This Annual Report on Form 10-K contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), each as amended. The forward-looking statements are principally, but not exclusively, contained in “Item 1: Business” and “Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, our business strategy, our ability to raise capital or borrow funds to consummate acquisitions and the availability of attractive acquisition candidates, our expectations regarding future costs of product revenues, our anticipated compliance with the covenants contained in our credit facility, the adequacy of our financial resources and our plans, objectives, expectations and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “seek,” “expects,” “plans,” “aim,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “think,” “strategy,” “potential,” “objectives,” “optimistic,” “new,” “goal” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in detail under the heading “Item 1A. Risk Factors” beginning on page 7 of this Annual Report on Form 10-K. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Harvard Bioscience, Inc. is referred to herein as “we,” “our,” “us,” and “the Company.”

PART I

Overview

Harvard Bioscience, Inc., a Delaware corporation, is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental advances in life science applications, including research, pharmaceutical and therapy discovery, bio-production and preclinical testing for drugpharmaceutical and therapy development. Our products and services are sold globally to customers rangeranging from renowned academic institutions and government laboratories to the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe and China, we sell through a combination of direct and distribution channels to customers around the world.

Recent Developments

COVID-19

The COVID-19 pandemic has had a negative impact on our operations since its onset in March 2020. While the Company has improved revenuesGlobal Supply Chain and operations during 2021, a higher degree of volatility and uncertainty in the global economy has been observed during this period, and with it uncertainty around economic impacts. Since the global outbreak of COVID-19, many customers, particularly academic research institutions, have reduced laboratory work which has negatively impacted, and will continue to negatively impact, the Company’s sales. While many of the Company's customers, including academic labs, have reopened, a significant number of them remained closed or at significantly lower capacity levels during 2021. Additionally, to ensure business continuity while maintaining a safe environment for employees aligned with guidance from government and health organizations, the Company transitioned a significant portion of its workforce to work-from-home while implementing social distancing requirements and other measures to allow manufacturing and other personnel essential to production to continue work within the Company’s facilities. Business travel was significantly reduced during this period. While a portion of the workforce has returned to in-office work and travel is less restricted, the Company continues to have restrictions which represent disruptions which can impact productivity including sales and marketing activities.Economic Environment

The global supply chain has experienced significant disruptions during 2021 due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of the COVID-19, pandemic, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. Accordingly,We expect these supply chain trends to continue into 2023. These conditions, in addition to the overall impactimpacts on the global economy, have negatively impacted our results of operations and cash flows.

Additionally, during 2022 the global economy has experienced high levels of inflation, rising interest rates, significant fluctuations in currency values, and increasing economic uncertainty, particularly in Europe. Our results of operations have been negatively impacted by higher costs of raw materials, labor and freight resulting from inflationary pressures. These factors and global events including the ongoing military conflict between Russia and Ukraine, a softening economy in Europe, and rising interest rates on our debt have had a negative impact on our results of operations.

COVID-19

The COVID-19 pandemic has had a negative impact on our operations to date and the future impacts of the pandemic and any resulting economic impact remain largely unknown and continue to evolve. Many countries worldwide continue to issue COVID-19 related restrictive orders in an attempt to control the effects of the pandemic. In particular, during the beginning of 2022, China implemented area-wide shutdowns in order to control the spread of COVID-19, which continued in different parts of China throughout 2022. Such shutdowns had an adverse impact on our financial results for fiscal 2022.

If business interruptions resulting from the current macroeconomic conditions or COVID-19 described above were to be prolonged or expanded in scope, the Company’s business, financial condition, results of operations and cash flows would likely be negatively impacted. If the impacts of the supply chain disruptions are more severe than we expect, it could result in longer lead times and further increased costs, all of which could materially adversely affect our business, financial condition and results of operations.

Our History and Strategy

Our business began in 1901 under the name Harvard Apparatus. It was founded by Dr. William T. Porter, a Professor of Physiology at Harvard Medical School and a pioneer of physiology education. We have grown over the years with the development and evolution of modern life science research and education. Our early inventions included ventilators based on Dr. Porter’s design, the mechanical syringe pump for drug infusion in the 1950s, and the microprocessor-controlled syringe pump in the 1980s.

In March of 1996, a group of investors acquired a majority of the then existing business of our predecessor, Harvard Apparatus, Inc. Following this acquisition, our focus was redirected to acquiring complementary companies with innovative technologies while continuing to grow the existing business through internal product development. Since 1996, we have completed multiple business or product line acquisitions related to our continuing operations. Harvard Bioscience, Inc. was incorporated in the State of Delaware in September 2000 and became the successor entity to Harvard Apparatus, Inc. by merger in November 2000.

In December2018, we acquired Data Sciences International, Inc. (“DSI”), a global leader in products, services and solutions focused on preclinical testing. The DSI product portfolio, which is largely complementary to our cellular and molecular technology (“CMT”) product portfolio, expanded our product portfolio to address the continuum from research and discovery to preclinical testing with principal application in pharmaceutical and therapy testing.  

In 2019, we implementedinitiated a restructuring plan (the “Restructuring Plan”)program to deliver significant cost savings beginningimprove operational efficiency and reduce costs which entailed consolidating and downsizing several sites and reducing headcount in 2020Europe and to support delivery of the strategic action planNorth America. This program was completed in 2021.

During 2022, we announced in September 2019. The Restructuring Plan included consolidationcompleted a review of our Connecticut manufacturing plantbusiness and product portfolio and identified opportunities to rationalize our existing Massachusetts site, downsizing of operationsproduct portfolio, improve our cost structure and  optimize our sales organization. In connection with this review, we identified certain non-strategic products for discontinuation and further reduced our headcount in the United KingdomEurope and a reduction in force across the business equal to approximately 10% of our headcount. The initial initiatives under the Restructuring PlanNorth America. We believe that these actions, which were completed in the second half of 2020.

We continued2022, will allow us to execute the Restructuring Plan during the COVID-19 pandemic and expanded the scope of the restructuring by realigning our organizational structure to reduce management layers and accelerated our efforts to move to a leaner organization and operation. As a result of this expanded scope, we eliminated additional headcount during 2020, and in the first quarter of 2021, communicated to employees our plan to consolidate certain engineering operations and eliminate two small facilities in Europe.

In 2021 we completed cost savings initiatives and related actions related to the Restructuring Plan, and we increased our focus on effectiveness of salesproduct opportunities that drive sustainable revenue growth with attractive gross margins and product management to deliver organic sales growth. A portion of the savings generated from the Restructuring Plan has been reinvested to support these growth initiatives.improved profitability.

Our Products

OurAs noted above, our products supportand services enable fundamental advances in life science applications, including research, in 6 different classes of laboratory use: (1) molecular, (2) cellular, (3) tissue, (4) organ, (5) organisms orpharmaceutical and therapy discovery, bio-production and preclinical and (6) clinical. testing.

We have organized our product line activities into two product families, Cellular and Molecular Technologies (CMT)CMT and Preclinical.     

ProductsOur CMT product family is primarily composed of products supporting research related to molecular, cellular organ and organoid technologies, with additional application in classes (1), (2), (3), (4)the emerging field of bio-production of pharmaceuticals and sometherapeutics. The principal customers for our CMT products in class (5) are part of CMT, which includes 14 individual business lines supporting new drug discoveryinclude academic and development. government laboratories, biotechnology and pharmaceutical companies, and contract research organizations.

Our Preclinical product family includes 4 individualfour business lines included in class (5) whichthat support the preclinical research and testing phase for drug development. CMT products are primarily solddevelopment, and in particular testing related to academicdata collection and government labsanalysis for safety and institutions.regulatory compliance. Preclinical products are primarily sold to pharmaceutical, biotechnology and contract research organizations.

organizations, as well as larger academic labs.

We primarily sell our products under several brand names, including Harvard Apparatus, DSI, Ponemah, Buxco, Biochrom, BTX, MCS.Heka, Hugo Sachs, Multichannel Systems MCS GmbH (“MCS”), and Panlab.

Our solutions range from simple to complex, and generally consist of hardware/firmware/firmware and software products, augmented with consumables, options, upgrades and post-sales (scientific)(scientific, installation and data) services. Sales prices of these products and services range typically from under $100$1,000 to over $100,000. Our products include spectrophotometers that analyze light to detect and quantify a wide range of molecules as well as cell analysis and electroporation and electrofusion systems to influence and/or analyze cellular processes. Other products and services focus on tissue and organ responses to new drugs and encompass wireless monitors, and signal acquisition and analysis functionality. We also feature products that monitor physiologyphysiological processes in living organisms to study behavior. Many of our proprietary products are leaders in their field.fields. 

In addition to our proprietarily manufactured products, we sell factoreddistribute products fromdeveloped by other manufacturers. These distributed products accounted for approximately 14%15% and 15%14% of our revenues for the years ended December 31, 20212022 and 2020,2021, respectively. Resale of factoredsuch products enableenables us to act as a single source for our customers’ research needs. They consist of a large variety of complementing instruments or accessories as well as consumables used in experiments involving fluid handling, molecular and cell analysis and tissue, organ and animal research. Following

Below is a description of each product family.

Cellular and Molecular Technologies Product Family

Our CMT product family includes products designed primarily to support the discovery phase of new drug development. CMT products include:

Our CMT product family made up approximately 57%51% and 47% of our global revenues for each of the years ended December 31, 2022 and 2021, and 2020.respectively.

Preclinical Product Family

Our Preclinical product family provides a complete platform to assess physiological data from organisms for research ranging from basic research to drug discovery, and drug development services. The Preclinical product family consists of the DSI and Buxco brands. It includes:

DSI’s direct sales force supports North America, Europe, and China, with distributors supporting the rest of the world. Our Preclinical productsproduct family made up approximately 43%49% and 53% of our global revenues for each of the years ended December 31, 2022 and 2021, and 2020.

respectively.

Customers

Our end-user customers are primarily research scientists at pharmaceutical and biotechnology companies, universities, hospitals, government laboratories, including the United States National Institutes of Health (NIH)(“NIH”), and contract research organizations (CROs)(“CROs”). Our pharmaceutical and biotechnology customers have included pharmaceutical companies and research laboratories such as Pfizer, Amgen, Inc., AstraZeneca plc, Genentech, Inc. and Johnson & Johnson. Our academic customers include major colleges and universities including Harvard University, Cambridge University, Johns Hopkins University, Massachusetts Institute of Technology, Yale University, the University of California system, Baylor College of Medicine, and the University of Texas - MD Anderson Center.and Imperial College London. Our CRO customers include Covance andLabcorp, Charles River Laboratories.Laboratories and Wuxi AppTec. We have a wide range of diverse customers worldwide and no customer accounted for more than 10% of our revenues in 2021.2022.

