
1,360,000 242,000 2,479,000 395,000 
Total$3,856,000 $1,182,000 $7,024,000 $2,318,000 
1 Includes $1,115,000 and $1,966,000 of revenue generated from Lineagen during the three and six months ended June 30, 2021, respectively.
The following table reflects total revenue by geography and as a percentage of total revenue, based on the billing address of our customers. North America consists of the United States and Canada. EMEIA consists of Europe, Middle East, India and Africa. Asia Pacific includes China, Japan, South Korea, Singapore and Australia.

 Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
$%$%$%$%
North America2
$2,365,000 61 %$788,000 67 %$3,872,000 55 %$1,514,000 65 %
EMEIA940,000 25 %315,000 26 %2,518,000 36 %705,000 31 %
Asia Pacific551,000 14 %79,000 %634,000 %99,000 %
Total$3,856,000 100 %$1,182,000 100 %$7,024,000 100 %$2,318,000 100 %
2 Includes $1,115,000 and $1,966,000 of revenue generated from Lineagen during the three and six months ended June 30, 2021, respectively.
Cost of Revenue
Cost of product revenue for our instruments and consumables includes costs from the manufacturer, raw material parts costs and associated freight, shipping and handling costs, contract manufacturer costs, salaries and other personnel costs, overhead and other direct costs related to those sales recognized as product revenue in the period. Cost of service revenue consists of third-party laboratory costs to process the diagnostic samples, salaries of our clinical technicians who interpret and deliver the results to patients, warranty services, and other costs of servicing equipment at customer sites.
Research and Development Expenses
Research and development expenses consist of salaries and other personnel costs, stock-based compensation, research supplies, third-party development costs for new products, materials for prototypes, and allocated overhead costs that include facility and other overhead costs. We have made substantial investments in research and development since our inception, and plan to continue to make investments in the future. Our research and development efforts have focused primarily on the tasks required to support development and commercialization of new and existing products. We believe that our continued investment in research and development is essential to our long-term competitive position.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and other personnel costs, and stock-based compensation for our sales and marketing, finance, legal, human resources and general management, as well as professional services, such as legal and accounting services.
Results of Operations
Comparison of the Three Months Ended June 30, 2021 and 2020
The following table sets forth our results of operations for the three months ended June 30, 2021 and 2020:
Three Months Ended June 30,Period-to-Period Change
2021
2020$%
Revenues:    
Product revenue$2,496,000 $940,000 $1,556,000 165.5 %
Service and other revenue$1,360,000 $242,000 1,118,000 462.0 %
Total revenue3,856,000 1,182,000 2,674,000 226.2 %
Cost of revenue:  
Cost of product revenue$1,869,000 $515,000 1,354,000 262.9 %
Cost of other revenue$548,000 $88,000 460,000 522.7 %
Total cost of revenue2,417,000 603,000 1,814,000 300.8 %
Operating expenses:  
Research and development$4,086,000 $2,401,000 1,685,000 70.2 %
Selling, general and administrative$13,829,000 $5,613,000 8,216,000 146.4 %
Total operating expenses17,915,000 8,014,000 9,901,000 123.5 %
Loss from operations(16,476,000)(7,435,000)(9,041,000)121.6 %
Other income (expenses):
Interest expense$(210,000)$(561,000)351,000 (62.6)%
Loss on debt extinguishment$(2,076,000)$— (2,076,000)100.0 %
Other income (expenses)$(15,000)$(73,000)58,000 (79.5)%
Total other income (expenses)(2,301,000)(634,000)(1,667,000)262.9 %
Loss before income taxes(18,777,000)(8,069,000)(10,708,000)132.7 %
Provision for income taxes$(9,000)$(5,000)(4,000)80.0 %
Net loss$(18,786,000)$(8,074,000)$(10,712,000)132.7 %
Revenue
Total revenue increased by $2.7 million, or 226.2%, to $3.9 million for the three months ended June 30, 2021 compared to $1.2 million for the same period in 2020. The increase impacted all regions. The increase in product sales was driven by increased demand of our reagent rental program and consumables, while the increase in service and other revenue was mostly driven by sales generated by our Lineagen subsidiary. Furthermore, below is a summary of changes for the three months ended June 30, 2021 as compared to the same period in 2020:
North America revenue increased by $1.6 million, or 200%;
EMEIA revenue increased by $0.6 million, or 198%; and
Asia Pacific revenue increased by $0.5 million, or 597%.
Revenue for the three months ended June 30, 2021, includes service revenue of $1.1 million generated from our Lineagen subsidiary.
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Cost of Revenue

