Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation ~~S-T~~S- T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July ~~30, 2021,~~29, 2022, there were ~~40,762,931~~41,636,502 shares of the registrant’s common stock issued and outstanding.

	June 30,			December 31,
	2021			2020			June 30, 2022			December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	6,237		$	8,317		$	4,259		$	7,821
Accounts receivable, net		17,391			17,766			17,847			21,834
Inventories		24,709			22,262			29,336			27,587
Other current assets		5,220			3,355			5,056			4,341
Total current assets		53,557			51,700			56,498			61,583
Property, plant and equipment, net		3,429			3,960			3,394			3,415
Operating lease right-of-use assets		7,241			7,761			6,236			6,897
Goodwill		58,424			58,590			56,232			57,689
Intangible assets, net		30,510			33,151			24,219			27,385
Other long-term assets		810			1,092			8,694			5,375
Total assets	$	153,971		$	156,254		$	155,273		$	162,344
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt	$	2,220		$	1,721		$	2,720		$	3,235
Current portion of operating lease liabilities		2,061			2,111			2,108			2,142
Accounts payable		7,489			5,972			6,810			4,911
Deferred revenue		3,675			3,771			3,612			4,266
Other current liabilities		7,823			7,478			8,104			10,762
Total current liabilities		23,268			21,053			23,354			25,316
Long-term debt		40,921			46,286
Long-term debt, net								45,764			45,095
Deferred tax liability		1,572			1,899			2,427			1,558
Operating lease liabilities		6,971			7,481			5,806			6,488
Other long-term liabilities		2,538			2,854			418			486
Total liabilities		75,270			79,573			77,769			78,943
Commitments and contingencies - Note 13
Commitments and contingencies - Note 12
Stockholders' equity:
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized		0			0
Common stock, par value $0.01 per share, 80,000,000 shares authorized; 40,485,586 and 47,152,587 shares issued and 40,485,586 and 39,407,080 shares outstanding, respectively		451			444
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized								0			0
Common stock, par value $0.01 per share, 80,000,000 shares authorized: 41,499,741 shares issued and outstanding at June 30, 2022; 41,142,876 shares issued and outstanding at December 31, 2021								453			452
Additional paid-in-capital		225,583			232,357			227,413			225,650
Accumulated deficit		(133,465	)		(132,386	)		(137,119	)		(132,674	)
Accumulated other comprehensive loss		(13,868	)		(13,066	)		(13,243	)		(10,027	)
Treasury stock at cost, -0- and 7,745,507 common shares, respectively		0			(10,668	)
Total stockholders' equity		78,701			76,681			77,504			83,401
Total liabilities and stockholders' equity	$	153,971		$	156,254		$	155,273		$	162,344

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020			2022			2021			2022			2021

Revenues	$	29,197		$	23,308		$	56,186		$	47,079		$	29,208		$	29,197		$	57,986		$	56,186
Cost of revenues		12,844			9,452			24,402			20,241			12,571			12,844			25,172			24,402
Gross profit		16,353			13,856			31,784			26,838			16,637			16,353			32,814			31,784

Sales and marketing expenses		5,730			4,279			11,116			9,858			6,587			5,730			13,274			11,116
General and administrative expenses		6,399			5,670			12,732			12,429			5,981			6,399			12,306			12,732
Research and development expenses		2,701			1,897			5,188			4,387			3,497			2,701			6,717			5,188
Amortization of intangible assets		1,465			1,454			2,929			2,881			1,454			1,465			2,920			2,929
Settlement of litigation, net - Note 13														(4,880	)		0			311			0
Total operating expenses		16,295			13,300			31,965			29,555			12,639			16,295			35,528			31,965

Operating income (loss)		58			556			(181	)		(2,717	)		3,998			58			(2,714	)		(181	)

Other expense:
Interest expense		(377	)		(1,233	)		(788	)		(2,532	)		(515	)		(377	)		(899	)		(788	)
Other expense, net		(313	)		(191	)		(347	)		(80	)		(62	)		(313	)		16			(347	)
Total other expense		(690	)		(1,424	)		(1,135	)		(2,612	)		(577	)		(690	)		(883	)		(1,135	)

Loss before income taxes		(632	)		(868	)		(1,316	)		(5,329	)
Income tax (benefit) expense		(222	)		713			(237	)		768
Net loss	$	(410	)	$	(1,581	)	$	(1,079	)	$	(6,097	)
Income (loss) before income taxes														3,421			(632	)		(3,597	)		(1,316	)
Income tax expense (benefit)														986			(222	)		848			(237	)
Net income (loss)													$	2,435			(410	)	$	(4,445	)	$	(1,079	)

Loss per share:
Basic and diluted loss per common share	$	(0.01	)	$	(0.04	)	$	(0.03	)	$	(0.16	)
Income (loss) per share:
Basic income (loss) per common share													$	0.06		$	(0.01	)	$	(0.11	)	$	(0.03	)

Diluted income (loss) per common share													$	0.06		$	(0.01	)	$	(0.11	)	$	(0.03	)

Weighted-average common shares:
Basic and diluted		40,152			38,468			39,960			38,389
Basic														41,304			40,152			41,256			39,960

Diluted														42,560			40,152			41,256			39,960

See accompanying notes to condensed consolidated financial ~~statements~~statements.

Three Months Ended																					Number					Additional						Other						Total
June 30, 2022																					of Shares			Common		Paid-in			Accumulated			Comprehensive			Treasury			Stockholders’
																					Issued			Stock		Capital			Deficit			Loss			Stock			Equity
Balance at March 31, 2022																						41,241		$	452	$	226,203		$	(139,554	)	$	(10,726	)	$	0		$	76,375
Stock option exercises																						5			1		11			0			0			0			12
Stock purchase plan																						78			0		239			0			0			0			239
Vesting of restricted stock units																						244			0		0			0			0			0			0
Shares withheld for taxes																						(68	)		0		(279	)		0			0			0			(279	)
Stock-based compensation expense																						-			0		1,239			0			0			0			1,239
Net income																						-			0		0			2,435			0			0			2,435
Other comprehensive loss																						-			0		0			0			(2,517	)		0			(2,517	)
Balance at June 30, 2022																						41,500		$	453	$	227,413		$	(137,119	)	$	(13,243	)	$	0		$	77,504
												Accumulated
Three Months Ended	*Number*					*Additional*						*Other*						*Total*			*Number*					*Additional*						*Other*						*Total*
June 30, 2021	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’			*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
																					*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
Balance at March 31, 2021		47,696		$	448	$	234,781		$	(133,055	)	$	(14,391	)	$	(10,668	)	$	77,115			47,696		$	448	$	234,781		$	(133,055	)	$	(14,391	)	$	(10,668	)	$	77,115
Retirement of treasury stock		(7,746	)		0		(10,668	)		0			0			10,668			0			(7,746	)		0		(10,668	)		0			0			10,668			0
Stock option exercises		186			3		630			0			0			0			633			186			3		630			0			0			0			633
Stock purchase plan		56			0		202			0			0			0			202			56			0		202			0			0			0			202
Vesting of restricted stock units		363			0		0			0			0			0			0			363			0		0			0			0			0			0
Shares withheld for taxes		(69	)		0		(526	)		0			0			0			(526	)		(69	)		0		(526	)		0			0			0			(526	)
Stock compensation expense		-			0		1,164			0			0			0			1,164
Stock-based compensation expense																						-			0		1,164			0			0			0			1,164
Net loss		-			0		0			(410	)		0			0			(410	)		-			0		0			(410	)		0			0			(410	)
Other comprehensive income		-			0		0			0			523			0			523
Other comprehensive loss																						-			0		0			0			523			0			523
Balance at June 30, 2021		40,486		$	451	$	225,583		$	(133,465	)	$	(13,868	)	$	0		$	78,701			40,486		$	451	$	225,583		$	(133,465	)	$	(13,868	)	$	0		$	78,701

Six Months Ended																					*Number*					*Additional*						*Other*						*Total*
June 30, 2022																					*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’
												*Accumulated*									*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
Three Months Ended	*Number*					*Additional*						*Other*						*Total*
June 30, 2020	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
Balance at March 31, 2020		46,121		$	438	$	229,740		$	(129,092	)	$	(14,409	)	$	(10,668	)	$	76,009
Balance at December 31, 2021																						41,143		$	452	$	225,650		$	(132,674	)	$	(10,027	)	$	0		$	83,401
Stock option exercises		7			0		19			0			0			0			19			16			1		42			0			0			0			43
Stock purchase plan		64			0		167			0			0			0			167			78			0		239			0			0			0			239
Vesting of restricted stock units		246			0		0			0			0			0			0			395			0		0			0			0			0			0
Shares withheld for taxes		(24	)		0		(20	)		0			0			0			(20	)		(132	)		0		(780	)		0			0			0			(780	)
Stock compensation expense		-			0		769			0			0			0			769
Stock-based compensation expense																						-			0		2,262			0			0			0			2,262
Net loss		-			0		0			(1,581	)		0			0			(1,581	)		-			0		0			(4,445	)		0			0			(4,445	)
Other comprehensive income		-			0		0			0			705			0			705
Balance at June 30, 2020		46,414		$	438	$	230,675		$	(130,673	)	$	(13,704	)	$	(10,668	)	$	76,068

Other comprehensive loss																						-			0		0			0			(3,216	)		0			(3,216	)
Balance at June 30, 2022																						41,500		$	453	$	227,413		$	(137,119	)	$	(13,243	)	$	0		$	77,504
												*Accumulated*
Six Months Ended	*Number*					*Additional*						*Other*						*Total*			*Number*					*Additional*						*Other*						*Total*
June 30, 2021	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’			*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*			*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
Balance at December 31, 2020		47,153		$	444		232,357		$	(132,386	)	$	(13,066	)	$	(10,668	)	$	76,681			47,153		$	444	$	232,357		$	(132,386	)	$	(13,066	)	$	(10,668	)	$	76,681
Retirement of treasury stock		(7,746	)		0		(10,668	)		0			0			10,668			0			(7,746	)		0		(10,668	)		0			0		$	10,668			0
Stock option exercises		497			7		2,550			0			0			0			2,557			497			7		2,550			0			0			0			2,557
Stock purchase plan		56			0		202			0			0			0			202			56			0		202			0			0			0			202
Vesting of restricted stock units		703			0		0			0			0			0			0			703			0		0			0			0			0			0
Shares withheld for taxes		(177	)		0		(990	)		0			0			0			(990	)		(177	)		0		(990	)		0			0			0			(990	)
Stock compensation expense		-			0		2,132			0			0			0			2,132
Stock-based compensation expense																						-			0		2,132			0			0			0			2,132
Net loss		-			0		0			(1,079	)		0			0			(1,079	)		-			0		0			(1,079	)		0			0			(1,079	)
Other comprehensive loss		-			0		0			0			(802	)		0			(802	)		-			0		0			0			(802	)		0			(802	)
Balance at June 30, 2021		40,486		$	451	$	225,583		$	(133,465	)	$	(13,868	)	$	0		$	78,701			40,486		$	451	$	225,583		$	(133,465	)	$	(13,868	)	$	0		$	78,701

