Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Nov. 02, 2023 | |
Document and Entity Information | ||
Entity Registrant Name | 908 DEVICES INC. | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Entity File Number | 001-39815 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 45-4524096 | |
Entity Address, Address Line One | 645 Summer Street | |
Entity Address, City or Town | Boston | |
Entity Address State Or Province | MA | |
Entity Address, Postal Zip Code | 02210 | |
City Area Code | 857 | |
Local Phone Number | 254-1500 | |
Title of 12(b) Security | Common Stock, par value $0.001 per share | |
Trading Symbol | MASS | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 32,379,113 | |
Entity Central Index Key | 0001555279 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 118,213 | $ 188,422 |
Marketable securities | 29,684 | 0 |
Accounts receivable, net of allowance for credit losses of $117 and $25 at September 30, 2023 and December 31, 2022 | 12,885 | 10,033 |
Inventory | 15,926 | 12,513 |
Prepaid expenses and other current assets | 3,119 | 4,658 |
Total current assets | 179,827 | 215,626 |
Operating lease, right-of-use assets | 6,677 | 3,956 |
Property and equipment, net | 2,854 | 3,083 |
Goodwill | 9,928 | 10,050 |
Intangible assets, net | 7,742 | 8,488 |
Other long-term assets | 1,447 | 1,384 |
Total assets | 208,475 | 242,587 |
Current liabilities: | ||
Accounts payable | 2,581 | 1,397 |
Accrued expenses | 7,267 | 8,847 |
Deferred revenue | 10,521 | 7,514 |
Operating lease liabilities | 1,953 | 1,468 |
Total current liabilities | 22,322 | 19,226 |
Long-term debt | 15,000 | |
Operating lease liabilities, net of current portion | 4,447 | 3,040 |
Deferred revenue, net of current portion | 9,371 | 11,496 |
Deferred income taxes | 2,406 | 2,671 |
Other long-term liabilities | 555 | |
Total liabilities | 38,546 | 51,988 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value; 5,000,000 shares authorized, no shares issued or outstanding at September 30, 2023 and December 31, 2022, respectively | ||
Common stock, $0.001 par value; 100,000,000 shares authorized; 32,371,428 shares and 31,859,847 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively | 32 | 32 |
Additional paid-in capital | 332,080 | 323,969 |
Accumulated other comprehensive income | 988 | 798 |
Accumulated deficit | (163,171) | (134,200) |
Total stockholders' equity | 169,929 | 190,599 |
Total liabilities and stockholders' equity | $ 208,475 | $ 242,587 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 117 | $ 25 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 32,371,428 | 31,859,847 |
Common stock, shares outstanding | 32,371,428 | 31,859,847 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue | $ 14,297 | $ 15,797 | $ 35,878 | $ 35,209 |
Cost of revenue | 6,428 | 6,459 | 17,831 | 15,108 |
Gross profit | 7,869 | 9,338 | 18,047 | 20,101 |
Operating expenses: | ||||
Research and development | 5,537 | 4,666 | 16,460 | 12,864 |
Selling, general and administrative | 11,421 | 11,826 | 34,632 | 32,281 |
Total operating expenses | 16,958 | 16,492 | 51,092 | 45,145 |
Loss from operations | (9,089) | (7,154) | (33,045) | (25,044) |
Other income: | ||||
Interest income | 1,449 | 981 | 4,155 | 1,446 |
Interest expense | 350 | (33) | (201) | (68) |
Other income (expense), net | 110 | (53) | (88) | (106) |
Total other income, net | 1,909 | 895 | 3,866 | 1,272 |
Loss from operations before income taxes | (7,180) | (6,259) | (29,179) | (23,772) |
Benefit for income taxes | 87 | 209 | ||
Net loss | $ (7,093) | $ (6,259) | $ (28,970) | $ (23,772) |
Net loss per share, basic | $ (0.22) | $ (0.20) | $ (0.90) | $ (0.76) |
Net loss per share, diluted | $ (0.22) | $ (0.20) | $ (0.90) | $ (0.76) |
Weighted average common shares outstanding, basic | 32,345,925 | 31,606,484 | 32,171,685 | 31,441,611 |
Weighted average common shares outstanding, diluted | 32,345,925 | 31,606,484 | 32,171,685 | 31,441,611 |
Product revenue | ||||
Revenue | $ 12,161 | $ 13,541 | $ 28,778 | $ 29,169 |
Cost of revenue | 4,651 | 5,234 | 13,237 | 11,509 |
Service revenue | ||||
Revenue | 2,136 | 1,896 | 6,730 | 4,905 |
Cost of revenue | $ 1,777 | 1,132 | 4,495 | 3,259 |
Contract revenue | ||||
Revenue | 360 | 370 | 1,135 | |
Cost of revenue | $ 93 | $ 99 | $ 340 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
Net loss | $ (7,093) | $ (6,259) | $ (28,970) | $ (23,772) |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustment | (404) | (613) | (170) | (613) |
Unrealized gains on marketable securities, net of tax of $0 | 248 | 360 | ||
Total other comprehensive (loss) income | (156) | (613) | 190 | (613) |
Comprehensive loss | $ (7,249) | $ (6,872) | $ (28,780) | $ (24,385) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||||
Tax on unrealized gains on marketable securities | $ 0 | $ 0 | $ 0 | $ 0 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Beginning balance at Dec. 31, 2021 | $ 31 | $ 315,210 | $ (100,637) | $ 214,604 | |
Beginning balance (in shares) at Dec. 31, 2021 | 31,077,004 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 324 | 324 | |||
Issuance of common stock upon exercise of stock options (in shares) | 243,842 | ||||
Stock-based compensation expense | 1,289 | 1,289 | |||
Vesting of restricted stock units shares | 12,936 | ||||
Net loss | (9,415) | (9,415) | |||
Ending balance at Mar. 31, 2022 | $ 31 | 316,823 | (110,052) | 206,802 | |
Ending balance (in shares) at Mar. 31, 2022 | 31,333,782 | ||||
Beginning balance at Dec. 31, 2021 | $ 31 | 315,210 | (100,637) | 214,604 | |
Beginning balance (in shares) at Dec. 31, 2021 | 31,077,004 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (23,772) | ||||
Foreign currency translation adjustments | (613) | ||||
Ending balance at Sep. 30, 2022 | $ 32 | 321,491 | $ (613) | (124,410) | 196,500 |
Ending balance (in shares) at Sep. 30, 2022 | 31,652,058 | ||||
Beginning balance at Dec. 31, 2021 | $ 31 | 315,210 | (100,637) | 214,604 | |
Beginning balance (in shares) at Dec. 31, 2021 | 31,077,004 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (33,600) | ||||
Ending balance at Dec. 31, 2022 | $ 32 | 323,969 | 798 | (134,200) | 190,599 |
Ending balance (in shares) at Dec. 31, 2022 | 31,859,847 | ||||
Beginning balance at Mar. 31, 2022 | $ 31 | 316,823 | (110,052) | 206,802 | |
Beginning balance (in shares) at Mar. 31, 2022 | 31,333,782 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | $ 1 | 275 | 276 | ||
Issuance of common stock upon exercise of stock options (in shares) | 164,638 | ||||
Stock-based compensation expense | 1,894 | 1,894 | |||
Issuance of common stock upon ESPP purchase | 242 | 242 | |||
Issuance of common stock upon ESPP purchase (in shares) | 16,052 | ||||
Vesting of restricted stock units shares | 16,643 | ||||
Net loss | (8,099) | (8,099) | |||
Ending balance at Jun. 30, 2022 | $ 32 | 319,234 | (118,151) | 201,115 | |
Ending balance (in shares) at Jun. 30, 2022 | 31,531,115 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 237 | 237 | |||
Issuance of common stock upon exercise of stock options (in shares) | 109,354 | ||||
Stock-based compensation expense | 2,020 | 2,020 | |||
Vesting of restricted stock units shares | 11,589 | ||||
Net loss | (6,259) | (6,259) | |||
Foreign currency translation adjustments | (613) | (613) | |||
Ending balance at Sep. 30, 2022 | $ 32 | 321,491 | (613) | (124,410) | 196,500 |
Ending balance (in shares) at Sep. 30, 2022 | 31,652,058 | ||||
Beginning balance at Dec. 31, 2022 | $ 32 | 323,969 | 798 | (134,200) | 190,599 |
Beginning balance (in shares) at Dec. 31, 2022 | 31,859,847 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 88 | 88 | |||
Issuance of common stock upon exercise of stock options (in shares) | 56,547 | ||||
Stock-based compensation expense | 2,166 | 2,166 | |||
Vesting of restricted stock units shares | 145,123 | ||||
Net loss | (12,532) | (12,532) | |||
Foreign currency translation adjustments | 291 | 291 | |||
Ending balance at Mar. 31, 2023 | $ 32 | 326,223 | 1,089 | (146,732) | 180,612 |
Ending balance (in shares) at Mar. 31, 2023 | 32,061,517 | ||||
Beginning balance at Dec. 31, 2022 | $ 32 | 323,969 | 798 | (134,200) | 190,599 |
Beginning balance (in shares) at Dec. 31, 2022 | 31,859,847 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Net loss | (28,970) | ||||
Foreign currency translation adjustments | (170) | ||||
Ending balance at Sep. 30, 2023 | $ 32 | 332,080 | 988 | (163,171) | 169,929 |
Ending balance (in shares) at Sep. 30, 2023 | 32,371,428 | ||||
Beginning balance at Mar. 31, 2023 | $ 32 | 326,223 | 1,089 | (146,732) | 180,612 |
Beginning balance (in shares) at Mar. 31, 2023 | 32,061,517 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 301 | 301 | |||
Issuance of common stock upon exercise of stock options (in shares) | 166,226 | ||||
Stock-based compensation expense | 2,578 | 2,578 | |||
Issuance of common stock upon ESPP purchase | 259 | 259 | |||
Issuance of common stock upon ESPP purchase (in shares) | 45,082 | ||||
Vesting of restricted stock units shares | 54,036 | ||||
Net loss | (9,346) | (9,346) | |||
Foreign currency translation adjustments | (57) | (57) | |||
Unrealized gains on marketable securities | 112 | 112 | |||
Ending balance at Jun. 30, 2023 | $ 32 | 329,361 | 1,144 | (156,078) | 174,459 |
Ending balance (in shares) at Jun. 30, 2023 | 32,326,861 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Issuance of common stock upon exercise of stock options | 15 | 15 | |||
Issuance of common stock upon exercise of stock options (in shares) | 15,393 | ||||
Stock-based compensation expense | 2,704 | 2,704 | |||
Vesting of restricted stock units shares | 29,174 | ||||
Net loss | (7,093) | (7,093) | |||
Foreign currency translation adjustments | (404) | (404) | |||
Unrealized gains on marketable securities | 248 | 248 | |||
Ending balance at Sep. 30, 2023 | $ 32 | $ 332,080 | $ 988 | $ (163,171) | $ 169,929 |
Ending balance (in shares) at Sep. 30, 2023 | 32,371,428 |
CONDENSED CONSOLIDATED STATEM_5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (28,970) | $ (23,772) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 1,979 | 1,037 |
Stock-based compensation expense | 7,448 | 5,203 |
Noncash interest expense and loss on extinguishment of debt | 206 | 10 |
Provision for inventory obsolescence | 284 | 46 |
Provision for credit losses | 92 | |
Change in fair value of contingent consideration | 335 | |
Deferred income tax | (239) | |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (2,950) | 1,306 |
Inventory | (3,841) | (4,108) |
Prepaid expenses and other current assets | 516 | 2,198 |
Other long-term assets | (210) | 131 |
Accounts payable and accrued expenses | 1,228 | (175) |
Deferred revenue | 884 | 2,463 |
Right-of-use operating lease assets | 1,222 | 911 |
Operating lease liabilities | (1,113) | (991) |
Other long-term liabilities | (73) | |
Net cash used in operating activities | (23,129) | (15,814) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (1,712) | (1,433) |
Purchases of marketable securities | (34,258) | |
Proceeds from sales and maturities of marketable securities | 4,934 | |
Acquisitions, net of cash acquired | (13,762) | |
Net cash used in investing activities | (31,036) | (15,195) |
Cash flows from financing activities: | ||
Payments for withholding taxes on vested awards | (598) | (199) |
Proceeds from issuance of common stock | 663 | 1,079 |
Payments of public offering costs | (112) | |
Proceeds from borrowings on revolving line of credit | 45,000 | |
Payments for contingent consideration | (1,095) | |
Repayment of notes payable | (15,000) | (45,000) |
Net cash (used in) provided by financing activities | (16,030) | 768 |
Effect of foreign exchange rate changes on cash and cash equivalents | (14) | (23) |
Net decrease in cash, cash equivalents and restricted cash | (70,209) | (30,264) |
Cash, cash equivalents and restricted cash at beginning of period | 188,593 | 224,133 |
Cash, cash equivalents and restricted cash at end of period | 118,384 | 193,869 |
Supplemental disclosure of noncash investing and financing information: | ||
Transfers of inventory to property and equipment | $ 342 | $ 598 |
CONDENSED CONSOLIDATED STATEM_6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2023 | Sep. 30, 2022 |
Reconciliation of cash, cash equivalents and restricted cash: | ||
Cash and cash equivalents | $ 118,213 | $ 193,698 |
Restricted cash included in prepaid expenses and other current assets | $ 60 | |
Restricted Cash, Current, Statement of Financial Position [Extensible Enumeration] | Prepaid Expense and Other Assets, Current | Prepaid Expense and Other Assets, Current |
Restricted cash included in other long-term assets | $ 171 | $ 111 |
Restricted Cash, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | $ 118,384 | $ 193,869 |
Nature of the Business and Basi
Nature of the Business and Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Nature of the Business and Basis of Presentation | |
Nature of the Business and Basis of Presentation | 1. Nature of the Business and Basis of Presentation 908 Devices Inc. (the “Company”) was incorporated in the State of Delaware on February 10, 2012. The Company is a commercial-stage technology company providing a suite of purpose-built handheld and desktop devices used at the point-of-need for chemical and biochemical analysis in a broad array of markets including life sciences research, bioprocessing, pharma/biopharma, forensics and adjacent markets. The Company is subject to risks and uncertainties common to technology companies in the device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations. Potential risks and uncertainties also include, without limitation, uncertainties regarding rising inflation and higher interest rates. Products currently under development will require additional research and development efforts prior to commercialization and will require additional capital and adequate personnel and infrastructure. The Company’s research and development may not be successfully completed, adequate protection for the Company’s technology may not be obtained, the Company may not obtain necessary government regulatory approval, and approved products may not prove commercially viable. The Company operates in an environment of rapid change in technology and competition. Acquisition The Company acquired TRACE Analytics GmbH, located in Braunschweig, Germany (“Trace”) in August 2022. Trace changed its corporate name to 908 Devices GmbH in February 2023. Trace is a leading provider of online analysis systems for biotech applications in research, development and production. Trace’s products are used for monitoring and control of complex processes in industrial pharmaceutical productions under continuous measurement conditions. With the acquisition of Trace, the Company has acquired enabling sampling technology that it expects to integrate within future product offerings. See Note 13, Acquisition Basis of Presentation The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Update (“ASU”) of the Financial Accounting Standards Board (“FASB”). The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, 908 Devices Securities Corporation, 908 Devices (Shanghai) Technology Co., Ltd. and 908 Devices GmbH. All intercompany balances and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared based on continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business. The Company has incurred recurring losses since inception, including net losses of $29.0 million for the nine months ended September 30, 2023 and $33.6 million for the year ended December 31, 2022. As of September 30, 2023, the Company had an accumulated deficit of $163.2 million. The Company expects to continue to generate operating losses in the foreseeable future. The Company expects that its cash and cash equivalents and revenue from product and service will be sufficient to fund its operating expenses and capital expenditure requirements for at least 12 months from the issuance date of the condensed consolidated financial statements. The Company may seek additional funding through private or public equity financings, debt financings, collaborations, strategic alliances and marketing, distribution or licensing arrangements. The Company may not be able to obtain financing on acceptable terms, or at all, and the Company may not be able to enter into collaborations or other arrangements. The terms of any financing may adversely affect the holdings or the rights of the Company’s stockholders. If the Company is unable to obtain funding, the Company could be forced to delay, reduce or eliminate some or all of its research and development programs, product expansion or commercialization efforts, or the Company may be unable to continue operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Unaudited Condensed Interim Financial Information The condensed consolidated balance sheet at December 31, 2022 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022 and statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022 have been made. The Company’s results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2023 or any other period. