Hyperfine Inc

Previous wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2024. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Hyperfine, Inc. and its consolidated subsidiaries. The unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023, respectively, present the financial position and results of operations of Hyperfine, Inc. and its wholly owned subsidiaries.

Current wording

The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our condensed consolidated results of operations and financial condition. The discussion should be read in conjunction with the unaudited condensed consolidated financial statements and notes thereto contained in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto for the year ended December 31, 2023 contained in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 22, 2024. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the “Risk Factors” sections of our Annual Report on Form 10-K for the year ended December 31, 2023, and of this Quarterly Report on Form 10-Q. Actual results may differ materially from those contained in any forward-looking statements. Unless the context otherwise requires, references to “we”, “us”, “our”, and “the Company” are intended to mean the business and operations of Hyperfine, Inc. and its consolidated subsidiaries. The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023, respectively, present the financial position and results of operations of Hyperfine, Inc. and its wholly owned subsidiaries.

Previous wording

The Swoop® system is AI-powered and integrates deep learning, a form of AI, for the reconstruction and denoising of T1, T2, and fluid-attenuated inversion recovery (“FLAIR”) sequences. The Swoop® system also incorporates deep learning denoising in the diffusion-weighted imaging (“DWI”) sequences for image post-processing. The integration of deep learning does not require any additional steps from the user. As a result, deep learning can enhance the image quality and, consequently, the diagnostic value of images generated at ULF. The algorithms are designed to improve ULF image quality, while reducing the impact of scan artifacts. The images created with these algorithms were validated by expert radiologists. The Swoop® system is used clinically every day as the first mover in the field of portable ULF MRI, and with an install base that continues to expand. The learnings from this field experience has served to improve our software, AI, and denoising algorithms resulting in the image quality and performance improvements of our product over the eight software releases since our initial clearance. As we move forward, we are continuously investing in improving our AI-powered image quality and leveraging each imaging-focused software release to further improve the Swoop® system performance.

Current wording

The Swoop® system is AI-powered and integrates deep learning, a form of AI, for the reconstruction and denoising of T1, T2, and fluid-attenuated inversion recovery (“FLAIR”) sequences. The Swoop® system also incorporates deep learning denoising in the diffusion-weighted imaging (“DWI”) sequences for image post-processing. The integration of deep learning does not require any additional steps from the user. As a result, deep learning can enhance the image quality and, consequently, the diagnostic value of images generated at ULF. The algorithms are designed to improve ULF image quality, while reducing the impact of scan artifacts. The images created with these algorithms were validated by expert radiologists. The Swoop® system is used clinically every day as the first mover in the field of portable ULF MRI, and with an install base that continues to expand. The learnings from this field experience have served to improve our software, AI, and denoising algorithms resulting in the image quality and performance improvements of our product over the nine software releases since our initial clearance. As we move forward, we are continuously investing in improving our AI-powered image quality and leveraging each imaging-focused software release to further improve the Swoop® system performance.

Previous wording

Legacy Hyperfine received initial 510(k) clearance for brain imaging of patients of all ages from the FDA in 2020 and has now received eight subsequent clearances from the FDA after the initial clearance. We received our most recent clearance from the FDA in October 2023 for the latest update of our Swoop® system AI-powered software. This updated software expanded the Swoop® system’s AI denoising capabilities by incorporating deep learning denoising in the DWI sequence for image post-processing. In February and October 2023, we received 510(k) clearances from the FDA for the latest updates to our Swoop® system AI-powered software. The combination of these two software updates significantly improved DWI, incorporated deep-learning based denoising in the post-processing of DWI images for crisper images, and improved image quality for all Swoop® system sequences. The Swoop® system has also received marketing authorization for brain imaging in several countries, including the European Union (CE), the United Kingdom (UKCA), Canada, Australia and New Zealand.

