NanoString Technologies, Inc. (the “Company”) was incorporated in the state of Delaware on June 20, 2003. The Company’s headquarters is located in Seattle, Washington. The Company’s technologyproprietary optical barcoding chemistry enables direct detection, identification and quantification of individual target molecules in a biological sample by attaching a unique color coded fluorescent reporter to each target molecule of interest. The Company markets its proprietary nCounter Analysis System, consisting of instruments and consumables includingand its Prosigna Breast Cancer Assay, to academic, government, biopharmaceutical and clinical laboratory customers. In addition, the Company is collaborating with biopharmaceutical companies to develop companion diagnostic tests for various cancer therapies.

The Company has incurred losses to date and expects to incur additional losses for the foreseeable future. The Company continues to invest the majority of its resources in the development and growth of its business, including significant investments in new product development and sales and marketing efforts. The Company’s activities have been financed primarily through the sale of equity securities and incurrence of indebtedness, cash received by the Company pursuant to certain product development collaborations, and, to a lesser extent, through the incurrence of capital leases and other borrowings.

In January 2018, the Company entered into a Sales Agreement with a sales agent to sell shares of the Company's common stock through an “at the market” equity offering program for up to $40.0$40.0 million in gross cash proceeds. The Sales Agreement allows the Company to set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limits on the number of shares that may be sold in any one trading day and a minimum price below which sales may not be made. Under the terms of the Sales Agreement, commission expenses to the sales agent will be 3% of the gross sales price per share sold through the sales agent. The Sales Agreement shall automatically terminateterminates upon the issuance and sale of shares that provide gross proceeds of $40.0$40.0 million and may be terminated earlier by either the Company or the sales agent upon five days’ notice. In March 2019, the Company terminated this agreement and there were no shares of common stock sold under this agreement.

The accompanying unaudited condensed consolidated financial statements reflect the accounts of the Company and its wholly-owned subsidiaries. The unaudited condensed consolidated balance sheet at December 31, 20172018 has been derived from the audited consolidated financial statements at that date but does not include all of the information and disclosures required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for annual financial statements. These unaudited condensed consolidated financial statements and notes should be read in conjunction with the Company’s audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.2018. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and U.S. GAAP for unaudited condensed consolidated financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s financial position and results of its operations as of and for the periods presented.

Unless indicated otherwise, all amounts presented in financial tables are presented in thousands, except for per share and par value amounts.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes.

The Company recognizes revenue when control of the promised goods or services areis transferred to its customers, in an amount that reflects the consideration expected to be received in exchange for those products and services. This process

The Company generates the majority of its revenue from the sale of products and services. The Company’s commercial products consist of its proprietary nCounter Analysis Systems and related consumables. Services consist of instrument service contracts and service fees for assay processing.

Instrument service contracts are sold with contract terms ranging from 12–36 months and cover periods after the end of the initial 12-month warranty. These contracts include services to maintain performance within the Company’s designed specifications and a minimum of one preventative maintenance service procedure during the contract term. Revenue from services to maintain designed specifications is considered a stand-ready obligation and recognized evenly over the contract term and service revenue related to preventative maintenance of instruments is recognized when the procedure is completed. Revenue from service fees for assay processing is recognized upon the rendering of the related performance obligation.

For arrangements with multiple performance obligations, the Company allocates the contract price in proportion to its stand-alone selling price. The Company uses its best estimate of stand-alone selling price for its products and services based on average selling prices over a 12-month period and reviews its stand-alone prices annually.

Product and service revenues from sales to customers through distributors are recognized consistent with the terms ofpolicies and practices for direct sales to customers.customers, as described above.

