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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 20202023

or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from___ to___
Commission file number: 001-39388
bli-20200630_g1.jpgPhenomeX_Logo.jpg
Berkeley Lights,PhenomeX Inc.
(Exact name of registrant as specified in its charter)
Delaware35-251539035-2415390
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
5858 Horton Street, Suite 320
Emeryville, California94608
(Address of principal executive offices, including zipoffices) (Zip code)
(510) 858-2855
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, $0.00005 par valueBLICELLThe NASDAQ StockNasdaq Global Select Market LLC
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 ☐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 (§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 ☐


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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.


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Large accelerated filer☐Accelerated filer☐Non-accelerated filer☒
Smaller reporting company☒Emerging growth company☐Emerging growth company☒
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 31, 2020, 63,736,5832023, 99,296,604 shares of the registrant’s common stock, $0.00005 par value per share, were outstanding.


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BERKELEY LIGHTS,PHENOMEX INC.
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 20202023
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PART 1.I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements (Unaudited).
Berkeley Lights,PhenomeX Inc.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)(Unaudited)
June 30,
2023		December 31,
2022
(In thousands, except share and per share data)(In thousands, except share and per share data)
AssetsAssetsJune 30,
2020		December 31,
2019		Assets
(unaudited)
Current assets:Current assets:Current assets:
Cash and cash equivalentsCash and cash equivalents$59,170 $81,033 Cash and cash equivalents$30,964 $86,522 
Trade accounts receivable10,236 9,334 
Short-term marketable securitiesShort-term marketable securities— 46,252 
Trade accounts receivable, netTrade accounts receivable, net14,375 18,534 
InventoryInventory11,908 7,181 Inventory41,455 18,861 
Prepaid expenses and other current assetsPrepaid expenses and other current assets9,061 7,799 Prepaid expenses and other current assets7,992 6,783 
Total current assetsTotal current assets90,375 105,347 Total current assets94,786 176,952 
Restricted cashRestricted cash270 270 Restricted cash93 — 
Property and equipment, netProperty and equipment, net14,757 16,472 Property and equipment, net32,710 23,847 
Operating lease right-of-use assetsOperating lease right-of-use assets13,000 7,785 Operating lease right-of-use assets26,224 23,326 
Intangible assets, netIntangible assets, net22,499 — 
Other assetsOther assets1,016 1,135 Other assets2,020 1,969 
Total assetsTotal assets$119,418 $131,009 Total assets$178,332 $226,094 
Liabilities and Stockholders’ EquityLiabilities and Stockholders’ EquityLiabilities and Stockholders’ Equity
Current liabilities:Current liabilities:Current liabilities:
Trade accounts payableTrade accounts payable$4,270 $3,239 Trade accounts payable$18,631 $10,092 
Accrued expenses and other current liabilitiesAccrued expenses and other current liabilities8,099 6,229 Accrued expenses and other current liabilities13,946 21,340 
Current portion of notes payable1,596 5,765 
Current portion of long-term debtCurrent portion of long-term debt— 4,966 
Deferred revenueDeferred revenue8,607 9,686 Deferred revenue9,648 9,092 
Total current liabilitiesTotal current liabilities22,572 24,919 Total current liabilities42,225 45,490 
Notes payable, net of current portion18,264 14,062 
Long-term debtLong-term debt— 14,860 
Deferred revenue, net of current portionDeferred revenue, net of current portion1,098 1,461 Deferred revenue, net of current portion876 963 
Lease liability, long-termLease liability, long-term11,439 6,784 Lease liability, long-term23,950 22,726 
Total liabilitiesTotal liabilities53,373 47,226 Total liabilities67,051 84,039 
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 17)Commitments and contingencies (Note 17)
Stockholders’ equity:Stockholders’ equity:Stockholders’ equity:
Convertible preferred stock, $0.00005 par value. Authorized 101,648,657 shares at June 30, 2020 and December 31, 2019, respectively; issued and outstanding 50,462,272 shares at June 30, 2020 and December 31, 2019, respectively224,769 224,769 
Common stock, $0.00005 par value. Authorized 130,600,000 shares at June 30, 2020 and 124,433,107 at December 31, 2019, respectively; issued and outstanding 3,288,531 and 3,073,067 shares at June 30, 2020 and December 31, 2019, respectively— — 
Common stock, $0.00005 par value. Authorized 300,000,000 shares on June 30, 2023 and December 31, 2022; issued and outstanding 99,113,089 and 72,169,052 shares on June 30, 2023 and December 31, 2022, respectivelyCommon stock, $0.00005 par value. Authorized 300,000,000 shares on June 30, 2023 and December 31, 2022; issued and outstanding 99,113,089 and 72,169,052 shares on June 30, 2023 and December 31, 2022, respectively5 4 
Additional paid-in capitalAdditional paid-in capital12,431 9,314 Additional paid-in capital546,538 503,708 
Accumulated deficitAccumulated deficit(171,155)(150,300)Accumulated deficit(435,312)(361,648)
Accumulated other comprehensive income (loss)Accumulated other comprehensive income (loss)50 (9)
Total stockholders’ equityTotal stockholders’ equity66,045 83,783 Total stockholders’ equity111,281 142,055 
Total liabilities and stockholders’ equityTotal liabilities and stockholders’ equity$119,418 $131,009 Total liabilities and stockholders’ equity$178,332 $226,094 
See accompanying notes to these condensed consolidated financial statements.
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Berkeley Lights,PhenomeX Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(In thousands, except share and per share data)
Three months ended June 30,Six months ended June 30,
2020201920202019
Revenue:
Product revenue$9,107 $7,795 $19,790 $17,322 
Service revenue1,462 3,968 4,557 7,082 
Total revenue10,569 11,763 24,347 24,404 
Cost of sales:
Product cost of sales2,384 1,949 5,004 4,405 
Service cost of sales1,223 242 2,402 582 
Total cost of sales3,607 2,191 7,406 4,987 
Gross profit6,962 9,572 16,941 19,417 
Operating expenses:
Research and development11,843 9,642 22,819 18,385 
General and administrative4,193 3,080 8,190 5,722 
Sales and marketing3,076 2,452 6,310 4,289 
Total operating expenses19,112 15,174 37,319 28,396 
Loss from operations(12,150)(5,602)(20,378)(8,979)
Other income (expense):
Interest expense(356)(350)(713)(704)
Interest income47 270 198 502 
Other income (expense), net37 (488)62 (1,175)
Loss before income taxes(12,422)(6,170)(20,831)(10,356)
Provision for income taxes8 15 24 34 
Net loss and net comprehensive loss$(12,430)$(6,185)$(20,855)$(10,390)
Net loss attributable to common stockholders per share, basic and diluted$(4.25)$(2.43)$(7.29)$(4.28)
Weighted-average shares used in calculating net loss per share, basic and diluted3,109,545 2,872,183 3,078,756 2,795,290 

Three months ended June 30,Six months ended June 30,
(In thousands, except share and per share data)2023202220232022
Revenue:
Product revenue$10,304 $9,468 $18,682 $19,242 
Service and other revenue3,758 9,682 13,896 20,114 
Total revenue14,062 19,150 32,578 39,356 
Cost of sales:
Product cost of sales7,089 2,614 11,001 5,309 
Service cost of sales930 3,610 2,106 7,294 
Total cost of sales8,019 6,224 13,107 12,603 
Gross profit6,043 12,926 19,471 26,753 
Operating expenses:
Research and development9,342 18,178 17,763 35,751 
Selling, general and administrative26,258 20,295 52,805 37,822 
Restructuring1,093 — 2,383 — 
Loss on impairment of goodwill16,557 — 16,557 — 
Total operating expenses53,250 38,473 89,508 73,573 
Loss from operations(47,207)(25,547)(70,037)(46,820)
Other income (expense):
Interest expense(1,632)(227)(2,016)(451)
Interest income694 53 1,521 87 
Other income (expense), net(2,049)(22)(3,061)35 
Loss before income taxes(50,194)(25,743)(73,593)(47,149)
Provision for income taxes51 4 71 24 
Net loss$(50,245)$(25,747)$(73,664)$(47,173)
Net loss attributable to common stockholders per share, basic and diluted$(0.51)$(0.38)$(0.84)$(0.70)
Weighted-average shares used in calculating net loss per share, basic and diluted98,900,780 67,985,664 87,394,201 67,842,372 
See accompanying notes to these condensed consolidated financial statements.
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Berkeley Lights,PhenomeX Inc.
Condensed Consolidated Statements of Changes in Stockholder’s EquityComprehensive Loss (Unaudited)
(In thousands, except share data)
Convertible
Preferred Stock		Common StockAdditional
Paid-in
Capital		Accumulated
Deficit		Total
Stockholders'
Equity
SharesAmountSharesAmount
Balances at December 31, 201950,462,272 $224,769 3,073,067 $— $9,314 $(150,300)$83,783 
Shares issued in connection with:
Exercise of stock options— — 8,580 — 21 — 21 
Vesting of shares subject to repurchase from early exercised options— — — — 88 — 88 
Stock-based compensation— — — — 1,213 — 1,213 
Net loss— — — — — (8,425)(8,425)
Balances at March 31, 202050,462,272 $224,769 3,081,647 $— $10,636 $(158,725)$76,680 
Shares issued in connection with:
Exercise of stock options— — 206,884 — 411 — 411 
Vesting of shares subject to repurchase from early exercised options— — — — 88 — 88 
Stock-based compensation— — — — 1,296 — 1,296 
Net loss— — — — — (12,430)(12,430)
Balances at June 30, 202050,462,272 $224,769 3,288,531 $— $12,431 $(171,155)$66,045 
Balances at December 31, 201850,462,272 $224,769 2,690,264 $— $4,860 $(131,998)$97,631 
Shares issued in connection with:
Exercise of stock options— — 100,631 — 217 — 217 
Stock-based compensation— — — — 814 — 814 
Net loss— — — — — (4,205)(4,205)
Balances at March 31, 201950,462,272 $224,769 2,790,895 $— $5,891 $(136,203)$94,457 
Shares issued in connection with:
Exercise of stock options— — 130,196 — 107 — 107 
Stock-based compensation— — — — 949 — 949 
Net loss— — — — — (6,185)(6,185)
Balances at June 30, 201950,462,272 $224,769 2,921,091 $— $6,947 $(142,388)$89,328 

Three months ended June 30,Six months ended June 30,
(In thousands)2023202220232022
Net loss$(50,245)$(25,747)$(73,664)$(47,173)
Other comprehensive income (loss):
Foreign currency translation adjustments53 — 50 — 
Unrealized gain on marketable securities, net of tax— (19)9 (19)
Other comprehensive income (loss):53 (19)59 (19)
Comprehensive loss$(50,192)$(25,766)$(73,605)$(47,192)
See accompanying notes to these condensed consolidated financial statements.
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Berkeley Lights,PhenomeX Inc.
Condensed Consolidated Statements of Cash FlowsChanges in Stockholders’ Equity (Unaudited)
(In thousands)
Six months ended June 30,
20202019
Cash flows from operating activities:
Net loss$(20,855)$(10,390)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation2,619 2,342 
Stock-based compensation2,531 1,763 
Amortization of operating lease right-of-use assets944 788 
Non-cash interest and other (income) expense related to debt and note receivable agreements34 (28)
Provision for excess and obsolete inventory79 155 
Loss on impairment of property and equipment61 689 
Change in fair value of embedded derivative— 62 
Equity method losses in Optera Therapeutics Corp.— 806 
Net loss on dissolution of Optera Therapeutics Corp.— 236 
Changes in operating assets and liabilities:
Trade accounts receivable(902)5,169 
Inventory(4,547)(2,015)
Prepaid expenses and other current assets(1,143)(199)
Trade accounts payable1,404 1,022 
Deferred revenue(1,441)(5,477)
Accrued expenses and other current liabilities1,249 70 
Operating lease liabilities(1,012)(832)
Net cash used in operating activities(20,979)(5,839)
Cash flows from investing activities:
Purchase of property and equipment(1,316)(4,121)
Issuance of notes receivable— (1,000)
Net cash used in investing activities(1,316)(5,121)
Cash flows from financing activities:
Net proceeds from issuance of preferred stock432 324 
Net cash provided by financing activities432 324 
Net decrease in cash and cash equivalents and restricted cash(21,863)(10,636)
Cash and cash equivalents and restricted cash at beginning of period81,303 99,887 
Cash and cash equivalents and restricted cash at end of period$59,440 $89,251 
Three Months Ended June 30, 2023
Common StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal
Stockholders'
Equity
(In thousands, except share data)SharesAmount
Balances on March 31, 202398,744,915 $5 $542,805 $(385,067)$(3)$157,740 
Shares issued in connection with:
Exercise of stock options55,875 — 35 — — 35 
Vesting of restricted stock units312,299 — — — — — 
Stock-based compensation— — 3,698 — — 3,698 
Foreign currency translation adjustments— — — — 53 53 
Net loss— — — (50,245)— (50,245)
Balances on June 30, 202399,113,089 $5 $546,538 $(435,312)$50 $111,281 
Three Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal
Stockholders'
Equity
(In thousands, except share data)SharesAmount
Balances on March 31, 202267,820,115 $4 $478,231 $(285,034)$— $193,201 
Shares issued in connection with:
Exercise of stock options181,013 — 354 — — 354 
Vesting of restricted stock units272,804 — — — — — 
Stock-based compensation— — 6,627 — — 6,627 
Unrealized gain (loss) on marketable securities, net of tax— — — — (19)(19)
Net loss— — — (25,747)— (25,747)
Balances on June 30, 202268,273,932 $4 $485,212 $(310,781)$(19)$174,416 