Current wording

Our Swoop® system received initial 510(k) clearance for brain imaging from the FDA in 2020 and has now received nine subsequent clearances from the FDA after the initial clearance. In February and October 2023, we received 510(k) clearances from the FDA to our Swoop® system AI-powered software. The combination of these two software updates significantly improved DWI, incorporated deep-learning based denoising in the post-processing of DWI images for crisper images, and improved image quality for all Swoop® system sequences. In July 2024, we received 510(k) clearance from the FDA for the latest update to our Swoop® system AI-powered software. This software update significantly reduces scan times across multiple MR sequences without sacrificing image quality. The Swoop® system has also received marketing authorization for brain imaging in several countries, including the European Union (CE certification), the United Kingdom (UK Conformity Assessment (“UKCA”)), Canada, Australia and New Zealand.

Previous wording

Total revenues were $3.3 million for the three months ended March 31, 2024, an increase of $0.7 million, or 25.0% from the three months ended March 31, 2023, primarily driven by increases in Swoop® system units sold and service revenues. See "Results of Operations - Sales" below for further information. Total Swoop® system units sold were 13 units for the three months ended March 31, 2024, an increase of 3 units, or 30.0% from the three months ended March 31, 2023.

Current wording

Total revenues were $3.6 million and $6.9 million for the three and six months ended June 30, 2024, respectively, an increase of $0.3 million, or 7.4% and $0.9 million, or 15.1% from the three and six months ended June 30, 2023. See "Results of Operations". Total Swoop® system units sold were 13 units and 26 units, for the three and six months ended June 30, 2024, respectively, a decrease of 1 unit and an increase of 2 units from the three and six months ended June 30, 2023.

Previous wording

We have developed our Swoop® system through extensive research and development activities. Moreover, our team is dedicated to clinical support programs designed to integrate the Swoop® system into an array of diverse healthcare environments and applications. We believe that, from our commercial and clinical experience, we are gaining invaluable insights into the Swoop® system’s feasibility. We believe these learnings will enable us to further improve our product and develop new services and tools in the future. We are continuously improving our image quality and imaging capabilities. Building upon this foundation and our expertise in ULF brain imaging, we plan to develop new imaging applications, broadening the range of clinical uses for our technology. Additionally, we are leveraging our strengths in AI and cloud technology to explore the Swoop® system’s role as a brain imaging clinical decision support platform. While these technical innovations may increase our research and development expenses, we expect them to have a positive impact on our results of operations and profitability in the future.

Current wording

We have developed our Swoop® system through extensive research and development activities. Moreover, our team is dedicated to clinical support programs designed to integrate the Swoop® system into an array of diverse healthcare environments and applications. We believe that, from our commercial and clinical experience, we are gaining invaluable insights into the Swoop® system’s utility. We believe these learnings will enable us to further improve our product and develop new services and tools in the future. We are continuously improving our image quality and imaging capabilities. Building upon this foundation and our expertise in ULF brain imaging, we plan to develop new imaging applications, broadening the range of clinical uses for our proprietary technology. Additionally, we are leveraging our strengths in AI and cloud technology to explore the Swoop® system’s role as a brain imaging clinical decision support platform. While these technical innovations may increase our research and development expenses, we expect them to have a positive impact on our results of operations and profitability in the future.

Previous wording

Our results have included revenue from outside the United States and outside the United States. Legacy Hyperfine received initial 510(k) clearance from the FDA in 2020. We are focused on building relationships and executing contracts with U.S. hospital systems. We are building a direct sales and field support organization in the United States and have recently made changes within our sales and clinical support teams who are working in strong collaboration to increase adoption, support successful implementations and support routine use at customer sites. As of 2024, we have targeted a select number of international markets to add to our commercial efforts operating through distributors.

Current wording

Our results have included revenue from the United States and outside the United States. Our Swoop® system received initial 510(k) clearance from the FDA in 2020. Initially, we are focused on executing contracts with U.S. hospitals and hospital systems. We have built a direct sales and field support organization in the United States who are working in strong collaboration to increase adoption, support successful implementations and support routine use at customer sites. As of 2024, we have targeted a select number of international markets to add to our commercial efforts operating through distributors.

