908 Devices Inc
For the period ended Jun 30, 2024. Filed Aug 6, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 6, 2024
MASS$10.56+4.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0001558370-24-006601
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-06.
0001558370-24-010969
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 140 previous paragraphs and 172 current paragraphs.
96 unchanged; 37 reworded; 28 added; 5 removed; 2 previous and 11 current paragraphs rearranged.
Tables are not compared: 33 previous and 39 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (28)
Current report
On April 29, 2024, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with CAM2 Technologies, LLC (d/b/a RedWave Technology) (“RedWave”), CAM3 HoldCo, LLC, a Connecticut limited liability company (“Seller Entity”), each of the holders of outstanding equity interests of Seller Entity (the “Beneficial Sellers”), and the other parties thereto, pursuant to which the Company purchased all of the outstanding equity interests of RedWave, and the transaction closed on the same day. The purchase price included an initial payment of $45.0 million in cash and 1,497,171 unregistered shares of the Company’s common stock, which reflects closing adjustments relating to working capital, cash and debt adjustments. The cash consideration is subject to additional working capital, cash, debt, and transaction expense adjustments. RedWave is a leading provider of portable FTIR spectroscopic analyzers for rapid chemical identification of bulk materials. FTIR (Fourier Transform Infrared), an optical spectroscopy technology, is highly regarded for its specific substance identification abilities across a broad range of bulk materials. This acquisition provides the Company with an expanded portfolio of handheld chemical analysis devices for forensic workflows that quickly detect and identify unknown solids, liquids, vapors, and aerosols at the point of need. In addition, RedWave bolsters the Company’s desktop portfolio with a line of accessories for pharma Process Analytical Technology (PAT) and industrial QC applications.
Current report
Service gross profit increased by 105% and gross profit margin increased by 12% for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023, primarily due to an increase in service volume related to training and extended service contracts, leveraging our investments in personnel and service infrastructure.
Current report
Contract cost of revenue increased by 42% for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease was primarily due to the level of labor and materials incurred related to our new contract revenue with a commercial entity, compared to the lower costs incurred in our contract during the three months ended June 30, 2023.
Current report
Our research and development expenses were $6.4 million for the three months ended June 30, 2024, an increase of $0.9 million from research and development expenses of $5.5 million for the three months ended June 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $0.3 million increase in personnel and related costs, a $0.2 million increase in stock-based compensation, a $0.1 million increase in project spend related to materials and consulting, and a $0.2 million increase in depreciation and occupancy related expenses, mainly related to our facility in North Carolina.
Current report
Our selling, general and administrative expenses were $14.6 million for the three months ended June 30, 2024, an increase of $3.4 million from selling, general and administrative expenses of $11.2 million for the three months ended June 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $2.1 million increase in investment bank, legal and accounting fees primarily related to our acquisition of RedWave, $0.6 million increase in salaries and related costs, a $0.3 million increase in stock-based compensation, a $0.2 million increase in travel and related costs and a $0.2 million increase in marketing and related costs.
Current report
Interest income decreased by $0.6 million for the three months ended June 30, 2024 from $1.7 million for the three months ended June 30, 2023. The decrease was due to the lower cash, cash equivalent and marketable securities balance, primarily due to the average balance during the three months ended June 30, 2024, compared to the three months ended June 30, 2023, mainly due to the use of cash with the RedWave acquisition.
Current report
Comparison of the six months ended June 30, 2024 and 2023
Current report
Product
Current report
Product revenue increased by $0.9 million, or 5%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily related to $2.6 million in product revenue from our recently acquired FTIR products and $1.5 million related to component shipments under our subcontract agreement with a commercial entity that holds
Current report
a U.S. government prime contract. These increases were offset in part by a $2.1 million decrease in MX908 related handheld product revenue, mainly due to fewer device placements, as well as a $1.1 million decrease in desktop product revenue, mainly due to 13 fewer desktop device placements, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.
Current report
Service
Current report
Service revenue increased by $1.8 million, or 40%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase was primarily related to an increase in handheld service revenues related to extended service contracts for MX908 devices and to lesser extent, our recently acquired FTIR products, as well as an increase in handheld training revenue and handheld service upgrades.
Current report
Service cost of revenue increased by $0.9 million, or 32%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The increase in service cost of revenue was primarily related to a $0.5 million increase in material costs and contract trainers used to support the higher handheld training revenue, but also due to a $0.4 million increase in personnel and other operating costs, partly related to our RedWave acquisition.
