(State or other jurisdiction | (I.R.S. Employer Identification No.) | ||||||||||
of incorporation or organization) | |||||||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
value per share | (The Nasdaq Capital Market) |
Large accelerated filer | ☐ | |||||||
Accelerated filer | ☐ | |||||||
☑ | ||||||||
Smaller reporting company | ||||||||
Emerging growth company |
Item 1. Legal Proceedings | |||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Unaudited | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | $ | ||||||
Investments | ||||||||
Trade accounts receivable, net | ||||||||
Inventory | ||||||||
Prepaid expenses | ||||||||
Other current assets | ||||||||
Total current assets | ||||||||
Property and equipment, net | ||||||||
Finance lease assets, net | ||||||||
Operating lease right of use assets, net | ||||||||
Other non-current assets | ||||||||
Total assets | $ | $ | ||||||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | $ | ||||||
Accrued liabilities | ||||||||
Accrued interest | ||||||||
Deferred revenue | ||||||||
Current portion of convertible notes | ||||||||
Finance lease, current | ||||||||
Operating lease, current | ||||||||
Total current liabilities | ||||||||
Finance lease, non-current | ||||||||
Operating lease, non-current | ||||||||
Other non-current liabilities | ||||||||
Accrued interest related-party | ||||||||
Long-term debt related-party | ||||||||
Total liabilities | $ | $ | ||||||
Commitments and contingencies (see Note 14) |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Unaudited | ||||||||
Stockholders’ deficit: | ||||||||
Preferred shares, $ | ||||||||
Common stock, $ | ||||||||
Contributed capital | ||||||||
Treasury stock | ( | ( | ||||||
Accumulated deficit | ( | ( | ||||||
Accumulated other comprehensive loss | ( | ( | ||||||
Total stockholders’ deficit | ( | ( | ||||||
Total liabilities and stockholders’ deficit | $ | $ |
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2023 | 2022 | |||||||
Net sales | $ | $ | ||||||
Cost of sales | ||||||||
Gross profit | ||||||||
Costs and expenses: | ||||||||
Research and development | ||||||||
Sales, general and administrative | ||||||||
Total costs and expenses | ||||||||
Loss from operations | ( | ( | ||||||
Other (expense) income: | ||||||||
Interest expense | ( | ( | ||||||
Interest expense related-party | ( | |||||||
Gain on extinguishment of debt | ||||||||
Foreign currency exchange loss | ||||||||
Interest income | ||||||||
Other income (expense), net | ( | |||||||
Total other (expense) income, net | ( | |||||||
Net loss before income taxes | ( | ( | ||||||
Provision for income taxes | ||||||||
Net loss | $ | ( | $ | ( | ||||
Basic and diluted net loss per share | $ | ( | $ | ( | ||||
Weighted average shares outstanding | ||||||||
Other comprehensive loss: | ||||||||
Net loss | $ | ( | $ | ( | ||||
Net unrealized gain (loss) on debt securities available-for-sale | ( | |||||||
Foreign currency translation adjustment | ( | ( | ||||||
Comprehensive loss | $ | ( | $ | ( |
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | ( | $ | ( | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation and amortization | ||||||||
Amortization of investment discount | ||||||||
Equity-based compensation | ||||||||
Amortization of debt discount and issuance costs | ||||||||
Amortization of debt discount related-party | ||||||||
Loss (gain) on disposal of property and equipment | ||||||||
Unrealized (gain) on equity investments | ( | |||||||
Gain on extinguishment of debt | ( | |||||||
(Increase) decrease in assets: | ||||||||
Contributions to deferred compensation plan | ( | |||||||
Accounts receivable | ( | |||||||
Inventory | ( | ( | ||||||
Prepaid expense and other | ( | ( | ||||||
Increase (decrease) in liabilities: | ||||||||
Accounts payable | ( | |||||||
Accrued liabilities and other | ||||||||
Accrued interest | ( | |||||||
Accrued interest from related-party | ||||||||
Deferred revenue and income | ( | ( | ||||||
Deferred compensation | ( | |||||||
Net cash used in operating activities | ( | ( | ||||||
Cash flows from investing activities: | ||||||||
Purchases of equipment | ( | ( | ||||||
Purchase of marketable securities | ( | |||||||
Maturities of marketable securities | ||||||||
Net cash provided (used) by investing activities | ( | |||||||
Cash flows from financing activities: | ||||||||
Payments on finance leases | ( | |||||||
Proceeds from issuance of common stocks under employee purchase plan | ||||||||
Net cash (used) provided by financing activities | ( |
Three Months Ended | ||||||||
March 31, | March 31, | |||||||
2023 | 2022 | |||||||
Effect of exchange rate on cash | ( | ( | ||||||
Decrease in cash and cash equivalents | ( | ( | ||||||
Cash and cash equivalents, beginning of period | ||||||||
Cash and cash equivalents, end of period | $ | $ | ||||||
Non-cash investing activities: | ||||||||
Net transfer of instruments from inventory to property and equipment | $ | $ | ||||||
Non-cash financing activities: | ||||||||
Extinguishment of convertible senior notes through issuance of common stock | $ | $ | ||||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | $ |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Preferred stock shares outstanding | ||||||||
Beginning | ||||||||
Ending | ||||||||
Preferred stock | ||||||||
Beginning | $ | $ | ||||||
Ending | $ | $ | ||||||
Common stock shares outstanding | ||||||||
Beginning | ||||||||
Restricted stock awards released | ||||||||
Issuance of common stock under employee purchase plan | — | |||||||
Issuance of shares to retire convertible notes | — | |||||||
Ending | ||||||||
Common stock | ||||||||
Beginning | $ | $ | ||||||
Restricted stock awards released | — | |||||||
Issuance of shares to retire convertible notes | — | |||||||
Ending | $ | $ | ||||||
Contributed capital | ||||||||
Beginning | $ | $ | ||||||
Cumulative effect of accounting changes | — | ( | ||||||
Issuance of common stock under employee purchase plan | — | |||||||
Issuance of shares to retire Convertible Notes | — | |||||||
Equity-based compensation | ||||||||
Ending | $ | $ |
Three Months Ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Accumulated deficit | ||||||||
Beginning | $ | ( | $ | ( | ||||
Cumulative effect of accounting changes | — | |||||||
Net loss | ( | ( | ||||||
Ending | $ | ( | $ | ( | ||||
Treasury stock | ||||||||
Beginning | $ | ( | $ | ( | ||||
Ending | $ | ( | $ | ( | ||||
Accumulated other comprehensive (loss) income | ||||||||
Beginning | $ | ( | $ | ( | ||||
Net unrealized gain (loss) on debt securities available-for-sale | ( | |||||||
Foreign currency translation adjustment | ( | ( | ||||||
Ending | $ | ( | $ | ( | ||||
Total stockholders' deficit | $ | ( | $ | ( |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Beginning balance | $ | $ | ||||||
Provisions, net | ||||||||
Write-offs | ( | ( | ||||||
$ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Beginning balance | $ | $ | ||||||
Provisions (reversals), net | ||||||||
Warranty cost incurred | ( | ( | ||||||
Ending balance | $ | $ |
March 31, 2023 | ||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | ||||||||||||||
Cash and cash equivalents: | ||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||
Total cash and cash equivalents | ||||||||||||||
Equity investments: | ||||||||||||||
Mutual funds | ||||||||||||||
Total equity investments | ||||||||||||||
Debt securities available-for-sale: | ||||||||||||||
Certificates of deposit | ||||||||||||||
Commercial paper | ||||||||||||||
Corporate notes and bonds | ||||||||||||||
Debt securities available-for-sale | ||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ |
December 31, 2022 | ||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total | |||||||||||
Assets: | ||||||||||||||
Cash and cash equivalents: | ||||||||||||||
Money market funds | $ | $ | $ | $ | ||||||||||
Total cash and cash equivalents | ||||||||||||||
Equity investments: | ||||||||||||||
Mutual funds | ||||||||||||||
Total equity investments | ||||||||||||||
Debt securities available-for-sale: | ||||||||||||||
Certificates of deposit | ||||||||||||||
U.S. Treasury securities | ||||||||||||||
Commercial paper | ||||||||||||||
Corporate notes and bonds | ||||||||||||||
Debt securities available-for-sale | ||||||||||||||
Total assets measured at fair value | $ | $ | $ | $ |
March 31, 2023 | ||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Certificates of deposit | $ | $ | $ | $ | ||||||||||
Commercial paper | ||||||||||||||
Corporate notes and bonds | ( | |||||||||||||
Total | $ | $ | $ | ( | $ |
December 31, 2022 | ||||||||||||||
Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||
Certificates of deposit | $ | $ | $ | ( | $ | |||||||||
U.S. Treasury securities | ( | |||||||||||||
Commercial paper | ( | |||||||||||||
Corporate notes and bonds | ( | |||||||||||||
Total | $ | $ | $ | ( | $ |
March 31, 2023 | December 31, 2022 | |||||||||||||
Amortized Cost | Fair Value | Amortized Cost | Fair Value | |||||||||||
Due in less than 1 year | $ | $ | $ | $ | ||||||||||
Total | $ | $ | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Unrealized gain (loss) on equity investments | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Raw materials | $ | $ | ||||||
Work in process | ||||||||
Finished goods | ||||||||
$ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Computer equipment | $ | $ | ||||||
Technical equipment | ||||||||
Facilities | ||||||||
Instruments | ||||||||
Capital projects in progress | ||||||||
Total property and equipment | $ | $ | ||||||
Accumulated depreciation | ( | ( | ||||||
Property and equipment, net | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Depreciation expense | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Instruments at cost under operating leases | $ | $ | ||||||
Accumulated depreciation under operating leases | ( | ( | ||||||
Net property and equipment under operating leases | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Products and services not yet delivered | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Outstanding principal at par | $ | $ | ||||||
Unamortized debt issuance | ( | |||||||
Net carrying amount | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Current portion of convertible notes | $ | $ | ||||||
Non-current portion of convertible notes | ||||||||
Total convertible notes | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Contractual coupon interest | $ | $ | ||||||
Amortization of debt issuance costs | ||||||||
Total interest expense on convertible notes | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Gain on extinguishment | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Outstanding principal | $ | $ | ||||||
Unamortized debt issuance discount | ( | ( | ||||||
Net carrying amount | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Contractual interest | $ | $ | ||||||
Amortization of the debt discount | ||||||||
Total interest expense | $ | $ |
Principal | Accrued Interest | Total | |||||||||
2023 | $ | $ | $ | ||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Stock price | $ | $ | ||||||
Term (years) | ||||||||
Volatility | % | % | ||||||
Risk-free rate | % | % |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Shares issuable upon the release of RSUs | ||||||||
Shares issuable upon exercise of stock options | ||||||||
Shares issuable upon the exercise of the Warrant | ||||||||
Number of Shares | Weighted Average Exercise Price per Share | |||||||
Options outstanding January 1, 2023 | $ | |||||||
Granted | ||||||||
Forfeited | ( | |||||||
Exercised | ||||||||
Expired | ( | |||||||
Options outstanding March 31, 2023 | $ |
Options Outstanding | Options Exercisable | |||||||
Number of options | ||||||||
Weighted average remaining contractual term (in years) | ||||||||
Weighted average exercise price | $ | $ | ||||||
Weighted average fair value | $ | $ | ||||||
Aggregate intrinsic value (in thousands) | $ | $ |
Number of Shares | Weighted Average Grant Date Fair Value per Share | |||||||
Outstanding January 1, 2023 | $ | |||||||
Granted | ||||||||
Forfeited | ( | |||||||
Released | ( | |||||||
Outstanding March 31, 2023 | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cost of sales | $ | $ | ||||||
Research and development | ||||||||
Sales, general and administrative | ( | |||||||
$ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cost capitalized to inventory | $ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Cash paid for amounts included in lease liabilities: | ||||||||
Operating cash flows from operating leases | $ | $ | ||||||
Financing cash flows from finance leases | $ | $ | ||||||
ROU assets obtained in exchange for lease obligations: | ||||||||
Operating leases | $ | $ | ||||||
Finance leases | $ | $ | ||||||
Lease Cost: | ||||||||
Operating leases | $ | $ | ||||||
Finance leases | $ | $ | ||||||
Short-term leases | $ | $ |
Operating | Finance | |||||||
Remainder of 2023 | $ | $ | ||||||
2024 | ||||||||
2025 | ||||||||
2026 | ||||||||
2027 | ||||||||
Thereafter | ||||||||
Total lease payments | ||||||||
Less imputed interest | ( | ( | ||||||
$ | $ |
Remainder of 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total undiscounted cash flows | |||||
Less imputed interest | |||||
Present value of lease payments | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Domestic | $ | $ | ||||||
Foreign | ||||||||
$ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Accelerate Pheno revenue | $ | $ | ||||||
Other revenue | ||||||||
$ | $ |
Three Months Ended March 31, | ||||||||
2023 | 2022 | |||||||
Products | $ | $ | ||||||
Services | ||||||||
$ | $ |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
Domestic | $ | $ | ||||||
Foreign | ||||||||
$ | $ |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Net sales | $ | 2,812 | $ | 2,958 | $ | (146) | (5) | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Cost of sales | $ | 1,801 | $ | 2,156 | $ | (355) | (16) | % | ||||||
Non-cash equity-based compensation as a component of cost of sales | 90 | 175 | (85) | (49) | % | |||||||||
Cost of sales less non-cash equity-based compensation | $ | 1,711 | $ | 1,981 | $ | (270) | (14) | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Gross profit | $ | 1,011 | $ | 802 | $ | 209 | 26 | % | ||||||
Non-cash equity-based compensation as a component of gross profit | 90 | 175 | (85) | (49) | % | |||||||||
Gross profit less non-cash equity-based compensation | $ | 1,101 | $ | 977 | $ | 124 | 13 | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Research and development | $ | 6,968 | $ | 6,024 | $ | 944 | 16 | % | ||||||
Non-cash equity-based compensation as a component of research and development | 605 | 362 | 243 | 67 | % | |||||||||
Research and development less non-cash equity-based compensation | $ | 6,363 | $ | 5,662 | $ | 701 | 12 | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Sales, general and administrative | $ | 10,105 | $ | 10,673 | $ | (568) | (5) | % | ||||||
Non-cash equity-based compensation as a component of sales, general and administrative | (140) | 2,442 | (2,582) | (106) | % | |||||||||
Sales, general and administrative less non-cash equity-based compensation | $ | 10,245 | $ | 8,231 | $ | 2,014 | 24 | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Loss from operations | $ | (16,062) | $ | (15,895) | $ | (167) | 1 | % | ||||||
Non-cash equity-based compensation as a component of loss from operations | 555 | 2,979 | $ | (2,424) | (81) | % | ||||||||
Loss from operations less non-cash equity-based compensation | $ | (15,507) | $ | (12,916) | $ | (2,591) | 20 | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Total other (expense) income, net | $ | (733) | $ | 2,430 | $ | (3,163) | (130) | % |
Three Months Ended March 31, | ||||||||||||||
(in thousands) | ||||||||||||||
2023 | 2022 | $ Change | % Change | |||||||||||
Provision for income taxes | $ | — | $ | — | $ | — | NM |
Payments due by Period (in thousands) | |||||||||||||||||||||||
Material Cash Requirements | Total | 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | ||||||||||||||||
Operating lease obligations | $ | 2,375 | $ | 741 | $ | 1,051 | $ | 583 | $ | — | $ | — | $ | — | |||||||||
Purchase obligation 1) | 11,900 | — | — | — | — | 11,900 | — | ||||||||||||||||
Finance lease obligations | 2,092 | 923 | 976 | 193 | — | — | — | ||||||||||||||||
Deferred compensation | 978 | — | — | 356 | 381 | 241 | — | ||||||||||||||||
Convertible notes | 56,595 | 56,595 | — | — | — | — | — | ||||||||||||||||
Convertible notes interest | 707 | 707 | — | — | — | — | — | ||||||||||||||||
Related party secured note 2) | 34,934 | — | — | — | — | 34,934 | — | ||||||||||||||||
Related party secured note interest 3) | 9,863 | — | — | — | — | 9,863 | — | ||||||||||||||||
Total | $ | 119,444 | $ | 58,966 | $ | 2,027 | $ | 1,132 | $ | 381 | $ | 56,938 | $ | — |
Cash Flow Summary | |||||||||||
Three Months Ended March 31, | |||||||||||
(in thousands) | |||||||||||
2023 | 2022 | $ Change | |||||||||
Net cash used in operating activities | $ | (13,367) | $ | (12,606) | $ | (761) | |||||
Net cash provided (used) by investing activities | 8,209 | (13,641) | 21,850 | ||||||||
Net cash (used) provided by financing activities | (77) | 77 | (154) |
Exhibit No. | Description | Filing Information | ||||||
3.1 | Incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement on Schedule 14A filed on November 13, 2012 | |||||||
3.1.1 | Incorporated by reference to Exhibit A to the Registrant’s Definitive Information Statement on Schedule 14C filed on July 12, 2013 | |||||||
3.1.2 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on March 15, 2016 | |||||||
3.1.3 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 15, 2019 | |||||||
3.1.4 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 13, 2021 | |||||||
3.1.5 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on September 23, 2021 | |||||||
3.1.6 | Incorporate by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 17, 2022 | |||||||
3.2 | Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on August 8, 2019 | |||||||
3.2.1 | Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on February 3, 2022 | |||||||
10.1 | Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 14, 2023 | |||||||
10.2 | Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on April 24, 2023 | |||||||
10.3 | Filed herewith | |||||||
31.1 | Filed herewith | |||||||
31.2 | Filed herewith | |||||||
32 | Furnished herewith |
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | Filed herewith | ||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed herewith | ||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed herewith | ||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed herewith | ||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed herewith | ||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed herewith | ||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101) | Filed herewith |
May 15, 2023 | /s/ Jack Phillips | ||||
Jack Phillips President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
May 15, 2023 | /s/ David Patience | ||||
David Patience Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
Provision | Agreement | |||||||
Title; Reporting; Duties; No Conflicts: | Beginning on the Effective Date, you will serve as the Chief Financial Officer of the Company, reporting directly to the President and Chief Executive Officer of the Company. In your capacity as Chief Financial Officer you will have control over, and responsibility for, the financial and accounting responsibilities of the Company and shall have such other duties, authorities and responsibilities commensurate for such or a similar position at a similarly-situated company and such additional duties as may be assigned to you by the President and Chief Executive Officer from time to time. | |||||||
You understand that, while you are employed as the Chief Financial Officer of the Company: (i) your employment services will be full-time and exclusive to the Company and that you will be expected to devote substantially all of your full business time, attention, energy and skills to the Company; (ii) you agree to serve the Company faithfully, loyally, honestly and to the best of your ability; and (iii) you will not, without the express written consent of the Board, engage in any other outside employment. | ||||||||
The preceding paragraph is not intended to prohibit you from engaging in charitable or nonprofessional activities such as personal investments or conducting private business affairs, as long as they do not conflict or interfere with the performance of your duties to the Company. You agree to observe and comply with the Company’s rules and policies, as the same may be adopted and amended from time to time. | ||||||||
By signing this Agreement, you represent and warrant that you are under no contractual or other obligations or commitments that are inconsistent with your obligations under this Agreement, including, without limitation, any restrictions that would preclude you from providing services to the Company (e.g., a non-compete with a former employer). |
Base Salary: | As of the Effective Date, your base salary will reflect $310,000. Your Base Salary will be reviewed at least annually and may be adjusted upward or downward by the Compensation Committee of the Board of Directors (the “Compensation Committee”) in its sole discretion. | |||||||
Sign-on Equity Grant: | After your effective date, a recommendation will be made to the Compensation Committee to award 500,000 restricted share units under our 2022 Omnibus Equity Incentive Plan (“Equity Plan”). This grant will be subject to a time-based vesting schedule over a 3-year period, with 40% vesting on/about your 2nd year anniversary, and the remaining 60% vesting on/about your 3rd year anniversary. This grant is subject to such other terms and conditions specified by the Compensation Committee, the Equity Plan, the award agreement that you must execute as a condition of the grant, and the Company’s insider trading policy. | |||||||
Opportunity: | Beginning with the Effective Date and for each full calendar year during the Term thereafter, you will be eligible to participate in an annual cash incentive program adopted in writing and approved by the Compensation Committee (the “AIP”). Your target incentive under the AIP will equal 60% of your Base Salary. Whether you are entitled to receive an AIP payment, and the amount of such payment, will depend on the attainment of written quantitative and qualitative performance goals, including financial performance goals, establish by the Compensation Committee in its sole discretion. The amount of the AIP, if any, will be certified by the Compensation Committee in January or February of the year following the year to which the AIP relates, and the earned AIP, if any, will be paid to you on or about March 15 of the year following the year to which the AIP relates (e.g., the AIP for 2023, if any, will be paid on or about March 15, 2024). Except as set forth below, you must be employed by the Company through the date the AIP is paid in order to earn and be eligible to receive the AIP. | |||||||
