UNITED STATES

SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549

FORM 10-Q

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

For the quarterly period ended March 31, ~~2022~~2023

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

For the transition period ~~from_____to _____~~from to

Commission file number 001-33957

HARVARD BIOSCIENCE, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware~~04-3306140~~

04-3306140

(State or other jurisdiction of ~~(I.R.S. Employer~~

Incorporation or organization)

(I.R.S. Employer Identification No.)

84 October Hill Road, Holliston, Massachusetts 01746

(Address of Principal Executive Offices, including zip code)

(508) 893-8999

(Registrant’s telephone number, including area code)

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

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

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

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

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

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

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

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

As of April ~~29, 2022,~~20, 2023, there were ~~41,241,449~~42,190,043 shares of the registrant’s common stock issued and outstanding.

	March 31,			December 31,			March 31,			December 31,
	2022			2021			2023			2022
Assets
Current assets:
Cash and cash equivalents	$	5,433		$	7,821		$	3,789		$	4,508
Accounts receivable, net		20,274			21,834			17,737			16,705
Inventories		28,711			27,587			26,861			26,439
Other current assets		5,030			4,341			4,062			3,472
Total current assets		59,448			61,583			52,449			51,124
Property, plant and equipment, net		3,499			3,415			3,424			3,366
Operating lease right-of-use assets		6,605			6,897			5,505			5,816
Goodwill		57,356			57,689			56,618			56,260
Intangible assets, net		25,878			27,385			19,641			21,014
Other long-term assets		5,258			5,375			7,941			7,780
Total assets	$	158,044		$	162,344		$	145,578		$	145,360
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	2,720		$	3,235		$	2,970		$	3,811
Current portion of operating lease liabilities		2,151			2,142			2,130			2,135
Accounts payable		6,218			4,911			5,978			6,447
Deferred revenue		3,956			4,266			4,121			3,370
Other current liabilities		12,181			10,762			8,018			7,486
Total current liabilities		27,226			25,316			23,217			23,249
Long-term debt, net		46,244			45,095			41,083			43,013
Deferred tax liability		1,442			1,558			546			590
Operating lease liabilities		6,159			6,488			4,938			5,282
Other long-term liabilities		598			486			1,454			1,006
Total liabilities		81,669			78,943			71,238			73,140
Commitments and contingencies - Note 12
Commitments and contingencies - Note 13
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized		0			0
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 41,241,449 shares issued and outstanding at March 31, 2022; 41,142,876 shares issued and outstanding at December 31, 2021		452			452
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized								-			-
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 42,190,043 shares issued and outstanding at March 31, 2023; 42,081,707 shares issued and outstanding at December 31, 2022								455			454
Additional paid-in-capital		226,203			225,650			230,108			229,008
Accumulated deficit		(139,554	)		(132,674	)		(141,568	)		(142,190	)
Accumulated other comprehensive loss		(10,726	)		(10,027	)		(14,655	)		(15,052	)
Total stockholders' equity		76,375			83,401			74,340			72,220
Total liabilities and stockholders' equity	$	158,044		$	162,344		$	145,578		$	145,360

Three Months Ended March 31,

2022

2021

Net loss
$ (6,880 ) $ (669 )
Other comprehensive loss:

Foreign currency translation adjustments
(699 ) (1,325 )
Comprehensive loss
$ (7,579 ) $ (1,994 )

	Three Months Ended March 31,
	2023			2022

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

																																Accumulated
																					*Number*					*Additional*						*Other*			*Total*
																					*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders*’
																					*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Equity*
Balance at December 31, 2022																						42,082		$	454	$	229,008		$	(142,190	)	$	(15,052	)	$	72,220
Stock option exercises																						39			1		103			-			-			104
Vesting of restricted stock units																						125			-		-			-			-			-
Shares withheld for taxes																						(56	)		-		(156	)		-			-			(156	)
Stock-based compensation expense																						-			-		1,153			-			-			1,153
Net income																						-			-		-			622			-			622
Other comprehensive income																						-			-		-			-			397			397
Balance at March 31, 2023																						42,190		$	455	$	230,108		$	(141,568	)	$	(14,655	)	$	74,340

												Accumulated																				*Accumulated*
	*Number*					*Additional*						*Other*						*Total*			*Number*					*Additional*						*Other*			*Total*
	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’			*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Stockholders*’
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*			*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Equity*
Balance at December 31, 2021		41,143		$	452	$	225,650		$	(132,674	)	$	(10,027	)	$	0		$	83,401			41,143		$	452	$	225,650		$	(132,674	)	$	(10,027	)	$	83,401
Stock option exercises		11			0		31			0			0			0			31			11			-		31			-			-			31
Vesting of restricted stock units		151			0		0			0			0			0			0			151			-		-			-			-			-
Shares withheld for taxes		(64	)		0		(501	)		0			0			0			(501	)		(64	)		-		(501	)		-			-			(501	)
Stock-based compensation expense		-			0		1,023			0			0			0			1,023			-			-		1,023			-			-			1,023
Net loss		-			0		0			(6,880	)		0			0			(6,880	)		-			-		-			(6,880	)		-			(6,880	)
Other comprehensive loss		-			0		0			0			(699	)		0			(699	)		-			-		-			-			(699	)		(699	)
Balance at March 31, 2022		41,241		$	452	$	226,203		$	(139,554	)	$	(10,726	)	$	0		$	76,375			41,241		$	452	$	226,203		$	(139,554	)	$	(10,726	)	$	76,375

Balance at December 31, 2020		47,153		$	444	$	232,357		$	(132,386	)	$	(13,066	)	$	(10,668	)	$	76,681
Stock option exercises		311			4		1,920			0			0			0			1,924
Vesting of restricted stock units		340			0		0			0			0			0			0
Shares withheld for taxes		(108	)		0		(464	)		0			0			0			(464	)
Stock-based compensation expense		-			0		968			0			0			0			968
Net loss		-			0		0			(669	)		0			0			(669	)
Other comprehensive loss		-			0		0			0			(1,325	)		0			(1,325	)
Balance at March 31, 2021		47,696		$	448	$	234,781		$	(133,055	)	$	(14,391	)	$	(10,668	)	$	77,115

