Personalis Inc

Previous wording

Today, our products are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized cancer vaccines and other next-generation cancer immunotherapies. For example, we are providing genomic testing to Moderna, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer vaccine. In addition, we partner with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. More recently, we launched new diagnostic offerings for the clinical setting and, in November 2023, entered into an agreement with Tempus AI, Inc. (formerly known as Tempus Labs, Inc., and referred to herein as "Tempus") to commercialize NeXT Personal Dx in the clinical diagnostics market. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").

Current wording

Today, our products are routinely used by many of the largest oncology-focused pharmaceutical companies for analysis of patient samples in their clinical trials and drug development programs. Our advanced genomic sequencing and analytics also support the development of personalized cancer vaccines and other next-generation cancer immunotherapies. For example, we are providing genomic testing to Moderna, Inc. ("Moderna") in its ongoing clinical trials evaluating a personalized cancer vaccine. In addition, we partner with diagnostics companies by providing our advanced tumor profiling and analysis capabilities as an input to their products. More recently, we launched new diagnostic offerings for the clinical setting and, in November 2023, entered into an agreement with Tempus AI, Inc. ("Tempus") to commercialize NeXT Personal Dx in the clinical diagnostics market. We have also pursued non-cancer related business opportunities, specifically within the population sequencing market, by providing whole genome sequencing ("WGS") services under contract with the U.S. Department of Veterans Affairs Million Veteran Program ("VA MVP").

Previous wording

We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish the clinical evidence-base to support our products and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are initially focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); Duke University; the Dana-Farber Cancer Institute; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium that will focus on building the evidence-base for our technology and these indications. If the key opinion leaders ("KOLs") we are collaborating with have a positive experience using our products, we are optimistic this will support broader use of our products by other KOLs, as well as clinicians in the future.

Current wording

We are working with a growing number of leading cancer centers and world-class academic research institutions to build and publish the clinical evidence-base to support our products and our key indications, as well as to obtain reimbursement coverage from Medicare and other payors. Because of the ultra-high analytical sensitivity of our technology, we are primarily focusing on three indications: breast cancer, lung cancer, and immunotherapy (IO) monitoring. We have collaborations with Cancer Research UK, University College London, and the Francis Crick Institute (the TRACERx study); The Royal Marsden; the Vall d'Hebron Institute of Oncology (VHIO); Duke University; Vanderbilt University and Johns Hopkins University (the PREDICT study); the Dana-Farber Cancer Institute; University Medical Center Hamburg-Eppendorf (also known as UKE); and Criterium and the Academic Breast Cancer Consortium that will focus on building the evidence-base for our technology and these indications. If the key opinion leaders ("KOLs") we are collaborating with have a positive experience using our products, we are optimistic this will support broader use of our products by other KOLs, as well as clinicians in the future.

Previous wording

Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 300 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced more than 415,000 human samples, of which more than 179,000 were whole human genomes.

Current wording

Our work in oncology is underpinned by our experience and capacity for next-generation sequencing at scale. We have the capacity to sequence and analyze over 350 trillion bases of DNA per week in our facility. We believe that our capacity is already larger than most cancer genomics companies, and we continue to build automation and other infrastructure to scale further as demand increases. To date, we have sequenced more than 445,000 human samples, of which more than 180,000 were whole human genomes.

Previous wording

Total revenue increased 4%, or $0.7 million, during the first quarter of 2024 compared to the first quarter of 2023, driven by higher revenue from pharma tests. Revenue from pharma tests was $9.8 million in the first quarter of 2024 compared to $6.3 million in the first quarter of 2023, an increase of 55%. This increase was partially offset by decreases in enterprise sales and population sequencing.

Current wording

Total revenue increased 35%, or $5.9 million, during the second quarter of 2024 compared to the second quarter of 2023, driven by higher revenue from pharma tests. Revenue from pharma tests was $13.2 million in the second quarter of 2024 compared to $6.1 million in the second quarter of 2023, an increase of 117%. This increase was partially offset by lower revenue from population sequencing, which declined $1.7 million, or 57%.

Previous wording

Key business accomplishments and financial updates in the first quarter of 2024 include:

Current wording

Key business accomplishments and financial updates in the second quarter of 2024 include:

Previous wording

Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, and allocated facilities and information technology (“IT”) costs. We expect variability in our gross margins over the medium-term due to fluctuations in customer mix and volume, investments in newer sequencing platforms and new capabilities such as automation of laboratory workflows, processing of diagnostic tests for the clinical market while we work to secure reimbursement, and costs related to our new Fremont facility. Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale.

