| Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and have been prepared in
accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the accounting disclosure rules and regulations of the Securities and Exchange Commission (the “SEC”). All intercompany
transactions are eliminated. These Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial
Statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. The Condensed Consolidated Balance Sheets as of December 31, 2023 included herein was derived from the audited Consolidated
Financial Statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP, on an annual reporting basis. In the opinion of management, the accompanying Condensed Consolidated Financial Statements reflect all normal recurring
adjustments necessary to present fairly the financial position, results of operations, and cash flows for the interim periods. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for any subsequent quarter, the year ending December 31, 2024, or any other period. There have been no material changes to the
Company’s significant accounting policies as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Global Developments Throughout 2023, various central banks around the world, including the
Federal Reserve in the United States, raised interest rates. While these rate increases have not had a significant adverse impact on the Company to date, the impact of such rate increases on the overall financial markets and the economy may
adversely impact the Company in the future. In addition, the global economy has experienced, and is continuing to experience, high levels of inflation and global supply chain disruptions. The Company continues to monitor these supply chain,
inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment. Although the Company does not expect to be significantly impacted by the
conflicts in Ukraine or Israel and Gaza, the Company has experienced some constraints in product and material availability and increasing costs required to obtain some materials and supplies as a result of these conflicts on the global
economy. To date, the Company’s business has not been materially impacted by the conflicts, however, as the conflicts continue or worsen, it may impact the Company’s business, financial condition, results of operations and cash flows. Concentration of Business Risk Financial instruments that potentially subject the Company to
concentration of credit risk consist principally of cash and cash equivalents and marketable securities. As of March 31, 2024, the Company’s marketable securities consist of mutual funds, U.S. Treasury securities and commercial paper. The
Company also maintains balances in certain operating accounts above federally insured limits and, as a result, the Company is exposed to credit risk in the event of default by the financial institutions to the extent account balances exceed
the amount insured by the Federal Deposit Insurance Corporation. The Company sources certain key materials and components
utilized in the Company’s products from single or limited suppliers. Historically, the Company has not experienced significant issues sourcing these materials and components. However, if these suppliers were not able to supply the requested
amount of materials or components, it could take a considerable length of time to obtain alternative sources, which could affect the Company’s development efforts and commercial operations. Segment Reporting The Company’s Chief Operating Decision Maker, its Chief Executive Officer, reviews the Company’s financial information on a consolidated
basis for purposes of allocating resources and evaluating its financial performance. Accordingly, the Company has determined that it operates as a single reportable segment. Reclassifications Certain prior year amounts have been reclassified for consistency with the current year’s presentation. Use of Estimates The preparation of the Condensed Consolidated Financial Statements in conformity
with U.S. GAAP requires the Company to make estimates and assumptions about future events that affect the amounts recorded in its Condensed Consolidated Financial Statements and accompanying notes. Future events and their effects cannot be
determined with certainty. On an ongoing basis, management evaluates these estimates and assumptions. Significant estimates and assumptions include:
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valuation allowances with respect to deferred tax assets;
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inventory valuation;
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valuation of excess and obsolete inventory reserves
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assumptions used for leases
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valuation of warrant liabilities;
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a ssumptions associated with revenue
recognition; and
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assumptions underlying the fair value used in the calculation of stock-based compensation. The Company bases these estimates on historical and anticipated results and trends
and on various other assumptions the Company believes are reasonable under the circumstances, including assumptions as to future events. Changes in estimates are recorded in the period in which they become known. Actual results could differ from
those estimates, and any such differences may be material to the Condensed Consolidated Financial Statements. Inventory, Net Inventory is stated at the lower of cost or net realizable value with
cost determined using the first-in, first-out method. Materials that may be utilized for either commercial or, alternatively, for research and development purposes, are classified as inventory. Amounts in inventory used for research and