		Three Months Ended March 31,							Three Months Ended March 31,
		2022			2021				2023			2022
Cash flows from operating activities:
Net loss		$	(6,880	)	$	(669	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Net income (loss)									$	622		$	(6,880	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation			382			445				333			382
Amortization of intangible assets			1,466			1,464				1,388			1,466
Amortization of deferred financing costs			70			70				70			70
Stock-based compensation expense			1,023			968				1,153			1,023
Deferred income taxes and other			(123	)		(53	)			(55	)		(123	)
Gain on sale of product line										(403	)		-
Changes in operating assets and liabilities:
Accounts receivable			1,506			584				(923	)		1,506
Inventories			(1,308	)		(602	)			(292	)		(1,308	)
Other assets			(466	)		(94	)			(308	)		(466	)
Accounts payable and accrued expenses			2,729			(245	)			(150	)		2,729
Deferred revenue			(300	)		(135	)			741			(300	)
Other liabilities			(85	)		(696	)			(364	)		(85	)
Net cash (used in) provided by operating activities			(1,986	)		1,037

Net cash provided by (used in) operating activities										1,812			(1,986	)
Cash flows from investing activities:
Additions to property, plant and equipment			(471	)		(151	)			(224	)		(471	)
Additions to intangible assets			0			(150	)
Net cash used in investing activities			(471	)		(301	)

Proceeds from sale of product line										512			-
Net cash provided by (used in) investing activities										288			(471	)
Cash flows from financing activities:
Borrowing from revolving line of credit			1,500			0
Repayment of revolving line of credit			0			(4,000	)
Borrowing on bank line of credit										1,500			1,500
Repayment on bank line of credit										(2,500	)		-
Repayment of term debt			(936	)		(500	)			(1,841	)		(936	)
Debt issuance costs			0			(101	)
Proceeds from exercise of stock options			31			1,924
Proceeds from exercise of stock options and employee stock purchase plan										104			31
Taxes paid related to net share settlement of equity awards			(501	)		(464	)			(156	)		(501	)
Net cash provided by (used in) financing activities			94			(3,141	)

Net cash (used in) provided by financing activities										(2,893	)		94
Effect of exchange rate changes on cash			(25	)		(97	)			74			(25	)
Decrease in cash and cash equivalents			(2,388	)		(2,502	)			(719	)		(2,388	)
Cash and cash equivalents at beginning of period			7,821			8,317				4,508			7,821
Cash and cash equivalents at end of period		$	5,433		$	5,815			$	3,789		$	5,433

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
Cash paid for interest		$	383		$	458			$	1,172		$	383
Cash paid (received) for income taxes, net of refunds		$	107		$	(113	)
Cash paid for income taxes, net of refunds									$	(134	)	$	107

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, ~~“Harvard Bioscience” or~~ the “Company”) as of March 31, ~~2022~~2023 and for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, ~~2021,~~2022, consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of March 31, ~~2022,~~2023, results of operations and comprehensive ~~loss~~income (loss) and cash flows for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, as applicable, have been made. The results of operations for the three months ended March 31, ~~2022,~~2023, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022. There have been no material changes in the Company’s significant accounting policies during the three months ended March 31, ~~2022.~~2023.

On ~~March 11, 2020,~~ ~~the World Health Organization declared the outbreak of a novel coronavirus (COVID-~~19~~) as a pandemic. The COVID-~~19 pandemic has had a negative impact on the Company’s operations to date and the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. 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. Also, countries world-wide continue to issue COVID-19 ~~related policies in an attempt to control the pandemic. In particular, during the beginning of~~ ~~2022,~~ ~~China implemented area-wide shutdowns in order to control the spread of COVID-~~~~19.~~ 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 continued to have restrictions which represent disruptions that can impact productivity including sales and marketing activities.

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

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

In ~~November 2021,~~January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2021~~-~~10,~~~~Government Assistance (Topic~~ ~~832~~~~), Disclosures by Business Entities About Government Assistance~~, which requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the assistance, the related accounting policies used to account for government assistance, the effect of government assistance on the entity’s financial statements, and any significant terms and conditions of the agreements, including commitments and contingencies. The new standard impacts footnote disclosures and is effective for the Company’s ~~December 31, 2022~~ ~~annual financial statements. The Company is currently evaluating the potential impact of adopting ASU~~ ~~2021~~-10 ~~will have on its consolidated financial statements.~~

In ~~January~~ ~~2017,~~ ~~the FASB issued ASU~~ 2017-04, ~~Intangibles~~—Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ~~(ASU~~ (“ASU 2017-0404”), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. ASU 2017-04 iswill be effective for the Company for fiscal years beginning after December 15, 2022. The Company ~~is currently evaluating~~adopted ASU 2016-13 effective January 1, 2023 with no impact to the ~~potential impact that adopting~~consolidated financial statements. The Company will perform future goodwill impairment test according to ASU 2017-0404. ~~will have on its consolidated financial statements.~~

In September 2016, the FASB issued ASU No. 2016-13, Financial ~~Instruments~~—Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on FinancialInstruments ~~(ASU~~(‘ASU 2016-1313’), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurredlosses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The FASB issued several ASUs after ASU 2016-13 to clarify implementation guidance and to provide transition relief for certain entities. ASU 2016-13 iswill be effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company ~~is evaluating the impact that adopting~~adopted ASU 2016-13 ~~and related amendments will have on its~~effective January 1, 2023 which resulted in an immaterial impact to the consolidated financial statements.