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition and accounts receivable, the valuation of inventory, fair value of assets acquired and liabilities assumed in acquisitions and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Due to rising inflation and higher interest rates, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require further updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of these condensed consolidated financial statements. These estimates may change, as new events occur and additional information is obtained. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions. Risk of Concentrations of Credit, Significant Customers and Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains the majority of its cash and cash equivalents with three financial institutions that management believes to be of high credit quality. The Company has not experienced any other-than-temporary losses with respect to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Significant customers are those that accounted for 10% or more of the Company’s total revenue or accounts receivable. For the three months ended September 30, 2023, two customers represented 41% and 17% of total revenue. For the comparable three months ended September 30, 2022, one customer represented 41% of total revenue. For the nine months ended September 30, 2023, two customers represented 22% and 11% of total revenue, respectively. For the comparable nine months ended September 30, 2022, Certain of the components included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers. Although the Company seeks to reduce dependence on those limited sources of suppliers and manufacturers, the partial or complete loss of certain of these sources, or the requirement to establish a new supplier for the components, could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships. Accounts Receivable Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and monitors economic conditions to identify facts and circumstances that may indicate its receivables are at risk of collection. The Company provides reserves against accounts receivable for estimated credit losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity. Amounts deemed uncollectible are charged or written-off against the reserve. As of September 30, 2023 and December 31, 2022, the Company recorded $0.1 million allowance and less than $0.1 million allowance for credit losses, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Balances at beginning of period $ 133 $ 1,750 $ 25 $ 1,750 Current period change for expected credit loss — — 108 — Deduction / recoveries collected (16) — (16) — Balances at end of period $ 117 $ 1,750 $ 117 $ 1,750 Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company's financial instruments consist primarily of cash equivalents, marketable securities, accounts receivable, accounts payable, accrued expenses and contingent consideration. Fair value measurements The carrying value of the Company’s long-term debt approximates its fair value (a Level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate. Marketable Securities The Company’s marketable securities (non-equity instruments) are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses are based on the specific identification method and are included as a component of other income (expense), net in the consolidated statements of operations. When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. There were no credit losses recorded during the nine months ended September 30, 2023. Goodwill and Intangible Assets Goodwill is not amortized, but is evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable. In assessing the recoverability of goodwill, the Company must make assumptions regarding the estimated future cash flows, and other factors, to determine the fair value of these assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges against these assets in the reporting period in which the impairment is determined. The Company tests goodwill for impairment at the reporting unit level, which is the operating segment. The Company has the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment. If as a result of the quantitative assessment, it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required. The quantitative goodwill impairment test requires the management to estimate and compare the fair value of the reporting unit with its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss up to the amount of goodwill. Intangible assets with a finite useful life are recorded at cost, net of accumulated amortization and are amortized on a straight-line basis over their estimated useful lives as follows: Customer Relationships 8 years Developed Technology 15 years Software 3 years Trade Name 2 years The Company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or an asset group may not be recoverable. In evaluating long-lived assets for recoverability, we estimate the undiscounted future cash flows that are expected from the use of each asset or asset group. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, impairment losses are measured and recorded for the excess of an asset's carrying value over its fair value. To determine the fair value of long-lived assets, the Company utilizes the valuation technique or techniques deemed most appropriate based on the nature of the asset or asset group, which may include the use of quoted market prices, prices for similar assets or other valuation techniques such as discounted future cash flows or earnings. Revenue Recognition The Company recognizes revenue from sales to customers under ASC 606, Revenue from Contracts with Customers For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management. Allocation of the transaction price is determined at the contract’s inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Product and Service Revenue The Company derives product and service revenue primarily from the sale of handheld and desktop products and related consumables and services. Revenue is recognized when control of the promised products, consumables or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products, consumables or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of accounting under ASC 606. For devices and consumables sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is other than perfunctory, the customer must have accepted the product or service. The Company’s principal terms of sale are freight on board (“FOB”) shipping point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB shipping point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. For extended warranty and support, control transfers to the customer over the term of the arrangement. Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement. The Company recognizes a receivable at the point in time at which it has an unconditional right to payment. Such receivables are not contract assets. Payment terms for customer orders, including for each of the Company’s primary performance obligations, are typically 30 to 90 days after the shipment or delivery of the product, and such payments typically do not include payments that are variable, dependent on specified factors or events. In limited circumstances, there exists a right of return for a product if agreed to by the Company. Revenue is only recognized for those goods that are not expected to be returned such that it is probable that there will not be a significant reversal of cumulative revenue. Service arrangements commonly call for payments in advance of performing the work (e.g., extended warranty/service contracts), upon completion of the service or a mix of both. The Company does not enter into significant financing agreements or other forms of variable consideration. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not only subject to the passage of time. The Company had no contract assets related to product or service revenue as of September 30, 2023 or December 31, 2022. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has determined that its only contract liability related to product and service revenue is deferred revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as noncurrent deferred revenue. The following is a summary of the activity of the Company’s deferred revenue related to product and service revenue (in thousands): Nine Months Ended September 30, 2023 2022 Balances at beginning of period $ 16,510 $ 14,521 Recognition of revenue included in balance at beginning of the period (5,332) (3,521) Revenue deferred during the period, net of revenue recognized 8,714 5,891 Balances at end of period $ 19,892 $ 16,891 The amount of deferred revenue equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such deferred revenue amounts related to product and service revenue are expected to be recognized in the future as follows (in thousands): September 30, December 31, 2023 2022 Deferred revenue expected to be recognized in: One year or less $ 10,521 $ 7,514 One to two years 5,885 4,750 Three years and beyond 3,486 4,246 $ 19,892 $ 16,510 Contract Revenue The Company generates revenue from short and long-term contracts associated with the design and development and delivery of detection devices or related design and support services. To date, these contracts are primarily with the U.S. government or commercial entities contracting with the U.S. government, but the Company has also had such contracts with commercial partners. The Company’s contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) and are priced based on estimated or actual costs of producing goods or providing services. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods or services provided under U.S. government contracts. The pricing for non-U.S. government contracts is based on the specific negotiations with each customer. Under the typical payment terms of U.S. government fixed-price contracts, the customer pays in accordance with the terms of the specific agreement, but generally through progress payments. If these progress payments are made in advance, these payments are recorded as a contract liability, classified as deferred revenue within the accompanying condensed consolidated balance sheet, until the Company provides the underlying services. For U.S. government cost-type contracts, the customer generally pays for actual costs incurred within a short period of time. For contracts with commercial partners, payments are made in accordance with the terms of the specific agreement. For agreements which call for milestone payments, to the extent the Company does not conclude that it is probable that a significant reversal of cumulative revenue will occur, a contract asset is generated until the Company is permitted to bill for costs incurred, which is classified as prepaid expense and other current assets in the accompanying condensed consolidated balance sheet. In some cases, payments received in advance under contract agreements are recorded as deferred revenue and recognized over the respective contract term, absent any other performance obligations. Generally, revenue for long-term contracts is recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time such as not creating an asset with an alternative use and having an enforceable right to payment for completed performance. However, the Company evaluates the proper revenue recognition on a contract by contract basis, as each contract generally contains terms specific to the underlying agreement which result in differing performance obligations and payment terms (cost plus, fixed price agreements among others). For revenue recognized under the cost-to-cost measure of progress basis, the Company continually assesses total costs expected to be incurred and if such costs require adjustment to the measure of progress, the Company records such adjustment as a change in estimate on a cumulative catch-up basis in the period of adjustment. The Company includes the unconstrained amount of consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, as required under ASC 606, the Company re-evaluates the estimated consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time. The Company includes contract assets within prepaid and other current assets in the accompanying condensed consolidated balance sheet. The Company had no contract assets related to contract revenue as of September 30, 2023 and $0.4 million contract assets related to contract revenue as of December 31, 2022. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. As of September 30, 2023, the Company had no contract liabilities. The Company recognizes deferred revenue by first allocating from the beginning deferred revenue balance to the extent that the beginning deferred revenue balance exceeds the revenue to be recognized. Billings during the period are added to the deferred revenue balance to be recognized in future periods. As of September 30, 2023, the Company held no wholly- or partially-unsatisfied performance obligations related to contract agreements entered prior to period end. Distribution Channels A majority of the Company’s revenue is generated by sales in conjunction with its distribution partners, such as its international distributors and, in the United States, for end customers where a government contract is required or a customer has a pre-existing relationship. When the Company transacts with a distribution partner, its contractual arrangement is with the partner and not with the end-use customer. Whether the Company transacts business with and receives the order from a distribution partner or directly from an end-use customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are the same. Disaggregated Revenue The Company’s product and service revenue consists of sales of devices and recurring revenue which includes consumables, accessories and the sale of service and extended warranty plans. The following table presents the Company’s revenue by revenue stream (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product and service revenue: Device sales revenue $ 10,719 $ 10,952 $ 23,761 $ 24,239 Recurring revenue 3,578 4,485 11,747 9,835 Total product and service revenue 14,297 15,437 35,508 34,074 Contract revenue — 360 370 1,135 Total revenue $ 14,297 $ 15,797 $ 35,878 $ 35,209 The following table presents the Company’s product and service revenue by device type (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Handheld revenue: Device sales revenue $ 9,681 $ 8,051 $ 19,929 $ 16,782 Recurring revenue 2,067 2,968 6,813 5,645 Total handheld revenue 11,748 11,019 26,742 22,427 Desktop revenue: Device sales revenue 1,039 2,901 3,832 7,458 Recurring revenue 1,510 1,517 4,934 4,189 Total desktop revenue 2,549 4,418 8,766 11,647 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 Revenue based on the end-user entity type for the Company’s product and service revenue are presented below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Government $ 11,740 $ 11,069 $ 26,732 $ 22,788 Pharmaceutical/Biotechnology 2,546 4,327 8,705 11,032 Academia and other 11 41 71 254 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 The following table disaggregates the Company’s revenue from contracts with customers by geography, which are determined based on the customer location (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 12,417 $ 12,403 $ 26,769 $ 27,916 Europe, Middle East and Africa 1,456 2,361 7,398 4,961 Asia Pacific 394 996 1,191 2,270 Americas other 30 37 520 62 $ 14,297 $ 15,797 $ 35,878 $ 35,209 International sales are comprised primarily of product and service revenue, with the majority of contract revenue being attributable to North America. Foreign currency The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss. Other Comprehensive income (Loss) Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are excluded from net loss as these amounts are recorded as an adjustment to shareholders' equity, net of tax. The Company's other comprehensive income (loss) was composed of Net Income (Loss) per Share The Company has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of any potential dilutive securities outstanding for the fiscal year. Potential dilutive securities include warrants, stock options, restricted stock units, and shares to be purchased under the Company’s employee stock purchase plan. For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Business combination Under the acquisition method of accounting, the Company generally recognizes the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets. The Company estimates the fair value of the contingent consideration earnouts using the Monte Carlo Simulation or probability weighted scenario depending on the nature of the contingent consideration and updates the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments. To the extent that these estimates change in the future regarding the likelihood of achieving these targets, the Company may need to record material adjustments to its accrued contingent consideration. Such changes in the fair value of contingent consideration are recorded as contingent consideration expense or income in the consolidated statements of operations. The Company uses the income approach to determine the fair value of certain identifiable intangible assets including customer relationships and developed technology. This approach determines fair value by estimating after-tax cash flows attributable to these assets over their respective useful lives and then discounting these after-tax cash flows back to a present value. The Company bases its assumptions on estimates of future cash flows, expected growth rates, expected trends in technology, probabilities of customer renewals, etc. The Company bases the discount rates used to arrive at a present value as of the date of acquisition on the time value of money and certain industry-specific risk factors. The Company believes the estimated purchased customer relationships, developed technology, software and trade name amounts determined represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets. Recently Adopted Accounting Pronouncements The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) interim periods within those fiscal years. Early application is allowed. The Company adopted this standard effective January 1, 2023 and deemed no material impact on our condensed consolidated financial statements. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value Measurements at September 30, 2023 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents - Money market funds $ 94,300 $ — $ — $ 94,300 Marketable securities - U.S. Treasury securities — 29,684 — 29,684 Total assets measured at fair value $ 94,300 $ 29,684 $ — $ 123,984 Other current liabilities: Acquisition-related contingent consideration $ — $ — $ 728 $ 728 Total liabilities measured at fair value $ — $ — $ 728 $ 728 Fair Value Measurements at December 31, 2022 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents - Money market funds $ 27,866 $ — $ — $ 27,866 $ 27,866 $ — $ — $ 27,866 Other current liabilities: Acquisition-related contingent consideration $ — $ — $ 343 $ 343 Acquisition-related contingent consideration - pension liability — — 900 900 — — 1,243 1,243 Other long-term liabilities: Acquisition-related contingent consideration — — 555 555 Total liabilities measured at fair value $ — $ — $ 1,798 $ 1,798 Money Market Funds Money market funds were valued by the Company based on quoted market prices, which represent a Level 1 measurement within the fair value hierarchy. There were no transfers Marketable Securities U.S. Treasury securities were valued by the Company using quoted prices in active markets for similar securities, which represent a Level 2 measurement within the fair value hierarchy. Contingent Consideration Acquisition-related contingent consideration is measured and reported at fair value using the Monte Carlo simulation method or probability weighted scenario based on the unobservable inputs, which are significant to the fair value and classified with Level 3 of the fair value hierarchy. The amount is contingent based on the acquired business’ performance for the milestones ranging from the date of acquisition to June 30, 2024. The unobservable inputs used in the fair value measurements include the probabilities of successful achievement of certain technological targets, forecasted results or targets, volatility, and discount rates. The total remaining maximum payments due related to the technological integration and revenue targets is approximately $1.2 million, of which the value as of September 30, 2023 was approximately $0.7 million. The Company received notice that the pension obligation had been transferred and no longer in Trace’s name and therefore t liability and paid out the sellers in April 2023. The sellers also achieved a portion of one of three milestones under the share purchase and transfer agreement and the Company paid $0.5 million in August 2023. The weighted average probability of achieving the technology integration target is approximately 95% . The average estimated revenue volatility and discount rate are approximately 40.9% and 23.0% , respectively. Increases or decreases in these assumptions may result in a higher or lower fair value measurement, respectively. The following table provides a roll-forward of the fair value of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs (in thousands): Balance as of December 31, 2022 $ 1,798 Accretion - earnout 335 Contingent consideration payment (505) Release of pension liability (900) Balance as of September 30, 2023 $ 728 Please Acquisition |
Marketable Securities
Marketable Securities | 9 Months Ended |
Sep. 30, 2023 | |
Marketable Securities | |
Marketable Securities | 4. Marketable Securities Marketable securities by security type consisted of the following (in thousands): September 30, 2023 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Credit Losses Fair Value Marketable securities - U.S. Treasury securities 29,324 360 — — 29,684 $ 29,324 $ 360 $ — $ — $ 29,684 Net realized gains on sales of marketable securities is $0.1 million and none for the nine months ended September 30, 2023 and 2022, respectively. The Company did not have marketable securities as of December 31, 2022. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Inventory | 5. Inventory Inventory consisted of the following (in thousands): September 30, December 31, 2023 2022 Raw materials $ 10,819 $ 8,343 Work-in-progress 3,214 2,722 Finished goods 1,893 1,448 $ 15,926 $ 12,513 |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets, net | |
Goodwill and Intangible Assets, net | 6. Goodwill and Intangible Assets, net Goodwill As of September 30 Nine Months Ended September 30, 2023 Balances at beginning of period $ 10,050 Foreign currency impact (122) Balances at end of period $ 9,928 The Company evaluates goodwill at least annually on November 1, as well as whenever events or changes in circumstances suggest that the carrying Intangible Assets, net Intangible September 30, 2023 Cost Accumulated Amortization Translation adjustments Net Book Value Customer Relationships $ 3,142 $ (476) $ 120 $ 2,786 Developed Technology 4,967 (400) 187 4,754 Software 254 (88) 10 176 Trade Name 61 (37) 2 26 $ 8,424 $ (1,001) $ 319 $ 7,742 December 31, 2022 Cost Accumulated Amortization Translation adjustments Net Book Value Customer Relationships $ 3,142 $ (163) $ 150 $ 3,129 Developed Technology 4,967 (137) 243 5,073 Software 254 (30) 11 235 Trade Name 61 (13) 3 51 $ 8,424 $ (343) $ 407 $ 8,488 Amortization expense for intangible assets was recorded in the following expense categories of its condensed consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product cost of revenue $ 108 $ 66 $ 321 $ 66 Selling, general and administrative expenses 113 69 337 69 $ 221 $ 135 $ 658 $ 135 Estimated future amortization expense for the intangible assets as of September 30, 2023 are as following (in thousands): 2023 (three months) $ 221 2024 869 2025 851 2026 775 2027 773 Thereafter 4,253 $ 7,742 |
Accrued Expenses
Accrued Expenses | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Accrued Expenses | 7. Accrued Expenses Accrued expenses consisted of the following (in thousands): September 30, December 31, 2023 2022 Accrued employee compensation and benefits $ 3,995 $ 4,909 Accrued warranty 1,009 1,119 Accrued professional fees 821 677 Contingent consideration 728 1,243 Accrued other 714 899 $ 7,267 $ 8,847 Changes in the Company’s product warranty obligations were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Accrual balance at beginning of period $ 1,119 $ 1,593 Provision for new warranties 367 1,194 Settlements and adjustments made during the period (477) (1,433) Accrual balance at end of period $ 1,009 $ 1,354 |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Long-Term Debt | |
Long-Term Debt | 8. Long-Term Debt 2021 Revolver On March 11, 2021, the Company entered into an Amended and Restated Loan and Security Agreement (the “2021 Revolver”) to replace a Loan and Security Agreement, as amended (the “2019 Loan”). This agreement created a revolving line of credit totaling $25.0 million and eliminated the existing term loan. Borrowings under the revolving line of credit bore interest at an annual rate equal to the greater of (i) one-half percent (0.5%) above the prime rate or (ii) four percent (4.0%) and were scheduled to mature on March 11, 2024. Borrowings were collateralized by substantially all of the Company’s property, excluding intellectual property, which was subject to a negative pledge. The 2021 Revolver subjected the Company to various customary covenants, including requirements as to financial reporting and financial covenants (including an unrestricted minimum cash level of $10.0 million), and restrictions on the Company’s ability to dispose of its business or property, to change its line of business, to liquidate or dissolve, to enter into any change in control transaction, to merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, to incur additional indebtedness, to incur liens on the Company’s property, to pay any dividends or make other distributions on capital stock other than dividends payable solely in capital stock, to redeem capital stock, to enter into in-bound licensing agreements, to engage in transactions with affiliates, and to encumber the Company’s intellectual property. Events of default under the 2021 Revolver included failure to make payments when due, insolvency events, failure to comply with covenants or material adverse events with respect to the Company. Upon the occurrence of an event of default and until such event of default was no longer continuing, the annual interest rate would be five percent (5.0%) above the otherwise applicable rate. The terms of the 2021 Revolver required that the existing term loan outstanding under the 2019 Loan be repaid with an advance under the line of credit. Accordingly, on March 11, 2021, the Company used $14.5 million of proceeds from the 2021 Revolver to repay all amounts then due on the existing term loan. The Company accounted for the transaction as a debt extinguishment and recorded a loss on extinguishment of $0.2 million, which was included in interest expense in the consolidated statements of operations and comprehensive loss. On November 2, 2022, the Company satisfied in full all of its outstanding obligations and voluntarily terminated the 2021 Revolver. The Company did not incur any early termination penalties in connection with the termination of the 2021 Revolver. The amount outstanding under the 2021 Revolver was fully repaid in October 2022 and no amounts were outstanding upon termination of the 2021 Revolver. 2022 Loan Revolver On November 2, 2022, the Company entered into a Loan and Security Agreement (the “2022 Revolver”), by and between, the Company, as borrower, and Silicon Valley Bank (“SVB”), as lender. The 2022 Revolver provided for a revolving line of credit of up to $35.0 million. The Company was permitted to make interest-only payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness would be immediately due and payable. The outstanding principal amount of any advance accrued interest at a floating rate per annum equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%). The Company’s obligations under the 2022 Revolver were secured by substantially all of the Company’s assets, excluding its intellectual property, which was subject to a negative pledge. The revolving line of credit under the 2022 Revolver was scheduled to terminate on November 2, 2025. As of September 30, 2023, there were no balances outstanding under the 2022 Revolver. As of December 31, 2022, the outstanding principal balance under the 2022 Revolver was $15.0 million, which was repaid in full on January 4, 2023. The interest rate applicable to borrowing under the 2022 Revolver was 7.0% as of December 31, 2022. The 2022 Revolver also contained certain financial covenants, including a requirement that the amount of unrestricted and unencumbered cash minus advances under the 2022 Revolver, was not less than the amount equal to the greater of (i) $10.0 million or (ii) nine 9 On March 10, 2023, SVB, one of our financial institutions, was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 12, 2023, the U.S. Department of the Treasury, Federal Reserve Board, and FDIC released a joint statement announcing that the FDIC would complete its resolution of SVB in a manner that fully protected all depositors and that depositors would have access to all of their money starting March 13, 2023. As of March 31, 2023, the Company had transferred substantially all its cash and cash equivalents away from SVB and deposited the funds with new financial institutions. As a result of the transfer of the Company’s cash, cash equivalents and marketable securities, the Company was in default of its financial covenants under the 2022 Revolver. The Company recorded a loss on extinguishment of debt of $0.5 million in the three months ended March 31, 2023, which was included in interest expense in the condensed consolidated statements of operations and comprehensive loss. On August 4, 2023, the Company entered into a Default Waiver and First Amendment to Loan and Security Agreement (the “Amended 2022 Revolver”), by and between, the Company, as borrower, and SVB, as lender. The Amended 2022 Revolver provides for a revolving line of credit of up to $10.0 million. The Company is permitted to make interest-only payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness shall be immediately due and payable. The outstanding principal amount of any advance shall accrue interest at a floating rate per annum equal to the greater of (i) four and one-half percent (4.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%). The Company’s obligations under the Amended 2022 Revolver are secured by substantially all of the Company’s assets, excluding its intellectual property, which is subject to a negative pledge. The revolving line of credit under the Amended 2022 Revolver terminates on November 2, 2025. Pursuant to the Amended 2022 Revolver, SVB waived filing any legal action or instituting or enforcing any rights and remedies it may have had against the Company in connection with the Company’s failing to maintain all of its operating accounts, depository accounts and excess cash with SVB, as previously required prior to the effectiveness of the Amended 2022 Revolver. The Amended 2022 Revolver also contains certain financial covenants, including a requirement that the Company maintain $20.0 million on account at or through SVB and the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine 9 |
