RAPID MICRO BIOSYSTEMS, INC.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated condensed financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2024, included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025 (the “2024 Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated condensed financial statements and the related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited Consolidated Financial Statements and related notes thereto for the year ended December 31, 2024, included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 28, 2025 (the “2024 Form 10-K”). Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Previous wording

Since our inception, we have devoted a majority of our resources to designing, developing, and building our proprietary Growth Direct platform and associated products, launching our Growth Direct platform commercially, expanding our sales and marketing infrastructure to grow our sales, building global customer service and support teams to deliver our value-added services, investing in robust manufacturing and supply chain operations to serve our customers globally, and providing general and administrative support for these operations. Prior to our IPO, we funded our operations primarily with proceeds from sales of preferred stock, borrowings under loan agreements and product and service sales, as well as our cost-reimbursement contract with the U.S. Department of Health and Human Services Biomedical Advanced Research & Development Authority ("BARDA").

Current wording

Since our inception, we have devoted a majority of our resources to designing, developing, and building our proprietary Growth Direct platform and associated products, launching our Growth Direct platform commercially, expanding our sales and marketing infrastructure to grow our sales, building global customer service and support teams to deliver our value-added services, investing in robust manufacturing and supply chain operations to serve our customers globally, and providing general and administrative support for these operations. Prior to our initial public offering ("IPO"), we funded our operations primarily with proceeds from sales of preferred stock, borrowings under loan agreements and product and service sales, as well as our cost-reimbursement contract with the U.S. Department of Health and Human Services Biomedical Advanced Research & Development Authority.

Previous wording

Since our inception, we have incurred net losses in each year. We generated revenue of $7.3 million and $6.6 million for the three months ended June 30, 2025 and 2024, respectively, and incurred net losses of $11.9 million and $12.6 million for those same periods, respectively. As of June 30, 2025, we had an accumulated deficit of $498.4 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 $7.8 million and $7.6 million for the three months ended September 30, 2025 and 2024, respectively, and incurred net losses of $11.5 million and $11.3 million for those same periods, respectively. As of September 30, 2025, we had an accumulated deficit of $509.9 million. We expect to continue to incur net losses in connection with our ongoing activities, including:

Previous wording

We believe that our cash, cash equivalents and investments as of June 30, 2025, together with our initial drawdown of $20.0 million under the LSA (as defined below), enable us to fund our operating expenses and capital expenditure requirements for at least twelve months following the issuance date of the unaudited interim condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for the quarter ended June 30, 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

Current wording

We believe that our cash, cash equivalents and investments as of September 30, 2025 enable us to fund our operating expenses and capital expenditure requirements for at least 12 months following the issuance date of the unaudited interim condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2025. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “—Liquidity and Capital Resources.”

Previous wording

In February 2025, the Company entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”). Pursuant to the Distribution Agreement, the Company granted MilliporeSigma a global, co-exclusive right to sell our products, initially consisting of our Growth Direct systems and related consumables, into all fields related to industrial quality control applications in the pharmaceutical, medical device, personal care, cosmetics and food and beverage spaces in all regions of the world. During the term of the Distribution Agreement, MilliporeSigma will receive tier-based transfer pricing on such products. The Company will continue to directly market, sell, manufacture and distribute our products and provide all services to customers, including in respect of system installation, validation, maintenance and support.

Current wording

In February 2025, we entered into a Distribution and Collaboration Agreement (the “Distribution Agreement”) with Millipore S.A.S., a subsidiary of the Life Science business of Merck KGaA, Darmstadt, Germany, which operates in the U.S. as MilliporeSigma ("MilliporeSigma”). Pursuant to the Distribution Agreement, we granted MilliporeSigma a global, co-exclusive right to sell our products, initially consisting of our Growth Direct systems and related consumables, into all fields related to industrial quality control applications in the pharmaceutical, medical device, personal care, cosmetics and food and beverage spaces in all regions of the world. During the term of the Distribution Agreement, MilliporeSigma will receive tier-based transfer pricing on such products. We will continue to directly market, sell, manufacture and distribute our products and provide all services to customers, including in respect of system installation, validation, maintenance and support.