development purposes are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an “alternative future use”
as defined in authoritative guidance The Company performs an assessment of the recoverability of capitalized inventory during each reporting period and, if needed, records an excess and obsolete
reserve against inventory to its estimated net realizable value in the period it is identified. For further discussion related to inventory, please refer to Note 5. Inventory, Net Warrant Liabilities The Company’s outstanding warrants include publicly traded warrants (the “Public Warrants”) and warrants sold in a private placement (the “Private Warrants”). The
Public Warrants and Private Warrants meet the definition of a derivative and the Company recorded these warrants as long-term liabilities in the Condensed Consolidated Balance Sheets at fair value upon initial recognition, with subsequent
changes in their respective fair values recognized in the Condensed Consolidated Statements of Operations and Comprehensive Loss at each reporting date. For further discussion related to the Public Warrants and Private Warrants, please
refer to Note 11. Warrant Liabilities Revenue Recognition The Company’s revenue is derived from sales of products and services. Product revenue is primarily generated from the sales of instruments and consumables used in protein sequencing and analysis. Service revenue is
primarily generated from service maintenance contracts including access to analysis software and advanced training for instrument use. The Company recognizes revenue when or as a customer obtains control of the promised goods and
services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for these goods and services. This process involves identifying the contract with a customer, determining
the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue as the performance obligations have been
satisfied. The Company has made the accounting policy election allowed for under ASC 606-10-32-2A to exclude all sales taxes from transaction price. Revenue recognition for contracts with multiple deliverables is based on the
separate satisfaction of each distinct performance obligation within the contract. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or
together with other resources that are readily available to the customer and is separately identified in the contract. The Company allocates transaction price to the performance obligations in a contract with a customer based on the
relative standalone selling price of each performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not
observable through past transactions, the Company estimates the standalone selling price taking into account available information and specific factors such as competitive positioning, internal costs, profit objectives, and
internally approved pricing guidelines related to the performance obligation The Company considers performance obligation for sales of products satisfied upon shipment of the goods to the customer in accordance with the shipping
terms (either upon shipment or delivery), which is when control of the product is deemed to be transferred; this includes instruments and consumables. Customers generally do not have a right to return products, except for defective or
damaged products during the warranty period or unless prior written consent is provided. In instances where right of payment or transfer of title is contingent upon the customer’s acceptance of the product, revenue is deferred until
all acceptance criteria have been met. Revenues for service maintenance contracts, which start after the first year of purchase and are considered as service type warranties that effectively extend the standard first-year service
coverage at the customer’s option are recognized ratably over the contract service period as these services are performed evenly over time. Revenues for advanced training is recognized at a point in time upon satisfaction of the
underlying performance obligation. T he Company disaggregates revenue from contracts with customers by type of revenue. The Company believes product revenue and service revenue
aggregate the payor types by nature, amount, timing and uncertainty of its revenue streams. Total revenue generated from domestic and international sales was approximately $0.3 million and $0.2 million, respectively, for the three
months ended March 31, 2024. All revenue generated for the three months ended March 31, 2023 resulted from domestic sales Deferred Revenue De ferred revenue is a contract liability that consists of customer payments received in advance of performance or billings in excess of revenue
recognized, net of revenue recognized from the balance at the beginning of the period. Deferred revenue primarily consists of billings and payments received in advance of revenue
recognition from service maintenance contracts including software subscription, proof of concept services and advanced training, and is reduced as the revenue recognition criteria are met. Deferred revenue also includes proof of concept
services and advanced training provided to customers until the service has been performed. Deferred revenue is classified as current or non-current based on expected revenue recognition timing. Specifically, deferred revenue that will be
recognized as revenue within the succeeding 12-month period is recorded as current and is included within Accrued expenses and other current liabilities, and the portion of deferred revenue where revenue is expected to be recognized beyond