Sales

We conduct direct sales in the United States, United Kingdom, Germany, France, Italy, Spain, Sweden, CanadaChina and China.major European markets. We sell primarily through distributors in other countries. For the year ended December 31, 2021,2022, revenues from direct sales to end-users represented approximately 67%63% of our revenues; and revenues from sales of our products through distributors represented approximately 33%37% of our revenues.

Direct Sales

We have a global sales organization managing both direct sales and distributors. Our websites and catalogsmarketing collateral serve as the primary sales tool for our product lines, which includes both proprietary manufactured products and complementary products from various suppliers. Our reputation as a leading producer of many of our manufactured products creates traffic to our websites, enables cross-selling and facilitates the introduction of new products.

Sales through Distributors

We engage distributors for the sales of our own branded and private label products in certain areas of the world and for certain product lines.

Marketing

We have a centralized marketing group, which encompasses product management, field-marketing and market communications and application science.communications. Marketing maintains value-proposition based product roadmaps, collaborates with research and development on timing and investment for new products, supports direct and distributor sales activities, sets the global pricing of our products and conceives the storylines on how to sell our products. Marketing also maintains digital presence across the web and social media platforms, creates electronic leads and analyzes opportunities for new product portfolio extensions.

Research and Development

Our principal research and development mission is to develop products that address growth opportunities within the life science research process as well as to maintain and optimize our existing product portfolios. We maintain development staff in many of our manufacturing facilities to design and develop new products and to re-engineer existing products to bring them to the next generation. Our research and development expenses were approximately $10.8$12.3 million and $8.7$10.8 million for the years ended December 31, 20212022 and 2020,2021, respectively. We anticipate that we will continue to make investments in research and development activities to advance our position in the industry as we deem appropriate.a provider of life science equipment, software and services. We plan to continue to pursue a balanced development portfolio strategy of originating new products from internal research and acquiring products and technologies through business and technology acquisitions.acquisitions or collaborations, as appropriate.

Manufacturing

We manufacture and test the majority of our products in our principal manufacturing facilities located in the United States, Sweden, Spain and Germany. We have considerable manufacturing flexibility at our various facilities, and each facility can manufacture multiple products at the same time. We maintain in-house manufacturing expertise, technologies and resources. We seek to maintain multiple suppliers for key components that are not manufactured in-house, and while some of our products are dependent on sole-source suppliers, we have made investments in new talent in procurement and other functions to reduce exposures related to sole-source suppliers, and are accelerating these efforts given the dynamics of the global supply chain in 2021.2022. Our manufacturing operations primarily involve assembly and testing activities along with some machine-based processes. Going forward we will continue to evaluate our manufacturing facilities and operations in order to optimize our manufacturing footprint.

See “Part I, Item 2. Properties” of this report for additional information regarding our manufacturing facilities.

Competition

The markets into which we sell our products are highly competitive, and we expect the intensity of competition to continue or increase. We compete with many companies engaged in developing and selling tools for life science research. Many of our competitors have greater financial, operational, sales and marketing resources and more experience in research and development and commercialization than we have. Moreover, our competitors may have greater name recognition than we do, and many offer discounts as a competitive tactic. These competitors and other companies may have developed or could in the future develop new technologies that compete with our products, which could render our products obsolete. We cannot provide assurance that we will be able to make the enhancements to our technologies necessary to compete successfully with newly emerging technologies. We believe that we offer one of the broadest selections of products to organizations engaged in life science research. We have numerous competitors on a product line basis. We believe that we compete favorably with our competitors on the basis of product performance, including quality, reliability, speed, technical support, price and delivery time.

We compete with several companies that provide instruments for life science research including, Lonza Group Ltd., Becton Dickinson, Eppendorf AG, Kent Scientific Corporation, Razel Scientific Instruments, Inc., Ugo Basile, Danaher Corporation, Bio-Rad Laboratories, Inc., PerkinElmer, Inc., Thermo Fisher Scientific, Inc. Notocord,Instem plc, Emka Technologies and TSE Systems.

We cannot forecast if or when these or other companies may develop competitive products. We expect that other products will compete with our products and potential products based on efficacy, safety, cost and intellectual property positions. While we believe that these will be the primary competitive factors, other factors include, in certain instances, availability of supply, manufacturing, marketing and sales expertise and capability.

Seasonality

Sales and earnings in our third quarter are usually flat or down from the second quarter primarily because there are a large number of holidays and vacations during such quarter, especially in Europe. Our fourth quarter revenues and earnings are often the highest in any fiscal year compared to the other three quarters, primarily because many of our customers tend to spend budgeted money before their own fiscal year ends.

Intellectual Property

To establish and protect our proprietary technologies and products, we rely on a combination of patent, copyright, trademark and trade secret laws, as well as confidentiality provisions in our contracts. Patents or patent applications cover certain of our new technologies. Most of our more mature product lines are protected by trade names and trade secrets only.

We have implemented a patent strategy designed to provide us with freedom to operate and facilitate commercialization of our current and future products. Our success depends, to a significant degree, upon our ability to develop proprietary products and technologies. We intend to continue to file patent applications as we developcovering new products and technologies.technologies where it is appropriate to do so taking into account factors such as the likely scope of coverage, strategic value, and cost.

Patents provide some degree of protection for our intellectual property. However, the assertion of patent protection involves complex legal and factual determinations and is therefore uncertain. The scope of any of our issued patents may not be sufficiently broad to offer meaningful protection. In addition, our issued patents or patents licensed to us may be successfully challenged, invalidated, circumvented or unenforceable so that our patent rights would not create an effective competitive barrier. Moreover, the laws of some foreign countries may protect our proprietary rights to a greater or lesser extent than the laws of the United States. In addition, the laws governing patentability and the scope of patent coverage continue to evolve, particularly in areas of interest to us. As a result, there can be no assurance that patents will be issued from any of our patent applications or from applications licensed to us. As a result of these factors, our intellectual property positions bear some degree of uncertainty.

We also rely in part on trade secret protection of our intellectual property. We attempt to protect our trade secrets by entering into confidentiality agreements with third parties, employees and consultants. Our employees and consultants also sign agreements requiring that they assign to us their interests in patents and copyrights arising from their work for us. Although many of our United States employees have signed agreements not to compete unfairly with us during their employment and after termination of their employment, through the misuse of confidential information, soliciting employees, soliciting customers and the like, the enforceability of these provisions varies from jurisdiction to jurisdiction and, in some circumstances, they may not be enforceable. In addition, it is possible that these agreements may be breached or invalidated and if so, there may not be an adequate corrective remedy available. Despite the measures we have taken to protect our intellectual property, we cannot provide assurance that third parties will not independently discover or invent competing technologies or reverse engineer our trade secrets or other technologies. Therefore, the measures we are taking to protect our proprietary rights may not be adequate.

We do not believe that our products infringe on the intellectual property rights of any third party. We cannot assure, however, that third parties will not claim such infringement by us or our licensors with respect to current or future products. We expect that product developers in our market will increasingly be subject to such claims as the number of products and competitors in our market segment grows and the product functionality in different market segments overlaps. In addition, patents on production and business methods are becoming more common and we expect that more patents will be issued in our technical field. Any such claims, with or without merit, could be time-consuming, result in costly litigation and diversion of management’s attention and resources, cause product shipment delays or require us to enter into royalty or licensing agreements. Moreover, such royalty or licensing agreements, if required, may not be on terms advantageous to us, or acceptable at all, which could seriously harm our business or financial condition.

“Harvard” is a registered trademark of Harvard University. The marks “Harvard Apparatus” and “Harvard Bioscience” are being used pursuant to a license agreement entered into in December 2002 between us and Harvard University.

Government Regulation

We are generally not subject to direct governmental regulation other than the laws and regulations generally applicable to businesses in the domestic and foreign jurisdictions in which we operate. In particular, other than our amino asset analyzer product, our current products are not subject to pre-market approval by the United States Food and Drug Administration (“FDA”) for use on human clinical patients. In addition, we believe we are materially in compliance with all relevant environmental laws.

Employees

As of December 31, 2021,2022, we employed 494455 employees, which included 475436 full-time employees. Some of our employees in Europe have statutory collective bargaining rights. We have never experienced a general work stoppage or strike, and management believes that our relations with our employees are good. Additional information about our employees follows:

Employees by country:

Employees by business function:

We make employment decisions without regard to age, color, national origin, citizenship status, physical or mental disability, race, religion, creed, gender, sex, sexual orientation, gender identity and/or expression, genetic information, marital status, status with regard to public assistance, veteran and military status or any other characteristic protected by federal, state or local law. We take steps to employ and advance in employment qualified protected veterans and qualified individuals with disabilities.

Every effort is made to ensure that our policies regarding hiring, salary administration, promotion, and transfer are based solely on job requirements, job performance, and job-related criteria.

Geographic Area

Financial information regarding geographic areas in which we operate is provided in Note 1516 to the Consolidated Financial Statements included in “Part IV, Item 15. Exhibits, Financial Statement Schedules” of this report.

Available Information and Website

Our website address is www.harvardbioscience.com. Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and exhibits and amendments to those reports filed or furnished with the Securities and Exchange Commission pursuant to Section 13(a) of the Exchange Act are available for review on our website and the Securities and Exchange Commission’s website at www.sec.gov. Any such materials that we file with, or furnish to, the SEC in the future will be available on our website as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The information on our website is not incorporated by reference into this Annual Report on Form 10-K.

The following factors should be reviewed carefully, in conjunction with the other information contained in this Annual Report on Form 10-K. As previously discussed, our actual results could differ materially from our forward-looking statements. Our business faces a variety of risks. These risks include those described below and may include additional risks and uncertainties not presently known to us or that we currently deem immaterial. If any of the events or circumstances described in the following risk factors occur, our business operations, performance and financial condition could be adversely affected, and the trading price of our common stock could decline.

Risks Related to Our Industry

The life sciences industry is very competitive.

We expect to encounter increased competition from both established and development-stage companies that continually enter the market. These include companies developing and marketing life science instruments, systems and lab consumables, health care companies that manufacture laboratory-based tests and analyzers, diagnostic and pharmaceutical companies, analytical instrument companies, and companies developing life science or drug discovery technologies. Currently, our principal competition comes from established companies that provide products that perform many of the same functions for which we market our products. Many of our competitors have substantially greater financial, operational, marketing and technical resources than we do. Moreover, these competitors may offer broader product lines and tactical discounts and may have greater name recognition. In addition, we may face competition from new entrants into the field. We may not have the financial resources, technical expertise or marketing, distribution or support capabilities to compete successfully in the future. In addition, we face changing customer preferences and requirements, including increased customer demand for more environmentally friendly products.