Equity and Net Income (Loss) pe
Equity and Net Income (Loss) per Share | 9 Months Ended |
Sep. 30, 2023 | |
Equity and Net Income (Loss) per Share | |
Equity and Net Income (Loss) per Share | 9. Equity and Net Income (Loss) per Share Equity As of September 30, 2023, the Company’s certificate of incorporation authorized the Company to issue up to 5,000,000 shares of preferred stock, all of which is undesignated. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are not entitled to receive dividends, unless declared by the board of directors. As of September 30, 2023, and December 31, 2022, the Company had outstanding warrants for the purchase of 92,703 shares of common stock at an exercise price of $9.17 per share, of which warrants for the purchase of 49,078 shares and 43,625 shares expire in 2027 and 2028, respectively. Net Income (Loss) per Share The Company only has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of outstanding stock awards. For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. As the Company has reported a net loss during the three and nine months ended September 30, 2023 and 2022, basic net loss per share is the same as diluted net loss per share. The Company excluded the following potential shares of common stock, presented based on amounts outstanding at each period end, from the computation of diluted net income (loss) per share attributable to common stockholders for the three and nine months ended September 30, 2023 and 2022 as the impact of including such common stock equivalents would have been anti-dilutive: September 30, 2023 2022 Warrants to purchase common stock 92,703 92,703 Options to purchase common stock 2,483,790 2,640,822 Performance stock units 53,794 — Restricted stock units 1,911,152 866,104 4,541,439 3,599,629 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | 10. Stock-Based Compensation The Company recorded stock-based compensation expense for all stock awards in the following expense categories of its condensed consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 155 $ 72 $ 410 $ 221 Research and development expenses 742 474 2,069 1,154 Selling, general and administrative expenses 1,807 1,474 4,969 3,828 $ 2,704 $ 2,020 $ 7,448 $ 5,203 As of September 30, 2023, there was $17.2 million of unrecognized compensation cost related to unvested restricted stock units (“RSUs”) that is expected to be recognized over a weighted average period of 2.8 years. In March 2023, the compensation committee of the Company’s board of directors granted an aggregate of 53,794 performance-based restricted stock units, (“PSUs”) under the 2020 Stock Option and Incentive Plan to the Company’s chief executive officer. Each PSU is equivalent in value to one share of the Company’s common stock. The maximum payout percentage for all PSUs granted by the Company is 100%. The vesting of the shares underlying the PSUs is subject to the achievement of stock price levels pre-established by the compensation committee at the grant date. The PSUs are subject to the market and service conditions and valued using the Monte Carlo simulation model, which requires certain assumptions, including the risk-free interest rate, expected volatility, and the estimated dividend yield. The risk-free interest rate used in the Monte Carlo simulation model is based on zero-coupon yields implied by U.S. Treasury issues with remaining terms similar to the performance period on the PSUs. The performance period of the PSUs represents the period of time between the PSU grant date and the end of the performance period. Expected volatility is based on historical data of the peers and certain indices over the most recent time period equal to the performance period. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Leases | 11. Leases The Company’s primary operating lease obligations consists of various leases for office space in Massachusetts, North Carolina and Braunschweig, Germany. There have been no material changes to the Company’s leases during the nine months ended September 30, 2023, other than noted herein. For additional information, read Note 13, Leases, In July 2022, the Company entered into a new operating lease agreement in Morrisville, North Carolina (the “New NC Lease”), to expand the Company’s research and development activities focused on its desktop offerings and enable the ability to stand up an additional manufacturing site for the Company. The New NC Lease is for approximately 13,300 rentable square feet and is for a term of 88 months with total lease costs of approximately $4.0 million. The New NC Lease commenced in March 2023. In October 2022, Trace entered into a new operating lease agreement in Braunschweig, Germany, as its existing lease was expiring and to increase the existing manufacturing site and set up European base of operations for the Company. The lease in Braunschweig is for approximately 7,500 rentable square feet and commenced in January 2023. The lease in Braunschweig is for a term of 60 months with total lease costs of approximately $0.4 million. The components of lease expense under ASC 842 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease cost $ 579 $ 587 $ 1,548 $ 1,752 Short-term lease cost 17 10 49 30 Variable lease cost 43 3 97 7 $ 639 $ 600 $ 1,694 $ 1,789 Supplemental disclosure of cash flow information related to leases was as follows (in thousands): Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 1,513 $ 1,342 Operating lease liabilities arising from obtaining right-of-use assets $ 3,003 $ — The weighted-average remaining lease term and discount rate were as follows: September 30, December 31, 2023 2022 Weighted-average remaining lease term - operating leases (in years) 3.85 2.75 Weighted-average discount rate - operating leases 7.9 % 9.5 % The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses its incremental borrowing rate based on information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Future annual minimum lease payments under operating leases as of September 30, 2023 are as follows (in thousands): 2023 (three months) $ 602 2024 2,429 2025 1,999 2026 578 2027 592 Thereafter 1,347 Total future minimum lease payments 7,547 Less: imputed interest (1,147) Total operating lease liabilities $ 6,400 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies | |
Commitments and Contingencies | 12. Commitments and Contingencies Royalty Arrangements The Company has entered into royalty arrangements with two parties whereby the Company owes low- to mid-single digit royalty percentages related to revenue that is derived pursuant to in-licensed technologies. Royalty obligations are expensed when incurred or over the minimum royalty periods and have not been material. Some of the arrangements include minimum royalties over a defined term. The future minimum royalty payments are $0.1 million per year through the end of the patents’ lives. The Company has the right to terminate the agreements with written notice. 401(k) Savings Plan The Company has a defined-contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Company contributions to the plan may be made at the discretion of the board of directors. On October 1, 2021, the Company commenced an employer match program whereby the Company matches 100% of the first 3% that each employee contributes to the plan, capped at a maximum of $3,500 per year per employee. During the nine months ended September 30, 2023 and 2022, the Company made $0.4 million and $0.4 million, respectively, in contributions to the plan. Contingent Consideration – Earnout and Pension Liability The Company agreed to pay three milestone based earnouts under the Trace purchase agreement for the total potential payout of $2.0 million. Milestones are based on target revenues and technical integration of Trace systems and knowledge and range to June 30, 2024. During the six months ended June 30, 2023, the Company received notice that the pension obligation had been transferred and was no longer in Trace’s name and therefore the Company released the $0.9 million assignment of the pension liability. The Trace acquisition consideration withheld in respect of the pension plan was paid out to the sellers in April 2023 Acquisition Indemnification Agreements In the ordinary course of business, the Company may provide indemnification of varying scope and terms to vendors, lessors, business partners and other parties with respect to certain matters including, but not limited to, losses arising out of breach of such agreements or from intellectual property infringement claims made by third parties. In addition, the Company has entered into indemnification agreements with its executive officers and members of its board of directors that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or services as directors or officers. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is, in many cases, unlimited. To date, the Company has not incurred any material costs as a result of such indemnifications. The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its condensed consolidated financial statements as of September 30, 2023. Legal Proceedings The Company is not currently party to any material legal proceedings. At each reporting date, the Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. The Company expenses as incurred the costs related to such legal proceedings. |
Acquisition
Acquisition | 9 Months Ended |
Sep. 30, 2023 | |
Acquisition | |
Acquisition | 13. Acquisition On August 3, 2022, the Company entered into a share purchase and transfer agreement and completed its acquisition of 100% of the registered share capital of Trace, for total purchase price consideration of $17.3 million, comprised of (i) a $14.4 million initial cash payment, (ii) up to $2.0 million contingent cash consideration upon achievement of certain milestones over a twenty four month period and (iii) $0.9 million contingent pension liability holdback to be released upon discharging or transferring of such liability from Trace. Trace is a leading provider of online analysis systems for biotech applications in research, development and production. Trace’s products are used for monitoring and controlling of complex processes in industrial pharmaceutical productions under continuous measurement conditions. The Company expects to integrate acquired sampling technology within future product offerings. The Company has accounted for the acquisition of Trace as a purchase of a business under U.S. GAAP. Under the acquisition method of accounting, the assets acquired and liabilities assumed from Trace have been recorded as of the acquisition date, at their respective fair values, and consolidated with those of the Company. The Company has allocated the purchase price to the net tangible and intangible assets based on their fair values as of August 3, 2022. The following table presents the final allocation of the acquisition date purchase consideration for the transaction including the contingent consideration and the allocation of the purchase consideration (in thousands): Consideration Transferred: Cash paid $ 14,400 Net cash and working capital adjustment 113 Contingent consideration - pension liability 900 Contingent consideration - earnout 737 Total consideration transferred $ 16,150 Assets acquired and liabilities assumed: Cash and cash equivalents $ 638 Accounts receivable 168 Inventory 364 Prepaid expenses and other current assets 11 Property and equipment, net 32 Intangible assets Customer Relationships 3,142 Developed Technology 4,967 Software 254 Trade Name 61 Goodwill 9,566 Indemnification assets 917 Pension liability (917) Accounts payable, accrued expenses and other current liabilities (306) Deferred tax liability, net (2,672) Other liabilities (75) Total $ 16,150 The excess of the purchase price over the fair value of the acquired business' net assets represents cost and revenue synergies specific to the companies, and has been allocated to goodwill, which is not tax deductible. Intangible assets acquired have finite life and are amortized per our accounting policy. See Note 2 for the amortization periods. The following unaudited pro forma information presents the condensed consolidated results of operations of the Company and Trace for the nine months ended September 30, 2022 and the three month period ended September 30, 2022 as if the acquisition of Trace had been completed on January 1, 2022 and have been calculated after applying the Company’s accounting policies. These pro forma condensed consolidated financial results have been prepared for comparative purposes only and include certain adjustments that reflect pro forma results of operations, such as consequential adjustments relating to the tax effect of these adjustments in combining the Company and Trace businesses. The unaudited pro forma results do not reflect any operating efficiencies or potential cost savings which may result from the consolidation of the operations of the Company and Trace. Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of the results of operations that would have been achieved had the acquisition occurred as of January 1, 2022, nor are they intended to represent or be indicative of future results of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 Revenue (unaudited) $ 15,950 $ 36,341 Pre-tax loss (unaudited) $ (5,947) $ (23,369) |
Segment Reporting and Geographi
Segment Reporting and Geographic Data | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting and Geographic Data | |