The Company enters into collaborativecollaboration agreements that may generate upfront fees, withand in some cases subsequent milestone payments that may be earned upon completion of development-related milestones.certain product development milestones or other designated activities. The Company is able to estimateestimates the expected total cost of product development and other services under these arrangements and recognizes collaboration revenue using a contingency-adjusted proportional performance model. Costs incurred to date compared to total expected costs are used to determine proportional performance, as this is considered to be representative of the delivery of outputs under the arrangements. Revenue recognized at any point in time is limited to cash received, amounts contractually due, and a development-relatedor the amounts of any product development or other contractual milestone payments when achievement of a milestone is deemed to be probable. Changes in estimates of total expected collaboration product development or other costs are accounted for prospectively as a change in estimate. From period to period, collaboration revenue can fluctuate substantially based on the achievement or probable achievement of development-related milestones.product development or other milestones, or as estimates of total expected collaboration product development or other costs are changed or updated. The Company recognizesmay recognize revenue from collaborativecollaboration agreements that do not include upfront and/or milestone-based payments when earned.payments. Amounts due to collaboration partners are recognized when the related activities have occurred and are classified in the statement of operations, generally as research and development expense, based on the nature of the related activities.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued “ASU 2014-09, Revenue from Contracts with Customers.” The standard requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to a customer. In March 2016, theFebruary 2018, FASB issued “ASU 2016-08, Principal vs Agent Considerations (Reporting Revenue Gross versus Net)2018-02, Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” which clarifiesThe new guidance permits companies to reclassify the implementation guidancestranded tax effects of the Tax Cuts and Jobs Act (the “Act”) on principal versus agent considerations. In April 2016, the FASB issued “ASU 2016-10, Identifying Performance Obligations and Licensing” which clarifies the implementation guidance on identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued “ASU 2016-12, Narrow-Scope Improvements and Practical Expedients” which provides practical expedients for contract modifications and clarification on assessing the collectability criterion, presentation of sales taxes, measurement date for non cash consideration and completed contracts at transition.items within accumulated other comprehensive income to retained earnings. The standards require an entity to recognize the amount of revenue which it expects to be entitledstandard became effective for the transfer of promised goods or services to a customer. This guidance replaces most existing revenue recognition guidance and requires more extensive disclosures related to revenue recognition, particularly in quarterly financial statements. A cumulative effect of applying the new revenue standard has been recognized as an adjustment to the opening balance of retained earnings as ofCompany beginning January 1, 2018, using the modified retrospective

In February 2016, FASB issued “ASU 2016-02, Leases – Recognition and Measurement of Financial Assets and Financial Liabilities.” The standard requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The standard requires lessors to classify leases as either sales-type, finance or operating. A sales-type lease occurs ifIn August 2018, FASB issued “ASU 2018-11, Leases (Topic 842): Targeted Improvements,” which allows the lessor transfers all of the risks and rewards, as well as control of the underlying asset,cumulative-effect adjustment to the lessee. If risks and rewards are conveyed withoutopening balance of retained earnings in the transferperiod of control, the lease is treated as a financing lease. If the lessor does not convey risks and rewards or control, an operating lease results. The standard will become effective for the Company beginningadoption.

On January 1, 2019, the Company adopted the new accounting standard for leases provided in “ASU 2016-02, Leases – Recognition and Measurement of Financial Assets and Financial Liabilities” and has elected the optional modified transition method. Accordingly, all periods prior to January 1, 2019 were presented in accordance with early adoption permitted.the previous ASC Topic 840, Leases, and no retrospective adjustments were made to the comparative periods presented. The Company is currently assessing the impact adoption of thisthe standard willhad a material impact on our condensed consolidated balance sheet as of March 31, 2019, but did not have a material impact on itsthe Company’s condensed consolidated resultsstatements of operations financial condition,or condensed consolidated statements of cash flows, and financial statement disclosures, and currently expects that most of itsflows. Upon adoption, the Company recognized operating lease commitments will be recognized as right-of-use assets, current and non-current operating lease liabilities, uponand derecognized current and non-current deferred rent liabilities, with no cumulative-effect adjustment to the adoptionopening balance of ASU 2016-02,retained earnings.

The Company elected the package of practical expedients permitted under the transition guidance within the new standard which, will increaseamong other things, allowed the totalcarry forward of the historical lease classification and assessment of prior conclusions about lease identification. In addition, the Company elected, as an accounting policy election, to use the short-term lease recognition exemption on all classes of assets. Leases with an initial term of 12 months or less are not recorded on the balance sheet and the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company determines if an arrangement is a lease at inception of a contract. The Company’s leasing portfolio is comprised of operating leases primarily for general office, manufacturing, and research and development purposes. Operating lease liabilities and the corresponding right-of-use assets are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. The operating lease right-of-use asset is reduced by lease incentives included in the agreement. As the existing leases do not contain an implicit interest rate, the Company estimates its incremental borrowing rate based on information available at commencement date in determining the present value of future payments. The Company includes options to extend the lease in the lease liability and liabilitiesright-of-use asset when it is reasonably certain that the Company reports relative to such amounts prior to adoption.option will be exercised. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. For our short-term leases, we recognize lease payments as an expense on a straight-line basis over the lease term. See Note 4. Leases for additional information regarding lease agreements.