												*Accumulated*
Six Months Ended	*Number*					*Additional*						*Other*						*Total*
June 30, 2020	*of Shares*			*Common*		*Paid-in*			*Accumulated*			*Comprehensive*			*Treasury*			*Stockholders*’
	*Issued*			*Stock*		*Capital*			*Deficit*			*Loss*			*Stock*			*Equity*
Balance at December 31, 2019		45,934		$	438	$	229,189		$	(124,576	)	$	(12,689	)	$	(10,668	)	$	81,694
Stock option exercises		7			0		19			0			0			0			19
Stock purchase plan		64			0		167			0			0			0			167
Vesting of restricted stock units		514			0		0			0			0			0			0
Shares withheld for taxes		(105	)		0		(262	)		0			0			0			(262	)
Stock compensation expense		-			0		1,562			0			0			0			1,562
Net loss		-			0		0			(6,097	)		0			0			(6,097	)
Other comprehensive loss		-			0		0			0			(1,015	)		0			(1,015	)
Balance at June 30, 2020		46,414		$	438	$	230,675		$	(130,673	)	$	(13,704	)	$	(10,668	)	$	76,068

		Six Months Ended June 30,							Six Months Ended June 30,
		2021			2020				2022			2021
Cash flows from operating activities:
Net loss		$	(1,079	)	$	(6,097	)		$	(4,445	)	$	(1,079	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation			891			982				758			891
Amortization of intangible assets			2,929			2,881				2,920			2,929
Amortization of deferred financing costs			140			197				140			140
Stock-based compensation expense			2,132			1,562				2,262			2,132
Deferred income taxes and other			(303	)		423				1,040			(303	)
Investment in Convertible Preferred Stock - Note 13										(3,900	)		0
Changes in operating assets and liabilities:
Accounts receivable			323			5,855				3,587			323
Inventories			(2,526	)		(1,374	)			(2,667	)		(2,526	)
Other assets			(1,517	)		(601	)			(250	)		(1,517	)
Accounts payable and accrued expenses			1,629			1,925				(435	)		1,629
Deferred revenue			(100	)		(276	)			(611	)		(100	)
Other liabilities			(714	)		(233	)			(575	)		(714	)
Net cash provided by operating activities			1,805			5,244

Net cash (used in) provided by operating activities										(2,176	)		1,805
Cash flows from investing activities:
Additions to property, plant and equipment			(357	)		(524	)			(913	)		(357	)
Additions to intangible assets			(150	)		0				0			(150	)
Net cash used in investing activities			(507	)		(524	)			(913	)		(507	)

Cash flows from financing activities:
Proceeds from issuance of debt			0			6,115
Repayments of debt			(5,000	)		(16,411	)
Borrowing on bank line of credit										5,300			0
Repayment on bank line of credit										(3,600	)		(4,000	)
Repayment of term debt										(1,686	)		(1,000	)
Debt issuance costs			(102	)		0				0			(102	)
Proceeds from exercise of stock options			2,759			187				282			2,759
Taxes paid related to net share settlement of equity awards			(990	)		(262	)			(780	)		(990	)
Net cash used in financing activities			(3,333	)		(10,371	)			(484	)		(3,333	)

Effect of exchange rate changes on cash			(45	)		(55	)			11			(45	)
Decrease in cash and cash equivalents			(2,080	)		(5,706	)			(3,562	)		(2,080	)
Cash and cash equivalents at beginning of period			8,317			8,335				7,821			8,317
Cash and cash equivalents at end of period		$	6,237		$	2,629			$	4,259		$	6,237

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:							Supplemental disclosures of cash flow information:
Cash paid for interest		$	834		$	2,549			$	845		$	834
Cash paid for income taxes, net of refunds		$	168		$	98			$	352		$	168

The unaudited consolidated financial statements of Harvard Bioscience, Inc. and its wholly-owned subsidiaries (collectively, ~~Harvard Bioscience or~~ the ~~Company)~~“Company”) as of June 30, ~~2021~~2022 and for the three and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission ~~(SEC)~~(the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ~~(U.S. GAAP)~~(“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations. The December 31, 2021, ~~31,~~~~2020~~consolidated balance sheet was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. However, the Company believes that the disclosures are adequate to make the information presented not misleading. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,~~2020.~~ 2021.

In the opinion of management, all adjustments, which include normal recurring adjustments necessary to present a fair statement of financial position as of June 30, ~~2021,~~2022, results of operations and comprehensive ~~income (loss)~~loss and cash flows for the three ~~months~~ and six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, as applicable, have been made. The results of operations for the three ~~months~~ and six months ended June 30, ~~2021~~2022, are not necessarily indicative of the operating results for the full fiscal year or any future periods.

The accounting policies underlying the accompanying unaudited consolidated financial statements are ~~those~~ set forth in Note 2 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. ~~31,~~~~2020.~~There have been no material changes in the Company’s significant accounting policies during the three and six months ended June 30, ~~2021.~~2022.

On ~~March 11, 2020,~~ ~~the World Health Organization declared the outbreak of a novel coronavirus (COVID-~~19~~) as a pandemic.~~ The COVID-19 pandemic has had a negative impact on the Company’s operations to date and the future impacts of the pandemic and any resulting economic impact are largely unknown and ~~rapidly~~continuously evolving. Since the global outbreak of COVID-19, many customers, particularly academic research institutions, have reduced laboratory work which has negatively impacted, and will continue to negatively impact, the Company’s sales. ~~While many~~Also, countries world-wide continue to issue COVID-19 related policies in an attempt to control the pandemic. In particular, during the beginning of 2022, China implemented area-wide shutdowns in order to control the ~~Company's customers, including academic labs,~~spread of COVID-19, which have ~~reopened, a significant number~~continued for different parts of ~~them remained closed or at significantly lower capacity levels through~~China throughout the ~~second~~first ~~quarter~~half of ~~2021.~~2022. ~~Additionally, to~~To ensure business continuity while maintaining a safe environment for employees aligned with guidance from government and health organizations, the Company transitioned a significant portion of its workforce to work-from-home ~~while implementing social distancing requirements~~ and ~~other measures to allow manufacturing and other personnel essential to production to continue work within the Company's facilities. Business travel was significantly reduced during this period. While~~while a portion of the workforce has returned to in-office work, ~~and~~ travel is ~~less restricted,~~still being managed and the Company ~~continued~~continues to have restrictions ~~which represent disruptions~~ which can impact productivity including sales and marketing activities.

The global supply chain has experienced significant disruptions ~~during the~~ ~~first~~ ~~half of~~ ~~2021~~ due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, ~~and~~ purchased materials, and manufacturing labor costs, while also delaying customer shipments. Accordingly, these conditions in addition to the overall impact on the global economy have negatively impacted results of operations and cash flows.

Additionally, during 2022 the global economy has experienced high levels of inflation, rising interest rates and significant fluctuations in currency values. The Company’s results of operations have been negatively impacted by higher costs of raw materials, labor and freight resulting from inflationary pressures and the ongoing military conflict between Russia and Ukraine, and we expect the interest paid on our debt will continue to increase in the current rising interest rate environment.

If business interruptions resulting from COVID-19 or current macroeconomic conditions described above were to be prolonged or expanded in scope, the Company’s business, financial condition, results of operations and cash flows would be negatively impacted.

In ~~December 2019,~~November 2021, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) ~~2019~~2021-~~12,~~10, ~~Income Taxes~~Government Assistance (Topic ~~740~~~~): Simplifying the Accounting for Income Taxes (ASU~~ ~~2019~~-12832), Disclosures by Business Entities About Government Assistance, which ~~enhances and simplifies various aspects~~requires entities to provide disclosures on material government assistance transactions for annual reporting periods. The disclosures include information around the nature of the ~~income tax~~assistance, the related accounting ~~guidance related~~policies used to ~~intra-period tax allocation, interim period accounting~~account for ~~enacted changes in tax law,~~government assistance, the effect of government assistance on the entity’s financial statements, and ~~the year-to-date loss limitation in interim period tax accounting. ASU~~ ~~2019~~-12 ~~also amends other aspects~~any significant terms and conditions of the ~~guidance to reduce complexity in certain areas.~~agreements, including commitments and contingencies. The new standard impacts footnote disclosures and is effective for the Company’s December 31, 2022 annual financial statements. The Company ~~adopted~~is currently evaluating the ~~provisions~~potential impact of adopting ASU ~~2019~~2021-1210 ~~effective~~will have on ~~January 1, 2021.~~ ~~The adoption of this new accounting guidance did~~ ~~not~~ ~~have a material impact on the Company’s~~its consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04,~~Accounting Pronouncements to be Adopted~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment (ASU 2017-04), which eliminates the performance of Step 2 from the goodwill impairment test. In performing its annual or interim impairment testing, an entity will instead compare the fair value of the reporting unit with its carrying amount and recognize any impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss. ASU 2017-04 is effective for the Company for fiscal years beginning after December 15, 2022. The Company is currently evaluating the potential impact that adopting ASU 2017-04 will have on its consolidated financial statements.

In September 2016, the ~~Financial Accounting Standards Board (FASB)~~FASB issued ~~Accounting Standards Update (ASU)~~ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses rather than incurred losses to estimate credit losses on certain types of financial instruments, including trade receivables. This may result in the earlier recognition of allowances for losses. The FASB issued several ASUs after ASU 2016-13 to clarify implementation guidance and to provide transition relief for certain entities. ASU 2016-13 is effective for the Company for fiscal years beginning after December 15, 2022, with early adoption permitted. The Company is evaluating the impact that adopting ASU 2016-13 and related amendments will have on its consolidated financial ~~position, results of operations and cash flows.~~

The change in the carrying amount of goodwill for the six months ended June 30, ~~2021~~2022, iswere as follows:

(in thousands)
Carrying amount at December 31, 2020	$	58,590
Carrying amount at December 31, 2021				$	57,689
Effect of change in currency translation		(166	)		(1,457	)
Carrying amount at June 30, 2021	$	58,424
Carrying amount at June 30, 2022				$	56,232

Identifiable intangible assets at June 30, 2022 and December 31, 2021 consist of the following:

Intangible asset amortization expense was $1.5 million for each of the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, ~~respectively,~~ and ~~was~~ $2.9 million for each of the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021. ~~respectively.~~ Estimated amortization expense of existing amortizable intangible assets for each of the five succeeding years and thereafter as of June 30, ~~2021~~2022, is as follows:

The following tables provide details of selected balance sheet items as of the periods indicated:

Inventories:	June 30,		December 31,		June 30,		December 31,
(in thousands)	2021		2020		2022		2021
Finished goods	$	5,434	$	4,938	$	6,150	$	5,646
Work in process		3,758		3,513		3,974		3,410
Raw materials		15,517		13,811		19,212		18,531
Total	$	24,709	$	22,262	$	29,336	$	27,587

On an ongoing basis, the Company reviews the global economy, the healthcare industry, and the markets in which it competes to identify operational efficiencies, enhance commercial capabilities, and align its cost base and infrastructure with customer needs and its strategic plans. In order to realize these opportunities, the Company undertakes restructuring-type activities from time to time to transform its business. A portion of these transformation activities are considered restructuring costs under ASC 420– Exit or Disposal Cost Obligations and are discussed below.

