RAPID MICRO BIOSYSTEMS INC

Previous wording

In July 2024, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we are implementing certain cost actions including a reduction in our current workforce, the closure of open and planned positions and reductions in other non-headcount-related expenses across the business (the “Operational Efficiency Program”). These actions are expected to result in approximately $7 million in annual cash savings and enable us to achieve positive cash flow by the end of 2027 without additional financing. We plan to continue to invest in key initiatives that are expected to drive future revenue growth and gross margin improvement, including product development and cost reduction programs. We expect to record a charge of approximately $0.7 million in the third quarter of 2024 related to the Operational Efficiency Program.

Current wording

In July 2024, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we are implementing certain cost actions including a reduction in our workforce, the closure of open and planned positions and reductions in other non-headcount-related expenses across the business (the “Operational Efficiency Program”). These actions are expected to result in approximately $7 million in annual cash savings and enable us to achieve positive cash flow by the end of 2027 without additional financing. We plan to continue to invest in key initiatives that are expected to drive future revenue growth and gross margin improvement, including product development and cost reduction programs. We recorded a charge of $0.6 million in the third quarter of 2024 related to the Operational Efficiency Program.

Previous wording

Since our inception, we have incurred net losses in each year. We generated revenue of $6.6 million and $5.0 million for the three months ended June 30, 2024 and 2023, respectively, and incurred net losses of $12.6 million and $14.0 million for those same periods, respectively. As of June 30, 2024, we had an accumulated deficit of $454.3 million. We expect to continue to incur net losses in connection with our ongoing activities, including:

Current wording

Since our inception, we have incurred net losses in each year. We generated revenue of $7.6 million and $6.1 million for the three months ended September 30, 2024 and 2023, respectively, and incurred net losses of $11.3 million and

Previous wording

While we are implementing our Operational Efficiency Program with the goal of achieving positive cash flow without additional financing, there can be no assurance that we will attain this goal. Our Operational Efficiency Program and intention to attain positive cash flow are based on our expectations and underlying assumptions of business performance that are generally consistent with our historical performance, including with respect to revenue growth and gross margin improvement, which may not be replicated in future periods. Our goal also depends on our ability to realize additional cost savings that we believe are reasonably achievable, but are not guaranteed. While we seek to achieve and sustain positive cash flow, if we are unable to generate revenue, improve our gross margins, and/or control our operating costs sufficiently, we may need to raise additional funding, which we would expect to secure through a combination of equity offerings and debt financings. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue our expansion plans including the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations.

Current wording

While we implemented our Operational Efficiency Program with the goal of achieving positive cash flow without additional financing, there can be no assurance that we will attain this goal. Our Operational Efficiency Program and intention to attain positive cash flow are based on our expectations and underlying assumptions of business performance that are generally consistent with our historical performance, including with respect to revenue growth and gross margin improvement, which may not be replicated in future periods. Our goal also depends on our ability to realize additional cost savings that we believe are reasonably achievable, but are not guaranteed. While we seek to achieve and sustain positive cash flow, if we are unable to generate revenue, improve our gross margins, and/or control our operating costs sufficiently, we may need to raise additional funding, which we would expect to secure through a combination of equity offerings and debt financings. If we are unable to raise capital or enter into such agreements as, and when, needed, we may have to significantly delay, scale back or discontinue our expansion plans including the further development and commercialization efforts of one or more of our products, or may be forced to reduce or terminate our operations.

Previous wording

There is an opportunity to broaden adoption and increase utilization of our Growth Direct platform throughout our existing customers' organizations as these customers purchase more systems. These additional systems will allow our existing customers to convert more of their test volume at existing locations, to support multiple locations, to meet redundancy requirements, or to increase capacity. As of June 30, 2024, approximately 44% of our customers have purchased Growth Direct systems for multiple sites, and approximately 58% of our customers have purchased multiple Growth Direct systems. Increased utilization amongst existing customers can also occur as customers advance through the Growth Direct platform adoption cycle, from early validation of initial applications to validation and conversion of multiple applications on the Growth Direct platform, or as the result of new product approvals or increases in their manufacturing volumes for existing products.