The life sciences industry is also subject to rapid technological change and discovery. The development of new or improved products, processes or technologies by other companies may render our products or proposed products obsolete or less competitive. In some instances, our competitors may develop or market products that are more effective or commercially attractive than our current or future products. To meet the evolving needs of customers, we must continually enhance our current products and develop and introduce new products. However, we may experience difficulties that may delay or prevent the successful development, introduction and marketing of new products or product enhancements. In addition, our product lines are based on complex technologies that are subject to change as new technologies are developed and introduced in the marketplace. We may have difficulty in keeping abreast of the changes affecting each of the different markets we serve or intend to serve. Our failure to develop and introduce products in a timely manner in response to changing technology, market demands, or the requirements of our customers could cause our product sales to decline, and we could experience significant losses.

We offer, and plan to continue to offer, a broad range of products and have incurred, and expect to continue to incur, substantial expenses for the development of new products and enhancements to our existing products. The speed of technological change in our market may prevent us from being able to successfully market some or all of our products for the length of time required to recover development costs. Failure to recover the development costs of one or more products or product lines could decrease our profitability or cause us to experience significant losses.

A portion of our revenues are derived from customers from the pharmaceutical and biotechnology industries and are subject to the risks faced by those industries. Such risks may adversely affect our financial results.

We derive a significant portion of our revenues from pharmaceutical and biotechnology companies. We expect that pharmaceutical and biotechnology companies will continue to be a significant source of our revenues for the foreseeable future, including in our Cellular and Molecular Technologies and Preclinical product families. As a result, we are subject to risks and uncertainties that affect the pharmaceutical and biotechnology industries, such as government regulation, ongoing consolidation, uncertainty of technological change, and reductions and delays in research and development expenditures by companies in these industries.

In particular, the biotechnology industry is largely dependent on raising capital to fund its operations. If biotechnology companies that are our customers are unable to obtain the financing necessary to purchase our products, our business and results of operations could be adversely affected. In addition, we are dependent, both directly and indirectly, upon general health care spending patterns, particularly in the research and development budgets of the pharmaceutical and biotechnology industries, as well as upon the financial condition and purchasing patterns of various governments and government agencies. As it relates to both the biotechnology and pharmaceutical industries, many companies have significant patents that have expired or are about to expire, which could result in reduced revenues for those companies. If pharmaceutical or biotechnology companies that are our customers suffer reduced revenues as a result of these patent expirations, they may be unable to purchase our products, and our business and results of operations could be adversely affected.

Changes in governmental regulations may reduce demand for our products, adversely impact our revenues, or increase our expenses.

We operate in many markets in which we and our customers must comply with federal, state, local and international regulations. We develop, configure and market our products to meet customer needs created by, and in compliance with, those regulations. These requirements include, among other things, regulations regarding manufacturing practices, product labeling, and advertising and post marketing reporting. We must incur expense and spend time and effort to ensure compliance with these complex regulations. Possible regulatory actions for non-compliance could include warning letters, fines, damages, injunctions, civil penalties, recalls, seizures of our products, and criminal prosecution. These actions could result in, among other things, substantial modifications to our business practices and operations; refunds, recalls, or seizures of our products; a total or partial shutdown of production in one or more of our facilities while we or our suppliers remedy the alleged violation; and withdrawals or suspensions of current products from the market. Any of these events could disrupt our business and have a material adverse effect on our revenues, profitability and financial condition.

Risks Related to Our Business

Reductions in customers’ research budgets or government funding may adversely affect our business.

Many of our customers are universities, government research laboratories, private foundations and other institutions who are dependent on grants from government agencies, such as the National Institutes of Health (“NIH”) in the United States,NIH, for funding. These customers represent a significant source of our revenue. Research and development spending by our customers may fluctuate based on spending priorities and general economic conditions. The level of government funding for research and development is unpredictable. In the past, NIH grants have been frozen or otherwise made unavailable for extended periods or directed to certain products. Reductions or delaydelays in governmental spending could cause customers to delay or forego purchases of our products. If government funding necessary for the purchase of our products were to decrease, our business and results of operations could be materially, adversely affected. Spending by some of these customers fluctuates based on budget allocations and the timely passage of the annual federal budget. An impasse in federal government budget decisions could lead to substantial delays or reductions in federal spending.

Our business is subject to economic, political and other risks associated with international revenues and operations.

We manufacture and sell our products worldwide and as a result, our business is subject to risks associated with doing business internationally. A substantial amount of our revenues is derived from international operations, and we anticipate that a significant portion of our sales will continue to come from outside the United States in the future. We anticipate that revenues from international operations will likely continue to increase as a result of our efforts to expand our business in markets abroad. In addition, a number of our manufacturing facilities and suppliers are located outside the United States.

Our foreign operations subject us to certain risks, including: effects of fluctuations in foreign currency exchange rates; the impact of local economic conditions; local product preferences and seasonality and product requirements; local difficulty to effectively establish and expand our business and operations in international markets; disruptions of capital and trading markets; restrictions and potentially negative tax implications of transfer of capital across borders; differing labor regulations; other factors beyond our control, including potential political instability, terrorism, acts of war, natural disasters and diseases, including the coronavirusCOVID-19 discussed below; unexpected changes and increased enforcement of regulatory requirements and various state, federal and international, intellectual property, environmental, antitrust, anti-corruption, fraud and abuse (including anti-kickback and false claims laws) and employment laws; interruption to transportation flows for delivery of parts to us and finished goods to our customers; and laws and regulations on foreign investment in the United States under the jurisdiction of the Committee on Foreign Investment in the United States, or CFIUS, and other agencies, including the Foreign Investment Risk Review Modernization Act, or FIRRMA, adopted in August 2018.

A small percentage of our products are subject to export control regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and by the Export Administration Regulations administered by the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”). Based on the nature of the product, its ultimate end use and country of destination, we are sometimes subject to foreign assets control and economic sanctions regulations administered by OFAC, which restrict or prohibit our ability to transact with certain foreign countries, certain individuals and entities identified on the Treasury Department’s “Denied Parties List.” Under the OFAC regulations, the sale or transfer of certain equipment to a location outside the United States may require prior approval in the form of an export license issued by the BIS or the U.S. Department of State’s Directorate of Defense Trade Controls. Some potential international transactions may also be restricted or prohibited based on the location, nationality or identity of the potential end user, customer or other parties to the transaction or may require prior authorization in the form of an OFAC license. Any delay in obtaining required governmental approvals could affect our ability to conclude a sale or timely commence a project, and the failure to comply with all such controls could result in criminal and/or civil penalties. These international transactions may otherwise be subject to tariffs and import/export restrictions from the United States or other governments.

Our overall success as a global business depends, in part, upon our ability to succeed in differing economic, social and political conditions. In order to continue to succeed in our international sales strategy, we must continue developing and implementing policies and strategies that are effective in each location where we do business, which could negatively affect our profitability.

Rising inflation and interest rates could negatively impact our revenues, profitability and borrowing costs. In addition, if our costs increase and we are not able to correspondingly adjust our commercial relationships to account for this increase, our net income would be adversely affected, and the adverse impact may be material.

Inflation rates, particularly in the U.S., have increased recently to levels not seen in years. Increased inflation may result in decreased demand for our products, increased operating costs (including our labor costs), reduced liquidity, and limitations on our ability to access credit or otherwise raise debt and equity capital. In addition, the United States Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation. Increases in interest rates have had, and could continue to have, a material impact on our borrowing costs. In an inflationary environment, we may be unable to raise the sales prices of our products at or above the rate at which our costs increase, which could reduce our profit margins and have a material adverse effect on our financial results and net income. We also may experience lower than expected sales if there is a decrease in spending on products in our industry in general or a negative reaction to our pricing. A reduction in our revenue would be detrimental to our profitability and financial condition and could also have an adverse impact on our future growth.

We have substantial debt and other financial obligations, and we may incur even more debt. Any failure to meet our debt and other financial obligations or maintain compliance with related covenants could harm our business, financial condition and results of operations.

Our credit agreement provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (collectively, the “Credit Agreement”) and will mature on December 22, 2025. As of December 31, 2021,2022, we had outstanding borrowings of $49.5$47.7 million under the Credit Agreement.

Pursuant to the terms of the Credit Agreement, we are subject to various covenants, including negative covenants that restrict our ability to engage in certain transactions, which may limit our ability to respond to changing business and economic conditions. Such negative covenants include, among other things, limitations on our ability and the ability of our subsidiaries to:

In addition, the Credit Agreement contains certain financial covenants, including a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio, each of which will be tested at the end of each fiscal quarter of the Company.

If we areWe were not in compliance with certain financial covenants under the Credit Agreement as of theseSeptember 30, 2022 but we were able to cure such noncompliance by entering into an amendment to the Credit Agreement, dated November 8, 2022. If we are not able to maintain compliance with the covenants under the Credit Agreement, as amended, or are unsuccessful in obtaining waivers or amendments for any covenant defaults in the future, in addition to other actions our lenders may require, the amounts outstanding under the Credit Agreement may become immediately due and payable. This immediate payment may negatively impact our financial condition. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely harm our ability to incur additional indebtedness on acceptable terms. Our cash flow and capital resources may be insufficient to pay interest and principal on our debt in the future. If that should occur, our capital raising or debt restructuring measures may be unsuccessful or inadequate to meet our scheduled debt service obligations, which could cause us to default on our obligations and further impair our liquidity.

Further, based upon our actual performance levels, our covenants relating to leverage and fixed charges could limit our ability to incur additional debt, which could hinder our ability to execute our current business strategy.

Our ability to make scheduled payments on our debt and other financial obligations and comply with financial covenants depends on our financial and operating performance. Our financial and operating performance will continue to be subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond our control. Failure within any applicable grace or cure periods to maymake such payments, comply with the financial covenants, or any other non-financial or restrictive covenant, would create a default under our Credit Agreement. Our cash flow and existing capital resources may be insufficient to repay our debt at maturity, in which such case prior thereto we would have to extend such maturity date, or otherwise repay, refinance and or restructure the obligations under the Credit Agreement, including with proceeds from the sale of assets, and additional equity or debt capital. If we are unsuccessful in obtaining such extension, or entering into such repayment, refinance or restructure prior to maturity, or any other default existed under the Credit Agreement, our lenders could accelerate the indebtedness under the Credit Agreement, foreclose against their collateral or seek other remedies, which would jeopardize our ability to continue our current operations.