~~The following table summarizes~~During 2019, the ~~changes~~Company initiated a restructuring program to improve operational efficiency and reduce costs which entailed consolidating and downsizing several sites and headcount reductions in ~~the restructuring liabilities for the~~Europe and North America. This program was completed in ~~six~~2021. ~~months ended~~ ~~June 30, 2021:~~

~~The restructuring liability has been included in other current liabilities in the consolidated balance sheet and is payable within the next~~ ~~twelve~~ ~~months.~~ Restructuring costs under this program were $0.7 million and $1.2 million for ~~each of~~ the three ~~months ended~~ ~~June 30, 2021~~ and~~2020,~~ ~~respectively, and were $1.2 million and $1.6 million for the~~ six months ended June 30, 2021, ~~and~~ ~~2020,~~ ~~respectively. Substantially~~respectively, substantially all of ~~these restructuring costs~~which have been included as a component of general and administrative expenses.

In connection with the 2014 acquisitions of Multi Channel Systems MCS GmbH (“MCS”), the Company entered into a facility lease agreement with the former principal owner of MCS who became an employee of the Company at the time of the acquisition and subsequently retired in 2021. The MCS agreement expires on December 31, 2024. Pursuant to this lease agreement, the Company made rent payments of ~~$0.1 million~~approximately $0.1million for each of the three months ended June 30, ~~2021~~2022 and ~~2020~~2021, ~~respectively,~~ and $0.2 million for each of the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021. ~~respectively.~~

The Company has noncancelable operating leases for offices, manufacturing facilities, warehouse space, automobiles and equipment expiring at various dates through 2030.

The components of lease expense for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021, are as follows:

	Three Months Ended June 30,						Six Months Ended June 30						Three Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2021			2020			2022			2021			2022			2021
Operating lease cost	$	506		$	544		$	1,023		$	1,079		$	493		$	506		$	997		$	1,023
Short term lease cost		55			43			101			85
Short-term lease cost														58			55			122			101
Sublease income		(26	)		(25	)		(51	)		(132	)		(26	)		(26	)		(51	)		(51	)
Total lease cost	$	535		$	562		$	1,073		$	1,032		$	525		$	535		$	1,068		$	1,073

Supplemental cash flow information related to the Company's operating leases was as follows:

	Six Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:	$	1,061	$	1,381	$	1,173	$	1,061
Right of use assets obtained in exchange for lease obligations:	$	400	$	387
Right-of-use assets obtained in exchange for lease obligations:					$	65	$	400

Supplemental balance sheet information related to the Company's operating leases was as follows:

							June 30,			December 31,
(in thousands)	June 30, 2021			December 31, 2020			2022			2021
Operating lease right-of use assets	$	7,241		$	7,761
Operating lease right-of-use assets							$	6,236		$	6,897

Current portion, operating lease liabilities	$	2,061		$	2,111		$	2,108		$	2,142
Operating lease liabilities, long term		6,971			7,481
Operating lease liabilities, long-term								5,806			6,488
Total operating lease liabilities	$	9,032		$	9,592		$	7,914		$	8,630

Weighted average remaining lease term (years)		7.1			7.4			6.4			6.7
Weighted average discount rate		9.3	%		9.3	%		9.3	%		9.3	%

~~Maturities of~~Future minimum lease payments for operating ~~lease liabilities at~~leases for each twelve-month period subsequent to June 30, ~~2021~~2022, ~~were~~are as follows:

Year Ending December 31,
(in thousands)
2021 (remainder of year)	$	1,053
2022		2,044
2022 (remainder of year)				$	1,066
2023		1,999			2,105
2024		1,732			1,747
2025		1,001			1,019
2026					980
Thereafter		4,854			3,871
Total lease payments		12,683			10,788
Less imputed interest		(3,651	)		(2,874	)
Total operating lease liabilities	$	9,032		$	7,914

In ~~May, 2021,~~ ~~the Company retired the 7,745,507 shares of common stock held by the Company as treasury shares and returned these shares to the status of authorized and unissued shares of common stock.~~

Stock-based awards consist of stock options, time-based restricted stock units (“RSUs”), performance-based RSUs and shares issued under the Company’s employee stock purchase plan. Activity under the Company’s equity incentive ~~plan~~plans for the six months ended June 30, ~~2021~~2022 was as follows:

	Stock Options					Restricted Stock Units					Market Condition RSU's								Weighted
				Weighted												*Stock*			*Average*		*Time-Based*					*Performance-*
	*Stock*			*Average*		*Restricted*					*Market*					*Options*			*Exercise*		*RSUs*			*Grant Date*		*Based RSUs*			*Grant Date*
	*Options*			*Exercise*		*Stock Units*			*Grant Date*		*Condition RSU's*			*Grant Date*		*Outstanding*			*Price*		*Outstanding*			*Fair Value*		*Outstanding*			*Fair Value*
	*Outstanding*			*Price*		*Outstanding*			*Fair Value*		*Outstanding*			*Fair Value*
Balance at December 31, 2020		2,637,339		$	3.51		1,560,461		$	2.44		813,031			2.12
Balance at December 31, 2021																	1,404,816		$	3.10		1,141,164		$	3.57		860,155		$	3.13
Granted		0			0		793,968			4.65		293,509			4.61		0			0		690,051			5.11		205,122			5.92
Exercised		(496,792	)		3.76		-			-		-			-		(15,597	)		2.72		-			-		-			-
Vested (RSUs)		-			-		(539,417	)		2.83		(163,218	)		2.98		-			-		(232,157	)		3.77		(163,223	)		2.98
Cancelled/Forfeited		(609,310	)		4.28		(56,642	)		3.64		(6,179	)		2.98		(29,928	)		2.93		(54,631	)		4.47		(7,823	)		3.18
Performance Factor Adjustment		-			-		0			0		163,216			2.98
Balance at June 30, 2021		1,531,237		$	3.13		1,758,370		$	3.28		1,100,359		$	2.78
Balance at June 30, 2022																	1,359,291		$	3.11		1,544,427		$	4.19		894,231		$	3.80

Stock-based compensation expense ~~related to stock options, restricted stock units, Market Condition RSU’s and the ESPP~~ for the three and six months ended June 30, ~~2021~~2022 and ~~2020~~2021 was allocated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Cost of revenues	$	31	$	14	$	51	$	24	$	52	$	31	$	88	$	51
Sales and marketing expenses		131		62		224		113		192		131		346		224
General and administrative expenses		969		645		1,803		1,341		923		969		1,714		1,803
Research and development expenses		33		48		54		84		72		33		114		54
Total stock-based compensation expenses	$	1,164	$	769	$	2,132	$	1,562	$	1,239	$	1,164	$	2,262	$	2,132

As of June 30, ~~2021,~~2022, the total compensation costs related to unvested awards not yet recognized is ~~$7.0~~$7.4 million and the weighted average period over which it is expected to be recognized is approximately ~~2.2~~1.9 years. The Company did not capitalize any stock-based compensation.

The weighted average estimated fair value of the ~~Market Condition~~performance-based RSUs that were granted during the six months ended June 30, ~~2021~~2022 was ~~$4.61~~$5.92 per unit. The following assumptions were used to estimate the fair value of the ~~Market Condition~~performance-based RSUs granted during the six months ended June 30, ~~2021~~2022 using a Monte-Carlo valuation simulation:

Basic earnings (loss) per share (EPS) is calculated by dividing net income (loss) by the number of weighted average shares of common stock outstanding during the period. The calculation of diluted earnings per share assumes conversion of stock options, ~~restricted stock units~~time-based RSUs, and ~~Market Condition~~performance-based RSUs into common stock using the treasury method. The weighted average number of shares used to compute basic and diluted ~~earnings per share~~EPS consists of the following:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Basic		40,152		38,468		39,960		38,389		41,304		40,152		41,256		39,960
Dilutive effect of equity awards		0		0		0		0		1,256		0		0		0
Diluted		40,152		38,468		39,960		38,389		42,560		40,152		41,256		39,960

The Company ~~has excluded~~excludes from the calculation of diluted EPS the weighted average shares ~~used in calculating the diluted earnings per common share options, restricted stock units and Market Condition RSUs totaling 4,389,966 and 5,727,716 as~~ of ~~June 30, 2021~~ ~~and~~ ~~2020~~ ~~respectively, as~~underlying stock-based awards if the impact of including these potential shares would be anti-dilutive.

The Company has excluded the impact of approximately 0.9 million shares and 4.8 million shares for the three months ended June 30, 2022 and 2021, and 3.7 million shares and 4.7 million shares for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s borrowings were comprised of:

	June 30,			December 31,			June 30,			December 31,
(in thousands)	2021			2020			2022			2021
Long-term debt:
Term loan	$	39,000		$	40,000		$	36,314		$	38,000
Revolving line		5,400			9,400			13,150			11,450
Less: unamortized deferred financing costs		(1,259	)		(1,393	)		(980	)		(1,120	)
Total debt		43,141			48,007			48,484			48,330
Less: current installments		(2,500	)		(2,000	)		(3,000	)		(3,515	)
Current unamortized deferred financing costs		280			279			280			280
Long-term debt	$	40,921		$	46,286		$	45,764		$	45,095

On December 22, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with Citizens Bank, N.A., Wells Fargo Bank, National Association, and Silicon Valley Bank (together, the “Lenders”). The Credit Agreement provides for a term loan of $40.0 million and a $25.0 million senior revolving credit facility (including a $10.0 million sub-facility for the issuance of letters of credit and a $10.0 million swingline loan sub facility) (collectively, the “Credit Facility”). The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s direct, domestic wholly-owned ~~subsidiaries;~~subsidiaries; none of the Company’s direct or indirect foreign subsidiaries has guaranteed the Credit Facility. The Company’s obligations under the Credit Agreement are secured by substantially all of the assets of Harvard Bioscience, Inc., and each guarantor (including all or a portion of the equity interests in certain of the Company’s domestic and foreign subsidiaries). The Credit Facility matures on December 22, 2025. Issuance costs of $1.4 million are amortized over the contractual term to maturity date on a straight-line basis, which approximates the effective interest method. ~~As of~~ ~~June 30, 2021,~~ ~~available~~Available and unused borrowing capacity under the revolving line of credit was ~~$19.6 million.~~$2.9 million as of June 30, 2022. Total revolver borrowing capacity is limited by the consolidated net leverage ratio as defined under the Credit Agreement. The Credit Facility replaced the Company’s prior credit facility, ~~with Cerberus Business Finance, LLC (the “Prior Credit Facility”),~~ which was repaid with borrowings under the Credit Facility.