Current report
Service gross profit increased by 51% , and gross profit margin increased by three percentage points for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, primarily due to an increase in in service volume related to training and extended service contracts, leveraging our investments in personal and service infrastructure.
Current report
Contract
Current report
Contract revenue decreased by $0.3 million, or 73%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. During the six months ended June 30, 2024 we recognized contract revenue with a new commercial
Current report
Contract cost of revenue decreased by 25% for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease was primarily due to the lower contract revenue and related costs to perform under the contract during the six months ended June 30, 2024.
Current report
Contract gross profit decreased by $0.2 million for the six months ended June 30, 2024 as compared to the six months ended June 30, 2023, primarily due to the reduced level of funding and the lower gross profit with our new contract compared to our prior arrangement during the six months ended June 30, 2023.
Current report
Research and development
Current report
Selling, general and administrative expenses
Current report
Other Income
Current report
Interest income
Current report
Interest income increased by $0.2 million for the six months ended June 30, 2024 from $2.7 million for the six months ended June 30, 2023. The decrease was due to the lower cash, cash equivalent and marketable securities balance, primarily due to the average balance during the six months ended June 30, 2024, compared to the six months ended June 30, 2023, partly due
Current report
to the use of cash with the RedWave acquisition. This decrease was offset in part by higher interest rates on our interest bearing accounts during the six months ended June 30, 2024.
Current report
Other expense, net
Current report
Benefit for Income Taxes
Current report
Benefit for income taxes was $0.1 million for the six months ended June 30, 2024, relatively unchanged from the six months ended June 30, 2023, and resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of 908 Devices GmbH.
Removed paragraphs (5)
Previous report
Operating Expenses
Previous report
Service gross profit decreased by 1% , and gross profit margin decreased by seven percentage points for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, primarily due to an increase in contract trainers versus internal resources to complete handheld training obligations.
Previous report
Contract cost of revenue decreased by 100% for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The decrease was primarily due to there being no contract revenue or contract cost of revenue during the three months ended March 31, 2024.
Previous report
Operating Expenses
Previous report
Interest income increased by $0.7 million for the three months ended March 31, 2024 from $1.0 million for the three months ended March 31, 2023. The increase was due to higher interest rates on our interest bearing accounts.
Reworded paragraphs (37)
Previous wording
We have developed an innovative suite of purpose-built handheld and desktop devices for point-of-need chemical and biochemical analysis. Leveraging our proprietary mass spectrometry, or Mass Spec, microfluidics, and analytics and machine learning technologies, we make devices that are significantly smaller and more accessible than conventional laboratory instruments. Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in life sciences research, bioprocessing, pharma/biopharma, forensics and adjacent markets.
Current wording
We have developed an innovative suite of purpose-built handheld and desktop devices for point-of-need chemical analysis. Leveraging complementary analytical technologies including our proprietary mass spectrometry, or Mass Spec, microfluidics, and analytics and machine learning technologies, we make devices that are significantly smaller and more accessible than conventional laboratory instruments. Our devices are used at the point-of-need to interrogate unknown and invisible materials and provide quick, actionable answers to directly address some of the most critical problems in forensics, bioprocessing, pharma/biopharma, life science research and adjacent markets.
Previous wording
Front-line workers rely upon our handheld devices to combat the opioid crisis and detect counterfeit pharmaceuticals and illicit materials in the air or on surfaces at levels 1,000 times below their lethal dose. Our desktop devices are accelerating development and production of biotherapeutics by identifying and quantifying extracellular species in bioprocessing critical to cell health and productivity. They sit alongside bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products. We believe the insights and answers our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users. The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the MX908, Rebel, ZipChip Interface, Maverick, Maven and related sampling devices.
Current wording
Front-line workers rely upon our handheld devices to combat the opioid crisis and detect counterfeit pharmaceuticals and illicit materials in the air or on surfaces at levels 1,000 times below their lethal dose. First responders also utilize our handheld devices to detect and identify thousands of hazardous bulk materials. Our desktop devices are accelerating development and production of biotherapeutics by identifying and quantifying extracellular species in bioprocessing critical to cell health and productivity. They sit alongside or are directly connected to bioreactors and fermenters producing drug candidates, functional proteins, cell and gene therapies, and synthetic biology derived products. We believe the insights and answers our devices provide accelerate workflows, reduce costs, and offer transformational opportunities for our end users. The term “products” as used in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” refers to the MX908, ThreatID, ProtectIR, XplorIR, Rebel, ZipChip Interface, Maverick, Maven and related sampling devices.