12 months from the reporting date is recorded as non-current deferred revenue and is included in Other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets. As of March 31, 2024, the Company had deferred revenue of $0.1 million included within Accrued expenses and other current liabilities
in the Company’s Condensed Consolidated Balance Sheets. As of March 31, 2024, amounts included within Other long-term liabilities in the Company’s Condensed Consolidated Balance Sheets were immaterial. The Company expects to recognize
approximately 30% of its remaining performance obligations as revenue for the remainder Stock-Based Compensation Stock-based compensation expense for stock option grants with only service conditions is recognized on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date
fair values. Stock-based compensation expense for stock option grants subject to non-financing event performance conditions on an accelerated basis is recognized as though each vesting portion of the award was, in substance, a separate award Prior to the business combination
between HighCape Capital Acquisition LLC and Quantum-Si Incorporated in June 2021 (the “Business Combination”), the fair value of the shares of common stock underlying stock options had historically been determined by the Company’s board of
directors (the “Board”), with input from management and contemporaneous third-party valuations, as there was no public market for the common stock. Given the absence of a public trading market for the Company’s common stock, the Board exercised
reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of the Company’s common stock at each option grant date
After the
completion of the Business Combination, the Company measures compensation expense for stock-based awards to employees, non-employees and directors based upon the awards’ initial grant-date fair values. Stock-based compensation expense for
stock options, restricted stock units and performance awards is recorded over the requisite service period. For awards with only a service condition, the Company expenses stock-based compensation using the straight-line method over the
requisite service period for the entire award. For awards with a market condition, the Company expenses the grant date fair value at the target over the vesting period regardless of the value the award recipients ultimately receive. The fair
value of restricted stock without a market condition is estimated using the current market price of the Company’s Class A common stock on the date of grant. The fair value of stock option grants with a market condition is estimated at the
date of grant using the Monte Carlo simulation model (“Monte Carlo”). The fair values of stock option grants are estimated as of the date of grant by applying the Black-Scholes option valuation model (“Black-Scholes”). The Black-Scholes and
Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The effect of forfeiture in compensation costs is recognized based on
actual forfeitures when they occur B lack-Scholes is affected by the stock price on the date of the grant as well as assumptions regarding a number of highly complex and subjective variables. These variables include the expected term of
the option, expected risk-free interest rate, the expected volatility of Class A common stock, and expected dividend yield; each of which is described below. The assumptions for expected term and expected volatility are the two assumptions that
significantly affect the grant date fair value
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Expected Term : The expected term using the “simplified” method, which is the simple average of the vesting period and the contractual term .
● Risk-free Interest Rate : The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect at the time of the grant.
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Expected Stock Price Volatility : The Company determined expected annual equity volatility based on the historical volatility of its Class A common stock.
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Dividend Yield : Because the Company has never paid a dividend and does not expect to begin doing so in the foreseeable future, no .
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Exercise Price : The exercise price is taken directly from the grant notice issued to employees and nonemployees . Recently Issued Accounting Pronouncements In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740) : Improvements to Income Tax Disclosures , which expands income tax disclosure requirements to include additional information related to the rate reconciliation of effective tax rates to statutory rates, as well as additional disaggregation of taxes paid in both
U.S. and foreign jurisdictions. The amendments in ASU 2023-09 also remove disclosures related to certain unrecognized tax benefits and deferred taxes. The amendments are effective for fiscal years beginning after December 31, 2024. The amendments
may be applied prospectively or retrospectively. The Company is currently evaluating the effect ASU 2023-09 may have on its Consolidated Financial Statements and disclosures. In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , which requires enhanced
disclosures about significant segment expenses. In addition, the ASU clarified that single reportable segment entities must apply Topic 280 in its entirely. The ASU does not change how an entity identifies its operating segments, aggregates those
operating segments, or applies the quantitative thresholds to determine its reportable segments. The ASU is required to be applied retrospectively to all periods presented in the financial statements and is effective for fiscal years beginning
after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the effect ASU 2023-07 may have on its Consolidated Financial Statements and disclosures . |