Current wording

There is an opportunity to broaden adoption and increase utilization of our Growth Direct platform throughout our existing customers' organizations as these customers purchase more systems. These additional systems will allow our existing customers to convert more of their test volume at existing locations, to support multiple locations, to meet redundancy requirements, or to increase capacity. As of September 30, 2024, approximately 42% of our customers have purchased Growth Direct systems for multiple sites, and approximately 58% of our customers have purchased multiple Growth Direct systems. Increased utilization amongst existing customers can also occur as customers advance through the Growth Direct platform adoption cycle, from early validation of initial applications to validation and conversion of multiple applications on the Growth Direct platform, or as the result of new product approvals or increases in their manufacturing volumes for existing products.

Previous wording

The Growth Direct Rapid Sterility application is now available for commercial sale. In the second quarter of 2024, we placed our first Rapid Sterility system with one of our existing customers. We plan to continue efforts to scale our manufacturing capabilities for Rapid Sterility in the second half of 2024.

Current wording

We made the Growth Direct Rapid Sterility application available for commercial sale and placed the first Rapid Sterility system at one of our existing customers in the second quarter of 2024. We plan to continue efforts to scale our manufacturing capabilities for the Rapid Sterility application through the end of 2024.

Previous wording

At the same time, we also expect future revenues from both products and services to grow at rates significantly higher than the related costs to provide and support those products and services. As a result, we also expect increasing revenues from both products and services to contribute significantly to future gross margin expansion. We have experienced positive trends in gross margin, improving from (38)% for the three months ended June 30, 2023 to (3)% for the three months ended June 30, 2024, and from (37)% for the six months ended June 30, 2023 to (14)% for the six months ended June 30, 2024.

Current wording

At the same time, we also expect future revenues from both products and services to grow at rates significantly higher than the related costs to provide and support those products and services. As a result, we also expect increasing revenues from both products and services to contribute significantly to future gross margin expansion. We have recently experienced positive trends in our gross margins, improving from (27)% for the three months ended September 30, 2023 to 8% for the three months ended September 30, 2024, and from (33)% for the nine months ended September 30, 2023 to (5)% for the nine months ended September 30, 2024. While we expect gross margins to continue to trend positively, expansion in gross margins in future periods may not be linear and may be subject to variability from period to period.

Previous wording

We regularly assess trends relating to our recurring revenue, which is the revenue from consumables and service contracts, based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 58.1% and 71.8% of our total revenue for the three months ended June 30, 2024 and 2023, respectively. Recurring revenue was 62.0% and 68.2% of our total revenue for the six months ended June 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of the total product and service revenue will generally vary based upon the number of Growth Direct systems placed and the cumulative number of validated systems in the period, as well as other variables such as the volume of tests being conducted and the test application(s) being used on customers' Growth Direct systems.

Current wording

We regularly assess trends relating to our recurring revenue, which is the revenue from consumables and service contracts, based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 48.3% and 55.5% of our total revenue for the three months ended September 30, 2024 and 2023, respectively. Recurring revenue was 56.8% and 63.4% of our total revenue for the nine months ended September 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of the total product and service revenue will generally vary based upon the number of Growth Direct systems placed and the cumulative number of validated systems in the period, as well as other variables such as the volume of tests being conducted and the test application(s) being used on customers' Growth Direct systems.

Previous wording

Growth Direct systems with over 40 customers globally, including 70% of the top twenty pharmaceutical companies as measured by revenue and the manufacturers of 20% of globally approved cell and gene therapies, including manufacturers of 100% of approved gene-modified autologous CAR-T cell therapies.