In June 2016, FASB issued “ASU 2016-13, Financial Instruments: Credit Losses.” The standard provides information aboutrequires disclosure regarding expected credit losses on financial instruments at each reporting date, and to changechanges how other than temporary impairments on investmentsinvestment securities are recorded. The standard will become effective for the Company beginning January 1, 2020 with early adoption permitted. The Company is currently assessing the impact adoption of this standard will have on its consolidated results of operations, financial condition, cash flows, and financial statement disclosures.

In FebruaryAugust 2018, FASB issued “ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220)2018-15, Intangibles — Goodwill and other — Internal-use software (Subtopic 350-40): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.” The new guidance permits companiesstandard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to reclassify the stranded tax effects of the Tax Cuts and Jobs Act (the “Act”) on items within accumulated other comprehensive income to retained earnings. Thisdevelop or obtain internal-use software. The standard will become effective for the Company beginning on January 1, 20192020, with early adoption permitted.

Unsatisfied or partially unsatisfied performance obligations related to collaboration agreements as of March 31, 20182019 were $14.2$9.7 million and are expected to be completed over the period of each collaboration agreement, through June 2020.December 2019. Performance obligations related to product and service contracts as of March 31, 20182019 were $6.0$7.0 million and are expected to be completed over the term of the related contract, through May 2022.February 2024.

Net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding. Outstanding stock options, restricted stock units and warrants have not been included in the calculation of diluted net loss per share because to do so would be anti-dilutive. Accordingly, the numerator and the denominator used in computing both basic and diluted net loss per share for each period are the same.

Financial instruments that potentially expose the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. Cash is invested in accordance with the Company’s investment policy, which includes guidelines intended to minimize and diversify credit risk. Most of the Company’s investments are not federally insured. The Company has credit risk related to the collectability of its accounts receivable. The Company performs initial and ongoing evaluations of its customers’ credit history or financial position and generally extends credit on account without collateral. The Company has not experienced any significant credit losses to date.

The Company had one customer/collaborator, Lam Research Corporation (“Lam”) that individually represented 17% and 18% of total revenue during the three months ended March 31, 2018. During the three months ended March 31, 2017, Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc. (“Merck”), represented 14% of total revenue.2019 and 2018, respectively. The Company had no customers or collaborators that represented more than 10% of total accounts receivable as of March 31, 20182019 or December 31, 2017.2018.

The Company is also subject to supply chain risks related to the outsourcing of the manufacturing and production of its instruments to sole suppliers. Although there are a limited number of manufacturers for instruments of this type, the Company believes that other suppliers could provide similar products on comparable terms. Similarly, the Company sources certain raw materials used in the manufacture of consumables from certain sole suppliers. A change in suppliers could cause a delay in manufacturing and a possible loss of sales, which would adversely affect operating results.

The recorded amounts of certain financial instruments, including cash, accounts receivable, prepaid expenses and other, accounts payable and accrued liabilities, approximate fair value due to their relatively short-term maturities. The recorded amount of the Company’s long-term debt approximates fair value because the related interest rates approximate rates currently available to the Company.

In October 2018, the Company entered into an amended and restated term loan agreement expired. Total(“2018 Term Loan”), under which it may borrow up to $100.0 million, which is due and payable in September 2024. At closing, the Company received net proceeds of approximately $7.8 million, pursuant to borrowings andof $60.0 million under the new facility, net of repayment of the Company's 2014 Term Loan of $50.4 million, including deferred interest and transaction-related fees and expenses. Of the $40.0 million in additional borrowing capacity under the amended2018 Term Loan, the Company has the option to borrow up to $20.0 million until June 2019 subject to no further terms and conditions, and up to an additional $20.0 million until March 2020, subject to the achievement of annual revenue thresholds on or prior to December 31, 2019.

The term loan agreementagreements involved multiple lenders who were $49.7 million and $49.3 millionconsidered members of a loan syndicate. In determining whether the most recent amendment was to be accounted for as a debt extinguishment or a debt modification, the Company considered whether lenders remained the same or changed. As all the lenders who were members of March 31, 2018 and December 31, 2017, respectively.