Ethical concerns surrounding the use of our products and misunderstanding of the nature of our business could adversely affect our ability to develop and sell our existing products and new products.

Some of our products may be used in areas of research involving animal research and other techniques presently being explored in the life science industry. These techniques have drawn negative attention in the public forum. Government authorities may regulate or prohibit any of these activities. Additionally, the public may disfavor or reject these activities.

If we are not able to manage our growth, our operating profits may be adversely impacted.

Our success will depend on the expansion of our operations through organic growth, and we may execute acquisitions in the future to augment this growth. Effective growth management will place increased demands on our management team, operational and financial resources and expertise. To manage growth, we must optimize our operational, financial and management processes and systems, and information technology infrastructure and hire and train additional qualified personnel. While we are currently in the process of evaluating potential improvements to and consolidation of many of our processes and systems, we may not be able to implement these changes in an efficient or timely manner. Failure to manage our growth effectively, including failure to improve our systems and processes timely or efficiently, could impair our ability to generate revenues or could cause our expenses to increase more rapidly than revenues, resulting in operating losses or reduced profitability.

Foreign currency exchange rate fluctuations may have a negative impact on our reported earnings.

We are subject to the risks of fluctuating foreign currency exchange rates, which could have an adverse effect on the sales price of our products in foreign markets, as well as the costs and expenses of our foreign subsidiaries. A substantial amount of our revenues is derived from international operations, and we anticipate that a significant portion of revenues will continue to come from outside the United States in the future. As a result, currency fluctuations among the United States dollar, British pound, euro and the other currencies in which we do business have caused and will continue to cause foreign currency translation and transaction gains and losses. We have not used forward exchange contracts to hedge our foreign currency exposures. We attempt to manage foreign currency risk through the matching of assets and liabilities. In the future, we may undertake to manage foreign currency risk through hedging methods, including foreign currency contracts. We recognize foreign currency gains or losses arising from our operations in the period incurred. We cannot guarantee that we will be successful in managing foreign currency risk or in predicting the effects of exchange rate fluctuations upon our future operating results because of the number of currencies involved, the variability of currency exposure and the potential volatility of currency exchange rates. We cannot predict with any certainty changes in foreign currency exchange rates or the degree to which we can address these risks.

Failure or inadequacy of our information technology infrastructure or software could adversely affect our day-to-day operations and decision-making processes and have an adverse effect on our performance.

We depend on accurate and timely information and numerical data from key software applications to aid our day-to-day business, financial reporting and decision-making and, in many cases, proprietary and custom-designed software is necessary to operate our business.

Disruption caused by the failure of these systems, the underlying equipment, or communication networks could delay or otherwise adversely impact day-to-day business and decision making, could make it impossible for us to operate critical equipment, and could have an adverse effect on our performance. Although we maintain disaster recovery procedures for our critical systems, our disaster recovery plans may not fully mitigate the effect of any such disruption. Disruptions could be caused by a variety of factors, such as catastrophic events or weather, power outages, or cyber-attacks on our systems by outside parties.

We review our information technology (IT)(“IT”) systems regularly to assess and implement opportunities to improve or upgrade our enterprise resource planning (ERP)(“ERP”) or other information systems required to operate our business effectively. Our ERP systems are critical to our ability to accurately maintain books and records, record transactions, provide important information to our management and prepare our financial statements. The implementation of any IT systems, including ERP systems, has required in the past, and may continue to require, the investment of significant financial and human resources. In addition, we may not be able to successfully complete the implementation of the ERP systems without experiencing difficulties. Any disruptions, delays or deficiencies in the design and implementation of any IT system, including ERP systems could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations or otherwise operate our business.

An information security incident, including a cybersecurity breach, could have a negative impact to our business or reputation.

To meet business objectives, we rely on both internal IT systems and networks, and those of third parties and their vendors, to process and store sensitive data, including confidential research, business plans, financial information, intellectual property, and personal data that may be subject to legal protection. The extensive information security and cybersecurity threats, which affect companies globally, pose a risk to the security and availability of these IT systems and networks, and the confidentiality, integrity, and availability of our sensitive data. We continually assess these threats and make investments to increase internal protection, detection, and response capabilities, as well as ensure our third-party providers have the required capabilities and controls, to address this risk. To date, we have not experienced any material impact to the business or operations resulting from information or cybersecurity attacks; however, because of the frequently changing attack techniques, along with the increased volume and sophistication of the attacks, there is the potential for us to be adversely impacted. This impact could result in reputational, competitive, operational or other business harm as well as financial costs and regulatory action. Additionally, the California Consumer Privacy Act of 2018 (the “CCPA”), which became effective on January 1, 2020, provides private rights of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties. Compliance with the CCPA and other current and future applicable privacy, cybersecurity and related laws can be costly and time-consuming. Significant capital investments and other expenditures could also be required to remedy cybersecurity problems and prevent future breaches, including costs associated with additional security technologies, personnel, experts and credit monitoring services for those whose data has been breached. These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred and may not meaningfully limit the success of future attempts to breach our information technology systems.

We may incur additional restructuring costs or not realize the expected benefits of our initiatives to reduce operating expensesin the future.

We may not be able to implement all of the actions that we intend to take in the restructuring of our operations, and we may not be able to fully realize the expected benefits from such realignment and restructuring plans or other similar restructurings in the future. In addition, we may incur additional restructuring costs in implementing such realignment and restructuring plans or other similar future plans in excess of our expectations. The implementation of our restructuring efforts, including the reduction of our workforce, may not improve our operational and cost structure or result in greater efficiency of our organization; and we may not be able to support sustainable revenue growth and profitability following such restructurings.

If we are not able to manage our growth, our operating profits may be adversely impacted.

Our success will depend on the expansion of our operations through organic growth, and we may execute acquisitions in the future to augment this growth. Effective growth management will place increased demands on our management team, operational and financial resources and expertise. To manage growth, we must optimize our operational, financial and management processes and systems, and information technology infrastructure and hire and train additional qualified personnel. While we are currently in the process of evaluating potential improvements to and consolidation of many of our processes and systems, we may not be able to implement these changes in an efficient or timely manner. Failure to manage our growth effectively, including failure to improve our systems and processes timely or efficiently, could impair our ability to generate revenues or could cause our expenses to increase more rapidly than revenues, resulting in operating losses or reduced profitability.

We may incur a variety of costs in connection with acquisitions we may seek to consummate in the future, and we may never realize the anticipated benefits of our acquisitions due in part to difficulties integrating the businesses, operations and product lines.

Our business strategy has historically included the acquisition of businesses, technologies, services or products that we believe are a strategic fit with our business. If we were to undertake future acquisitions, the process of integrating the acquired business, technology, service and/or product(s) may result in unforeseen operating difficulties and expenditures and potentially absorb significant management attention that would otherwise be available for ongoing development of our business. Moreover, we may fail to realize the anticipated benefits of an acquisition as rapidly as expected, or at all. Such transactions are inherently risky, and any such recent or future acquisitions could reduce stockholders’ ownership, cause us to incur debt, expose us to future liabilities and result in amortization expenses related to intangible assets with definite lives, which may adversely impact our ability to undertake future acquisitions on substantially similar terms. We may also incur significant expenditures in anticipation of an acquisition that is never realized.

Our ability to achieve the benefits of acquisitions depends in part on the integration and leveraging of technology, operations, sales and marketing channels and personnel. Integration is a complex, time-consuming and expensive process and may disrupt our business if not completed in a timely and efficient manner. We may have difficulty successfully integrating acquired businesses, and their domestic and foreign operations or product lines, and as a result, we may not realize any of the anticipated benefits of the acquisitions we make. We cannot assure that our growth rate will equal the growth rates that have been experienced by us, and these other acquired companies, respectively, operating as separate companies in the past.

Failure to raise additional capital or generate the significant capital necessary to implement our acquisition strategy, expand our operations, and invest in new products, or pursue acquisitions or other business development opportunities could reduce our ability to compete and result in less revenues.

We anticipate that our financial resources, which include available cash, cash generated from operations, and debt and equity capacity, will be sufficient to finance operations and capital expenditures for at least the next twelve months. However, this expectation is premised on the current operating plan, which may change as a result of many factors, including market acceptance of new products and future opportunities with collaborators. Consequently, we may need additional funding sooner than anticipated. In addition, our borrowings under the Credit Agreement may not be sufficient to fundsupport our acquisition strategy.pursuit of potential acquisitions or other business development opportunities. In such case, our inability to raise sufficient capital on favorable terms and in a timely manner (if at all) could seriously harm our business, product development, and acquisition efforts. In addition, our Credit Agreement contains various negative covenants that, among other things, restrict our ability to incur additional indebtedness and make acquisitions for aggregate consideration in excess of $5.0 million. If future financing is not available or is not available on acceptable terms, we may have to alter our operations or change our business strategy. We cannot assure you that the capital required to fund operations, or our acquisition strategy will be available in the future.

If we fail to retain key personnel and hire, train and retain qualified employees, we may not be able to compete effectively, which could result in reduced revenue or increased costs.

Our success is highly dependent on the continued services of key management, technical and scientific personnel. Our management and other employees may voluntarily terminate their employment at any time upon short notice. The loss of the services of any member of the senior management team, including the Chief Executive Officer James Green; theor Interim Chief Financial Officer Michael Rossi; or any of theour  managerial, technical or scientific staff may significantly delay or prevent the achievement of product development, our growth strategies and other business objectives. Our future success will also depend on our ability to identify, recruit and retain additional qualified scientific, technical and managerial personnel. We operate in several geographic locations where labor markets are particularly competitive, including the Boston, Massachusetts and Minneapolis, Minnesota metropolitan areas, England, and Germany where demand for personnel with these skills is extremely high and is likely to remain high. Additionally, the COVID-19 pandemic and other macroeconomic factors have exacerbated these challenges, contributed to a sustained labor shortage, and increased turnover rates. As a result, competition for qualified personnel is intense, particularly in the areas of general management, finance, information technology, engineering and science, and the process of hiring suitably qualified personnel is often lengthy and expensive, and may become more expensive in the future. If we are unable to hire and retain a sufficient number of qualified employees, our ability to conduct and expand our business could be seriously reduced.

Our success will depend partly on our ability to operate without infringing on or misappropriating the intellectual property rights of others.

We may be sued for infringing on the intellectual property rights of others, including the patent rights, trademarks and trade names of third parties. Intellectual property litigation is costly, and the outcome is uncertain. If we do not prevail in any intellectual property litigation, in addition to any damages we might have to pay, we could be required to stop the infringing activity, or obtain a license to or design around the intellectual property in question. If we are unable to obtain a required license on acceptable terms, or are unable to design around any third-party patent, we may be unable to sell some of our products and services, which could result in reduced revenue.