Borrowings under the Credit Facility will, at the option of the Company, bear interest at either (i) a rate per annum based on LIBOR for an interest period of one, two, three or six months, plus an applicable interest rate margin determined as provided in the Credit Agreement (a “LIBOR Loan”), or (ii) an alternative base rate plus an applicable interest rate margin, each as determined as provided in the Credit Agreement (an “ABR Loan”). LIBOR interest under the Credit Agreement is subject to applicable market rates and a floor of ~~0.50 %.~~0.50%. The alternative base rate is based on the Citizens Bank prime rate or the federal funds effective rate of the Federal Reserve Bank of New York and is subject to a floor of 1.0%. The applicable interest rate margin varies from 2.0% per annum to 3.25% per annum for LIBOR Loans, and from 1.5% per annum to 3.0% per annum for ABR Loans, in each case depending on the Company’s consolidated leverage ratio and is determined in accordance with a pricing grid set forth in the Credit Agreement. The LIBOR benchmark is expected to be phased out over time and the terms of the Credit Agreement provide for a transition to an alternate benchmark rate when that occurs. Interest on LIBOR Loans is payable in arrears on the last day of each applicable interest period, and interest on ABR Loans is payable in arrears at the end of each calendar quarter. There are no prepayment penalties in the event the Company elects to prepay and terminate the Credit Facility prior to its scheduled maturity date, subject to LIBOR breakage and redeployment costs in certain circumstances.

~~As of~~ ~~June 30, 2021,~~ ~~the weighted average interest rate on the Credit Agreement borrowings was~~ ~~3.0%.The~~The effective interest rate for the three months ended June 30, ~~2021~~2022 and ~~2020~~2021, was ~~3.4%~~4.0% and ~~9.8%~~3.4%, ~~respectively. The effective interest rate~~respectively, and for the six months ended June 30, ~~2021~~2022 and ~~2020~~2021, was ~~3.3%~~3.6% and ~~9.6%~~3.3%, respectively. The carrying value of the debt approximates fair value because the interest rate under the obligation approximates market rates of interest available to the Company for similar instruments.

Commencing on March 31, 2021, the outstanding term loans amortizes in quarterly installments of $0.5 million per quarter on such date and during each of the next three quarters thereafter, $0.75 million per quarter during the next eight quarters thereafter and $1.0 million per quarter thereafter, with a balloon payment at maturity. Furthermore, within ninety days after the end of the Company’s fiscal year, ~~ended~~ ~~December 31, 2021~~ ~~and for each fiscal year thereafter,~~ the term loans may be permanently reduced pursuant to certain mandatory prepayment events including an annual “excess cash flow sweep” of 50% of the consolidated excess cash flow, as defined in the ~~agreement;~~agreement; provided that, in any fiscal year, any voluntary prepayments of the term loans shall be credited against the Company’s “excess cash flow” prepayment obligations on a dollar-for-dollar basis _for such fiscal year. Amounts outstanding under the revolving credit facility can be repaid at any time but are due in full at maturity.

The Credit Agreement includes customary affirmative, negative, and financial covenants binding on the Company. The negative covenants limit the ability of the Company, among other things, to incur debt, incur liens, make investments, sell assets and pay dividends on its capital stock. The financial covenants include a maximum consolidated net leverage ratio and a minimum consolidated fixed charge coverage ratio. The Credit Agreement also includes customary events of default.

On April 28, 2022, the Company entered into an amendment to the Credit Agreement and Pledge and Security Agreement (the “Amendment”), pursuant to which the Lenders and the Administrative Agent have agreed, among other things, (i) to modify the financial covenant relating to the consolidated net leverage ratio and (ii) to consent to the settlement described in Note 13- Litigation Settlement. In consideration for the Amendment, the Company paid a fee of $0.2 million to the Lenders and the Administrative Agent. The ~~carrying value~~Company was in compliance with the covenants of the ~~debt approximates fair value because~~Credit Agreement, as amended by the ~~interest rate under the obligation approximates market rates~~Amendment, as of ~~interest available to the Company for similar instruments.~~

The Company monitors interest rate risk attributable to both its outstanding and forecasted debt obligations by the use of cash flow sensitivity analysis which estimates the expected impact of changes in interest rates on the Company’s future cash flows.

On ~~January 31, 2018,~~ ~~the Company entered into an interest rate swap contract with a notional amount of $36.0 million and a termination date of~~ ~~January 1, 2023.~~ This swap contract, which converted specific variable-rate debt into fixed-rate debt and fixed the LIBOR rate associated with a portion of the term loan under the Prior Credit Facility at 2.72% was cancelled on ~~December 22, 2020,~~ ~~in connection with the new Credit Agreement as described in Note~~ 9. ~~The Company structured this interest rate swaps to be fully effective in accordance with ASC~~ ~~815~~ “Derivatives and Hedging”, and therefore changes in the fair value of the swap offset the variability of cash flows associated with the variable-rate, long-term debt obligations and were reported in accumulated other comprehensive income (AOCI). These amounts subsequently were reclassified into interest expense as a yield adjustment of the hedged interest payments in the same period in which the related interest affects earnings.

~~The following table summarizes the effect of derivatives designated as cash flow hedging instruments and their classification within comprehensive loss for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2020:~~

The following tables represent a disaggregation of revenue from contracts with customers for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020		2022		2021		2022		2021
Instruments, equipment, software and accessories	$	27,992	$	22,069	$	53,819	$	45,006	$	27,765	$	27,992	$	55,303	$	53,819
Service, maintenance and warranty contracts		1,205		1,239		2,367		2,073		1,443		1,205		2,683		2,367
Total revenues	$	29,197	$	23,308	$	56,186	$	47,079	$	29,208	$	29,197	$	57,986	$	56,186

The following tables represent a disaggregation of revenue by geographic destination for the three and six months ended June 30, ~~2021~~2022 and ~~2020:~~2021:

No ~~customer accounted for more than~~ ~~10%~~ ~~of revenues for the~~ ~~three~~ ~~and~~ ~~six~~ ~~months ended~~ ~~June 30, 2021~~ ~~and~~ ~~2020.~~

~~Changes in~~The following tables provide details of deferred revenue ~~from service contracts and advance payments from customers were~~ as ~~follows:~~of the periods indicated:

During the three months ended June 30, 2022 and 2021, the Company recognized revenue of $0.6 million and $0.3 million from contract liabilities existing at December 31, 2021 and 2020, respectively. During the six months ended June 30, 2022 and 2021 the Company recognized revenue of $1.3 million and $1.5 million from contract liabilities existing at December 31, 2021 and 2020, respectively.

Allowance for doubtful accounts is based on the Company’s assessment of the collectability of accounts receivable. ~~A rollforward of~~Activity in the allowance for doubtful accounts is as follows:

	Six Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2022			2021
Balance, beginning of period	$	227		$	325		$	136		$	227
Bad debt (credit) expense		(17	)		4			107			(17	)
Charge-offs and other recoveries		(62	)		(40	)
Effect of foreign currency translation		(3	)		1
Charge-offs and other								(48	)		(65	)
Balance, end of period	$	145		$	290		$	195		$	145

revenues for the three and six months ended June 30, 2022 and 2021. At June 30, 2022 and December 21, 2021, no customer accounted for more than 10% of net accounts receivable.

Income tax expense (benefit) ~~expense~~ was ~~$(0.2)~~$1.0 million and ~~$0.7~~$(0.2) million for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and was ~~$(0.2)~~$0.8 million and ~~$0.8~~$(0.2) million for the six months ended June 30, ~~2021~~2022 and ~~2020.~~2021, respectively. The effective tax rates for the three months ended June 30, ~~2021~~2022 and ~~2020,~~2021, were ~~35.1%~~28.8% and ~~(82.1)%~~35.1%, respectively. The effective tax rates for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, were ~~18.0%~~(23.6)% and ~~(14.4)%~~18.0%, respectively.

The difference between the Company’s effective tax rates in ~~2021~~2022 and ~~2020~~2021 compared to the U.S. statutory tax rate of 21% is primarily due to changes in valuation allowances associated with the Company’s assessment of the likelihood of the recoverability of deferred tax assets. The Company currently has valuation allowances against substantially all of its net operating loss carryforwards and tax credit carryforwards.

On April ~~14, 2017,~~27, 2022, ~~representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts (the “Court”), against~~ the Company and ~~other defendants, including~~ Biostage, Inc. (f/k/a Harvard Apparatus Regenerative Technology, Inc.) (“Biostage”), executed a ~~former subsidiary of the Company that was spun off in~~ ~~2013,~~ ~~as well as another~~ ~~third~~ ~~party. The complaint seeks payment for an unspecified amount of damages and alleges that the plaintiff sustained terminal injuries allegedly caused by products, including~~ ~~one~~ ~~synthetic trachea scaffold and~~ ~~two~~ ~~bioreactors, provided by certain of the named defendants and utilized in connection~~settlement with ~~surgeries performed by~~ ~~third~~ ~~parties in Europe in~~ ~~2012~~ ~~and~~ ~~2013.~~

On ~~October 1, 2019,~~ ~~the Court entered an order granting plaintiffs’ motion to compel the defendant to produce discovery. Subsequently,~~ the plaintiffs ~~filed a motion for sanctions against the Company on~~ ~~January 6, 2020~~ ~~claiming failure to produce. The Company’s counsel at the time,~~ which had been selected for the case by the Company’s liability insurance carrier, never notified the Company of plaintiffs’ motion and never responded to plaintiff’ motion. As a result of the failure of our former counsel to respond, on ~~January 29, 2020,~~ ~~the Court entered an order allowing plaintiffs’ sanctions against the Company and the other defendants, which establishes a sanction of admitted liability. In~~ ~~June 2021,~~ ~~the Company was informed of these~~ ~~2019~~ ~~and~~ ~~2020~~ ~~court actions by new defense counsel appointed by the Company’s liability insurance carrier. On~~ ~~June 9, 2021,~~ ~~the Company, together with the other defendants, filed a motion to vacate the Court’s order allowing plaintiffs’ motion for sanctions. On~~ ~~August 3, 2021,~~ ~~the Court held a hearing on the defendants' motion to vacate but~~ no ~~ruling has been made. The Company continues to actively fight the damages in this case.~~

~~While the Company believes that~~resolves all claims made in this lawsuit are without merit and that there are strong grounds to vacate the sanctions, unless the sanctions award is vacated the Company could face a trial on damages. If the sanctions award is vacated, the Company will have the opportunity to contest the underlying claims at trial and, while there can be no ~~assurance of prevailing, the Company believes those claims lack merit. If the Company faces a trial on damages, whether as a result of the sanctions or following a loss on the merits, the Company does~~ ~~not~~ know the exact amount of compensatory and, potentially, punitive damages that could be awarded. In all events, the Company believes that available product liability insurance coverage will be available for all or a significant portion of such damages, although there can be no assurance that the damages awarded will be within the limits of the insurance. The Company is also evaluating possible malpractice claims as an additional source of recovery. The Company cannot provide assurance that any losses will ~~not~~ ~~exceed such recoveries. Further, Biostage has agreed to indemnify us for claims and losses~~ relating to ~~certain liabilities that it has assumed from us, including liabilities~~the litigation as described in connection with the sale of Biostage’s products and other liabilities related to the operation of Biostage’s business. However, the Company cannot be assured that Biostage will have the ability to indemnify the Company against the liabilities the CompanyNote ~~may~~ 13~~incur in this lawsuit, in particular due to Biostage having limited revenues, products in early-stage development, a need for additional funds in the future and its overall financial condition.~~ – “Litigation Settlement”.