Segment Reporting and Geographic Data | 14. Segment Reporting and Geographic Data The Company has determined that it operates in one segment (see Note 2). See Note 2 for revenue by country. Long-lived assets by geography are summarized as follows (in thousands): September 30, December 31, 2023 2022 Long-lived assets (1) United States $ 8,985 $ 7,852 All other countries 546 63 Total long-lived assets $ 9,531 $ 7,915 (1) Long-lived assets exclude goodwill, other intangible assets and other assets. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Unaudited Condensed Interim Financial Information | Unaudited Condensed Interim Financial Information The condensed consolidated balance sheet at December 31, 2022 was derived from audited consolidated financial statements but does not include all disclosures required by GAAP. The accompanying unaudited condensed consolidated financial statements as of September 30, 2023 and for the three and nine months ended September 30, 2023 and 2022 have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 on file with the SEC. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2023 and results of operations for the three and nine months ended September 30, 2023 and 2022 and statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022 and cash flows for the nine months ended September 30, 2023 and 2022 have been made. The Company’s results of operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2023 or any other period. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected in these condensed consolidated financial statements include, but are not limited to, revenue recognition and accounts receivable, the valuation of inventory, fair value of assets acquired and liabilities assumed in acquisitions and the valuation of stock-based awards. The Company bases its estimates on historical experience, known trends and other market-specific or other relevant factors that it believes to be reasonable under the circumstances. Due to rising inflation and higher interest rates, there has been uncertainty and disruption in the global economy and financial markets. The Company is not aware of any specific event or circumstance that would require further updates to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date of issuance of these condensed consolidated financial statements. These estimates may change, as new events occur and additional information is obtained. On an ongoing basis, management evaluates its estimates as there are changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Actual results may differ from those estimates or assumptions. |
Risk of Concentrations of Credit, Significant Customers and Significant Suppliers | Risk of Concentrations of Credit, Significant Customers and Significant Suppliers Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company maintains the majority of its cash and cash equivalents with three financial institutions that management believes to be of high credit quality. The Company has not experienced any other-than-temporary losses with respect to its cash and cash equivalents and does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships. Significant customers are those that accounted for 10% or more of the Company’s total revenue or accounts receivable. For the three months ended September 30, 2023, two customers represented 41% and 17% of total revenue. For the comparable three months ended September 30, 2022, one customer represented 41% of total revenue. For the nine months ended September 30, 2023, two customers represented 22% and 11% of total revenue, respectively. For the comparable nine months ended September 30, 2022, Certain of the components included in the Company’s products are obtained from a sole source, a single source or a limited group of suppliers. Although the Company seeks to reduce dependence on those limited sources of suppliers and manufacturers, the partial or complete loss of certain of these sources, or the requirement to establish a new supplier for the components, could have a material adverse effect on the Company’s operating results, financial condition and cash flows and damage its customer relationships. |
Accounts Receivable | Accounts Receivable Accounts receivable are presented net of an allowance for credit losses, which is an estimate of amounts that may not be collectible. The Company performs ongoing credit evaluations of its customers and monitors economic conditions to identify facts and circumstances that may indicate its receivables are at risk of collection. The Company provides reserves against accounts receivable for estimated credit losses, if any, that may result from a customer’s inability to pay based on the composition of its accounts receivable, current economic conditions and historical credit loss activity. Amounts deemed uncollectible are charged or written-off against the reserve. As of September 30, 2023 and December 31, 2022, the Company recorded $0.1 million allowance and less than $0.1 million allowance for credit losses, respectively. Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Balances at beginning of period $ 133 $ 1,750 $ 25 $ 1,750 Current period change for expected credit loss — — 108 — Deduction / recoveries collected (16) — (16) — Balances at end of period $ 117 $ 1,750 $ 117 $ 1,750 |
Fair Value Measurements | Fair Value Measurements Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: ● Level 1 — Quoted prices in active markets for identical assets or liabilities. ● Level 2 — Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. ● Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. The Company's financial instruments consist primarily of cash equivalents, marketable securities, accounts receivable, accounts payable, accrued expenses and contingent consideration. Fair value measurements The carrying value of the Company’s long-term debt approximates its fair value (a Level 2 measurement) at each balance sheet date due to its variable interest rate, which approximates a market interest rate. |
Marketable Securities | Marketable Securities The Company’s marketable securities (non-equity instruments) are classified as available-for-sale and are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity. Realized gains and losses are based on the specific identification method and are included as a component of other income (expense), net in the consolidated statements of operations. When the fair value is below the amortized cost of a marketable security, an estimate of expected credit losses is made. The credit-related impairment amount is recognized in the consolidated statements of operations. Credit losses are recognized through the use of an allowance for credit losses account in the consolidated balance sheet and subsequent improvements in expected credit losses are recognized as a reversal of an amount in the allowance account. If the Company has the intent to sell the security or it is more likely than not that the Company will be required to sell the security prior to recovery of its amortized cost basis, then the allowance for the credit loss is written-off and the excess of the amortized cost basis of the asset over its fair value is recorded in the consolidated statements of operations. There were no credit losses recorded during the nine months ended September 30, 2023. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill is not amortized, but is evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable. In assessing the recoverability of goodwill, the Company must make assumptions regarding the estimated future cash flows, and other factors, to determine the fair value of these assets. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges against these assets in the reporting period in which the impairment is determined. The Company tests goodwill for impairment at the reporting unit level, which is the operating segment. The Company has the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment. If as a result of the quantitative assessment, it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required. The quantitative goodwill impairment test requires the management to estimate and compare the fair value of the reporting unit with its carrying value. If the fair value of the reporting unit exceeds the carrying value of the net assets, goodwill is not impaired. If the fair value of the reporting unit is less than the carrying value, the difference is recorded as an impairment loss up to the amount of goodwill. Intangible assets with a finite useful life are recorded at cost, net of accumulated amortization and are amortized on a straight-line basis over their estimated useful lives as follows: Customer Relationships 8 years Developed Technology 15 years Software 3 years Trade Name 2 years The Company reviews other long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an asset or an asset group may not be recoverable. In evaluating long-lived assets for recoverability, we estimate the undiscounted future cash flows that are expected from the use of each asset or asset group. In the event that such cash flows are not expected to be sufficient to recover the carrying amount of the assets, impairment losses are measured and recorded for the excess of an asset's carrying value over its fair value. To determine the fair value of long-lived assets, the Company utilizes the valuation technique or techniques deemed most appropriate based on the nature of the asset or asset group, which may include the use of quoted market prices, prices for similar assets or other valuation techniques such as discounted future cash flows or earnings. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue from sales to customers under ASC 606, Revenue from Contracts with Customers For a contract with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation on a relative standalone selling price basis using the Company’s best estimate of the standalone selling price of each distinct product or service in the contract. The primary method used to estimate standalone selling price is the price observed in standalone sales to customers; however, when prices in standalone sales are not available the Company may use third party pricing for similar products or services or estimate the standalone selling price, which is set by management. Allocation of the transaction price is determined at the contract’s inception and is not updated to reflect changes between contract inception and when the performance obligations are satisfied. Product and Service Revenue The Company derives product and service revenue primarily from the sale of handheld and desktop products and related consumables and services. Revenue is recognized when control of the promised products, consumables or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products, consumables or services (the transaction price). A performance obligation is a promise in a contract to transfer a distinct product or service to a customer and is the unit of accounting under ASC 606. For devices and consumables sold by the Company, control transfers to the customer at a point in time. To indicate the transfer of control, the Company must have a present right to payment, legal title must have passed to the customer, the customer must have the significant risks and rewards of ownership, and where acceptance is other than perfunctory, the customer must have accepted the product or service. The Company’s principal terms of sale are freight on board (“FOB”) shipping point, or equivalent, and, as such, the Company primarily transfers control and records revenue for product sales upon shipment. Sales arrangements with delivery terms that are not FOB shipping point are not recognized upon shipment and the transfer of control for revenue recognition is evaluated based on the associated shipping terms and customer obligations. If a performance obligation to the customer with respect to a sales transaction remains to be fulfilled following shipment (typically installation or acceptance by the customer), revenue recognition for that performance obligation is deferred until such commitments have been fulfilled. For extended warranty and support, control transfers to the customer over the term of the arrangement. Revenue for extended warranty and support is recognized based upon the period of time elapsed under the arrangement as this period represents the transfer of benefits or services under the agreement. The Company recognizes a receivable at the point in time at which it has an unconditional right to payment. Such receivables are not contract assets. Payment terms for customer orders, including for each of the Company’s primary performance obligations, are typically 30 to 90 days after the shipment or delivery of the product, and such payments typically do not include payments that are variable, dependent on specified factors or events. In limited circumstances, there exists a right of return for a product if agreed to by the Company. Revenue is only recognized for those goods that are not expected to be returned such that it is probable that there will not be a significant reversal of cumulative revenue. Service arrangements commonly call for payments in advance of performing the work (e.g., extended warranty/service contracts), upon completion of the service or a mix of both. The Company does not enter into significant financing agreements or other forms of variable consideration. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not only subject to the passage of time. The Company had no contract assets related to product or service revenue as of September 30, 2023 or December 31, 2022. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. The Company has determined that its only contract liability related to product and service revenue is deferred revenue, which consists of amounts that have been invoiced but that have not been recognized as revenue. Amounts expected to be recognized as revenue within 12 months of the balance sheet date are classified as current deferred revenue and amounts expected to be recognized as revenue beyond 12 months of the balance sheet date are classified as noncurrent deferred revenue. The following is a summary of the activity of the Company’s deferred revenue related to product and service revenue (in thousands): Nine Months Ended September 30, 2023 2022 Balances at beginning of period $ 16,510 $ 14,521 Recognition of revenue included in balance at beginning of the period (5,332) (3,521) Revenue deferred during the period, net of revenue recognized 8,714 5,891 Balances at end of period $ 19,892 $ 16,891 The amount of deferred revenue equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such deferred revenue amounts related to product and service revenue are expected to be recognized in the future as follows (in thousands): September 30, December 31, 2023 2022 Deferred revenue expected to be recognized in: One year or less $ 10,521 $ 7,514 One to two years 5,885 4,750 Three years and beyond 3,486 4,246 $ 19,892 $ 16,510 Contract Revenue The Company generates revenue from short and long-term contracts associated with the design and development and delivery of detection devices or related design and support services. To date, these contracts are primarily with the U.S. government or commercial entities contracting with the U.S. government, but the Company has also had such contracts with commercial partners. The Company’s contracts with the U.S. government typically are subject to the Federal Acquisition Regulation (“FAR”) and are priced based on estimated or actual costs of producing goods or providing services. The FAR provides guidance on the types of costs that are allowable in establishing prices for goods or services provided under U.S. government contracts. The pricing for non-U.S. government contracts is based on the specific negotiations with each customer. Under the typical payment terms of U.S. government fixed-price contracts, the customer pays in accordance with the terms of the specific agreement, but generally through progress payments. If these progress payments are made in advance, these payments are recorded as a contract liability, classified as deferred revenue within the accompanying condensed consolidated balance sheet, until the Company provides the underlying services. For U.S. government cost-type contracts, the customer generally pays for actual costs incurred within a short period of time. For contracts with commercial partners, payments are made in accordance with the terms of the specific agreement. For agreements which call for milestone payments, to the extent the Company does not conclude that it is probable that a significant reversal of cumulative revenue will occur, a contract asset is generated until the Company is permitted to bill for costs incurred, which is classified as prepaid expense and other current assets in the accompanying condensed consolidated balance sheet. In some cases, payments received in advance under contract agreements are recorded as deferred revenue and recognized over the respective contract term, absent any other performance obligations. Generally, revenue for long-term contracts is recognized based upon the cost-to-cost measure of progress, provided that the Company meets the criteria associated with transferring control of the good or service over time such as not creating an asset with an alternative use and having an enforceable right to payment for completed performance. However, the Company evaluates the proper revenue recognition on a contract by contract basis, as each contract generally contains terms specific to the underlying agreement which result in differing performance obligations and payment terms (cost plus, fixed price agreements among others). For revenue recognized under the cost-to-cost measure of progress basis, the Company continually assesses total costs expected to be incurred and if such costs require adjustment to the measure of progress, the Company records such adjustment as a change in estimate on a cumulative catch-up basis in the period of adjustment. The Company includes the unconstrained amount of consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each subsequent reporting period, as required under ASC 606, the Company re-evaluates the estimated consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis in the period of adjustment. Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time. The Company includes contract assets within prepaid and other current assets in the accompanying condensed consolidated balance sheet. The Company had no contract assets related to contract revenue as of September 30, 2023 and $0.4 million contract assets related to contract revenue as of December 31, 2022. Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer. As of September 30, 2023, the Company had no contract liabilities. The Company recognizes deferred revenue by first allocating from the beginning deferred revenue balance to the extent that the beginning deferred revenue balance exceeds the revenue to be recognized. Billings during the period are added to the deferred revenue balance to be recognized in future periods. As of September 30, 2023, the Company held no wholly- or partially-unsatisfied performance obligations related to contract agreements entered prior to period end. Distribution Channels A majority of the Company’s revenue is generated by sales in conjunction with its distribution partners, such as its international distributors and, in the United States, for end customers where a government contract is required or a customer has a pre-existing relationship. When the Company transacts with a distribution partner, its contractual arrangement is with the partner and not with the end-use customer. Whether the Company transacts business with and receives the order from a distribution partner or directly from an end-use customer, its revenue recognition policy and resulting pattern of revenue recognition for the order are the same. Disaggregated Revenue The Company’s product and service revenue consists of sales of devices and recurring revenue which includes consumables, accessories and the sale of service and extended warranty plans. The following table presents the Company’s revenue by revenue stream (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product and service revenue: Device sales revenue $ 10,719 $ 10,952 $ 23,761 $ 24,239 Recurring revenue 3,578 4,485 11,747 9,835 Total product and service revenue 14,297 15,437 35,508 34,074 Contract revenue — 360 370 1,135 Total revenue $ 14,297 $ 15,797 $ 35,878 $ 35,209 The following table presents the Company’s product and service revenue by device type (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Handheld revenue: Device sales revenue $ 9,681 $ 8,051 $ 19,929 $ 16,782 Recurring revenue 2,067 2,968 6,813 5,645 Total handheld revenue 11,748 11,019 26,742 22,427 Desktop revenue: Device sales revenue 1,039 2,901 3,832 7,458 Recurring revenue 1,510 1,517 4,934 4,189 Total desktop revenue 2,549 4,418 8,766 11,647 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 Revenue based on the end-user entity type for the Company’s product and service revenue are presented below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Government $ 11,740 $ 11,069 $ 26,732 $ 22,788 Pharmaceutical/Biotechnology 2,546 4,327 8,705 11,032 Academia and other 11 41 71 254 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 The following table disaggregates the Company’s revenue from contracts with customers by geography, which are determined based on the customer location (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 12,417 $ 12,403 $ 26,769 $ 27,916 Europe, Middle East and Africa 1,456 2,361 7,398 4,961 Asia Pacific 394 996 1,191 2,270 Americas other 30 37 520 62 $ 14,297 $ 15,797 $ 35,878 $ 35,209 International sales are comprised primarily of product and service revenue, with the majority of contract revenue being attributable to North America. |
Foreign currency | Foreign currency The Company translates assets and liabilities of its foreign subsidiaries at rates in effect at the end of the reporting period. Revenues and expenses are translated at average rates in effect during the reporting period. Translation adjustments are included in accumulated other comprehensive loss. |
Other Comprehensive income (Loss) | Other Comprehensive income (Loss) Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are excluded from net loss as these amounts are recorded as an adjustment to shareholders' equity, net of tax. The Company's other comprehensive income (loss) was composed of |
Net Income (Loss) per Share | Net Income (Loss) per Share The Company has one class of shares outstanding and basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, including potential dilutive common shares assuming the dilutive effect of any potential dilutive securities outstanding for the fiscal year. Potential dilutive securities include warrants, stock options, restricted stock units, and shares to be purchased under the Company’s employee stock purchase plan. For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. |
Business combination | Business combination Under the acquisition method of accounting, the Company generally recognizes the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition. The fair values assigned, defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants, are based on estimates and assumptions determined by management. The excess consideration over the aggregate value of tangible and intangible assets, net of liabilities assumed, is recorded as goodwill. These valuations require significant estimates and assumptions, especially with respect to intangible assets. The Company estimates the fair value of the contingent consideration earnouts using the Monte Carlo Simulation or probability weighted scenario depending on the nature of the contingent consideration and updates the fair value of the contingent consideration at each reporting period based on the estimated probability of achieving the earnout targets and applying a discount rate that captures the risk associated with the expected contingent payments. To the extent that these estimates change in the future regarding the likelihood of achieving these targets, the Company may need to record material adjustments to its accrued contingent consideration. Such changes in the fair value of contingent consideration are recorded as contingent consideration expense or income in the consolidated statements of operations. The Company uses the income approach to determine the fair value of certain identifiable intangible assets including customer relationships and developed technology. This approach determines fair value by estimating after-tax cash flows attributable to these assets over their respective useful lives and then discounting these after-tax cash flows back to a present value. The Company bases its assumptions on estimates of future cash flows, expected growth rates, expected trends in technology, probabilities of customer renewals, etc. The Company bases the discount rates used to arrive at a present value as of the date of acquisition on the time value of money and certain industry-specific risk factors. The Company believes the estimated purchased customer relationships, developed technology, software and trade name amounts determined represent the fair value at the date of acquisition and do not exceed the amount a third-party would pay for the assets. |
Recently Adopted Accounting Pronouncements | Recently Adopted Accounting Pronouncements The Company qualifies as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 and has elected not to “opt out” of the extended transition related to complying with new or revised accounting standards, which means that when a standard is issued or revised and it has different application dates for public and nonpublic companies, the Company will adopt the new or revised standard at the time nonpublic companies adopt the new or revised standard and will do so until such time that the Company either (i) irrevocably elects to “opt out” of such extended transition period or (ii) no longer qualifies as an emerging growth company. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) interim periods within those fiscal years. Early application is allowed. The Company adopted this standard effective January 1, 2023 and deemed no material impact on our condensed consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Summary of Significant Accounting Policies | |
Schedule of allowance for credit losses | Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Balances at beginning of period $ 133 $ 1,750 $ 25 $ 1,750 Current period change for expected credit loss — — 108 — Deduction / recoveries collected (16) — (16) — Balances at end of period $ 117 $ 1,750 $ 117 $ 1,750 |
Schedule of finite lived intangible assets useful life | Customer Relationships 8 years Developed Technology 15 years Software 3 years Trade Name 2 years |
Summary of the activity of the Company's deferred revenue | The following is a summary of the activity of the Company’s deferred revenue related to product and service revenue (in thousands): Nine Months Ended September 30, 2023 2022 Balances at beginning of period $ 16,510 $ 14,521 Recognition of revenue included in balance at beginning of the period (5,332) (3,521) Revenue deferred during the period, net of revenue recognized 8,714 5,891 Balances at end of period $ 19,892 $ 16,891 |
Schedule of deferred revenue amounts expected to be recognized in the future | The amount of deferred revenue equals the transaction price allocated to unfulfilled performance obligations for the period presented. Such deferred revenue amounts related to product and service revenue are expected to be recognized in the future as follows (in thousands): September 30, December 31, 2023 2022 Deferred revenue expected to be recognized in: One year or less $ 10,521 $ 7,514 One to two years 5,885 4,750 Three years and beyond 3,486 4,246 $ 19,892 $ 16,510 |
Schedule of disaggregation of revenue | The Company’s product and service revenue consists of sales of devices and recurring revenue which includes consumables, accessories and the sale of service and extended warranty plans. The following table presents the Company’s revenue by revenue stream (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product and service revenue: Device sales revenue $ 10,719 $ 10,952 $ 23,761 $ 24,239 Recurring revenue 3,578 4,485 11,747 9,835 Total product and service revenue 14,297 15,437 35,508 34,074 Contract revenue — 360 370 1,135 Total revenue $ 14,297 $ 15,797 $ 35,878 $ 35,209 The following table presents the Company’s product and service revenue by device type (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Handheld revenue: Device sales revenue $ 9,681 $ 8,051 $ 19,929 $ 16,782 Recurring revenue 2,067 2,968 6,813 5,645 Total handheld revenue 11,748 11,019 26,742 22,427 Desktop revenue: Device sales revenue 1,039 2,901 3,832 7,458 Recurring revenue 1,510 1,517 4,934 4,189 Total desktop revenue 2,549 4,418 8,766 11,647 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 Revenue based on the end-user entity type for the Company’s product and service revenue are presented below (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Government $ 11,740 $ 11,069 $ 26,732 $ 22,788 Pharmaceutical/Biotechnology 2,546 4,327 8,705 11,032 Academia and other 11 41 71 254 Total product and service revenue $ 14,297 $ 15,437 $ 35,508 $ 34,074 The following table disaggregates the Company’s revenue from contracts with customers by geography, which are determined based on the customer location (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 12,417 $ 12,403 $ 26,769 $ 27,916 Europe, Middle East and Africa 1,456 2,361 7,398 4,961 Asia Pacific 394 996 1,191 2,270 Americas other 30 37 520 62 $ 14,297 $ 15,797 $ 35,878 $ 35,209 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Measurements | |
Schedule of assets and liabilities that are measured at fair value on a recurring basis | The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands): Fair Value Measurements at September 30, 2023 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents - Money market funds $ 94,300 $ — $ — $ 94,300 Marketable securities - U.S. Treasury securities — 29,684 — 29,684 Total assets measured at fair value $ 94,300 $ 29,684 $ — $ 123,984 Other current liabilities: Acquisition-related contingent consideration $ — $ — $ 728 $ 728 Total liabilities measured at fair value $ — $ — $ 728 $ 728 Fair Value Measurements at December 31, 2022 Using: Level 1 Level 2 Level 3 Total Assets: Cash equivalents - Money market funds $ 27,866 $ — $ — $ 27,866 $ 27,866 $ — $ — $ 27,866 Other current liabilities: Acquisition-related contingent consideration $ — $ — $ 343 $ 343 Acquisition-related contingent consideration - pension liability — — 900 900 — — 1,243 1,243 Other long-term liabilities: Acquisition-related contingent consideration — — 555 555 Total liabilities measured at fair value $ — $ — $ 1,798 $ 1,798 |
Schedule of change in fair value of liabilities | The following table provides a roll-forward of the fair value of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs (in thousands): Balance as of December 31, 2022 $ 1,798 Accretion - earnout 335 Contingent consideration payment (505) Release of pension liability (900) Balance as of September 30, 2023 $ 728 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Marketable Securities | |
Schedule of marketable securities | Marketable securities by security type consisted of the following (in thousands): September 30, 2023 Amortized Cost Gross Unrealized Gain Gross Unrealized Loss Credit Losses Fair Value Marketable securities - U.S. Treasury securities 29,324 360 — — 29,684 $ 29,324 $ 360 $ — $ — $ 29,684 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Inventory | |
Schedule of inventory | Inventory consisted of the following (in thousands): September 30, December 31, 2023 2022 Raw materials $ 10,819 $ 8,343 Work-in-progress 3,214 2,722 Finished goods 1,893 1,448 $ 15,926 $ 12,513 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets, net | |
Schedule of rollforward of goodwill | As of September 30 Nine Months Ended September 30, 2023 Balances at beginning of period $ 10,050 Foreign currency impact (122) Balances at end of period $ 9,928 |
Schedule of intangible assets, net | Intangible September 30, 2023 Cost Accumulated Amortization Translation adjustments Net Book Value Customer Relationships $ 3,142 $ (476) $ 120 $ 2,786 Developed Technology 4,967 (400) 187 4,754 Software 254 (88) 10 176 Trade Name 61 (37) 2 26 $ 8,424 $ (1,001) $ 319 $ 7,742 December 31, 2022 Cost Accumulated Amortization Translation adjustments Net Book Value Customer Relationships $ 3,142 $ (163) $ 150 $ 3,129 Developed Technology 4,967 (137) 243 5,073 Software 254 (30) 11 235 Trade Name 61 (13) 3 51 $ 8,424 $ (343) $ 407 $ 8,488 |