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Six Months Ended June 30, 2023
Common StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal
Stockholders'
Equity
(In thousands, except share data)SharesAmount
Balances on December 31, 202272,169,052 $4 $503,708 $(361,648)$(9)$142,055 
Common stock issued for IsoPlexis Merger24,945,611 1 31,929 — — 31,930 
Fair value of vested IsoPlexis options attributable to pre-merger service— — 306 — — 306 
Fair value of IsoPlexis Warrant at Acquisition Date— — 170 — — 170 
Shares issued in connection with:
Exercise of stock options134,234 — 64 — — 64 
Vesting of restricted stock units597,428 — — — — — 
Employee stock purchase plan121,863 — 166 — — 166 
Restricted Stock Units issued for 2022 Bonuses (1)
1,144,901 — 2,107 — — 2,107 
Stock-based compensation— — 8,088 — — 8,088 
Unrealized gain (loss) on marketable securities, net of tax— — — — 9 9 
Foreign currency translation adjustments— — — — 50 50 
Net loss— — — (73,664)— (73,664)
Balances on June 30, 202399,113,089 $5 $546,538 $(435,312)$50 $111,281 
Six Months Ended June 30, 2022
Common StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated Other Comprehensive LossTotal
Stockholders'
Equity
(In thousands, except share data)SharesAmount
Balances on December 31, 202167,595,535 $4 $471,820 $(263,608)$— $208,216 
Shares issued in connection with:— 
Exercise of stock options262,667 — 766 — — 766 
Vesting of restricted stock units300,384 — — — — — 
Employee stock purchase plan115,346 610 — 610 
Stock-based compensation— — 12,016 — — 12,016 
Unrealized gain (loss) on marketable securities, net of tax— — — — (19)(19)
Net loss— — — (47,173)— (47,173)
Balances on June 30, 202268,273,932 $4 $485,212 $(310,781)$(19)$174,416 
See accompanying notes to these condensed consolidated financial statements.
(1) Annual bonuses for certain employees related to fiscal year 2022 were not paid in cash and instead the Company issued fully vested restricted stock units on March 3, 2023 with a grant date fair value of $1.84 per share. The associated expense was recorded in 2022, the period in which the bonus was earned.
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Berkeley Lights,
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PhenomeX Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six months ended June 30,
(In thousands)20232022
Cash flows from operating activities:
Net loss$(73,664)$(47,173)
Adjustments to reconcile net loss to cash used in operating activities:
Loss on impairment of goodwill16,557 — 
Depreciation and amortization6,202 4,431 
Stock-based compensation8,119 11,958 
Restricted stock units issued for 2022 Bonuses2,107 — 
Amortization of operating lease right-of-use assets2,076 1,538 
Non-cash interest and other expense related to debt and note receivable agreements63 32 
Provision for excess and obsolete inventory1,899 479 
Provision for doubtful accounts208 — 
Loss on debt extinguishment1,230 — 
Loss on disposal and impairment of property and equipment306 27 
Realized loss on marketable securities6 — 
Other non-cash(927)271 
Changes in operating assets and liabilities:
Trade accounts receivable7,025 12,128 
Inventory(4,120)(1,539)
Prepaid expenses, other current assets and other assets3,449 1,340 
Trade accounts payable7,724 1,000 
Deferred revenue(929)(4,400)
Accrued expenses and other current liabilities(14,664)(585)
Operating lease liabilities(2,084)(95)
Net cash used in operating activities(39,417)(20,588)
Cash flows from investing activities:
Purchase of property and equipment(457)(6,758)
Purchase of marketable securities(2,451)(9,372)
Proceeds from sales of marketable securities36,749 — 
Proceeds from maturities of marketable securities12,400 — 
Asset acquisition(264)— 
Acquisitions, net of cash acquired(40,285)— 
Net cash provided by (used in) investing activities5,692 (16,130)
Cash flows from financing activities:
Repayment of term loan(90,000)— 
Payment of term loan prepayment fees(770)
Proceeds from issuance of term loan70,000 — 
Payment of debt issuance costs(1,200)— 
Proceeds from issuance of common stock upon exercise of stock options64 766 
Proceeds from issuance of common stock under employee stock purchase plan166 610 
Net cash (used in) provided by financing activities(21,740)1,376 
Net increase (decrease) in cash and cash equivalents and restricted cash(55,465)(35,342)
Cash, cash equivalents and restricted cash at beginning of period86,522 178,366 
Cash, cash equivalents and restricted cash at end of period$31,057 $143,024 
See accompanying notes to these condensed consolidated financial statements.
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PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

(1)The Company and Basis of Presentation

Description of Business
Berkeley Lights,PhenomeX Inc. (the “Company” or “Berkeley Lights”“PhenomeX”), was incorporated as a Delaware corporation on April 5, 2011. Berkeley Lights is a leading Digital Cell Biologyfunctional cell biology company focusedthat provides live cell biology research tools which deliver deep insights into cellular function and new perspectives on enabling and accelerating the rapid development and commercialization of biotherapeutics and other cell-based products. Berkeley Lights’ platform is a fully integrated, end-to-end solution, comprised of proprietary consumables, including our OptoSelect chips and reagent kits, advanced automation systems and advanced application and workflow software.phenomes.
In 2017, Berkeley Lights incorporated BLI Europe International, Ltd. as a wholly-owned subsidiary in the United Kingdom to support Berkeley Lights’ planned expansion in Europe. Berkeley Lights also established a representative branch office in China during 2019 to support its pre-sales and marketing efforts in the region. Berkeley LightsPhenomeX and its consolidated subsidiarysubsidiaries are hereinafter referred to as the “Company”.“Company.” The Company’s headquarters are in Emeryville, California.
The Company commercially launched its platform in December of 2016, which included its Beacon system and the alpha version of its Opto Cell Line Development 1.0 workflow, targeted to the antibody therapeutics market. In June 2019, the Company launched its desktop Lightning system targeted for assay development and lower throughput workflows, and in early 2020 the Company launched the Culture Station instrument. The Company is expanding the platform capabilities through the commercial launch of additional workflows in its core markets of antibody therapeutics, cellular therapy and synthetic biology.
Basis of Presentation
On December 21, 2022, Berkeley Lights, Inc. (“Berkeley Lights”) entered into an Agreement and Plan of Merger (“Merger Agreement”) with Iceland Merger Sub Inc., a wholly owned subsidiary of Berkeley Lights (“Merger Sub”) and IsoPlexis Corporation (“IsoPlexis”). Pursuant to the Merger Agreement on March 21, 2023 (“Acquisition Date”), Merger Sub was merged with IsoPlexis, with IsoPlexis surviving the merger as a wholly owned subsidiary of Berkeley Lights (“IsoPlexis Merger”). The newly combined company has been renamed PhenomeX. The historical financial statements of PhenomeX for periods prior to the IsoPlexis Merger are the historical financial statements of Berkeley Lights.
The accompanying unaudited condensed consolidated financial statements of Berkeley Lights in this Quarterly Report(“condensed consolidated financial statements”) have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the instructions to Form 10-Q and Article 10 of Regulation of S-X of the Securities and Exchange Commission (“the SEC”). Accordingly, these interim financial statements do not include all of the information and footnotes required by U.S. GAAP for annual financial statements.America. In the opinion of Berkeley Lights’the Company’s management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of our financial information have been included.
The preparation ofthe condensed consolidated financial statements reflect all adjustments, which are normal and recurring in conformity with U.S. GAAPnature, necessary for fair financial statement presentation. The preparation of these condensed consolidated financial statements and accompanying notes requires the Companymanagement to make estimates and assumptions that affect the amounts reported in its condensed consolidated financial statements and the accompanying notes. Despite the Company’s intentions to establish accurate estimates and reasonable assumptions, actualreported. Actual results could differ materially from such estimates and assumptions. Operating results for the three and six months ended June 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020 or for any other period. The condensed consolidated balance sheet at December 31, 2019 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These interim financial statements and notes should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2019 included in our Registration Statement on Form S-1, which has been filed with the SEC on July 16, 2020.those estimates.

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Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Reverse Stock Split
On July 10, 2020, the Board of Directors of the Company approved a 1-for-2 reverse stock split of its issued and outstanding common stock and convertible preferred stock, which was effected on July 14, 2020. All issued and outstanding shares of common stock and convertible preferred stock and related per share amounts contained in the accompanying consolidated financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented. The par value of the authorized stock was not adjusted as a result of the reverse stock split. Other than the par value, all share and per share data shown in the accompanying condensed consolidated financial statements and related notes have been retroactively revised to reflect the reverse stock split.
Initial Public Offering
The Company’s registration statement on Form S-1 related to its initial public offering (“IPO”) was declared effective on July 16, 2020 by the SEC, and the Company’s common stock began trading on the NASDAQ Global Select Market on July 17, 2020. On July 21, 2020, the Company completed its IPO, in which the Company sold 9,315,000 shares of common stock (which included 1,215,000 shares that were offered and sold pursuant to the full exercise of the IPO underwriters’ option to purchase additional shares) at a price to the public of $22 per share. Including the option exercise, the Company received aggregate net proceeds of $188.0 million after deducting offering costs, underwriting discounts and commissions of $16.9 million.
Immediately prior to the completion of the IPO, 50,462,272 shares of convertible preferred stock then outstanding converted into an equivalent number of shares of common stock.
Liquidity
The Company’s condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has experienced losses from its operations since its inception and has relied primarily on equity and debt financing to fund its operations to date. For the three and six months ended June 30, 2020,2023, the Company had a consolidated net loss of $12.4$50.2 million and $20.9$73.7 million, respectively. Asrespectively, and as of June 30, 2020,2023 had an accumulated deficit of $435.3 million. Cash and cash equivalents (including marketable securities classified as cash equivalents) were $31.0 million as of June 30, 2023.

On June 30, 2023, the Company hadrepaid in full all outstanding indebtedness under the Second Amended and Restated Loan and Security Agreement (“Second Amended Loan Agreement”) dated as of March 21, 2023, among, inter alios, the Company, IsoPlexis Corporation, a Delaware corporation and East West Bank, a California banking corporation (“EWB”), and upon such repayment, the Second Amended Loan Agreement and all related guarantees and loan documents were terminated and have no further force and effect. The Company entered into the Second Amended Loan Agreement with EWB on March 21, 2023 to increase the Company’s and EWB’s term loan amount of $20.0 million by $50.0 million to an aggregate outstanding principal of $70.0 million. The proceeds were used to repay $52.5 million of indebtedness (including prepayment premium and interest) held by IsoPlexis on the acquisition date. Under the terms of the Second Amended Loan Agreement, the Company was required to maintain cash and cash equivalents of $59.2no less than $70.0 million and an accumulated deficit of $171.2 million. Management expects to continue to incur significant expenses for the foreseeable future and to incur operating losses in the near term whileaggregate at all times in a deposit account with EWB that is assigned to EWB. Because such cash was restricted and unavailable for use in financing operations, management elected to prepay the Company makes investments to support its anticipated growth. Management believes that its cash and cash equivalents balance asoutstanding balance. As of June 30, 2020, as well as2023, the proceeds from
7
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Company has not entered into any further financing arrangements. See Note 12 for additional information on our Second Amended Loan Agreement with EWB.