The 2018 Term Loan accrues interest at a rate of 10.5%, payable quarterly, of which 3.0% may be deferred during the six-year term at the Company’s option and repaid at maturity together with the principal. The Company paid an upfront fee of 0.5% of the term andaggregate principal payments are due in four equal installments during the eighth yearamount of the term. The amended term loan agreement includedinitial borrowing under the 2018 Term Loan, and will pay a declining redemption fee payable upon prepayment during the first four years after we entered into the agreement. However, this period has lapsed and we have the option to prepay the term loan, in whole or part, at any time, with no penalty. A facility fee equal to 2.0% of the total amount borrowed plusincluding any accrueddeferred interest is payable at the end oftime the term or when the loanprincipal is repaid in full.repaid. A long-term liability of $1.1$1.4 million for the facility fee is being accreted using the effective interest method for the facility fee over the term of the loan agreement. 2018 Term Loan. Additional borrowings under the 2018 Term Loan will bear the same upfront and facility fees as the initial borrowing.

Obligations under the term loan agreement2018 Term Loan are collateralized by substantially all of the Company’s assets.

In January 2018, the Company entered into a $15.0 million secured revolving loan facility, with availability subject to a borrowing base consisting of eligible accounts receivable. TheIn November 2018, the Company entered into an amended and restated loan and security agreement matures in January 2021, at which timeto increase the outstanding principal will become dueborrowing capacity under the facility to $20.0 million, amend the borrowing base to include finished goods inventory, and payable. extend the final maturity under the facility to November 2021. As of March 31, 2019 and December 31, 2018, no amounts had been drawn on the facility.

Interest on borrowings is payable monthly and accrues at a yearly rate equal to the greater of the prime rate as reported in the Wall Street Journal plus 0.50% or 4.75%. During an event of default, amounts drawn accrue interest at a yearly rate equal to 8.75%. Obligations under the agreement are secured by the Company'sCompany’s cash and cash equivalents, accounts receivable and proceeds thereof, and inventory and proceeds from the sale thereof. The lender’s interest in the collateral under the loan facility is senior to the lender’s interest in such collateral under the term loan agreement. The loan facility contains various customary representations and warranties, conditions to borrowing, events of default, including cross default provisions with respect to the loan facility, and covenants, including financial covenants requiring the maintenance of minimum annual revenue and liquidity. There were no borrowings under the secured revolving loan facility as of March 31, 2018.

TheAt the time of entering into collaboration agreements, the Company evaluates the statement of operationsappropriate presentation and classification of payments between the participants in each ofwithin its collaboration agreements at inceptionconsolidated financial statements based on the nature of the arrangement, the nature of its business operations and the contractual terms of the arrangement. The Company has determined that amounts to be received from collaborators in connection with theits collaboration agreements entered into through March 31, 20182019 are related to revenue generating activities.

The Company uses a contingency-adjusted proportional performance model to recognize revenue over the Company’s performance period for each collaboration agreement that includes upfront and/up front, or milestone-based or other contractual payments. Costs incurred to date compared to total expected costs are used to determine proportional performance, as this is considered to be representative of the delivery of outputs under the arrangement. Revenue recognized at any point in time is a factor of and limited to cash received and amounts contractually due. Changes in estimates of total expected costs are accounted for prospectively.prospectively in the period of change.

The Company recognizes revenue from collaboration agreements that do not include upfront and/up front, milestone-based or milestone-basedother contractual payments when earned, which is generally in the same period that related costs are incurred. Amounts due to

In March 2014, the Company entered into a collaboration agreement with Celgene Corporation (“Celgene”) to develop, seek regulatory approval for, and commercialize a companion diagnostic using the nCounter Analysis System to identify a subset of patients with Diffuse Large B-Cell Lymphoma. In February 2018, the Company and Celgene entered into an amendment to their collaboration agreement in which Celgene agreed to provide the Company additional funding for work intended to enable a subtype and prognostic indication for the test being developed under the agreement for Celgene’s drug REVLIMID. In addition, the amendment provides an additional milestone payment to the Company payable upon achievement of certain regulatory activities and timelines. In connection with this amendment, the Company agreed to remove the right to receive payments from Celgene in the event commercial sales of the companion diagnostic test do not exceed certain pre-specified minimum annual revenues during the first three years following regulatory approval. In addition, the amendment allows Celgene, at its election, to use trial samples with additional technologies for companion diagnostics.