Current wording

We derive product revenue primarily from the sale of our Growth Direct systems and related consumables as well as our LIMS connection software, which the majority of our customers purchase. As of September 30, 2024, we had placed 156 Growth Direct systems with over 40 customers globally, including 70% of the top twenty pharmaceutical companies as measured by revenue, and the manufacturers of approximately 19% of globally approved cell and gene therapies, including manufacturers of 100% of approved gene-modified autologous CAR-T cell therapies.

Previous wording

As part of our Operational Efficiency Program, we are reducing employee-related expenses and certain other non-employee related costs. For future periods, we expect our costs of revenue to increase or decrease commensurate with product and service volumes subject to the impact of our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity.

Current wording

As part of our Operational Efficiency Program, we have implemented actions to reduce employee-related expenses and certain other non-employee related costs. For future periods, we expect our costs of revenue to increase or decrease commensurate with product and service volumes. Such costs may be further impacted by our ongoing efforts to reduce product costs and increase manufacturing productivity and efficiencies as well as service productivity.

Previous wording

Our research and development costs are expensed as incurred. As part of our Operational Efficiency Program, we are reducing research and development employee-related expenses and certain other non-employee-related costs. We believe that our continued investment in research and development is essential to our long-term competitive position. For future periods, we expect our research and development expenses to increase or decrease commensurate with the size, scope and complexity of our research and development activities.

Current wording

Our research and development costs are expensed as incurred. As part of our Operational Efficiency Program, we have implemented actions to reduce research and development employee-related expenses associated with reduced headcount and certain other non-employee-related costs. We believe that our continued investment in research and development is essential to our long-term competitive position. For future periods, we expect our research and development expenses to increase or decrease commensurate with the size, scope and complexity of our research and development activities.

Previous wording

Sales and marketing expenses consist primarily of salaries, commissions, benefits and other personnel costs including stock-based compensation expense as well as costs relating to travel, consulting, public relations and allocated information technology and facility-related costs for our employees engaged in sales and marketing activities. As part of the Operational Efficiency Program, we are reducing sales and marketing employee-related expenses associated with reduced headcount. For future periods, we expect sales and marketing expenses to increase or decrease as and when we make investments into our sales and marketing organization, including in the number of sales and marketing personnel and our continued efforts to expand our geographic reach and capabilities, broaden our customer base and introduce new products.

Current wording

Sales and marketing expenses consist primarily of salaries, commissions, benefits and other personnel costs including stock-based compensation expense as well as costs relating to travel, consulting, public relations and allocated information technology and facility-related costs for our employees engaged in sales and marketing activities. As part of the Operational Efficiency Program, we have implemented actions to reduce sales and marketing employee-related expenses associated with reduced headcount and certain other non-employee-related costs. For future periods, we expect sales and marketing expenses to increase or decrease as and when we make investments into our sales and marketing organization, including in the number of sales and marketing personnel and our continued efforts to expand our geographic reach and capabilities, broaden our customer base and introduce new products.

Previous wording

General and administrative expenses consist primarily of salaries, bonuses and other personnel costs including stock-based compensation expense for our executive, finance, legal, human resources and general management employees, as well as director and officer insurance costs and professional fees for legal, patent, accounting, audit, investor relations, recruiting, consulting, regulatory, compliance, board of directors' fees and other services. General and administrative expenses also include direct and allocated information technology and facility-related costs. As part of our Operational Efficiency Program, we are reducing general and administrative employee-related expenses associated with reduced headcount. For future periods, we expect these expenses to increase or decrease, as applicable, commensurate with the size, scope and complexity of our general and administrative functions.

Current wording

General and administrative expenses consist primarily of salaries, bonuses and other personnel costs including stock-based compensation expense for our executive, finance, legal, human resources and general management employees, as well as director and officer insurance costs and professional fees for legal, patent, accounting, audit, investor relations, recruiting, consulting, regulatory, compliance, board of directors' fees and other services. General and administrative expenses also include direct and allocated information technology and facility-related costs. As part of our Operational Efficiency Program, we have implemented actions to reduce general and administrative employee-related expenses associated with reduced headcount and certain other non-employee-related costs. For future periods, we expect these expenses to increase or decrease, as applicable, commensurate with the size, scope and complexity of our general and administrative functions.