Long-Term Incentive Compensation: | As of the Effective Date, you will be eligible to receive grants of stock options, performance shares and other awards under the Equity Plan (the “Equity Awards”). The amount of Equity Awards, the mix of Equity Awards, the vesting schedule and the other terms and conditions of the Equity Awards will be established by the Compensation Committee in its sole discretion, provided, that your Equity Award grant will equal 150% of your then Base Salary. The Equity Awards will be subject to such other terms and conditions specified by the Compensation Committee, the Equity Plan, the award agreement that you must execute as a condition of the grant(s), and the Company’s insider trading policy. | |||||||
Benefits; Vacation: | During the Term, you will be eligible to participate in the Company’s standard company benefit and vacation plans, as such plans may be amended, modified, or terminated by the Company from time to time, with or without notice, in accordance with the applicable benefit and vacation plan documents. For the avoidance of doubt, your participation in such plans will be subject to the terms and conditions set forth in the applicable benefit plan documents. |
Term: | Your employment with the Company is at-will and either you or the Company may terminate your employment at any time and for any reason, with or without Cause in each case subject to the terms and provisions of this Agreement. | |||||||
Unless otherwise indicated in a writing to you from the Board of Directors (the “Board”), upon your termination of employment with Company for any reason, and without any further action on your part, you will be deemed to immediately resign all other officerships, directorships, managerships, and other positions you hold with the Company and its affiliates. If for any reason this provision is determined to be insufficient to effectuate such resignations, you agree to sign any documents or instruments the Company determines necessary to effectuate such resignations. | ||||||||
Termination of Employment: | This Agreement, and your employment hereunder, may be terminated at any time, for any reason, by you or the Company upon at least 30 days prior written notice, provided, that, the Company may terminate your employment immediately for Cause. Upon your termination for any reason, the Company will pay you your accrued but unpaid Base Salary through your date of termination and any accrued but unpaid reasonable business expenses through your date of termination (the “Accrued Obligations”), with such amount paid in compliance in accordance with applicable law. In addition to the Accrued Obligations, you may be entitled to receive severance benefits and Equity Award acceleration as described below. | |||||||
Death or Disability: | This Agreement, and your employment hereunder, will terminate immediately upon your death or Disability (as defined in Exhibit A). In such case, you (or your spouse or estate) will be entitled to the Accrued Obligations. | |||||||
Termination and Severance Prior to a Change of Control: | In the event your full-time employment is terminated by the Company without Cause or by you with Good Reason (as defined in Exhibit A) prior to a Change of Control (as defined in Exhibit A then, in addition to the Accrued Obligations, and subject to your timely execution (and non-revocation) of the release described below, you will be entitled to receive a cash severance payment equal to the sum of: (i) 12 months of your then Base Salary; and (ii) your average earned AIP for over the Term (collectively, the “Base Severance Amount”). The Base Salary Severance Amount will be paid to you in installments over a 12-month period, in accordance with the Company’s normal payroll cycle, with the first installment paid during the first payroll period following the expiration of the release revocation period described below. In addition to the Base Severance Amount, you will be entitled to receive a pro-rata AIP for the year in which your termination occurred, with such pro-rata AIP paid at the same time described above. | |||||||
Full Vesting of Equity Awards on Change of Control: | Upon the closing of a transaction that results in a Change of Control, and notwithstanding anything in the Equity Plan to the contrary, your Option and other Equity Awards shall fully vest and become exercisable. |
Termination and Severance Following a Change of Control: | In the event your full-time employment is terminated by the Company without Cause or by you with Good Reason (as defined in Exhibit A) during the 12 month period following a Change of Control, then, in addition to the Accrued Obligations, and subject to your timely execution (and non-revocation) of the release described below, you will be entitled receive a cash severance payment equal to the sum of: (i) 18 months of your then Base Salary; and (ii) 18 times the monthly amount that is charged to COBRA qualified beneficiaries for the same medical coverage options elected by you immediately prior to your last day of employment (collectively, the “Enhanced Severance Amount”). The Enhanced Severance Amount will be paid to you in installments over an 18 month period, in accordance with the Company’s normal payroll cycle, with the first installment paid during the first payroll period following the expiration of the release revocation period described below. In addition to the Enhanced Severance Amount, you will be entitled to receive a pro-rata AIP for the year in which your termination occurred, with such pro-rata AIP paid at the same time described above. | |||||||
Release Required to Receive Severance: | In order to receive the severance pay and other benefits described above, you must, no later than 60 days following your last day of employment, execute (and not revoke) a general release and waiver of any claims that you may have in connection with your employment and termination of employment with the Company and its affiliates. Notwithstanding anything in this Agreement to the contrary, if the Company concludes that the severance pay and benefits are subject to Section 409A of the Internal Revenue Code, and if the consideration period described in the release, plus the revocation period described in the release spans two (2) calendar years, then, to the extent required by Section 409A of the Code, such severance payments and benefits shall not begin to be paid until the second calendar year (and such first installment shall include installment payments that would otherwise have been made prior to such date). | |||||||
Restrictive Covenants: | This offer is contingent upon you signing the Restrictive Covenant Agreement attached hereto as Exhibit B. | |||||||
Cooperation: | Following the termination of your service with the Company for any reason, you agree to cooperate fully with the Company and with the Company’s counsel in connection with any present and future actual or threatened litigation, administrative proceeding or other investigation involving the Company or any affiliate that relates to events, occurrences or conduct occurring (or claimed to have occurred) during your employment. You are hereby instructed to tell the truth in any litigation, administrative proceeding, or other investigation involving the Company and nothing herein shall be deemed or construed to suggest otherwise. If your cooperation is required pursuant to this section, the Company will: (i) reimburse you for reasonable out-of-pocket expenses (excluding legal fees); and (ii) pay you hourly compensation at a rate equivalent to your hourly Base Salary at the time of your termination of employment. |
Non-Disparagement; Social Media: | During the Term and following the termination of your service for any reason, you agree that you will not criticize, defame, be derogatory toward or otherwise disparage the Company, its products, services, or the Company’s past, present and future officers, directors, managers, stockholders, agents, representatives, employees, or affiliates, or its or their business plans or actions, to any third-party, either orally or in writing; provided that that this provision will not preclude you from giving truthful testimony in response to a lawful subpoena or preclude any conduct protected under any local, state or federal law, including those providing “whistleblower” protection to you or the right to engage in concerted activities. The Company also agrees that it will instruct its senior management and Board, as constituted as of your last day of employment, not to issue any official statements or press releases that disparage you; provided, that, you acknowledge and agree that senior management and the Board are permitted to discuss your employment and performance internally and confidentially as required to conduct business, or to make any legally required disclosures, or if otherwise required under law, in each such instance as reasonably determined by the Company or pursuant to the advice of the Company’s legal counsel. Finally, on the date of your termination of service for any reason, you agree to update your profile on social media websites (such as LinkedIn) to reflect that you are no longer an employee of the Company. | |||||||
Dispute Resolution: | You and the Company agree to meet to informally in a good faith effort to resolve any issues arising under this Agreement. If the parties are unable to resolve their differences, they agree to submit to binding arbitration in Tucson, Arizona, any and all claims and disputes arising hereunder. The parties agree that any dispute will be heard by a single arbitrator, applying Arizona and Federal substantive law, as applicable, in accordance with the American Arbitration Association’s Employment Arbitration Rules. If necessary, an action may be brought in any court of competent jurisdiction solely to compel arbitration or enforce an arbitration award (or for injunctive relief to enforce the Restrictive Covenants of this Agreement). This agreement to arbitrate survives the termination of your employment. | |||||||
You expressly agree and understand that, by agreeing to arbitration to resolve all claims described herein, you, as well as the Company, are waiving your right to a jury or court trial for all such claims. You further understand that arbitration is a private, claim resolution process which utilizes a neutral third-party, instead of a judge or jury, to resolve all claims and typically has more limited discovery than in a case filed in court. You understand that you may refuse to sign this Agreement, but that if the Agreement is not signed, you will not be entitled to the compensation and benefits outlined in this Agreement. |
/s/ DBP | ||||||||
Employee must initial above, indicating his agreement to submit all claims to arbitration. |
Return of Property: | Upon the Company’s request or your termination of employment for any reason, you shall promptly return to the Company all property of the Company, including but not limited to: originals and hard and electronic copies of records, documents, Confidential Information, computer and office equipment, other equipment, plans, designs, electronic devices, keys, access cards, passwords, credit cards, and other tangible and intangible items, in whatever form, in your possession or control. You understand that all electronic mail, equipment, and all computer hardware and software are property of the Company. | |||||||
Miscellaneous: | To the extent required by law, the Company shall withhold from any payments due to you under this Agreement any applicable federal, state or local taxes. You hereby acknowledge that neither the Company nor any of its affiliates, shareholders, members, directors, managers, officers, employees, agents or representatives have provided you with any tax-related advice with respect to the matters covered by this Agreement and that you are solely responsible for obtaining your own tax advice with respect to the matters covered by this Agreement. | |||||||
This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona without regard to conflicts of law principles. If any term or provision of this Agreement is declared by a court or tribunal of competent jurisdiction to be invalid or unenforceable for any reason, this Agreement shall remain in full force and effect, and either: (i) the invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable; or (ii) if such a modification is not possible, this Agreement shall be interpreted as if such invalid or unenforceable provision were not a part hereof. | ||||||||
Each party acknowledges that such party had the opportunity to be represented by counsel in the negotiation and execution of this Agreement. Accordingly, the rule of construction of contract language against the drafting party is hereby waived by each party. |
Section 409A of the Code: | This Agreement shall comply with Section 409A of the Internal Revenue Code or an exception thereto and each provision of the Agreement shall be interpreted, to the extent possible, to comply with Section 409A or an exception thereto. Nevertheless, the Company does not and cannot guarantee any particular tax effect or treatment of the amounts due under this Agreement. Except for the Company’s responsibility to withhold applicable income and employment taxes from compensation paid or provided to you, the Company will not be responsible for the payment of any applicable taxes on compensation paid or provided pursuant to this Agreement. Neither the time nor schedule of any payment under this Agreement may be accelerated or subject to further deferral except as permitted by Section 409A of the Internal Revenue Code and the applicable regulations. You do not have any right to make any election regarding the time or form of any payment due under this Agreement. Notwithstanding anything in this Agreement to the contrary, if the Company concludes, that the Base Severance Amount or the Enhanced Severance Amount are subject to Section 409A of the Internal Revenue Code, then no such Severance Amount will be paid prior to your “separation from service” as defined in Treasury Regulation Section 1.409A-1(h) (applying the default rules of Treasury Regulation Section 1.409A-1(h)). Installment payments made pursuant to this Agreement shall be treated as separate payments for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii). | |||||||
If the Base Severance Amount or the Enhanced Severance Amount are subject to Section 409A of the Internal Revenue Code, and if you are a “specified employee” as defined in Treasury Regulation Section 1.409A-1(i)(1) on the date of your termination of employment, such payments shall not begin until the first day of the seventh month following your “separation from service” as defined in Treasury Regulation Section 1.409A-1(h) (applying the default rules of Treasury Regulation Section 1.409A-1(h)) (and such first payment shall include all prior payments that would otherwise have been made prior to such date). | ||||||||
Section 280G of the Code: | In the event that any payments, distributions, benefits or entitlements of any type payable to you, whether or not payable upon a termination of employment (“Payments”): (i) constitute “parachute payments” within the meaning of Section 280G of the Code; and (ii) but for this Section would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (the “Excise Tax”), then the Payments shall be reduced to such lesser amount (the “Reduced Amount”) that would result in no portion of the Payments being subject to the Excise Tax; provided, however, that such Payments shall not be so reduced if a nationally recognized accounting firm or compensation consulting firm selected by the Company (the “Accountants”) determines that without such reduction, you would be entitled to receive and retain, on a net after-tax basis (including, without limitation, any excise taxes payable under Section 4999 of the Internal Revenue Code, federal, state and local income taxes, social security and Medicare taxes and all other applicable taxes, determined by applying the highest marginal rates which applied (or is likely to apply) to you for the tax year in which the Payments are to be made, or such other rate(s) as the Accountants determine to be likely to apply to you in the relevant tax year(s) in which any of the Payments are expected to be made), an amount that is greater than the amount, on a net after-tax basis, that you would be entitled to retain upon receipt of the Reduced Amount. |
Unless otherwise agreed in writing, any determination made under this paragraph shall be made in good faith by the Accountants in a timely manner and shall be binding on the parties absent manifest error. In the event of a reduction of Payments pursuant to this paragraph, the Payments shall be reduced in the order determined by the Accountants that results in the greatest economic benefit to you in a manner that would not result in subjecting you to additional tax under Section 409A of the Internal Revenue Code. For purposes of making the calculations required by this paragraph, the Accountants may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of the Internal Revenue Code, and other applicable legal authority. The Accountants shall provide detailed supporting calculations to both you and the Company and the Company shall bear the cost of all fees charged by the Accountants in connection with any calculations contemplated by this paragraph. If the provisions of Sections 280G and 4999 of the Internal Revenue Code are repealed without succession or if the Company determines that such provisions do not apply to it and/or you for whatever reason, this paragraph shall be of no further force or effect. |
Sincerely, | ||||||||
Accelerate Diagnostics, Inc. | ||||||||
By: /s/ Jack Phillips | ||||||||
Jack Phillips, President and Chief Executive Officer |
Accepted and agreed to: | |||||
By: /s/ David Patience | 3/14/2023 | ||||
David Patience | Date |
Restrictive Covenants: | Non-Solicitation of Customers/Prospective Customers. You agree, for the duration of the Time Limit (as defined below), that you will not, either directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s current customers or clients with whom you have had contact in the past year to withdraw, curtail, cancel, or decrease the level of their business with the Company or request that they do business with any third party in competition with the Company. You further agree that, for the duration of the Time Limit, you will not, either directly or indirectly, or in any individual or representative capacity, request or solicit any of the Company’s prospective customers (defined as any person or entity who has been directly solicited to become a customer or client by the Company and with whom you have had contact with within the past year or possesses Confidential Information about) or clients with whom you have had contact with in the past year or possesses Confidential Information about to forgo doing business with the Company or request that such prospective customer or client do business with any third party in competition with the Company. | |||||||
Non-Solicitation of Employees/Applicants. You agree, for the duration of the Time Limit, that you will not, either directly or indirectly, or in any individual or representative capacity, solicit, induce or encourage or attempt to solicit, induce or encourage any Company employee and/or applicant to terminate his/her employment or prospective employment with the Company. | ||||||||
Non-Competition. You agree, for the duration of the Time Limit, (as defined below), that you will not, either directly or indirectly or in any individual or representative capacity, be employed by, engage, own, manage, operate, control, aid, or assist another in the operation, organization or promotion of, participate in, advise, contract with or otherwise engage in any manner with the ownership, management, operation, or control of any business, which has a place of business or regularly conducts business in the Geographical Limit (as defined below) and that promotes or sells products or services competitive with those of the Company. You acknowledge and agree that a business will be deemed “competitive” with the Company if it performs any of the services or produces, distributes or sells any of the products or services provided or offered by the Company during the term of your relationship with the Company. | ||||||||
Tolling. The non-competition and non-solicitation Time Limits set forth above shall be tolled during any period in which you are in breach of the restrictions set forth herein. | ||||||||
Reasonable Limitations. You hereby acknowledge and agree that the covenants and obligations made and undertaken in this Agreement are fair and reasonable with respect to duration, geographic area and scope of activity, and do not (and shall not) prevent you from earning a livelihood in complying with the covenants herein. |
Injunctive Relief. You agree that a breach of the covenants described herein will result in substantial and irreparable damages to the Company, which would be difficult to fully ascertain and calculate, and, by reason of such fact, you agree that, in the event of any such breach or threatened or anticipated breach, the Company will have the right to a restraining order and injunction, both temporary and permanent, enjoining and restraining any such breach or threatened breach, without the necessity of proving actual damages or posting a bond. Such injunctive relief will be in addition to any other remedies available to the Company at law or in equity. | ||||||||
Survival of Restrictive Covenants. Your acknowledgements and agreements set forth in this Agreement shall survive the expiration or termination of this Agreement and the termination of your employment with the Company for any reason. | ||||||||
Notice to Future Employers: | You agree that you will notify, and the Company shall have the right to notify, any future or prospective employers, or individuals or entities with whom you may be entering into a contractual relationship, of the Restrictive Covenant provisions of this Agreement for purposes of ensuring that the Company’s interests are protected. | |||||||