Previous wording

While we will maintain our commercial focus in the United States in 2024, our commitment to the vision of providing affordable and accessible imaging that enables earlier detection and timely management of health conditions worldwide is currently made possible by grant funding from the BMGF. Through our engagement with the BMGF, we have deployed and continue to deploy the Swoop® system in low-middle income settings without readily-accessible MRI technology. The multiple grants provided by our research partnership with the BMGF, which commenced funding in the spring of 2020, support the deployment of 25 Swoop® system and accessories to investigators. As of March 31, 2024 and December 31, 2023, 25 and 22 Swoop® system units, respectively, have been delivered to the BMGF. The ongoing investigation is designed to provide data to validate the potential use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection, and birth-related injury. In May 2023, we were awarded an additional 3-year grant from the BMGF to continue to develop a scalable approach to measuring neurodevelopment via ULF brain imaging in neonates, infants, and young children in low-to-middle income countries. During the three months ended March 31, 2024, we completed and delivered the remaining Swoop system® devices and delivered a grant milestone of a software update that provides faster scan times, additional system quality control tests, and other minor enhancements, we released $0.6 million of restricted cash and recorded grant receivable of $0.5 million excluding interest earned, in prepaid expenses and other current assets in our condensed consolidated balance sheet.

Current wording

Our commitment to the vision of providing affordable and accessible imaging that enables earlier detection and timely management of health conditions worldwide is furthermore advanced by grant funding from the BMGF. Through our engagement with the BMGF, we have deployed and continue to deploy the Swoop® system in low-middle income settings without readily-accessible MRI technology. The multiple grants provided by our research partnership with the BMGF, which commenced funding in the spring of 2020, support the deployment of 25 Swoop® system and accessories to investigators. As of June 30, 2024 and December 31, 2023, 25 and 22 Swoop® system units, respectively, have been delivered to the BMGF. The ongoing investigation is designed to provide data to validate the potential use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection, and birth-related injury. In May 2023, we were awarded an additional 3-year grant from the BMGF to continue to develop a scalable approach to measuring neurodevelopment via ULF brain imaging in neonates, infants, and young children in low-to-middle income countries. During the three and six months ended June 30, 2024, we completed and delivered the remaining Swoop system® devices and delivered a grant milestone of a software update, we received cash of $0.6 million which settled an outstanding grant receivable of $0.5 million as of March 31, 2024, and partially paid $0.1 million of grant fulfilled during the three months ended June 30, 2024. As of June 30, 2024, we recorded grant receivable of $0.2 million excluding interest earned, as part of prepaid expenses and other current assets in our unaudited condensed consolidated balance sheet.

Previous wording

The following is a discussion of our results of operations for the three months ended March 31, 2024 and 2023. Our accounting policies are described under"Summary of Significant Accounting Policies"in Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

The following is a discussion of our results of operations for the three and six months ended June 30, 2024 and 2023. Our accounting policies are described under"Summary of Significant Accounting Policies"in Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

Service sales increased by $0.1 million, or 17.5%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was driven by an increase in the volume of commercial system units installed as generally all commercial systems installations generate recurring service revenue. Service sales revenue is generally recognized over time as we are providing the customer with ongoing access to our resources and software upgrades throughout the subscription period. This type of revenue is recurring in nature and we expect will continue to grow as more devices are sold.

Current wording

Service sales increased by $0.1 million, or 15.8%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was driven by an increase in the volume of commercial system units installed as generally all commercial systems installations generate recurring service revenue. Service sales revenue is generally recognized over time as we are providing the customer with ongoing access to our resources and software upgrades throughout the subscription period. This type of revenue is recurring in nature and we expect will continue to grow as more devices are sold.

Previous wording

Device sales increased by $0.6 million, or 26.8%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was driven primarily by an increase in the volume of device sales.

Current wording

Service sales increased by $0.2 million, or 16.6%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was driven by an increase in the volume of commercial system units installed as generally all commercial systems installations generate recurring service revenue.

Previous wording

Cost of service sales increased by $33 thousand, or 8.1%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase is due to the increased install base.

Current wording

Cost of service sales increased by $18 thousand, or 4.6%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase is due to the increased install base.