Previous wording
Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $10.0 million and $9.5 million for the three months ended March 31, 2024 and 2023, respectively, and incurred net losses of $10.9 million and $12.5 million for those same periods. As of March 31, 2024, we had an accumulated deficit of $181.5 million. We expect to continue to incur net losses as we focus on growing commercial sales of our products in both the United
Current wording
Since our inception, we have incurred significant operating losses. Our ability to generate revenue sufficient to achieve profitability will depend on the successful further development and commercialization of our products. We generated revenue of $24.0 million and $21.6 million for the six months ended June 30, 2024 and 2023, respectively, and incurred net losses of $23.5 million and $21.9 million for those same periods. As of June 30, 2024, we had an accumulated deficit of $194.1 million. We expect to continue to incur net losses as we focus on growing sales of our products in both the United States and international markets, including expanding our sales teams as we grow, scaling our manufacturing operations, continuing
Previous wording
States and international markets, including growing our sales teams, scaling our manufacturing operations, continuing research and development efforts to develop new products and further enhance our existing products. Further, we expect to incur additional costs associated with operating as a public company. As a result, we may need additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research and development expenses.
Current wording
research and development efforts to develop new products and further enhance our existing products. Further, we expect to incur additional costs associated with operating as a public company. As a result, we may need additional funding for expenses related to our operating activities, including selling, general and administrative expenses and research and development expenses.
Previous wording
We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for life sciences research related to our Maverick, Rebel, ZipChip Interface, and Maven and related sampling devices. We regularly solicit feedback from our customers and focus our research and development efforts on enhancing our devices and enabling our customers to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our devices and consumables.
Current wording
We plan to grow our device sales in the coming years through multiple strategies including expanding our sales efforts domestically and globally and continuing to enhance the underlying technology and applications for bioprocessing and life sciences research related to our Maverick, Rebel, ZipChip Interface, and Maven and related sampling devices. We regularly solicit feedback from our customers and focus our research and development efforts on enhancing our devices and enabling our customers to use additional applications that address their needs, which we believe in turn helps to drive additional sales of our devices and consumables.
Previous wording
Our sales process varies considerably depending upon the type of customer to whom we are selling. Our handheld device orders relate to our MX908 as well as components for the Aerosol and Vapor Chemical Agent Detectors (“AVCAD”) sold to our channel partner. Historically, our handheld devices have been used by state, federal and foreign governments and governmental agencies. Our sales process with government customers is often long and involves multiple levels of approvals, testing and, in some cases, trials. Device orders from a government customer are typically large orders and can be impacted by the timing of their capital budgets. As a result, the revenue for our handheld devices can vary significantly from period-to-period and has been and may continue to be concentrated in a small number of customers in any given period.
Current wording
Our sales process varies considerably depending upon the type of customer to whom we are selling. Our handheld device orders relate to our MX908, ThreatID, ProtectIR, and XplorIR, as well as components for the Aerosol and Vapor Chemical Agent Detectors (“AVCAD”) sold to our channel partner. Historically, our handheld devices have been used by municipal, state, federal and foreign governments and governmental agencies. Our sales process with government customers is often long and involves multiple levels of approvals, testing and, in some cases, trials. Device orders from a government customer are typically large orders and can be impacted by the timing of their capital budgets. As a result, the revenue for our handheld devices can vary significantly from period-to-period and has been and may continue to be concentrated in a small number of customers in any given period.
Previous wording
We regularly assess trends relating to recurring revenue which includes consumables, accessories and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 45% and 45% of total product and service revenue for the three months ended March 31, 2024 and 2023, respectively. Our recurring revenue as a percentage of total product and service revenue will vary based upon new device placements in the period. As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.
Current wording
We regularly assess trends relating to recurring revenue which includes consumables, accessories and services based on our product offerings, our customer base and our understanding of how our customers use our products. Recurring revenue was 41% and 39% of total product and service revenue for the six months ended June 30, 2024 and 2023, respectively. Our recurring revenue as a percentage of total product and service revenue will vary based upon new device placements in the period. As our device installed base expands, recurring revenue on an absolute basis is expected to increase and over time should be an increasingly important contributor to our revenue.