Company Proprietary Information: | While you are providing services to the Company, the Company may disclose or make available to you, Confidential Information. By signing this Agreement, you agree to: (i) protect and safeguard the confidentiality of the Confidential Information with at least the same degree of care as you would protect your own confidential information, but in no event with less than a commercially reasonable degree of care; and (ii) not use or disclose the Confidential Information, or permit it to be accessed, used or disclosed, for any purpose other than to carry out the duties assigned to you by the Company or as may be required to be disclosed pursuant to applicable federal, state or local law, regulation or a valid order issued by a court or governmental agency of competent jurisdiction. Upon your termination of service for any reason, or upon the Company’s written request, you shall promptly return to the Company all copies, whether in written, electronic or other form or media, of the Confidential Information, or destroy all such copies at the Company’s written request and certify in writing to the Company that such Confidential Information has been destroyed. In addition to all other remedies available at law, the Company may seek equitable relief (including injunctive relief) against you to prevent the breach or threatened breach of this confidentiality covenant and to secure its enforcement. Notwithstanding anything in this Agreement to the contrary, pursuant to the Defend Trade Secrets Act of 2016, you shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that: (a) is made in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and solely for the purpose of reporting or investigating a suspected violation of law; or (b) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. If you file a lawsuit for retaliation by the Company for reporting a suspected violation of law, you may disclose the Company’s trade secrets to your attorney and use the trade secret in the court proceeding, if you file any document containing the trade secret under seal and do not disclose the trade secret, except pursuant to court order. |
In addition to the obligations above, we may ask that you also sign the Company’s standard Confidentiality and Intellectual Property Assignment Agreement. | ||||||||
Definitions: | For purposes of this Agreement, the following terms shall have the following meanings: | |||||||
“Confidential Information” means non-public information about the Company’s business affairs, products, services, confidential intellectual property, trade secrets, third-party confidential information and other sensitive or proprietary information, whether orally or in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential.” Confidential Information shall not include information that, at the time of disclosure and as established by documentary evidence: (i) is or becomes generally available to and known by the public other than as a result of, directly or indirectly, any breach of this Agreement by you; (ii) is or becomes available to you on a non-confidential basis from a third-party source, provided that such third-party is not and was not prohibited from disclosing such Confidential Information; (iii) was known by or in the possession of you prior to being disclosed by or on behalf of the Company; or (iv) was or is independently developed by you without reference to or use, in whole or in part, of any of the Confidential Information. | ||||||||
“Geographical Limit” means the United States of America; if a court determines that the United States of America is too broad, then the state of Arizona; if a court determines that Arizona is too broad, then Maricopa and Pima County; if a court determines that Maricopa and Pima County is too broad, then Pima County only; if a court determines that Pima County is too broad, then Tucson, Arizona. | ||||||||
“Time Limit” means the term of your employment with the Company and for a period of 18 months thereafter; if a court determines that 18 months is longer than necessary to protect the Company’s legitimate interests, then 12 months; if a court determines 12 months is longer than necessary to protect the Company’s legitimate interests, then 9 months. | ||||||||
Miscellaneous: | This Agreement shall be governed by and construed in accordance with the laws of the State of Arizona without regard to conflicts of law principles. If any term or provision of this Agreement is declared by a court or tribunal of competent jurisdiction to be invalid or unenforceable for any reason, this Agreement shall remain in full force and effect, and either: (i) the invalid or unenforceable provision shall be modified to the minimum extent necessary to make it valid and enforceable; or (ii) if such a modification is not possible, this Agreement shall be interpreted as if such invalid or unenforceable provision were not a part hereof. | |||||||
Each party acknowledges that such party had the opportunity to be represented by counsel in the negotiation and execution of this Agreement. Accordingly, the rule of construction of contract language against the drafting party is hereby waived by each party. |
The dispute resolution provisions of the Offer Letter attached hereto are incorporated by reference and by signing below you acknowledge and agree that any dispute arising under this Agreement will be resolved in accordance with the procedures set forth in the Offer Letter. |
Accepted and agreed to: | |||||
By: /s/ David Patience | 3/14/2023 | ||||
David Patience | Date |
May 15, 2023 | /s/ Jack Phillips | ||||
Jack Phillips President and Chief Executive Officer | |||||
(Principal Executive Officer) |
May 15, 2023 | /s/ David Patience | ||||
David Patience Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
May 15, 2023 | /s/ Jack Phillips | ||||
Jack Phillips President and Chief Executive Officer | |||||
(Principal Executive Officer) | |||||
May 15, 2023 | /s/ David Patience | ||||
David Patience Chief Financial Officer | |||||
(Principal Financial and Accounting Officer) |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred Stock, shares outstanding (in shares) | 3,954,546 | 3,954,546 |
Common Stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common Stock, shares issued (in shares) | 99,628,248 | 97,477,546 |
Common Stock, shares outstanding (in shares) | 99,628,248 | 97,477,546 |
ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES | NOTE 1. ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES Accelerate Diagnostics, Inc. (“we” or “us” or “our” or “Accelerate” or the “Company”) is an in vitro diagnostics company dedicated to providing solutions that improve patient outcomes and lower healthcare costs through the rapid diagnosis of serious infections. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures such as notes required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the entire year ending December 31, 2023, or any future period. All amounts are rounded to the nearest thousand dollars unless otherwise indicated. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of intercompany transactions and balances. Liquidity and Going Concern Since inception, the Company has not achieved profitable operations or positive cash flows from operations. The Company’s accumulated deficit totaled $624.0 million as of March 31, 2023. During the three months ended March 31, 2023, the Company had a net loss of $16.8 million and negative cash flows from operations of $13.4 million. The Company had a working capital deficit of $25.3 million as of March 31, 2023. The Company’s 2.5% Convertible Senior Notes (the “Notes”) matured on March 15, 2023 and became due and payable. On March 9, 2023, the Company entered into a forbearance agreement (the “Forbearance Agreement”), which became effective on March 13, 2023, with the holders of approximately 85% of the Company’s outstanding Notes (collectively, the “Ad Hoc Noteholder Group”) and the trustee for the Notes (the “Trustee”). Pursuant to the Forbearance Agreement, the members of the Ad Hoc Noteholder Group agreed, and directed the Trustee, to forbear from exercising their rights and remedies under the indenture governing the Notes (the “Indenture”) in connection with certain events of default under the Indenture, including, but not limited to, the failure to timely pay in full the principal of any Note due and payable on March 15, 2023 and the failure to pay any interest on any Note due and payable. The Forbearance Agreement was initially effective for the period commencing on March 13, 2023 and ending on March 29, 2023, which was subsequently extended by the parties to April 21, 2023. On April 21, 2023, the Company entered into a restructuring support agreement (the “Restructuring Support Agreement”) with certain holders of the Notes, the holder of the Company’s secured promissory note in an aggregate principal amount of $34.9 million (the “Secured Note”) and the holders of the Company’s Series A Preferred Stock to negotiate in good faith to effect the restructuring of the Company’s capital structure (the “Restructuring Transactions”), including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement (as defined in Note 17), as an out-of-court restructuring and not involve any judicial proceeding or approval (the “Out-of-Court Restructuring”). See Note 9, Convertible Notes and Note 19, Subsequent Events for additional information. As of March 31, 2023, the Company had $31.9 million in cash and cash equivalents and investments, a decrease of $13.7 million from $45.6 million at December 31, 2022. The primary reason for the decrease was due to cash used in operations during the period. The future success of the Company is dependent on its ability to successfully commercialize its products, obtain regulatory clearance for and successfully launch its future product candidates, obtain additional capital and ultimately attain profitable operations. The Company is subject to a number of risks similar to other early commercial stage life science companies, including, but not limited to commercially launching the Company’s products, development and market acceptance of the Company’s product candidates, development by its competitors of new technological innovations, protection of proprietary technology, and raising additional capital. Historically, the Company has funded its operations primarily through multiple equity raises and the issuance of debt. The Company’s primary use of capital has been for the development and commercialization of the Accelerate Pheno system and development of complementary products. While the Company continues to explore additional funding in the form of potential equity and/or debt financing arrangements or similar transactions, as well as non-cash means to settle and/or refinance the Notes in accordance with the Restructuring Support Agreement, there can be no assurance the necessary financing will be available on terms acceptable to the Company, or at all. Although the Company is actively considering all available strategic alternatives to maximize value, if we are unable to obtain adequate capital resources to fund operations, we would not be able to continue to operate our business pursuant to our current plans. Additionally, if the Company is unable to consummate the Restructuring Transactions contemplated by the Restructuring Support Agreement, including in the event that the requisite consents for the contemplated Out-of-Court Restructuring are not obtained by the date provided for in the Restructuring Support Agreement, the Company and the Consenting Stakeholders (as defined in Note 19) have agreed to consummate the Restructuring Transactions pursuant to a pre-packaged plan of reorganization under chapter 11 of the U.S. Bankruptcy Code. The Company is required to evaluate its financial condition as of the date of filing this Form 10-Q pursuant to the requirements of Accounting Standards Codification (“ASC”) 205-40, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Management must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that the financial statements are issued. This evaluation initially does not take into consideration the potential mitigating effect of management’s plans that have not been fully implemented as of the date the financial statements are issued. When substantial doubt exists under this methodology, management evaluates whether the mitigating effect of its plans sufficiently alleviates substantial doubt about the Company’s ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both (1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued, and (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Based on its evaluation pursuant to ASC 205-40, the Company has determined that, as of the date of this Form 10-Q filing, there is substantial doubt about its ability to continue as a going concern, as the Company does not currently have adequate financial resources to pay its outstanding debt obligation under the Notes and to fund its forecasted operating costs for at least twelve months from the date of issuance of these condensed consolidated financial statements. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above. Use of Estimates The preparation of the Company’s condensed consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to accounts receivable, inventory, property and equipment, accrued liabilities, warranty liabilities, convertible notes, notes from related parties, tax valuation accounts, equity-based compensation, warrants, revenue and leases. Actual results could differ materially from those estimates. Estimated Fair Value of Financial Instruments The Company follows ASC 820, Fair Value Measurement, which has defined fair value and requires the Company to establish a framework for measuring and disclosing fair value. The framework requires the valuation of assets and liabilities subject to fair value measurements using a three-tiered approach and fair value measurement be classified and disclosed in one of the following three categories: •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; •Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The carrying amounts of financial instruments such as cash and cash equivalents, trade accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, and other current liabilities approximate the related fair values due to the short-term maturities of these instruments. See Note 4, Fair Value of Financial Instruments, for further information and related disclosures regarding the Company’s fair value measurements. As of March 31, 2023, the Notes are instruments measured at fair value using Level 3 inputs. The Notes matured on March 15, 2023 and became due and payable on such date. As of March 31, 2023 the Notes were no longer traded on an active market with observable inputs which resulted in the Notes being reclassified from a Level 2 measurement to a Level 3 measurement. As of December 31, 2022, the Notes were instruments measured at fair value using Level 2 inputs, as the Notes were traded on an active market with observable inputs. See Note 9, Convertible Notes for further detail on the Notes. The long-term debt with a related-party consisting of the Secured Note are instruments measured at fair value using Level 3 inputs and was initially measured at fair value using Level 3 inputs. As of March 31, 2023, the debt is measured at amortized cost and the fair value is only disclosed. See Note 10, Long-Term Debt Related-Party for further detail on the Secured Note. Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at time of purchase are considered to be cash equivalents. Cash and cash equivalents include overnight repurchase agreement accounts and other investments. As part of the Company’s cash management process, excess operating cash is invested in overnight repurchase agreements with its bank. Repurchase agreements and other investments classified as cash and cash equivalents are not deposits and are not insured by the U.S. Government, the FDIC or any other government agency and involve investment risk including possible loss of principal. Notwithstanding the possibility of bank failures, we believe that as a result of the Company’s selected banks, diversified holdings strategy, and the U.S. Government’s continued support to stabilize the banking system, such as steps taken in March 2023 as a result of bank failures, that the market risk arising from holding these financial instruments is minimal. Investments The Company invests in various debt and equity securities which are primarily held in the custody of major financial institutions. Debt securities consist of certificates of deposit, U.S. government and agency securities, commercial paper, and corporate notes and bonds. Equity securities consist of mutual funds. The Company records these investments in the condensed consolidated balance sheet at fair value. Unrealized gains or losses for debt securities available-for-sale are included in accumulated other comprehensive loss, a component of stockholders’ deficit. Unrealized gains or losses for equity securities are included in other income (expense), net, a component of condensed consolidated statements of operations and comprehensive loss. The Company considers all debt securities available-for-sale, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. We perform an assessment to determine whether there have been any events or economic circumstances to indicate that a debt security available-for-sale in an unrealized loss position has suffered impairment as a result of credit loss or other factors. A debt security is considered impaired if its fair value is less than its amortized cost basis at the reporting date. If we intend to sell the debt security or if it is more-likely-than-not that we will be required to sell the debt security before the recovery of its amortized cost basis, the impairment is recognized and the unrealized loss is recorded as a direct write-down of the security's amortized cost basis with an offsetting entry to earnings. If we do not intend to sell the debt security or believe we will not be required to sell the debt security before the recovery of its amortized cost basis, the impairment is assessed to determine if a credit loss component exists. We use a discounted cash flow method to determine the credit loss component. In the event a credit loss exists, an allowance for credit losses is recorded in earnings for the credit loss component of the impairment while the remaining portion of the impairment attributable to factors other than credit loss is recognized, net of tax, in accumulated other comprehensive income (loss). The amount of impairment recognized due to credit factors is limited to the excess of the amortized cost basis over the fair value of the security. Inventory Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first-out method. The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value and records a charge to expense for such inventory as appropriate. We charge cost of sales for inventory provisions to write-down our inventory to the lower of cost or net realizable value or for obsolete or excess inventory. Most of our inventory provisions relate to excess quantities of products, based on our inventory levels and future product purchase commitments compared to assumptions about future demand and market conditions. Once inventory has been written-off or written-down, it creates a new cost basis for the inventory that is not subsequently written-up. See Note 6, Inventory, for further information and related disclosures. Accounts Receivable Accounts receivable consist of amounts due to the Company for sales to customers and are based on what we expect to collect in exchange for goods and services. Receivables are considered past due based on the contractual payment terms and are written off if reasonable collection efforts prove unsuccessful. We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the consolidated statements of operations. We assess collectibility by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectibility issues. In determining the amount of the allowance for credit losses, we consider historical collectibility and make judgments about the creditworthiness of customers based on credit evaluations. Our customers typically have good credit quality. We also consider customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data. The allowance for credit losses for the three months ended March 31, 2023 and 2022 is comprised of the following (in thousands):
The Company’s three months ended March 31, 2023 beginning balance increased when compared to the three months ended March 31, 2022 beginning balance due to provisions recorded during the year ended December 31, 2022. These provisions were in connection with aged net investment in sales-type leases. Property and Equipment Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred and expenditures for major improvements are capitalized. Gains and losses from retirement or replacement are included in costs and expenses. Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the assets, ranging from to seven years. Leasehold improvements are depreciated over the remaining life of the lease or the life of the asset, whichever is less. Instruments Classified as Property and Equipment Property and equipment includes Accelerate Pheno systems (also referred to as instruments) used for sales demonstrations, instruments under rental agreements and instruments used for research and development. Depreciation expense for instruments used for sales demonstrations is recorded as a component of sales, general and administrative expense. Depreciation expense for instruments placed at customer sites pursuant to reagent rental agreements is recorded as a component of cost of sales. Depreciation expense for instruments used in our laboratory and research is recorded as a component of research and development expense. The Company retains title to these instruments and depreciates them over five years. Losses from the retirement of returned instruments are included in costs and expenses. The Company evaluates the recoverability of the carrying amount of its instruments whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable, and at least annually. This evaluation is based on our estimate of future cash flows and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of instruments. No impairment charges have been recorded for the three months ended March 31, 2023 and 2022. See Note 7, Property and Equipment, for further information and related disclosures. Long-lived Assets Long-lived assets and certain identifiable intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows from and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of the long-lived asset. Warranty Reserve Instruments are typically sold with a one year limited warranty, while kits and accessories are typically sold with a sixty days limited warranty. Accordingly, a provision for the estimated cost of the limited warranty repair is recorded at the time revenue is recognized. Our estimated warranty provision is based on our estimate of future repair events and the related estimated cost of repairs. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary. The cost incurred for these provisions is included in cost of sales on the condensed consolidated statements of operations and comprehensive loss. Warranty reserve activity for the three months ended March 31, 2023 and 2022 is as follows (in thousands):