These factors raise substantial doubt about the IPO received in July 2020, provide sufficient capital resourcesCompany’s ability to continue as a going concern within one year after these financial statements are issued. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The financial statements do not reflect any adjustment that might result if the Company is unable to continue as a going concern.
Management’s intent is to implement plans that will allow the Company to continue as a going concern. The Company intends to improve operating cash flow by increasing its operation for at least 12 months from the issuance daterevenue and lowering its operational costs. New commercial leadership, geographic expansion, and a refined product roadmap are expected to drive revenue growth, and significant cost synergies as a result of the accompanying condensed consolidated financial statements.IsoPlexis Merger and are expected to lower operating expenses. Cost synergies are expected to be accomplished by eliminating duplicative costs associated with maintaining the infrastructure needed by public companies, complementary research and development (“R&D”) capabilities, marketing resources and sales operations, and manufacturing, supply chain, logistics and operations synergies. In addition, the Company has launched a process to explore, review and evaluate a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value. While management is focused on these efforts, there can be no assurance that the Company will be successful in doing so.
(2)Summary of Significant Accounting Policies

Significant Accounting Policies
The Company’s significant accounting policies are disclosed in its Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission.
Updates to those policies are below, including updates related to the IsoPlexis Merger.

Cash, cash equivalents and Cash Equivalents and Restricted Cashrestricted cash
The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.
The Company records cash and cash equivalents as restricted when it is unable to freely use such cash and cash equivalents for general operating purposes. AtAs of June 30, 2020 and December 31, 2019,2023, restricted cash consistsconsisted of cash on deposit in$0.1 million related to a financial institution that is restricted from use for the Company’s corporateletter of credit card program.
6
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
with an international customer.
The following table provides a reconciliation of cash, and cash equivalents and restricted cash onincluded in the Company’s condensed consolidated balance sheets to the totals presented on the condensed consolidated statements of cash flows (in thousands):
June 30,
2020		December 31,
2019
Cash and cash equivalents$59,170 $81,033 
Restricted cash270 270 
Total cash and cash equivalents and restricted cash as presented on the condensed consolidated statements of cash flows$59,440 $81,303 
Trade Accounts Receivable
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its account receivable portfolio. In establishing the required allowance, management considers historical losses adjusted to take into account current market conditions and the Company’s customers’ respective financial conditions, the amounts of receivables in dispute and the current receivables aging and current payment patterns. To the extent identified, account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. We have not had any material write-offs or allowance for doubtful accounts in the three and six months ended June 30, 2020 and 2019.
Revenue Recognition
The Company derives revenue from 2 primary sources, product revenues, which are comprised primarily of direct platform sales revenues and consumables revenues, and service revenues, which are comprised of revenue from joint development agreements, service and warranty, platform support and feasibility studies on the Company’s platforms. Revenues are recognized net of applicable taxes imposed on the related transaction.
The Company recognizes revenue when the Company satisfies the performance obligations under the terms of a contract and control of its products and services is transferred to its customers in an amount that reflects the consideration the Company expects to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract based on stand-alone selling price, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of a good or service to the customer, meaning the customer has the ability to use and obtain the benefit of the good or service.
The Company’s agreements with customers often include multiple performance obligations, which can sometimes be included in separate contracts entered into within a reasonably short period of time. The Company considers an entire customer arrangement to determine if separate contracts should be considered combined for the purposes of revenue recognition.
In order to determine the stand-alone selling price, the Company conducts a periodic analysis to determine whether various goods or services have an observable stand-alone selling price as well as to identify significant changes to current stand-alone selling prices. If the Company does not have an observable stand-alone selling price for a particular good or service, then the stand-alone selling price for
7
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
that particular good or service is estimated using an approach that maximizes the use of observable inputs. The Company’s process for determining stand-alone selling price requires judgment and considers multiple factors that are reasonably available and maximizes the use of observable inputs that may vary over time depending upon the unique facts and circumstances related to each performance obligation. The Company believes that this method results in an estimate that represents the price the Company would charge for the product offerings if they were sold separately.
For most of its performance obligations, the Company has established stand-alone selling price as a range rather than a single value, such range being plus or minus 15% of the median of observable prices. If the contractually stated prices of all the performance obligations in a contract fall within their respective stand-alone selling price ranges, the Company will allocate the transaction price at the contractually stated amounts. In situations where the contractually stated price for one or more performance obligations in a contract fall(s) outside of their respective stand-alone selling price range, the Company will use the mid-point of the respective stand-alone selling price range for performance obligations in the contract priced outside of their respective stand-alone selling price range(s) and the contract values for performance obligations priced within their respective stand-alone selling price range(s), to allocate the transaction price on a relative stand- alone selling price basis.
Taxes, such as sales, value-add and other taxes, collected from customers concurrent with revenue generating activities and remitted to governmental authorities are not included in revenue. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and are included in cost of sales.
The following describes the nature of the Company’s primary types of revenue and the revenue recognition policies and significant payment terms as they pertain to the types of transactions the Company enters into with its customers.
Product revenues
June 30, 2023December 31, 2022
Cash$28,060 $63,596 
Cash equivalents2,904 22,926 
Restricted cash93 — 
Total cash, cash equivalents and restricted cash as presented on the condensed consolidated statements of cash flows$31,057 $86,522 
Product revenues are comprised of 2 major revenue streams, direct platform sales and consumables. Direct platform sales revenues are comprised of advanced automation systems (including fully paid workflow licenses) as well as Culture Station instruments. Consumables revenues are comprised of OptoSelect chips required to run the system as well as reagent kits. The Company’s standard arrangement with its customers is generally a purchase order or an executed contract.
Revenue on product sales is recognized when control has transferred to the customer which typically occurs when the product has been shipped to the customer, risk of loss has transferred to the customer and the Company has a present right to payment for the system, chip or kit, as applicable. In certain limited circumstances when a product sale includes client acceptance provisions, the Company will first assess such terms to determine if the control of the good is being transferred to the customer in accordance with the agreed-upon specifications in the contract. To the extent that such acceptance provisions can be objectively determined to be aligned with the standard specifications of the arrangement, are defined and easily evaluated for completion, as well as do not afford the customer any additional rights or create additional performance obligations for the Company, such provisions would be determined perfunctory and would not preclude revenue recognition presuming all other criteria are met. If such acceptance provisions are considered to be substantive, revenue is recognized either when client acceptance has been obtained, client acceptance provisions have lapsed, or the Company has objective evidence that the criteria specified in the client acceptance provisions have been satisfied. Payment terms are generally thirty to ninety days from the date of invoicing.
On a limited basis, the Company also enters into fixed-term sales-type lease arrangements with certain qualified customers. Revenue from sales-type lease arrangements is generally recognized in a manner consistent with platform equipment, assuming all other revenue recognition criteria have been met.
8
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Service revenues
Service revenues primarily consist of joint development agreements, service and warranty, platform support and feasibility studies on the Company’s advanced automation systems and workflows. The Company’s services are provided primarily on a fixed fee basis; from time to time these fixed fee contracts may be invoiced at the outset of the arrangements. The Company recognizes revenue from the sale of extended warranty and enhanced service warranty arrangements over the respective period, while revenue on feasibility studies is recognized over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Revenue on platform support is recognized as the services are performed. Service contracts are typically short-term in nature. Payment terms are generally thirty to ninety days from the date of invoicing.
Joint development agreements are agreements whereby the Company provides services for the development of customized advanced automation systems and workflows to meet a specific customer’s needs. Such contracts generally include defined milestones associated with these development activities over extended periods of time, some in excess of twenty-four months. Typically, there are formal customer acceptance clauses as each milestone is completed, and an approval to proceed with the next milestone is generally required. The Company recognizes revenue over time, using an input measure of progress based on costs incurred to date relative to total expected costs. Payment terms are generally thirty to ninety days from the achievement of each milestone.
The Company places a constraint on a variable consideration estimate that focuses on possible future downward revenue adjustments (i.e., revenue reversals) if there is uncertainty that could prevent a faithful depiction of the consideration to which the Company expects to be entitled to. The constraint estimate is reassessed at each reporting date until the uncertainty is resolved.
Contract assets and contract liabilities
Contract assets include amounts where revenue recognized exceeds the amount invoiced to the customer and the right to payment is not solely subject to the passage of time. The Company’s contract asset balances of $4.0 million and $5.2 million as of June 30, 2020 and December 31, 2019, respectively, are primarily from its development and feasibility study agreements. The Company does not have impairment losses associated with contracts with customers for the three and six months ended June 30, 2020 and 2019.
Contract liabilities consist of fees invoiced or paid by the Company’s customers for which the associated services have not been performed and revenues have not been recognized based on the Company’s revenue recognition criteria described above. Such amounts are reported as deferred revenue on the consolidated balance sheets. Deferred revenue that is expected to be recognized during the following twelve months is recorded as a current liability and the remaining portion is recorded as non-current.
Contract assets and contract liabilities are reported in a net position on an individual contract basis at the end of each reporting period. Contract assets are classified as current or long-term on the condensed consolidated balance sheet based on the timing of when the Company expects to complete the related performance obligations and invoice the customers. Contract liabilities are classified as current or long-term on the condensed consolidated balance sheet based on the timing when the revenue recognition associated to the related customer payments and invoicing is expected to occur.
Costs to obtain or fulfill a contract
9
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Origination costs relate primarily to the payment of incentive bonuses that are directly related to sales transactions. Fulfillment costs generally include the direct cost of services such as platform support and feasibility studies.
Origination and fulfillment costs that are internal to the Company are generally expensed when incurred because most of those costs are incurred concurrently with the delivery of the related goods and services, which are predominantly recognized at a point in time or short-term in nature. The origination costs that are related to long-term development agreements are capitalized and amortized over the relevant service period.
The origination costs that are related to long-term development agreements are not material as of June 30, 2020 and 2019.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation on property and equipment is computed using the straight-line method over the estimated useful lives of the assets, as presented in the table below. Expenditures for major additions and improvements to property and equipment are capitalized and maintenance and repairs are charged to expense as incurred. Assets not yet placed in use are not depreciated.
The estimated useful lives of Company’s property and equipment are as follows:
Equipment, tooling and molds5-7 years
Computer equipment and software3-7 years
Furniture, fixtures and other3-7 years
Leasehold ImprovementsShorter of lease term or estimated useful life
Other Assets
Other current assets and other assets consist primarily of prepaid rent, prepaid insurance and advance payments made to certain vendors for future delivery of goods or services and software implementation costs for cloud-based hosting arrangements that are a service contract.
The Company expenses all cloud-based hosting arrangement related costs (internal and external) that were incurred in the planning and post-implementation operation stages of such implementations and capitalizes costs related to the application development stage of such projects. The capitalized costs are amortized on a straight-line basis over the estimated useful life of five years starting on the date that the projects are placed into production and are ready for their intended use.
Deferred Offering Costs
Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to equity offerings, are capitalized and will be offset against proceeds upon the consummation of the offering within stockholders’ equity. As of December 31, 2019, there were 0 capitalized deferred offering costs in the condensed consolidated balance sheet and as of June 30, 2020, there were $1.7 million of deferred offering costs which are reported as prepaid and other current assets in the condensed consolidated balance sheets.
Research and Development Costs
Research and development costs primarily consist of salaries, benefits, incentive compensation, stock-based compensation, and allocated facilities costs for employees and contractors engaged in development
10
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
arrangements, research, regulatory affairs, and product development. The Company expenses all research and development costs in the periods in which they are incurred.
Income Taxes
The Company accounts for income taxes under an asset-and-liability approach. Deferred income taxes comprise the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and the amounts recognized for income tax reporting purposes, net operating loss carryforwards, and other tax credits measured by applying currently enacted tax laws. A valuation allowance is provided when necessary to reduce deferred tax assets to an amount that is more likely than not to be realized.
The Company determines whether a tax position is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The Company uses a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. The Company's policy for interest and penalties related to uncertain tax positions is to recognize interest and penalties, if any, as a component of the provision for income taxes in the condensed consolidated statements of operations and to include accrued interest and penalties within the related tax liability line in the condensed consolidated balance sheets.
For all periods presented, the Company has provided a valuation reserve equal to 100% of its deferred tax assets as the Company is not in a position to determine if its operating plans will be successful and result in taxable income to absorb any loss carryforwards.
Stock-Based Compensation
The Company maintains an incentive compensation plan under which incentive stock options and non-qualified stock options are granted primarily to employees and non-employee consultants.
Stock-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite service period. The fair value of stock-based awards is estimated using the Black-Scholes option pricing model. The Company records forfeitures as they occur.
Fair Value Measurements
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels (see Note 6 to these condensed consolidated financial statements):
•Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date for identical assets and liabilities.
•Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
11
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
•
Level 3 Inputs: Unobservable inputs
Accounts Receivables and Allowance for Credit Losses
Trade accounts receivable are recorded at the invoiced amount as a result of the transaction with customers. The Company maintains allowances for credit losses for uncollectible accounts receivable. The Company estimates anticipated losses from doubtful accounts based on days past due, historical collection history, and other factors. Write-offs are recorded at the time all collection efforts have been exhausted. The Company reviews its allowance for doubtful accounts on a quarterly basis.