Previous wording

Over the first two years of the Distribution Agreement, MilliporeSigma has committed to purchase a minimum number of Growth Direct systems. Thereafter, the Company and MilliporeSigma will evaluate and mutually agree on additional purchase commitments, if any. Pursuant to the Distribution Agreement, the Company is permitted to continue to sell its products independently and through its existing distributors, but the Company may not grant the right to sell the products covered by the Distribution Agreement to other third parties so long as a purchase commitment by MilliporeSigma is in place. The initial term of the Distribution Agreement is five years, unless earlier terminated by the Company or MilliporeSigma in accordance with its terms.

Current wording

Over the first two years of the Distribution Agreement, MilliporeSigma has committed to purchase a minimum number of Growth Direct systems. Thereafter, our company and MilliporeSigma will evaluate and mutually agree on additional purchase commitments, if any. Pursuant to the Distribution Agreement, we are permitted to continue to sell its products independently and through its existing distributors, but we may not grant the right to sell the products covered by the Distribution Agreement to other third parties so long as a purchase commitment by MilliporeSigma is in place. The initial term of the Distribution Agreement is five years, unless earlier terminated by our company or MilliporeSigma in accordance with its terms.

Previous wording

The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery. In that regard, within six months, the parties intend to negotiate in good faith towards a supply agreement, pursuant to which the parties will explore cost-saving measures within the Company's supply chain focused on accelerating gross margin improvement, particularly with respect to consumables. The focus of such supply agreement may include raw materials and components as well as manufacturing and supply chain services. The parties intend to share in any cost savings achieved in the supply of the products through this supply agreement. Additionally, within one year, the parties intend to negotiate in good faith towards a services agreement to permit the Company and MilliporeSigma to provide certain services to each other’s customers. The parties also intend to explore additional opportunities for collaboration, such as joint development efforts for the enhancement of our products or introducing new products to be covered by the distribution arrangement. At this time, an estimate of the impact of the Distribution Agreement on our financial statements cannot be made. However, we do expect to make incremental investments in our manufacturing and service organizations over time to support increased sales volumes related to the Distribution Agreement.

Current wording

The Distribution Agreement also contemplates future collaboration by the parties, including with respect to sourcing materials and service delivery. In that regard, the parties are negotiating towards a supply agreement, pursuant to which the parties will explore cost-saving measures within our supply chain focused on accelerating gross margin improvement, particularly with respect to consumables. The focus of such supply agreement may include raw materials and components as well as manufacturing and supply chain services. The parties intend to share in any cost savings achieved in the supply of the products through this supply agreement. Additionally, within one year, the parties intend to negotiate in good faith towards a services agreement to permit our company and MilliporeSigma to provide certain services to each other’s customers. The parties also intend to explore additional opportunities for collaboration, such as joint development efforts for the enhancement of our products or introducing new products to be covered by the distribution arrangement. At this time, an estimate of the impact of the Distribution Agreement on our financial statements cannot be made. However, we do expect to make incremental investments in our manufacturing and service organizations over time to support increased sales volumes related to the Distribution Agreement.

Previous wording

On August 8, 2025 (the “Closing Date”), the Company entered into a Loan and Security Agreement (the “LSA”) with the lenders party thereto (the “Lenders”) and Trinity Capital Inc., as administrative agent and collateral agent (the “Agent”).

Current wording

On August 8, 2025 (the “Closing Date”), we entered into a Loan and Security Agreement (the “LSA”) with the lenders party thereto (the “Lenders”) and Trinity Capital Inc., as administrative agent and collateral agent (the “Agent”).

Previous wording

Under the LSA, the Lenders agreed to extend debt capital to the Company, in the form of a term loan, in tranches totaling an aggregate principal amount of up to $45.0 million available as follows: (a) at closing, an aggregate principal amount of $20.0 million (the “First Tranche”), (b) until January 31, 2027, subject to the achievement of certain commercial and operational milestones, an aggregate principal amount of $10.0 million (the “Second Tranche”), (c) until July 31, 2027, subject to the achievement of certain commercial and operational milestones, an aggregate principal amount of $10.0 million (the “Third Tranche”), and (d) an aggregate principal amount of $5.0 million in Lenders’ sole discretion (the “Fourth Tranche” and collectively with the First Tranche, the Second Tranche and the Third Tranche, the “Tranches”). The obligations of the Lenders to extend such debt capital are subject to certain conditions precedent described in the LSA. The Company is required to pay a commitment fee of 1.0% of the amount drawn, plus related documentation and funding fees, in connection with each drawdown. On the Closing Date, the Company drew down the First Tranche. The Company’s obligations under the facility may be guaranteed by certain subsidiaries and are secured by a first priority security interest in substantially all assets of the Company and any subsidiaries providing a guarantee.