AsThe shares of Series E Preferred Stock of Biostage held by the Company could fluctuate considerably in value and could become worthless.

In connection with the Biostage Settlement, Biostage issued shares of its Series E Convertible Preferred Stock (the “Series E Preferred Stock”) to the Company on June 10, 2022 in satisfaction of $4.0 million of Biostage’s total indemnification obligations to the Company. The Series E Preferred Stock is convertible at any time at the option of the Company into such number of shares of Biostage common stock determined by dividing (a) the $1,000 face value of the Series E Preferred Stock plus all accrued and unpaid dividends thereon by (b) the average of the volume weighted average trading prices of Biostage’s common stock, which is currently quoted on the OTCQB Marketplace, for the 60 consecutive trading days prior to the conversion. In the event Biostage has a resultsubsequent qualified offering of our spin-offits common stock, (which is defined as an offering of Harvard Apparatus Regenerative Technology, Inc.Biostage common stock that coincides with its uplisting onto Nasdaq, the first subsequent public offering by Biostage, or the first subsequent private placement by Biostage resulting in gross proceeds to Biostage of at least $4,000,000), now knownthe Series E Preferred Stock is mandatorily converted into Biostage common stock at the applicable qualified offering price.

Due to Biostage’s limited operating history, their overall financial condition, (including whether it can continue as a going concern without additional capital) and the limited trading volume and liquidity of Biostage’s common stock, the value of the Series E Preferred Stock could fluctuate considerably or become worthless.

Biostage together with certain related transactions, third parties may seek to hold us responsible for Biostage’s liabilities, including liabilities that Biostage has assumed from us.

Third parties may continue to seek to hold us responsible for Biostage’s liabilities, including any of the liabilities that Biostage agreed to retain or assume in connection with the separation of the Biostage business from our businesses, and related spin-off distribution. On April 14, 2017, representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts (the “Court”), against us and other defendants, including Biostage, as well as another third party.party (the “Biostage Litigation”). The complaint seekssought payment for an unspecified amount of damages and alleges that the plaintiff sustained terminal injuries allegedly caused by products, including one synthetic trachea scaffold and two bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in Europe in 2012 and 2013.

On September 15, 2021, Biostage’s products liability insurance carrier, which insures us as an additional insured and which had appointed defense counsel and had been defending both Biostage and us on this case, notified us and Biostage that it was denying coverage under the applicable policy for the lawsuit and would no longer be providing a defense to us or Biostage with respect thereto, or covering related legal expenses incurred after September 30, 2021. The insurance carrier also filed a corresponding complaint for declaratory judgment with the Court asking the Court to declare that said insurance provider is not required to defend, indemnify or provide coverage to us or Biostage with respect to the lawsuit.

On January 24, 2022, the Superior Court Suffolk County, granted our and Biostage’s jointly filed motion for a preliminary injunction against the insurance carrier requiring that it continue to pay legal expenses incurred by Biostage and us in connection with the underlying lawsuit during the pendency of the insurance coverage lawsuit, as well as awarding reasonable attorneys’ fees and costs incurred by the parties in connection with seeking the preliminary injunction. The insurance carrier has filed a notice of appeal of the preliminary injunction.

We continue to believe thatOn April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs of the Biostage Litigation and Biostage’s products liability insurance carrier’s grounds for denying coverage are without merit,carriers (the “Biostage Settlement”), which resolved all claims by and intend to vigorously defend against this complaint for declaratory judgmentbetween the parties and Biostage’s product liability insurance carriers and resulted in the dismissal with prejudice of the wrongful death claim and all claims between the Company, Biostage and the insurance carrier’s denialcarriers. The Biostage Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the claim and related matters in order to, among other things, restore our rights to seek insurance coverage for any damages awarded inCompany or Biostage. Biostage has indemnified the lawsuit. However, notwithstanding the preliminary injunction, there can be no assurance that we and Biostage will prevail in the insurance coverage litigation. As such, other than what has been ordered in the preliminary injunction, it is unclear at this point the full extent to which our liability insurance coverage will reimburse usCompany for all or any portion of any defense costs or damageslosses and expenses, including legal expenses that the Company incurred in connection with the underlying case. Biostage Litigation and the Biostage Settlement.

Additionally, while there can be no assurance of prevailing, we intend to defend the plaintiff’s claims against us in the underlying case vigorously. A trial date has been set for October 2022 and the parties are currently preparing for trial. If we lose on the merits and a jury awards damages, we do not know the exact amount of compensatory and, potentially, punitive damages that could be awarded, but the amounts could be substantial. Further, while Biostage has agreed to indemnify us for claims and losses relating to certain liabilities that it has assumed from us, including liabilities in connection with the sale of Biostage’s products and other liabilities related to the operation of Biostage’s business, we cannot be assured that Biostage will have the ability to indemnify us against the liabilities we may incur in this lawsuit, in particular due to Biostage’s overall financial condition. If Biostage is unable to satisfy its obligations under its indemnity to us and if the insurance carrier does not fund the defense of the case, we may have to fund the entire defense of the case and satisfy the liabilities in this lawsuit, which could have an adverse impact on our financial condition or cash flows.

Risks Related to Our Common Stock

If we raise additional funds through the sale of equity or convertible debt or equity-linked securities, existing percentages of ownership in our common stock will be reduced and these transactions may dilute the value of our outstanding common stock.

We may raise additional funds through the sale of equity or convertible debt or equity-linked securities to repay our existing indebtedness, implement our acquisition strategy, expand our operations and/or invest in new products. If we so raise additional funds through such sales, existing percentages of ownership in our common stock will be reduced and these transactions may dilute the value of our outstanding common stock. We may issue securities that have rights, preferences and privileges senior to our common stock. If we raise additional funds through collaborations or licensing arrangements, we may relinquish rights to certain of our technologies or products, or grant licenses to third parties on terms that are unfavorable.

Our stock price has fluctuated in the past and could experience substantial declines in the future.

The market price of our common stock has experienced significant fluctuations and may become volatile and could decline in the future, perhaps substantially, in response to various factors including, but not limited to:

In addition, public stock markets have experienced extreme price and trading volatility. The stock market and the Nasdaq Global Market in general, and the biotechnology industry and small cap markets in particular, have experienced significant price and volume fluctuations that at times may have been unrelated or disproportionate to the operating performance of those companies. These broad market and industry factors may further harm the market price of our common stock, regardless of our operating performance. In the past, securities class action litigation has often been instituted following periods of volatility in the market price of a company’s securities. A securities class action suit against us could result in substantial costs, potential liabilities and the diversion of management’s attention and resources.

If we raise additional funds through the sale of equity or convertible debt or equity-linked securities, existing percentages of ownership in our common stock will be reduced and these transactions may dilute the value of our outstanding common stock.

We may raise additional funds through the sale of equity or convertible debt or equity-linked securities to repay our existing indebtedness, implement our acquisition strategy, expand our operations and/or invest in new products. If we raise additional funds through such sales, existing percentages of ownership in our common stock will be reduced and these transactions may dilute the value of our outstanding common stock. We may issue securities that have rights, preferences and privileges senior to our common stock. If we raise additional funds through collaborations or licensing arrangements, we may relinquish rights to certain of our technologies or products, or grant licenses to third parties on terms that are unfavorable

General Risks

We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine or any other geopolitical tensions.

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions. We are continuing to monitor the situation in Ukraine and globally and assessing its potential impact on our business.

Additionally, Russia’s prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People’s Republic, and the so-called Luhansk People’s Republic, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication (“SWIFT”) payment system. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets and lead to instability and lack of liquidity in capital markets, potentially making it more difficult for us to obtain additional funds.

Any of the abovementioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K.

The COVID-19 outbreak has significantly impactimpacted worldwide economic conditions and has negatively impacted our business, financial condition and results of operations.

The ongoing global outbreak of COVID-19 has caused disruptions to our business andpandemic has had a negative impact on our operations to date. Sincedate and the global outbreakfuture impacts of the pandemic and any resulting economic impact remain largely unknown and continue to evolve. Many countries worldwide continue to issue COVID-19 related restrictive orders in an attempt to control the effects of the pandemic. In particular, during the beginning of 2022, China implemented area-wide shutdowns in order to control the spread of COVID-19, manywhich continued for different parts of our customers, particularly academic research institutions,China throughout 2022. Such shutdowns have reduced laboratory work which has negatively impacted, and will continue to negatively impact, our sales. While many of our customers, including academic labs, have reopened, a significant number of them remained closed or at significantly lower capacity levels through during 2021. Additionally, to ensure business continuity while maintaining a safe environment for employees aligned with guidance from government and health organizations, we transitioned a significant portion of our workforce to work-from-home while implementing social distancing requirements and other measures to allow manufacturing and other personnel essential to production to continue work within the Company’s facilities. Business travel continues to be significantly reduced. While a portion of our workforce has returned to in-office work and travel is less restricted, we continue to have restrictions which represent disruptions which can impact productivity including sales and marketing activities. Accordingly, these conditions in addition to the overallhad an adverse impact on the global economyour financial results for fiscal 2022 and if they continue could continue to have a negativean adverse impact on our results of operations and cash flows.future financial results.

Disruptions to the global supply chain and the economic environment have adversely affected our financial results and cash flows.

The global supply chain has experienced significant disruptions during 2021 as a result ofdue to electronic component and labor shortages and other macroeconomic factors thatwhich have emerged since the onset of the COVID-19, pandemic. As a result of these disruptions, we have experienced delays in supplier deliveries, extended lead times, andleading to increased cost of freight, purchased materials and manufacturing labor costs. These disruptions have delayed and may continue to delay the timing of somecosts, while also delaying customer orders and expected deliveries of our products.shipments. We believe that these supply chain trends will continue into 2023. These conditions, in 2022.addition to the overall impacts on the global economy, have negatively impacted our results of operations and cash flows.

Additionally, during 2022 the global economy has experienced high levels of inflation, rising interest rates, significant fluctuations in currency values, and increasing economic uncertainty, particularly in Europe. Our results of operations have been negatively impacted by higher costs of raw materials, labor and freight resulting from inflationary pressures. These factors and global events including the ongoing military conflict between Russia and Ukraine, a softening economy in Europe, and rising interest rates on our debt have had a negative impact on our results of operations.

If business interruptions resulting from COVID-19 or the current macroeconomic conditions described above were to be prolonged or expanded in scope, our business, financial condition, results of operations and cash flows would likely be negatively impacted. If the impacts of the supply chain disruptions are more severe than we expect, it could result in longer lead times and further increased costs, all of which could materially adversely affect our business, financial condition and results of operations.