Current wording

Cost of revenue consists of raw materials costs, personnel costs (salaries, bonuses, stock-based compensation, payroll taxes, and benefits), laboratory supplies and consumables, depreciation and maintenance on equipment, and allocated facilities and information technology (“IT”) costs. We expect variability in our gross margins over the medium-term due to fluctuations in customer mix and volume, investments in newer sequencing platforms and new capabilities such as automation of laboratory workflows, processing of diagnostic tests for the clinical market while we work to secure reimbursement, and costs related to our Fremont facility. Over the long-term, we anticipate higher gross margins as growing revenue leads to economies of scale.

Previous wording

In connection with our November 2023 agreement with Tempus, we issued two warrants to Tempus to purchase, in the aggregate, up to 9,218,800 shares of our common stock (the “Tempus Warrants”). Other income (expense), net consists primarily of a noncash gain related to the remeasurement of the Tempus Warrants. Otherwise, other income (expense), net consists primarily of foreign currency exchange gains and losses.

Current wording

In connection with our November 2023 agreement with Tempus, we issued two warrants to Tempus to purchase, in the aggregate, up to 9,218,800 shares of our common stock (the “Tempus Warrants”). Other income (expense), net consists primarily of a noncash gain related to the remeasurement of the Tempus Warrants. Other income (expense), net also includes foreign currency exchange gains and losses.

Previous wording

Revenue from enterprise sales decreased 16%, or $1.5 million, due to lower selling prices. The number of samples we processed for Natera increased by over 20%, but such increase was offset by lower selling prices.

Current wording

Revenue from enterprise sales decreased 5%, or $0.9 million, in the first half of 2024 due to lower selling prices. The number of samples we processed for Natera increased by over 35%, but such increase was offset by lower selling prices.

Previous wording

We launched a reduced-cost version of our exome product offering for Natera near the end of the first quarter of 2024 to support their requirement for an overall reduction in cost. Our total revenue from Natera in 2024 is expected to decline from comparable periods in 2023 due to their use of the reduced-cost version of our exome product offering. Our agreement with Natera includes minimum volume commitments through the end of 2024.

Current wording

We launched a reduced-cost version of our exome product offering for Natera near the end of the first quarter of 2024 to support their requirement for an overall reduction in cost. Our total revenue from Natera in 2024 is expected to decline from comparable periods in 2023 due to their use of the reduced-cost version of our exome product offering. Our agreement with Natera includes minimum volume commitments through the end of 2024. We do not expect our commercial relationship with Natera to extend beyond 2024.

Previous wording

Population sequencing revenue is made up entirely of sales to the VA MVP. The decrease in revenue of 50%, or $1.5 million, was primarily due to a decrease in the number of samples we tested, with a slight drop in selling prices accounting for the remainder of the decrease.

Current wording

Population sequencing revenue is made up entirely of sales to the VA MVP. The decreases in revenue of 57%, or $1.7 million, in the second quarter of 2024, and 54%, or $3.2 million, in the first half of 2024, were primarily due to a decrease in the number of samples we tested, with a slight drop in selling prices accounting for the remainder of the decreases.

Previous wording

Revenue recognized each period is also impacted by timing of our fulfillment of samples under each annual task order. Our annual task orders received in 2023, 2022, and 2021 were $7.5 million, $10.0 million, and $9.7 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we have the ability to modulate the volume of samples processed from the VA MVP up or down to complement sample volumes from other customers, which can vary from period to period. As of the end of 2024, our remaining unfulfilled task orders amounted to $5.9 million, which we expect to recognize as revenue over the next two to three quarters.

Current wording

Revenue recognized each period is also impacted by timing of our fulfillment of samples under each annual task order. Our annual task orders received in 2023, 2022, and 2021 were $7.5 million, $10.0 million, and $9.7 million, respectively. Our contract with the VA MVP does not include specific testing turnaround times. Therefore, we have the ability to modulate the volume of samples processed from the VA MVP up or down to complement sample volumes from other customers, which can vary from period to period. As of June 30, 2024, our remaining unfulfilled task orders amounted to $4.7 million, which we expect to recognize as revenue over the next two quarters.

Previous wording

Other revenue increased 277%, or $0.2 million, driven by sales of our NeXT Dx diagnostic test.