Inventory
Inventories are recorded at the lower of cost, determined on a first-in, first-out basis, or net realizable value. Inventory that is obsolete or in excess of forecasted usage is written down to its estimated net realizable value based on assumptions about future demand and market conditions. Inventory write-downs are charged to cost of goods sold and establish a new cost basis for the asset or liability used to measure fair value to the extent that observable inputsinventory. Costs included in inventories are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.raw materials, labor, supplies, allocable depreciation of manufacturing facilities, equipment and overhead.

Stock-based compensation
The categorization of a financial instrument withinCompany maintains the valuation hierarchy2020 Incentive Award Plan (“2020 Plan”), an incentive compensation plan under which stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”) are granted to employees, non-employee consultants and directors.
Stock-based compensation expense is calculated based on the lowest levelgrant date fair value of input that is significant tothe award. The Company determines the fair value measurement.
The Company recognizes transfers between levelsof RSUs and RSAs based on the closing price of the fair value hierarchyCompany’s common stock as reported by Nasdaq on the date of the event or change in circumstances that caused the transfer.
Product Warrantiesgrant.
The Company providesestimates the fair value of the majority of stock option awards on the grant date using the Black-Scholes option-pricing model. For option awards that include a one year assurance-type warranty on its platforms and chip consumables. At the time revenue is recognized,goal tied to the Company establishes an accrual for estimated warranty expenses based on historical data and trends of product reliability and costs of repairing and replacing defective products. The Company exercises judgment in estimating the expected product warranty costs, using data such as the actual and projected product failure rates, estimated repair costs, freight, material, labor, and overhead costs. While management believes that historical experience providesshare price (i.e., a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in the Company’s products could result in actual expenses that are below those currently estimated.
Leases
The Company determines the initial classification and measurement of its right-of-use assets and lease liabilities at the lease commencement date and thereafter, if modified. The lease term includes any renewal options and termination options that the Company is reasonably assured to exercise. The present value of lease payments is determined by using the interest rate implicit in the lease, if that rate is readily determinable; otherwise,market condition), the Company uses its incremental borrowing rate. a Monte Carlo simulation to estimate the fair value.
The incremental borrowing rate is determined by using the ratefair value of interest that the Company would pay to borrow onstock options, RSUs and RSAs with only a collateralized basis an amount equal to the lease payments for a similar term and in a similar economic environment.
Lease expense for operating leasesservice condition is recognized as compensation expense on a straight-line basis over the reasonably assured lease term basedrequisite service period in which the awards are expected to vest and forfeitures are recognized as they occur.
Stock options and RSUs that include a service condition and a performance condition are considered expected to vest when the performance condition is probable of being met. Compensation expense associated with performance awards that are determined to be probable of achievement is recognized over the requisite service period on a tranche-by-tranche basis.
For performance stock options and RSUs not initially assessed as probable of achievement, the total lease paymentsCompany records a cumulative adjustment to compensation expense in the period the Company changes its determination that a performance condition becomes probable of being achieved. The Company ceases recognition of compensation expense in any periods where the Company determines the attainment of a performance condition is no longer probable. If the performance goals are determined to be improbable, any previously recognized compensation expense is reversed.
The fair value of stock options with a market condition is recognized over the requisite service period for each tranche of the award and is included in operating expenses inrecognized regardless of whether (or to what extent) the condensed consolidated statements of operations and comprehensive income.market condition is ultimately achieved.
For all leases, rent payments that are based on a fixed index or rate at the lease commencement date are included in the measurement of lease assets and lease liabilities at the lease commencement date.
The Company has elected the practical expedient to not separate lease and non-lease components. The Company’s non-lease components are primarily related to property maintenance and insurance, which varies based on future outcomes, and thus is recognized in rent expense when incurred.
The Company also acts as a lessor to provide equipment financing through sales-type lease arrangements with certain qualified customers. Revenue from sales-type leases is presented on a gross basis when the company enters into a lease to realize value from a product that it would otherwise sell in its ordinary course of business. Amounts due and receivable under these arrangements are recorded at the outset of the arrangement as a contract asset in prepaid expenses and other current assets until such time that invoices are issued in accordance with the terms of the lease, at which point they are recorded as trade accounts receivable in the condensed consolidated balance sheets.
Net Loss Attributable to Common Stockholders Per Share
129
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Net loss attributable to common stockholders per share is computed by dividing the weighted-average number of common shares outstanding for the period. Diluted net loss per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock; however, potential common equivalent shares are excluded if their effect is anti-dilutive. In computing diluted net loss per share, the Company utilizes the treasury stock method.Business Combinations
The Company appliesrecords tangible and intangible assets acquired and liabilities assumed in a business combination using the two-classpurchase method to compute basic and diluted net loss or income per share when it has issued shares that meet the definition of participating securities.accounting. The two-class method determines net (loss) or income per share for each class of common and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two-class method requires net (loss) income available to common stockholders for the period to be allocated between common and participating securities based upon their respective rights to share in the earnings as if all net (loss) income for the period had been distributed. The Company’s convertible preferred stock participates in any dividends declared by the Company and are therefore considered to be participating securities. The participating securities are not required to participate in the lossesexcess of the Company, and therefore during periodspurchase consideration over the fair value of loss therenet assets acquired is norecorded as goodwill. The allocation required under the two-class method.
Recently Issued and Adopted Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Credit losses (Topic 326), which sets forthof purchase consideration in a “current expected credit loss” (CECL) model whichbusiness combination requires the Company to measure allmake significant estimates and assumptions. Such estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the Acquisition Date, the Company may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period or the final determination of the fair value, whichever comes first, any subsequent adjustments are recorded to the consolidated statement of operations. Transaction costs associated with business combinations are expensed as they are incurred.

Goodwill and Intangible Assets
Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. Intangible assets are measured at their respective fair values as of the Acquisition Date and may be subject to adjustment within the measurement period, which may be up to one year from the Acquisition Date. The Company does not amortize goodwill rather; goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. Such triggering events potentially warranting an annual or interim goodwill impairment assessment include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained decreases in the Company’s stock price or market capitalization.
To determine whether goodwill is impaired, the Company performs a quantitative impairment test whereby the Company estimates the fair values of its single reporting unit using a combination of an income and market approach. To determine the fair value, the Company is required to make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include the valuation methodology itself, as well as inputs to the valuation model. The Company utilizes a combination of an income and market approach to assess the fair value of the reporting unit. The income approach considers the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate and projected future economic and market conditions while the guideline public company market approach considers marketplace earnings multiples from within a peer public company group. These assumptions require significant judgement.
To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. The Company also completes a reconciliation between the implied equity valuation prepared and the Company’s market capitalization. The majority of the inputs used in the discounted cash flow model are unobservable and thus are considered to be Level 3 inputs. The inputs for the market capitalization calculation are considered Level 1 inputs.

During the six months ended June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. This sustained decrease was considered to represent a triggering event requiring management to perform a quantitative goodwill impairment test as of June 30, 2023. As a result of the impairment test, the Company fully impaired its goodwill and recorded a loss on impairment of goodwill of $16.6 million. Refer to Note 8 for further information regarding Goodwill and Intangible Assets.

Intangible assets with finite useful lives are amortized over their estimated useful lives, generally on a straight-line basis, and are reviewed for impairment when facts or circumstances indicate that the carrying value of these assets may not be recoverable. As discussed above, during the six months ended June 30, 2023, the Company experienced a decline in market capitalization resulting from a sustained decrease in stock price and also recorded a $16.6 million loss on impairment of goodwill. Management considered these events to be triggering events and
10
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
reviewed its single long-lived asset group (including its intangible assets) for impairment. Because the sum of future undiscounted cash flows for the asset group exceeded the carrying value of the asset group, management concluded the assets were recoverable and no impairment charge was recorded.

The Company does not have any indefinite-lived intangible assets as of June 30, 2023.

Long-Lived Assets
Long-lived assets, including property, plant and equipment and finite-lived intangible assets, are amortized over their estimated useful lives, generally on a straight line basis, and are reviewed for impairment whenever facts or circumstances indicate that the carrying value of an asset may not be recoverable. Should there be an indication of impairment, the Company first tests for recoverability by comparing the estimated undiscounted future cash flows expected creditto result from the use of the asset group to the carrying amount of that asset group. If the carrying amount of the asset group is not recoverable on an undiscounted cash flow basis, the Company is then required to estimate the fair value of the asset or asset group. Any excess of the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss.
During the six months ended June 30, 2023, the Company experienced a decline in its market capitalization as a result of a sustained decrease in the Company’s stock price. This sustained decrease was considered to represent a triggering event requiring management to perform a quantitative impairment test of its long-lived assets as of June 30, 2023. Because the sum of future estimated undiscounted cash flows for the Company’s single asset group exceeded its carrying value, the Company concluded there was no impairment as of June 30, 2023. Refer to Note 8, Goodwill and Other Intangible Assets, and Note 10, Property and Equipment, Net, for further information.

Foreign currency translation and transactions
The Company assesses the functional currency of each of its international subsidiaries. For subsidiaries where the functional currency is the U.S. dollar, gains or losses arising from currency exchange rate fluctuations on transactions denominated in a currency other than the U.S. dollar are included in “Other income (expense), net” in the condensed consolidated statement of operations.
For subsidiaries where the functional currency is the local currency, the translation of foreign currencies into U.S. dollars is performed for financial instruments heldbalance sheet accounts using exchange rates in effect at the balance sheet dates and revenue and expense accounts using the average exchange rate during each period. The gains and losses resulting from the translation are included in accumulated other comprehensive loss in stockholders’ equity and are excluded from net loss. The portions of intercompany accounts receivable and accounts payable that are intended for settlement are translated at exchange rates in effect at the balance sheet date.

Research and development state tax credits
R&D tax credits exchanged for cash pursuant to the Connecticut R&D Tax Credit Exchange Program, which permits a qualified small business engaged in R&D activities within Connecticut to exchange its unused R&D tax credits for a cash amount equal to 65% of the value of exchanged credits, are recorded as a receivable and other income in the year the R&D tax credits relate to, as it is reasonably assured that the R&D tax credits will be received, based upon the Company’s history of filing for and receiving the tax credits. R&D tax credits receivable where cash is expected to be received by the Company more than one year after the balance sheet date are classified as noncurrent in the consolidated balance sheets. The Company has recorded $0.2 million of R&D tax credits receivable as of June 30, 2023.