The Company is involved in various other claims and legal proceedings arising in the ordinary course of business. After consultation with legal counsel, the Company has determined that the ultimate disposition of such proceedings is not likely to have a material adverse effect on its business, financial condition, results of operations or cash flows. Although unfavorable outcomes in the proceedings are possible, the Company has not accrued for loss contingencies relating to any such matters as they are not considered to be probable and reasonably estimable. If one or more of these matters are resolved in a manner adverse to the Company, the impact on the Company’s business, financial condition, results of operations and cash flows could be material.

On April 14, 2017, representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against the Company and other defendants, including Biostage, a former subsidiary of the Company that was spun off in 2013, as well as another third party. The complaint seeks payment for an unspecified amount of damages and alleges that the plaintiff sustained terminal injuries allegedly caused by products, including one synthetic trachea scaffold and two bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in Europe in 2012 and 2013.

On April 27, 2022, the Company and Biostage executed a settlement with the plaintiffs of the litigation and Biostage’s products liability insurance carriers (the “Settlement”), which resolved all claims by and between the parties and Biostage’s product liability insurance carriers and resulted in the dismissal with prejudice of the wrongful death claim and all claims between the Company, Biostage and the insurance carriers. The Settlement was entered into solely by way of compromise and settlement and is not in any way an admission of liability or fault by the Company or Biostage. Biostage has indemnified the Company for all losses and expenses, including legal expenses, that the Company incurs in connection with the litigation and the Settlement.

During the three months ended March 31, 2022, the Company accrued $5.2 million of costs related to legal fees and the Settlement. Additionally, during the year ended December 31, 2021, the Company had incurred $0.3 million in legal fees in connection with the litigation. Due to the financial condition of Biostage, the Company determined that it was uncertain as to whether Biostage would be able to meet its indemnification obligation and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022, the Company recorded a credit of $4.9 million as a result of adjustments to the reserves against the indemnification receivable from Biostage. The adjustments reflect: i) the issuance by Biostage of 4,000 shares of its Series E Convertible Preferred Stock (the “Series E Preferred Stock”) to the Company on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligation, ii) the payment by Biostage of a portion of the legal fees associated with the Settlement, and iii) other accrual adjustments. As of June 30, 2022, the Company has fully reserved approximately $0.5 million of unpaid indemnification obligation receivables from Biostage.

The Series E Preferred Stock was recorded at an estimated fair value of $3.9 million, and is included in the June 30, 2022 Consolidated Balance Sheet as a component of Other Long-Term Assets. The Series E Preferred Stock ranks senior to all classes of common stock of Biostage and all classes of preferred stock of Biostage (unless the Company consents to Biostage’s issuance of other preferred stock that is senior to or pari passu with the Series E Preferred Stock) and accrues dividends at a rate of 8% per annum that are payable in additional shares of Series E Preferred Stock. Each share of Series E Preferred Stock is convertible at any time at the option of the Company into such number of shares of Biostage common stock determined by dividing (x) the $1,000 face value of the Series E Preferred Stock plus all accrued and unpaid dividends thereon by (b) the average of the volume weighted average trading prices of Biostage’s common stock, which is currently quoted on the OTCQB Marketplace, for the 60 consecutive trading days prior to the conversion. In the event Biostage has a subsequent qualified offering of its common stock, (which is defined as an offering of Biostage common stock that coincides with its uplisting onto Nasdaq, the first subsequent public offering by Biostage, or the first subsequent private placement by Biostage resulting in gross proceeds to Biostage of at least $4,000,000), the Series E Preferred Stock is mandatorily converted into Biostage common stock at the applicable qualified offering price. Due to Biostage’s limited operating history, their overall financial condition and the limited trading volume and liquidity of Biostage’s common stock, the value of the Series E Preferred Stock could fluctuate considerably from time to time. The Company intends to liquidate its position in Biostage following future qualifying events but does not anticipate any material cash inflows in the next twelve months.

The Company has elected the provisions within ASC 321Investment Securities to subsequently measure the Series E Preferred Stock at its original cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of Biostage.

This Quarterly Report on Form 10-Q contains statements that are not statements of historical fact and are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). The forward-looking statements are principally, but not exclusively, contained in “Item 2: Management’s Discussion and Analysis of Financial Condition andResultsofOperations.” These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements include, but are not limited to, statements about management’s confidence or expectations, and our plans, objectives, expectations, and intentions that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “seek,” “expects,” “plans,” “aim,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “intends,” “think,” “potential,” “objectives,” “optimistic,” “strategy,” “goals,” “sees,” “new,” “guidance,” “future,” “continue,” “drive,” “growth,” “long-term,” “projects,” “develop,” “possible,” “emerging,” “opportunity,” “pursue” and similar expressions intended to identify forward-looking statements. These statements reflect our current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. ~~Factors that may cause our actual results to differ materially from those~~We discuss many of these risks in ~~the forward-looking statements include the duration and~~~~severity of the COVID-19 pandemic and its impact on our business; reductions in customers~~’ research budgets or government funding; domestic and global economic conditions; economic, political and other risks associated with international revenues and operations; recently enacted U.S. government tax reform; currency exchange rate fluctuations; economic and political conditions generally and those affecting pharmaceutical and biotechnology industries; the seasonal nature of purchasing in Europe; our failure to expand into foreign countries and international markets; our inability to manage our growth; competition from our competitors; our substantial debt and our ability to meet the financial covenants contained in our credit facility; failure or inadequacy of the our information technology structure; impact of difficulties implementing our enterprise resource planning systems; information security incidents or cybersecurity breaches; our failure to identify potential acquisition candidates and successfully close such acquisitions with favorable pricing or integrate acquired businesses or technologies; unanticipated costs relating to acquisitions and known and unknown costs arising in connection with our consolidation of business functions and our current and any future restructuring initiatives; failure of any banking institution in which we deposit our funds or its failure to provide services; our failure to raise or generate capital necessary to implement our acquisition and expansion strategy; the failure of Biostage to indemnify us for any liabilities associated with Biostage’s business; impact of any impairment of our goodwill or intangible assets; our ability to retain key personnel; failure or inadequacy or our information technology structure; rising commodity and precious metals costs;~~our ability to protect our intellectual property and operate without infringing on others~~’ ~~intellectual property; exposure to product and other liability claims; global stock market volatility, currency exchange rate fluctuations and regulatory changes caused by the United Kingdom~~’~~s exit from the European Union; plus other factors described under the heading~~ “~~Item 1A. Risk Factors~~”detail in our Annual Report on Form 10-K for year ended December 31, ~~2020, or~~2021. You should carefully review all of these factors, as well as other risks described in our public filings, and you should be aware that there may be other ~~public filings. Our results may also be affected by~~factors, including factors of which we are not currently ~~aware.~~aware, that could cause these differences. Also, these forward-looking statements represent our estimates and assumptions only as of the date of this report. We may not update these forward-looking statements, even though our situation may change in the future, unless we have obligations under the federal securities laws to update and disclose material developments related to previously disclosed information.

~~Unless the context requires otherwise, references in this Quarterly Report to “we,” “us” and “our” refer to Harvard Bioscience, Inc., and its subsidiaries.~~

Harvard Bioscience, Inc. is ~~a leading developer, manufacturer~~referred to herein as “we,”“our,”“us,” and seller of technologies, products and services that enable fundamental research, discovery, and preclinical testing for drug development. Our customers range from renowned academic institutions and government laboratories to “the world’s leading pharmaceutical, biotechnology and contract research organizations. With operations in North America, Europe, and China, we sell through a combination of direct and distribution channels to customers around the world.Company.”

~~On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic.~~ The COVID-19 pandemic has had a negative impact on our operations to date and the future impacts of the pandemic and any resulting economic impact ~~remain~~are largely unknown and ~~rapidly~~continuously evolving. Since the global outbreak of COVID-19, many customers, particularly academic research institutions, reduced laboratory work which has negatively impacted, and will continue to negatively impact, our sales. ~~While many~~Also, countries world-wide continue to issue COVID-19 related policies in an attempt to control the pandemic. In particular, during the beginning of ~~our customers, including academic labs,~~2022, China implemented area-wide shutdowns in order to control the spread of COVID-19, which have ~~reopened, a significant number~~continued for different parts of ~~them remained closed or at significantly lower capacity levels through~~China throughout the ~~second quarter~~first half of ~~2021. Additionally, to~~2022. To ensure business continuity while maintaining a safe environment for employees aligned with guidance from government and health organizations, we transitioned a significant portion of our workforce to work-from-home ~~while implementing social distancing requirements~~ and ~~other measures to allow manufacturing and other personnel essential to production to continue work within our facilities. Business travel was significantly reduced during this period. While~~while a portion of the workforce has returned to in-office work, ~~and~~ travel is ~~less restricted, we continue~~still being managed and the Company continues to have restrictions ~~which represent disruptions~~ which can impact productivity including sales and marketing activities.

The global supply chain has experienced significant disruptions ~~during the first half of 2021~~ due to electronic component and labor shortages and other macroeconomic factors which have emerged since the onset of COVID-19, leading to increased cost of freight, ~~and~~ purchased materials and manufacturing labor costs, while also delaying customer shipments. We believe these supply chain trends will continue through the rest of ~~2021.~~

2022. These conditions in addition to the overall impact on the global economy ~~has~~have negatively impacted our results of operations and cash flows.

~~Revenue for~~Additionally, during 2022 the ~~three~~global economy has experienced high levels of inflation, rising interest rates and ~~six months ended June 30, 2021 and for the year ending December 31, 2020 was~~significant fluctuations in currency values. Our results of operations have been negatively impacted ~~due~~by higher labor costs associated with inflation, and we expect the interest paid on our debt will continue to ~~the conditions noted.~~ increase as a result of these conditions.

If business interruptions resulting from COVID-19 or the current macroeconomic conditions described above were to be prolonged or expanded in scope, our business, financial condition, results of operations and cash flows would be negatively impacted. We will continue to actively monitor this situation and will implement actions necessary to maintain business continuity.

In December 2019, we implemented a restructuring plan (the “2019 Restructuring Plan”) to deliver significant cost savings beginning in 2020 and support delivery of a strategic action plan announced in September 2019. The 2019 Restructuring Plan includes consolidation of our Connecticut manufacturing plant with our existing Massachusetts site, downsizing of operations in the United Kingdom and a reduction in force across the business equal to approximately 10% of our headcount. The 2019 Restructuring Plan is expected to deliver approximately $4.5 million of annualized run-rate savings. The original initiatives under the 2019 Restructuring Plan were completed in the second half of 2020.

We continued to execute the 2019 Restructuring Plan during the COVID-19 pandemic and expanded the scope of the restructuring by realigning our organizational structure to reduce management layers and accelerated our efforts to move to a leaner organization and operation. As a result of this expanded scope, we eliminated additional headcount during 2020 and in the first quarter of 2021 communicated to employees our plan to consolidate certain engineering operations and eliminate two small facilities in Europe. These incremental actions are expected to generate additional annualized cost savings of approximately $2.0 million, and were substantially complete as of June 30, 2021.