Convertible Notes The Company follows Accounting Standards Update (“ASU”) 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). The Notes are accounted for as a single liability measured at their amortized cost. Interest expense is comprised of (1) cash interest payments, (2) amortization of any debt discounts or premiums based on the original offering, and (3) amortization of any debt issuance costs. Gain or loss on extinguishment of Notes is calculated as the difference between the (i) fair value of the consideration transferred and (ii) the sum of the carrying value of the debt at the time of repurchase. Revenue Recognition The Company recognizes revenue when control of the promised good or service is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales taxes are excluded from revenues. The Company determines revenue recognition through the following steps: •Identification of the contract with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations •Recognition of revenue as we satisfy a performance obligation Product revenue is derived from the sale or rental of instruments and sales of related consumable products. When an instrument is sold, revenue is generally recognized upon installation of the unit consistent with contract terms, which do not include a right of return. When a consumable product is sold, revenue is generally recognized upon shipment. Invoices are generally issued when revenue is recognized. Payment terms vary by the type and location of the customer and the products or services offered. The term between invoicing and when payment is due is not significant. Service revenue is derived from the sale of extended service agreements which are generally non-cancellable. This revenue is recognized on a straight-line basis over the contract term beginning on the effective date of the contract because the Company is standing ready to provide services. Invoices are generally issued annually and coincide with the beginning of individual service terms. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines relative standalone selling prices based on the price charged to customers for each individual performance obligation. Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined these costs would have an amortization period of less than one year and has elected to recognize them as an expense when incurred. Contract asset opening and closing balances were immaterial for the three months ended March 31, 2023. Gross Profit and Gross Margin Gross profit consists of total revenue, net of allowances, less cost of sales. Cost of sales includes cost of materials, direct labor, equity-based compensation, facility and other manufacturing overhead costs for consumable tests and instruments sold to customers. Cost of sales for instruments also includes depreciation on revenue generating instruments that have been placed with our customers under a reagent rental agreement. Cost of sales includes repair and maintenance cost for instruments covered by a service agreement or instruments covered by a reagent rental agreement. Cost of sales also includes warranty related costs. The Company’s overall gross margin was 36% and 27% for the three months ended March 31, 2023 and 2022, respectively. The increase in gross margin is primarily due to reductions in costs to manufacture consumables. The Company’s gross margin also increased due to select instruments being sold to certain customers with more favorable than usual gross margins, which included instruments that were expensed in a previous year. The Company manufactures pre-launch inventory in advance of regulatory approval. This inventory is expensed before an economic benefit is probable. Pre-launch inventory sold to customers (not capitalized and expensed in a previous year) during each of the three months ended March 31, 2023 and 2022 was $0.1 million. Shipping and Handling Shipping and handling costs billed to customers are included as a component of revenue. The corresponding expense incurred with third party carriers is included as a component of sales, general and administrative costs on the consolidated statements of operations and comprehensive loss. Leases The Company accounts for leases in accordance with ASC 842, Leases. The Company determines if an arrangement is or contains a lease and the type of lease at inception. The Company classifies leases as finance leases (lessee) or sales-type leases (lessor) when there is either a transfer of ownership of the underlying asset by the end of the lease term, the lease contains an option to purchase the asset that we are reasonably certain will be exercised, the lease term is for the major part of the remaining economic life of the asset, the present value of the lease payments and any residual value guarantee equals or substantially exceeds all the fair value of the asset, or the asset is of such a specialized nature that it will have no alternative use to the lessor at the end of the lease term. Payments contingent on future events (i.e. based on usage) are considered variable and excluded from lease payments for the purposes of classification and initial measurement. Several of our leases include options to renew or extend the term upon mutual agreement of the parties and others include one-year extensions exercisable by the lessee. None of our leases contain residual value guarantees, restrictions, or covenants. To determine whether a contract contains a lease, the Company uses its judgment in assessing whether the lessor retains a material amount of economic benefit from an underlying asset, whether explicitly or implicitly identified, which party holds control over the direction and use of the asset, and whether any substantive substitution rights over the asset exist. Leases as Lessee Operating leases are included in right-of-use (“ROU”) assets and corresponding lease liabilities, and finance leases are included in ROU assets and corresponding lease liabilities within our condensed consolidated balance sheets. These assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and their related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Typically, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. We use the implicit rate when readily determinable. ROU assets are net of lease payments made and exclude lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term, which may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Our operating leases consist primarily of leased office, factory, and laboratory space in the U.S. and office space in Europe, have between and six-year terms, and typically contain penalizing, early-termination provisions. Our finance leases consist of leased equipment and have three-year terms. Leases as Lessor The Company leases instruments to customers under “reagent rental” agreements, whereby the customer agrees to purchase consumable products over a stated term, typically five years or less, for a volume-based price that includes an embedded rental for the instruments. When collectibility is probable, that amount is recognized as income at lease commencement for sales-type leases and as product is shipped, typically in a straight–line pattern, over the term for operating leases, which typically include a termination without cause or penalty provision given a short notice period. Consideration is allocated between lease and non-lease components based on stand-alone selling price in accordance with ASC 606, Revenue from Contracts with Customers. Net investment in sales-type leases are included within our condensed consolidated balance sheets as a component of other current assets and other non-current assets, which include the present value of lease payments not yet received and the present value of the residual asset, which are determined using the information available at commencement, including the lease term, estimated useful life, rate implicit in the lease, and expected fair value of the instrument. Nonqualified Cash Deferral Plan The Company's Cash Deferral Plan (the “Deferral Plan”) provides certain key employees with an opportunity to defer the receipt of such participant's base salary. The Deferral Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code. All of the investments held in the Deferral Plan are equity securities consisting of mutual funds and recorded at fair value with changes in the investments’ fair value recognized as earnings in the period they occur. The corresponding liability for the Deferral Plan is included in other non-current liabilities in the condensed consolidated balance sheet. Equity-Based Compensation The Company may award stock options, restricted stock units (“RSU”), performance-based awards and other equity-based instruments to its employees, directors and consultants. Compensation cost related to equity-based instruments is based on the fair value of the instrument on the grant date, and is recognized over the requisite service period on a straight-line basis over the vesting period for each tranche (an accelerated attribution method). Performance-based awards vest based on the achievement of performance targets. Compensation costs associated with performance-based awards are recognized over the requisite service period based on probability of achievement. Performance-based awards require management to make assumptions regarding the likelihood of achieving performance targets. The Company estimates the fair value of service based and performance-based stock option awards, including modifications of stock option awards, using the Black-Scholes option pricing model. This model derives the fair value of stock options based on certain assumptions related to expected stock price volatility, expected option life, risk-free interest rate and dividend yield. •Volatility: The expected volatility is based on the historical volatility of the Company's stock price over the most recent period commensurate with the expected term of the stock option award. •Expected term: The estimated expected term for employee awards is based on a simplified method that considers an insufficient history of employee exercises. For consultant awards, the estimated expected term is the same as the life of the award. •Risk-free interest rate: The risk-free interest rate is based on published U.S. Treasury rates for a term commensurate with the expected term. •Dividend yield: The dividend yield is estimated as zero as the Company has not paid dividends in the past and does not have any plans to pay any dividends in the foreseeable future. The Company records the fair value of RSUs or stock grants based on the published closing market price on the day before the grant date. The Company accounts for forfeitures as they occur rather than on an estimated basis. The Company also has an employee stock purchase program whereby eligible employees can elect payroll deductions that are subsequently used to purchase common stock at a discounted price. There is no compensation recorded for this program as (i) the purchase discount does not exceed the issuance costs that would have been incurred to raise a significant amount of capital by a public offering, (ii) substantially all employees that meet limited employment qualifications may participate on an equitable basis, and (iii) the plan doesn't incorporate option features that would require compensation to be recorded. See Note 12, Employee Equity-Based Compensation for further information. Deferred Tax Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheet. The change in deferred tax assets and liabilities for the period represents the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws in deferred tax assets and liabilities are reflected as an adjustment to the tax provision or benefit in the period of enactment. The Company follows the provisions of ASC 740, Income Taxes, to account for any uncertainty in income taxes with respect to the accounting for all tax positions taken (or expected to be taken) on any income tax return. This guidance applies to all open tax periods in all tax jurisdictions in which the Company is required to file an income tax return. Under U.S. GAAP, in order to recognize an uncertain tax benefit the taxpayer must be more likely than not certain of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more likely than not to be realized upon resolution of the position. Interest and penalties, if any, would be recorded within tax expense. Foreign Currency Translation and Foreign Currency Transactions Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive loss in the condensed consolidated statements of stockholders’ deficit. The Company has assets and liabilities, including receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to re-measurement, the impact of which is recorded in foreign currency exchange gain and loss, within the condensed consolidated statement of operations and comprehensive loss. Loss Per Share Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Potentially dilutive common shares consist of shares issuable from stock options, unvested RSUs and the Warrant (as defined in Note 10). Potentially dilutive common shares would also include common shares that would be outstanding if the Notes and the Series A Preferred Stock outstanding at the balance sheet date were converted and shares issuable in connection with the March 2022 Securities Purchase Agreement. Diluted earnings are not presented when the effect of adding such additional common shares is antidilutive. See Note 11, Loss Per Share, for further information. Comprehensive Loss In addition to net loss, comprehensive loss includes all changes in equity during a period, except those resulting from investments by and distributions to owners. The Company holds debt securities as available-for-sale and records the change in fair market value as a component of comprehensive loss. The Company also has adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars which is included as a component of comprehensive loss.
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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS |
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Mar. 31, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS | NOTE 2. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS Standards that were recently adopted In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. ASU 2022-01 is related to the portfolio layer method of hedge accounting. The amendments in this update clarify the accounting and promote consistency in reporting for hedges where the portfolio layer method is applied. This ASU was adopted January 1, 2023, and did not impact the Company’s consolidated financial statements at January 1, 2023. In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 relates to troubled debt restructurings (“TDRs”) and vintage disclosures for financing receivables. The amendments in this update eliminate the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This ASU was adopted January 1, 2023, and did not impact the Company's consolidated financial statements at January 1, 2023.
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CONCENTRATION OF CREDIT RISK |
3 Months Ended |
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Mar. 31, 2023 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK | NOTE 3. CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term investments and accounts receivable. The Company has financial institutions for banking operations that hold 10% or more of the Company’s cash and cash equivalents. As of March 31, 2023, four of the Company's financial institutions held 44%, 20%, 18% and 13% of the Company’s cash and cash equivalents. As of December 31, 2022, three of the Company’s financial institutions held 52%, 24% and 21% of the Company’s cash and cash equivalents. The Company grants credit to domestic and international customers. Exposure to losses on accounts receivable is principally dependent on each client's financial position. The Company had one customer that accounted for 15% and 15% of the Company’s net accounts receivable balance as of March 31, 2023 and December 31, 2022, respectively. The Company did not have any customers that represented 10% or more of the Company’s total revenue for the three months ended March 31, 2023 and 2022.
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FAIR VALUE OF FINANCIAL INSTRUMENTS |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
FAIR VALUE OF FINANCIAL INSTRUMENTS | NOTE 4. FAIR VALUE OF FINANCIAL INSTRUMENTS The following tables represent the financial instruments measured at fair value on a recurring basis in the financial statements of the Company and the valuation approach applied to each class of financial instruments at March 31, 2023 and December 31, 2022 (in thousands):
Highly liquid investments with an original maturity of three months or less at time of purchase are included in cash and cash equivalents on the condensed consolidated balance sheet. Level 1 assets are priced using quoted prices in active markets for identical assets which include money market funds, U.S. Treasury securities and mutual funds as these specific assets are liquid. Level 2 available-for-sale securities are priced using quoted market prices for similar instruments or nonbinding market prices that are corroborated by observable market data. The Company uses inputs such as actual trade data, benchmark yields, broker/dealer quotes, and other similar data, which are obtained from quoted market prices, independent pricing vendors, or other sources, to determine the ultimate fair value of these assets and liabilities. The Company uses such pricing data as the primary input to make its assessments and determinations as to the ultimate valuation of its investment portfolio and has not made, during the periods presented, any material adjustments to such inputs. As of March 31, 2023, the Notes represented a Level 3 measurement with an outstanding principal amount of $56.6 million, and a fair value of $16.9 million. As of December 31, 2022, the Notes represented a Level 2 measurement with an outstanding principal amount of $56.6 million, and a fair value of $51.9 million. See Note 9, Convertible Notes for further detail on the Notes. As of March 31, 2023 and December 31, 2022, the Company’s Secured Notes represented a Level 3 measurement with a fair value of $6.2 million and $16.0 million, respectively. See Note 10, Long-Term Debt Related-Party for further detail on the Secured Note.
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INVESTMENTS |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENTS | NOTE 5. INVESTMENTS The following tables summarize the Company’s debt securities classified as available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands):
The following table summarizes the maturities of the Company’s debt securities classified as available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands):
There were no proceeds from sales of debt securities available-for-sale (including principal paydowns) for the three months ended March 31, 2023 and 2022. The Company determines gains and losses of marketable securities based on specific identification of the securities sold. There were no material realized gains or losses from debt securities available-for-sale for the three months ended March 31, 2023 and 2022. No material balances were reclassified out of accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022. No unrealized losses on debt securities available-for-sale have been recognized in income for the three months ended March 31, 2023 and 2022, as the issuers of such securities held by us were of high credit quality. As of March 31, 2023, there were five single issuers of debt securities classified as available-for-sale investments with an amount greater than 10%, which ranged from $0.2 million to $0.3 million per holding. As of March 31, 2023 the Company did not carry any debt securities available-for-sale that were below the Company's minimum credit rating. All debt securities available-for-sale had a credit rating of A- or better as of March 31, 2023. Equity securities are comprised of investments in mutual funds. The fair value of equity securities for each of the periods ended March 31, 2023 and December 31, 2022 was $1.0 million and $0.9 million, respectively. Unrealized gains or losses on equity securities recorded in income during the three months ended March 31, 2023 and 2022 were as follows (in thousands):
These unrealized gains or losses are recorded as a component of other income (expense), net. There were no realized gains or losses from equity securities for each of the three months ended March 31, 2023 and 2022.
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INVENTORY |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORY | NOTE 6. INVENTORY Inventories consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
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PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | NOTE 7. PROPERTY AND EQUIPMENT Property and equipment consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
Depreciation expense for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Instruments at cost and accumulated depreciation where the Company is the lessor under operating leases consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
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DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS | NOTE 8. DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS Deferred revenue consists of amounts received for products or services not yet delivered or earned. If we anticipate revenue will not be earned within the following twelve months, the amount is reported as other non-current liabilities. A summary of the balances as of March 31, 2023 and December 31, 2022 follows (in thousands):
We recognized $0.2 million of revenues that were included in the beginning contract liabilities balances for each of the three months ended March 31, 2023 and March 31, 2022. No material amount of revenue recognized during the period was from performance obligations satisfied in prior periods. Transaction Price Allocated to Remaining Performance Obligations As of March 31, 2023, $7.0 million of revenue is expected to be recognized from remaining performance obligations. This balance primarily relates to product shipments for reagents sold to customers under sales-type lease agreements. These agreements have between two and four year terms and revenue is recognized as product is shipped, typically on a straight-line basis. The remaining balance relates to executed service contracts that begin as warranty periods expire. These service contracts typically provide for four-year terms and revenue is recognized on a straight-line basis. The Company elects not to disclose the value of unsatisfied performance obligations for (i) contracts with an expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed.