11
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Warrants
On March 21, 2023, and in connection with the closing of the IsoPlexis Merger, PhenomeX, IsoPlexis and Perceptive Credit Holdings III, LP (“Perceptive”) executed a warrant certificate to purchase shares of PhenomeX stock (“Warrant Certificate”). The Company accounts for these common stock warrants as equity classified instruments in accordance with ASC 480, Distinguishing Liabilities from Equity.

(3)Marketable Securities
The Company may invest in available-for-sale marketable debt securities generally consisting of commercial paper and U.S. government securities with contractual maturities due within one year. Marketable securities with a maturity of three months or less when purchased are considered to be cash equivalents.

The following tables summarize the amortized costs and carrying value of the Company’s available-for-sale securities, by balance sheet classification and major security type, as of June 30, 2023 and December 31, 2022 (in thousands):

Marketable Securities reported as Cash Equivalents

June 30, 2023
Amortized CostUnrealized GainsUnrealized LossesFair Value
Money market funds$2,904 $— $— $2,904 
   Total$2,904 $— $— $2,904 


December 31, 2022
Amortized CostUnrealized GainsUnrealized LossesFair Value
Money market funds$2,354 $— $— $2,354 
Commercial paper16,606 — (4)16,602 
U.S. agency securities3,969 1 — 3,970 
U.S. government securities— — — — 
   Total$22,929 $1 $(4)$22,926 


Marketable Securities reported as Short-term Marketable Securities

As of June 30, 2023, the Company did not hold any short-term marketable securities. Realized gains/losses from the sale of short-term marketable securities during the three and six months ended June 30, 2023 were immaterial.

Short-term marketable securities on December 31, 2022 were as follows (in thousands):

12
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 31, 2022
Amortized CostUnrealized GainsUnrealized LossesFair Value
Commercial paper$22,158 $1 $(11)$22,148 
U.S. agency securities4,941 1 — 4,942 
U.S. government securities19,159 5 (2)19,162 
   Total$46,258 $7 $(13)$46,252 

At each reporting date, basedthe Company performs an evaluation of impairment to determine if any unrealized losses are the result of credit losses. Impairment is assessed at the individual security level. Unrealized losses on historical experience, current conditions,available-for-sale debt securities as of December 31, 2022 were not significant and reasonable supportable forecasts. This replaceswere primarily market driven due to changes in interest rates, and not due to increased credit risk associated with specific securities. Accordingly, the existing incurred loss model and is applicable to the measurement ofCompany did not record an allowance for credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. The standard is effectivethese short-term investments as of December 31, 2022.

See Note 9 for fiscal years beginning after December 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company adopted Topic 326 effective January 1, 2020; such adoption did not have a material impact on its condensed consolidated financial statements.
Recently Issued But Not Yet Adopted Accounting Standardsinformation about the fair value of the Company’s short-term marketable securities.
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions related to intra-period tax allocations and deferred tax accounting on outside basis differences in foreign subsidiaries and equity method investments. Additionally, it provides other simplifying measures for the accounting for income taxes. ASU 2019-12 is effective for the Company in the first quarter of 2021 and early adoption is permitted. The Company has not yet adopted ASU 2019-12 and is currently evaluating the impact the new guidance will have on its financial position, results of operations and cash flows.
(3)(4)Significant Risks and Uncertainties Including Business and Credit Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, short-term available-for-sale debt securities and trade receivables. The Company’s cash and cash equivalents are held by large, credit worthy financial institutions. The Company invests its excess cash in money market funds.funds and short-term available-for-sale debt securities with the primary objective of facilitating liquidity and capital preservation. The Company has established guidelines relative to credit ratings, diversification and maturities that seek to maintain safety and liquidity. Deposits in these banksfinancial institutions may exceed the amounts of insurance provided on such deposits. To date, the Company has not experienced any material realized losses on its deposits of cash, cash equivalents and cash equivalents.marketable securities.
Most
The Company controls credit risk through credit approvals and monitoring procedures. The Company performs periodic credit evaluations of its customers and generally does not require collateral. Accounts receivable are recorded net of an allowance for doubtful accounts. The allowance for doubtful accounts is based on management’s assessment of the collectability of specific customer accounts and the aging of the related invoices and represents the Company’s customers are locatedbest estimate of expected credit losses in its existing trade accounts receivable. As of June 30, 2023, the United States and Asia Pacific. Company recorded an allowance for doubtful accounts of $0.2 million. As of December 31, 2022, the Company had not recorded any material allowance for doubtful accounts.

For the three months ended June 30, 2023, three customers accounted for 12%, 11% and 10% of revenue. For the six months ended June 30, 2020, four2023, one customer accounted for 22% of revenue. For the three months ended June 30, 2022, three customers accounted for 18%20%, 18%11% and 10% of revenue. For the six months ended June 30, 2022, three customers accounted for 16%, 17%11% and 10% of revenue.

As of June 30, 2023, two customers comprised 16% and 10% of revenue andaccounts receivable. As of December 31, 2022, two customers accounted for 15%24% and 11% of revenue, respectively. For the three and six months endedaccounts receivable.
13
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(5)Business Combinations
IsoPlexis Merger
On March 21, 2023, the Company completed the IsoPlexis Merger. Under the terms of the Merger Agreement, IsoPlexis shareholders received, for each share of IsoPlexis stock, 0.612 shares of Berkeley Lights common stock (which was automatically converted into shares of PhenomeX common stock).
Consideration Transferred
The Acquisition Date fair value of consideration transferred in the IsoPlexis Merger totaled $84.9 million, summarized as follows (in thousands):
Fair value of PhenomeX common stock issued to IsoPlexis stockholders (1)
$31,930 
Repayment of IsoPlexis debt (2)
52,482 
Fair value of vested IsoPlexis options attributable to pre-merger service (3)
306 
Fair value of IsoPlexis Warrant at Acquisition Date (4)
170 
   Total purchase consideration$84,888 
(1) Represents the fair value of PhenomeX common stock issued to IsoPlexis stockholders pursuant to the Merger Agreement. The fair value is based on 24,945,611 shares of PhenomeX common stock at $1.28 per share on March 21, 2023 issued to IsoPlexis stockholders. IsoPlexis stockholders received 0.612 shares of PhenomeX stock for each IsoPlexis share they held.
(2) Includes $50 million in principal repayment to retire debt of IsoPlexis, as required by change in control provisions of the debt, as well as prepayment penalties and accrued interest.
(3) Represents the fair value on March 21, 2023 of IsoPlexis options assumed by PhenomeX attributable to pre-combination service (see Note 13 for additional information).
(4) Represents the fair value of the IsoPlexis warrant assumed by PhenomeX at March 21, 2023 (see Note 13 for additional information).

Fair Value of Assets Acquired and Liabilities Assumed
The Company accounted for the IsoPlexis Merger as a business combination. The identifiable assets acquired and liabilities assumed are recorded at their fair values as of the Acquisition Date and are consolidated into the Company’s financial statements. The assignment of fair market value requires significant judgments regarding the estimates and assumptions used to value the acquired assets and liabilities assumed. In determining the fair values of the assets acquired and liabilities assumed, the Company utilized the cost, income and market approaches from the perspective of a market participant.
The following table summarizes the fair values for each major class of assets acquired and liabilities assumed at the Acquisition Date (in thousands). The Company used third party valuation professionals to aid in the determination of the estimated fair value of certain assets acquired and liabilities assumed. As of the date of this Quarterly Report, the allocation of the acquisition purchase price to the intangible assets acquired and the resulting goodwill has not been finalized. Management’s analysis of these items has not yet been completed because of the inherent complexities of estimating fair values of acquired patented technologies, customer relationships and trade names and trademarks. The fair value of the remaining assets acquired and liabilities assumed were determined by management based on its consideration of all currently available information and the allocation of consideration to these items can be considered final. Notwithstanding the above, as described in Note 8, Goodwill and Intangible Assets, management determined that there were indicators of asset impairment during the quarterly period ended June 30, 2019, five customers accounted for 16%, 15%, 15%, 15%2023, and 14%assessed the carrying values of revenuethe Company’s long-lived assets and two customers accounted for 18% and 14% of revenue, respectively.goodwill.
As of
14
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
During the three months ended June 30, 2020, four customers comprised 19%, 18%, 17%2023, the Company recorded a $4.3 million increase to goodwill related to changes in estimates pertaining to the fair value of inventory and 17%property and equipment. Of the $4.3 million increase to goodwill, approximately $2.2 million represents a correction of the opening balance sheet to reduce the fair value of acquired inventory.

Cash and cash equivalents$12,197 
Accounts receivable3,075 
Inventories22,612 
Prepaid expenses and other current assets4,190 
Property and equipment, net11,562 
Intangible assets22,900 
Goodwill16,557 
Operating lease right-of-use assets4,975 
Other assets526 
    Total assets acquired98,594 
Accounts payable2,359 
Accrued expenses and other current liabilities4,912 
Deferred revenue1,399 
Operating lease obligations5,036 
     Total liabilities assumed13,706 
Total consideration transferred$84,888 
Acquired Receivables
The fair value of accounts receivable.receivable acquired was $3.1 million.
Inventory
The fair value of inventory acquired was initially estimated to be $27.3 million. During the three months ended June 30, 2022, the initial estimate of fair value of inventory acquired in the opening balance sheet was decreased to $22.6 million (which included a step up from the acquired cost basis of $4.1 million) as a result of a correction of $2.2 million and a measurement period adjustment of $2.5 million.
Intangible Assets and Goodwill
Intangible assets include $11.7 million of patented technology, $7.7 million of customer relationships and $3.5 million of IsoPlexis trade names and trademarks. The intangible assets will be amortized over their respective useful lives which range from eight to fourteen years. Goodwill with a provisional assigned value of $16.6 million represents the excess of the consideration transferred over the estimated fair values of assets and liabilities assumed. None of the goodwill resulting from the IsoPlexis Merger is deductible for tax purposes. Refer to Note 8, Goodwill and Intangible Assets, for further information.
Transaction Costs
The Company recognized transaction costs associated with the IsoPlexis Merger of $3.5 million for the six months ended June 30, 2023, plus $2.8 million which was recognized in the fourth quarter of 2022. These costs are primarily related to professional services and are recorded in selling, general, and administrative expenses in the Company’s condensed consolidated statement of operations.
15
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Supplemental Pro Forma Information
The following unaudited pro forma financial information gives effect to the IsoPlexis Merger as if it had been completed on January 1, 2022. The unaudited pro forma information was prepared in accordance with the requirements of ASC 805, which is a different basis than pro forma information prepared under Article 11 of Regulation S-X (“Article 11”). As such, they are not directly comparable with historical results for stand-alone Berkeley Lights prior to March 21, 2023 or our previously provided pro forma financials prepared in accordance with Article 11. The pro forma adjustments are based on historical reported transactions by the respective companies and do not include any anticipated synergies or other expected benefits of December 31, 2019, four customers comprised 20%, 19%, 18%the acquisition.
(in thousands)Three months ended June 30, 2023Three months ended June 30, 2022Six months ended June 30, 2023Six months ended June 30, 2022
Total revenue$14,062 $23,155 $34,232 $48,272 
Net loss$(50,245)$(51,404)$(116,708)$(101,822)
Pro forma adjustments consisted of:
•Amortization/Depreciation- Tangible and 12%,intangible assets are assumed to be recorded at their assigned fair values as of January 1, 2022. Historical depreciation and amortization for IsoPlexis has been removed and the new fair values of the assets are depreciated or amortized over their estimated useful lives.
•Interest Expense- Entry into the Second Amended Term Loan and repayment of the Perceptive Credit Agreement are assumed to have occurred on January 1, 2022. Historical interest expense has been removed and replaced with the applicable interest rate as of March 21, 2023 associated with the Second Amended Term Loan, which was 8.5%.
•Transaction costs- Both entities incurred transaction costs, which totaled $13.7 million. Of the $13.7 million, approximately $4.4 million was incurred in the first quarter of 2023 and has been eliminated as it is not recurring.
•Accounting policies adjustment- IsoPlexis historically classified certain operations, quality and facility related costs in selling, general and administrative expenses. To align with PhenomeX accounting policies, these costs were reclassified to costs of goods sold or research and development. However, since this is a reclassification between expense line items on the condensed statement of operations, the adjustment does not have an impact on revenue or net loss for purposes of the pro forma financial information disclosed above.
For the three and six months ended June 30, 2023, IsoPlexis contributed total revenues of $1.9 million and $2.9 million, respectively, and operating losses (excluding goodwill impairment charges) of accounts receivable.$13.0 million and $14.1 million, respectively, that were included in the Company’s condensed consolidated statements of operations. In addition, the Company signed an agreement to license, on an exclusive and perpetual basis, certain intellectual property acquired in the IsoPlexis Merger for $7.3 million (see Note 6 for additional information).