Previous wording

We generated significant taxable losses during each of the three and six months ended June 30, 2024 and 2023 and, therefore, have not recorded any U.S. federal or state income tax expense during those periods. However, we did record an immaterial amount of foreign income tax expense during each of those periods.

Current wording

We generated significant taxable losses during each of the three and nine months ended September 30, 2024 and 2023 and, therefore, have not recorded any U.S. federal or state income tax expense during those periods. However, we did record an immaterial amount of foreign income tax expense during each of those periods.

Previous wording

Product revenue increased by $1.4 million, or 43.2%, with the increase largely attributable to higher system placements as well as higher system-related revenue, primarily from LIMS connection software.

Current wording

Product revenue increased by $1.1 million, or 25.1%, with the increase largely attributable to higher system placements, improvements in average selling prices during the period, as well as higher system-related revenue, primarily from LIMS connection software and other software sales.

Previous wording

Service revenue increased by $0.2 million, or 13.5%. The increase in service revenue was primarily due to increases in revenue related to validations and installations as well as higher service contract revenue due to an increase in the cumulative number of Growth Direct systems validated and under such contracts.

Current wording

Service revenue increased by $0.4 million, or 20.8%. The increase in service revenue was primarily due to increases in revenue related to validations and installations as well as higher service contract revenue due to an increase in the cumulative number of Growth Direct systems validated and under such contracts.

Previous wording

Cost of product revenue increased by $0.2 million, or 4.9%. The increase was driven primarily by costs associated with the higher volume of Growth Direct systems sold but was largely offset by decreased material, labor and overhead costs as a result of the impact of cost reduction activities, improvements in production efficiencies and increased output for both consumables and systems.

Current wording

Cost of product revenue decreased by $0.4 million, or 6.6%. The decrease was driven by lower material, labor and overhead costs as a result of the impact of cost reduction activities, improvements in production efficiencies and increased production volumes for both systems and consumables, partially offset by the higher volume of Growth Direct systems sold.

Previous wording

Research and development expenses increased by $0.5 million, or 15.8%. This increase was primarily due to slightly higher headcount as well as increased engineering and facilities costs related to our innovation center and lab in our existing Lexington, Massachusetts facility. These increases were partially offset by a reduction in bonus expense related to the 2022 retention bonus program which ended in the third quarter of 2023.

Current wording

Research and development expenses increased by $0.5 million, or 15.8%. This increase was primarily due to higher spending on new product development activities, including our rapid sterility application, as well as increased headcount-related costs and facilities costs related to our innovation center and lab in our existing Lexington, Massachusetts facility.

Previous wording

General and administrative expenses decreased by $0.9 million, or 13.5%. The decrease was largely attributable to a $0.4 million reduction in both headcount-related costs and bonus expense related to the 2022 retention bonus program which ended in the third quarter of 2023. Lower public company operating costs, including third-party legal fees and business insurance premiums, also contributed to the decrease.

Current wording

General and administrative expenses decreased by $0.5 million, or 8.5%. The decrease was largely attributable to lower headcount-related costs and one-time bonus expense related to the 2022 retention bonus program which ended in the third quarter of 2023.

Previous wording

Interest income, which is related to interest earned on our investments, decreased $0.2 million as a result of lower investment balances during the three months ended June 30, 2024.

Current wording

Interest income, which is related to interest earned on our investments, decreased $0.3 million primarily as a result of lower investment balances during the three months ended September 30, 2024.

Previous wording

Other expense, which is comprised of miscellaneous expenses unrelated to our core business, were flat for each of the three months ended June 30, 2024 and 2023.

Current wording

Other expense, which is comprised of miscellaneous expenses unrelated to our core business, was flat for each of the three months ended September 30, 2024 and 2023.

Previous wording

Income tax expense was less than $0.1 million for each of the three months ended June 30, 2024 and 2023. The expense is attributable to an income tax provision related to our German subsidiary.