The change in the carrying amount of goodwill for the three months ended March 31, ~~2022,~~2023 ~~were~~is as follows:

Identifiable intangible assets at March 31, ~~2022~~2023 and December 31, ~~2021~~2022 consist of the following:

Intangible asset amortization expense was $1.4 million and $1.5 million for ~~each~~ the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022, respectively. Estimated amortization expense of existing amortizable intangible assets for each of the five succeeding years and thereafter as of March 31, ~~2022,~~2023, is as follows:

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

On an ongoing basis, the Company reviews the global economy, the healthcare industry, and the markets in which it competes to identify operational efficiencies, enhance commercial capabilities, and align its cost base and infrastructure with customer needs and its strategic plans. In order to realize these opportunities, the Company undertakes restructuring-type activities from time to time to transform its business. A portion of these transformation activities are considered restructuring costs under ~~ASC~~ ~~420~~– ~~Exit or Disposal Cost Obligations~~ ~~and are discussed below.~~

~~During~~ ~~2019,~~ the Company initiated a restructuring program to improve operational efficiency and reduce costs which entailed consolidating and downsizing several sites and headcount reductions in Europe and North America. This program was completed in ~~2021.~~ ~~Restructuring costs under this program were $0.6 million for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2021,~~ ~~substantially all of which have been included as a component of general and administrative expenses.~~

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

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

The components of lease expense for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, are as follows:

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

Supplemental balance sheet information related to the ~~Company's~~Company’s operating leases ~~was as follows:~~

~~Future minimum lease payments for operating leases for each~~ ~~twelve~~~~-month period subsequent to~~ ~~March 31, 2022,~~ are as follows:

Stock-based awards consist of stock options, time-based restricted stock units (“RSUs”), performance-based RSU’s and shares issued under the Company’s employee stock purchase plan. Activity under the Company’s equity incentive plans for the ~~three~~ ~~months ended~~ ~~March 31, 2022,~~ ~~was as follows:~~

~~Stock-based compensation expense for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022~~ ~~and~~ ~~2021,~~ ~~was allocated as follows:~~

~~As of~~ ~~March 31, 2022,~~ ~~the total compensation costs related to unvested awards~~ ~~not~~ ~~yet recognized is $8.2 million and the weighted average period over which it is expected to be recognized is approximately 2.2 years. The Company did~~ ~~not~~ ~~capitalize any stock-based compensation.~~

~~The weighted average estimated fair value of the performance-based RSUs that were granted during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022~~ ~~was $5.92 per unit. The following assumptions were used to estimate the fair value of the performance-based RSUs granted during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022~~ ~~using a Monte-Carlo valuation simulation:~~

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

~~For the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022,~~ ~~and~~ ~~2021,~~ the Company excluded from the calculations of diluted earnings per share approximately 3.5 million shares and 4.5 million shares, respectively, of weighted average shares of underlying stock-based awards as the impact of including these potential shares would be anti-dilutive.

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

As of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, the Company’s borrowings were ~~comprised of:~~as follows:

On December 22, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A., Wells Fargo Bank, National Association, and Silicon Valley Bank (together, the “Lenders”). All commitments and obligations under the Credit Agreement previously held by Silicon Valley Bank have now been assumed by Silicon Valley Bridge Bank, N. A. The Credit Agreement provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub facility) (collectively, the “Credit Facility”). The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s direct, domestic wholly-owned subsidiaries; none of the Company’s direct or indirect foreign subsidiaries has guaranteed the Credit Facility. The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of Harvard Bioscience, Inc., and each guarantor (including all or a portion of the equity interests in certain of the Company’s domestic and foreign subsidiaries). The Credit Facility matures on December 22, 2025. Issuance costs of $1.4 million are amortized over the contractual term to maturity date on a straight-line basis, which approximates the effective interest method. Available and unused borrowing capacity under the revolving line of credit was ~~$6.8~~$10.5 million as of March 31, ~~2022.~~2023 based on the Credit Agreement, as amended, pursuant to the April 2022 Amendment and November 2022 Amendment (both described below). Total revolver borrowing capacity is limited by the ~~Maximum Leverage~~consolidated net leverage ratio as defined under the amended Credit Agreement. ~~The Credit Facility replaced the Company’s prior credit facility, which was repaid with borrowings under the Credit Facility.~~

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

The effective interest rate on the ~~Credit Agreement~~Company borrowings ~~was 3.4%. The effective interest rate~~ for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, was ~~3.1%~~7.9 % and ~~3.3%~~3.1%, ~~respectively.~~respectively, and the weighted average interest rate as of March 31, 2023, net of the effect of the Company’s interest rate swaps, was 8.0%. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments.

~~Commencing on~~ ~~March 31, 2021,~~ ~~the outstanding~~The term loans ~~amortizes~~amortize in quarterly installments of ~~$0.5~~$0.75 million per quarter ~~on such date and during~~for each of the next three quarters ~~thereafter, $0.75~~and $1.0 million per quarter during the next ~~eight~~seven quarters ~~thereafter and $1.0 million per quarter~~ thereafter, with a balloon payment at maturity. Furthermore, within ninety days after the end of the Company’s fiscal year, ~~ended~~ ~~December 31, 2021,~~ ~~and for each fiscal year thereafter,~~ the term loans may be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, as defined in the agreement; provided that, in any fiscal year, any voluntary prepayments of the term loans shall be credited against the Company’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis for such fiscal year. As of December 31, 2022, the current portion of long-term debt included an excess cash flow sweep of $1.1 million which was paid on March 31, 2023. Amounts outstanding under the revolving credit facility can be repaid at any time but are due in full at maturity. ~~The Company made an excess cash flow sweep payment of $0.2 million during the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022.~~

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

On April 28, 2022, the Company entered into an amendment to the Credit Agreement ~~and Pledge and Security Agreement~~ (the ~~“Amendment”~~“April 2022 Amendment”)~~, among the Company,~~ pursuant to which the Lenders and ~~Citizens Bank, N.A., as the~~ administrative agent, ~~(the “Administrative Agent”). Pursuant to the Amendment, the Lenders and the Administrative Agent have agreed,~~ among other things, ~~(i) to modify~~modified the financial covenant relating to the consolidated net leverage ratio, and ~~(ii) to consent~~consented to the Biostage Settlement ~~described~~(as defined below), including without limitation the receipt by the Company of convertible preferred stock in Biostage Inc. (“Biostage”) and the securities issuable upon conversion thereof, as partial payment for Biostage’s indemnification obligations in connection with the Biostage Settlement. See Note 1314~~- “~~~~Subsequent Events~~”. for information regarding the Biostage Settlement. In consideration for the April 2022 Amendment, the Company paid ~~a fee~~fees of $0.2 million to the Lenders and administrative agent.