Previous wording
Revenue from the sales of consumables will vary by type of device. We expect that recurring revenue as a percentage of the original device price to be higher for our desktop devices (Rebel, ZipChip Interface, Maverick, Maven and related sampling devices) than for our handheld device (MX908). While we sell single-use swab samplers for MX908 to be used in liquid and solid materials analysis, there are a number of other applications that the MX908 can be used for that do not require consumables. Rebel and ZipChip Interface require consumables kits for all areas of operations. Currently, Rebel customers, who are actively utilizing the device, are consuming on average approximately half a 200-sample kit per month; however,
Current wording
Revenue from the sales of consumables will vary by type of device. We expect that recurring revenue as a percentage of the original device price to be higher for our desktop devices (Rebel, ZipChip Interface, Maverick, Maven and related sampling devices) than for our handheld devices (MX908, ThreatID, ProtectIR, and XplorIR). While we sell single-use swab samplers for MX908 to be used in liquid and solid materials analysis, there are a number of other applications that the MX908 can be used for that do not require consumables. ThreatID, ProtectIR, and XplorIR do not have consumables. Rebel and ZipChip
Previous wording
Rebel is a relatively new product and purchasing patterns related to our consumables kits are evolving. We expect that the number of kits sold per month will vary over the short term. In time, we expect Rebel consumables kits sales to become more consistent as our installed base grows and our customers establish usage patterns. At maximum potential capacity, with continuous operation, the Rebel can consume approximately one 200-sample kit per day. Maverick devices require consumables, probes and standards for all areas of operations. Maven and related sampling devices require consumable sets of buffers, probes and biosensors for all areas of operations.
Current wording
Interface require consumables kits for all areas of operations. Currently, Rebel customers, who are actively utilizing the device, are consuming on average approximately half a 200-sample kit per month; however, Rebel is a relatively new product and purchasing patterns related to our consumables kits are evolving. We expect that the number of kits sold per month will vary over the short term. In time, we expect Rebel consumables kits sales to become more consistent as our installed base grows and our customers establish usage patterns. At maximum potential capacity, with continuous operation, the Rebel can consume approximately one 200-sample kit per day. Maverick devices require consumables, probes and standards for all areas of operations. Maven and related sampling devices require consumable sets of buffers, probes and biosensors for all areas of operations.
Previous wording
During the three months ended March 31, 2024 and 2023, our product placements (units recognized as revenue) were as follows:
Current wording
During the six months ended June 30, 2024 and 2023, our product placements (units recognized as revenue) were as follows:
Previous wording
We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables, accessories and services. Device sales accounted for 55% and 55% of our product and service revenue for the three months ended March 31, 2024 and 2023, respectively. Recurring revenue accounted for 45% and 45% of our product and service revenue for the three months ended March 31, 2024 and 2023, respectively.
Current wording
We generate product and service revenue from the sale of our devices and recurring revenue from the sale of consumables, accessories and services. Device sales accounted for 59% and 61% of our product and service revenue for the six months ended June 30, 2024 and 2023, respectively. Recurring revenue accounted for 41% and 39% of our product and service revenue for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
Contract agreements are arrangements whereby we provide engineering services for the development of our technology platform for specific programs or new and expanding applications of our technologies for future commercial endeavors. Our contract agreements are with the U.S. government and commercial entities (who may be contracting with the government). Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our contract revenue was primarily related to one customer during the three months ended March 31, 2023.
Current wording
Contract agreements are arrangements whereby we provide engineering services for the development of our technology platform for specific programs or new and expanding applications of our technologies for future commercial endeavors. Our contract agreements are with the U.S. government and commercial entities (who may be contracting with the government). Contracts typically include compensation for labor effort and materials incurred related to the deliverables under the contract. Our contract revenue was related to one customer during the six months ended June 30, 2024 and 2023, respectively.
Previous wording
During the three months ended March 31, 2024 and 2023, our revenue was comprised of revenue from the following sources:
Current wording
During the three and six months ended June 30, 2024 and 2023, our revenue was comprised of revenue from the following sources:
Previous wording
our pricing, sales mix among devices, sales mix changes among consumables, excess and obsolete inventories, our cost structure for manufacturing operations relative to volume, and product warranty obligations. Our gross profit in future periods will vary based upon our channel mix and may decrease based upon our distribution channels and the potential to establish original equipment manufacturing channels for certain components of our technology platform which would have a lower gross margin.