Previous wording

Cost of device sales increased by $0.4 million, or 40.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was driven primarily by an increase in units sold.

Current wording

Cost of device sales increased by $0.3 million, or 11.5%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was driven primarily by an increase by two units sold in the six months ended June 30, 2024.

Previous wording

Research and development expenses increased by $0.1 million, or 2.0%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This increase was driven primarily by an increase in personnel related costs of $0.7 million as a result of increased headcount and an increase in consulting costs of $0.3 million, partially offset by $0.9 million of higher grant fulfilments recorded as credits to research and development expenses.

Current wording

Research and development expenses increased by $0.7 million, or 6.8%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was driven primarily by an increase in personnel-related costs and stock-based compensation expenses of $1.4 million and an increase in consulting costs of $0.5 million, partially offset by $0.9 million of a higher grant fulfillment credits.

Previous wording

General and administrative expenses decreased by $1.8 million, or 28.3%, for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. This decrease was driven primarily by a decrease in personnel related costs and stock-based compensation expenses of $1.0 million as a result of a lean executive team, a decrease in accounting, auditing and SEC expenses of $0.3 million, a decrease in insurance expenses of $0.1 million, a decrease in legal expenses and legal related expenses of $0.3 million, and a decrease in recruitment expenses of $0.1 million.

Current wording

General and administrative expenses decreased by $0.9 million, or 16.7%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This decrease was driven primarily by a decrease in personnel-related costs and stock-based compensation expenses of $0.4 million, a decrease in legal and patent expenses of $0.2 million, and a decrease in accounting, auditing, SEC, and insurance expenses of $0.2 million.

Previous wording

Interest income decreased by $73 thousand for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. The decrease was driven primarily by lower cash balances in money market funds and demand deposit accounts during the three months ended March 31, 2024 compared to the three months ended March 31, 2023.

Current wording

Interest income decreased by $0.4 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. The decrease was driven primarily by lower cash balances in money market funds and demand deposit accounts during the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Previous wording

Other income, net was unchanged for the three months ended March 31, 2024 compared to the three months ended March 31, 2023. Other income, net during the three months ended March 31, 2024 was $6 thousand consisting primarily of interest income from customer financing of approximately $24 thousand, offset by a net realized loss on foreign currencies of approximately $14 thousand and other expenses of $4 thousand.

Current wording

Other income, net decreased by $10 thousand for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. Other income, net during the three months ended June 30, 2024 was $15 thousand consisting primarily of interest income from customer financing of approximately $24 thousand, offset by a net realized loss on foreign currencies of approximately $5 thousand and other expenses of $4 thousand.

Previous wording

We have funded our operations primarily with proceeds from the issuance of common and preferred stock. We have incurred significant cash burn and recurring net losses, which includes a net loss of $9.8 million for the three months ended March 31, 2024, and an accumulated deficit of $263.6 million as of March 31, 2024. As of March 31, 2024, we had cash and cash equivalents of $63.2 million. As we continue to invest in research and development of our products and sales and marketing, we expect to continue to incur a significant cash burn and recurring net losses for the foreseeable future until such time that our product and services sales generate enough gross profit to cover our operating expenses. However, we can provide no assurance that our product and service sales will generate a net profit in the future or that our cash resources will be sufficient to continue our commercialization and development activities.

Current wording

We have funded our operations primarily with proceeds from the issuance of common and preferred stock. We have incurred significant cash burn and recurring net losses, which includes a net loss of $20.0 million for the six months ended June 30, 2024, and an accumulated deficit of $273.7 million as of June 30, 2024. As of June 30, 2024, we had cash and cash equivalents of $53.8 million. As we continue to invest in research and development of our products and sales and marketing, we expect to continue to incur a significant cash burn and recurring net losses for the foreseeable future until such time that our product and services sales generate enough gross profit to cover our operating expenses. However, we can provide no assurance that our product and service sales will generate a net profit in the future or that our cash resources will be sufficient to continue our commercialization and development activities.