16
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(4)(6)Revenue From Contracts With Customers
DisaggregationThe Company’s revenue consists of both product revenue and service and other revenue, which is primarily generated through the following revenue streams: (i) platform, (ii) recurring and (iii) partnership, license and other.
In the first quarter of 2023, the Company entered into a license arrangement whereby certain patents were licensed to a third party and for which the customer agreed to pay a non-refundable fee. For licenses of intellectual property, the Company recognizes revenue from non-refundable fees when the license is transferred to the customer and the customer is able to use and benefit from the license.

The following table depicts the disaggregation of revenue by type of customer or sales channel, market segment as defined by nature of workflows and activitiestables provide an overview of the endCompany’s revenue streams and how the Company reports revenue in its consolidated statements of operations:
Income Statement ClassificationProduct or Service soldRevenue Stream
Product revenueSale of advanced automation systems (Beacon and Lightning systems, Culture Station)Platform
Software and workflow licensesPlatform
Fixed term sales-type lease arrangements with qualified customersPlatform
Quarterly workflow subscriptions, annual or multi-year subscriptions arrangements (e.g., TechAccess)Recurring
Consumables and reagent kits (e.g., OptoSelect chips)Recurring
Service and other revenueStrategic partnerships, joint development and collaboration agreements where we provide services for development of new workflows, cells or organism typesPartnership, License and Other
Application support, installation and trainingPlatform
Fixed fee extended warranty and service programsRecurring
IP license revenue
Partnership, License and Other (1)
(1) License revenue relates to certain intellectual property acquired in the IsoPlexis Merger and subsequently licensed to a third party. License revenue related to the Company’s platforms (e.g., workflow licenses) is reported as Platform product revenue.





17
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The following tables provide information by revenue stream for the periods presented:

Three Months Ended June 30, 2023Six Months Ended June 30, 2023
(in thousands)ProductService and otherTotalProductService and OtherTotal
Platform$5,988 $482 $6,470 $11,761 $812 $12,573 
Recurring4,316 2,952 7,268 6,921 5,510 12,431 
Partnership, License and Other (1)
— 324 324 — 7,574 7,574 
   Total revenue$10,304 $3,758 $14,062 $18,682 $13,896 $32,578 
(1) During the six months ended June 30, 2023, the Company signed an agreement to license, on an exclusive and perpetual basis, certain intellectual property acquired in the IsoPlexis Merger for $7.3 million (“License Agreement”). As the $7.3 million represented a non-refundable fee and the license was transferred to the customer and timingduring the quarter, the $7.3 million was recognized as revenue during the first quarter of revenue recognition (in thousands):2023.
Three months ended June 30,Six months ended June 30,
2020201920202019
Type of Sales Channel
Direct sales channel$8,750 $11,738 $20,731 $24,339 
Distributor channel1,819 25 3,616 65 
Net revenues$10,569 $11,763 $24,347 $24,404 
Market Segment
Antibody therapeutics$9,956 $11,445 $21,777 $23,825 
Cell therapy47 318 398 499 
Synthetic biology566 — 2,172 80 
Net revenues$10,569 $11,763 $24,347 $24,404 
Timing of Revenue Recognition
Goods and services transferred at a point in time$8,890 $7,736 $19,578 $17,263 
Services transferred over time1,679 4,027 4,769 7,141 
Net revenues$10,569 $11,763 $24,347 $24,404 
Three Months Ended June 30, 2022Six Months Ended June 30, 2022
(in thousands)ProductService and otherTotalProductService and OtherTotal
Platform$6,226 $200 $6,426 $12,973 $857 $13,830 
Recurring3,242 2,687 5,929 6,269 5,103 11,372 
Partnership, License and Other— 6,795 6,795 — 14,154 14,154 
   Total revenue$9,468 $9,682 $19,150 $19,242 $20,114 $39,356 

Revenues by geographical markets are presented in Note 1719.
Performance Obligations
A significant number of the Company’s product and service sales, as well as its feasibility study arrangements, are short-term in nature with a contract term of one year or less. For those contracts, the Company has utilized the practical expedient in ASC 606-10-50-14 exempting the Company from disclosure of the transaction price allocated to theseremaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

As of June 30, 2023, the aggregate amount of remaining performance obligations that are unsatisfied or partially unsatisfied related to customer contracts in excess of one year was $10.4 million, which, to the extent invoiced, is included in deferred revenue on the condensed consolidated financial statements.balance sheets, of which approximately 50% is expected to be recognized as revenue in the next 12 months, with the remainder recognized afterwards.
Contract Balances
The following table provides information about receivables, contract assets and deferred revenue from contracts with customers (in thousands):
June 30,
2020		December 31,
2019
Trade accounts receivable$10,236 $9,334 
Contract assets, which are included in 'Prepaid expenses and other current assets'4,047 5,234 
Deferred revenue (current)8,607 9,686 
Deferred revenue (non-current)1,098 1,461 
1418
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
For each
June 30,
2023		December 31,
2022
Trade accounts receivable, net$14,375 $18,534 
Contract assets, which are included in “Prepaid expenses and other current assets”$480 $1,283 
Contract assets, long-term, which are included in “Other assets”$442 $549 
Deferred revenue (current)$9,648 $9,092 
Deferred revenue (non-current)$876 $963 

The contract liabilities of $10.5 million and $10.1 million as of June 30, 2023 and December 31, 2022, respectively, consisted of deferred revenue related to extended warranty service agreements, strategic partnerships and services agreements and advanced automation systems arrangements. Revenue recorded during the three and six months ended June 30, 20202023 included $2.1 million and 2019, changes$4.9 million, respectively,of previously deferred revenue that was included in contract liabilities as of December 31, 2022.
Sales-type Lease Arrangements
The Company also enters into sales-type lease arrangements with certain qualified customers. Revenue related to lease elements from sales-type leases is presented as product revenue and was none for the three and six months ended June 30, 2023 and 2022.

The following table presents the future maturity of the Company’s fixed-term customer leases and reconciles the undiscounted cash flows from the amounts due from customers under such arrangements as of June 30, 2023 (in thousands):
Year ending December 31,Sales-Type
Leases
Remainder of 2023 (1)
$223 
2024445 
2025408 
2026— 
Total undiscounted cash flows1,076 
Less: unearned income(143)
Total amounts due from customers (2)
$933 
(1) During the six months ended June 30, 2023, the Company impaired the net investment of a sales-type lease with a customer. The write down of the respective contract asset of $0.8 million, net of the return of the underlying asset, was recorded as an impairment charge of $0.6 million within selling, general and administrative expense in the contract assets were associated with feasibility and development agreement revenues, primarily due to the timing differenceCompany’s condensed consolidated statement of progress made on a projectoperations and the related rightresulting return of the underlying asset was recorded as an addition to bill upon completion of a feasibility program or achievement of milestones.fixed assets in the Company’s condensed consolidated balance sheet.
(2) Of the $0.9 million, $0.1 million is recorded in trade accounts receivable, with the remaining balance recorded in contract assets.
19
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(5)
(7)Balance Sheet Accounts
Trade accounts receivable, net consists of the following (in thousands):
June 30,
2023		December 31,
2022
Trade accounts receivable$14,583 $18,534 
Allowance for doubtful accounts(208)— 
Total$14,375 $18,534 

Changes in the allowance for doubtful accounts were as follows (in thousands):
Six months ended June 30, 2023
Allowance for doubtful accounts, beginning of year$— 
Write-offs of uncollectible accounts58 
Provision for doubtful accounts(266)
Allowance for doubtful accounts, end of period$(208)

Inventory
The following table shows the components of inventory (in thousands):
June 30,
2020		December 31,
2019		June 30,
2023		December 31,
2022
Raw materialsRaw materials$6,050 $3,392 Raw materials$30,143 $11,946 
Work in progressWork in progress425 — 
Finished goodsFinished goods5,858 3,789 Finished goods10,887 6,915 
TotalTotal$11,908 $7,181 Total$41,455 $18,861 


Prepaid expenses and other current assets
The following table shows the components of prepaid expenses and other current assets (in thousands):
June 30,
2020		December 31,
2019		June 30,
2023		December 31,
2022
Contract assetContract asset$4,047 $5,234 Contract asset$480 $1,283 
Vendor depositsVendor deposits144 65 Vendor deposits728 126 
Deferred costsDeferred costs2,239 554 Deferred costs365 472 
Other2,631 1,946 
Prepaid insurancePrepaid insurance2,583 2,025 
Other (1)
Other (1)
3,836 2,877 
TotalTotal$9,061 $7,799 Total$7,992 $6,783 
(1) Other includes primarily prepaid rent expenses, software licenses and prepaid VAT.
20
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Accrued expenses and other current liabilities
The following table shows the components of accrued expenses and other current liabilities (in thousands):
June 30,
2020		December 31,
2019		June 30,
2023		December 31,
2022
Accrued payroll and employee related expensesAccrued payroll and employee related expenses$2,362 $2,134 Accrued payroll and employee related expenses$6,116 $7,410 
Lease liability, short-term2,558 2,067 
Lease liability – short-termLease liability – short-term5,018 3,291 
Accrued product warrantyAccrued product warranty1,184 1,065 Accrued product warranty654 749 
Accrued legal expensesAccrued legal expenses995 170 Accrued legal expenses518 8,271 
Other(1)Other(1)1,000 793 Other(1)1,640 1,619 
TotalTotal$8,099 $6,229 Total$13,946 $21,340 
(1) Other includes accrued income taxes, sales taxes, accrued royalties and other miscellaneous accruals.
(6)(8)Fair Value of Financial InstrumentsGoodwill and Other Intangible Assets
FairGoodwill
On March 21, 2023, the Company completed the IsoPlexis Merger. Under the purchase method of accounting, the Company preliminarily recorded as goodwill, the $16.6 million excess of the Acquisition Date fair value is defined asof the priceconsideration transferred over the estimated fair value of net tangible and identifiable intangible assets that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participantsit acquired.
The Company tests goodwill for impairment at the reporting date. The categorizationunit level annually or more frequently if a change in circumstances or the occurrence of events indicates that potential impairment exists. During the three and six months ended June 30, 2023, the Company experienced a decline in its market capitalization as a result of a financial instrument withinsustained decrease in the valuation hierarchy is based on the lowest levelCompany’s stock price. The Company considered such sustained decrease to represent a triggering event requiring management to perform a quantitative goodwill impairment test as of input that is significantJune 30, 2023.

The Company utilized a combination of an income and market approach to assess the fair value measurement.of the reporting unit as of June 30, 2023. The income approach considers the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate and projected future economic and market conditions while the guideline public company market approach considers marketplace earnings multiples from within a peer public company group.
The carrying amounts
Based on the results of the quantitative goodwill impairment test, it was concluded that the estimated fair value of the Company’s cash equivalents, accounts receivable and accounts payable approximatesingle reporting unit was lower than its carrying value, as such, the Company recorded a goodwill impairment charge of $16.6 million during the three months ended June 30, 2023, which is included in the condensed consolidated statement of operations under the caption “Loss on impairment of goodwill”. As of June 30, 2023, cumulative goodwill impairment charges of $16.6 million were incurred.