Current wording
Gross profit is calculated as revenue less cost of revenue. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including: market conditions that may impact our pricing, sales mix among devices, sales mix changes among consumables, excess and obsolete inventories, our cost structure for manufacturing operations relative to volume, and product warranty obligations. Our gross profit in future periods will vary based upon our channel mix and may decrease based upon our distribution channels and the potential to establish original equipment manufacturing channels for certain components of our technology platform which would have a lower gross margin.
Previous wording
We recognized an income tax benefit of $0.1 million and $0.0 million during the three months ended March 31, 2024 and 2023, respectively. The income tax benefit recognized during the three months ended March 31, 2024 primarily resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of 908 Devices GmbH.
Current wording
We recognized an income tax benefit of $0.1 million and $0.1 million during the six months ended June 30, 2024 and 2023, respectively. The income tax benefit recognized during the six months ended June 30, 2024 and 2023, primarily resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of 908 Devices GmbH.
Previous wording
Product revenue increased by $0.2 million, or three percentage points, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily related to component shipments under our subcontract agreement with a commercial entity that holds a U.S. government prime contract, offset in part by nine fewer handheld device placements and eight fewer desktop device placements for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
Current wording
Product revenue increased by $0.7 million, or 7%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily related to $2.6 million in product revenue from our recently acquired FTIR products, offset in part by a $1.2 million decrease in MX908 related handheld product revenue, mainly due to a decrease in device placements, as well as a $0.7 million decrease in desktop product revenue, mainly due to five fewer desktop device placements for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.
Previous wording
Service revenue increased by $0.5 million, or 23%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase was primarily related to an increase in handheld service revenues related to extended service contracts for MX908 devices and, to a lesser extent, increases in handheld service upgrades, and handheld training revenue and desktop service arrangements.
Current wording
Service revenue increased by $1.3 million, or 56%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase was primarily related to an increase in handheld service revenues related to extended service contracts for MX908 devices and our recently acquired FTIR products, and to a lesser extent, an increase in handheld training revenue.
Previous wording
Service cost of revenue increased by $0.5 million, or 40%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The increase in service cost of revenue was primarily related to a $0.2 million increase in contract trainers used to support the higher handheld training revenue, a $0.1 million increase in personnel costs to support the increase in service revenue and an increase in travel, postage and other operating costs.
Current wording
Service cost of revenue increased by $0.4 million, or 26%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The increase in service cost of revenue was primarily related to a $0.2 million increase in material costs and contract trainers used to support the higher handheld training revenue, but also due to a $0.2 million increase in personnel and other operating costs primarily related to our RedWave acquisition.
Previous wording
Contract revenue decreased by $0.2 million, or 100%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The majority of contract revenue, for the three months ended March 31, 2023, was related to activities under our subcontract agreement with a commercial entity that holds a U.S. government prime contract, which was concluded in the second quarter of 2024.
Current wording
Contract revenue decreased by less than $0.1 million, or 31%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. During the three months ended June 30, 2024 we recognized contract revenue with a new commercial entity. The contract revenue for the three months ended June 30, 2023, was related to activities under our subcontract agreement with a commercial entity that holds a U.S. government prime contract, which was concluded in the second quarter of 2023.
Previous wording
Contract gross profit decreased by $0.2 million for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, primarily due to there being no contract revenue or contract cost of revenue during the three months ended March 31, 2024.
Current wording
Contract gross profit decreased by $0.1 million for the three months ended June 30, 2024 as compared to the three months ended June 30, 2023, primarily due to the reduced level of funding to cover costs in our new contract compared to our prior arrangement during the three months ended June 30, 2023.
Previous wording
Benefit for income taxes was $0.1 million for the three months ended March 31, 2024, and resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of 908 Devices GmbH.
Current wording
Benefit for income taxes was $0.1 million for the three months ended June 30, 2024, relatively unchanged from the three months ended June 30, 2023, and resulted from a reduction in the deferred tax liabilities recorded as part of our acquisition of 908 Devices GmbH.
Previous wording
Product cost of revenue decreased by $0.6 million, or 15%, for the three months ended March 31, 2024, compared to the three months ended March 31, 2023. The decrease in product cost of revenue was primarily related to an increase in production resulting in a $0.7 million increase in labor and overhead absorption for the three months ended March 31, 2024, as well as $0.4 million in lower materials and supplies consumed in production activities, offset in part by $0.3 million in higher warranty costs and $0.2 million in higher personnel related costs.