Current wording

Other revenue decreased 37%, or $0.1 million, in the second quarter of 2024, due to non-recurring projects with universities and non-profits. Other revenue increased 31%, or $0.1 million, in the first half of 2024, driven by sales of our NeXT Dx diagnostic test.

Previous wording

Specific offsetting components were a $1.0 million decrease in shared laboratory costs due to greater usage of our laboratory capacity for R&D activities, a $0.9 million decrease in labor costs, and a $0.1 million decrease in outside services; partially offset by a $1.0 million increase in facilities and equipment costs (mainly due to our move of our laboratory from our prior Menlo Park facility to our Fremont facility), and a $0.9 million increase in direct material costs mostly in connection with higher Natera volumes.

Current wording

Specific components of the increase in the second quarter of 2024 were a $2.1 million increase in direct material costs to support higher revenue levels, a $1.0 million increase in allocated facilities and equipment costs (mainly due to moving our laboratory from our prior Menlo Park facility to our Fremont facility), and a $0.3 million increase in laboratory supplies and consumables due to increased test volumes; partially offset by a $0.6 million decrease in labor costs and a $0.2 million decrease in shared laboratory costs due to greater usage of our laboratory capacity for R&D activities.

Previous wording

The decrease in research and development expenses of 23%, or $3.8 million, was primarily due to cost savings from our workforce reductions in 2023.

Current wording

The decreases in research and development expenses of 27%, or $4.9 million, in the second quarter of 2024, and 25%, or $8.7 million, in the first half of 2024 were primarily due to cost savings from our workforce reductions in 2023.

Previous wording

Specific components of the decrease were a $2.6 million decrease in personnel-related costs driven by our workforce reductions and a $1.8 million decrease in facilities costs (primarily due to a reduction in research and development expenses for use of our facilities relative to other functions, as well as lower facilities costs in general); partially offset by a $0.6 million increase in sample processing costs incurred in our laboratory for product development, collaborations, and clinical evidence generation.

Current wording

Specific components of the decrease in the second quarter of 2024 were a $1.9 million decrease in allocated facilities costs (primarily due to a reduction in R&D usage of our facilities relative to other functions, as well as lower facilities costs in general), a $1.7 million decrease in personnel-related costs driven by our workforce reductions, and a $1.3 million decrease in sample processing costs incurred in our laboratory for product development, collaborations, and clinical evidence generation.

Previous wording

The decrease in selling, general and administrative expenses of 18%, or $2.5 million, was primarily due to cost savings from our workforce reductions in 2023.

Current wording

The decreases in selling, general and administrative expenses of 1%, or $0.2 million, in the second quarter of 2024, and 10%, or $2.7 million, in the first half of 2024 were primarily due to cost savings from our workforce reductions in 2023.

Previous wording

Specific components of the decrease were a $1.5 million decrease in personnel-related costs driven by our reductions in workforce in 2023, a $1.1 million decrease in professional outside services, and a $0.2 million decrease in marketing costs such as trade shows expenses; partially offset by a $0.3 million increase in facilities costs.

Current wording

Specific components of the decrease in the second quarter of 2024 were a $0.9 million decrease in personnel-related costs and a $0.4 million decrease in professional outside services; partially offset by a $0.6 million increase in allocated facilities costs and a $0.5 million increase in marketing costs such as trade shows expenses.

Previous wording

The $3.9 million charge recognized in the first quarter of 2023 was comprised of $3.3 million in one-time employee termination benefits (including costs related to termination of our former China employees) and $0.6 million of other noncash charges (primarily asset disposals and impairments in connection with the closure of our China operations).

Current wording

The $4.0 million charge recognized in the first half of 2023 was comprised of $3.4 million in one-time employee termination benefits (including costs related to termination of our former China employees) and $0.6 million of other noncash charges (primarily asset disposals and impairments in connection with the closure of our China operations).

Previous wording

The increase in interest income was due to increased yields on our investments. Interest expense is the recognition of imputed interest on noninterest bearing loans.

Current wording

The decreases in interest income were due to lower average investment balances, partially offset by increased yields. Interest expense is the recognition of imputed interest on noninterest bearing loans.