Total cost of revenue increased by $1.8 million, or 300.8%, to $2.4 million for the three months ended June 30, 2021 compared to $0.6 million for the same period in 2020. The increase was due to an increase in sales volume. Gross margins were affected by a shift in our product mix towards lower margin instrument sales.
Research and Development Expenses

Research and development expenses increased by $1.7 million, or 70.2%, to $4.1 million for the three months ended June 30, 2021 compared to $2.4 million for the same period in 2020. The increase is primarily due to a $1.0 million increase in compensation expenses and an increase of $0.5 million in product development costs. The increase in compensation expense is driven by a 22% increase in headcount as well as wages returning against a lower comparable last year where wages were reduced 25% as part of a COVID-related savings measure. In addition, compensation expense included a $0.3 million increase in stock-based compensation expense as a result of increased grant date fair values of options issued this year.
Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $8.2 million, or 146.4%, to $13.8 million for the three months ended June 30, 2021 compared to $5.6 million for the same period in 2020. The increase is primarily due to a $4.6 million increase in compensation expenses, $1.0 million in other headcount-related expenses, and $1.9 million in professional services. The increase in compensation expense is driven mainly by a 133% increase in headcount, over half of which are employees of Lineagen, as well as wages returning against a lower comparable last year where wages were reduced 25% as part of a COVID-related savings measure. In addition, compensation expense included a $1.4 million increase in stock-based compensation expense as a result of increased grant date fair values of options issued. Other headcount-related expenses include the cost of recruiting, temporary employment, and facilities expenses incurred in order to support increased product demand. Professional services include expenses incurred to expand our global marketing outreach as well consulting, audit, legal, and other fees necessary to satisfy our obligations as a public company.
Interest Expense
    
Interest expense decreased by $0.4 million, or 62.6%, to $0.2 million for the three months ended June 30, 2021 compared to $0.6 million for the same period in 2020, driven by payment in full of the LSA Innovatus Term Loan during the three months ended June 30, 2021.
Loss on debt extinguishment
A loss on debt extinguishment of $2.1 million was recognized during the three months ended June 30, 2021 in connection with our payment in full of the LSA Innovatus Term Loan, including all accrued interest, an end of term fee, a prepayment fee, and write-off of unamortized debt issuance costs.