Current wording
Product cost of revenue decreased by $0.6 million, or 8%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023. The decrease in product cost of revenue was primarily related to an increase in production resulting in a $1.3 million increase in labor and overhead absorption and a $0.8 million decrease in materials and supplies consumed in production related activities, for the six months ended June 30, 2024, offset in part by $0.5 million in higher costs related to the higher product volume, $0.4 million in higher amortization of intangibles and $0.6 million in higher personnel related costs.
Previous wording
Product gross profit increased by $0.8 million, or 24%, and gross profit margin increased by ten percentage points for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023. The increase in product gross profit was primarily due to favorable timing of production and lower material costs, but also due to favorable product mix for the three months ended March 31, 2024.
Current wording
Product gross profit increased by $1.5 million, or 19%, and gross profit margin increased by seven percentage points for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023. The increase in product gross profit was primarily due to favorable timing of production and lower material costs, but also due to favorable channel mix for the six months ended June 30, 2024.
Previous wording
Our research and development expenses were $5.8 million for the three months ended March 31, 2024, an increase of $0.4 million from research and development expenses of $5.4 million for the three months ended March 31, 2023. The increase was due primarily to a $0.2 million increase in stock-based compensation, and a $0.1 million increase in occupancy related expenses, mainly related to our facility in North Carolina.
Current wording
Our research and development expenses were $12.2 million for the six months ended June 30, 2024, an increase of $1.2 million from research and development expenses of $10.9 million for the six months ended June 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $0.6 million increase in personnel and related costs, a $0.3 million increase in stock-based compensation, and a $0.4 million increase in depreciation and occupancy related expenses, mainly related to our facility in North Carolina.
Previous wording
Our selling, general and administrative expenses were $11.9 million for the three months ended March 31, 2024, a decrease of $0.1 million from selling, general and administrative expenses of $12.0 million for the three months ended March 31, 2023. The decrease was due primarily to a $0.3 million decrease in salaries and related costs mainly from a decrease in severance costs, a $0.3 million decrease in third party commissions and a $0.2 million decrease in marketing and related costs. These decreases were partially offset by a $0.3 million increase in stock-based compensation and a $0.3 million increase in legal costs related to acquisition-related costs.
Current wording
Our selling, general and administrative expenses were $26.5 million for the six months ended June 30, 2024, an increase of $3.3 million from selling, general and administrative expenses of $23.2 million for the six months ended June 30, 2023. The increase was partly due to the increased expenses from the RedWave acquisition and was due primarily to a $2.5 million increase in banker, legal and accounting fees, mainly related to our acquisition of RedWave, a $0.9 million increase in salaries and related costs, a $0.6 million increase in stock-based compensation and a $0.4 million increase in travel and related costs. These increases were partially offset by a $0.5 million decrease in severance and related costs, a $0.2 million decrease in valuation of contingent consideration, a $0.2 million decrease in third party commissions and a $0.1 million decrease in insurance costs.
Previous wording
Interest expense decreased by $0.6 million for the three months ended March 31, 2024 from $0.6 million for the three months ended March 31, 2023. The decrease was primarily due to costs incurred in March 2023 related to the write-off of deferred financing costs on our 2022 Revolver, which was in default and later amended in August 2023.
Current wording
Interest expense decreased by $0.6 million for the six months ended June 30, 2024 from $0.6 million for the six months ended June 30, 2023. The decrease was primarily due to costs incurred in March 2023 related to the write-off of deferred financing costs on our 2022 Revolver, which was in default and later amended in August 2023.
Previous wording
Since our inception, we have incurred significant operating losses. To date, we have funded our operations primarily with proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and contract revenue, proceeds from our initial public offering in December 2020, and with proceeds from an underwritten public offering in November 2021. As of March 31, 2024, we had cash, cash equivalents and marketable securities of $134.2 million. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months.
Current wording
Since our inception, we have incurred significant operating losses. To date, we have funded our operations primarily with proceeds from sales of redeemable preferred stock, borrowings under loan agreements and revenue from sales of our products and services and contract revenue, proceeds from our initial public offering in December 2020, and with proceeds from an underwritten public offering in November 2021. As of June 30, 2024, we had cash, cash equivalents and marketable securities of $77.4 million. We believe that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses, capital expenditure requirements and debt service payments for at least the next twelve months.