Current wording

Income tax expense was less than $0.1 million for each of the three months ended September 30, 2024 and 2023. The expense in each period was attributable to an income tax provision related to our German subsidiary.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2024 and 2023:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023:

Previous wording

Product revenue increased by $1.8 million, or 27.1%. The increase was driven primarily by higher volumes of both system placements and consumable shipments as well as higher average selling prices in consumables. Higher system-related revenue, particularly from our LIMS connection software, also contributed to the increase.

Current wording

Product revenue increased by $2.8 million, or 26.3%. The increase was driven primarily by a higher volume of system placements as well as higher average selling prices in consumables. Higher system-related revenue, particularly from our LIMS connection software and other software sales, also contributed to the increase.

Previous wording

Service revenue increased by $0.4 million, or 12.3%. The increase in service revenue was primarily driven by increases in revenue related to validations and installations as well as higher service contract revenue as a result of an increase in the cumulative number of Growth Direct systems validated and under such contracts.

Current wording

Service revenue increased by $0.8 million, or 15.3%. The increase in service revenue was primarily driven by increases in revenue related to validations and installations as well as higher service contract revenue as a result of an increase in the cumulative number of Growth Direct systems validated and under such contracts.

Previous wording

Research and development expenses increased by $1.2 million, or 18.8%. This increase was primarily due to higher spending on new product development activities, including our rapid sterility application, as well as increased headcount-related costs, engineering costs, and facilities costs related to our innovation center and lab in our existing Lexington, Massachusetts facility.

Current wording

Research and development expenses increased by $1.7 million, or 17.8%. This increase was primarily due to higher spending on new product development activities, including our rapid sterility application, as well as increased headcount-related costs, engineering costs, and facilities costs related to our innovation center and lab in our Lexington, Massachusetts facility.

Previous wording

General and administrative expenses decreased by $1.8 million, or 13.3%. This decrease was attributable to lower headcount and related costs as well as lower bonus expense related to the 2022 retention bonus program which ended in the third quarter of 2023. Lower public company operating costs, including third-party legal fees and business insurance premiums, also contributed to the decrease.

Current wording

General and administrative expenses decreased by $2.3 million, or 11.7%. This decrease was primarily attributable to lower headcount and headcount-related costs as well as lower bonus expense related to the 2022 retention bonus program which ended in the third quarter of 2023. Lower public company operating costs, including third-party legal fees and business insurance premiums, also contributed to the decrease.

Previous wording

Interest income decreased $0.3 million, or 12.3% due to lower investment balances during the six months ended June 30, 2024 as compared to the prior year period.

Current wording

Interest income decreased $0.6 million, or 18.3% due to lower investment balances during the nine months ended September 30, 2024.

Previous wording

Other expense, which is comprised of miscellaneous expenses unrelated to our core business, were flat for each of the six months ended June 30, 2024 and 2023.

Current wording

Other expense, which is comprised of miscellaneous expenses unrelated to our core business, were flat for each of the nine months ended September 30, 2024 and 2023.

Previous wording

Income tax expense was less than $0.1 million for each of the six months ended June 30, 2024 and 2023. The expense is attributable to an income tax provision related to our German subsidiary.

Current wording

Income tax expense was less than $0.1 million for each of the nine months ended September 30, 2024 and 2023. The expense in each period was attributable to an income tax provision related to our German subsidiary.

Previous wording

Since our inception, we have incurred operating losses. To date, we have funded our operations primarily through proceeds from sales of redeemable convertible preferred stock, borrowings under loan agreements, revenue from sales of our products and services, and proceeds from our IPO.

Current wording

Since our inception, we have incurred operating losses. To date, we have funded our operations primarily through proceeds from sales of redeemable convertible preferred stock, borrowings under loan agreements, revenue from sales of our products and services, and the proceeds from our IPO.