Previous wording

In November 2023, we issued the Tempus Warrants. If Tempus acquires any shares of common stock directly from us other than by exercise of the Tempus Warrants, then the total number of shares issuable upon exercise of the Tempus Warrants will be reduced by such number of shares acquired. Because the number of shares issuable upon settlement are subject to adjustment, the Tempus Warrants are classified as liability instruments and are subject to remeasurement at each balance sheet date, with changes in fair value recognized as other income (expense). Fair value of the Tempus Warrants decreased by $4.8 million as of March 31, 2024 as compared to December 31, 2023. The decrease in fair value resulted in a $4.8 million noncash gain recognized in the first quarter of 2024.

Current wording

In November 2023, we issued the Tempus Warrants. If Tempus acquires any shares of common stock directly from us other than by exercise of the Tempus Warrants, then the total number of shares issuable upon exercise of the Tempus Warrants will be reduced by such number of shares acquired. Because the number of shares issuable upon settlement are subject to adjustment, the Tempus Warrants are classified as liability instruments and are subject to remeasurement at each balance sheet date, with changes in fair value recognized as other income (expense). Fair value of the Tempus Warrants decreased by $7.7 million as of June 30, 2024 as compared to December 31, 2023. The decrease in fair value resulted in a $3.0 million and $7.7 million noncash gain recognized in the second quarter and first half of 2024, respectively.

Previous wording

From our inception through March 31, 2024, we have funded our operations primarily from $279.0 million in net proceeds from our follow-on equity offerings in August 2020 and January 2021, $144.0 million in net proceeds from our IPO in June 2019, $89.6 million from issuance of redeemable convertible preferred stock, $5.0 million in net proceeds from our at-the-market ("ATM") sales facility (see Note 2, "Summary of Significant Accounting Policies" in our unaudited condensed consolidated financial statements for additional information), as well as cash from operations and debt financings. As of March 31, 2024, we had cash and cash equivalents of $44.0 million and short-term investments of $51.4 million.

Current wording

From our inception through June 30, 2024, we have funded our operations primarily from $279.8 million in net proceeds from our follow-on equity offerings in August 2020 and January 2021, $144.0 million in net proceeds from our IPO in June 2019, $89.6 million from issuance of redeemable convertible preferred stock, $6.4 million in net proceeds from our at-the-market ("ATM") sales facility (see Note 2, "Summary of Significant Accounting Policies" in our unaudited condensed consolidated financial statements for additional information), as well as cash from operations and debt financings. As of June 30, 2024, we had cash and cash equivalents of $47.7 million and short-term investments of $39.2 million.

Previous wording

We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus in December 2023 pursuant to which we may offer and sell up to an aggregate amount of $50.0 million of shares of our common stock through our ATM facility. As of March 31, 2024, $48.5 million in common stock remained available for future issuance under the ATM facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all.

Current wording

We have based these future funding requirements on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If our available cash balances and anticipated cash flow from operations are insufficient to satisfy our liquidity requirements, including because of lower demand for our services or other risks described in this Quarterly Report on Form 10-Q, we may seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing. We filed a sales agreement prospectus in December 2023 pursuant to which we may offer and sell up to an aggregate amount of $50.0 million of shares of our common stock through our ATM facility. As of June 30, 2024, $47.1 million in common stock remained available for future issuance under the ATM facility. The sale of equity and convertible debt securities may result in dilution to our stockholders and, in the case of preferred equity securities or convertible debt, those securities could provide for rights, preferences or privileges senior to those of our common stock. The terms of debt securities issued or borrowings pursuant to a credit agreement could impose significant restrictions on our operations. Additional capital may not be available on reasonable terms, or at all.

Previous wording

The $4.7 million increase in cash used in operating activities was primarily due to working capital needs. For example, our annual bonus was paid during the first quarter of 2024 whereas it was paid in the second quarter of 2023. Also, during the first quarter of 2023, we received a significant customer deposit in connection with our agreement with Moderna to support its ongoing clinical trials evaluating a personalized cancer vaccine, whereas we received no such comparable customer deposits during the first quarter of 2024. These items were partially offset by higher customer collections in the first quarter of 2024 as compared to the first quarter of 2023.

Current wording

The $5.0 million increase in cash used in operating activities was primarily due to working capital needs. During the first half of 2023 we received a significant customer deposit in connection with our agreement with Moderna to support its ongoing clinical trials project for development of a personalized cancer vaccine and the customer deposit did not repeat in 2024. We also paid more in rent during the first half of 2024 as compared to the first half of 2023 for our Fremont headquarters due to the end of a free rent period plus escalating rent payments. Furthermore, we paid more to vendors during the first half of 2024 as compared to 2023 due to timing of vendor shipments and billings. Greater use of cash for working capital needs was partially offset by lower operating expenses.