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CONVERTIBLE NOTES |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE NOTES | NOTE 9. CONVERTIBLE NOTES On March 27, 2018, the Company issued $150.0 million aggregate principal amount of 2.50% Senior Convertible Notes due 2023. In connection with the offering of the Notes, the Company granted the initial purchasers of the Notes a 13-day option to purchase up to an additional $22.5 million aggregate principal amount of the Notes on the same terms and conditions. On April 4, 2018 the option was partially exercised, which resulted in $21.5 million of additional proceeds, for total proceeds of $171.5 million. The Notes matured on March 15, 2023 (the “Maturity Date”) and became due and payable. The Company incurred issuance costs related to the issuance of the Notes which was amortized over the five-year contractual term of the Notes using the effective interest method. The effective interest rate on the Notes, including accretion of the Notes to par was 3.2%. The Notes include customary terms and covenants, including certain events of default upon which the Notes may be due and payable immediately. Holders had the option to convert the Notes in multiples of $1,000 principal amount at any time prior to December 15, 2022, but only in the following circumstances: •if the Company’s stock price exceeds 130% of the conversion price for 20 of the last 30 trading days of any calendar quarter after June 30, 2018; •during the 5 business day period after any 5 consecutive trading day period in which the Notes’ trading price is less than 98% of the product of the common stock price times the conversion rate; or •the occurrence of certain corporate events, such as a change of control, merger or liquidation. At any time on or after December 15, 2022, a holder could have converted its Notes in multiples of $1,000 principal amount. Holders of the Notes who convert their Notes in connection with a make-whole fundamental change (as defined in the Indenture) were, under certain circumstances, entitled to an increase in the conversion rate. In addition, in the event of a fundamental change or event of default prior to the Maturity Date, holders, subject to certain conditions, had the right, at their option, to require the Company to repurchase for cash all or part of the Notes at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest up to, but excluding, the repurchase date. As of March 31, 2023, $56.6 million aggregate principal amount of the Notes were outstanding and are no longer convertible pursuant to their original terms. None of the Notes converted prior to the Maturity Date. As of March 31, 2023, the Company carried $0.7 million of accrued interest which was payable on March 15, 2023. Forbearance Agreement On March 9, 2023, the Company entered into the Forbearance Agreement, which became effective on March 13, 2023, with the Ad Hoc Noteholder Group holding approximately 85% of the Company’s outstanding Notes, the Trustee and any other owner of the Notes who executes and delivers to the Company a joinder to the Forbearance Agreement (collectively with the Trustee and Ad Hoc Noteholder Group, the “Counterparties”). Pursuant to the Forbearance Agreement, the members of the Ad Hoc Noteholder Group agreed, and directed the Trustee, to forbear from exercising their rights and remedies under the Indenture in connection with certain events of default under the Indenture, such as (i) failure to timely pay in full the principal of any Note when due and payable on March 15, 2023, (ii) failure to pay any interest on any Note when due and payable, (iii) failure to convert any Notes, (iv) default under any agreement with outstanding indebtedness for money borrowed in excess of $15.0 million and (v) any other breach, default or event of default under the Indenture arising from the failure of the Company to timely pay in full the principal of any Note when due and payable on the Maturity Date. The Forbearance Agreement was initially effective for the period commencing on March 13, 2023 and ending on March 29, 2023, which was subsequently extended by the parties to April 21, 2023. The notes associated with the remaining approximately 15% of holders that did not join the Ad Hoc Noteholder Group is considered in default as of March 31, 2023. The holders of the Notes that joined the Forbearance Agreement received a fee (the “Forbearance Premium”) equal to $5.00 per $1,000 principal amount of Notes held by such party, by executing and delivering a joinder to the Forbearance Agreement to the Company. As of March 31, 2023 the Ad Hoc Noteholder Group held $48.3 million aggregate principal amount of the Notes and received $0.2 million in Forbearance Premiums. As of March 31, 2023, holders of $8.3 million aggregate principal amount of the Notes had not joined the Ad Hoc Noteholder Group and did not receive a Forbearance Premium. The Forbearance Premium of $0.2 million paid during the three months ended March 31, 2023 was capitalized and amortized to expense for the period commencing on March 13, 2023 through March 29, 2023. Restructuring Support Agreement On April 21, 2023, the Company entered into the Restructuring Support Agreement with certain holders of the Notes, the holder of the Secured Note and the holders of the Company’s Series A Preferred Stock to negotiate in good faith to effect the restructuring of the Company’s capital structure, including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement, as an Out-of-Court Restructuring. See Note 19, Subsequent Events for additional information. The carrying value of the Notes at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):
At March 31, 2023 and December 31, 2022 the Notes were classified as follows (in thousands):
Interest expense during the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Gain on extinguishment of exchanged Notes during the three months ended March 31, 2023 and 2022 was as follows (in thousands):
March 2022 Exchange Transaction On March 21, 2022, the Company entered into a privately negotiated exchange agreement (the “March 2022 Exchange Agreement”) with a holder of the Notes. Under the terms of the March 2022 Exchange Agreement, the note holder agreed to exchange with the Company $14.0 million in aggregate principal amount of Notes held by it in eight equal tranches as follows for each tranche: (a) 22.64 shares per $1,000 principal amount of Notes exchanged, plus (b) an additional number of shares of the Company’s common stock per $1,000 principal amount of Notes exchanged equal to the sum, for each of the trading days during a separate agreed upon reference period for each tranche commencing on March 21, 2022 for the first tranche, of the quotient of (i) $155.67 divided by (ii) the daily volume-weighted average price for such trading day (collectively, the “Exchange Transaction”). The closing of the Exchange Transaction occurred in eight tranches (“Obligation to Exchange”), with the first closing occurring on March 29, 2022. The remaining seven tranches closed during the three months ended June 30, 2022. On March 21, 2022 the Obligation to Exchange the $14.0 million of Notes was accounted for as an extinguishment and was replaced by new notes with an embedded feature (the “New Exchange Notes”). The New Exchange Notes were elected to be carried using the fair value option. The New Exchange Notes are recorded at fair value on initial measurement and remeasured at fair value (“mark to market”) at each reporting period with changes in fair value reported in other income and expense, net. This fair value election is exclusive to the New Exchange Notes and does not extend to other Notes. On March 21, 2022, the New Exchange Notes were determined to have a fair value of $11.5 million. The fair value of the New Exchange Notes was determined using a common share price of $1.86 per share, applied using the settlement method described above. After giving effect for all mark to market adjustments during the three months ended March 31, 2022, the total net mark to market gain on extinguishment was $2.9 million. On March 29, 2022, the holder of the New Exchange Notes legally exchanged approximately $1.8 million (the “Exchanged Principal”) in aggregate principal amount of New Exchange Notes held by the holder for 849,713 shares of the Company’s common stock pursuant to the March 2022 Exchange Agreement. The legal exchange of the New Exchange Notes resulted in an additional gain of $0.5 million. Using the closing stock price on March 29, 2022 of $1.48, the 849,713 shares of the Company's common stock were determined to have a value of $1.3 million, which was recorded to contributed capital during the three months ended March 31, 2022. The total net gain recorded during the three months ended March 31, 2022 was $3.4 million. This gain was comprised of mark to market adjustments during the period and a legal exchange of the New Exchange Notes. Closing of Prepaid Forward In connection with the offering of the Notes, we entered into a prepaid forward stock repurchase transaction (the “Prepaid Forward”) with a financial institution. Pursuant to the Prepaid Forward, we used approximately $45.1 million of the proceeds from the offering of the Notes to pay the prepayment amount. The aggregate number of our common stock underlying the Prepaid Forward is approximately 1,858,500 shares (based on the sale price of $24.25). On March 24, 2023, 1,858,500 shares of common stock were returned to the Company pursuant to our agreement with the counterparty. As of March 31, 2022, these shares purchased under the Prepaid Forward were treated as treasury stock on the condensed consolidated balance sheet (and not outstanding for purposes of the calculation of basic and diluted earnings per share), but remain outstanding for corporate law purposes, including for purposes of any future stockholders’ votes. Fair Value of the Notes As of December 31, 2022, the Notes were instruments measured at fair value using Level 2 inputs, as the Notes were traded on an active market with observable inputs. The estimated fair value of the Notes at December 31, 2022 was $51.9 million. At March 31, 2023, the fair value of the Notes are determined based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The Company used the Probability-Weighted Expected Return Method (“PWERM”) to value the Notes. This approach involved the estimation of future potential outcomes for the Company, as well as values and probabilities associated with each respective potential outcome, which consisted of the probability of the Notes remaining outstanding until the maturity date of the Forbearance Agreement and the probability of default on the Notes. The Company calculated the present value of the Notes payoff on the maturity date using the estimated effective interest rate of the Notes. Key assumptions used in the calculation included a discount rate of 27.6%. After taking into consideration the PWERM of this scenario, the Company arrived at the estimated fair value of the Notes of $16.9 million as of March 31, 2023. See Note 4, Fair Value of Financial Instruments for additional information.
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LONG-TERM DEBT RELATED-PARTY |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LONG-TERM DEBT RELATED-PARTY | NOTE 10. LONG-TERM DEBT RELATED-PARTY On August 15, 2022, the Company entered into an exchange agreement (the “August 2022 Exchange Agreement”) with the Jack W. Schuler Living Trust (the “Schuler Trust”). Jack Schuler, who serves as a member of the Company’s board of directors, is the sole trustee of the Schuler Trust. Under the terms of the August 2022 Exchange Agreement, the Schuler Trust agreed to exchange with the Company $49.9 million in aggregate principal amount of Notes held by it for (a) the Secured Note in an aggregate principal amount of $34.9 million and (b) a warrant to acquire the Company’s common stock at an exercise price of $2.12 per share (the “Warrant”). The Secured Note has a scheduled maturity date of August 15, 2027 and is repayable upon written demand at any time on or after such date. The Company may, at its option, repay the Secured Note in (i) cash or (ii) in the form of common stock of the Company, in a number of shares that is obtained by dividing the total amount of such payment by $2.12. The Secured Note bears interest at a rate of 5.0% per annum, payable at the option of the Company in the same form, at the earlier of (i) any prepayment of principal and (ii) maturity. The Company may prepay the Secured Note at any time without premium or penalty. The Secured Note is secured by substantially all of the assets of the Company, subject to customary exceptions and limitations, pursuant to a security agreement, dated as of August 15, 2022. The Secured Note does not restrict the incurrence of future indebtedness by the Company but shall become subordinated in right of payment and lien priority upon the request of any future senior lender. On August 15, 2022, the transaction qualified as an extinguishment of debt. Under extinguishment accounting, the Notes exchanged by the Schuler Trust were derecognized and the new instruments were issued, which include the Secured Note and the Warrant, were recorded at their fair values. The estimated fair value of the Secured Note on August 15, 2022 was $16.0 million. This valuation estimated an issuance discount of $18.9 million. The effective interest rate on the Secured Note is 24.60%. The carrying value of the Secured Note at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):
Interest expense in connection with the Secured Note during the three months ended March 31, 2023 and 2022 was as follows (in thousands):
The Secured Note’s carrying amount of $17.4 million and accrued interest expense of $1.1 million are recorded in non-current liabilities on the Company’s condensed consolidated balance sheet as of March 31, 2023. Neither the principal amount nor the accrued interest are contractually payable within twelve months of the balance sheet date of March 31, 2023. The Secured Note’s interest is payable at the option of the Company in the same form as the principal, at the earlier of (i) any prepayment of principal and (ii) maturity. It is the Company’s intention to pay all interest at maturity. No principal or accrued interest under the Secured Note have been paid or shares issued as of March 31, 2023. The following presents maturities of future principal and accrued interest obligations of the Secured Note as of March 31, 2023 (in thousands):
If the Company were to make a first and final interest payment on the maturity date of August 15, 2027, the interest payable amount would be $9.9 million. Fair Value of the Secured Notes The Secured Note is an instrument measured at fair value using Level 3 inputs. The estimated fair value of the Secured Note on March 31, 2023 and December 31, 2022 was $6.2 million and $16.0 million, respectively. The fair value of the Secured Note was estimated using a Monte Carlo simulation which simulated the share price of the Company over the remaining term through the Secured Note’s maturity date. The simulated per-share price in a given iteration determined if the Company settled in cash or shares, and the mean present value of the iterations was concluded as the estimated fair value. The table below summarizes the significant assumptions and inputs used to estimate the fair value of the Secured Note as of March 31, 2023 and December 31, 2022:
See Note 4, Fair Value of Financial Instruments for additional information. Warrant The Warrant may be exercised from February 15, 2023 through the earlier of (i) August 15, 2029 and (ii) the consummation of certain acquisition transactions involving the Company, as set forth in the Warrant. The Warrant is exercisable for up to 2,471,710 shares of common stock. The Warrant meets the criteria for classification in stockholders’ equity and was recorded in equity and initially measured at fair value. Restructuring Support Agreement On April 21, 2023, the Company entered into the Restructuring Support Agreement with certain holders of the Notes, the holder of the Secured Note and the holders of the Company’s Series A Preferred Stock to negotiate in good faith to effect the restructuring of the Company’s capital structure, including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement, as an Out-of-Court Restructuring. See Note 19, Subsequent Events for additional information.
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LOSS PER SHARE |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOSS PER SHARE | NOTE 11. LOSS PER SHARE Basic net loss per common share was determined by dividing net loss applicable to common stockholders by the weighted average common shares outstanding during the period. Basic and diluted net loss per share are the same because all outstanding common stock equivalents have been excluded, as they are anti-dilutive due to the Company’s losses. The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect for each of the three months ended March 31, 2023 and 2022 (in thousands):
Potentially dilutive common shares also include the following: Series A Preferred Stock Potentially dilutive common shares include common shares that would be outstanding if Series A Preferred Stock were converted into common stock. Each share of Series A Preferred Stock is convertible, at the option of the holder, at any time into one share of the Company’s common stock. Additionally, each share of Series A Preferred Stock will automatically be converted into one share of the Company’s common stock immediately upon a sale of all outstanding stock of the Company or a merger of the Company into another corporation where the pre- merger Company’s stockholders cease to be the controlling stockholders of the post-merger corporation. The number of shares of common stock issuable upon conversion of the Series A Preferred Stock is 3,954,546 as of March 31, 2023. The shares issuable upon conversion of the Series A Preferred Stock were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses. March 2022 Securities Purchase Agreement As discussed in Note 17, Stockholders' Equity, the Company entered into the March 2022 Securities Purchase Agreement with the Schuler Trust for the issuance and sale by the Company of an aggregate of 2,439,024 shares of the Company’s common stock. The shares to be issued from this agreement were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses. Secured Note As discussed in Note 10, Long-Term Debt Related-Party, the Company may, at its option, repay the Secured Note in (i) cash or (ii) in the form of common stock of the Company, in a number of shares that is obtained by dividing the total amount of such payment by $2.12. Additionally, the Secured Note bears interest at a rate of 5.0% per annum, payable at the option of the Company in the same form, at the earlier of (i) any prepayment of principal and (ii) maturity. The number of shares of common stock issuable upon conversion of the Secured Note and accrued interest was approximately 16,478,066 and 520,951 shares respectively, as of March 31, 2023. The shares issuable in connection with a repayment of the Secured Note or payment of accrued interest were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect due to net losses. See Note 19, Subsequent Events for additional information about the contemplated restructuring of the Company’s capital structure, including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement, in connection with the Restructuring Support Agreement.
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EMPLOYEE EQUITY-BASED COMPENSATION |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EMPLOYEE EQUITY-BASED COMPENSATION | NOTE 12. EMPLOYEE EQUITY-BASED COMPENSATION The following table summarizes option activity under the Company's equity-based compensation plans for the three months ended March 31, 2023:
The following table shows summary information for outstanding options and options that are exercisable (vested) as of March 31, 2023:
The following table summarizes RSU and restricted stock award activity for the three months ended March 31, 2023:
The table below summarizes equity-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands):
Equity-based compensation expense decreased for the three months ended March 31, 2023 when compared to the three months ended March 31, 2022, primarily due to the reversal of equity-based compensation expense from forfeitures. Employees separating from the Company forfeited an increased number of stock options and RSUs than in the previous period. The table below summarizes share-based compensation cost capitalized to inventory for the three months ended March 31, 2023 and 2022 (in thousands):
As of March 31, 2023, unrecognized equity-based compensation expense related to unvested stock options and unvested RSUs was $1.2 million and $3.3 million, respectively. This is expected to be recognized over the years 2023 through 2027. Included in the above-noted RSU and restricted stock award outstanding amounts are performance-based RSUs which vest only upon the achievement of certain targets. Performance-based RSUs contingently vest over a period of 1 to 3 years, depending on the nature of the performance goal, and have contractual lives of 10 years. These units were valued in the same manner as other RSUs, based on the published closing market price on the day before the grant date. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options. During 2021, the Company granted performance-based RSUs of which 103,299 were outstanding as of March 31, 2023. No activity occurred during the three months ended March 31, 2023, and the targets associated with the performance-based RSUs are not considered probable of being achieved. No share-based compensation cost was recorded for the performance-based RSUs for the three months ended March 31, 2023 and 2022.
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INCOME TAXES |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 13. INCOME TAXES For the three months ended March 31, 2023, the Company did not carry an income tax provision amount as the Company does not recognize tax benefits from current year tax losses in the U.S. and other foreign jurisdictions. The Company’s tax expense for the three months ended March 31, 2023 differs from the tax expense computed by applying the U.S. statutory tax rate to its year-to-date pre-tax loss of $16.8 million, as no tax benefits were recorded for tax losses generated in the U.S. and other foreign jurisdictions due to the valuation allowance. At March 31, 2023, the Company had deferred tax assets primarily related to U.S. federal and state tax loss carryforwards and a deferred tax liability related to amortization of the Notes. The Company provided a valuation allowance against its net deferred tax assets as future realization of such assets is not more likely than not to occur. The Company accounts for uncertain tax positions pursuant to the recognition and measurement criteria under ASC 740, Income Taxes. For the three months ended March 31, 2023, we did not note any significant changes to our uncertain tax positions. We do not anticipate significant changes to uncertain tax positions within the next 12 months.
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COMMITMENTS |
3 Months Ended |
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Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS | NOTE 14. COMMITMENTS During April 2022, the Company entered into a non-cancellable purchase obligation with a supplier to acquire raw materials for a total commitment of $11.9 million. Under the terms of this agreement the Company has until March 15, 2027 to take delivery of purchased items. This commitment was entered into to ensure proper material quantities to develop and commercialize our next generation AST platform. As of March 31, 2023, the commitment remains $11.9 million as the Company has not taken delivery of any inventory.
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LEASES |
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Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LEASES | NOTE 15. LEASES The following presents supplemental information related to our leases in which we are the lessee for the three months ended March 31, 2023 and 2022 (in thousands):
The weighted average remaining lease term on our operating leases is 2.3 years. The weighted average discount rate on those leases is 7.1%. The weighted average remaining lease term on our finance leases is 1.9 years. The weighted average discount rate on those leases is 6.2%. The following presents maturities of lease liabilities in which we are the lessee as of March 31, 2023 (in thousands):
The net investment in sales-type leases, where we are the lessor, is a component of other current assets and other non-current assets in our condensed consolidated balance sheet. As of March 31, 2023, the total net investment in these leases was $2.4 million. The following presents maturities of lease receivables under sales-type leases as of March 31, 2023 (in thousands):
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LEASES | NOTE 15. LEASES The following presents supplemental information related to our leases in which we are the lessee for the three months ended March 31, 2023 and 2022 (in thousands):
The weighted average remaining lease term on our operating leases is 2.3 years. The weighted average discount rate on those leases is 7.1%. The weighted average remaining lease term on our finance leases is 1.9 years. The weighted average discount rate on those leases is 6.2%. The following presents maturities of lease liabilities in which we are the lessee as of March 31, 2023 (in thousands):
The net investment in sales-type leases, where we are the lessor, is a component of other current assets and other non-current assets in our condensed consolidated balance sheet. As of March 31, 2023, the total net investment in these leases was $2.4 million. The following presents maturities of lease receivables under sales-type leases as of March 31, 2023 (in thousands):
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GEOGRAPHIC AND REVENUE DISAGGREGATION |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GEOGRAPHIC AND REVENUE DISAGGREGATION | NOTE 16. GEOGRAPHIC AND REVENUE DISAGGREGATION The Company operates as one operating segment. Sales to customers outside the U.S. represented 14% and 15% for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, balances due from foreign customers, in U.S. dollars, were $0.7 million and $0.6 million, respectively. The following presents total net sales by geographic territory for the three months ended March 31, 2023 and 2022 (in thousands):
The following presents total net sales by line of business for the three months ended March 31, 2023 and 2022 (in thousands):
The following presents total net sales by products and services for the three months ended March 31, 2023 and 2022 (in thousands):
Lease revenue included in net sales was $0.2 million and $0.5 million for the three months ended March 31, 2023 and 2022, respectively. The following presents property and equipment, net by geographic territory (in thousands):
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STOCKHOLDERS' EQUITY |
3 Months Ended |
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Mar. 31, 2023 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 17. STOCKHOLDERS' EQUITY March 2022 Exchange Transaction On March 29, 2022, the holder of the New Exchange Notes legally exchanged approximately $1.8 million in aggregate principal amount of New Exchange Notes held by the holder for 849,713 shares of the Company’s common stock pursuant to the March 2022 Exchange Agreement. Using the closing stock price on March 29, 2022 of $1.48, the 849,713 shares of the Company's common stock were determined to have a value of $1.3 million, which was recorded to contributed capital during the three months ended March 31, 2022. See Note 9, Convertible Notes for additional information. March 2022 Securities Purchase Agreement On March 24, 2022, the Company entered into a securities purchase agreement (the “March 2022 Securities Purchase Agreement”) with the Schuler Trust for the issuance and sale by the Company of an aggregate of 2,439,024 shares of the Company’s common stock to the Schuler Trust in an offering (the “Private Placement”) exempt from registration pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder. Pursuant to the March 2022 Securities Purchase Agreement, the Schuler Trust agreed to purchase the shares at a purchase price (determined in accordance with Nasdaq rules relating to the “market value” of the Company’s common stock) of $1.64 per share, for an aggregate purchase price of $4.0 million. The Company and the Schuler Trust agreed to extend the closing date of the Private Placement from March 24, 2023 to April 20, 2023, which was further extended in accordance with the terms of the Restructuring Support Agreement. See Note 19, Subsequent Events for additional information about the contemplated restructuring of the Company’s capital structure, including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement , in connection with the Restructuring Support Agreement.