Previous wording
The 2022 Revolver provided for a revolving line of credit of up to $35.0 million. We were permitted to make interest-only payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness would be immediately due and payable. The outstanding principal amount of any advance accrued interest at a floating rate per annum equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%). Our obligations under the 2022 Revolver were secured by substantially all of our assets, excluding our intellectual property, which was subject to a negative pledge. The revolving line of credit under the 2022 Revolver was scheduled to terminate on November 2, 2025.
Current wording
payments on the revolving line of credit through November 2, 2025, at which time all outstanding indebtedness would be immediately due and payable. The outstanding principal amount of any advance accrued interest at a floating rate per annum equal to the greater of (i) three and one-half percent (3.50%) and (ii) the “prime rate” as published in The Wall Street Journal for the relevant period minus one-half percent (0.50%). Our obligations under the 2022 Revolver were secured by substantially all of our assets, excluding our intellectual property, which was subject to a negative pledge. The revolving line of credit under the 2022 Revolver was scheduled to terminate on November 2, 2025.
Previous wording
The Amended 2022 Revolver also contains certain financial covenants, including a requirement that the Company maintain $20.0 million on account at or through the Lender and that the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn. The Amended 2022 Revolver contains customary representations and warranties, as well as certain non-financial covenants, including limitations on, among other things, the Company’s ability to change the principal nature of its business, dispose of the Company’s business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem the Company’s capital stock, engage in transactions with affiliates or otherwise encumber the Company’s intellectual property, in each case, subject to customary exceptions.
Current wording
The Amended 2022 Revolver also contains certain financial covenants, including a requirement that the Company maintain $20.0 million on account at or through the Lender and that the amount of unrestricted and unencumbered cash minus advances under the Amended 2022 Revolver, is not less than the amount equal to the greater of (i) $10.0 million or (ii) nine (9) months of cash burn. The Amended 2022 Revolver contains customary representations and warranties, as well as certain non-financial covenants, including limitations on, among other things, the Company’s ability to change the principal nature of its business, dispose of the Company’s business or property, engage in any change of control transaction, merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity, incur additional indebtedness or liens, pay dividends or make other distributions on capital stock, redeem the Company’s capital stock, engage in transactions with affiliates or otherwise encumber the Company’s intellectual property, in each case, subject to customary
Previous wording
During the three months ended March 31, 2023, net cash used in operating activities was $10.6 million, primarily resulting from our net loss of $12.5 million and net cash used in changes in our operating assets and liabilities of $1.6 million, partially offset by noncash charges of $3.4 million. Net cash used by changes in our operating assets and liabilities for the three months ended March 31, 2023 consisted primarily of a $1.5 million decrease from changes in prepaid expenses and other current assets and a $1.0 million decrease from changes in inventory, partially offset by a $1.9 million increase from changes in accounts receivable.
Current wording
During the six months ended June 30, 2024, net cash used in operating activities was $22.4 million, primarily resulting from our net loss of $23.5 million and net cash used in changes in our operating assets and liabilities of $6.7 million, partially offset by noncash charges of $7.8 million. Net cash used in changes in our operating assets and liabilities for the six months ended June 30, 2024, consisted primarily of a $3.1 million decrease from changes in inventory, a $1.7 million decrease from changes in deferred revenue, and a $1.4 million decrease from changes in accounts payable and accrued expenses, partially offset by a $0.7 million increase from changes in prepaid expenses and other current assets.
Previous wording
During the three months ended March 31, 2024, net cash used in operating activities was $9.4 million, primarily resulting from our net loss of $10.9 million and net cash used in changes in our operating assets and liabilities of $2.5 million, partially offset by noncash charges of $4.0 million. Net cash used in changes in our operating assets and liabilities for the three months ended March 31, 2024, consisted primarily of a $1.8 million decrease from changes in accounts payable and accrued expenses and a $1.7 million decrease from changes in inventory, partially offset by a $1.5 million increase from changes in accounts receivable.
Current wording
During the six months ended June 30, 2023, net cash used in operating activities was $18.5 million, primarily resulting from our net loss of $21.9 million and net cash used in changes in our operating assets and liabilities of $3.4 million, partially offset by noncash charges of $6.8 million. Net cash used by changes in our operating assets and liabilities for the six months ended June 30, 2023 consisted primarily of a $1.7 million decrease from changes in inventory and a $0.9 million decrease from changes in accounts payable and accrued expenses.