Current wording

Under the LSA, the Lenders agreed to extend debt capital to us, in the form of a term loan, in tranches totaling an aggregate principal amount of up to $45.0 million available as follows: (a) at closing, an aggregate principal amount of $20.0 million (the “First Tranche”), (b) until January 31, 2027, subject to the achievement of certain commercial and operational milestones, an aggregate principal amount of $10.0 million (the “Second Tranche”), (c) until July 31, 2027, subject to the achievement of certain commercial and operational milestones, an aggregate principal amount of $10.0 million (the “Third Tranche”), and (d) an aggregate principal amount of $5.0 million in Lenders’ sole discretion (the “Fourth Tranche” and collectively with the First Tranche, the Second Tranche and the Third Tranche, the “Tranches”). The obligations of the Lenders to extend such debt capital are subject to certain conditions precedent described in the LSA. We are required to pay a commitment fee of 1.0% of the amount drawn, plus related documentation and funding fees, in connection with each drawdown. On the Closing Date, we drew down the First Tranche. Our obligations under the facility may be guaranteed by certain subsidiaries and are secured by a first priority security interest in substantially all assets of ours and any subsidiaries providing a guarantee.

Previous wording

In connection with the drawdown of any Tranche, the Company is required to issue to the Lenders a warrant to purchase shares of the Company’s Class A common stock (the “Common Stock”). The exercise price (“Exercise Price”) for each warrant shall be equal to the lower of (a) the volume-weighted average price of the Common Stock over the ten days prior to the drawdown and (b) the closing price of the Common Stock on the day immediately prior to the drawdown. The number of shares of Common Stock for which each warrant is exercisable is equal to 3.0% of the drawn down amount of the applicable Tranche, divided by the Exercise Price. Each warrant shall have a term of ten years from the date of issuance and shall permit cashless exercise, all in accordance with its terms. In connection with the drawdown of the First Tranche, the Company issued warrants to purchase up to an aggregate of 179,104 shares of Common Stock, with an Exercise Price of $3.35 per share.

Current wording

In connection with the drawdown of any Tranche, we are required to issue to the Lenders a warrant to purchase shares of our Class A common stock (the “Common Stock”). The exercise price (“Exercise Price”) for each warrant shall be equal to the lower of (a) the volume-weighted average price of the Common Stock over the ten days prior to the drawdown and (b) the closing price of the Common Stock on the day immediately prior to the drawdown. The number of shares of Common Stock for which each warrant is exercisable is equal to 3.0% of the drawn down amount of the applicable Tranche, divided by the Exercise Price. Each warrant shall have a term of ten years from the date of issuance and shall permit cashless exercise, all in accordance with its terms. In connection with the drawdown of the First Tranche, we issued warrants to purchase up to an aggregate of 179,104 shares of Common Stock, with an Exercise Price of $3.35 per share.

Previous wording

All Tranches will mature on September 1, 2030 (the “Maturity Date”), unless earlier accelerated under the terms of the LSA. At maturity, the Company is required to repay the then-outstanding principal amount, together with any accrued and unpaid interest thereon and any other obligations outstanding under the LSA. In addition, at maturity or early termination of the LSA, including acceleration of the loans, the Company is required to pay the Lenders an additional 4.0% of the amounts drawn down by the Company under the LSA (the "End of Term Payment").

Current wording

All Tranches will mature on September 1, 2030 (the “Maturity Date”), unless earlier accelerated under the terms of the LSA. At maturity, we are required to repay the then-outstanding principal amount, together with any accrued and unpaid interest thereon and any other obligations outstanding under the LSA. In addition, at maturity or early termination of the LSA, including acceleration of the loans, we are required to pay the Lenders an additional 4.0% of the amounts drawn down by us under the LSA (the "End of Term Payment").

Previous wording

Interest accrues on the Tranches that the Company has drawn down at a floating rate per annum, calculated based on a 360-day year, equal to the greater of (a) the sum of (i) The Wall Street Journal Prime Rate and (ii) 4.0%, and (b) 11.0%. The initial interest rate is 11.5% per annum. For the first 36 months after the Closing Date (the “Interest Only Period”), the Company is required to make only monthly payments of interest in arrears. Following such period, and until the Maturity Date (the “Amortization Period”), the Company is required to make monthly payments of principal and interest in an amount that fully amortizes the outstanding principal balance due over the duration of the Amortization Period. If the Second Tranche is fully drawn down by the Company, the Interest Only Period will be extended by six months. If the Third Tranche is fully drawn down by the Company, the Interest Only Period will be extended by a further six months. In the event of such extensions of the Interest Only Period, the duration of the Amortization Period will decrease by the same amount. In any event, the total term of all Tranches shall not exceed 60 months.