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RELATED-PARTY TRANSACTIONS |
3 Months Ended |
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Mar. 31, 2023 | |
Related Party Transactions [Abstract] | |
RELATED-PARTY TRANSACTIONS | NOTE 18. RELATED-PARTY TRANSACTIONS March 2022 Securities Purchase Agreement As discussed in Note 17, Stockholders' Equity, on March 24, 2022, the Company entered into the March 2022 Securities Purchase Agreement with the Schuler Trust for the issuance and sale by the Company of 2,439,024 shares of the Company’s common stock. Jack Schuler serves as a member of the Company’s board of directors and is the sole trustee of the Schuler Trust. Pursuant to the March 2022 Securities Purchase Agreement, the Schuler Trust agreed to purchase the shares at a purchase price of $1.64 per share, for an aggregate purchase price of $4.0 million. August 2022 Exchange Transaction As discussed in Note 10, Long-Term Debt Related-Party, on August 15, 2022, the Company entered into the August 2022 Exchange Agreement with the Schuler Trust. Jack Schuler serves as a member of the Company’s board of directors and is the sole trustee of the Schuler Trust. Under the terms of the August 2022 Exchange Agreement, the Schuler Trust agreed to exchange with the Company $49.9 million in aggregate principal amount of Notes held by it for the Secured Note in an aggregate principal amount of $34.9 million and the Warrant. The Secured Note’s carrying amount is $17.4 million and accrued interest expense is $1.1 million. The Secured Note’s interest is payable at the option of the Company in the same form as the principal, at the earlier of (i) any prepayment of principal and (ii) maturity. It is the Company’s intention to pay all interest at maturity. No principal or accrued interest under the Secured Note have been paid or shares issued as of March 31, 2023. See Note 19, Subsequent Events for additional information about the contemplated restructuring of the Company’s capital structure, including the Notes, the Secured Note and the Company’s Series A Preferred Stock, as well as a contemplated amendment to the March 2022 Securities Purchase Agreement, in connection with the Restructuring Support Agreement.
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SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 19. SUBSEQUENT EVENTS The Company evaluates events that have occurred after the balance sheet date but before the financial statements are issued. Restructuring Support Agreement On April 21, 2023, the Company entered into the Restructuring Support Agreement with (i) certain holders of the Notes (together with holders that subsequently execute a Joinder or Transferee Agreement (each as defined in the Restructuring Support Agreement, the “Consenting Noteholders”), (ii) the holder (together with any holders that subsequently execute a Transferee Agreement, the “Consenting Senior Secured Lenders”) of claims arising from the Secured Note (the “Senior Secured Claims”) and (iii) the holders (together with any holders that subsequently execute a Transferee Agreement the “Consenting Preferred Shareholders,” and collectively with the Consenting Noteholders and Consenting Senior Secured Lenders, the “Consenting Stakeholders”) of the Company’s Series A Preferred Stock (the “Existing Preferred Interests”). Pursuant to the transactions contemplated by the Restructuring Support Agreement, the Company will be relieved of approximately $92.2 million of outstanding indebtedness and will incur approximately $67.3 million of indebtedness in the form of New Senior Secured Convertible Notes (as defined below) which are expected to have a term of 3.5 years, in each case subject to increase on account of interest accrued from March 15, 2023, and will receive up to approximately $14 million of additional funding (plus up to an additional $20 million of equity funding pursuant to the additional securities purchase agreement referred below). These transactions are expected to result in the issuance of significant amounts of common Stock and securities convertible into significant amounts of common Stock as described below. On the Effective Date (as defined in the Restructuring Support Agreement), the Company expects to enter into the transactions described in this paragraph pursuant to the Restructuring Support Agreement. The Company expects to issue approximately $57.3 million aggregate principal amount of New Senior Secured Convertible Notes to the Consenting Noteholders in exchange for a like aggregate amount of the outstanding existing Notes (plus additional New Senior Secured Convertible Notes in respect of interest accrued on the from March 15, 2023). Separately, subject to agreed allocations, certain Consenting Noteholders have committed to purchase $10 million of additional New Senior Secured Convertible Notes, in the aggregate. The New Senior Secured Convertible Notes are expected to have a term of 3.5 years and would be convertible at the election of the holder into up to approximately 93.5 million shares of Company’s common stock (without giving effect to interest accrued on the Notes since March 15, 2023) at a conversion price of approximately $0.72 per share and would bear interest at a rate of 5% per annum, payable in kind. Interest on the New Senior Secured Convertible Notes would be convertible into up to approximately 18.0 million shares of the Company’s common stock if held to maturity. The conversion price is subject to adjustment based on the difference between the 31 to 90 day volume-weighted average price, subject to a cap of $0.83 per share. The foregoing amounts are based on the amount of principal and accrued but unpaid interest on the Notes as of March 15, 2023 and the final amounts will be adjusted based on interest accrued on the Notes after March 15, 2023. Pursuant to the Restructuring Support Agreement, the Senior Secured Claims in the aggregate principal amount of $35.9 million (inclusive of accrued interest) would be converted into the Company’s common stock at a price of $1.06 per share or approximately 34.0 million shares valued at $1.06 per share and the Existing Preferred Interests would be converted into 3,954,546 shares of the Company’s common stock. Also pursuant to the Restructuring Support Agreement, the Company would enter into an amendment to the March 2022 Securities Purchase Agreement that it entered into with the Schuler Trust in March 2022. Pursuant to this amendment, the Company would issue approximately 5.0 million shares of the Company’s common stock valued at $0.82 per share to the Schuler Trust for proceeds of $4.0 million, with the closing date under the March 2022 Securties Purchase Agreement also being extended to the effective date. Also pursuant to the Restructuring Support Agreement, the Company would enter into an additional securities purchase agreement with the Schuler Trust that would require the Schuler Trust at the Company’s option to either purchase approximately 14.0 million shares of common stock from the Company for aggregate proceeds of $10.0 million or to backstop a public offering by the Company of common stock at market prices for proceeds of $10.0 million. If other investors purchase $10 million of common stock in the public offering, the Schuler Trust will have the right, but not the obligation, to purchase up to $10 million of additional shares of common stock at the public offering price for the backstopped offering. The Company and the Consenting Stakeholders agreed to negotiate in good faith to effect the Restructuring Transactions as an Out-of-Court Restructuring. The Consenting Noteholders party to the Restructuring Support Agreement held 91% in aggregate principal amount of the Notes as of April 21, 2023. In connection with the Out-of-Court Restructuring, holders of no less than 99% (the “Consent Condition Milestone”) in principal amount of the outstanding Notes must agree to exchange their existing Notes for a like aggregate amount of senior secured convertible notes (“New Senior Secured Convertible Notes”). In the event that the requisite consents for the Out-of-Court Restructuring are not obtained by the date provided for in the Restructuring Support Agreement, the Company and Consenting Stakeholders have agreed to consummate the Restructuring Transactions pursuant to a pre-packaged plan of reorganization under chapter 11 of the U.S. Bankruptcy Code. The Restructuring Support Agreement may be mutually terminated by the Company and certain Consenting Stakeholders by written agreement. The Restructuring Support Agreement will automatically terminate immediately upon (a) the date that is 10 days after any third party files involuntary bankruptcy petitions in respect of the Company unless such petitions have been dismissed or (b) the consummation of the Restructuring Transactions on the terms and conditions set forth in the Restructuring Support Agreement. The Company and the Consenting Stakeholders each have termination rights if certain conditions are not met. In connection with the Restructuring Support Agreement and the transactions contemplated thereby, on April 14, 2023, the Company’s board of directors approved an amendment to the Company’s Certificate of Incorporation to increase the total number of authorized shares of the Company’s capital stock to 455,000,000 shares, of which 450,000,000 shares are to be designated as common stock and 5,000,000 shares are to be designated as preferred stock. The adoption of this amendment is subject to the consent of the stockholders of the Company. The Company filed a Preliminary Proxy Statement on April 21, 2023 and a Definitive Proxy Statement on May 1, 2023 (the “Proxy Statement”) seeking stockholder approval of the amendment in order to enable the Company to restructure the Company’s outstanding Notes, including to be able to reserve for issuance shares of common stock that would underlie the New Senior Secured Convertible Notes to be issued in connection with the restructuring. In the Proxy Statement, the Company is also seeking stockholder approval prior to the issuance of the Company’s common stock or securities convertible or exercisable into common stock in connection with the restructuring in accordance with the NASDAQ Listing Rule 5635(d). These proposals in the Proxy Statement provide additional details concerning the transactions contemplated by the Restructuring Support Agreement. On May 12, 2023, the Company and the Consenting Noteholders agreed to extend the Consent Condition Milestone to no later than 11:59 P.M. (Eastern Daylight Time) on May 16, 2023.
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ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 31, 2023. The condensed consolidated balance sheet as of December 31, 2022 included herein was derived from the audited financial statements as of that date but does not include all disclosures such as notes required by U.S. GAAP. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods presented, but are not necessarily indicative of the results of operations to be anticipated for the entire year ending December 31, 2023, or any future period. All amounts are rounded to the nearest thousand dollars unless otherwise indicated.
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Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries after elimination of intercompany transactions and balances.
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Use of Estimates | Use of Estimates The preparation of the Company’s condensed consolidated financial statements requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and the related disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to accounts receivable, inventory, property and equipment, accrued liabilities, warranty liabilities, convertible notes, notes from related parties, tax valuation accounts, equity-based compensation, warrants, revenue and leases. Actual results could differ materially from those estimates.
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Estimated Fair Value of Financial Instruments | Estimated Fair Value of Financial Instruments The Company follows ASC 820, Fair Value Measurement, which has defined fair value and requires the Company to establish a framework for measuring and disclosing fair value. The framework requires the valuation of assets and liabilities subject to fair value measurements using a three-tiered approach and fair value measurement be classified and disclosed in one of the following three categories: •Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; •Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; •Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e. supported by little or no market activity). The carrying amounts of financial instruments such as cash and cash equivalents, trade accounts receivable, prepaid expenses, other current assets, accounts payable, accrued liabilities, and other current liabilities approximate the related fair values due to the short-term maturities of these instruments. See Note 4, Fair Value of Financial Instruments, for further information and related disclosures regarding the Company’s fair value measurements. As of March 31, 2023, the Notes are instruments measured at fair value using Level 3 inputs. The Notes matured on March 15, 2023 and became due and payable on such date. As of March 31, 2023 the Notes were no longer traded on an active market with observable inputs which resulted in the Notes being reclassified from a Level 2 measurement to a Level 3 measurement. As of December 31, 2022, the Notes were instruments measured at fair value using Level 2 inputs, as the Notes were traded on an active market with observable inputs. See Note 9, Convertible Notes for further detail on the Notes. The long-term debt with a related-party consisting of the Secured Note are instruments measured at fair value using Level 3 inputs and was initially measured at fair value using Level 3 inputs. As of March 31, 2023, the debt is measured at amortized cost and the fair value is only disclosed. See Note 10, Long-Term Debt Related-Party for further detail on the Secured Note.
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Cash and Cash Equivalents | Cash and Cash Equivalents All highly liquid investments with an original maturity of three months or less at time of purchase are considered to be cash equivalents. Cash and cash equivalents include overnight repurchase agreement accounts and other investments. As part of the Company’s cash management process, excess operating cash is invested in overnight repurchase agreements with its bank. Repurchase agreements and other investments classified as cash and cash equivalents are not deposits and are not insured by the U.S. Government, the FDIC or any other government agency and involve investment risk including possible loss of principal. Notwithstanding the possibility of bank failures, we believe that as a result of the Company’s selected banks, diversified holdings strategy, and the U.S. Government’s continued support to stabilize the banking system, such as steps taken in March 2023 as a result of bank failures, that the market risk arising from holding these financial instruments is minimal.
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Investments | Investments The Company invests in various debt and equity securities which are primarily held in the custody of major financial institutions. Debt securities consist of certificates of deposit, U.S. government and agency securities, commercial paper, and corporate notes and bonds. Equity securities consist of mutual funds. The Company records these investments in the condensed consolidated balance sheet at fair value. Unrealized gains or losses for debt securities available-for-sale are included in accumulated other comprehensive loss, a component of stockholders’ deficit. Unrealized gains or losses for equity securities are included in other income (expense), net, a component of condensed consolidated statements of operations and comprehensive loss. The Company considers all debt securities available-for-sale, including those with maturity dates beyond 12 months, as available to support current operational liquidity needs. The Company classifies its investments as current based on the nature of the investments and their availability for use in current operations. We perform an assessment to determine whether there have been any events or economic circumstances to indicate that a debt security available-for-sale in an unrealized loss position has suffered impairment as a result of credit loss or other factors. A debt security is considered impaired if its fair value is less than its amortized cost basis at the reporting date. If we intend to sell the debt security or if it is more-likely-than-not that we will be required to sell the debt security before the recovery of its amortized cost basis, the impairment is recognized and the unrealized loss is recorded as a direct write-down of the security's amortized cost basis with an offsetting entry to earnings. If we do not intend to sell the debt security or believe we will not be required to sell the debt security before the recovery of its amortized cost basis, the impairment is assessed to determine if a credit loss component exists. We use a discounted cash flow method to determine the credit loss component. In the event a credit loss exists, an allowance for credit losses is recorded in earnings for the credit loss component of the impairment while the remaining portion of the impairment attributable to factors other than credit loss is recognized, net of tax, in accumulated other comprehensive income (loss). The amount of impairment recognized due to credit factors is limited to the excess of the amortized cost basis over the fair value of the security.
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Inventory | Inventory Inventory is stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first-out method. The Company estimates the recoverability of inventory by reference to internal estimates of future demands and product life cycles, including expiration. The Company periodically analyzes its inventory levels to identify inventory that may expire prior to expected sale or has a cost basis in excess of its estimated realizable value and records a charge to expense for such inventory as appropriate. We charge cost of sales for inventory provisions to write-down our inventory to the lower of cost or net realizable value or for obsolete or excess inventory. Most of our inventory provisions relate to excess quantities of products, based on our inventory levels and future product purchase commitments compared to assumptions about future demand and market conditions. Once inventory has been written-off or written-down, it creates a new cost basis for the inventory that is not subsequently written-up.
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Accounts Receivable | Accounts Receivable Accounts receivable consist of amounts due to the Company for sales to customers and are based on what we expect to collect in exchange for goods and services. Receivables are considered past due based on the contractual payment terms and are written off if reasonable collection efforts prove unsuccessful. We maintain an allowance for credit losses for expected uncollectible accounts receivable, which is recorded as an offset to accounts receivable and changes in such are classified as general and administrative expense in the consolidated statements of operations. We assess collectibility by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis when we identify specific customers with known disputes or collectibility issues. In determining the amount of the allowance for credit losses, we consider historical collectibility and make judgments about the creditworthiness of customers based on credit evaluations. Our customers typically have good credit quality. We also consider customer-specific information, current market conditions and reasonable and supportable forecasts of future economic conditions to inform adjustments to historical loss data.
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Property and Equipment | Property and Equipment Property and equipment are recorded at cost. Maintenance and repairs are charged to expense as incurred and expenditures for major improvements are capitalized. Gains and losses from retirement or replacement are included in costs and expenses. Depreciation of property and equipment is computed using the straight-line method over the estimated useful life of the assets, ranging from to seven years. Leasehold improvements are depreciated over the remaining life of the lease or the life of the asset, whichever is less. Instruments Classified as Property and Equipment Property and equipment includes Accelerate Pheno systems (also referred to as instruments) used for sales demonstrations, instruments under rental agreements and instruments used for research and development. Depreciation expense for instruments used for sales demonstrations is recorded as a component of sales, general and administrative expense. Depreciation expense for instruments placed at customer sites pursuant to reagent rental agreements is recorded as a component of cost of sales. Depreciation expense for instruments used in our laboratory and research is recorded as a component of research and development expense. The Company retains title to these instruments and depreciates them over five years. Losses from the retirement of returned instruments are included in costs and expenses. The Company evaluates the recoverability of the carrying amount of its instruments whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable, and at least annually. This evaluation is based on our estimate of future cash flows and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of instruments. No impairment charges have been recorded for the three months ended March 31, 2023 and 2022.
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Long-lived Assets | Long-lived Assets Long-lived assets and certain identifiable intangibles to be held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company continuously evaluates the recoverability of its long-lived assets based on estimated future cash flows from and the estimated fair value of such long-lived assets, and provides for impairment if such undiscounted cash flows or the estimated fair value are insufficient to recover the carrying amount of the long-lived asset.