Schedule of amortization expense for intangible assets | Amortization expense for intangible assets was recorded in the following expense categories of its condensed consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Product cost of revenue $ 108 $ 66 $ 321 $ 66 Selling, general and administrative expenses 113 69 337 69 $ 221 $ 135 $ 658 $ 135 |
Schedule of future amortization expense of intangible assets | Estimated future amortization expense for the intangible assets as of September 30, 2023 are as following (in thousands): 2023 (three months) $ 221 2024 869 2025 851 2026 775 2027 773 Thereafter 4,253 $ 7,742 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Accrued Expenses | |
Schedule of accrued expenses | Accrued expenses consisted of the following (in thousands): September 30, December 31, 2023 2022 Accrued employee compensation and benefits $ 3,995 $ 4,909 Accrued warranty 1,009 1,119 Accrued professional fees 821 677 Contingent consideration 728 1,243 Accrued other 714 899 $ 7,267 $ 8,847 |
Schedule of changes in product warranty obligation | Changes in the Company’s product warranty obligations were as follows (in thousands): Nine Months Ended September 30, 2023 2022 Accrual balance at beginning of period $ 1,119 $ 1,593 Provision for new warranties 367 1,194 Settlements and adjustments made during the period (477) (1,433) Accrual balance at end of period $ 1,009 $ 1,354 |
Equity and Net Income (Loss) _2
Equity and Net Income (Loss) per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Equity and Net Income (Loss) per Share | |
Schedule of anti-dilutive securities excluded from the computation of diluted net loss per share attributable to common stockholders | September 30, 2023 2022 Warrants to purchase common stock 92,703 92,703 Options to purchase common stock 2,483,790 2,640,822 Performance stock units 53,794 — Restricted stock units 1,911,152 866,104 4,541,439 3,599,629 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Stock-Based Compensation | |
Schedule of stock-based compensation expense | The Company recorded stock-based compensation expense for all stock awards in the following expense categories of its condensed consolidated statements of operations (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenue $ 155 $ 72 $ 410 $ 221 Research and development expenses 742 474 2,069 1,154 Selling, general and administrative expenses 1,807 1,474 4,969 3,828 $ 2,704 $ 2,020 $ 7,448 $ 5,203 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases | |
Schedule of components of lease expense | The components of lease expense under ASC 842 were as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Operating lease cost $ 579 $ 587 $ 1,548 $ 1,752 Short-term lease cost 17 10 49 30 Variable lease cost 43 3 97 7 $ 639 $ 600 $ 1,694 $ 1,789 |
Schedule of supplemental cash flow information related to leases | Supplemental disclosure of cash flow information related to leases was as follows (in thousands): Nine Months Ended September 30, 2023 2022 Cash paid for amounts included in the measurement of operating lease liabilities $ 1,513 $ 1,342 Operating lease liabilities arising from obtaining right-of-use assets $ 3,003 $ — The weighted-average remaining lease term and discount rate were as follows: September 30, December 31, 2023 2022 Weighted-average remaining lease term - operating leases (in years) 3.85 2.75 Weighted-average discount rate - operating leases 7.9 % 9.5 % |
Schedule of future annual minimum lease payments | Future annual minimum lease payments under operating leases as of September 30, 2023 are as follows (in thousands): 2023 (three months) $ 602 2024 2,429 2025 1,999 2026 578 2027 592 Thereafter 1,347 Total future minimum lease payments 7,547 Less: imputed interest (1,147) Total operating lease liabilities $ 6,400 |
Acquisition (Tables)
Acquisition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Acquisition | |
Schedule of preliminary allocation of the purchase consideration | The following table presents the final allocation of the acquisition date purchase consideration for the transaction including the contingent consideration and the allocation of the purchase consideration (in thousands): Consideration Transferred: Cash paid $ 14,400 Net cash and working capital adjustment 113 Contingent consideration - pension liability 900 Contingent consideration - earnout 737 Total consideration transferred $ 16,150 Assets acquired and liabilities assumed: Cash and cash equivalents $ 638 Accounts receivable 168 Inventory 364 Prepaid expenses and other current assets 11 Property and equipment, net 32 Intangible assets Customer Relationships 3,142 Developed Technology 4,967 Software 254 Trade Name 61 Goodwill 9,566 Indemnification assets 917 Pension liability (917) Accounts payable, accrued expenses and other current liabilities (306) Deferred tax liability, net (2,672) Other liabilities (75) Total $ 16,150 |
Schedule of pro forma financial information | the acquisition occurred as of January 1, 2022, nor are they intended to represent or be indicative of future results of operations (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2022 2022 Revenue (unaudited) $ 15,950 $ 36,341 Pre-tax loss (unaudited) $ (5,947) $ (23,369) |
Segment Reporting and Geograp_2
Segment Reporting and Geographic Data (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Segment Reporting and Geographic Data | |
Schedule of long-lived assets by geography | The Company has determined that it operates in one segment (see Note 2). See Note 2 for revenue by country. Long-lived assets by geography are summarized as follows (in thousands): September 30, December 31, 2023 2022 Long-lived assets (1) United States $ 8,985 $ 7,852 All other countries 546 63 Total long-lived assets $ 9,531 $ 7,915 (1) Long-lived assets exclude goodwill, other intangible assets and other assets. |
Nature of the Business and Ba_2
Nature of the Business and Basis of Presentation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Nature of the Business and Basis of Presentation | |||||||||
Entity Incorporation, Date of Incorporation | Feb. 10, 2012 | ||||||||
Net loss | $ (7,093) | $ (9,346) | $ (12,532) | $ (6,259) | $ (8,099) | $ (9,415) | $ (28,970) | $ (23,772) | $ (33,600) |
Accumulated deficit | $ (163,171) | $ (163,171) | $ (134,200) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Risk of Concentrations of Credit, Significant Customers and Significant Suppliers (Details) - Customers - customer | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Number of customers with concentration risk | 2 | 1 | 2 | 1 | |
Revenue | Customer One | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Concentration risk percentage | 41% | 41% | 22% | 29% | |
Revenue | Customer Two | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Concentration risk percentage | 17% | 11% | |||
Accounts Receivable | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Threshold percentage used to determine significant risk | 10% | ||||
Number of customers with concentration risk | 1 | 2 | |||
Accounts Receivable | Customer One | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Concentration risk percentage | 47% | 20% | |||
Accounts Receivable | Customer Two | |||||
Concentrations of Credit Risk and of Significant Customers | |||||
Concentration risk percentage | 12% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Accounts Receivable and Fair Value (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2023 | Sep. 30, 2023 | |
Summary of Significant Accounting Policies | ||
Balances at beginning of period | $ 133 | $ 25 |
Current period change for expected credit loss | 108 | |
Deduction / recoveries collected | (16) | (16) |
Balances at end of period | $ 117 | 117 |
Credit losses during the period | 0 | |
Maximum | ||
Summary of Significant Accounting Policies | ||
Balances at beginning of period | $ 100 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Goodwill and Intangible Assets (Details) | Sep. 30, 2023 |
Customer Relationships | |
Summary of Significant Accounting Policies | |
Finite intangible assets useful life (in years) | 8 years |
Developed Technology | |
Summary of Significant Accounting Policies | |
Finite intangible assets useful life (in years) | 15 years |
Software | |
Summary of Significant Accounting Policies | |
Finite intangible assets useful life (in years) | 3 years |
Trade Name | |
Summary of Significant Accounting Policies | |
Finite intangible assets useful life (in years) | 2 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Deferred Revenue (Details) - Product and service revenue - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Revenue Recognition | |||
Contract assets | $ 0 | $ 0 | |
Summary of the activity of the Company's deferred revenue related to product and service revenue | |||
Balances at beginning of period | 16,510 | $ 14,521 | |
Recognition of revenue included in balance at beginning of the period | (5,332) | (3,521) | |
Revenue deferred during the period, net of revenue recognized | 8,714 | 5,891 | |
Balances at end of period | $ 19,892 | $ 16,891 | |
Minimum | |||
Revenue Recognition | |||
Payment terms for customer receivables | 30 days | ||
Maximum | |||
Revenue Recognition | |||
Payment terms for customer receivables | 90 days |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Deferred Revenue Expected To Be Recognized (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue Recognition | ||
Remaining performance obligation amount | $ 19,892 | $ 16,510 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-01-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 1 year | |
Remaining performance obligation amount | $ 7,514 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 3 months | |
Remaining performance obligation amount | $ 10,521 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-01-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 1 year | |
Remaining performance obligation amount | $ 4,750 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-10-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 1 year | |
Remaining performance obligation amount | $ 5,885 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-01-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 1 year | |
Remaining performance obligation amount | $ 4,246 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-10-01 | ||
Revenue Recognition | ||
Period in which remaining performance obligation is expected to be recognized as revenue | 1 year | |
Remaining performance obligation amount | $ 3,486 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Contract Revenue (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue Recognition | ||||
Contract revenue | $ 14,297,000 | $ 15,797,000 | $ 35,878,000 | $ 35,209,000 |
Contract revenue | ||||
Revenue Recognition | ||||
Contract assets | 0 | 400,000 | 0 | 400,000 |
Contract revenue | $ 360,000 | 370,000 | $ 1,135,000 | |
Contract liabilities | $ 0 | 0 | ||
Wholly- or partially-unsatisfied performance obligations | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenue Recognition | ||||
Revenue | $ 14,297 | $ 15,797 | $ 35,878 | $ 35,209 |
United States | ||||
Revenue Recognition | ||||
Revenue | 12,417 | 12,403 | 26,769 | 27,916 |
Europe, Middle East and Africa | ||||
Revenue Recognition | ||||
Revenue | 1,456 | 2,361 | 7,398 | 4,961 |
Asia Pacific | ||||
Revenue Recognition | ||||
Revenue | 394 | 996 | 1,191 | 2,270 |
Americas other | ||||
Revenue Recognition | ||||
Revenue | 30 | 37 | 520 | 62 |
Product and service revenue | ||||
Revenue Recognition | ||||
Revenue | 14,297 | 15,437 | 35,508 | 34,074 |
Product and service revenue | Government | ||||
Revenue Recognition | ||||
Revenue | 11,740 | 11,069 | 26,732 | 22,788 |
Product and service revenue | Pharmaceutical/Biotechnology | ||||
Revenue Recognition | ||||
Revenue | 2,546 | 4,327 | 8,705 | 11,032 |
Product and service revenue | Academia and other | ||||
Revenue Recognition | ||||
Revenue | 11 | 41 | 71 | 254 |
Product and service revenue | Handheld | ||||
Revenue Recognition | ||||
Revenue | 11,748 | 11,019 | 26,742 | 22,427 |
Product and service revenue | Desktop | ||||
Revenue Recognition | ||||
Revenue | 2,549 | 4,418 | 8,766 | 11,647 |
Device sales revenue | ||||
Revenue Recognition | ||||
Revenue | 10,719 | 10,952 | 23,761 | 24,239 |
Device sales revenue | Handheld | ||||
Revenue Recognition | ||||
Revenue | 9,681 | 8,051 | 19,929 | 16,782 |
Device sales revenue | Desktop | ||||
Revenue Recognition | ||||
Revenue | 1,039 | 2,901 | 3,832 | 7,458 |
Recurring revenue | ||||
Revenue Recognition | ||||
Revenue | 3,578 | 4,485 | 11,747 | 9,835 |
Recurring revenue | Handheld | ||||
Revenue Recognition | ||||
Revenue | 2,067 | 2,968 | 6,813 | 5,645 |
Recurring revenue | Desktop | ||||
Revenue Recognition | ||||
Revenue | $ 1,510 | 1,517 | 4,934 | 4,189 |
Contract revenue | ||||
Revenue Recognition | ||||
Revenue | $ 360 | $ 370 | $ 1,135 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring basis (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Dec. 31, 2022 | |
Money market funds | ||
Fair Value Measurements | ||
Amount of asset transferred into level 3 | $ 0 | |
Amount of asset transferred out of level 3 | 0 | |
Recurring | ||
Fair Value Measurements | ||
Total assets measured at fair value | 123,984 | $ 27,866 |
Total current liabilities measured at fair value | 1,243 | |
Total liabilities measured at fair value | 728 | 1,798 |
Recurring | Acquisition-related contingent consideration | ||
Fair Value Measurements | ||
Contingent consideration, current | 728 | 343 |
Contingent consideration, long-term | 555 | |
Recurring | Acquisition-related contingent consideration - pension liability | ||
Fair Value Measurements | ||
Contingent consideration, current | 900 | |
Recurring | Money market funds | ||
Fair Value Measurements | ||
Cash and cash equivalents | 94,300 | 27,866 |
Recurring | U.S. Treasury securities | ||
Fair Value Measurements | ||
Marketable securities | 29,684 | |
Recurring | Level 1 | ||
Fair Value Measurements | ||
Total assets measured at fair value | 94,300 | 27,866 |
Recurring | Level 1 | Money market funds | ||
Fair Value Measurements | ||
Cash and cash equivalents | 94,300 | 27,866 |
Recurring | Level 2 | ||
Fair Value Measurements | ||
Total assets measured at fair value | 29,684 | |
Recurring | Level 2 | U.S. Treasury securities | ||
Fair Value Measurements | ||
Marketable securities | 29,684 | |
Recurring | Level 3 | ||
Fair Value Measurements | ||
Total current liabilities measured at fair value | 1,243 | |
Total liabilities measured at fair value | 728 | 1,798 |
Recurring | Level 3 | Acquisition-related contingent consideration | ||
Fair Value Measurements | ||
Contingent consideration, current | $ 728 | 343 |
Contingent consideration, long-term | 555 | |
Recurring | Level 3 | Acquisition-related contingent consideration - pension liability | ||
Fair Value Measurements | ||
Contingent consideration, current | $ 900 |
Fair Value Measurements - Chang
Fair Value Measurements - Change in fair value (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Fair Value Measurements | |
Beginning balance | $ 1,798 |
Accretion - earnout | 335 |
Contingent consideration payment | (505) |
Release of pension liability | (900) |
Ending balance | $ 728 |
Fair Value Measurements - Narra
Fair Value Measurements - Narratives (Details) $ in Thousands | 1 Months Ended | 9 Months Ended | ||||
Aug. 31, 2023 USD ($) item | Sep. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) | Apr. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Aug. 03, 2022 USD ($) | |
Fair Value Measurements | ||||||