Previous wording

In July 2024, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we are implementing our Operational Efficiency Program for certain cost actions including a reduction in tour current workforce, the closure of open and planned positions, and reductions in other non-headcount-related expenses across the business. These actions are expected to result in approximately $7 million in annual cash savings and enable us to achieve positive cash flow by the end of 2027 without additional financing.

Current wording

In July 2024, we completed an enterprise-wide review of opportunities to realize operational efficiencies. Based on the results of this review, we implemented our Operational Efficiency Program for certain cost actions including a reduction in our workforce, the closure of open and planned positions, and reductions in other non-headcount-related expenses across the business. These actions are expected to result in approximately $7 million in annual cash savings and enable us to achieve positive cash flow by the end of 2027 without additional financing.

Previous wording

We plan to continue to invest in key initiatives that are expected to drive future revenue growth and gross margin improvement, including product development and cost reduction programs. We expect to record a charge of approximately $0.7 million in the third quarter of 2024 related to the Operational Efficiency Program.

Current wording

We plan to continue to invest in key initiatives that are expected to drive future revenue growth and gross margin improvement, including product development and cost reduction programs. We recorded a charge of $0.6 million in the third quarter of 2024 related to the Operational Efficiency Program.

Previous wording

In October 2013, we entered into an operating lease for office and manufacturing space in Lowell, Massachusetts. In March 2022, we amended the lease to increase the amount of facility space subject to the lease and extend the expiration of the lease from July 2026 to July 2029. The terms of the amendment include options for a one-time, five-year extension of the lease and early termination of the lease in July 2026 (subject to an early termination fee). Monthly rent payments are fixed and future minimum lease payments under the lease (as amended) are $3.3 million as of June 30, 2024, including $0.6 million in short-term obligations.

Current wording

In October 2013, we entered into an operating lease for office and manufacturing space in Lowell, Massachusetts. In March 2022, we amended the lease to increase the amount of facility space subject to the lease and extend the expiration of the lease from July 2026 to July 2029. The terms of the amendment include options for a one-time, five-year extension of the lease and early termination of the lease in July 2026 (subject to an early termination fee). Monthly rent payments are fixed and future minimum lease payments under the lease (as amended) are $3.2 million as of September 30, 2024, including $0.6 million in short-term obligations.

Previous wording

In June 2021, we entered into a sublease agreement for our Lexington, Massachusetts headquarters, which expires in June 2029. The sublease includes an option to terminate the sublease in July 2026, subject to an early termination fee. Monthly rent payments are fixed and future minimum lease payments over the term of the sublease are $3.8 million as of June 30, 2024, including $0.7 million in short-term obligations. Concurrent with entering into the sublease agreement, we executed an option agreement with the property owner which provides us the option to enter into a new direct lease for our Lexington, Massachusetts facility for an additional five years following expiration of the sublease.

Current wording

In June 2021, we entered into a sublease agreement for our Lexington, Massachusetts headquarters, which expires in June 2029. The sublease includes an option to terminate the sublease in July 2026, subject to an early termination fee. Monthly rent payments are fixed and future minimum lease payments over the term of the sublease are $3.6 million as of September 30, 2024, including $0.7 million in short-term obligations. Concurrent with entering into the sublease agreement, we executed an option agreement with the property owner which provides us the option to enter into a new direct lease for our Lexington, Massachusetts facility for an additional five years following expiration of the sublease.

Previous wording

During the six months ended June 30, 2024, net cash used in operating activities was $25.6 million, a decrease of $0.2 million compared to the prior-year period. The lower use of net cash was primarily a result of the timing of payments to vendors. This decrease was offset by increased inventory purchases, decreased receipts of our accounts receivable due to the timing of system placements, and higher usage of cash to settle accrued expenses and other current liabilities mainly as a result of higher annual bonus program payments made during the six months ended June 30, 2024. During the six months ended June 30, 2023, these payments were limited due to annual bonuses being temporarily replaced by a retention bonus program for non-executive employees in that period. The temporary retention bonus program was established in connection with our August 2022 restructuring action and concluded in the third quarter of 2023.