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

The Company was in compliance with the covenants of the Credit Agreement, as amended, ~~by the Amendment,~~ as of March 31, ~~2022.~~2023.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The following tables represent a disaggregation of revenue from contracts with customers for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:

The following tables represent a disaggregation of revenue by geographic destination for the three months ended March 31, ~~2022~~2023 and ~~2021:~~2022:

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

~~During the~~ ~~three~~ ~~months ended~~ ~~March 31, 2022~~ ~~and~~ ~~2021,~~ ~~the Company recognized revenue of $0.7 million and $1.2 million from contract liabilities existing at~~ ~~December 31, 2021~~ ~~and~~ ~~2020,~~ ~~respectively.~~

~~Allowance for doubtful accounts is based on the Company’s assessment of the collectability of accounts receivable. Activity in the allowance for doubtful accounts is as follows:~~

No customer accounted for more than 10% of revenues for the three months ended March 31, ~~2022~~2023 and ~~2021.~~2022. At March 31, ~~2022~~2023 and December 21, ~~2021,~~2022, no customer accounted for more than 10% of net accounts receivable.

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

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

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

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

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

Income tax ~~benefit~~expense (benefit) was ~~$0.1~~$0.6 million and $(0.1) million for the three months ended March 31, ~~2022~~2023 and ~~was less than $0.1 million for the~~ ~~three~~2022, ~~months ended~~ ~~March 31, 2021.~~ respectively. The effective tax rates for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022 were ~~2.0%~~48.5% and ~~2.2%~~2.0%, respectively.

The difference between the Company’s effective tax rates in ~~2022~~2023 and ~~2021~~2022 compared to the U.S. statutory tax rate of 21% is primarily due to a Global Intangible Low-Taxed Income (“GILTI”) inclusion to taxable income and changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company ~~currently~~ has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.

On April ~~14, 2017,~~ representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against the Company and other defendants, including Biostage, Inc. (f/k/a Harvard Apparatus Regenerative Technology, Inc.) (“Biostage”), a former subsidiary of the Company that was spun off in ~~2013,~~ ~~as well as another~~ ~~third~~ ~~party. The complaint seeks 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 ~~April 28,~~27, 2022, the Company and Biostage executed a settlement with the plaintiffs ~~(the “Settlement”)~~in the Biostage Litigation (as defined below) which ~~resolves~~resolved all claims relating to the ~~litigation. The settlement is~~litigation as described in Note 1314 – “~~Subsequent Events~~ –Litigation ~~Settlement~~”.Settlement.

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

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

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

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

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs of the Biostage Litigation and Biostage’s products liability insurance carriers (the ~~“Settlement”~~“Biostage Settlement”), which ~~resolves~~resolved all claims by and between the parties and Biostage’s product liability insurance carriers and resulted in the dismissal with prejudice of the wrongful death claim and all claims ~~relating to~~between the ~~litigation, including outstanding lawsuits with the plaintiffs~~Company, Biostage and~~one~~ of the insurance carriers. The Biostage Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company or Biostage. ~~The Company~~Biostage has ~~accrued $5.2 million of costs related to the legal fees and the Settlement as of~~ ~~March 31, 2022.~~ ~~Biostage is required to indemnify~~indemnified the Company for all losses and expenses, including legal expenses that the Company ~~incurs~~incurred in connection with the ~~litigation~~Biostage Litigation and the Biostage Settlement.

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

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

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

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

The book value of the ~~litigation and Settlement, if at all. Accordingly,~~shares of Series E Preferred Stock, inclusive of accrued dividends, as of March 31, ~~2022,~~2023 is $4.0 million and is included in the consolidated balance sheet as a component of Other long-term assets. The Company has elected the provisions within ASC 321 Investment Securities to subsequently measure the Series E Preferred Stock at its original cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Biostage. As of March 31, 2023, there have been no observable price changes or indicators of impairment and therefore, there have been no measurement adjustments to the carrying value of the Series E Preferred Stock.

On February 17, 2023, the Company ~~has fully reserved any receivables from Biostage~~completed the disposition of its Hoefer product line for cash consideration of $0.5 million. The carrying value of assets sold was $0.1 million resulting in a gain on disposition of $0.4 million which is recorded in Other income, net in the consolidated statement of operations for the three months ended March 31, 2023. Revenue and gross profit of this disposed product line included in the ~~financial results only reflect expected losses to be paid by~~condensed consolidated statement of operations for the ~~Company.~~three months ended March 31, 2023 and 2022 are not significant.

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

On April ~~28, 2022,~~6, 2023, all of the Company’s remaining Series E Preferred Stock, plus all accrued dividends, were converted into approximately 675,000 shares of Biostage common stock at the applicable qualified offering price of $6.00 per share. Immediately after the conversion, the Company ~~entered into an amendment~~owned approximately 5% of Biostage’s total common shares outstanding. Due to the Credit Agreement and Pledge and Security Agreement (the “Amendment”), among the Company, the Lenders, and Citizens Bank, N.A., as the administrative agent (the “Administrative Agent”). Pursuant to the Amendment, the LendersBiostage’s limited operating history, their overall financial condition and the ~~Administrative Agent have agreed, among other things, (i) to modify~~limited trading volumes and liquidity of their common stock, the ~~financial covenant relating to~~value of the consolidated net leverage ratio and (ii) to consent to the Settlement described above. In consideration for the Amendment, the Company paid a fee of $0.2 million to the Lenders and the Administrative Agent.Company’s investment in Biostage’s common stock could fluctuate considerably or become worthless.

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

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in “Item 2: Management’s Discussion and Analysis of Financial Condition andResultsofOperations.”These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, and our plans, objectives, expectations, and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,”“will,”“should,”“could,”“would,”“seek,”“expects,”“plans,”“aim,”“anticipates,”“believes,”“estimates,”“projects,”“predicts,”“intends,”“think,”“potential,”“objectives,”“optimistic,”“strategy,”“goals,”“sees,”“new,”“guidance,”“future,”“continue,”“drive,”“growth,”“long-term,”“projects,”“develop,”“possible,”“emerging,”“opportunity,”“pursue”and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. We discuss many of these risks in detail in our Annual Report on Form 10-K for the year ended December 31, ~~2021.~~2022 and our other filings with the SEC. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other factors, including factors of which we are not currently aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information. Harvard Bioscience, Inc. is referred to herein as “we,”“our,”“us,”and “the Company.”