Through June 30, 2021, we incurred cash outlays of $8.2 million as a result of the actions taken under the 2019 Restructuring Plan and incremental cost reductions and other business improvements. We believe these strategic actions will position the business for improved financial performance.

Three months ended June 30, ~~2021~~2022 compared to three months ended June 30, ~~2020~~2021.

	Three Months Ended June 30,											Three Months Ended June 30,
(dollars in thousands)	2021			% of revenue			2020		% of revenue			2022			% of revenue			2021			% of revenue
Revenues	$	29,197					$	23,308				$	29,208					$	29,197
Gross profit		16,353			56.0	%		13,856		59.4	%		16,637			57.0	%		16,353			56.0	%
Sales and marketing expenses		5,730			19.6	%		4,279		18.4	%		6,587			22.6	%		5,730			19.6	%
General and administrative expenses		6,399			21.9	%		5,670		24.3	%		5,981			20.5	%		6,399			21.9	%
Research and development expenses		2,701			9.3	%		1,897		8.1	%		3,497			12.0	%		2,701			9.3	%
Amortization of intangible assets		1,465			5.0	%		1,454		6.2	%		1,454			5.0	%		1,465			5.0	%
Settlement of litigation, net													(4,880	)		-16.7	%		-			-
Interest expense		377			1.3	%		1,233		5.3	%		515			1.8	%		377			1.3	%
Income tax (benefit) expense		(222	)		-0.8	%		713		3.1	%
Income tax expense (benefit)													986			3.4	%		(222	)		-0.8	%

Revenues for the three months ended June 30, ~~2021~~2022, were $29.2 million ~~an increase of approximately $5.9 million, or 25.3%,~~as compared to revenues of ~~$23.3~~$29.2 million for the three months ended June 30, ~~2020.~~2021. Revenue improved significantly due to academic labs reopening in 2021. A large number of academic labs remained closed during the second quarter of 2020. We believe that academic lab activity has not yet returned to pre-COVID levels, but activity is significantly higher than the prior year period. Revenue alsofrom our cellular and molecular products increased due to ~~improved sales of products~~improvements in order fulfillment processes which reduced order backlog. These increases were offset by decreases from our preclinical product family ~~associated with improved sales processes~~related to lower order volume in Europe and ~~product enhancements released~~China. Also, revenue was negatively impacted in ~~2020.~~the three months ended June 30, 2022, by unfavorable currency adjustments.

Gross profit increased ~~$2.5~~$0.3 million, or ~~18.0%~~1.7%, to $16.6 million for the three months ended June 30, 2022, compared with $16.4 million for the three months ended June 30, ~~2021, compared with $13.9 million~~2021. Gross margin increased to 57.0% for the three months ended June 30, ~~2020, due primarily to the increase in revenue noted. Gross margin decreased to~~2022, compared with 56.0% for the three months ended June 30, ~~2021 compared with 59.4% for the three months ended June 30, 2020.~~2021. The ~~decrease~~increase in gross margin percentage was due to higher supply chain and logistics costs. The global supply chain has experienced significant disruptions during the first half of 2021 due to electronic component and labor shortages and other macroeconomic factors, leading to increased cost of freight and purchased materials. We believe these supply chain trends will continue through the rest of 2021.a pricing improvements over last year.

Sales and marketing expenses increased ~~$1.4~~$0.9 million, or ~~33.9%~~15.0%, to ~~$5.7~~$6.6 million for the three months ended June 30, ~~2021~~2022, compared to ~~$4.3~~$5.7 million during the same period in ~~2020.~~2021. The increase was ~~primarily~~ due to ~~investments in~~ new marketing and sales support personnel and ~~higher~~increases in travel and attendance at in-person trade shows. Travel and tradeshow costs ~~as many of our employees returned from part-time~~were lower in the prior year quarter due to full-time status. During the second quarter of 2020 part-time work, pay reductions and other temporary cost reduction measures were in place in response to the rapid reduction of revenue following the onset of COVID-19.COVID restrictions.

General and administrative expenses ~~were $6.4~~decreased $0.4 million, or 6.5%, to $6.0 million for the three months ended June 30, ~~2021, an increase of $0.7~~2022, compared to $6.4 million ~~or 12.9%, compared with $5.7 million for~~during the ~~three months ended June 30, 2020.~~same period in 2021. The ~~increase~~decrease was primarily due to ~~higher overall compensation as many of our employees returned from part-time to full-time status~~lower restructuring expenses and ~~higher stock-based~~variable compensation. During the second quarter of 2020 part-time work, pay reductions and other temporary cost reduction measures were in place in response to the rapid reduction of revenue following the onset of COVID-19.

Research and development expenses were $3.5 million for the three months ended June 30, 2022, an increase of $0.8 million, or 29.5%, compared with $2.7 million for the three months ended June 30, ~~2021, an increase of $0.8 million, or 42.4%, compared with $1.9 million for the three months ended June 30, 2020.~~2021. The increase was primarily due to higher ~~compensation as many of~~costs associated with new product development for our employees returned from part-time to full-time status and higher stock-based compensation and other costs to affect our strategic plans. During the second quarter of 2020 part-time work, pay reductions and other temporary cost reduction measures were in place in response to the rapid reduction of revenue following the onset of COVID-19.preclinical product lines.

Amortization of intangible ~~asset expenses was~~assets of $1.5 million for the three months ended June 30, ~~2021 and did not change materially as compared~~2022, was comparable to the three months ended June 30, ~~2020.~~2021.

During the three months ended March 31, 2022, we accrued $5.2 million of costs related to the Settlement as discussed in Note 13 Litigation Settlement to our Consolidated Financial Statements. Due to the financial condition of Biostage, we determined that it was uncertain as to whether Biostage would be able to satisfy its indemnification obligations to us and had fully reserved any receivable from Biostage.

During the three months ended June 30, 2022, we recorded a credit of $4.9 million as a result of adjustments to the reserves against the indemnification receivable from Biostage. These adjustments reflect: i) the issuance by Biostage of Series E Preferred Convertible Stock to us on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligations, ii) the payment by Biostage of a portion of the legal fees associated with the Settlement, and iii) other accrual adjustments.

Interest expense was $0.5 million for the three months ended June 30, 2022, and $0.4 million for the three months ended June 30, ~~2021, a decrease~~2021. The increase was the result of ~~$0.8~~higher interest rates under our Credit Agreement as well as higher average borrowing balances.

Income tax expense (benefit) for the three months ended June 30, 2022 was $1.0 million ~~or 69.4%, compared with $1.2~~and was $(0.2) million for the three months ended June 30, ~~2020. The decrease was due to lower interest rates under our new Credit Agreement entered into on December 22, 2020, as well as reduced average borrowing as compared to the prior period.~~

~~Income tax (benefit) expense for the three months ended June 30, 2021 and 2020 was $(0.2) million and $0.7 million, respectively.~~2021. The effective tax rates for the three months ended June 30, 2022 and 2021 were 28.8% and ~~2020 were~~ 35.1% ~~and (82.1)%~~, respectively. The difference between our effective tax rates in ~~2021~~2022 and ~~2020~~2021 compared to the U.S. statutory tax rate of 21% is primarily due to changes in valuation allowances associated with our assessment of the likelihood of the recoverability of our deferred tax assets. We currently have valuation allowances against substantially all of our net operating loss carryforwards and tax credit carryforwards.

Six months ended June 30, ~~2021~~2022 compared to six months ended June 30, ~~2020~~2021.

	Six Months Ended June 30,											Six Months Ended June 30,
(dollars in thousands)	2021			% of revenue			2020		% of revenue			2022		% of revenue			2021			% of revenue
Revenues	$	56,186					$	47,079				$	57,986				$	56,186
Gross profit		31,784			56.6	%		26,838		57.0	%		32,814		56.6	%		31,784			56.6	%
Sales and marketing expenses		11,116			19.8	%		9,858		20.9	%		13,274		22.9	%		11,116			19.8	%
General and administrative expenses		12,732			22.7	%		12,429		26.4	%		12,306		21.2	%		12,732			22.7	%
Research and development expenses		5,188			9.2	%		4,387		9.3	%		6,717		11.6	%		5,188			9.2	%
Amortization of intangible assets		2,929			5.2	%		2,881		6.1	%		2,920		5.0	%		2,929			5.2	%
Settlement of litigation, net													311		0.5	%		-			-
Interest expense		788			1.4	%		2,532		5.4	%		899		1.6	%		788			1.4	%
Income tax (benefit) expense		(237	)		-0.4	%		768		1.6	%
Income tax expense (benefit)													848		1.5	%		(237	)		-0.4	%

Revenues for the six months ended June 30, ~~2021~~2022 were ~~$56.2~~$58.0 million, an increase of approximately ~~$9.1~~$1.8 million, or ~~19.3%,~~3.2% compared to revenues of ~~$47.1~~$56.2 million for the six months ended June 30, ~~2020.~~2021. Revenue improved ~~significantly~~in the first half of 2022 due to ~~academic labs reopening~~improvements in ~~2021. A large number of academic labs remained closed during 2020. We believe that academic lab activity has not yet returned~~order fulfillment processes which reduced backlog. Revenue was negatively impacted by lower orders outside the United States. Orders from customers in Asia continue to ~~pre-COVID levels, but activity is significantly higher~~be lower than the prior ~~year. Revenue also increased~~year due to ~~improved~~COVID lockdowns in China. We expect sales to China customers to remain at reduced levels until lockdown conditions are removed. Also, revenue was negatively impacted in the six months ended June 30, 2022 by unfavorable currency adjustments.

Gross profit increased ~~$4.9~~$1.0 million, or ~~18.4%~~3.2%, to $32.8 million for the six months ended June 30, 2022, compared with $31.8 million for the six months ended June 30, 2021 ~~compared with $26.9 million for the six months ended June 30, 2020,~~ due primarily to the increase in revenue noted. Gross margin ~~decreased to~~was 56.6% for both the ~~six~~three months ended June 30, ~~2021 compared with 57.0% for the six months ended~~2022 and June 30, ~~2020. The decrease~~2021. Increases in gross margin ~~on a year-to-date date was~~percentage due to ~~supply chain cost increases in the second quarter of 2021 which~~pricing improvements and volume were offset by ~~gross margin increases~~the impact of supply chain disruption. The global supply chain has experienced significant disruptions due to ~~higher volumes~~electronic component and ~~improved product mix.~~labor shortages and other macroeconomic factors, leading to increased costs. We believe these supply chain trends will continue to impact our results of operations through the rest of 2022.

Sales and marketing expenses increased ~~$1.2~~$2.2 million, or ~~12.8%~~19.4%, to ~~$11.1~~$13.3 million for the six months ended June 30, ~~2021~~2022, compared to ~~$9.9~~$11.1 million during the same period in ~~2020.~~2021. The increase was primarily due to ~~investments in~~ new marketing and sales support personnel ~~higher costs as many of our employees returned from part-time to full-time status~~ and ~~higher variable sales costs~~increases in travel and attendance at in-person trade shows offset by ~~cost reduction initiatives~~lower variable compensation. Travel and tradeshow costs were lower ~~travel and trade show related costs~~in the prior year quarter due to ~~COVID-19-related~~COVID restrictions.