Current wording

During the nine months ended September 30, 2024, net cash used in operating activities was $34.2 million, a decrease of $1.3 million compared to the prior-year period. The lower use of net cash was primarily a result of the timing of payments to vendors and increased customer cash receipts. This decrease was offset by increased inventory purchases, and higher usage of cash to settle accrued expenses and other current liabilities mainly as a result of higher annual bonus payments made during the nine months ended September 30, 2024. During the nine months ended September 30, 2023, these payments were limited due to annual bonuses being temporarily replaced by a retention bonus program for non-executive employees in that period. The temporary retention bonus program was established in connection with our August 2022 restructuring action and concluded in the third quarter of 2023.

Previous wording

During the six months ended June 30, 2024, net cash provided by financing activities was flat compared to the six months ended June 30, 2023 at $0.1 million.

Current wording

During the nine months ended September 30, 2024, net cash provided by financing activities was flat compared to the nine months ended September 30, 2023, at $0.2 million.

Previous wording

The initial period during which we were required to regain compliance with the Bid Price Requirement expired on July 31, 2024. Because we did not regain compliance with the requirement during the initial period, we will transfer the listing of our Class A common stock to the Nasdaq Capital Market, effective at the opening of business on August 5, 2024, in order to secure an additional 180 calendar day compliance period ending on January 27, 2025. As a condition of securing such additional compliance period, we informed Nasdaq that we intend to regain compliance with the Bid Price Requirement during the second compliance period, which may include the implementation of a reverse stock split if necessary. We intend to monitor the closing bid price of our Class A common stock and take such reasonable measures to regain compliance with the Bid Price Requirement. However, there can be no assurance that we will be able to regain compliance with the Bid Price Requirement even during the second compliance period, nor can there be any assurance that we will receive the necessary approvals from our stockholders to effect a reverse stock split. If we do not cure the deficiency during the additional compliance period and regain compliance with the Bid Price Requirement, Nasdaq will provide written notice that our common stock will be subject to delisting. In the event of such notification, we may appeal Nasdaq’s delisting determination. However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by Nasdaq, such appeal would be successful. As a result, there can be no assurance that we will be able to continue the listing of our Class A common stock on Nasdaq.

Current wording

The initial period during which we were required to regain compliance with the Bid Price Requirement expired on July 31, 2024. Because we did not regain compliance with the requirement during the initial period, we transferred the listing of our Class A common stock to the Nasdaq Capital Market, in order to secure an additional 180 calendar day compliance period ending on January 27, 2025. As a condition of securing such additional compliance period, we informed Nasdaq that we intend to regain compliance with the Bid Price Requirement during the second compliance period, which may include the implementation of a reverse stock split if necessary. We intend to monitor the closing bid price of our Class A common stock and take such reasonable measures to regain compliance with the Bid Price Requirement. However, there can be no assurance that we will be able to regain compliance with the Bid Price Requirement even during the second compliance period, nor can there be any assurance that we will receive the necessary approvals from our stockholders to effect a reverse stock split. If we do not cure the deficiency during the additional compliance period and regain compliance with the Bid Price Requirement, Nasdaq will provide written notice that our common stock will be subject to delisting. In the event of such notification, we may appeal Nasdaq’s delisting determination. However, there can be no assurance that, if we receive a delisting notice and appeal the delisting determination by Nasdaq, such appeal would be successful. As a result, there can be no assurance that we will be able to continue the listing of our Class A common stock on Nasdaq.

Previous wording

Our revenues vary from quarter to quarter as a result of factors such as our customers’ budgetary cycles and extended summer vacation periods that can impact our ability to deliver products and provide onsite services to our customers during those periods. We expect this volatility to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics.

Current wording

Our revenues vary from quarter to quarter as a result of factors such as our customers’ budgetary cycles and extended summer vacation periods that can impact our ability to deliver products and provide onsite services to our customers during those periods. We expect this variability to continue for the foreseeable future, which may cause fluctuations in our operating results and financial metrics.