~~On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic. The COVID-19 pandemic has had a negative impact on our operations to date~~Global Supply Chain and the future impacts of the pandemic and any resulting economic impact remain unknown and continuously evolving. Since the global outbreak of COVID-19, many customers, particularly academic research institutions, reduced laboratory work which has negatively impacted, and will continue to negatively impact, our sales. Also, countries world-wide continue to issue COVID-19 related policies in an attempt to control the pandemic. In particular, during the beginning of 2022, China implemented area-wide shutdowns in order to control the spread of COVID-19. 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 that can impact productivity including sales and marketing activities.Economic Environment

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

We believe that these global economic uncertainties and supply chain trends will continue through 2023. The COVID-19 pandemic continues to evolve, and the ~~rest~~future impact of ~~2022. These conditions in addition~~the pandemic is difficult to ~~the overall impact on the global economy have negatively impacted~~predict. If these factors are prolonged or are more severe than anticipated, our business, results of operations, and cash ~~flows.~~flow may be materially impacted.

If business interruptions resulting from COVID-19 were to be prolonged or expanded in scope, our business, financial condition, results of operations and cash flows would be negatively impacted. We will continue to actively monitor this situation and will implement actions necessary to maintain business continuity.

Three months ended March 31, ~~2022~~2023 compared to three months ended March 31, ~~2021.~~2022.

Revenues ~~for the three months ended March 31, 2022, were $28.8 million, an increase of approximately $1.8~~increased $1.2 million, or ~~6.6%~~4.2%, ~~compared~~ to ~~revenues of $27.0~~$30.0 million for the three months ended March 31, ~~2021. Revenues increased~~2023, compared to $28.8 million for the three months ended March 31, 2022. The increase in revenue was primarily due to ~~improved sales of~~growth in preclinical products, ~~from our preclinical product family associated with improved sales processes as well as improvements in order fulfillment processes~~ which ~~reduce order backlog. These improvements were~~was partially offset by ~~lower orders~~reduced revenue from ~~customers in Asia than~~ the ~~prior year due to COVID lockdowns in China in 2022 which delayed orders. We expect sales to China customers to remain at reduced levels until lockdown conditions are removed.~~discontinuation of non-strategic cellular and molecular products and unfavorable currency impacts.

Gross profit increased ~~$0.7~~$2.2 million, or ~~4.8%~~13.4%, to $18.3 million for the three months ended March 31, 2023 compared with $16.2 million for the three months ended March 31, ~~2022, compared with $15.4 million~~2022. Gross margin increased to 61.2% for the three months ended March 31, ~~2021, due primarily to the increase in revenue noted. Gross margin decreased to~~2023, compared with 56.2% for the three months ended March 31, ~~2022, compared with 57.2% for the three months ended March 31, 2021.~~2022. The ~~decrease~~increase in gross margin was due primarily to the increase in revenue, a higher ~~supply chain, logistics~~mix of preclinical products which carries a higher gross margin than our other product lines, and ~~manufacturing labor costs.~~ the discontinuation in the second half of 2022 of lower margin non-strategic products.

The global supply chain has experienced significant disruptions due to electronic ~~component~~components and labor shortages and other macroeconomic factors, leading to ~~the~~ increased ~~cost noted.~~costs. We ~~believe~~expect that these supply chain trends will continue through the rest of ~~2022. These costs were partially offset by volume increases and improved product mix and pricing.~~2023.

Sales and marketing expenses ~~increased $1.3~~decreased $0.7 million, or ~~24.2%~~10.6%, to ~~$6.7~~$6.0 million for the three months ended March 31, ~~2022,~~2023, compared to ~~$5.4~~$6.7 million during the same period in ~~2021.~~2022. The ~~increase~~decrease was primarily due to ~~investments in new marketing~~reduced salaries and ~~sales support personnel and~~travel expenses partially offset by increases in ~~travel and attendance at in-person trade shows. Travel and tradeshow costs were lower in the prior year quarter due to COVID restrictions.~~variable compensation.

General and administrative expenses were $6.3 million for ~~both~~each of the three months ended March 31, ~~2022,~~2023 and ~~March 31, 2021. General and administrative expenses for the three months ended March 31, 2022 experienced lower restructuring expenses and variable compensation which were offset by higher~~2022. This includes decreases in consulting costs associated with enterprise-level operational improvement ~~planning.~~initiatives offset by increases in variable compensation.

Research and development expenses ~~were~~decreased $0.3 million, or 10.0%, to $2.9 million for the three months ended March 31, 2023, compared with $3.2 million for the three months ended March 31, ~~2022, an increase of $0.7 million, or 29.5%, compared with $2.5 million for the three months ended March 31, 2021.~~2022. The ~~increase~~decrease was primarily due to reduced salaries and consulting costs ~~involving investments~~partially offset by increases in ~~our preclinical product lines.~~variable compensation.

Amortization of intangible asset expenses were ~~$1.5~~$1.4 million for ~~both~~ the three months ended March 31, ~~2022, and~~2023, compared with $1.5 million for the three months ended March 31, ~~2021.~~2022. Amortization expense decreased as we completed the amortization of certain intangible assets discontinued during 2022.