The following table presents changes in the Company’s goodwill (in thousands):

Beginning balance, January 1, 2023$—
Preliminary goodwill recognized in connection with the IsoPlexis Merger12,246 
Ending balance, March 31, 202312,246 
Measurement period adjustments (1)
4,311 
Impairment charge(16,557)
Ending balance, June 30, 2023$— 
(1) Includes a $2.2 million correction of the opening balance sheet to reduce the fair value due to their relatively short maturities. The Company classifies its cashof acquired inventory.
1521
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
equivalents, which are comprised primarily of money market funds, within Level 1, as it uses quoted market pricesAcquired Intangible Assets
In connection with the IsoPlexis Merger, the Company identified certain intangible assets summarized in the determinationtable below (see Note 5 for further information). In addition, on February 15, 2023, the Company acquired certain tangible and intangible assets from Evorion Biotechnologies for a total purchase price of fair value.$0.3 million, of which $0.2 million related to intangible assets attributable to patents and technology. These intangible assets are also included in the table below.
June 30, 2023
 (in thousands):Remaining Useful Life (Years)GrossAccumulated AmortizationNet
Customer relationships8$7,700 $(280)$7,420 
Trade names103,500 (97)3,403 
Patented technology1411,915 (239)11,676 
Total intangible assets$23,115 $(616)$22,499 
Amortization expense was $577,000 and $616,000 for the three and six months ended June 30, 2023.
As discussed above, during the six months ended June 30, 2023, the Company experienced a decline in market capitalization resulting from a sustained decrease in stock price and recorded a $16.6 million loss on impairment of goodwill. Management considered these events to be triggering events and reviewed its single long-lived asset group (including its intangible assets) for impairment. Because the sum of future undiscounted cash flows for the asset group exceeded the carrying value of the asset group, management concluded the assets were recoverable and no impairment charge was recorded.

The estimated aggregate future amortization expense for intangible assets subject to amortization expense are summarized below (in thousands). Actual amortization expense to be reported in future periods could differ from these estimates as a result of the finalization of the preliminary purchase price allocation of the IsoPlexis Merger, divestitures and other factors.
Estimated Future Amortization
Year Ending December 31:
Remainder of 2023$1,091 
2024$2,164 
2025$2,164 
2026$2,164 
2027$2,164 
(9)Fair Value of Financial Instruments
The following tables set forthis a description of the valuation techniques the Company uses to measure the fair value of assets and reports fair value on a recurring basis:
•Cash equivalents: As of June 30, 2023, the Company’s financial assetscash equivalents consisted of money market funds. Money market funds are highly liquid investments and liabilities by level withinare actively traded and pricing information is readily available. Accordingly, the Company classifies these securities as Level 1 of the fair value hierarchyhierarchy.
•Short Term Marketable Securities: As of June 30, 2023, the Company did not hold any short-term marketable securities. Generally, the Company values short-term marketable securities using quoted
22
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
prices in active markets for similar instruments. Accordingly, the Company classifies marketable securities as Level 2 of the fair value hierarchy.
The carrying amounts of the Company’s cash, accounts receivable, prepaid expenses, other current assets, accounts payable, accrued expenses and other current liabilities as of June 30, 2023 and December 31, 2022 approximate fair value due to their relatively short maturities.

As of June 30, 2023 and December 31, 2022, the fair value measurements of the Company’s assets measured on a recurring basis were as follows (in thousands):
June 30,
2020		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets
Cash and cash equivalents$25,129 $25,129 $— $— 
Total$25,129 $25,129 $— $— 
June 30,
2023		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
Money market funds$2,904 $2,904 $— $— 
Total assets measured at fair value$2,904 $2,904 $— $— 
December 31,
2019		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Assets
Cash and cash equivalents$28,035 $28,035 $— $— 
Total$28,035 $28,035 $— $— 
December 31,
2022		Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)
Cash equivalents:
Money market funds$2,354 $2,354 $— $— 
Commercial paper16,602 — 16,602 — 
U.S. agency securities3,970 — 3,970 — 
Total cash equivalents22,926 2,354 20,572 — 
Debt securities, available for sale:
Commercial paper22,148 — 22,148 — 
U.S. agency securities4,942 — 4,942 — 
U.S. government securities19,162 — 19,162 — 
Total debt securities, available for sale46,252 — 46,252 — 
Total assets measured at fair value$69,178 $2,354 $66,824 $— 
The
As of June 30, 2023 and December 31, 2022, the carrying values and fair values of the Company’s financial instruments not measured at fair value were as follows (in thousands):
June 30, 2020December 31, 2019
Carrying
Value		Fair ValueCarrying
Value		Fair Value
Long-term debt, including current maturities$19,860 $21,125 $19,827 $21,392 
June 30, 2023December 31, 2022
Carrying
Value		Fair ValueCarrying
Value		Fair Value
Long-term debt, including current maturities (1)
$— $— $19,826 $17,443 
(1) The Company repaid in full all outstanding indebtedness on June 30,2023.
23
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The Company estimated the fair value of its long-term debt using a market-based approach that considers an average cost of debt. The Company has incorporated its own credit risk for all liability fair value measurements. Such fair value measurements are considered Level 2 under the fair value hierarchy.

The Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3 for anybetween the levels of the fair value measurement hierarchy during the periods presented.
16
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(7)(10)Property and Equipment, net
Property and equipment, net comprised the following (in thousands):
June 30,
2020		December 31,
2019		June 30,
2023		December 31,
2022
Equipment, tooling and moldsEquipment, tooling and molds$19,817 $19,510 Equipment, tooling and molds$44,814 $36,152 
Computer software and equipmentComputer software and equipment2,014 1,905 Computer software and equipment4,427 2,667 
Furniture, fixtures and otherFurniture, fixtures and other1,699 1,599 Furniture, fixtures and other2,401 2,007 
Leasehold improvementsLeasehold improvements5,304 5,283 Leasehold improvements11,978 10,836 
Construction in processConstruction in process200 342 Construction in process1,304 1,409 
Total property and equipmentTotal property and equipment$29,034 $28,639 Total property and equipment64,924 53,071 
Less: Accumulated depreciationLess: Accumulated depreciation(14,277)(12,167)Less: Accumulated depreciation(32,214)(29,224)
Property and equipment, net(1)Property and equipment, net(1)$14,757 $16,472 Property and equipment, net(1)$32,710 $23,847 
Total depreciation(1) As of December 31, 2022, Property and equipment, net included $0.1 million of assets held for sale.

Depreciation expense for the three and six months ended June 30, 20202023 was $1.3$2.5 million and $2.6$4.6 million, respectively. Total depreciationDepreciation expense for the three and six months ended June 30, 20192022 was $1.2$2.5 million and $2.3$4.4 million, respectively.

During the three and six months ended June 30, 2023 and 2022, losses on the impairment and disposal of property and equipment were not material.
(8)(11)Leases
The Company leases office, manufacturing, distribution and laboratory facilities in various locations in the United States, primarily in Emeryville, California under multiple operating leases. In June 2020,and Branford, Connecticut. The Company also leases facilities in Shanghai, China for office and laboratory facilities. On December 28, 2022, the Company entered into a sub-lease arrangement for its facility in Lexington, Massachusetts. Sub-lease income for the three and six months ended June 30, 2023 was $0.2 million and $0.3 million, respectively and was recorded as an offset to rent expense. There was no sub-lease income during the three and six months ended June 30, 2022.

Future payments associated with the Company’s operating lease for 34,789 square feetliabilities as of additional space in Emeryville, California,June 30, 2023 are as well as amended its existing lease arrangements to vacate certain existing space and extend the terms of its remaining existing space in Emeryville. The lease for additional space commences October 1, 2020 and all of the leases now expire on March 31, 2028.
In addition, the Company also leases multiple facilities in Shanghai, China under operating leases that expire at various dates, including additional office and laboratory facilities under an operating lease agreement that was entered into in July 2020. These leases expire at various dates, the latest of which is August 2023.
Certain of the Emeryville leases contain options to early terminate the lease and options to extend the lease for an additional term. However, the Company is not reasonably certain to exercise any of these options. The monthly base rental rate of the leases is subject to adjustment upon renewal based on then current market rental conditions.
follows (in thousands):
1724
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The maturity of
Operating leases
Undiscounted lease payments for the year ending December 31,
Remainder of 2023$3,121 
20246,297 
20255,952 
20265,398 
20274,759 
Thereafter7,464 
Total undiscounted lease payments32,991 
Less: implied interest(3,958)
Less: tenant improvement allowances receivable(65)
Present value of operating lease payments28,968 
Less: current portion (1)
(5,018)
Total long-term operating lease liabilities$23,950 
(1) Included in the Company’s operating lease liabilities as of June 30, 2020 is as follows (in thousands):balance sheet caption “Accrued expenses and other current liabilities.”
Operating leases
Undiscounted lease payments:
Remainder of 2020$1,087 
20212,218 
20222,002 
20232,006 
20242,075 
Thereafter7,188 
Total undiscounted lease payments16,576 
Less: implied interest(2,579)
Present value of operating lease payments13,997 
Less: current portion(2,558)
Total long-term operating lease liabilities$11,439 

Rent expense, net for the three and six months ended June 30, 20202023 was $0.6$1.6 million and $1.2$2.5 million, respectively. Rent expense, net for the three and six months ended June 30, 20192022 was $0.6$1.4 million and $1.1$2.5 million, respectively. Under the terms of the lease agreements, the Company is also responsible for certain variable lease payments that are not included in the measurement of the lease liability. Variable lease payments for operating leases were $0.3$0.8 million and $0.6$1.6 million for the three and six months ended June 30, 2020,2023, respectively, including non-lease components such as common area maintenance fees. Variable lease payments for operating leases were $0.2$1.0 million and $0.5$1.8 million for the three and six months ended June 30, 2019,2022, respectively, including non-lease components such as common area maintenance fees.

The following information represents supplemental disclosure for the statement of cash flows related to operating leases (in thousands):
Six months ended June 30,
2020
Right-of-use assets obtained in exchange for new operating lease liabilities$6,159
Cash paid for amounts included in the measurement of lease liabilities639
Six months ended June 30, 2023Six months ended June 30, 2022
Right-of-use assets obtained for new operating lease liabilities$— $— 
Right-of-use lease assets assumed in IsoPlexis Merger$4,975 $— 
Cash paid for amounts included in the measurement of lease liabilities$3,123 $1,070 
The following summarizes additional information related to operating leases:
June 30, 2020
Weighted-average remaining lease term (years)6.87
Weighted-average discount rate7.00%
June 30, 2023December 31, 2022
Weighted-average remaining lease term (years)5.506.48
Weighted-average discount rate4.72 %4.66 %

The Company also enters into leasing transactions in which the Company is the lessor, which to date have been classified as sales-type leases. See Note 6 for the related sales-type lease disclosures.
25
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(9)Notes Payable
In(12)Long-term Debt
On May 23, 2018, the Company entered into a Loan and Security Agreement with East West Bank (the “EWB (“Loan Agreement”) providing itwith EWB to provide a $20.0 million term loan facility (“Term Loan”). The loan facility was fully drawn as of May 23, 2018.

On June 30, 2021, the abilityCompany entered into an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”) with EWB. Pursuant to borrow up to $20.0 million.
The EWBthe Amended Loan Agreement, hasEWB provided a $20.0 million term loan (“Amended Term Loan”) which was used to refinance the Term Loan outstanding under the Loan Agreement dated May 23, 2018. The Amended Term Loan had a maturity of 48 months and carries an interest only period through May 2021, such interest only period subject to extension based on certain cash and revenue metrics. The note payable is collateralized by substantially all the assets of the Company, excluding intellectual property, which is subject to a negative pledge. The note carries anfixed interest rate of 6.73% per annum.
18
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
The EWB Loan Agreement contains customary negative covenants that limit the Company’s ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or consolidate. The EWB Loan Agreement also contains customary affirmative covenants, including requirements to, among other things, deliver audited financial statements.4.17%. In addition, the EWBAmended Term Loan had an initial interest-only period of 24 months, which could have been extended to up to 36 months based on the achievement of certain liquidity measures, and could have been pre-paid without penalty at any time.

On March 21, 2023, the Company entered into the Second Amended Loan Agreement contains covenantswith EWB. Pursuant to the Second Amended Loan Agreement, EWB increased the existing Amended Term Loan amount of $20.0 million by $50.0 million to an aggregate outstanding principal of $70.0 million (“Second Amended Term Loan”). The Second Amended Loan Agreement had a maturity of 60 months and a variable interest rate per annum equal to (i) the greater of 6.25% or the variable rate of interest, per annum most recently announced by EWB as its prime rate, plus (ii) one-half of one percent (0.5%). The Company used the proceeds from the Second Amended Term Loan to repay $52.5 million of indebtedness (including prepayment premium and interest) with Perceptive held by IsoPlexis (“Perceptive Credit Agreement”). Associated with these transactions, a $0.2 million loss on extinguishment of debt and a $0.7 million commitment fee associated with cash holdings with East West Bank and ratiosthe Loan Agreement, was recorded in “Other expense, net” on the Company’s condensed consolidated statement of cash to cash burn. As ofoperations during the three months ended March 31, 2023.