Previous wording

In November 2023, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. Our shelf registration statement on Form S-3 also included a prospectus (the “Sales Agreement Prospectus”) covering up to an aggregate of $50.0 million in shares of Class A common stock that we may issue and sell from time to time, through B. Riley Securities, Inc. (“B. Riley”) acting as our sales agent, pursuant to the sales agreement that we entered into with B. Riley in November 2023 (the “Sales Agreement”), for our “at-the-market” equity program. We are not obligated to make any sales of Class A common stock under the Sales Agreement. As of March 31, 2024, we had not sold any Class A common stock pursuant to the Sales Agreement. As of the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, we are subject to the SEC general instructions of Form S-3 known as the “baby shelf rules.” Under these instructions, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by non-affiliates. Therefore, we are limited in the amount of proceeds we are able to raise by selling shares of our common stock using our Form S-3, including under the Sales Agreement, until such time as our public float exceeds $75 million. On March 22, 2024, we filed an amendment to the Sales Agreement Prospectus, pursuant to which, as of such date, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $22.8 million from time to time through or to B. Riley.

Current wording

In November 2023, we filed a shelf registration statement on Form S-3 with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. Our shelf registration statement on Form S-3 also includes a prospectus (the “Sales Agreement Prospectus”) covering up to an aggregate of $50.0 million in shares of Class A common stock that we may issue and sell from time to time, through B. Riley Securities, Inc. (“B. Riley”) acting as our sales agent, pursuant to the sales agreement that we entered into with B. Riley in November 2023 (the “Sales Agreement”), for our “at-the-market” equity program. We are not obligated to make any sales of Class A common stock under the Sales Agreement. As of June 30, 2024, we had not sold any Class A common stock pursuant to the Sales Agreement. As of the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, we are subject to the SEC general instructions of Form S-3 known as the “baby shelf rules.” Under these instructions, the amount of funds we can raise through primary public offerings of securities in any 12-month period using our registration statement on Form S-3 is limited to one-third of the aggregate market value of the shares of our common stock held by non-affiliates. Therefore, we are limited in the amount of proceeds we are able to raise by selling shares of our common stock using our Form S-3, including under the Sales Agreement, until such time as our public float exceeds $75 million. On March 22, 2024, we filed an amendment to the Sales Agreement Prospectus, pursuant to which, as of such date, we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $22.8 million from time to time through or to B. Riley.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $63.2 million. Our future capital requirements may vary from those currently planned and will depend on various factors including further development costs, commercialization strategy, international expansion, and regulatory costs. If we need additional funds and are unable to obtain funding on a timely basis, we may need to curtail significantly our product development and commercialization efforts to provide sufficient funds to continue our operations, which could adversely affect our business prospects.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $53.8 million. Our future capital requirements may vary from those currently planned and will depend on various factors including further development costs, commercialization strategy, international expansion, and regulatory costs. If we need additional funds and are unable to obtain funding on a timely basis, we may need to curtail significantly our product development and commercialization efforts to provide sufficient funds to continue our operations, which could adversely affect our business prospects.

Previous wording

For the three months ended March 31, 2024, net cash used in operating activities of $12.5 million was due primarily to a net loss of $9.8 million and changes in operating assets and liabilities of $4.0 million, partially offset by non-cash items of $1.3 million. Non-cash items were primarily stock-based compensation expense of $1.0 million and depreciation expense of $0.3 million. Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable of $2.1 million due to timing of billing and collection, a decrease in accrued expenses and other current liabilities of $1.4 million mainly due to annual bonus payout, an increase in prepaid expenses and other current assets of $1.3 million mainly due to the timing of payment of the directors and officers insurance and the recording of a grant receivable, an increase in inventory of $0.8 million, a decrease in deferred grant funding of $0.6 million due to fulfillment and delivery of a BMGF grant milestone related to a delivery of an enhanced version of our software, partially offset by an increase in accounts payable of $1.2 million, a decrease in prepaid inventory of $0.7 million, a decrease in other long term assets of $0.2 million, and an increase in deferred revenue of $0.1 million.