~~On April 27,~~During the three months ended March 31, 2022, the Company and Biostage executed a settlement with the plaintiffs and Biostage’s products liability insurance carriers (the “Settlement”), which resolves with prejudice all claims relating to the litigation, including outstanding lawsuits with the plaintiffs and one of the insurance carriers (see “Subsequent Events” – Litigation Settlement ” included in Note 13 to our Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial Statement” of this report). We havewe accrued ~~approximately~~ $5.2 million of costs ~~as of March 31, 2022, and expect~~related to ~~incur an additional $0.8 million of expenses as a result of~~ legal fees ~~and the Settlement. Biostage is required to indemnify us for all losses and expenses, including legal expenses, we incur~~ in connection with the Biostage Litigation and the Biostage Settlement. WeDue to the financial condition of Biostage, we determined that it was uncertain as to whether Biostage would be able to meet its indemnification obligation and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022 and September 30, 2022, we recorded credits of $4.9 million and $0.5 million, respectively consisting of adjustments to the reserve against an indemnification receivable from Biostage ~~have agreed in principle that,~~to reflect: i) the issuance by Biostage of Series E Preferred Stock to us on June 10, 2022, in satisfaction of $4.0 million of ~~its~~Biostage’s total indemnification obligations, ii) the payment by Biostage ~~will issue senior convertible preferred stock to the Company. The issuance~~ of such preferred stock, and the terms thereof, are subject to the negotiation and execution of definitive documents. Due to Biostage’s current financial condition, there is uncertainty as to whether Biostage’s indemnification obligation togetherlegal fees associated with the Biostage Settlement, and iii) other accrual adjustments. The Series E Preferred Stock was initially recorded at an estimated fair value ~~if any,~~ of such preferred stock will offset the amounts the Company has incurred in connection with the litigation and Settlement, if at all. Accordingly, as of March 31, 2022, we have fully reserved any receivables$3.9 million using a Monte Carlo valuation simulation incorporating information from ~~Biostage and the financial results only reflect expected losses to be paid by us.~~selected guideline companies.

Interest expense ~~was $0.4~~increased $0.6 million, ~~for both the three months ended March 31, 2022, and March 31, 2021.~~

~~Income tax benefit for the three months ended March 31, 2022 was $0.1 million and was less than $0.1~~or 153.6%, to $1.0 million for the three months ended March 31, ~~2021.~~2023, compared with $0.4 million for the three months ended March 31, 2022. The increase was the result of higher interest costs in a rising rate environment.

Income tax expense (benefit) for the three months ended March 31, 2023 was $0.6 million and was $(0.1) million for the three months ended March 31, 2022. The effective tax rates for the three months ended March 31, 2023 and 2022 were 48.5% and ~~2021 were~~ 2.0% ~~and 2.2%~~, ~~respectively~~respectively. The difference between our effective tax rates in ~~2022~~2023 and ~~2021~~2022 compared to the U.S. statutory tax rate of 21% is primarily due to a Global Intangible Low-Taxed Income (“GILTI”) inclusion to taxable income and changes in valuation allowances associated with our assessment of the likelihood of the recoverability of our deferred tax assets. We ~~currently~~ have valuation allowances against substantially all of our net operating loss carryforwards and tax credit carryforwards.

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

As of March 31, ~~2022,~~2023, we held cash and cash equivalents of ~~$5.4~~$3.8 million, compared with ~~$7.8~~$4.5 million at December 31, ~~2021.~~2022. Borrowings outstanding ~~was $50.0~~were $44.8 million and ~~$49.4~~$47.7 million as of March 31, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

On December 22, 2020, we entered into a Credit Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility ~~and matures~~both maturing on December 22, ~~2025 (See Note 9 to the Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial Statement” of this report).~~2025. As of March ~~31,2022,~~31, 2023, the weighted average interest rate on our borrowings, net of the effect of the interest rate swaps, was ~~3.4%. Available~~8.0%, and the available and unused borrowing capacity ~~under the revolving line of credit~~ was ~~$6.8 million as of March 31, 2022.~~$10.5 million. Total revolver borrowing capacity is limited by our ~~Maximum Leverage~~consolidated net leverage ratio as defined under the Credit ~~Agreement.~~

~~On April 28, 2022,~~Agreement, as amended. As of March 31, 2023, we entered into an amendment to the Credit Agreement and Pledge and Security Agreement (the “Amendment”), among the Company, the Lenders, and Citizens Bank, N.A., as the administrative agent (see Note 13- “Subsequent Events” to our Condensed Consolidated Financial Statements). We are in compliance with the covenants of the Credit Agreement, as ~~amended by the Amendment, as of March 31, 2022.~~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~~business improvement initiatives and capital expenditures for at least the next 12 months. This assessment includes consideration of our best estimates of the impact of macroeconomic conditions and the COVID-19 pandemic on our financial results described above. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary as a result of a number of factors.

Cash provided by (used in) ~~provided by~~ operating activities was ~~$(2.0)~~$1.8 million and ~~$1.0~~$(2.0) million for the three months ended March 31, ~~2022~~2023 and ~~2021,~~2022, respectively. Cash flow from operations for the three months ended March 31, ~~2022,~~2023 was ~~lower~~greater than the ~~same~~comparable period in the prior year ~~period due to higher variable compensation payments~~primarily as ~~well as increases in marketing and R&D investments as discussed above.~~a result of improved operating profits.

Cash provided by investing activities was $0.3 million for the three months ended March 31, 2023, and primarily consisted of $0.5 million from proceeds of the sale our Hoefer product line partially offset by $0.2 million of capital expenditures in manufacturing and information technology infrastructure. Cash used in investing activities was ~~$0.5 million and $0.3~~$(0.5) million for the three months ended March 31, 2022, and ~~2021, respectively,~~ primarily ~~consisting~~consisted of capital expenditures in manufacturing and information technology infrastructure.

Cash (used in) provided by ~~(used in)~~ financing activities was ~~$0.1~~$(2.9) million and ~~$(3.1)~~$0.1 million for the three months ended March 31, 2023 and 2022, respectively. During the three months ended March 31, 2023, debt outstanding under our credit facility decreased by $2.8 million, consisting of net payments against our revolver of $1.0 million, and ~~2021, respectively.~~payments of $1.8 million against the term loan. During the three months ended March 31, 2022, we increased total debt outstanding under our credit facility by $0.6 million. This increase included $0.9 million paid under the term loan and an increase in revolver borrowings of $1.5 million. We also paid $0.5 million for taxes related to net share settlement of equity awards. During the three months ended March 31, 2021, we repaid $4.5 million of debt, which included a term loan installment payment of $0.5 million and paydown of debt under our revolving facility of $4.0 million. Net cash proceeds from the issuance of common stock associated with stock option exercises were $1.5 million during the three months ended March 31, 2021.