If we incur higher costs as a result of trade policies, treaties, government regulations or tariffs, we may become less profitable.

There continues to be uncertainty about the relationship between the United States and foreign countries, including with respect to trade policies, treaties, government regulations and tariffs. We are unable to predict whether or when tariffs will be imposed or the impact of any such future tariff increases.

We may be the subject of lawsuits from counterparties to acquisitions and divestitures, including an acquiring company or its stockholders, an acquired company’s previous stockholders, a divested company’s stockholders or our current stockholders.

We may be the subject of lawsuits from either an acquiring company or its stockholders, an acquired company’s previous stockholders, a divested company’s stockholders or our current stockholders. Such lawsuits could result from the actions of the acquisition or divestiture target prior to the date of the acquisition or divestiture, from the acquisition or divestiture transaction itself or from actions after the acquisition or divestiture. Defending potential lawsuits could cost us significant expense and detract management’s attention from the operation of the business. Additionally, these lawsuits could result in the cancellation of or the inability to renew certain insurance coverage that would be necessary to protect our assets.

Rising commodity and precious metals costs could adversely impact our profitability.

Raw material commodities such as resins, and precious metal commodities such as platinum are subject to wide price variations. Increases in the costs of these commodities and the costs of energy, transportation and other necessary services may adversely affect our profit margins if we are unable to pass along any higher costs in the form of price increases or otherwise achieve cost efficiencies such as in manufacturing and distribution.

Provisions of Delaware law, or of our charter and bylaws may make a takeover more difficult, which could cause our stock price to decline.

Provisions in our certificate of incorporation and bylaws and in the Delaware corporate law may make it difficult and expensive for a third party to pursue a tender offer, change in control or takeover attempt, which is opposed by management and the board of directors. Public stockholders who might desire to participate in such a transaction may not have an opportunity to do so. We have a staggered board of directors that makes it difficult for stockholders to change the composition of the board of directors in any one year. These anti-takeover provisions could substantially impede the ability of public stockholders to change our management and board of directors. Such provisions may also limit the price that investors might be willing to pay for shares of our common stock in the future.

None.

Our facilities perform manufacturing, research and development, sales and marketing, and administration functions. As of December 31, 2021,2022, we leased the following principal facilities: 

We also lease additional facilities in Cambridge, England; Kista, Sweden; Beijing, China; and Shanghai, China; St. Augustin, Germany; and Montreal, Canada.China. We believe our current facilities are adequate for our needs for the foreseeable future.

For information related to legal proceedings, see the discussion in Note 14 to the Consolidated Financial Statements included in “Part IV, Item 15. Exhibits, Financial Statement Schedules” of this report, which information is incorporated by reference into this Item 3.

Not Applicable.

PART II

Market Information

Our common stock has been quoted on the Nasdaq Global Market since our initial public offering on December 7, 2000, and trades under the symbol “HBIO.”

Stockholders

There were 9493 holders of record of our common stock as of March 4, 2022.1, 2023. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of our common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

Dividend Policy

We have never declared or paid cash dividends on our common stock in the past and do not intend to pay cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our Board of Directors and will depend on our financial condition, results of operations, capital requirements and other factors our Board of Directors deems relevant.

Forward-Looking Statements

The following section of this Annual Report on Form 10-K contains statements that are not statements of historical fact and are forward-looking statements within the meaning of federal securities laws. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Factors that may cause our actual results to differ materially from those in the forward-looking statements include those factors described in “Item 1A. Risk Factors” in this Annual Report on Form 10-K. You should carefully review all of these factors, as well as the comprehensive discussion of forward-looking statements on page 1 of this Annual Report on Form 10-K.

Overview

Harvard Bioscience is a leading developer, manufacturer and seller of technologies, products and services that enable fundamental advances in life science applications, including research, pharmaceutical and therapy discovery, bio-production and preclinical testing for drugpharmaceutical and therapy development. Our products and services are sold globally to customers rangeranging from renowned academic institutions and government laboratories to the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe and China, we sell through a combination of direct and distribution channels to customers around the world.

Recent Developments

COVID-19Global Supply Chain and Economic Environment

The COVID-19 pandemic has had a negative impact on our operations since its onset in March 2020. While the Company has improved revenues and operations during 2021, a higher degree of volatility and uncertainty in the global economy has been observed during this period, and with it uncertainty around economic impacts. Since the global outbreak of COVID-19, many customers, particularly academic research institutions, have reduced laboratory work which has negatively impacted, and will continue to negatively impact, our sales. While many of our customers, including academic labs, have reopened, a significant number of them remained closed or at significantly lower capacity levels during 2021. Additionally, to ensure business continuity while maintaining a safe environment for employees aligned with guidance from government and health organizations, we transitioned a significant portion of our workforce to work-from-home while implementing social distancing requirements and other measures to allow manufacturing and other personnel essential to production to continue work within our facilities. Business travel was significantly reduced during this period. While a portion of the workforce has returned to in-office work and travel is less restricted, we continue to have restrictions which represent disruptions which can impact productivity including sales and marketing activities.

The global supply chain has experienced significant disruptions during 2021 due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of the COVID-19, pandemic, leading to increased cost of freight, purchased materials, and manufacturing labor costs, while also delaying customer shipments. We believe these supply chain trends will continue through 2022.into 2023. These conditions, in addition to the overall impactimpacts on the global economy, have negatively impacted our results of operations and cash flows.

Revenues forAdditionally, during 2022 the years ending December 31, 2021global economy has experienced high levels of inflation, rising interest rates, significant fluctuations in currency values, and 2020, wereincreasing economic uncertainty, particularly in Europe. Our results of operations have been negatively impacted due toby higher costs of raw materials, labor and freight resulting from inflationary pressures. These factors and global events including the conditions noted. ongoing military conflict between Russia and Ukraine, a softening economy in Europe, and rising interest rates on our debt have had a negative impact on our results of operations.

If business interruptions resulting from COVID-19the current macroeconomic conditions described above were to be more prolonged or expanded in scope, ourthe Company’s business, financial condition, results of operations and cash flows would likely be further negatively impacted. We willIf the impacts of the supply chain disruptions are more severe than we expect, it could result in longer lead times and further increased costs, all of which could materially adversely affect our business, financial condition and results of operations.

COVID-19

The COVID-19 pandemic has had a negative impact on our operations to date and the future impacts of the pandemic and any resulting economic impact remain largely unknown and continue to actively monitor this situationevolve. Many countries worldwide continue to issue COVID-19 related restrictive orders in an attempt to control the effects of the pandemic. In particular, during the beginning of 2022, China implemented area-wide shutdowns in order to control the spread of COVID-19, which continued in different parts of China throughout 2022. Such shutdowns had an adverse impact on our financial results for fiscal 2022 and will implement actions necessary to maintain business continuity.if they continue could have an adverse impact on our future financial results.

See Part I, Item 1. “Business–Our History and Strategy” of this report for a discussion of recent significant acquisitions, divestitures and other developments.

July 2019 Restructuring PlanActivities

In DecemberOn an ongoing basis, we review our business, the global economy, the healthcare industry, and the markets in which we compete to identify operational efficiencies, enhance commercial capabilities and align our cost base and infrastructure with customer needs and our strategic plans.

During 2019, we implementedinitiated a restructuring program to improve operational efficiency and reduce costs which entailed consolidating and downsizing several sites and reducing headcount in Europe and North America. This program was completed in 2021. Restructuring costs under this program were $1.3 million for the July 2019 Restructuring Plan (the “Restructuring Plan”) to deliver significant cost savings beginning in 2020year ended December 31, 2021. Substantially all of these costs have been included as a component of general and to support delivery of the strategic action planadministrative expenses.

During 2022, we announced in September 2019. The Restructuring Plan included consolidationcompleted a review of our Connecticut manufacturing plantbusiness and product portfolio and identified opportunities to rationalize our product portfolio, improve our cost structure, optimize our sales organization. In connection with our existing Massachusetts site, downsizingthis review, we identified certain non-strategic products for discontinuation and recorded charges of operations$1.6 million in the United Kingdomcost of revenue. We also incurred $0.9 million in severance expenses in connection with headcount reductions in Europe and a reduction in force across the business equal to approximately 10% of our headcount. The Restructuring Plan is expected to deliver annualized run-rate savings of $4.0 million to $5.0 million. The original initiatives under the Restructuring Plan were completed in the second half of 2020.

We continued to execute the Restructuring Plan during the COVID-19 pandemic and expanded the scope of the restructuring by realigning our organizational structure to reduce management layers and accelerated our efforts to move to a leaner organization and operation. As a result of this expanded scope, we eliminated additional headcount during 2020, and in the first quarter of 2021, communicated to employees our plan to consolidate certain engineering operations and eliminate two small facilities in Europe.

We incurred cash outlays of $9.0 million as a result of the actions taken under the Restructuring Plan and incremental cost reduction actions taken and other business improvements. The Restructuring Plan generated significant cost savings while removing waste and inefficiency and improving our overall skillset in our workforce. A portion of these savings have been reinvested in sales, marketing and other areas to support profitable growth, as well as additional labor costs added in 2021 to address the global supply chain and other macroeconomic impacts discussed throughout this MD&A.North America.

Selected Results of Operations

Year ended December 31, 20212022 compared to year ended December 31, 20202021

In the table below, we provide an overview of selected operating metrics.

Revenues

Revenues for the year ended December 31, 2021, were $118.9 million, an increase of approximately $16.8decreased $5.6 million, or 16.5%4.7%, compared to revenues of $102.1$113.3 million for the year ended December 31, 2020. As a result of the COVID-19 pandemic, many customers, particularly academic research institutions, had been unable2022, compared to maintain laboratory work resulting in a large number of academic labs were closed during 2020. Revenue improved significantly in 2021 due to academic labs reopening. We believe that academic lab activity was below pre-COVID levels$118.9 million for the majority of 2021, but activityyear ended December 31, 2021. The decrease in revenues was significantly higher than prior year. Revenue also increased due primarily to improveda decrease in sales of our preclinical products, from our Preclinical product family associated with improved sales processes, market growthlower revenue in Asia,Europe and product enhancements released in 2020.an unfavorable currency impact of $3.4 million.