Current wording

Interest accrues on the Tranches that we have drawn down at a floating rate per annum, calculated based on a 360-day year, equal to the greater of (a) the sum of (i) The Wall Street Journal Prime Rate and (ii) 4.0%, and (b) 11.0%. The initial interest rate is 11.5% per annum. For the first 36 months after the Closing Date (the “Interest Only Period”), we are required to make only monthly payments of interest in arrears. Following such period, and until the Maturity Date (the “Amortization Period”), we are required to make monthly payments of principal and interest in an amount that fully amortizes the outstanding principal balance due over the duration of the Amortization Period. If the Second Tranche is fully drawn down by us, the Interest Only Period will be extended by six months. If the Third Tranche is fully drawn down by us, the Interest Only Period will be extended by a further six months. In the event of such extensions of the Interest Only Period, the duration of the Amortization Period will decrease by the same amount. In any event, the total term of all Tranches shall not exceed 60 months.

Previous wording

The Company may voluntarily prepay the outstanding loan balance at any time, in whole or in part, subject to the payment of prepayment premiums. If prepayment occurs on or before the first anniversary of the Closing Date, the premium shall equal 3.0% of the principal being repaid. Thereafter, if prepayment occurs on or before the second anniversary of the Closing Date, the premium shall equal 2.0% of the principal being repaid. Thereafter, the premium shall equal 1.0% of the principal being repaid. For the avoidance of doubt, such prepayment premiums are in addition to the End of Term Payment. Additionally, the Company is required to prepay the outstanding loan balance (plus accrued and unpaid interest thereon, any prepayment premiums and any other obligations that are due and payable) upon a sale, divestment or transfer of all or substantially all assets of the Company and its subsidiaries, taken as a whole, or of a material business line of the Company, the acquisition by a person or group of a sufficient number of the Company’s equity securities to elect a majority of the members of the Company’s board of directors, or the acceleration of the loans by the Agent on behalf of the Lenders following an event of default under the LSA.

Current wording

We may voluntarily prepay the outstanding loan balance at any time, in whole or in part, subject to the payment of prepayment premiums. If prepayment occurs on or before the first anniversary of the Closing Date, the premium shall equal 3.0% of the principal being repaid. Thereafter, if prepayment occurs on or before the second anniversary of the Closing Date, the premium shall equal 2.0% of the principal being repaid. Thereafter, the premium shall equal 1.0% of the principal being repaid. For the avoidance of doubt, such prepayment premiums are in addition to the End of Term Payment. Additionally, we are required to prepay the outstanding loan balance (plus accrued and unpaid interest thereon, any prepayment premiums and any other obligations that are due and payable) upon a sale, divestment or transfer of all or substantially all assets of our company's, taken as a whole, or of a material business line of our company's, the acquisition by a person or group of a sufficient number of our equity securities to elect a majority of the members of our board of directors, or the acceleration of the loans by the Agent on behalf of the Lenders following an event of default under the LSA.

Previous wording

The LSA contains customary affirmative and negative covenants, including with respect to notice obligations, limitations on new indebtedness, liens, investments and transactions with affiliates of the Company, restrictions on the payment of dividends, maintenance of collateral and accounts and maintenance of insurance. The LSA does not contain any covenants to maintain a specified level of revenues, profitability, cash flow or cash resources.

Current wording

The LSA contains customary affirmative and negative covenants, including with respect to notice obligations, limitations on new indebtedness, liens, investments and transactions with affiliates of ours, restrictions on the payment of dividends, maintenance of collateral and accounts and maintenance of insurance. The LSA does not contain any covenants to maintain a specified level of revenues, profitability, cash flow or cash resources.

Previous wording

The LSA contains customary representations and warranties of the Company, as well as customary events of default, the occurrence of which may accelerate the obligations of the Company, increase the interest rate by a specified default rate and impose other consequences described in the LSA. Such events include among others, failure to make payments when due, breach of covenants, insolvency, a cross-default to other indebtedness, a judgment event of default, the occurrence of a material adverse change to the Company, and delisting of the Company’s securities from Nasdaq.