Previous wording
During the three months ended March 31, 2024, net cash used in investing activities was $5.8 million, due to $14.6 million in purchases of marketable securities, partially offset by $9.7 million proceeds from maturities of marketable securities.
Current wording
During the six months ended June 30, 2024, net cash used in investing activities was $50.9 million, due to $44.8 million increase from the acquisition of RedWave and $30.2 million increase from purchases of marketable securities, partially offset by $24.4 million proceeds from maturities of marketable securities.
Previous wording
During the three months ended March 31, 2023, net cash used in investing activities was $1.2 million, due to purchases of property and equipment.
Current wording
During the six months ended June 30, 2023, net cash used in investing activities was $21.1 million, due to $19.6 million in purchases of marketable securities and $1.5 million in purchases of property and equipment.
Previous wording
Cash used in financing activities during the three months ended March 31, 2024 was $1.3 million, consisting primarily of $0.9 million in payments for withholding taxes on vested equity awards and $0.4 million of contingent consideration related to the release of the $0.5 million milestone paid in February 2024.
Current wording
Cash used in financing activities during the six months ended June 30, 2024 was $0.9 million, consisting primarily of $1.0 million in payments for withholding taxes on vested equity awards and $0.4 million of contingent consideration related to the
Previous wording
Cash used in financing activities during the three months ended March 31, 2023 was $15.4 million, consisting primarily of repayment of $15.0 million outstanding under the 2022 Revolver. We also paid $0.5 million for taxes withheld from employees on vested equity awards.
Current wording
Cash used in financing activities during the six months ended June 30, 2023 was $15.8 million, consisting primarily of the repayment of $15.0 million outstanding under the 2022 Revolver and a $0.9 million payment for release of pension liability.
Previous wording
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that
Current wording
Our condensed consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.
Previous wording
For a further discussion ofour critical accounting policies, please refer to Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and our 2023 Report on Form 10-K. There were no significant changes to our critical accounting policies for the three months ended March 31, 2024.
Current wording
For a further discussion ofour critical accounting policies, please refer to Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q and our 2023 Report on Form 10-K. There were no significant changes to our critical accounting policies for the six months ended June 30, 2024.
Rearranged current paragraphs (11)
Current report — wording carried from elsewhere
Product cost of revenue decreased by $0.1 million, or 1%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. The decrease in product cost of revenue was primarily related to an increase in production
Current report — wording carried from elsewhere
resulting in a $0.7 million increase in labor and overhead absorption for the three months ended June 30, 2024, as well as $0.2 million in lower warranty costs, offset in part by $0.4 million in higher intangible amortization and $0.3 million in higher personnel related costs, partly related to our RedWave acquisition.
Current report — wording carried from elsewhere
Product gross profit increased by $0.7 million, or 15%, and gross profit margin increased by four percentage points for the three months ended June 30, 2024, as compared to the three months ended June 30, 2023. The increase in product gross profit was primarily due to favorable timing of production and lower warranty costs, but also due to the increase in product revenues.
Current report — wording carried from elsewhere
Thefollowing table summarizes our results of operations for the six months ended June 30, 2024 and 2023:
Current report — wording carried from elsewhere
Revenue, Cost of Revenue and Gross Profit
Current report — wording carried from elsewhere
Our product revenue is comprised of revenue from sales of devices and related accessories and consumables as follows:
Current report — wording carried from elsewhere
Ourservice revenue is comprised of revenue from sales of extended warranty and service plans and customer training as follows:
Current report — wording carried from elsewhere
entity. Contract revenue for the six months ended June 30, 2023, was related to activities under our subcontract agreement with a commercial entity that holds a U.S. government prime contract, which was concluded in the second quarter of 2023.
Current report — wording carried from elsewhere
Other expense, net for the six months ended June 30, 2024 did not change materially from the six months ended June 30, 2023.
Current report — wording carried from elsewhere
The 2022 Revolver provided for a revolving line of credit of up to $35.0 million. We were permitted to make interest-only
Current report — wording carried from elsewhere
release of the $0.5 million milestone paid in February 2024, partially offset by $0.5 million proceeds from issuance of common stock.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Gross profit is calculated as revenue less cost of revenue. Gross profit margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including: market conditions that may impact
Previous report — wording carried elsewhere
are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.