Gross profit

Gross profit increased $9.7decreased $6.8 million, or 16.6%10.1%, to $60.8 million for the year ended December 31, 2022, compared with $67.7 million for the year ended December 31, 2021, compared with $58.02021. Gross profit in 2022 was negatively impacted by charges of $1.6 million related to the discontinuation of certain non-strategic products. Our gross profit was also negatively impacted by the decrease in revenue noted above, as well as higher costs of labor, material and freight. Gross margin decreased 3.2% to 53.7% for the year ended December 31, 2020, due primarily2022 as compared to 56.9% for the increase in revenue noted. Grossyear ended December 31, 2021. Of the reduction of gross margin, improved1.4%  was driven by the previously mentioned inventory charges, with the remaining impact due to improved product mix and higher volume but was adversely impactedreduced overhead absorption from lower revenue, offset by higher supply chain, logistics and manufacturing labor costs . pricing increases during 2022.

The global supply chain has experienced significant disruptions during 2021 due to electronic componentcomponents and labor shortages and other macroeconomic factors, leading to the increased cost noted.costs as noted above. We believeexpect these supply chain trends willto continue in 2022.into 2023.

Sales and marketing expenses

Sales and marketing expenses increased $4.7$0.4 million, or 23.7%1.6%, to $25.0 million for the year ended December 31, 2022, compared to $24.6 million for the year ended December 31, 2021, compared to $19.9 million during the same period in 2020.2021. The increase was primarily due to investmentsincreases in new marketingtravel and sales support personnelattendance at in-person trade shows offset by lower variable compensation. Travel and relatedtrade show costs as more of our employees returned from part-time to full-time status and higher variable sales costs associated with the increasewere lower in sales as compared to the prior period.year due to COVID-19 related restrictions.

General and administrative expenses

General and administrative expenses wereincreased slightly by $0.2 million, or 0.8%, to $24.5 million for the year ended December 31, 2022, compared with $24.3 million for the year ended December 31, 2021, an increase of $0.8 million, or 3.4%, compared with $23.5 million for the year ended December 31, 2020.2021. The increase was primarily due to higher compensationexternal costs asrelated to our employees returned from part-time to full-time statusproduct portfolio review and higher stock-based compensation costs which were partiallylegal expenses mostly offset by lower restructuring and related initiative costs as compared to the prior period.variable compensation.

Research and development expenses

Research and development expenses wereincreased $1.5 million, or 14.2%, to $12.3 million for the year ended December 31, 2022, compared with $10.8 million for the year ended December 31, 2021, an increase of $2.1 million, or 24.3%, compared with $8.7 million for the year ended December 31, 2020.2021. The increase was primarily due to higher compensation costs asincreased spending associated with new product development in our employees returned from part-time to full-time status and increased project related costs aligned with our organic growth initiatives noted.preclinical product lines.

Amortization of intangible assets

Amortization of intangible asset expensesassets was $6.1 million for the year ended December 31, 2022, compared to $5.8 million for the year ended December 31, 2021, compared2021. Amortization expense in 2022 was higher due to $5.7 million fora change in the estimated remaining economic life of certain intangible assets related to products we decided to discontinue in 2022.

Settlement of litigation

During the year ended December 31, 2020.2022, we recorded a net credit of $0.2 million related to the Biostage Settlement consisting of $5.2 million in settlement and legal expenses accrued during the three months ended March 31, 2022, offset by credits of $4.9 million and $0.5 million during the three months ended June 30, 2022 and September 30, 2022, respectively. The credits consisted of adjustments to the reserve against an indemnification receivable from Biostage to reflect: i) the issuance by Biostage of Series E Convertible Preferred Stock to us on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligations, ii) the payment by Biostage of legal fees associated with the Biostage Settlement, and iii) other accrual adjustments.

Interest expense

Interest expense wasincreased $1.0 million, or 65.5%, to $2.5 million for the year ended December 31, 2022, compared with $1.5 million for the year ended December 31, 2021, a decrease of $3.3 million, or 68.1%, compared with $4.8 million for the year ended December 31, 2020.2021. The decreaseincrease was primarily due to lowerthe result of higher interest rates under our new Credit Agreement as well as slightly higher average borrowing balances.  Subsequent to year-end, the Company entered into on December 22, 2020.

Debt extinguishment and related costs

On December 22, 2020, we entered into the Credit Agreement which replaced our prior credit facility. In connection with our entry into the Credit Agreement, we paid $0.6 million in debt extinguishment costs, wrote off $0.8 million of unamortized debt issuance costs, and paid $0.5 million to terminate ouran interest rate swap agreements.

Income tax expense

Income tax expense for the year ended December 31, 2021 and 20202022 was $0.3 million compared to $0.1 million and $0.5 million, respectively.for the year ended December 31, 2021. The effective tax rates for the yearyears ended December 31, 2022 and 2021 and 2020 were (106)(3.7)% and (7)(105.7)%, respectively. The difference between our effective tax rates in 2021 and 2020 compared to the U.S. statutory tax rate of 21% is primarily due to changes in reserves for uncertain tax positions in 2022, and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of our deferred tax assets.assets in 2021. We currently have valuation allowances against substantially all of our net operating loss carryforwards and tax credit carryforwards.

Liquidity and Capital Resources

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

As of December 31, 2022, we held cash and cost reduction initiatives.cash equivalents of $4.5 million, compared with $7.8 million at December 31, 2021. Borrowings outstanding under our Credit Agreement were $47.7 million and $49.5 million as of December 31, 2022 and December 31, 2021, respectively.

On December 22, 2020, we entered into the Credit Agreement that provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub-facility). Our borrowings under the Credit Agreement mature on December 22, 2025.

The Credit Agreement replaced the prior credit facility which consisted of a revolving credit facility and a term loan and was scheduled to expire on January 31, 2023. In connection with entering into the Credit Agreement, we paid off the prior credit facility with borrowings under the Credit Agreement and incurred $1.9 million in fees and expenses.

As of December 31, 2021, we held cash and cash equivalents of $7.8 million, compared with $8.3 million at December 31, 2020. Borrowings outstanding was $49.4 million as of both December 31, 2021 and December 31, 2020. Total debt, net of cash and cash equivalents, was $41.6 million at December 31, 2021, compared to $41.1 million at December 31, 2020. As of December 31, 2021 and December 31, 2020, cash held by our foreign subsidiaries was $2.8 million and $2.5 million.

Condensed Consolidated Cash Flow Statements

Cash provided by operations was $1.3 million and $9.3 million for the year ended December 31, 2021 and 2020, respectively. Cash flow from operations for year ended December 31, 2021, was lower than the prior year period due to higher levels of working capital. During 2021 we experienced longer supplier lead times due to global supply chain disruptions as well as an overall increase in customer demand and orders. Accordingly, inventory purchasing has increased to ensure continuity of supply for order fulfillment. Also, accounts receivable has increased due to revenue growth. Cash flow from operations for the year ended December 31, 2020, was positively impacted by reductions in working capital due to lower revenue and management efforts to offset the initial significant negative impacts that the COVID-19 pandemic had on revenue.

Cash used in investing activities was $1.3 million and $1.4 million for the years ended December 31, 2021 and 2020, respectively, and consisted primarily of capital expenditures in manufacturing and information technology infrastructure.

Cash used in financing activities was $0.3 million for the year ended December 31, 2021. During this period, we made term loan installments payments under the Credit Agreement of $2.0 million, with net borrowings of $2.0 million under the revolving facility. We also received proceeds of $3.3 million from the exercise of stock options and employee stock purchases and paid $3.5 million for taxes related to net share settlement of equity awards.

Cash used in financing activities was $8.0 million for the year ended December 31, 2020. During this period, we made net payments to reduce total debt by $5.6 million. Prior to entering the Credit Agreement, we made payments under the prior credit facility of $11.1 million to reduce term loan borrowings, with net borrowings of $2.8 million under the revolving facility. At the closing of the Credit Agreement, we repaid in full the prior credit facility, which included $43.9 million of term loan borrowings and $2.8 million of outstanding revolver borrowings. Under the Credit Agreement, we borrowed $49.4 million, consisting of a $40.0 million term loan and $9.4 million drawn on the revolving loan. We paid $1.9 million of costs associated with the debt refinancing. We also received proceeds of $0.7 million from the exercise of stock options and employee stock purchases and paid $1.1 million for taxes related to net share settlement of equity awards.

Borrowing

On December 22, 2020, we entered into the Credit Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $ 10.0 million swingline loan sub-facility). Obligations under the Credit Agreement are secured by substantially all of our assets and are guaranteed by certain of our direct, domestic wholly-owned subsidiaries. We are compliant with all covenants under the Credit Agreement as of December 31, 2021. Our borrowings under the Credit Agreement will matureboth maturing on December 22, 2025. See2025 (See Note 11 to the Consolidated Financial Statements for a detailed discussion regarding our Credit Agreement.

We had borrowingsincluded in “Part IV, Item 15. Exhibits, Financial Statement Schedules” of $49.4 million outstanding as of both December 31, 2021 and December 31, 2020. Available borrowing capacity under the revolving line of credit was $13.6 million as of December 31, 2021.this report). As of December 31, 2021 and 2020,2022, the weighted average interest rate on our borrowings was 3.0%7.6%, and 3.25%, respectively.the available and unused borrowing capacity under the Credit Agreement, as amended, was $2.9 million. Total revolver borrowing capacity is limited by our consolidated net leverage ratio as defined under the Credit Agreement, as amended.

On April 28, 2022, and November 8, 2022, we entered into amendments to the Credit Agreement and Pledge and Security Agreement (respectively, the “April 2022 Amendment” and the “November 2022 Amendment”) (see Note 11 to the Consolidated Financial Statements included in “Part IV, Item 15. Exhibits, Financial Statements Schedules” of this report). The April 2022 Amendment, among other things modified the financial covenant relating to the consolidated net leverage ratio, and consented to the Biostage Settlement, including without limitation the receipt by the Company of convertible preferred stock in Biostage, and the securities issuable upon conversion thereof, as partial payment for Biostage’s indemnification obligations in connection with the Biostage Settlement. (See Note 15 to the Consolidated Financial Statements included in “Part IV, Item 15. Exhibits, Financial Statements Schedules” of this report). In consideration for the April 2022 Amendment, the Company paid fees of $0.2 million to the lenders and administrative agent. The November 2022 Amendment, among other things, modified the financial covenant relating to the consolidated net leverage ratio and the definition of Consolidated EBITDA used in the calculation of certain financial covenants, including to exclude non-cash inventory charges related to the Company’s decision to discontinue non-strategic products. In consideration for the November 2022 Amendment, the Company paid fees of $0.2 million to the lenders and administrative agent. As of December 31, 2022, we are in compliance with the financial covenants of the Credit Agreement, as amended.