Pursuant to the Company's agreement as amended in February 2018, the Company is eligible to receive payments from Celgene totaling up to $27.3$24.8 million, of which $5.8 million was received as an upfront payment upon delivery of certain information to Celgene and $21.5$19.0 million is for development funding and potential success-based development and regulatory milestones. There have been several amendments to the collaboration agreement and in return the Company has received additional payments totaling $2.1 million. The Company will retain all commercial rights to the diagnostic test developed under this collaboration, subject to certain backup rights granted to Celgene to commercialize the diagnostic test in a particular country if the Company elects to cease distribution or elects not to distribute the diagnostic in such country. Assuming success in the clinical trial process, and subject to regulatory approval, the Company will market and sell the diagnostic assay.

The Company achieved and was paid for milestones totaling $6.0 million during 2014. The process of successfully developing a product candidate, obtaining regulatory approval and ultimately commercializing a product candidate is highly uncertain and the attainment of any additional milestones is therefore uncertain and difficult to predict. In addition, certain milestones are outside the Company’s control and are dependent on the performance of Celgene and the outcome of a clinical trial and related regulatory processes. Accordingly, the Company is not able to reasonably estimate when, if at all, any additional milestone payments may be payable to the Company by Celgene. See Note 14. Subsequent Event for an update on this collaboration agreement.

During the three months ended March 31, 2018,2019, the Company increased its estimated future costs, in part as a result of the amended agreement which expanded the scope and nature of the work being performed in future periods. Additionally, the Company became aware of new information during the quarter which resulted in an increase of future costs associated primarilyrecognized revenue related to ongoing regulatory activities associated with the collaboration. As a resultCelgene agreement of the higher cost estimates in future periods, the$1.3 million. The Company recognized a reduction of cumulative revenue of $0.2 million during the three months ended March 31, 2018, due to higher cost estimates in future periods related to the expanded scope and the nature of the work to be performed in future periods. The Company received development funding of $0.2 million related to the Celgene collaboration

In May 2015, the Company entered into a clinical research collaboration agreement with Merck Sharp & Dohme Corp., a subsidiary of Merck & Co., Inc. (“Merck”), to develop an assay intended to optimize immune-related gene expression signatures and evaluate the potential to predict benefit from Merck’s anti-PD-1therapy,anti-PD-1 therapy, KEYTRUDA. Under the terms of the collaboration agreement, the Company received $3.9 million in payments during 2015. In connection with the execution of the development collaboration agreement, the Company and Merck terminated the May 2015 clinical research collaboration and moved all remaining activities under the related work plan to the new development collaboration agreement. In February 2016, the Company expanded its collaboration with Merck by entering into a new development collaboration agreement to clinically develop, seek regulatory approval for, and commercialize a companion diagnostic test to predict response to KEYTRUDA in multiple tumor types. During 2016, the Company received $12.0 million upfront as a technology access fee and $8.5 million of preclinical milestone payments. In October 2017, Merck notified the Company of its decision not to pursue regulatory approval of the companion diagnostic test for KEYTRUDA.KEYTRUDA and, in August 2018, the Company and Merck agreed to mutually terminate their development collaboration agreement, effective as of September 30, 2018, following the completion of certain close-out activities. As a result, the scopepart of the collaboration was significantly reduced, and its related activities are expectedmutual termination agreement, Merck granted to be materially concluded in 2018.

From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. Additionally, the Company operates in various states and local jurisdictions for which sales, occupation, or franchise taxes may be payable to certain taxing authorities. Management believes that there are no claims or actions pending against the Company currently, the ultimate disposition of which would have a material adverse effect on the Company’s consolidated results of operation,operations, financial condition or cash flows.

The Company operates as a single reportable segment and enables customers to perform both research and clinical testing on its nCounter Analysis Systems. The Company has one sales force that sells these systems to both research and clinical testing labs, and certain of its nCounter Elements reagents can be used for both research and diagnostic testing. In addition, the Company’s Prosigna Breast Cancer Assay is marketed to clinical laboratories. The Company has also entered into collaboration agreements with Lam, Celgene, Merck, and previously Medivation and Astellas.

Research and development expenses consist primarily of salaries and benefits, occupancy, laboratory supplies, engineering services, consulting fees, costs associated with licensing molecular diagnostics rights and clinical study expenses to support the regulatory approval or clearance of diagnostic products. We have made substantial investments in research and development since our inception. Our research and development efforts have focused primarily on the tasks required to enhance our technologies and to support development and commercialization of new and existing products and applications. We believe that our continued investment in research and development is essential to our long-term competitive position and expect these expenses to continue to increase in future periods. In particular, following theour entry into the Lam collaboration in August 2017, which provides up to $50$50.0 million of funding for our Hyb & Seq program, we expect to experiencehave experienced a substantialsignificant increase in related research and development expenses.