Current wording

The LSA contains our customary representations and warranties, as well as customary events of default, the occurrence of which may accelerate our obligations, increase the interest rate by a specified default rate and impose other consequences described in the LSA. Such events include among others, failure to make payments when due, breach of covenants, insolvency, a cross-default to other indebtedness, a judgment event of default, the occurrence of a material adverse change to our operations, and delisting of our securities from the Nasdaq Stock Market LLC.

Previous wording

The current inflationary and interest rate environment could have a negative impact on our results of operations, cash flows and overall financial condition. The widespread use of tariffs may have an inflationary effect on the prices of goods and services, including those that we utilize in the production of our products and delivery of our services. As a result, due to tariffs and other macroeconomic factors, we may experience inflationary pressures on significant cost categories including labor, materials and freight. We continue to monitor the impact of inflation on these costs in order to minimize its effects through productivity improvements and cost reductions. There can be no assurance, however, that our operating results will not be affected by inflation in the future. In addition, inflation and increased interest rates (or the impact on the broader macroeconomic environment resulting from the foregoing) may decrease demand for our Growth Direct systems, as our customers may face economic uncertainty as a result. A decrease in demand for our products or increases in our costs, as well as any steps we may take to mitigate changes, could impact our overall growth. However, the related financial impact cannot be reasonably estimated at this time.

Current wording

The current inflationary and interest rate environment could have a negative impact on our results of operations, cash flows and overall financial condition. The widespread use of tariffs may have an inflationary effect on the prices of goods and services, including those that we utilize in the production of our products and delivery of our services. As a result, due to tariffs and other macroeconomic factors, we have and may continue to experience inflationary pressures on significant cost categories including labor, materials and freight. We continue to monitor the impact of inflation on these costs in order to minimize its effects through productivity improvements and cost reductions. There can be no assurance, however, that our operating results will not be affected by inflation in the future. In addition, inflation and increased interest rates (or the impact on the broader macroeconomic environment resulting from the foregoing) may decrease demand for our Growth Direct systems, as our customers may face economic uncertainty as a result. A decrease in demand for our products or increases in our costs, as well as any steps we may take to mitigate changes, could impact our overall growth. However, the related financial impact cannot be reasonably estimated at this time.

Previous wording

Our revenue is derived from sales of our Growth Direct systems, our LIMS connection and RMBNucleus Mold Alarm software, proprietary consumables, and services. Growth Direct system revenue involves a capital selling process and tends to be somewhat concentrated within a relatively small (but varied) group of customers each year, so it is subject to variability from quarter to quarter.

Current wording

Our revenue is derived from sales of our Growth Direct systems, our LIMS connection and Mold Alarm software, proprietary consumables, and services. Growth Direct system revenue involves a capital selling process and tends to be somewhat concentrated within a relatively small (but varied) group of customers each year, so it is subject to variability from quarter to quarter.

Previous wording

The majority of our customers are large, global pharmaceutical manufacturers and CDMOs. In order to meet the expectations of our customers, we have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after-sales service. Since the third quarter of 2024, when we achieved positive gross margins for the first time in our company's history, we have maintained positive gross margins each quarter. Maintaining these positive gross margins in future periods will depend on our ability to execute on our business objectives, including generating sufficient revenues to cover the costs of producing and delivering our products and services. In order to further grow our gross margins, we are actively targeting numerous areas including:

Current wording

The majority of our customers are large, global pharmaceutical manufacturers and contract development and manufacturing organizations. In order to meet the expectations of our customers, we have made significant investments to build infrastructure and develop capabilities in areas such as procurement, manufacturing, distribution, quality and after-sales service. Since the third quarter of 2024, when we achieved positive gross margins for the first time in our company's history, we have maintained positive gross margins each quarter. Maintaining these positive gross margins in future periods will depend on our ability to execute on our business objectives, including generating sufficient revenues to cover the costs of producing and delivering our products and services. In order to further grow our gross margins, we are actively targeting numerous areas including:

Previous wording

•Reducing instrument and consumable product costs (materials and labor) through activities including strategic sourcing and product redesign;

Current wording

•Reducing system and consumable product costs (materials and labor) through activities including strategic sourcing and product redesign;

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 60.9% and 58.1% of our total revenue for the three months ended June 30, 2025 and 2024, respectively. Recurring revenue was 58.0% and 62.0% for the six months ended June 30, 2025 and 2024, 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 61.7% and 48.3% of our total revenue for the three months ended September 30, 2025 and 2024, respectively. Recurring revenue was 59.3% and 56.8% for the nine months ended September 30, 2025 and 2024, 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

We generate revenue from sales of our Growth Direct system (including our LIMS connection and RMBNucleus Mold Alarm software), consumables, validation services, service contracts, and field service. We have historically primarily sold our products and services through direct sales representatives. Our sales arrangements are noncancellable and nonrefundable after ownership passes to the customer.