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Comparison of the Six Months Ended June 30, 2021 and 2020
The following table sets forth our results of operations for the six months ended June 30, 2021 and 2020:
Six Months Ended June 30,Period-to-Period Change
2021
2020$%
Revenues:    
Product revenue$4,545,000 $1,923,000 $2,622,000 136.3 %
Service and other revenue2,479,000 395,000 2,084,000 527.6 %
Total revenue7,024,000 2,318,000 4,706,000 203.0 %
Cost of revenue:  
Cost of product revenue3,383,000 1,289,000 2,094,000 162.5 %
Cost of other revenue1,159,000 170,000 989,000 581.8 %
Total cost of revenue4,542,000 1,459,000 3,083,000 211.3 %
Operating expenses:  
Research and development6,765,000 5,075,000 1,690,000 33.3 %
Selling, general and administrative23,357,000 12,981,000 10,376,000 79.9 %
Total operating expenses30,122,000 18,056,000 12,066,000 66.8 %
Loss from operations(27,640,000)(17,197,000)(10,443,000)60.7 %
Other income (expenses):
Interest expense(748,000)(1,322,000)574,000 (43.4)%
Gain on forgiveness of Paycheck Protection Program loan1,775,000 — 1,775,000 100.0 %
Loss on debt extinguishment(2,076,000)— (2,076,000)100.0 %
Other income (expenses)(29,000)(55,000)26,000 (47.3)%
Total other income (expenses)(1,078,000)(1,377,000)299,000 (21.7)%
Loss before income taxes(28,718,000)(18,574,000)(10,144,000)54.6 %
Provision for income taxes(15,000)(10,000)(5,000)50.0 %
Net loss$(28,733,000)$(18,584,000)$(10,149,000)54.6 %
Revenue
Total revenue increased by $4.7 million, or 203.0%, to $7.0 million for the six months ended June 30, 2021 compared to $2.3 million for the same period in 2020. The increase impacted all regions. The increase in product sales was driven by increased demand of our reagent rental program and consumables, while the increase in service and other revenue was mostly driven by sales generated by our Lineagen subsidiary. Furthermore, below is a summary of changes for the six months ended June 30, 2021 as compared to the same period in 2020:
North America revenue increased by $2.4 million, or 156%;
EMEIA revenue increased by $1.8 million, or 257%; and
Asia Pacific revenue increased by $0.5 million, or 540%.
Revenue for the six months ended June 30, 2021, includes service revenue of $2.0 million generated from our Lineagen subsidiary.
Cost of Revenue
Total cost of revenue increased by $3.1 million, or 211.3%, to $4.5 million for the six months ended June 30, 2021 compared to $1.5 million for the same period in 2020. The increase was primarily due to an increase in sales volume. Gross margins reduced due to a shift in our product mix towards lower margin instrument sales.
Research and Development Expenses

Research and development expenses increased by $1.7 million, or 33.3%, to $6.8 million for the six months ended June 30, 2021 compared to $5.1 million for the same period in 2020. The increase is primarily due to a $1.1 million increase in
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compensation expenses and an increase of $0.3 million in product development costs. The increase in compensation expense is driven by a 22% increase in headcount as well as wages returning against a lower comparable last year where wages were reduced 25% as part of a COVID-related savings measure. In addition, compensation expense included a $0.3 million increase in stock-based compensation expense as a result of increased grant date fair values of options issued this year.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $10.4 million, or 79.9%, to $23.4 million for the six months ended June 30, 2021 compared to $13.0 million for the same period in 2020. The increase is primarily due to a $5.9 million increase in compensation expenses, $1.1 million in other headcount-related expenses, and $2.6 million in professional services. The increase in compensation expense is driven mainly by a 133% increase in headcount, over half of which are employees of Lineagen, as well as wages returning against a lower comparable last year where wages were reduced 25% as part of a COVID-related savings measure. In addition, compensation expense included a $1.5 million increase in stock-based compensation expense as a result of increased grant date fair values of options issued. Other headcount-related expenses include the cost of recruiting, temporary employment, and facilities expenses incurred in order to support increased product demand. Professional services include expenses incurred to expand our global marketing outreach as well consulting, audit, legal, and other fees necessary to satisfy our obligations as a public company.
Interest Expense
    
Interest expense decreased by $0.6 million, or 43.4%, to $0.7 million for the six months ended June 30, 2021 compared to $1.3 million for the same period in 2020, driven by payment in full of the LSA Innovatus Term Loan during the three months ended June 30, 2021.
Gain on forgiveness of Paycheck Protection Program loan
A gain on forgiveness of Paycheck Protection Program loan of $1.8 million was recognized during the six months ended June 30, 2021 in connection with the forgiveness of our PPP Loan, including all accrued interest in full.
Loss on debt extinguishment
A loss on debt extinguishment of $2.1 million was recognized during the six months ended June 30, 2021 in connection with our payment in full of the LSA Innovatus Term Loan, including all accrued interest, an end of term fee, a prepayment fee, and write-off of unamortized debt issuance costs.
Liquidity and Capital Resources