Selling, general and administrative expense consists primarily of costs for our sales and marketing, finance, human resources, information technology, business development, legal and general management functions, as well as professional services, such asfees for legal, consulting and accounting services. We expect selling, general and administrative expense to increase in future periods as the number of sales, technical support and marketing and administrative personnel grows to support the expected introduction of new products and product platforms, including our Digital Spatial Profiling, or DSP, and Hyb and Seq product candidates, as well as the general broadening of our customer base and growth of our existing nCounter business. In the first half of 2017, we made significant additions to ourOur sales force including the addition of newincludes roles which are focused mainly on sales of consumables to our existing instrument base. These changes have enabledbase, which enables our existing sales representatives to focus on instrument sales and support the growth of our installed instrument base. Legal, accounting and compliance costs have increased as a result of our being a public company, and we expect them to continue to increase as our business grows.

The increase in selling, general and administrationadministrative expense for the three monthsmonth period ended March 31, 2019 as compared to the same period in 2018 was primarily attributable primarily to an increaseincreased investment in staffingpersonnel and personnel-relatedcommercial launch activities related to GeoMx DSP costs of $1.4$1.7 million, to support our sales, marketing and administrative functions, as well as increasedhigher professional and consulting fees of $0.4$1.5 million related to legal, consulting and other services providedcosts associated with activities supporting our compliance with the Sarbanes Oxley Act and other regulatory matters.

We expect selling, general and administrative expense to increase in future periods as the Company.number of sales, technical support and marketing and administrative personnel grows to support the expected growth in our existing lines of business, as well as to support the introduction of new products and product platforms, including our new GeoMx DSP platform.

As of March 31, 2018,2019, we had cash, cash equivalents and short-term investments totaling $60.5of $142.4 million. We believe our existing cash, cash equivalents and short-term investments will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. However, we may need to raise additional capital to expand the commercialization of our products, fund our operations and further our research and development activities. Our future funding requirements will depend on many factors, including: the nature and timing of any additional companion diagnostic development collaborations we may establish; market acceptance of our products and the level of sales of our existing products and new product candidates; the nature and timing of any additional collaborations or partnerships we may establish; the nature and timing of any additional research, product development or other partnerships or collaborations we may establish; the cost and timing of establishing additional sales, marketing and distribution capabilities; the cost of our research and development activities; the cost and timing of regulatory clearances or approvals; the effect of competing technological and market developments; and the extent to which we acquire or invest in businesses, products and technologies, although we currently have no commitments or agreements relating to any of these types of transactions.

We willmay require additional funds in the future and we may not be able to obtain such funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or additional equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through partnerships,partnership, collaboration or licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, delay or delay, reduce the scope of or eliminate some or all of our research and development programs, delay development, launch activities or commercialization of our products or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize, or reduce marketing, customer support or other resources devoted to our products or cease operations.

In January 2018, we entered into a Sales Agreementsales agreement with a sales agent to sell shares of our common stock through an “at the market” equity offering program for up to $40.0 million in gross cash proceeds. The Sales Agreement allows usIn March 2019, subsequent to set the parameters for the sale of shares, including the number of shares to be issued, the time period during which sales are requested to be made, limits on the number of shares that may be sold in any one trading day and a minimum price below which sales may not be made. Under the terms of the Sales Agreement, commission expenses to the sales agent will be 3% of the gross sales price per share sold through the sales agent. The Sales Agreement will automatically terminate upon the issuance and sale of placement shares equaling sales proceeds of $40.0 million and may beour most recent underwritten public offering, we terminated earlier by either us, or the sales agent upon five days’ notice. As of the date of this report, there had been noagreement. No shares of common stock were sold under this agreement.