Previous wording

The $7.5 million decrease in cash provided by investing activities was due to lower net proceeds from short-term investment maturities, partially offset by a $3.7 million reduction in capital expenditures.

Current wording

The $14.0 million decrease in cash provided by investing activities was due to $20.6 million lower net proceeds from short-term investments, partially offset by a $6.4 million reduction in capital expenditures and $0.2 million proceeds from sales of equipment.

Previous wording

Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $95.4 million as of March 31, 2024, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.

Current wording

Our material cash requirements in the short- and long-term consist primarily of variable costs of revenue, operating expenditures, capital expenditures, property leases, and other. We plan to fund our material cash requirements with our existing cash and cash equivalents and short-term investments, which amounted to $87.0 million as of June 30, 2024, as well as anticipated cash receipts from customers. To fund our material cash requirements in the short- and long-term, we may also seek to sell additional common or preferred equity or convertible debt securities, enter into an additional credit facility or another form of third-party funding or seek other debt financing.

Previous wording

Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to increase in 2024 relative to 2023 primarily to support future growth in sales of our clinical diagnostics tests.

Current wording

Variable costs of revenue. From time to time in the ordinary course of business, we enter into agreements with vendors for the purchase of raw materials, laboratory supplies and consumables to be used in the sequencing of customer samples. However, we generally do not have binding and enforceable purchase orders beyond the short term, and the timing and magnitude of purchase orders beyond such period is difficult to accurately project. We currently expect spending in this area to be higher in 2024 relative to 2023 primarily to support future growth in sales of our clinical diagnostics tests.

Previous wording

Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development, selling, general and administrative functions. We currently expect our spend in these areas to decrease in 2024 relative to 2023 as a result of our workforce reductions in 2023. On a long-term basis, we manage future cash requirements relative to our long-term business plans.

Current wording

Operating expenditures. Our primary use of cash relates to employee compensation, spend on professional services, spend related to research and development projects, and other costs to support our research and development, selling, general and administrative functions. We currently expect our spend in these areas to be lower in 2024 relative to 2023 as a result of our workforce reductions in 2023. On a long-term basis, we manage future cash requirements relative to our long-term business plans.

Previous wording

Capital expenditures. Capital expenditures are expected to decrease from 2023 levels as we have completed significant laboratory capacity additions. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be approximately $1 million in 2024 and between $4 million to $6 million in each of the years 2025 and 2026.

Current wording

Capital expenditures. Capital expenditures are expected to be lower in 2024 from 2023 levels as we have completed significant laboratory capacity additions. Going forward, our capital expenditures are expected to consist primarily of laboratory equipment and computer equipment. We currently expect capital expenditures to be approximately $1 million in 2024 and between $4 million to $5 million in each of the years 2025 and 2026.

Previous wording

Property leases. Our noncancelable operating lease payments were $76.6 million as of March 31, 2024. The timing of these future payments, by year, can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Condensed Consolidated Financial Statements in Note 7, “Leases.”

Current wording

Property leases. Our noncancelable operating lease payments were $74.6 million as of June 30, 2024. The timing of these future payments, by year, can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Condensed Consolidated Financial Statements in Note 7, “Leases.”

Previous wording

Other. As of March 31, 2024, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory. We owe a total of $2.2 million, with $0.9 million of that owed in the remaining months of 2024 and the remainder in 2025. Additionally, we have an outstanding noninterest bearing loan that was used to finance the purchase of internal use software licenses and related ongoing support. We will make a payment of $0.4 million in September 2024 to pay off this loan. Further discussion of the loans can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Condensed Consolidated Financial Statements in Note 6, “Loans.”

Current wording

Other. As of June 30, 2024, we have an outstanding noninterest bearing loan that was used to finance the purchase of equipment for our laboratory. We owe a total of $2.0 million, of which $0.7 million is payable in 2024 and the remainder in 2025. Additionally, we have an outstanding noninterest bearing loan that was used to finance the purchase of internal use software licenses and related ongoing support. We will make a payment of $0.4 million in September 2024 to pay off this loan. Further discussion of the loans can be found in Part I, Item 1 of this Form 10-Q in the Notes to Unaudited Condensed Consolidated Financial Statements in Note 6, “Loans.”