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

Condensed Consolidated Cash Flow Statements

Cash provided by operations was $1.2 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively. Cash flow from operations for the year ended December 31, 2022, was lower than the comparable period in the prior year due to increased operating losses as noted and payments related to the Biostage Litigation, offset by the positive impact of improved accounts receivable collections and accounts payable management activities. During the year ended December 31, 2022, we paid approximately $4.0 million in connection with the Biostage Settlement.

Cash used in investing activities was $1.6 million and $1.3 million for the years ended December 31, 2022 and 2021, respectively, and consisted primarily of capital expenditures in manufacturing and information technology infrastructure.

Cash used in financing activities was $2.8 million for the year ended December 31, 2022. During this period, we made term loan payments under the Credit Agreement of $3.2 million, with net borrowings of $1.4 million under the revolving facility. We also received proceeds of $0.6 million from the exercise of stock options and employee stock purchase plan purchases and paid $1.6 million for taxes related to net share settlement of equity awards.

Cash used in financing activities was $0.3 million for the year ended December 31, 2021. During this period, we made term loan installments payments under the Credit Agreement of $2.0 million, with net borrowings of $2.0 million under the revolving credit facility. We also received proceeds of $3.3 million from the exercise of stock options and employee stock purchases and paid $3.5 million for taxes related to net share settlement of equity awards.

Impact of Foreign Currencies

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

During the year ended December 31, 2021,2022, changes in foreign currency exchange rates resulted in a favorable translation effect on our consolidated revenues and on our consolidated net loss. Changes in foreign currency exchange rates resulted in a favorablean unfavorable effect on revenues of approximately $1.7$3.4 million and an unfavorablea favorable effect on expenses of approximately $1.8$3.3 million.

The translation of foreign currency into U.S. dollars included as a component of comprehensive income during the year ended December 31, 20212022 resulted in a loss of approximately $2.4$3.0 million, compared to a gainloss of $1.7$2.4 million for the year ended December 31, 2020.2021.

In addition, the currency exchange rate fluctuations included as a component of net loss resulted in approximatelycurrency losses of $(0.4) million and $(0.1) million and $(0.5) million in currency loss during the yearyears ended December 31, 2022 and 2021, and 2020, respectively.

Recent Accounting Pronouncements

For information on recent accounting pronouncements impacting our business, see “Recent Accounting Pronouncements” included in Note 2 to the Consolidated Financial Statements included in “Part IV, Item 15. Exhibits, Financial Statement Schedules” of this report.

Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, investments, income taxes, litigation and other contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following are the more significant judgments and estimates used in the preparation of our consolidated financial statements.

Intangible AssetsValuation of Biostage Series E Preferred Stock

Intangible assets are comprisedDuring 2022, we received 4,000 shares of existing technology, customer contracts and contractual relationships, and other definite-lived and indefinite-lived intangible assets. Identifiable intangible assets resulting from the acquisitions of entities accounted for usingSeries E Preferred Stock in connection with the purchase method of accounting areBiostage Settlement. The Series E Preferred Stock was initially recorded at an estimated by management based on the fair value of assets received. Identifiable definite-lived intangible assets are being amortized over$3.9 million and has a carrying value at December 31, 2022, of $4.1 million, inclusive of accrued dividends.  We estimated the periodinitial fair value of the Series E Preferred Stock using an income approach which considered a discount rate and an estimated benefit using the straight-line method and estimated useful lives ranging from four to fifteen years.time until conversion into Biostage’s common stock.

We amortize definite-lived assets over their estimated useful lives. We evaluate definite-lived and indefinite-lived assets forhave elected the provisions within ASC 321 Investment Securities to subsequently measure the Series E Preferred Stock at its original cost minus impairment, whenever eventsif any, plus or minus changes resulting from observable price changes in circumstances indicateorderly transactions for the carrying valueidentical or a similar investment of an asset may not be recoverable. The carrying value is not recoverable if it exceeds the undiscounted cash flows resulting from the useBiostage. As of the assetDecember 31, 2022, there have been no observable price changes or indicators of impairment and its eventual disposition. Our estimates of future cash flows attributabletherefore there have been no measurement adjustments to our assets require significant judgment based on our historical and anticipated results and are subject to many factors. Factors we consider important which could trigger an impairment review include significant negative industry or economic trends, significant loss of clients, and significant changes in the manner of our use of the acquired assets or the strategy for our overall business.

When we determine that the carrying value of the assets may not be recoverable based uponSeries E Preferred Stock.

Due to Biostage’s limited operating history, their overall financial condition which includes the existencerequirement to raise additional capital in order to continue as a going concern and the limited trading volume and liquidity of one or moreBiostage’s common stock, the value of the above indicators of impairment, we measure the potential impairment based on a projected discounted cash flow method using a discount rate determined by our management to be commensurate with the risk inherent in our current business model. An impairment loss is recognized only if the carrying amount of the asset is not recoverable and exceeds its fair value. Different assumptions and judgmentsSeries E Preferred Stock could materially affect the calculation of the fair value of our assets.fluctuate considerably or become worthless.

Income Taxes and Valuation Allowance

We are subject to income taxes in the U.S. and numerous foreign jurisdictions. Our annual tax rate is based on income, statutory tax rates, tax reserve changes and tax planning opportunities available to us in the various jurisdictions in which we operate. Significant judgment is required in determining the annual tax rate and in evaluating our tax positions. We regularly assess the likelihood of tax adjustments in each of the tax jurisdictions in which we have operations and account for the related financial statement implications. We have established tax reserves that we believe are appropriate given the possibility of tax adjustments. Determining the appropriate level of tax reserves requires significant judgment regarding the uncertain application of tax laws. Reserves are adjusted when information becomes available or when an event occurs indicating a change in the reserve is appropriate. Changes in tax reserves could have a material impact on our financial condition or results of operations.

Significant judgment is also required in determining the amount of deferred tax assets that will ultimately be realized and corresponding deferred tax asset valuation allowance. When estimating the necessary valuation allowance, we consider all available evidence for each jurisdiction including historical operating results, estimates of future taxable income and the feasibility of ongoing tax planning strategies. If new information becomes available that would alter our estimate of the amount of deferred tax assets that will ultimately be realized, we adjust the valuation allowance through income tax expense. Changes in the deferred tax asset valuation allowance could have a material impact on our financial condition or results of operations.

Excess and Obsolete Inventory

Inventories are priced at the lower of cost (first-in, first-out method) or net realizable value. When necessary, the write-down of inventory to its net realizable value is recorded for obsolete or slow-moving inventory based on assumptions about future demand and marketability of products, the impact of new product introductions and specific identification of items, such as product discontinuance or engineering/material changes. In the future if these factors are less favorable than our projected expectations additional inventory write-downs may be required.

Not Applicable.

The information required by this item is contained in the financial statements referenced in “Part IV, Item 15. Exhibits, Financial Statement Schedules” of this report, which financial statements are appended to this report. An index of those financial statements is found on page F-1.

None.

This Report includes the certifications of our Chief Executive Officer and Interim Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). See Exhibits 31.1 and 31.2. This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.

Disclosure controls and procedures refer to controls and other procedures designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the U.S. Securities and Exchange Commission. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, as appropriate to allow timely decisions regarding our required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management was required to apply its judgment in evaluating and implementing possible controls and procedures.

We carried out an evaluation, under the supervision and with the participation our Chief Executive Officer and Interim Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered in this Report. Based upon the evaluation described above, our Chief Executive Officer and Interim Chief Financial Officer have concluded that they believe that our disclosure controls and procedures were effective, as of December 31, 2021,2022, in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Interim Chief Financial Officer, to allow timely decisions regarding required disclosures, and is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed by and under the supervision of our Chief Executive Officer and Interim Chief Financial Officer and effected by our management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles, (3) provide reasonable assurance that receipts and expenditures are being made only in accordance with authorizations of management and directors, and (4) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the consolidated financial statements.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. It is a process that involves human diligence and compliance and is therefore subject to human error and misjudgment. In general, evaluations of effectiveness for future periods are subject to risk as controls may become inadequate due to changes in conditions or the degree of compliance with key processes or procedures could deteriorate.

Our management evaluated the effectiveness of our internal control over financial reporting as of December 31, 20212022 using the criteria set forth in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).Commission. As a result of that evaluation, management has concluded that our internal control over financial reporting was effective as of December 31, 2021.2022.

The effectiveness of our internal control over financial reporting as of December 31, 20212022 has also been audited by Grant Thornton LLP, our independent registered public accounting firm, as stated in their report, which is included below in Item 9A(e).

There has been no change in the Company's internal control over financial reporting as of December 31, 2021,2022, that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. We continue to monitor the impact of the COVID-19 pandemic and, despite many of our employees working remotely, have not experienced any changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

The design of any system of control is based upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated objectives under all future events, no matter how remote, that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may not deteriorate. Because of their inherent limitations, systems of control may not prevent or detect all misstatements. Accordingly, even effective systems of control can provide only reasonable assurance of achieving their control objectives.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Harvard Bioscience, Inc.

Opinion on internal control over financial reporting

We have audited the internal control over financial reporting of Harvard Bioscience, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2021,2022, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021,2022, based on criteria established in the 2013 Internal Control—Control—Integrated Framework issued by COSO.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended December 31, 2021,2022, and our report dated March 11, 20229, 2023 expressed an unqualified opinion on those financial statements.

Basis for opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Reportreport on Internal Control over Financial Reporting (“Management’s Report”Report’). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and limitations of internal control over financial reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ GRANT THORNTON LLP

Boston, Massachusetts

Hartford, Connecticut
March 11, 2022

9, 2023

None.

Not applicable.

PART III

Incorporated by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with our 20222023 Annual Meeting of Stockholders.

Incorporated by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with our 20222023 Annual Meeting of Stockholders.

Incorporated by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with our 20222023 Annual Meeting of Stockholders.

Incorporated by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with our 20222023 Annual Meeting of Stockholders.

Incorporated by reference to our definitive Proxy Statement to be filed pursuant to Regulation 14A under the Exchange Act in connection with our 20222023 Annual Meeting of Stockholders.

PART IV

The following documents are filed as part of this Annual Report on Form 10-K or incorporated by reference as indicated:

(a)    Financial Statements, Schedules, and Exhibits. We have listed our consolidated financial statements filed as part of this annual report in the index to consolidated financial statements on page F-1.

(b)    Exhibits. We have listed the exhibits filed as part of this annual report in the accompanying exhibit index, which follows the signature page to this annual reportreport.

(c)    Financial Statement Schedules. We have omitted all financial statement schedules because they are not applicable or not required or because we have included the necessary information in our consolidated financial statements or related notes.

None.

HARVARD BIOSCIENCE, INC.

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to condensed consolidated financial statements.

See accompanying notes to consolidated financial statements.