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, ~~especially the British pound,~~primarily the euro ~~the Canadian dollar,~~ and ~~the Swedish krona.~~British pound.

During the three months ended March 31, ~~2022,~~2023, changes in foreign currency exchange rates resulted in an unfavorable translation effect on our consolidated revenues of approximately $0.5 million and a favorable effect on ~~expenses~~expense of approximately ~~$0.4~~$0.5 million.

The ~~loss~~gain associated with the translation of foreign equity into U.S. dollars included as a component of comprehensive ~~loss was $0.7 million and $1.3 million~~income during ~~each of~~ the three months ended March 31, ~~2022 and 2021, respectively.~~

~~In addition, currency~~2023 was $0.8 million, compared to a loss of approximately $0.7 million for the three months ended March 31, 2022. Currency exchange rate fluctuations included as a component of net income ~~resulted in currency (losses) gains of $(0.1) million and $0.1 million~~(loss) during ~~each of~~ the three months ended March 31, 2023, and March 31, 2022 ~~and 2021, respectively.~~were not significant.

The critical accounting policies underlying the accompanying unaudited consolidated financial statements are those set forth in Part II, Item 7 included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021.~~2022.

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

Item 3. Quantitative and Qualitative Disclosures about Market ~~Risk.~~Risk

Most of our manufacturing and testing of products occurs in our facilities in the United States, Germany, Sweden and Spain. We sell our products globally through our distributors, direct sales force, websites and catalogs. As a result, our financial results are affected by factors such as changes in foreign currency exchange rates and weak economic conditions in foreign markets. In addition, we are subject to the broad market risk that is created by the global market disruptions and uncertainties resulting from the COVID-19 pandemic.Not Applicable.

We collect amounts representing a substantial portion of our revenues and pay amounts representing a substantial portion of our operating expenses in foreign currencies. As a result, changes in currency exchange rates from time to time may affect our operating results (see “Impact of Foreign Currencies” included in “Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this report). For example, we estimate that a 10% increase in foreign currency exchange rates during the three months ended March 31, 2022 as compared to the actual rates incurred, would have resulted in a favorable translation effect on our consolidated revenues of approximately $0.9 million and an unfavorable effect on expenses of approximately $0.8 million.

We are exposed to market risk from changes in interest rates primarily through our financing activities. Our Credit Facility provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility. Borrowings under the Credit Facility bear interest at variable rates (see Note 9 to our Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial Statement” of this report). As of March 31, 2022, we had $50.0 million outstanding under our Credit Facility with a weighted average interest rate of 3.4%.

Assuming no other changes which would affect the margin of the interest rate, the estimated effect of interest rate fluctuations on outstanding borrowings under our Credit Facility over the next twelve months from March 31, 2022, is as follows:

As of March 31, ~~2022,~~2023, the end of the period covered by this report, our management, including our Chief Executive Officer and our Interim Chief Financial Officer, reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based upon management's review and evaluation, our Chief Executive Officer and Interim Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC and is accumulated and communicated to management, including the Chief Executive Officer and Interim Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the first quarter of fiscal ~~2022~~2023 that have materially affected, or are reasonably likely to materially affect, our 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.

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

The information included in Note 1213 and Note 1314 to the Condensed Consolidated Financial Statements (Unaudited) included in ~~Part~~“Part I, Item 1 Financial Statements” of this quarterly report is incorporated herein by reference.

You should carefully consider the risk factors ~~set forth below together with the risk factors~~ discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2021,~~2022, which could materially affect our business, financial position, or future results of operations. The risks described ~~below and~~ in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial position, or future results of operations.

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

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

	Page

PART I - FINANCIAL INFORMATION	3

Item 1. Condensed Consolidated Financial Statements (unaudited)	3

Consolidated Balance Sheets	3

Consolidated Statements of Operations	4

Consolidated Statements of Comprehensive ~~Loss~~Income (Loss)	5

Consolidated Statements of Stockholders' Equity	6

Consolidated Statements of Cash Flows	7

Notes to Unaudited Consolidated Financial Statements	8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	1618

Item 3. Quantitative and Qualitative Disclosures about Market Risk	2022

Item 4. Controls and Procedures	2022

PART II - OTHER INFORMATION	23

Item 1. Legal Proceedings	2123

Item1A. Risk Factors	2123

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	2123

Item 3. ~~Default~~Defaults Upon Senior Securities	2123

Item 4. Mine Safety Disclosures	2123

Item 5. Other Information	2123

Item 6. Exhibits	2123

SIGNATURES	2224

							Three Months Ended March 31,
	Three Months Ended March 31,						2023			2022
	2022			2021
Revenues	$	28,778		$	26,989		$	29,975		$	28,778
Cost of revenues		12,601			11,558			11,629			12,601
Gross profit		16,177			15,431			18,346			16,177

Sales and marketing expenses		6,687			5,386			5,978			6,687
General and administrative expenses		6,325			6,333			6,334			6,325
Research and development expenses		3,220			2,487			2,897			3,220
Amortization of intangible assets		1,466			1,464			1,388			1,466
Settlement of litigation - Note 13		5,191			0
Settlement of litigation, net - Note 14								-			5,191
Total operating expenses		22,889			15,670			16,597			22,889

Operating loss		(6,712	)		(239	)
Operating income (loss)								1,749			(6,712	)

Other (expense) income:
Other expense:
Interest expense		(384	)		(411	)		(974	)		(384	)
Other income (expense), net		78			(34	)
Other income, net								432			78
Total other expense		(306	)		(445	)		(542	)		(306	)

Loss before income taxes		(7,018	)		(684	)
Income tax benefit		(138	)		(15	)
Net loss	$	(6,880	)	$	(669	)
Income (loss) before income taxes								1,207			(7,018	)
Income tax expense (benefit)								585			(138	)
Net income (loss)							$	622		$	(6,880	)

Loss per share:
Basic and diluted loss per common share	$	(0.17	)	$	(0.02	)
Income (loss) per share:
Basic income (loss) per share							$	0.01		$	(0.17	)

Diluted income (loss) per share							$	0.01		$	(0.17	)

Weighted-average common shares:
Basic and diluted		41,219			39,787
Basic								42,119			41,219