In April 2014, we entered into a term loan agreement, or the 2014 Term Loan, under which we could borrow up to $45.0 million could be borrowed, including an option to defer payment of a portion of the interest that would accrue on the borrowing under the term loan agreement.million. In October 2015, we amended our term loan agreementthe 2014 Term Loan primarily to among other provisions, increase the maximum borrowing capacity to $60.0 million, (excluding accrued interest),excluding deferred interest, reduce the applicable interest rate from 12.5% to 12.0%, extend the interest-only period through March 2021, and extend the final maturity to March 2022. Under the amended agreement,2014 Term Loan, borrowings accrueaccrued interest at 12.0% annually, payable quarterly, of which 3.0% cancould be deferred during the first six years of the amended term at our option and paid together with the principal at maturity. We have elected to exercise the option to defer a portion of the interest and we have recorded $4.7 million of deferred interest through March 31, 2018. We have borrowed a total of $45.0 million under the amended term loan agreement and at2014 Term Loan through June 2016, excluding deferred interest. On December 31, 2016, theour option to borrow the remaining $15.0 million under the 2014 Term Loan expired. As of March 31,

Our operating cash requirements may increase in the future as we (1)invest in the research and development of new or existing product platforms including our nCounter and GeoMx DSP platforms, increase sales and marketing activities to expand the installed base of our nCounter Analysis Systems and continue to promote consumable usage, including Prosigna, (2) commercialize, and conduct studies to expand the clinical utility of Prosigna and develop new diagnostic tests, (3) develop new applications chemistry and instrumentschemistry for our nCounter platform, and (4) invest in the research and development of new product platforms includingGeoMx DSP and Hyb & Seq.platforms. We cannot be certain our revenue will grow sufficiently to offset our operating expense increases, nor can we be certain that we will be successful in continuing to generate cash from new partnerships or collaborations to help fund our operations. As a result, we may need to raise additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all. If we are unable to raise additional funds when needed, our operations and ability to execute our business strategy could be adversely affected.

We derive operating cash flows from cash collected from the sale of our products and services and from collaborations. These cash flows received are currently outweighed by our use of cash for operating expenses to support the growth of our business. As a result, we have historically experienced negative cash flows from operating activities and this will likely continue for the foreseeable future.

For the three months ended March 31, 2019, net cash used in operating activities consisted of our net loss of $21.9 million and net increases in our operating assets and liabilities of $12.1 million, partially offset by $5.8 million of net non-cash income and expense items, such as stock-based compensation, depreciation and amortization, deferred interest converted to principal pursuant to our term loan agreement, and provisions for inventory obsolescence.

For the three months ended March 31, 2018, net cash used in operating activities consisted of our net loss of $19.2 million $3.1and $3.2 million of net increases in our operating assets and liabilities, andpartially offset by $4.6 million of net non-cash income and expense items, such as stock-based compensation, depreciation and amortization, deferred interest converted to principal for thepursuant to our term loan agreement, and provision for bad debts.

Our most significant investing activities for the three months ended March 31, 20182019 and 20172018 were related to the purchase, maturity and sale of short-term investments. Because we manage our cash usage with respect to our total cash, cash equivalents and short-term investments, we do not consider these cash flows to be important to an understanding of our liquidity and capital resources.

During the three month periods ended March 31, 20182019 and 2017,2018, we purchased property and equipment totaling $1.1$0.2 million and $2.5$1.1 million, respectively, which we believe will be required to support the growth and expansion of our operations.

Historically, we have funded our operations through the issuance of equity securities and debt borrowings.

Net cash provided by financing activities for the three months ended March 31, 2018 consisted of net proceeds of $0.8 million associated with our Employee Stock Purchase Plan, $0.7 million from proceeds from the issuance of common stock warrants and $0.4 million of proceeds from the exercise of stock options. These proceeds were offset by payment of $0.2 million for debt financing costs associated with our line of credit agreement and tax payments of $0.1 million related to the net share settlements of restricted stock units.

Our future significant contractual obligations as of December 31, 2018 were reported in our Annual Report on Form 10-K, filed with the three months endedSEC on March 11, 2019.

As of March 31, 2017 consisted of $0.9 million from proceeds associated with our Employee Stock Purchase Plan and $0.3 million of proceeds2019, there have been no material changes from the exercise of stock options. These proceeds were partially offset by tax payments of $0.2 million related tocontractual commitments previously disclosed in the net share settlements of restricted stock units.Annual Report on Form 10-K.

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with U.S. generally accepted accounting principles, or GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and liabilities, revenue and expenses at the date of the financial statements. Generally, we base our estimates on historical experience and on various other assumptions in accordance with GAAP that we believe to be reasonable under the circumstances. Actual results may differ from these estimates.