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Warranty Reserve | Warranty Reserve Instruments are typically sold with a one year limited warranty, while kits and accessories are typically sold with a sixty days limited warranty. Accordingly, a provision for the estimated cost of the limited warranty repair is recorded at the time revenue is recognized. Our estimated warranty provision is based on our estimate of future repair events and the related estimated cost of repairs. The Company periodically assesses the adequacy of the warranty reserve and adjusts the amount as necessary. The cost incurred for these provisions is included in cost of sales on the condensed consolidated statements of operations and comprehensive loss.
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Convertible Notes | Convertible Notes The Company follows Accounting Standards Update (“ASU”) 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). The Notes are accounted for as a single liability measured at their amortized cost. Interest expense is comprised of (1) cash interest payments, (2) amortization of any debt discounts or premiums based on the original offering, and (3) amortization of any debt issuance costs. Gain or loss on extinguishment of Notes is calculated as the difference between the (i) fair value of the consideration transferred and (ii) the sum of the carrying value of the debt at the time of repurchase.
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Revenue Recognition | Revenue Recognition The Company recognizes revenue when control of the promised good or service is transferred to its customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. Sales taxes are excluded from revenues. The Company determines revenue recognition through the following steps: •Identification of the contract with a customer •Identification of the performance obligations in the contract •Determination of the transaction price •Allocation of the transaction price to the performance obligations •Recognition of revenue as we satisfy a performance obligation Product revenue is derived from the sale or rental of instruments and sales of related consumable products. When an instrument is sold, revenue is generally recognized upon installation of the unit consistent with contract terms, which do not include a right of return. When a consumable product is sold, revenue is generally recognized upon shipment. Invoices are generally issued when revenue is recognized. Payment terms vary by the type and location of the customer and the products or services offered. The term between invoicing and when payment is due is not significant. Service revenue is derived from the sale of extended service agreements which are generally non-cancellable. This revenue is recognized on a straight-line basis over the contract term beginning on the effective date of the contract because the Company is standing ready to provide services. Invoices are generally issued annually and coincide with the beginning of individual service terms. The Company’s contracts with customers may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines relative standalone selling prices based on the price charged to customers for each individual performance obligation. Sales commissions earned by the Company’s sales force are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined these costs would have an amortization period of less than one year and has elected to recognize them as an expense when incurred. Contract asset opening and closing balances were immaterial for the three months ended March 31, 2023. Gross Profit and Gross Margin Gross profit consists of total revenue, net of allowances, less cost of sales. Cost of sales includes cost of materials, direct labor, equity-based compensation, facility and other manufacturing overhead costs for consumable tests and instruments sold to customers. Cost of sales for instruments also includes depreciation on revenue generating instruments that have been placed with our customers under a reagent rental agreement. Cost of sales includes repair and maintenance cost for instruments covered by a service agreement or instruments covered by a reagent rental agreement. Cost of sales also includes warranty related costs. The Company’s overall gross margin was 36% and 27% for the three months ended March 31, 2023 and 2022, respectively. The increase in gross margin is primarily due to reductions in costs to manufacture consumables. The Company’s gross margin also increased due to select instruments being sold to certain customers with more favorable than usual gross margins, which included instruments that were expensed in a previous year. The Company manufactures pre-launch inventory in advance of regulatory approval. This inventory is expensed before an economic benefit is probable. Pre-launch inventory sold to customers (not capitalized and expensed in a previous year) during each of the three months ended March 31, 2023 and 2022 was $0.1 million. Shipping and Handling Shipping and handling costs billed to customers are included as a component of revenue. The corresponding expense incurred with third party carriers is included as a component of sales, general and administrative costs on the consolidated statements of operations and comprehensive loss.
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Leases as Lessee | Leases The Company accounts for leases in accordance with ASC 842, Leases. The Company determines if an arrangement is or contains a lease and the type of lease at inception. The Company classifies leases as finance leases (lessee) or sales-type leases (lessor) when there is either a transfer of ownership of the underlying asset by the end of the lease term, the lease contains an option to purchase the asset that we are reasonably certain will be exercised, the lease term is for the major part of the remaining economic life of the asset, the present value of the lease payments and any residual value guarantee equals or substantially exceeds all the fair value of the asset, or the asset is of such a specialized nature that it will have no alternative use to the lessor at the end of the lease term. Payments contingent on future events (i.e. based on usage) are considered variable and excluded from lease payments for the purposes of classification and initial measurement. Several of our leases include options to renew or extend the term upon mutual agreement of the parties and others include one-year extensions exercisable by the lessee. None of our leases contain residual value guarantees, restrictions, or covenants. To determine whether a contract contains a lease, the Company uses its judgment in assessing whether the lessor retains a material amount of economic benefit from an underlying asset, whether explicitly or implicitly identified, which party holds control over the direction and use of the asset, and whether any substantive substitution rights over the asset exist. Leases as Lessee Operating leases are included in right-of-use (“ROU”) assets and corresponding lease liabilities, and finance leases are included in ROU assets and corresponding lease liabilities within our condensed consolidated balance sheets. These assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and their related liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Typically, we use our incremental borrowing rate based on the information available at commencement in determining the present value of lease payments. We use the implicit rate when readily determinable. ROU assets are net of lease payments made and exclude lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term, which may include options to extend or terminate the lease when it is reasonably certain that we will exercise the option. Our operating leases consist primarily of leased office, factory, and laboratory space in the U.S. and office space in Europe, have between and six-year terms, and typically contain penalizing, early-termination provisions. Our finance leases consist of leased equipment and have three-year terms.
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Leases as Lessor | Leases The Company accounts for leases in accordance with ASC 842, Leases. The Company determines if an arrangement is or contains a lease and the type of lease at inception. The Company classifies leases as finance leases (lessee) or sales-type leases (lessor) when there is either a transfer of ownership of the underlying asset by the end of the lease term, the lease contains an option to purchase the asset that we are reasonably certain will be exercised, the lease term is for the major part of the remaining economic life of the asset, the present value of the lease payments and any residual value guarantee equals or substantially exceeds all the fair value of the asset, or the asset is of such a specialized nature that it will have no alternative use to the lessor at the end of the lease term. Payments contingent on future events (i.e. based on usage) are considered variable and excluded from lease payments for the purposes of classification and initial measurement. Several of our leases include options to renew or extend the term upon mutual agreement of the parties and others include one-year extensions exercisable by the lessee. None of our leases contain residual value guarantees, restrictions, or covenants. To determine whether a contract contains a lease, the Company uses its judgment in assessing whether the lessor retains a material amount of economic benefit from an underlying asset, whether explicitly or implicitly identified, which party holds control over the direction and use of the asset, and whether any substantive substitution rights over the asset exist. Leases as Lessor The Company leases instruments to customers under “reagent rental” agreements, whereby the customer agrees to purchase consumable products over a stated term, typically five years or less, for a volume-based price that includes an embedded rental for the instruments. When collectibility is probable, that amount is recognized as income at lease commencement for sales-type leases and as product is shipped, typically in a straight–line pattern, over the term for operating leases, which typically include a termination without cause or penalty provision given a short notice period. Consideration is allocated between lease and non-lease components based on stand-alone selling price in accordance with ASC 606, Revenue from Contracts with Customers. Net investment in sales-type leases are included within our condensed consolidated balance sheets as a component of other current assets and other non-current assets, which include the present value of lease payments not yet received and the present value of the residual asset, which are determined using the information available at commencement, including the lease term, estimated useful life, rate implicit in the lease, and expected fair value of the instrument.
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Nonqualified Cash Deferral Plan | Nonqualified Cash Deferral Plan The Company's Cash Deferral Plan (the “Deferral Plan”) provides certain key employees with an opportunity to defer the receipt of such participant's base salary. The Deferral Plan is intended to be a nonqualified deferred compensation plan that complies with the provisions of Section 409A of the Internal Revenue Code. All of the investments held in the Deferral Plan are equity securities consisting of mutual funds and recorded at fair value with changes in the investments’ fair value recognized as earnings in the period they occur. The corresponding liability for the Deferral Plan is included in other non-current liabilities in the condensed consolidated balance sheet.
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Equity-Based Compensation | Equity-Based Compensation The Company may award stock options, restricted stock units (“RSU”), performance-based awards and other equity-based instruments to its employees, directors and consultants. Compensation cost related to equity-based instruments is based on the fair value of the instrument on the grant date, and is recognized over the requisite service period on a straight-line basis over the vesting period for each tranche (an accelerated attribution method). Performance-based awards vest based on the achievement of performance targets. Compensation costs associated with performance-based awards are recognized over the requisite service period based on probability of achievement. Performance-based awards require management to make assumptions regarding the likelihood of achieving performance targets. The Company estimates the fair value of service based and performance-based stock option awards, including modifications of stock option awards, using the Black-Scholes option pricing model. This model derives the fair value of stock options based on certain assumptions related to expected stock price volatility, expected option life, risk-free interest rate and dividend yield. •Volatility: The expected volatility is based on the historical volatility of the Company's stock price over the most recent period commensurate with the expected term of the stock option award. •Expected term: The estimated expected term for employee awards is based on a simplified method that considers an insufficient history of employee exercises. For consultant awards, the estimated expected term is the same as the life of the award. •Risk-free interest rate: The risk-free interest rate is based on published U.S. Treasury rates for a term commensurate with the expected term. •Dividend yield: The dividend yield is estimated as zero as the Company has not paid dividends in the past and does not have any plans to pay any dividends in the foreseeable future. The Company records the fair value of RSUs or stock grants based on the published closing market price on the day before the grant date. The Company accounts for forfeitures as they occur rather than on an estimated basis. The Company also has an employee stock purchase program whereby eligible employees can elect payroll deductions that are subsequently used to purchase common stock at a discounted price. There is no compensation recorded for this program as (i) the purchase discount does not exceed the issuance costs that would have been incurred to raise a significant amount of capital by a public offering, (ii) substantially all employees that meet limited employment qualifications may participate on an equitable basis, and (iii) the plan doesn't incorporate option features that would require compensation to be recorded.
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Deferred Tax | Deferred Tax Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the accompanying condensed consolidated balance sheet. The change in deferred tax assets and liabilities for the period represents the deferred tax provision or benefit for the period. Effects of changes in enacted tax laws in deferred tax assets and liabilities are reflected as an adjustment to the tax provision or benefit in the period of enactment. The Company follows the provisions of ASC 740, Income Taxes, to account for any uncertainty in income taxes with respect to the accounting for all tax positions taken (or expected to be taken) on any income tax return. This guidance applies to all open tax periods in all tax jurisdictions in which the Company is required to file an income tax return. Under U.S. GAAP, in order to recognize an uncertain tax benefit the taxpayer must be more likely than not certain of sustaining the position, and the measurement of the benefit is calculated as the largest amount that is more likely than not to be realized upon resolution of the position. Interest and penalties, if any, would be recorded within tax expense.
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Foreign Currency Translation and Foreign Currency Transactions | Foreign Currency Translation and Foreign Currency Transactions Adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars are included in the foreign currency translation adjustment, a component of accumulated other comprehensive loss in the condensed consolidated statements of stockholders’ deficit. The Company has assets and liabilities, including receivables and payables, which are denominated in currencies other than their functional currency. These balance sheet items are subject to re-measurement, the impact of which is recorded in foreign currency exchange gain and loss, within the condensed consolidated statement of operations and comprehensive loss.
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Loss Per Share | Loss Per Share Basic loss per share includes no dilution and is computed by dividing loss available to common stockholders by the weighted average number of common shares outstanding for the period. Potentially dilutive common shares consist of shares issuable from stock options, unvested RSUs and the Warrant (as defined in Note 10). Potentially dilutive common shares would also include common shares that would be outstanding if the Notes and the Series A Preferred Stock outstanding at the balance sheet date were converted and shares issuable in connection with the March 2022 Securities Purchase Agreement. Diluted earnings are not presented when the effect of adding such additional common shares is antidilutive.
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Comprehensive Loss | Comprehensive Loss In addition to net loss, comprehensive loss includes all changes in equity during a period, except those resulting from investments by and distributions to owners. The Company holds debt securities as available-for-sale and records the change in fair market value as a component of comprehensive loss. The Company also has adjustments resulting from translating foreign functional currency financial statements into U.S. Dollars which is included as a component of comprehensive loss.
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Standards that were recently adopted | Standards that were recently adopted In March 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-01, Derivatives and Hedging (Topic 815): Fair Value Hedging - Portfolio Layer Method. ASU 2022-01 is related to the portfolio layer method of hedge accounting. The amendments in this update clarify the accounting and promote consistency in reporting for hedges where the portfolio layer method is applied. This ASU was adopted January 1, 2023, and did not impact the Company’s consolidated financial statements at January 1, 2023. In March 2022, the FASB issued ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. ASU 2022-02 relates to troubled debt restructurings (“TDRs”) and vintage disclosures for financing receivables. The amendments in this update eliminate the accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors made to borrowers experiencing financial difficulty. The amendments also require disclosure of current-period gross write-offs by year of origination for financing receivables. This ASU was adopted January 1, 2023, and did not impact the Company's consolidated financial statements at January 1, 2023.
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ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance For Credit Losses | The allowance for credit losses for the three months ended March 31, 2023 and 2022 is comprised of the following (in thousands):
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Schedule of Warranty Reserve | Warranty reserve activity for the three months ended March 31, 2023 and 2022 is as follows (in thousands):
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FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurement | The following tables represent the financial instruments measured at fair value on a recurring basis in the financial statements of the Company and the valuation approach applied to each class of financial instruments at March 31, 2023 and December 31, 2022 (in thousands):
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INVESTMENTS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-Sale Investments | The following tables summarize the Company’s debt securities classified as available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands):
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Schedule of Maturities of Available-for-Sale Investments | The following table summarizes the maturities of the Company’s debt securities classified as available-for-sale investments at March 31, 2023 and December 31, 2022 (in thousands):
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Schedule of Unrealized Losses or Gains on Equity Securities | Unrealized gains or losses on equity securities recorded in income during the three months ended March 31, 2023 and 2022 were as follows (in thousands):
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INVENTORY (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Inventories | Inventories consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
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PROPERTY AND EQUIPMENT (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
Depreciation expense for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
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Schedule of Instruments at Cost and Accumulated Depreciation, Lessor | Instruments at cost and accumulated depreciation where the Company is the lessor under operating leases consisted of the following at March 31, 2023 and December 31, 2022 (in thousands):
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DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Deferred Revenue and Income Summary | A summary of the balances as of March 31, 2023 and December 31, 2022 follows (in thousands):
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CONVERTIBLE NOTES (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Convertible Notes | The carrying value of the Notes at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):
At March 31, 2023 and December 31, 2022 the Notes were classified as follows (in thousands):
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Schedule of Interest Expense | Interest expense during the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Interest expense in connection with the Secured Note during the three months ended March 31, 2023 and 2022 was as follows (in thousands):
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Schedule of Gain on Extinguishment | Gain on extinguishment of exchanged Notes during the three months ended March 31, 2023 and 2022 was as follows (in thousands):
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LONG-TERM DEBT RELATED-PARTY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Carrying Value | The carrying value of the Secured Note at March 31, 2023 and December 31, 2022 consisted of the following (in thousands):
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Schedule of Interest Expense | Interest expense during the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Interest expense in connection with the Secured Note during the three months ended March 31, 2023 and 2022 was as follows (in thousands):
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Schedule of Maturities of Future Principal and Accrued Interest Obligations | The following presents maturities of future principal and accrued interest obligations of the Secured Note as of March 31, 2023 (in thousands):
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Summary of Inputs Used to Estimated Fair Value | The table below summarizes the significant assumptions and inputs used to estimate the fair value of the Secured Note as of March 31, 2023 and December 31, 2022:
See Note 4, Fair Value of Financial Instruments for additional information.