Diluted								42,783			41,219

(in thousands)
Carrying amount at December 31, 2021	$	57,689
Effect of change in currency translation		(333	)
Carrying amount at March 31, 2022	$	57,356

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

			March 31, 2022							December 31, 2021									March 31, 2023							December 31, 2022
(in thousands)	Average				Accumulated							Accumulated					Average				Accumulated							Accumulated
Amortizable intangible assets:	Life*		Gross		Amortization			Net		Gross		Amortization			Net		Life*		Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships		7.7	$	17,594	$	(8,938	)	$	8,656	$	17,689	$	(8,675	)	$	9,014		7.0	$	16,226	$	(9,086	)	$	7,140	$	16,124	$	(8,727	)	$	7,397
Existing technology		3.9		38,611		(24,786	)		13,825		38,707		(23,962	)		14,745		3.0		37,365		(27,196	)		10,169		37,549		(26,482	)		11,067
Trade names and patents		4.2		8,467		(5,304	)		3,163		8,496		(5,108	)		3,388		3.5		7,558		(5,428	)		2,130		7,523		(5,197	)		2,326
Total amortizable intangible assets			$	64,672	$	(39,028	)	$	25,644	$	64,892	$	(37,745	)	$	27,147			$	61,149	$	(41,710	)	$	19,439	$	61,196	$	(40,406	)	$	20,790
Indefinite-lived intangible assets:									234							238									202							224
Total intangible assets								$	25,878						$	27,385								$	19,641						$	21,014

	Amortization
Year Ending December 31,	Expense
(in thousands)
2022 (remainder of year)	$	4,366
2023		5,728
2024		5,427
2025		4,109
2026		2,368
Thereafter		3,646
Total	$	25,644

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

*Inventories:*	March 31,		December 31,		March 31,		December 31,
(in thousands)	2022		2021		2023		2022
Finished goods	$	6,798	$	5,646	$	5,144	$	5,223
Work in process		3,439		3,410		3,660		3,776
Raw materials		18,474		18,531		18,057		17,440
Total	$	28,711	$	27,587	$	26,861	$	26,439

*Other Current Liabilities:*	March 31,		December 31,
(in thousands)	2022		2021
Compensation	$	2,878	$	6,048
Professional fees		396		480
Warranty costs		242		240
Customer related costs		2,058		2,265
Settlement of litigation		4,814		0
Accrued income taxes		141		224
Other		1,653		1,505
Total	$	12,181	$	10,762

				Weighted
	*Stock*			*Average*		*Time-Based*					*Performance-*
	*Options*			*Exercise*		*RSUs*			*Grant Date*		*Based RSUs*		*Grant Date*
	*Outstanding*			*Price*		*Outstanding*			*Fair Value*		*Outstanding*		*Fair Value*
Balance at December 31, 2021		1,404,816		$	3.10		1,141,164		$	3.57		860,155	$	3.13
Granted		0			0		518,163			5.52		205,122		5.92
Exercised		(10,987	)		2.78		-			-		-		-
Vested (RSUs)		-			-		(151,185	)		2.30		0		0
Cancelled/Forfeited		(3,126	)		3.79		(12,917	)		3.07		0		0
Balance at March 31, 2022		1,390,703		$	3.10		1,495,225		$	4.37		1,065,277	$	3.67

	~~2022~~
~~Volatility~~		~~65.1~~	%
~~Risk-free interest rate~~		~~1.4~~	%
~~Correlation coefficient~~		~~38.5~~	%
~~Dividend yield~~		0	%

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

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

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

	Three Months Ended March 31,												Three Months Ended March 31,
(dollars in thousands)	2022			% of revenue			2021			% of revenue			2023		% of revenue			2022			% of revenue
Revenues	$	28,778					$	26,989					$	29,975				$	28,778
Gross profit		16,177			56.2	%		15,431			57.2	%		18,346		61.2	%		16,177			56.2	%
Sales and marketing expenses		6,687			23.2	%		5,386			20.0	%		5,978		19.9	%		6,687			23.2	%
General and administrative expenses		6,325			22.0	%		6,333			23.5	%		6,334		21.1	%		6,325			22.0	%
Research and development expenses		3,220			11.2	%		2,487			9.2	%		2,897		9.7	%		3,220			11.2	%
Amortization of intangible assets		1,466			5.1	%		1,464			5.4	%		1,388		4.6	%		1,466			5.1	%
Settlement of litigation		5,191			18.0	%		-			-
Settlement of litigation, net														-		-			5,191			18.0	%
Interest expense		384			1.3	%		411			1.5	%		974		3.2	%		384			1.3	%
Income tax benefit		(138	)		-0.5	%		(15	)		-0.1	%
Income tax expense (benefit)														585		2.0	%		(138	)		-0.5	%

(in thousands)	Interest expense increase
Interest rates increase by 1%	$	500
Interest rates increase by 2%	$	1,000

10.1	Separation Agreement and Release between ~~Harvard Bioscience, Inc.~~the Company and ~~Ken Olson,~~Michael Rossi, dated ~~as of~~ January ~~26, 2022~~18, 2023 (previously filed as an exhibit to the Company’s Current Report on Form 8-K on January ~~28, 2022~~19, 2023 and incorporated by reference thereto).
~~10.2~~	First Amendment to Credit Agreement and Amendment to Pledge and Security Agreement, dated April 27, 2022, among Harvard Bioscience, Inc., Citizens Bank, N.A., as the administrative agent, and the lenders party thereto (previously filed as an exhibit to the Company’s Current Report on Form 8-K on April 28, 2022 and incorporated by reference thereto).
31.1	Certification ofInterim Chief Financial Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Interim Chief Financial Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief ~~Financial~~Executive Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

*	This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of ~~1934.~~1934

	HARVARD BIOSCIENCE, INC.
Date: ~~May 4, 2022~~ April 26, 2023
	By:	/s/ JAMES GREEN
		James Green
		Chief Executive Officer




	By:	/s/ ~~MICHAEL A. ROSSI~~JENNIFER COTE
		~~Michael A. Rossi~~Jennifer Cote
		Interim Chief Financial Officer