Current wording

We generate revenue from sales of our Growth Direct system (including our LIMS connection and Mold Alarm software), consumables, validation services, service contracts, and field service. We have historically primarily sold our products and services through direct sales representatives. Our sales arrangements are noncancellable and nonrefundable after ownership passes to the customer.

Previous 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 June 30, 2025, we had placed 169 Growth Direct systems with approximately 50 customers globally, including approximately 70% of the top twenty pharmaceutical companies as measured by revenue, and the manufacturers of 16% of globally approved cell and gene therapies, including manufacturers of 86% 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, 2025, we had placed 174 Growth Direct systems with approximately 50 customers globally, including approximately 75% of the top 20 pharmaceutical companies as measured by revenue, and the manufacturers of 16% of globally approved cell and gene therapies, including manufacturers of 86% of approved gene-modified autologous CAR-T cell therapies.

Previous wording

We expect our Growth Direct system revenue to continue to grow over time as we increase system placements into our existing customers and markets and expand into new customers, markets and products.

Current wording

We expect our Growth Direct system revenue to continue to grow over time as we increase system placements into our existing customers and markets and expand into new customers, markets and products. We recently announced the receipt of a large, multi-system customer order that we expect to contribute to our fourth quarter and full year 2025 results. If fulfilled in the contemplated timeframe, these system sales would be expected to contribute meaningfully to Growth Direct system revenue and placements in the fourth quarter. However, there can be no assurance that we will achieve placement of the ordered systems on the contemplated timing, if at all.

Previous wording

Our RMBNucleus Mold Alarm software is a recurring or non-recurring product revenue stream depending on the type of software license purchased. This software allows investigations to begin within one day with automated alerts triggered by detection of molds during the early stages of incubation.

Current wording

Our Mold Alarm software is a recurring or non-recurring product revenue stream depending on the type of software license purchased. Mold Alarm is an optional software module that offers additional functionality by allowing the Growth Direct to distinguish between mold and non-mold growth. Early detection of molds, in as little as 24 hours, allows facilities to begin remediation efforts earlier and return to routine production sooner. This software allows investigations to begin within one day with automated alerts triggered by detection of molds during the early stages of incubation.

Previous wording

We offer our customers validation services (including related documentation) that enable them to replace their existing manual testing method and utilize their Growth Direct systems in compliance with relevant MQC regulations. We also offer validation services in connection with our LIMS connection software and RMBNucleus Mold Alarm software. Validation services are recognized as revenue over time as these services are provided to the customer.

Current wording

We offer our customers validation services (including related documentation) that enable them to replace their existing manual testing method and utilize their Growth Direct systems in compliance with relevant MQC regulations. We also offer validation services in connection with our LIMS connection software and Mold Alarm software. Validation services are recognized as revenue over time as these services are provided to the customer.

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 implemented in August 2024 certain actions to reduce costs and expenses across the business (collectively, the "Operational Efficiency Program"). As part of our Operational Efficiency Program, we implemented actions to reduce employee-related expenses and certain other non-employee related costs. The reduced headcount and lower labor costs reflected in costs of revenue and the operating expense categories below was the result of the Operational Efficiency Program announced in August 2024. Our headcount at the end of the second quarter of 2025 was lower than our headcount at the end of the second quarter of 2024.

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 in August 2024 certain actions to reduce costs and expenses across the business (collectively, the "Operational Efficiency Program"). As part of our Operational Efficiency Program, we implemented actions to reduce employee-related expenses and certain other non-employee related costs. The reduced headcount and lower labor costs reflected in costs of revenue and the operating expense categories below was the result of the Operational Efficiency Program announced in August 2024. Our headcount at the end of the third quarter of 2025 was lower than our headcount at the end of the third quarter of 2024.