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LOSS PER SHARE (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Potentially Issuable Common Shares not Included in Computation of Diluted Net Loss Per Share | The following potentially issuable common shares were not included in the computation of diluted net loss per share because they would have an anti-dilutive effect for each of the three months ended March 31, 2023 and 2022 (in thousands):
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EMPLOYEE EQUITY-BASED COMPENSATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Option Activity under the Company's Equity-Based Compensation | The following table summarizes option activity under the Company's equity-based compensation plans for the three months ended March 31, 2023:
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Schedule of Outstanding Options and Options that are Exercisable (Vested) | The following table shows summary information for outstanding options and options that are exercisable (vested) as of March 31, 2023:
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Schedule of Restricted Stock Activity | The following table summarizes RSU and restricted stock award activity for the three months ended March 31, 2023:
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Schedule of Equity-Based Compensation Expense | The table below summarizes equity-based compensation expense for the three months ended March 31, 2023 and 2022 (in thousands):
Equity-based compensation expense decreased for the three months ended March 31, 2023 when compared to the three months ended March 31, 2022, primarily due to the reversal of equity-based compensation expense from forfeitures. Employees separating from the Company forfeited an increased number of stock options and RSUs than in the previous period. The table below summarizes share-based compensation cost capitalized to inventory for the three months ended March 31, 2023 and 2022 (in thousands):
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LEASES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Supplemental Lease Information | The following presents supplemental information related to our leases in which we are the lessee for the three months ended March 31, 2023 and 2022 (in thousands):
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Schedule of Lease Costs | The following presents supplemental information related to our leases in which we are the lessee for the three months ended March 31, 2023 and 2022 (in thousands):
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Schedule of Maturities of Operating Lease Liabilities | The following presents maturities of lease liabilities in which we are the lessee as of March 31, 2023 (in thousands):
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Schedule of Maturities of Sales-type Lease Receivables | The following presents maturities of lease receivables under sales-type leases as of March 31, 2023 (in thousands):
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GEOGRAPHIC AND REVENUE DISAGGREGATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Disaggregation of Revenue | The following presents total net sales by geographic territory for the three months ended March 31, 2023 and 2022 (in thousands):
The following presents total net sales by line of business for the three months ended March 31, 2023 and 2022 (in thousands):
The following presents total net sales by products and services for the three months ended March 31, 2023 and 2022 (in thousands):
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Schedule of Long-lived Assets by Geographic Territory | The following presents property and equipment, net by geographic territory (in thousands):
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ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES - Allowance For Doubtful Accounts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 324 | $ 140 |
Provisions, net | 0 | 23 |
Write-offs | (10) | (4) |
Ending balance | $ 314 | $ 159 |
ORGANIZATION AND NATURE OF BUSINESS; BASIS OF PRESENTATION; PRINCIPLES OF CONSOLIDATION; SIGNIFICANT ACCOUNTING POLICIES - Schedule of Product Warranty Reserve Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 225 | $ 139 |
Provisions (reversals), net | 34 | 46 |
Warranty cost incurred | (38) | (9) |
Ending balance | $ 221 | $ 176 |
CONCENTRATION OF CREDIT RISK (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Cash and cash equivalents | Concentration of credit risk | Financial Institutions One | ||
Concentration Risk [Line Items] | ||
Risk concentration | 44.00% | 52.00% |
Cash and cash equivalents | Concentration of credit risk | Financial Institutions Two | ||
Concentration Risk [Line Items] | ||
Risk concentration | 20.00% | 24.00% |
Cash and cash equivalents | Concentration of credit risk | Financial Institutions Three | ||
Concentration Risk [Line Items] | ||
Risk concentration | 18.00% | 21.00% |
Cash and cash equivalents | Concentration of credit risk | Financial Institutions Four | ||
Concentration Risk [Line Items] | ||
Risk concentration | 13.00% | |
Net accounts receivable | Customer concentration | One customer | ||
Concentration Risk [Line Items] | ||
Risk concentration | 15.00% | 15.00% |
FAIR VALUE OF FINANCIAL INSTRUMENTS - Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Aug. 15, 2022 |
---|---|---|---|
Convertible notes | 2.50% Convertible notes due 2023 | |||
Debt Instrument [Line Items] | |||
Outstanding principal | $ 56,595 | $ 56,595 | |
Convertible notes | 2.50% Convertible notes due 2023 | Level 2 | |||
Debt Instrument [Line Items] | |||
Fair value | 51,900 | ||
Convertible notes | Forbearance Agreement | |||
Debt Instrument [Line Items] | |||
Outstanding principal | 56,600 | ||
Fair value | 16,900 | ||
Senior Notes | 5.0% Secured promissory note | Level 3 | Affiliated Entity | Schuler Trust | |||
Debt Instrument [Line Items] | |||
Fair value | $ 6,200 | $ 16,000 | $ 16,000 |
INVESTMENTS - Schedule of Available-for-sale Securities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | $ 1,483 | $ 9,757 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (4) | (29) |
Fair Value | 1,479 | 9,728 |
Certificates of deposit | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 333 | 2,548 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (7) |
Fair Value | 333 | 2,541 |
U.S. Treasury securities | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 3,015 | |
Gross Unrealized Gains | 0 | |
Gross Unrealized Losses | (6) | |
Fair Value | 3,009 | |
Commercial paper | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 125 | 425 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | 0 | (1) |
Fair Value | 125 | 424 |
Corporate notes and bonds | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Amortized Cost | 1,025 | 3,769 |
Gross Unrealized Gains | 0 | 0 |
Gross Unrealized Losses | (4) | (15) |
Fair Value | $ 1,021 | $ 3,754 |
INVESTMENTS - Schedule of Available-for-Sale Investment Maturities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Amortized Cost | ||
Due in less than 1 year | $ 1,483 | $ 9,757 |
Amortized Cost | 1,483 | 9,757 |
Fair Value | ||
Due in less than 1 year | 1,479 | 9,728 |
Fair Value | $ 1,479 | $ 9,728 |
INVESTMENTS - Unrealized Losses or Gains on Equity Securities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Investments, Debt and Equity Securities [Abstract] | ||
Unrealized gain (loss) on equity investments | $ 50 | $ 0 |
INVENTORY (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 1,810 | $ 1,827 |
Work in process | 1,651 | 2,115 |
Finished goods | 1,809 | 1,252 |
Inventory | $ 5,270 | $ 5,194 |
PROPERTY AND EQUIPMENT - Property and Equipment at Cost (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Property, Plant and Equipment [Line Items] | |||
Total property and equipment | $ 14,351 | $ 14,299 | |
Accumulated depreciation | (11,135) | (10,821) | |
Property and equipment, net | 3,216 | 3,478 | |
Depreciation expense | 355 | $ 460 | |
Computer equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 3,553 | 3,551 | |
Technical equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 3,238 | 3,236 | |
Facilities | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 3,688 | 3,663 | |
Instruments | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | 3,812 | 3,735 | |
Capital projects in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment | $ 60 | $ 114 |
PROPERTY AND EQUIPMENT - Instruments at Cost and Accumulated Depreciation, Lessor (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Instruments at cost under operating leases | $ 2,611 | $ 2,585 |
Accumulated depreciation under operating leases | (1,338) | (1,209) |
Net property and equipment under operating leases | $ 1,273 | $ 1,376 |
DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Products and services not yet delivered | $ 468 | $ 547 |
Revenues recognized included in contract liabilities balances | 200 | |
Revenue expected to be recognized from remaining performance obligations | $ 7,000 | |
Contact period | These agreements have between two and four year terms and revenue is recognized as product is shipped, typically on a straight-line basis. The remaining balance relates to executed service contracts that begin as warranty periods expire. These service contracts typically provide for four-year terms and revenue is recognized on a straight-line basis. | |
Products and services not yet delivered | ||
Disaggregation of Revenue [Line Items] | ||
Products and services not yet delivered | $ 468 | $ 547 |
CONVERTIBLE NOTES - Schedule of Carrying Value of Convertible Notes (Details) - 2.50% Convertible notes due 2023 - Convertible notes - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-Term Debt, Gross | $ 56,595 | $ 56,595 |
Debt Issuance Costs, Net | 0 | (182) |
Long-term debt | 56,595 | 56,413 |
Long-Term Debt, by Current and Noncurrent [Abstract] | ||
Current portion of convertible notes | 56,595 | 56,413 |
Non-current portion of convertible notes | 0 | 0 |
Total convertible notes | $ 56,595 | $ 56,413 |
CONVERTIBLE NOTES - Schedule of Interest Expense (Details) - 2.50% Convertible notes due 2023 - Convertible notes - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Contractual coupon interest | $ 236 | $ 753 |
Amortization of debt issuance costs | 182 | 162 |
Total interest expense on convertible notes | $ 418 | $ 915 |
CONVERTIBLE NOTES - Gain on Extinguishment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Gain on extinguishment | $ 0 | $ 3,366 |
Exchange Agreement | 2.50% Convertible notes due 2023 | Convertible notes | ||
Debt Instrument [Line Items] | ||
Gain on extinguishment | $ 0 | $ 3,366 |
LONG-TERM DEBT RELATED-PARTY - Carrying Value of the Secured Notes (Details) - 5.0% Secured promissory note - Senior Notes - August 2022 Exchange Transaction - Affiliated Entity - Schuler Trust - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
Aug. 15, 2022 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Outstanding principal | $ 34,934 | $ 34,934 | |
Unamortized debt issuance discount | (17,504) | (18,076) | |
Net carrying amount | $ 17,430 | $ 16,858 | $ 17,400 |
LONG-TERM DEBT RELATED-PARTY - Schedule of Interest Expense (Details) - Affiliated Entity - August 2022 Exchange Transaction - 5.0% Secured promissory note - Senior Notes - Schuler Trust - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Contractual interest | $ 441 | $ 0 |
Amortization of the debt discount | 572 | 0 |
Total interest expense on convertible notes | $ 1,013 | $ 0 |
LONG-TERM DEBT RELATED-PARTY - Long-Term Debt, Maturity, Future Principal and Accrued Interest Obligation (Details) - August 2022 Exchange Transaction - 5.0% Secured promissory note - Senior Notes - Affiliated Entity - Schuler Trust - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Principal | ||
2023 | $ 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 34,934 | |
Thereafter | 0 | |
Total | 34,934 | $ 34,934 |
Accrued Interest | ||
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 1,104 | |
Thereafter | 0 | |
Total | 1,104 | |
Total | ||
2023 | 0 | |
2024 | 0 | |
2025 | 0 | |
2026 | 0 | |
2027 | 36,038 | |
Thereafter | 0 | |
Total | $ 36,038 |
LONG-TERM DEBT RELATED-PARTY - Summary of Inputs Used to Estimated Fair Value (Details) - 5.0% Secured promissory note - Senior Notes - Affiliated Entity - Schuler Trust |
Mar. 31, 2023
$ / shares
year
|
Dec. 31, 2022
year
$ / shares
|
---|---|---|
Stock price | ||
Class of Warrant or Right [Line Items] | ||
Measurement input | $ / shares | 0.70 | 2.68 |
Term (years) | ||
Class of Warrant or Right [Line Items] | ||
Measurement input | year | 4.38 | 5 |
Volatility | ||
Class of Warrant or Right [Line Items] | ||
Measurement input | 1.0349 | 0.8430 |
Risk-free rate | ||
Class of Warrant or Right [Line Items] | ||
Measurement input | 0.0367 | 0.0291 |
LOSS PER SHARE - Schedule of Potentially Issuable Common Shares not Included in Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock instruments outstanding (in shares) | 11,091 | 10,428 |
Shares issuable upon the release of RSUs | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock instruments outstanding (in shares) | 3,343 | 3,610 |
Shares issuable upon exercise of stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock instruments outstanding (in shares) | 5,276 | 6,818 |
Shares issuable upon the exercise of the Warrant | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive common stock instruments outstanding (in shares) | 2,472 | 0 |
EMPLOYEE EQUITY-BASED COMPENSATION - Option Activity under the Company's Equity-Based Compensation (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Outstanding, beginning balance (in shares) | shares | 5,408,661 |
Granted (in shares) | shares | 100,000 |
Forfeited (in shares) | shares | (99,934) |
Exercised (in shares) | shares | 0 |
Expired (in shares) | shares | (132,874) |
Outstanding, ending balance (in shares) | shares | 5,275,853 |
Weighted Average Exercise Price per Share | |
Outstanding, beginning balance (in usd per share) | $ / shares | $ 14.60 |
Granted (in usd per share) | $ / shares | 0.51 |
Forfeited (in usd per share) | $ / shares | 8.15 |
Exercised (in usd per share) | $ / shares | 0 |
Expired (in usd per share) | $ / shares | 13.15 |
Outstanding, ending balance (in usd per share) | $ / shares | $ 14.49 |
EMPLOYEE EQUITY-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2021 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Unrecognized equity-based compensation cost | $ 1.2 | |
RSUs | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Unrecognized equity-based compensation cost, restricted stock units | $ 3.3 | |
Performance-based Restricted Stock Units | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Contractual life | 10 years | |
Outstanding (in shares) | 103,299 | |
Performance-based Restricted Stock Units | Minimum | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Vesting period | 1 year | |
Performance-based Restricted Stock Units | Maximum | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Vesting period | 3 years |
EMPLOYEE EQUITY-BASED COMPENSATION - Outstanding Options and Options that are Exercisable (Vested) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
Options Outstanding | ||
Number of options (in shares) | 5,275,853 | 5,408,661 |
Weighted average remaining contractual term (in years) | 4 years 7 months 13 days | |
Weighted average exercise price (in usd per share) | $ 14.49 | $ 14.60 |
Weighted average fair value (in usd per shares) | $ 9.01 | |
Aggregate intrinsic value (in thousands) | $ 20 | |
Options Exercisable | ||
Number of options (in shares) | 4,422,198 | |
Weighted average remaining contractual term (in years) | 4 years 21 days | |
Weighted average exercise price (in usd per share) | $ 15.37 | |
Weighted average fair value (in usd per share) | $ 9.50 | |
Aggregate intrinsic value (in thousands) | $ 0 |
EMPLOYEE EQUITY-BASED COMPENSATION - Restricted Stock Activity (Details) - RSUs and RSAs |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | shares | 4,355,420 |
Granted (in shares) | shares | 1,833,230 |
Forfeited (in shares) | shares | (695,050) |
Released (in shares) | shares | (2,150,702) |
Ending balance (in shares) | shares | 3,342,898 |
Weighted Average Grant Date Fair Value per Share | |
Beginning balance (in usd per share) | $ / shares | $ 4.29 |
Granted (in usd per share) | $ / shares | 0.62 |
Forfeited (in usd per share) | $ / shares | 4.30 |
Released (in usd per share) | $ / shares | 1.88 |
Ending balance (in usd per share) | $ / shares | $ 3.82 |
EMPLOYEE EQUITY-BASED COMPENSATION - Equity-Based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity-based compensation expense | $ 555 | $ 2,979 |
Cost capitalized to inventory | 74 | 43 |
Cost of sales | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity-based compensation expense | 90 | 175 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity-based compensation expense | 605 | 362 |
Sales, general and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Equity-based compensation expense | $ (140) | $ 2,442 |
INCOME TAXES (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 0 | $ 0 |
Pre-tax loss | $ (16,795,000) | $ (13,465,000) |
COMMITMENTS (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Apr. 30, 2022 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Total commitments | $ 11.9 | $ 11.9 |
LEASES - Assets and Liabilities (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Cash paid for amounts included in lease liabilities: | ||
Operating cash flows from operating leases | $ 226 | $ 205 |
Financing cash flows from finance leases | 77 | 0 |
ROU assets obtained in exchange for lease obligations: | ||
Operating leases | 0 | 0 |
Finance leases | 0 | 240 |
Lease Cost: | ||
Operating leases | 249 | 305 |
Finance leases | 261 | 7 |
Short-term leases | $ 24 | $ 20 |
Weighted average remaining lease term (years) | 2 years 3 months 18 days | |
Weighted average discount rate (%) | 7.10% | |
Weighted average remaining lease term finance leases (years) | 1 year 10 months 24 days | |
Weighted average discount rate finance leases (%) | 6.20% |
LEASES - Maturities of Lease Liabilities (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Operating | |
Remainder of 2023 | $ 741 |
2024 | 1,051 |
2025 | 583 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total lease payments | 2,375 |
Less imputed interest | (185) |
Lessee lease liabilities | 2,190 |
Finance | |
Remainder of 2023 | 923 |
2024 | 976 |
2025 | 193 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total lease payments | 2,092 |
Less imputed interest | (273) |
Finance lease obligation | $ 1,819 |
LEASES - Sales-type Lease Receivable Maturity (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Leases [Abstract] | |
Net investment in leases | $ 2,400 |
Remainder of 2023 | 1,082 |
2024 | 867 |
2025 | 280 |
2026 | 130 |
2027 | 43 |
Thereafter | 0 |
Total undiscounted cash flows | 2,402 |
Less imputed interest | 0 |
Present value of lease payments | $ 2,402 |
GEOGRAPHIC AND REVENUE DISAGGREGATION - Narrative (Details) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023
USD ($)
segment
|
Mar. 31, 2022
USD ($)
|
Dec. 31, 2022
USD ($)
|
|
Segment Reporting [Abstract] | |||
Number of operating segments | segment | 1 | ||
Segment Reporting Information [Line Items] | |||
Trade accounts receivable, net | $ 2,427 | $ 2,416 | |
Lease income | $ 200 | $ 500 | |
Geographic concentration | Outside the U.S. | Total revenue | |||
Segment Reporting Information [Line Items] | |||
Risk concentration | 14.00% | 15.00% | |
Geographic concentration | Outside the U.S. | Net accounts receivable | |||
Segment Reporting Information [Line Items] | |||
Trade accounts receivable, net | $ 700 | $ 600 |
GEOGRAPHIC AND REVENUE DISAGGREGATION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 2,812 | $ 2,958 |
Accelerate Pheno revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 2,812 | 2,918 |
Other revenue | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 0 | 40 |
Products | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 2,444 | 2,546 |
Services | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 368 | 412 |
Domestic | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | 2,416 | 2,517 |
Foreign | ||
Disaggregation of Revenue [Line Items] | ||
Net sales | $ 396 | $ 441 |
GEOGRAPHIC AND REVENUE DISAGGREGATION - Long-lived Assets by Geographic Territory (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Long-lived assets (excluding intangible assets) | $ 3,216 | $ 3,478 |
Property and equipment | Geographic concentration | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets (excluding intangible assets) | 3,216 | 3,478 |
Property and equipment | Geographic concentration | Domestic | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets (excluding intangible assets) | 2,872 | 3,120 |
Property and equipment | Geographic concentration | Foreign | ||
Segment Reporting Information [Line Items] | ||
Long-lived assets (excluding intangible assets) | $ 344 | $ 358 |
STOCKHOLDERS' EQUITY (Details) - USD ($) $ / shares in Units, $ in Millions |
Mar. 29, 2022 |
Mar. 24, 2022 |
Mar. 21, 2022 |
---|---|---|---|
Class of Stock [Line Items] | |||
Share price (in usd per share) | $ 1.48 | $ 1.86 | |
Affiliated Entity | March 2022 Securities Purchase Agreement | Schuler Trust | Private Placement | |||
Class of Stock [Line Items] | |||
Agreement to purchase shares (in shares) | 2,439,024 | ||
Purchase price (in usd per share) | $ 1.64 | ||
Purchase price | $ 4.0 | ||
Convertible notes | Exchange Agreement | New Notes | |||
Class of Stock [Line Items] | |||
Notes exchanged | $ 1.8 | ||
Shares issued (in shares) | 849,713 | ||
Aggregate principal amount | $ 1.3 |
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ / shares in Units, $ in Thousands |
Aug. 15, 2022 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Mar. 24, 2022 |
---|---|---|---|---|
Affiliated Entity | March 2022 Securities Purchase Agreement | Schuler Trust | Private Placement | ||||
Related Party Transaction [Line Items] | ||||
Agreement to purchase shares (in shares) | 2,439,024 | |||
Purchase price (in usd per share) | $ 1.64 | |||
Purchase price | $ 4,000 | |||
Convertible notes | 5.0% Secured promissory note | Schuler Trust | August 2022 Exchange Transaction | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | $ 49,900 | |||
Senior Notes | 5.0% Secured promissory note | Affiliated Entity | August 2022 Exchange Transaction | Schuler Trust | ||||
Related Party Transaction [Line Items] | ||||
Aggregate principal amount | 34,900 | |||
Long-term debt | 17,400 | $ 17,430 | $ 16,858 | |
Accrued interest | $ 1,100 |
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