Current contingent consideration | $ 728 | $ 1,243 | ||||
Contingent consideration, pension plan terminated and released | 900 | |||||
Payments for contingent consideration | 1,095 | |||||
TRACE Analytics GmbH | ||||||
Fair Value Measurements | ||||||
Contingent consideration | 2,000 | $ 2,000 | ||||
Contingent consideration, pension plan terminated and released | $ 900 | $ 900 | ||||
Payments for contingent consideration | $ 500 | |||||
TRACE Analytics GmbH | Technological Integration And Revenue Targets Contingent Consideration | ||||||
Fair Value Measurements | ||||||
Contingent consideration | 1,200 | |||||
Current contingent consideration | $ 700 | |||||
Probability of achieving target for contingent consideration (as a percent) | 95% | |||||
TRACE Analytics GmbH | Share Purchase and Transfer Agreement Contingent Consideration | ||||||
Fair Value Measurements | ||||||
Number Of Milestones Achieved | item | 1 | |||||
Total Number Of Milestones | item | 3 | |||||
Payments for contingent consideration | $ 500 | |||||
Average estimated revenue volatility | TRACE Analytics GmbH | ||||||
Fair Value Measurements | ||||||
Contingent consideration, measurement input | 0.409 | |||||
Discount rate | TRACE Analytics GmbH | ||||||
Fair Value Measurements | ||||||
Contingent consideration, measurement input | 0.230 |
Marketable Securities (Details)
Marketable Securities (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Marketable Securities | |||
Realized gains on sales of marketable securities | $ 100 | $ 0 | |
Marketable securities | 29,684 | $ 0 | |
U.S. Treasury securities | |||
Marketable Securities | |||
Amortised Cost | 29,324 | ||
Gross Unrealized Gain | 360 | ||
Fair Value | 29,684 | ||
Marketable securities | |||
Marketable Securities | |||
Amortised Cost | 29,324 | ||
Gross Unrealized Gain | 360 | ||
Fair Value | $ 29,684 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Inventory | ||
Raw materials | $ 10,819 | $ 8,343 |
Work-in-progress | 3,214 | 2,722 |
Finished goods | 1,893 | 1,448 |
Total | $ 15,926 | $ 12,513 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets, net - Goodwill narratives (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets, net | ||
Goodwill | $ 9,928 | $ 10,050 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets, net - Goodwill rollforward (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill | |
Balances at beginning of period | $ 10,050 |
Foreign currency impact | (122) |
Balances at end of period | $ 9,928 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets, net - Intangible Assets, net (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
Goodwill and Intangible Assets, net | ||
Cost | $ 8,424 | $ 8,424 |
Accumulated amortization | (1,001) | (343) |
Translation adjustments | 319 | 407 |
Net Book Value | 7,742 | 8,488 |
Customer Relationships | ||
Goodwill and Intangible Assets, net | ||
Cost | 3,142 | 3,142 |
Accumulated amortization | (476) | (163) |
Translation adjustments | 120 | 150 |
Net Book Value | 2,786 | 3,129 |
Developed Technology | ||
Goodwill and Intangible Assets, net | ||
Cost | 4,967 | 4,967 |
Accumulated amortization | (400) | (137) |
Translation adjustments | 187 | 243 |
Net Book Value | 4,754 | 5,073 |
Software | ||
Goodwill and Intangible Assets, net | ||
Cost | 254 | 254 |
Accumulated amortization | (88) | (30) |
Translation adjustments | 10 | 11 |
Net Book Value | 176 | 235 |
Trade Name | ||
Goodwill and Intangible Assets, net | ||
Cost | 61 | 61 |
Accumulated amortization | (37) | (13) |
Translation adjustments | 2 | 3 |
Net Book Value | $ 26 | $ 51 |
Goodwill and Intangible Asset_6
Goodwill and Intangible Assets, net - Amortization expense of intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets, net | ||||
Amortization expense of intangible assets | $ 221 | $ 135 | $ 658 | $ 135 |
Cost of revenue | ||||
Goodwill and Intangible Assets, net | ||||
Amortization expense of intangible assets | 108 | 66 | 321 | 66 |
Selling, general and administrative expenses | ||||
Goodwill and Intangible Assets, net | ||||
Amortization expense of intangible assets | $ 113 | $ 69 | $ 337 | $ 69 |
Goodwill and Intangible Asset_7
Goodwill and Intangible Assets, net - Estimated future amortization expense of intangible assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets, net | ||
2023 (three months) | $ 221 | |
2024 | 869 | |
2025 | 851 | |
2026 | 775 | |
2027 | 773 | |
Thereafter | 4,253 | |
Net Book Value | $ 7,742 | $ 8,488 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Accrued Expenses | ||
Accrued employee compensation and benefits | $ 3,995 | $ 4,909 |
Accrued warranty | 1,009 | 1,119 |
Accrued professional fees | 821 | 677 |
Contingent consideration | 728 | 1,243 |
Accrued other | 714 | 899 |
Total accrued expenses | $ 7,267 | $ 8,847 |
Accrued Expenses - Changes in p
Accrued Expenses - Changes in product warranty obligation (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Changes in product warranty obligation | ||
Accrual balance at beginning of period | $ 1,119 | $ 1,593 |
Provision for new warranties | 367 | 1,194 |
Settlements and adjustments made during the period | (477) | (1,433) |
Accrual balance at end of period | $ 1,009 | $ 1,354 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Aug. 04, 2023 | Nov. 02, 2022 | Mar. 11, 2021 | Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Long-Term Debt | |||||||
Loss on extinguishment | $ (206) | $ (10) | |||||
2021 Revolver | |||||||
Long-Term Debt | |||||||
Loan capacity | $ 25,000 | ||||||
Maturity date | Mar. 11, 2024 | ||||||
Unrestricted minimum cash required pursuant to financial covenants of the loan | $ 10,000 | ||||||
Annual interest rate above the otherwise applicable rate upon the occurrence of an event of default | 5% | ||||||
Line of credit outstanding | $ 0 | ||||||
2021 Revolver | Minimum | |||||||
Long-Term Debt | |||||||
Annual interest rate | 4% | ||||||
2022 Revolver | |||||||
Long-Term Debt | |||||||
Loan capacity | $ 10,000 | 35,000 | |||||
Annual interest rate | 7% | ||||||
Loss on extinguishment | $ 500 | ||||||
Line of credit outstanding | $ 0 | $ 15,000 | |||||
Debt instrument covenant, minimum balance on account at or through lender | 20,000 | ||||||
2022 Revolver | Minimum | |||||||
Long-Term Debt | |||||||
Amount of minimum unrestricted and unencumbered cash minus advances | $ 10,000 | $ 10,000 | |||||
Term of cash burn period for minimum unrestricted and unencumbered cash minus advances | 9 months | 9 months | |||||
2019 Loan | |||||||
Long-Term Debt | |||||||
Repayment of loan | $ 14,500 | ||||||
Loss on extinguishment | $ 200 | ||||||
Prime rate | 2021 Revolver | Minimum | |||||||
Long-Term Debt | |||||||
Spread on basis rate (percentage) | 0.50% | ||||||
Prime rate | 2022 Revolver | Minimum | |||||||
Long-Term Debt | |||||||
Spread on basis rate (percentage) | (0.50%) | (0.50%) | |||||
Annual interest rate | 4.50% | 3.50% |
Equity and Net Income (Loss) _3
Equity and Net Income (Loss) per Share (Details) | Sep. 30, 2023 Vote $ / shares shares | Dec. 31, 2022 $ / shares shares |
Equity and Net Income (Loss) per Share | ||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Number of votes for each share of common stock | Vote | 1 | |
Warrants to purchase common stock | ||
Equity and Net Income (Loss) per Share | ||
Number of shares purchased from outstanding warrants | 92,703 | 92,703 |
Purchase price, per share | $ / shares | $ 9.17 | $ 9.17 |
Warrants to purchase common stock | Warrants Expiring in 2027 | ||
Equity and Net Income (Loss) per Share | ||
Number of shares purchased from outstanding warrants | 49,078 | 49,078 |
Warrants to purchase common stock | Warrants Expiring in 2028 | ||
Equity and Net Income (Loss) per Share | ||
Number of shares purchased from outstanding warrants | 43,625 | 43,625 |
Equity and Net Income (Loss) _4
Equity and Net Income (Loss) per Share - Anti-dilutive securities (Details) - shares | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Equity and Net Income (Loss) per Share | ||
Anti-dilutive securities | 4,541,439 | 3,599,629 |
Warrants to purchase common stock | ||
Equity and Net Income (Loss) per Share | ||
Anti-dilutive securities | 92,703 | 92,703 |
Options to purchase common stock | ||
Equity and Net Income (Loss) per Share | ||
Anti-dilutive securities | 2,483,790 | 2,640,822 |
Performance stock units | ||
Equity and Net Income (Loss) per Share | ||
Anti-dilutive securities | 53,794 | |
Restricted stock units | ||
Equity and Net Income (Loss) per Share | ||
Anti-dilutive securities | 1,911,152 | 866,104 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Mar. 31, 2023 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-Based Compensation | |||||
Stock-based compensation expense | $ 2,704 | $ 2,020 | $ 7,448 | $ 5,203 | |
Restricted stock units | |||||
Stock-Based Compensation | |||||
Unrecognized compensation expense | 17,200 | $ 17,200 | |||
Weighted average period for recognition of stock-based compensation expense | 2 years 9 months 18 days | ||||
Performance stock units | |||||
Stock-Based Compensation | |||||
Equivalent share | 1 | ||||
Maximum payout percentage | 100% | ||||
Risk-free interest rate | 0% | ||||
Performance stock units | 2020 Employee Stock Option and Incentive Plan | |||||
Stock-Based Compensation | |||||
Granted | 53,794 | ||||
Cost of revenue | |||||
Stock-Based Compensation | |||||
Stock-based compensation expense | 155 | 72 | $ 410 | 221 | |
Research and development expenses | |||||
Stock-Based Compensation | |||||
Stock-based compensation expense | 742 | 474 | 2,069 | 1,154 | |
Selling, general and administrative expenses | |||||
Stock-Based Compensation | |||||
Stock-based compensation expense | $ 1,807 | $ 1,474 | $ 4,969 | $ 3,828 |
Leases - Summary (Details)
Leases - Summary (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2022 USD ($) ft² | Jul. 31, 2022 USD ($) ft² | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2023 USD ($) | Sep. 30, 2022 USD ($) | |
Leases | ||||||
Operating lease cost | $ 579 | $ 587 | $ 1,548 | $ 1,752 | ||
Morrisville, North Carolina (New NC Lease) | ||||||
Leases | ||||||
Area of facility | ft² | 13,300 | |||||
Lease term | 88 months | |||||
Operating lease cost | $ 4,000 | |||||
Braunschweig, Germany (New Operating lease Agreement) | ||||||
Leases | ||||||
Area of facility | ft² | 7,500 | |||||
Lease term | 60 months | |||||
Operating lease cost | $ 400 |
Leases - Components of lease ex
Leases - Components of lease expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Components of lease expense | ||||
Operating lease cost | $ 579 | $ 587 | $ 1,548 | $ 1,752 |
Short-term lease cost | 17 | 10 | 49 | 30 |
Variable lease cost | 43 | 3 | 97 | 7 |
Total | $ 639 | $ 600 | $ 1,694 | $ 1,789 |
Leases - Supplemental disclosur
Leases - Supplemental disclosure of cash flow information (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Leases | |||
Cash paid for amounts included in the measurement of operating lease liabilities | $ 1,513 | $ 1,342 | |
Operating lease liabilities arising from obtaining right-of-use assets | $ 3,003 | ||
Weighted-average remaining lease term - operating leases (in years) | 3 years 10 months 6 days | 2 years 9 months | |
Weighted-average discount rate - operating leases | 7.90% | 9.50% |
Leases - Minimum lease payments
Leases - Minimum lease payments (Details) $ in Thousands | Sep. 30, 2023 USD ($) |
Minimum lease payments | |
2023 (three months) | $ 602 |
2024 | 2,429 |
2025 | 1,999 |
2026 | 578 |
2027 | 592 |
Thereafter | 1,347 |
Total future minimum lease payments | 7,547 |
Less: imputed interest | (1,147) |
Total operating lease liabilities | $ 6,400 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | 1 Months Ended | 9 Months Ended | |||||
Oct. 01, 2021 USD ($) | Aug. 31, 2023 USD ($) Milestone | Sep. 30, 2023 USD ($) item Milestone | Sep. 30, 2022 USD ($) | Jun. 30, 2023 USD ($) | Apr. 30, 2023 USD ($) | Aug. 03, 2022 USD ($) | |
Commitments and Contingencies | |||||||
Payments for contingent consideration | $ 1,095,000 | ||||||
Contingent consideration, pension plan terminated and released | $ 900,000 | ||||||
Royalty Arrangements | |||||||
Number of parties with royalty arrangements | item | 2 | ||||||
Future minimum annual royalty payments | $ 100,000 | ||||||
401(k) Savings Plan | |||||||
Employer contributions to defined contribution plan | $ 400,000 | $ 400,000 | |||||
Employer matching contribution, percentage of match | 100% | ||||||
Employer matching contribution, percentage of employees' gross pay | 3% | ||||||
Employer matching contribution, maximum amount of annual match per employee | $ 3,500 | ||||||
TRACE Analytics GmbH | |||||||
Commitments and Contingencies | |||||||
Number of milestone based earnouts payment achieved under Trace purchase agreement | Milestone | 1 | ||||||
Number of milestone based earnouts under Trace purchase agreement | Milestone | 3 | 3 | |||||
Contingent consideration | $ 2,000,000 | $ 2,000,000 | |||||
Payments for contingent consideration | $ 500,000 | ||||||
Contingent consideration, pension plan terminated and released | $ 900,000 | $ 900,000 |
Acquisition - Additional inform
Acquisition - Additional information (Details) - TRACE Analytics GmbH - USD ($) $ in Thousands | Aug. 03, 2022 | Sep. 30, 2023 |
Acquisition | ||
Percentage of share capital acquired | 100% | |
Total potential contractual purchase price | $ 17,300 | |
Initial cash payment plus | 14,400 | |
Cash in contingent consideration upon achievement of certain milestones | $ 2,000 | $ 2,000 |
Cash in contingent consideration upon achievement of certain milestones, period | 24 months | |
Contingent consideration - pension liability | $ 900 |
Acquisition - Preliminary alloc
Acquisition - Preliminary allocation of purchase consideration (Details) - USD ($) $ in Thousands | Aug. 03, 2022 | Sep. 30, 2023 | Dec. 31, 2022 |
Assets acquired and liabilities assumed: | |||
Goodwill | $ 9,928 | $ 10,050 | |
TRACE Analytics GmbH | |||
Consideration Transferred: | |||
Cash paid | $ 14,400 | ||
Net cash and working capital adjustment | 113 | ||
Contingent consideration - pension liability | 900 | ||
Contingent consideration - earnout | 737 | ||
Total consideration transferred | 16,150 | ||
Assets acquired and liabilities assumed: | |||
Cash and cash equivalents | 638 | ||
Accounts receivable | 168 | ||
Inventory | 364 | ||
Prepaid expenses and other current assets | 11 | ||
Property and equipment, net | 32 | ||
Goodwill | 9,566 | ||
Indemnification assets | 917 | ||
Pension liability | (917) | ||
Accounts payable, accrued expenses and other current liabilities | (306) | ||
Deferred tax liability, net | (2,672) | ||
Other liabilities | (75) | ||
Total | 16,150 | ||
TRACE Analytics GmbH | Customer Relationships | |||
Assets acquired and liabilities assumed: | |||
Intangible assets | 3,142 | ||
TRACE Analytics GmbH | Developed Technology | |||
Assets acquired and liabilities assumed: | |||
Intangible assets | 4,967 | ||
TRACE Analytics GmbH | Software | |||
Assets acquired and liabilities assumed: | |||
Intangible assets | 254 | ||
TRACE Analytics GmbH | Trade Name | |||
Assets acquired and liabilities assumed: | |||
Intangible assets | $ 61 |
Acquisition - Pro forma Results
Acquisition - Pro forma Results (Details) - TRACE Analytics GmbH - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Business Acquisition [Line Items] | ||
Revenue (unaudited) | $ 15,950 | $ 36,341 |
Pre-tax loss (unaudited) | $ (5,947) | $ (23,369) |
Segment Reporting and Geograp_3
Segment Reporting and Geographic Data (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | |
Segment Reporting and Geographic Data | ||
Number of operating segment | segment | 1 | |
Long-lived assets | $ 9,531 | $ 7,915 |
United States | ||
Segment Reporting and Geographic Data | ||
Long-lived assets | 8,985 | 7,852 |
All other countries | ||
Segment Reporting and Geographic Data | ||
Long-lived assets | $ 546 | $ 63 |