Previous wording

Interest income, net is comprised primarily of interest income from investments.

Current wording

Interest income is comprised primarily of interest income from cash equivalents and investments.

Previous wording

We generated significant taxable losses during each of the three and six months ended June 30, 2025 and 2024 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, 2025 and 2024 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

Service revenue increased by $0.4 million, or 18.2%. The increase in service revenue was primarily due to higher revenue related to validations as well as 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 $0.3 million, or 11.7%. The increase in service revenue was primarily due to higher revenue related to validations as well as 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 $0.4 million, or 8.1%. The increase was driven by higher consumables sales volume (net of the impact of one fewer system placement) as well as higher inventory reserves in the current year period.

Current wording

Cost of product revenue increased by $0.2 million, or 4.7%. The increase was driven by higher consumables sales volume, net of the impact of two fewer system placements.

Previous wording

Cost of service revenue decreased by $0.2 million, or 11.5%. The decrease was primarily attributable to lower service headcount and headcount-related costs.

Current wording

Cost of service revenue decreased by $0.1 million, or 5.3%. The decrease was primarily attributable to lower service headcount and related costs due in part to productivity improvements.

Previous wording

Sales and marketing expenses decreased by $0.5 million, or 14.1%. This decrease was primarily driven by lower headcount-related and third-party consulting costs.

Current wording

Sales and marketing expenses decreased by $0.5 million, or 14.2%. This decrease was primarily driven by lower headcount-related and third-party consulting costs.

Previous wording

Other expense, which is comprised of miscellaneous expenses unrelated to our core business, was flat for each of the three months ended June 30, 2025 and 2024.

Current wording

Other expense, net, which is comprised of miscellaneous expenses unrelated to our core business, was flat for each of the three months ended September 30, 2025 and 2024.

Previous wording

The following table summarizes our results of operations for the six months ended June 30, 2025 and 2024:

Current wording

The following table summarizes our results of operations for the nine months ended September 30, 2025 and 2024:

Previous wording

Product revenue increased by $0.7 million, or 7.9%. The increase was driven primarily by a higher volume of consumables as well as an increase in the average selling price of our systems. Higher system-related revenue, particularly from software sales, also contributed to the increase. The increase from these factors was partially offset by one fewer system placement during the six months ended June 30, 2025 compared to the same period in 2024.

Current wording

Product revenue increased by $0.6 million, or 4.5%. The increase was driven primarily by a higher volume of consumables as well as an increase in the average selling price of our systems. Higher system-related revenue, particularly from software sales, also contributed to the increase. The increase from these factors was partially offset by three fewer system placements during the nine months ended September 30, 2025 compared to the same period in 2024.

Previous wording

Service revenue increased by $1.6 million, or 39.8%. The increase in service revenue was primarily driven by increases in revenue related to validations and installations (including higher one-time services unrelated to new system sales) 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 $1.9 million, or 29.4%. The increase in service revenue was primarily driven by increases in revenue related to validations and installations (including higher one-time services unrelated to new system sales) 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

Cost of product revenue increased $0.3 million, or 2.5%. The increase was driven by higher consumables sales volume (net of the impact of one fewer system placement) as well as higher inventory reserves in the current year period

Current wording

Cost of product revenue increased $0.5 million, or 3.3%. The increase was driven by higher consumables sales volume (net of the impact of three fewer system placements) as well as higher inventory reserves in the current-year period.

Previous wording

Cost of service revenue decreased by $0.4 million, or 10.6%. This decrease was primarily attributable to lower headcount and headcount-related costs due in part to productivity improvements.

Current wording

Cost of service revenue decreased by $0.5 million, or 9.0%. This decrease was primarily attributable to lower headcount and related costs due in part to productivity improvements.

Previous wording

Research and development expenses decreased by $0.7 million, or 9.6%. The decrease was primarily driven by lower headcount and headcount-related costs as well as the timing of spending related to new product development activities.

Current wording

Research and development expenses decreased by $0.8 million, or 7.3%. The decrease was primarily driven by lower headcount and headcount-related costs as well as the timing of spending related to new product development activities.

Previous wording

Sales and marketing expenses decreased by $1.0 million, or 15.1%. This decrease was primarily due to lower headcount-related and third-party consulting costs.

Current wording

Sales and marketing expenses decreased by $1.5 million, or 14.8%. This decrease was primarily due to lower headcount-related and third-party consulting costs.