General and administrative expenses ~~were $12.7~~decreased $0.4 million, or 3.3%, to $12.3 million for the six months ended June 30, ~~2021, an increase of $0.3~~2022, compared to $12.7 million ~~or 2.4%, compared with $12.4 million for~~during the ~~six months ended June 30, 2020.~~same period in 2021. The ~~increase~~decrease was primarily due to ~~higher compensation costs as many of our employees returned from part-time to full-time status and higher stock-based compensation which were partially offset by cost reduction initiatives and~~ lower ~~restructuring and other costs to affect our strategic plans.~~variable compensation.

Research and development expenses were $6.7 million for the six months ended June 30, 2022, an increase of $1.5 million, or 29.5%, compared with $5.2 million for the six months ended June 30, ~~2021, an increase of $0.8 million, or 18.3%, compared with $4.4 million for the six months ended June 30, 2020.~~2021. The increase was primarily due to higher ~~compensation~~ costs ~~as many of~~associated with new product development in our ~~employees returned from part-time to full-time status and higher restructuring and other costs to affect our strategic plans.~~preclinical product lines.

Amortization of intangible asset expenses ~~was~~were $2.9 million for both the six months ended June 30, ~~2021~~2022, and ~~did not change materially as compared to~~June 30, 2021.

During the six months ended June 30, ~~2021.~~2022, we incurred a net expense of $0.3 million related to the Settlement consisting of $5.2 million in settlement and legal expenses accrued during the three months ended March 31, 2022 offsets by a credit recorded during the three months ended June 30, 2022 of $4.9 million as a result of adjustments to the reserves against the indemnification receivable from Biostage. These adjustments reflect: i) the issuance by Biostage of Series E Convertible Preferred Stock to us on June 10, 2022, in satisfaction of $4.0 million of Biostage’s total indemnification obligations, ii) the payment by Biostage of a portion of the legal fees associated with the Settlement, and iii) other accrual adjustments.

Interest expense was $0.9 million for the six months ended June 30, 2022, and $0.8 million for the six months ended June 30, ~~2021, a decrease~~2021. The increase was the results of ~~$1.7~~both higher interest rates under our Credit Agreement as well as higher average borrowing balances.

Income tax expense (benefit) for the six months ended June 30, 2022 was $0.8 million ~~or 68.9%, compared with $2.5~~and was $(0.2) million for the six months ended June 30, ~~2020. The decrease was due to lower interest rates under our new Credit Agreement entered into on December 22, 2020, as well as reduced average borrowing as compared to the prior period.~~

~~Income tax (benefit) expense for the six months ended June 30, 2021 and 2020 was $(0.2) million and $0.8 million, respectively.~~2021. The effective tax rates for the six months ended June ~~31,~~30, 2022 and 2021 were (23.6)% and ~~2020 were~~ 18.0% ~~and (14.4)%~~, respectively. The difference between our effective tax rates in ~~2021~~2022 and ~~2020~~2021 compared to the U.S. statutory tax rate of 21% is primarily due to changes in valuation allowances associated with our assessment of the likelihood of the recoverability of our deferred tax assets. We currently have valuation allowances against substantially all of our net operating loss carryforwards and tax credit carryforwards.

Our primary sources of liquidity are cash and cash equivalents, internally generated cash flow from operations and our revolving credit facility. Our expected cash outlays relate primarily to cash payments due under our Credit Agreement described below as well as capital expenditures ~~severance~~ and ~~other~~ payments associated with ongoing ~~restructuring and cost reduction~~business improvement initiatives.

As of June 30, ~~2021,~~2022, we held cash and cash equivalents of ~~$6.2~~$4.3 million, compared with ~~$8.3~~$7.8 million at December 31, ~~2020. As of June 30, 2021 and December 31, 2020, we had $44.4~~2021. Borrowings outstanding was $49.5 million and $49.4 million as of ~~borrowings outstanding under our Credit Facility, respectively. Total debt, net of cash~~June 30, 2022 and ~~cash equivalents, was $38.2 million at June, 2021, compared to $41.1 million at~~ December 31, ~~2020.~~2021, respectively.

On December 22, 2020, we entered into ~~the~~a Credit ~~Facility~~Agreement which provides for a term loan of $40.0 million and a $25.0 million senior revolving credit ~~facility. Obligations under the Credit Agreement are secured by substantially all of our assets~~facility and ~~are guaranteed by certain of our direct, domestic wholly-owned subsidiaries. The Credit Agreement~~ matures on December 22, ~~2025. See~~2025 (See Note 9 to ~~the~~our Condensed Consolidated Financial Statements ~~for a detailed discussion regarding our Credit Agreement.~~

included in “Part I, Item 1. Financial Statement” of this report). As of June 30, ~~2021,~~2022, the weighted average interest rate on our borrowings was ~~3.0%~~5.3%, and ~~our~~the available and unused borrowing capacity under the revolving line of credit was ~~$19.6~~$2.9 million. Total revolver borrowing capacity is limited by our consolidated net leverage ratio as defined under the Credit Agreement.

On April 28, 2022, we entered into an amendment to the Credit Agreement and Pledge and Security Agreement (see Note 9 to our Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial Statements” of this report). We are ~~compliant~~in compliance with ~~all~~the covenants ~~under~~of the Credit Agreement, as amended, as of June 30, ~~2021.~~2022.

Based on our current operating plans, we expect that our available cash, cash generated from current operations and debt capacity will be sufficient to finance current operations, any costs associated with restructuring activities and capital expenditures for at least the next 12 months. This assessment includes consideration of our best estimates of the impact of the COVID-19 pandemic and other macroeconomic trends on our financial results described above. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary as a result of a number of factors.

	Six Months Ended June 30,						Six Months Ended June 30,
(in thousands)	2021			2020			2022			2021
Cash provided by operating activities	$	1,805		$	5,244
Cash (used in) provided by operating activities							$	(2,176	)	$	1,805
Cash used in investing activities		(507	)		(524	)		(913	)		(507	)
Cash used in financing activities		(3,333	)		(10,371	)		(484	)		(3,333	)
Effect of exchange rate changes on cash		(45	)		(55	)		11			(45	)
Decrease in cash and cash equivalents	$	(2,080	)	$	(5,706	)	$	(3,562	)	$	(2,080	)

Cash (used in) provided by ~~operations~~operating activities was ~~$1.8~~$(2.2) million and ~~$5.2~~$1.8 million for the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively. Cash flow from operations for the six months ended June 30, ~~2021,~~2022 was lower than the comparable period in the prior year ~~period~~ due to ~~variable compensation paid in 2021~~increased operating losses as noted, and ~~higher levels~~offset by the positive impact of ~~working capital due to sales growth. Cash flow from operations for~~improved accounts receivable collections. Also, during the six months ended June 30, ~~2020 was positively impacted by reductions~~2022, we paid approximately $4.0 million in ~~working capital due to lower revenue and management efforts to offset~~connection with the ~~initial significant negative impacts that the COVID-19 pandemic had on revenue.~~Settlement.

Cash used in investing activities was $0.9 million and $0.5 million for ~~each of~~ the six months ended June 30, 2022 and 2021, respectively, and ~~2020, respectively,~~ primarily ~~consisting~~consisted of capital ~~expenditures.~~expenditures in manufacturing and information technology infrastructure.

Cash used in financing activities was ~~$3.3~~$0.5 million and ~~$10.3~~$3.3 million for the six months ended June 30, 2022 and 2021, ~~and 2020,~~ respectively. During the six months ended June 30, 2022, total debt outstanding under our credit facility was unchanged. Payments of $1.7 million paid against the term loan were offset by net drawings against our revolver of $1.7 million. We also paid $0.5 million for taxes related to net share settlement of equity awards. During the six months ended June 30, 2021, we repaid $5.0 million of debt, which included a term loan installment payment of $1.0 million and paydown of debt under our revolving facility of $4.0 million, we received proceeds of $2.8 million from the exercise of stock options and we paid $1.0 million for taxes related to net share ~~settlement~~settlements of equity awards. ~~During the six months ended June 30, 2020, we repaid $10.3 million~~

Our international operations in some instances operate in a natural hedge as we sell our products in many countries and a substantial portion of our revenues, costs and expenses are denominated in foreign currencies, especially the British pound, the euro, the Canadian dollar, and the Swedish krona.

During the three months ended June 30, ~~2021,~~2022, changes in foreign currency exchange rates resulted in ~~a favorable~~an unfavorable translation effect on our consolidated revenues of approximately ~~$1.0~~$0.9 million and ~~an unfavorable~~a favorable effect on ~~expenses~~expense of approximately $0.9 million. During the six months ended June 30, ~~2021,~~2022, changes in foreign currency exchange rates resulted in ~~a favorable~~an unfavorable translation effect on our consolidated revenues of approximately ~~$1.8~~$1.3 million and ~~an unfavorable~~a favorable effect on expenses of approximately ~~$1.7~~$1.3 million.

The gain associated with the translation of foreign equity into U.S. dollars included as a component of comprehensive income (loss) during the three months ended June 30 2021 was approximately $0.5 million, compared to a gain of $0.7 million for the three months ended June 31, 2020. The loss associated with the translation of foreign equity into U.S. dollars included as a component of comprehensive (loss) income ~~(loss)~~during the three months ended June 30, 2022 was $(2.5) million, compared to gain of approximately $0.5 million for the three months ended June 30, 2021. The loss associated with the translation of foreign equity into U.S. dollars included as a component of comprehensive loss during the six months ended June ~~31, 2021~~30, 2022 was ~~approximately $(0.8)~~$(3.2) million, compared to a loss of ~~$(1.0)~~$(0.8) million for the six months ended June 30, ~~2020.~~2021.

In addition, currency exchange rate fluctuations included as a component of net income resulted in currency ~~gains (losses)~~losses of approximately $(0.2) million and ~~$(0.1)~~$(0.2) million during each of the three months ended June 30, 2022 and 2021, and ~~2020, and currency gains (losses) of $(0.1)~~$(0.2) million and ~~$0.1~~$(0.1) million during each of the six months ended June 30, ~~2021~~2022 and ~~2020,~~2021, respectively.

The critical accounting policies underlying the accompanying unaudited consolidated financial statements are those set forth in Part II, Item 7 included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020.~~2021.

For information on recent accounting pronouncements impacting our business, see “Recently Issued Accounting Pronouncements” included in Note 2 to our Condensed Consolidated Financial Statements included in “Part I, Item 1. Financial ~~Statement”~~Statements” of this report.

As of June 30, ~~2021,~~2022, the end of the period covered by this report, our management, including our Chief Executive Officer and our Chief Financial Officer, reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) of the Exchange Act). Based upon management's review and evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified by the SEC and is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the second quarter of fiscal ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We continue to monitor the impact of the COVID-19 pandemic and, despite many of our employees working remotely, have not experienced any changes that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

In designing and evaluating our controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud within the Company have been detected.