Current wording

For the six months ended June 30, 2024, net cash used in operating activities of $21.9 million was due primarily to a net loss of $20.0 million and changes in operating assets and liabilities of $4.7 million, partially offset by non-cash items of $2.8 million. Non-cash items were primarily stock-based compensation expense of $2.2 million, depreciation expense of $0.5 million and loss on disposal of property and equipment, net of $0.1 million. Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable and unbilled receivables of $3.4 million driven primarily by increased revenue, an increase in inventory of $1.0 million, a decrease in accrued expense and other current liabilities of $0.9 million driven primarily by lower bonus and salary and benefit accrual due to timing and a decreased headcount, a decrease in deferred grant funding of $0.6 million due to fulfillment of the BMGF grant milestones, an increase in prepaid expenses and other current assets of $0.5 million, partially offset by an increase in accounts payable of $0.9 million, a decrease in prepaid inventory of $0.7 million and an increase in deferred revenue of $0.1 million.

Previous wording

For the three months ended March 31, 2023, net cash used in operating activities of $13.5 million was due primarily to a net loss of $12.2 million and changes in operating assets and liabilities of $2.7 million, partially offset by non-cash items of $1.4 million. Non-cash items were primarily stock-based compensation expense of $1.1 million and depreciation expense of $0.3 million. Changes in operating assets and liabilities were driven primarily by a decrease in accrued expenses and other liabilities of $1.8 million mainly driven by annual bonus payout and lower payroll and related benefits accrual, an increase in inventory of $1.1 million, an increase in accounts receivable of $0.9 million, an increase in unbilled receivables of $0.3 million, a decrease in deferred grant funding of $0.1 million, a decrease in deferred revenue of $0.1 million, partially offset by an increase in accounts payable of $1.0 million, a decrease in prepaid expenses and other current assets of $0.3 million, a decrease in prepaid inventory of $0.3 million.

Current wording

For the six months ended June 30, 2023, net cash used in operating activities of $23.2 million was due primarily to a net loss of $22.8 million and changes in operating assets and liabilities of $3.2 million, partially offset by non-cash items of $2.8 million. Non-cash items were primarily stock-based compensation expense of $2.3 million and depreciation expense of $0.5 million. Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable and unbilled receivables of $1.8 million driven primarily by increased revenue, a decrease in accrued expense and other current liabilities of $1.8 million driven primarily by lower bonus and salary and benefit accrual due to a decreased headcount, and an increase in inventory of $1.5 million, partially offset by a decrease in prepaid expenses and other current assets of $0.9 million, an increase in accounts payable of $0.7 million, a decrease in prepaid inventory of $0.3 million and an increase in deferred grant funding of $0.2 million.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities of $142 thousand was from fixed assets purchased.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities of $0.2 million was from fixed assets purchased.

Previous wording

For the three months ended March 31, 2023, net cash used in investing activities of $61 thousand was from fixed assets purchased.

Current wording

For the six months ended June 30, 2023, net cash used in investing activities of $0.3 million was from fixed assets purchased.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities of $55 thousand was proceeds from option exercises.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities of $0.1 million was proceeds from option exercises.

Previous wording

For the three months ended March 31, 2023, net cash provided by financing activities of $49 thousand was proceeds from option exercises.

Current wording

For the six months ended June 30, 2023, net cash provided by financing activities of $0.1 million was proceeds from option exercises.

Previous wording

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. We did not make any matching contributions to the 401(k) plan for the three months ended March 31, 2024 and 2023.

Current wording

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. We did not make any matching contributions to the 401(k) plan for the three and six months ended June 30, 2024 and 2023.

Previous wording

For information on contingencies, refer to Note 13 in the notes to our unaudited condensed consolidated financial statements for the three months ended March 31, 2024 and 2023 included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

For information on contingencies, refer to Note 13 in the notes to our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023 included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements and notes thereto for the three months ended March 31, 2024 and 2023 included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements and notes thereto for the three and six months ended June 30, 2024 and 2023 included elsewhere in this Quarterly Report on Form 10-Q.