The information included in Note 12 and Note 13 to the Condensed Consolidated Financial Statements (Unaudited) included in Part I, Item 1 of this quarterly report is incorporated herein by reference.

You should carefully consider the risk factors set forth below together with the risk factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2020,~~2021, which could materially affect our business, financial position, or future results of operations. The risks described below and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially adversely affect our business, financial position, or future results of operations.

~~As a result~~Item 2.Unregistered Sales of ~~our spin-off~~Equity Securities and Use of ~~Harvard Apparatus Regenerative Technology, Inc., now known as Biostage, together with certain related transactions, third parties may seek to hold us responsible for Biostage~~’~~s liabilities, including liabilities that Biostage has assumed from us.~~Proceeds.

Third parties may continue to seek to hold us responsible for Biostage’s liabilities, including any of the liabilities that Biostage agreed to retain or assume in connection with the separation of the Biostage business from our businesses, and related spin-off distribution. On April 14, 2017, representatives for the estate of an individual plaintiff filed a wrongful death complaint with the Suffolk Superior Court, in the County of Suffolk, Massachusetts, against us and other defendants, including Biostage, as well as another third party. The complaint seeks payment for an unspecified amount of damages and alleges that the plaintiff sustained terminal injuries allegedly caused by products, including one synthetic trachea scaffold and two bioreactors, provided by certain of the named defendants and utilized in connection with surgeries performed by third parties in Europe in 2012 and 2013.

On October 1, 2019, the Court entered an order granting plaintiffs’ motion to compel the defendant to produce discovery. Subsequently, the plaintiffs filed a motion for sanctions against us on January 6, 2020 claiming failure to produce. Our counsel at the time, which had been selected for the case by our liability insurance carrier, never notified us of plaintiffs’ motion and never responded to plaintiffs’ motion. As a result of the failure of our former counsel to respond, on January 29, 2020, the Court entered an order allowing plaintiffs’ sanctions against us and the other defendants, which establishes a sanction of admitted liability. In June 2021, we were informed of these 2019 and 2020 court actions by new defense counsel appointed by our liability insurance carrier. On June 9, 2021, we, together with the other defendants, filed a motion to vacate the Court’s order allowing plaintiffs’ motion for sanctions. On August 3, 2021, the Court held a hearing on the defendants' motion to vacate but no ruling on the motion has been made. We continue to actively fight the damages in this case.

While we believe that claims made in this lawsuit are without merit and that there are strong grounds to vacate the sanctions, unless the sanctions award is vacated, we could face a trial on damages. If the sanctions award is vacated, we will have the opportunity to contest the underlying claims at trial and, while there can be no assurance of prevailing, we believe those claims lack merit. If we face a trial on damages, whether as a result of the sanctions or following a loss on the merits, we do not know the exact amount of compensatory and, potentially, punitive damages that could be awarded. In all events, we believe that available product liability insurance coverage will be available for all or a significant portion of such damages, although there can be no assurance that the damages awarded will be within the limits of the insurance. We are also evaluating possible malpractice claims as an additional source of recovery. We cannot provide assurance that any losses will not exceed such recoveries. Further, while Biostage has agreed to indemnify us for claims and losses relating to certain liabilities that it has assumed from us, including liabilities in connection with the sale of Biostage’s products and other liabilities related to the operation of Biostage’s business. we cannot assure you that Biostage will have the ability to indemnify us against the liabilities we may incur in this lawsuit, in particular due to Biostage having limited revenues, products in early-stage development, a need for additional funds in the future and its overall financial condition. If Biostage is unable to satisfy its obligations under its indemnity to us, we may have to satisfy the liabilities in this lawsuit, which could have an adverse impact on our financial condition, results of operations or cash flows.

There were no unregistered sales of equity securities during the period covered by this report.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by undersigned thereunto duly authorized.

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	HBIO	The Nasdaq Global Market

Large accelerated filer ☐	Accelerated filer ☒
Non-accelerated filer ☐	Smaller reporting company ☒
	Emerging growth company ☐

		Page

PART I - FINANCIAL INFORMATION	3

Item 1.	Condensed Consolidated Financial Statements	3

	~~Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020~~ (unaudited)	3

Consolidated Balance Sheets	3

Consolidated Statements of Operations ~~for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)~~	4

	Consolidated Statements of Comprehensive ~~Income (Loss) for the Three and Six Months Ended June 30, 2021 and 2020 (unaudited)~~Loss	5

	Consolidated Statements of Stockholders' Equity ~~for the Three and Six Months Ended June 31, 2021 and 2020 (unaudited)~~	6

	Consolidated Statements of Cash Flows ~~for the Six Months Ended June 30, 2021 and 2020 (unaudited)~~	7

	Notes to Unaudited Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23

Item 4.	Controls and Procedures	23

PART II - OTHER INFORMATION	24

Item 1.	Legal Proceedings	24

~~Item 1A.~~	Item1A. Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2524

Item 3.	~~Default~~ Defaults Upon Senior Securities	2524

Item 4.	Mine Safety Disclosures	2524

Item 5.	Other Information	2524

Item 6.	Exhibits	2524

SIGNATURES	2625

			June 30, 2021							December 31, 2020
	Weighted		(in thousands)
Amortizable intangible assets:	Average Life*		Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Distribution agreements/customer relationships		8.4	$	18,039	$	(8,267	)	$	9,772	$	18,237	$	(7,746	)	$	10,491
Existing technology		4.7		39,032		(22,403	)		16,629		38,761		(20,674	)		18,087
Trade names and patents		4.9		8,617		(4,756	)		3,861		8,681		(4,362	)		4,319
Total amortizable intangible assets			$	65,688	$	(35,426	)	$	30,262	$	65,679	$	(32,782	)	$	32,897
Indefinite-lived intangible assets:									248							254
Total intangible assets								$	30,510						$	33,151

			June 30, 2022							December 31, 2021
(in thousands)	Average				Accumulated							Accumulated
Amortizable intangible assets:	Life*		Gross		Amortization			Net		Gross		Amortization			Net
Distribution agreements/customer relationships		7.4	$	17,182	$	(8,965	)	$	8,217	$	17,689	$	(8,675	)	$	9,014
Existing technology		3.7		38,220		(25,348	)		12,872		38,707		(23,962	)		14,745
Trade names and patents		4.0		8,324		(5,416	)		2,908		8,496		(5,108	)		3,388
Total amortizable intangible assets			$	63,726	$	(39,729	)	$	23,997	$	64,892	$	(37,745	)	$	27,147
Indefinite-lived intangible assets:									222							238
Total intangible assets								$	24,219						$	27,385

	Amortization
Year Ending December 31,	Expense
	(in thousands)
2021 (remainder of year)	$	2,923
2022		5,814
2023		5,704
2024		5,398
2025		4,280
Thereafter		6,143
Total	$	30,262

Other Current Liabilities:	June 30,		December 31,
(in thousands)	2021		2020
Compensation	$	3,409		3,715
Professional fees		815		432
Warranty costs		237		185
Customer related costs		1,120		1,093
Accrued income taxes		544		286
Other		1,698		1,767
Total	$	7,823	$	7,478

*Other Current Liabilities:*	June 30,		December 31,
(in thousands)	2022		2021
Compensation	$	3,119	$	6,048
Professional fees		628		480
Warranty costs		240		240
Customer related costs		2,097		2,265
Litigation related		472		0
Accrued income taxes		52		224
Other		1,496		1,505
Total	$	8,104	$	10,762

(in thousands)	Severance			Other			Total
Balance at December 31, 2020	$	270		$	18		$	288
Restructuring and other exit costs		1,145			79			1,224
Non-cash charges		0			(41	)		(41	)
Cash payments		(882	)		(45	)		(927	)
Balance at June 30, 2021	$	533		$	11		$	544

	~~2021~~2022
Volatility		65.1	%
Risk-free interest rate		~~0.3~~1.4	%
Correlation coefficient		~~35.7~~38.5	%
Dividend yield		0	%

	Three Months Ended			Six Months Ended
(in thousands)	June 30, 2020			June 30, 2020
Amount of loss recognized in OCT on derivatives (effective portion)	$	(11	)	$	(227	)
Amounts reclassified from accumulated other comprehensive loss
to interest expense		97			169
Total	$	86		$	(58	)

	Three Months Ended June 30, 2021
(in thousands)	Service Contracts			Customer Advances			Total
Balance at March 31, 2021	$	1,712		$	1,925		$	3,637
Deferral of revenue		988			322			1,310
Recognition of deferred revenue		(846	)		(433	)		(1,279	)
Effect of foreign currency translation		7			0			7
Balance at June 30, 2021	$	1,861		$	1,814		$	3,675

	*Three Months Ended June 30, 2020*
(in thousands)	*Service Contracts*			*Customer Advances*			*Total*
Balance at March 31, 2020	$	1,410		$	2,263		$	3,673
Deferral of revenue		1,177			121			1,298
Recognition of deferred revenue		(1,144	)		(145	)		(1,289	)
Effect of foreign currency translation		(30	)		0			(30	)
Balance at June 30, 2020	$	1,413		$	2,239		$	3,652

	Six Months Ended June 30, 2021
(in thousands)	Service Contracts			Customer Advances			Total
Balance at December 31, 2020	$	1,629		$	2,142		$	3,771
Deferral of revenue		2,239			663			2,902
Recognition of deferred revenue		(2,011	)		(991	)		(3,002	)
Effect of foreign currency translation		4			0			4
Balance at June 30, 2021	$	1,861		$	1,814		$	3,675

	*Six Months Ended June 30, 2020*
(in thousands)	*Service Contracts*			*Customer Advances*			*Total*
Balance at December 31, 2019	$	1,587		$	2,362		$	3,949
Deferral of revenue		1,485			344			1,829
Recognition of deferred revenue		(1,643	)		(467	)		(2,110	)
Effect of foreign currency translation		(16	)		0			(16	)
Balance at June 30, 2020	$	1,413		$	2,239		$	3,652

10.1	First Amendment to Credit Agreement and Amendment to Pledge and Security Agreement, dated April 28, 2022, among Harvard Bioscience, Inc. ~~2021 Incentive Plan~~, Citizens Bank, N.A., as the administrative agent, and the lenders party thereto (previously filed as an exhibit to the Company’s Current Report on Form 8-K ~~(filed~~on April 28, 2022 and incorporated by reference thereto).
10.2	Harvard Bioscience, Inc. Employee Stock Purchase Plan, as amended (previously filed as an exhibit to the Company’s Current Report on Form 8-K on May ~~19, 2021)~~17, 2022 and incorporated by reference thereto).
31.1	Certification of Chief Financial Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Executive Officer of Harvard Bioscience, Inc., pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Financial Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief ~~Executive~~Financial Officer of Harvard Bioscience, Inc., pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)
*	This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.


	HARVARD BIOSCIENCE, INC.

Date: August 4, 2022
	By:	/s/ JAMES GREEN
		James Green
		Chief Executive Officer


	By:	/s/ MICHAEL A. ROSSI
		Michael A. Rossi
		Chief Financial Officer