On June 30, 2020 and December 31, 2019,2023, the Company repaid in full all outstanding indebtedness under the Second Amended Loan Agreement, and upon such repayment, the Second Amended Loan Agreement and all related guarantees and loan documents were terminated and have no further force and effect. The Second Amended Loan Agreement payoff of $71.2 million included the principal amount of $70.0 million, accrued interest of $0.5 million, an early termination fee of $0.7 million plus other related fees and expenses, which satisfied all of the Company’s indebtedness obligations thereunder. Associated with this repayment, a $1.8 million loss on extinguishment of debt (including the write off of deferred issuance costs amounting to $1.1 million at the payoff date), was recorded in compliance“Other income (expense), net” on the Company’s condensed consolidated statement of operations during the three months ended June 30, 2023.

In connection with the termsrepayment of such outstanding indebtedness obligations by the Company, all security interests, liens, pledges, financing statements, mortgages and covenantsother charges of whatever nature against the collateral and other encumbrances held by EWB securing the obligations of any loan party under the Second Amended Loan Agreement.Agreement were automatically and irrevocably terminated and released.
The following is a schedule of payments due on notes payable as of June 30, 2020 (in thousands):
June 30,
2020
Year Ending December 31:
Remainder of 2020$684 
202112,832 
20228,475 
Total payments due21,991 
Less:
Interest payments, loan discounts and financing costs(2,131)
Current portion, less loan discounts and financing costs(1,596)
Notes payable, net of current portion$18,264 

Total interest cost incurred for the three and six months ended June 30, 20202023 was $0.4$1.6 million and $0.7$2.0 million, respectively. Total interest cost incurred for the three and six months ended June 30, 20192022 was $0.4$0.2 million and $0.8$0.5 million, respectively.
(10)
26
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(13)Equity and Stock Compensation Plans
2011 Equity Incentive Plan
AsIsoPlexis Merger
On March 21, 2023, in connection with the completion of the IsoPlexis Merger:

•All outstanding IsoPlexis RSAs were assumed by PhenomeX and converted into PhenomeX RSAs based on the 0.612 conversion ratio (see Note 5) and on the same terms and conditions (including with respect to vesting schedules and restrictions) as applied to IsoPlexis RSAs immediately prior to the closing of the IsoPlexis Merger.

•All outstanding IsoPlexis stock options (whether vested or unvested) that had a per share exercise price of less than $1.28 and were held by continuing employees were assumed by PhenomeX and converted into PhenomeX stock options based on the 0.612 conversion ratio (and rounded down) and on the same terms and conditions (including with respect to time-based vesting) as applied to IsoPlexis stock options immediately prior to the closing of the IsoPlexis Merger, with the exercise price per share of the assumed stock options determined by dividing the per share exercise price of the IsoPlexis options by the 0.612 conversion ratio (and rounded up to the nearest whole cent). The assumed stock options expire 10 years from their original date of grant. The assumed stock options and RSAs generally vest 25% upon the one-year anniversary of the service inception date and then ratably each month over the remaining 36 months.

On March 21, 2023, PhenomeX assumed 304,619 IsoPlexis RSAs and 378,767 IsoPlexis stock options after applying the 0.612 conversion ratio. The Company accounted for the assumed equity awards as a modification under ASC 718 and recorded stock compensation expense of $0.1 million during the six months ended June 30, 2023 associated with the modification.
Future grants of equity awards will be issued under the Company’s 2020 Plan.

Warrant Certificate
On March 21, 2023, and in connection with the closing of the IsoPlexis Merger, PhenomeX, IsoPlexis and Perceptive executed the Warrant Certificate. Under the Warrant Certificate, the outstanding warrant (“IsoPlexis Warrant”) to purchase shares of common stock, par value $0.001, of IsoPlexis (“IsoPlexis Common Stock”), issued by IsoPlexis to Perceptive was assumed by PhenomeX and converted into a warrant (“PhenomeX Warrant”) to purchase shares of common stock, par value $0.00005, of PhenomeX (“PhenomeX Common Stock”), on the same terms and subject to the same conditions as were applicable to the IsoPlexis Warrant as of immediately prior to the Acquisition Date; provided, that the PhenomeX Warrant is exercisable for 496,560 shares of PhenomeX Common Stock (i.e., a number of shares of PhenomeX Common Stock equal to the number of shares of common stock issuable underIsoPlexis Common Stock that were subject to the 2011 Equity Incentive Plan, as amended (the “2011 Plan”)IsoPlexis Warrant multiplied by the 0.612 exchange ratio) and has an exercise price of $9.80 per share of PhenomeX Common Stock (i.e., was 11,154,553 shares, including shares issuable upon the exercise price per share of outstanding awards. FollowingIsoPlexis Common Stock that was applicable to the adoptionIsoPlexis Warrant divided by 0.612).

Restricted stock awards
As a result of the 2020 Incentive Award Plan in July 2020, any awards outstanding underIsoPlexis Merger and as discussed above, the 2011 Plan continueCompany now has RSAs outstanding. RSAs are rights to be governed by their existing terms but no further awards may be granted under the 2011 Plan.
2020 Incentive Award Plan
In July 2020,receive shares of the Company’s BoardCommon Stock upon meeting specified vesting requirements. The fair value of Directors approveda RSA is the 2020 Incentive Award Plan (the “2020 Plan”). The initial numbermarket value as determined by the closing price of shares authorized and available for issuance in connection with the grant of future awards is 6,750,000.
2020 Employee Stock Purchase Plan
In July 2020, the Company’s Board of Directors approvedstock on the 2020 Employee Stock Purchase Plan (the “ESPP”). A total of 612,150 shares of common stock was initially reserved for issuance under the ESPP.original grant date.

27
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Stock-based compensation
Stock-based compensation related to the Company'sCompany’s stock-based awards was recorded as an expense and allocated as follows (in thousands):
19
Berkeley Lights, Inc.
Three months ended June 30,Six months ended June 30,
2023202220232022
Cost of sales$46 $68 $62 $119 
Research and development463 2,292 1,011 3,873 
Selling, general and administrative3,222 4,205 7,046 7,966 
Total stock-based compensation$3,731 $6,565 $8,119 $11,958 
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three months ended June 30,Six months ended June 30,
2020201920202019
Cost of sales$54 $— $60 $— 
Research and development553 432 1,064 830 
General and administrative586 446 1,115 770 
Sales and marketing159 71 292 163 
Total stock-based compensation$1,352 $949 $2,531 $1,763 

Stock-based compensation capitalized in inventory was immaterialnot material as of June 30, 20202023 and December 31, 2019.2022.

(11)(14)Restructuring
During 2022, the Company adopted a new strategic plan with the intention of reducing costs and better aligning the organization with the Company’s long-term goals. As a result, the Company approved a set of restructuring initiatives in 2022 and continued with similar initiatives in the first quarter and second quarter of 2023. During the three and six months ended June 30, 2023, the Company incurred restructuring charges of $1.1 million and $2.4 million, respectively, related to severance and other employee-related restructuring costs associated with the termination of approximately 15% of total full-time employees. As of June 30, 2023, the Company has substantially completed its restructuring efforts. It is unable to currently estimate future restructuring charges but will record any additional restructuring-related expenses as they are incurred.
Changes in the Company’s restructuring liability are set forth in the table below (in thousands):
Employee severance and termination benefitsNon labor restructuringTotal
Accrual on January 1, 2023$130 $107 $237 
Restructuring liability assumed in IsoPlexis Merger834 — 834 
Restructuring charges2,383 — 2,383 
Cash payments(2,832)(107)(2,939)
Non-cash settlements— — — 
Accrual on June 30, 2023$515 $— $515 
Restructuring liabilities are included in accrued expenses and other current liabilities in the condensed consolidated balance sheet.
(15)Income Taxes
The Company’s provision for income taxes was $8,000$51,000 and $71,000, respectively, for the three and six months ended June 30, 2023, and $4,000 and $24,000, respectively, for the three and six months ended June 30, 2020 and $15,000 and $34,000, respectively, for2022. For the three and six months ended June 30, 2019. Deferred2023 and 2022, loss from operations before taxes consisted of amounts related to U.S. operations and the Company’s foreign operations. The Company maintains a full valuation allowance on its deferred tax assets generated fromand intends to do so until there is sufficient evidence to support the Company’s domestic net operating losses have been fully reserved, as the Company believes it is not more likely than not that the benefit will be realized.reversal of all or some portion of this allowance.
28
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
(12)(16)Statements of Cash Flows
The supplemental cash flow information consists of the following (in thousands):
Six months ended June 30,
20202019Six months ended June 30,
20232022
Cash paid for interestCash paid for interest$684 $677 Cash paid for interest$1,954 $278 
Cash paid for income taxesCash paid for income taxes$6 $91 Cash paid for income taxes$317 $— 
Non-cash investing and financing activitiesNon-cash investing and financing activitiesNon-cash investing and financing activities
Accrued issuance costs$1,248 $— 
Non-cash consideration for the acquisition of IsoPlexisNon-cash consideration for the acquisition of IsoPlexis$32,406 $— 
Property and equipment transferred to inventoryProperty and equipment transferred to inventory$104 $— 
Inventory transferred to property and equipment (1)
Inventory transferred to property and equipment (1)
$1,912 $— 
Customer return of Beacon transferred to property and equipment (2)
Customer return of Beacon transferred to property and equipment (2)
$201 $— 
Change in accounts payable and accrued liabilities related to purchases of property and equipmentChange in accounts payable and accrued liabilities related to purchases of property and equipment$(69)$239 Change in accounts payable and accrued liabilities related to purchases of property and equipment$(68)$(699)
Release of repurchase rights on early exercised options$176 $— 
(1) The non-cash transfer of inventory to property and equipment principally relates to Beacons that were transferred to the Company’s BioFoundry operations in the first half of 2023. Beacons that at inception are planned to be used in the Company’s BioFoundry operations will be categorized as “Purchase of property and equipment.”
(2) Refer to Note 6 under “Sales-type Lease Arrangements” for further information.
(13)(17)Commitments and Contingencies
Legal Proceedings
From time to time, the Company may be involved in legal and administrative proceedings and claims of various types. The Company records a liability in its financial statements for these matters when a loss is known and considered probable and the amount can be reasonably estimated. The Company does not recognize gain contingencies until they are realized. Legal costs incurred relating to loss contingencies are expensed as incurred.
AbCellera Biologics Litigation
In July through September 2020, AbCellera Biologics Inc. (“AbCellera”) filed a complaintseries of complaints in the United States District Court for the District of Delaware, alleging that the Company infringed and continues to infringe, directly and indirectly, the following patents exclusively licensed by AbCellera by making, using, offering for sale, selling and/or importing ourthe Company’s Beacon and Culture Station instruments and the OptoSelect chips, and sale of the Opto Plasma B Discovery Workflow: U.S. Patent Nos. 10,107,812, 10,274,494, 10,466,241, 10,578,618, 10,697,962, 10,087,408, 10,421,936, 10,704,018, 10,718,768, 10,738,270, 10,746,737, 10,753,933, 10,775,376, 10,775,377, and 10,704,018.10,775,378. The University of British Columbia (“UBC”), the owner of the patents, joined AbCellera isas a named plaintiff in the lawsuits. AbCellera and UBC are seeking, among other things, judgment of infringement, a permanent injunction and damages (including lost profits, a
20
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
reasonable royalty, reasonable costs and attorney’s fees, and treble damages for willful infringement). ThisIn addition to procedural motions, the Company has filed an answer and counterclaims in response to each of the lawsuits. The Company’s counterclaims in each lawsuit remains pending.include counts for declaratory judgment of non-infringement of the asserted patents, for declaratory judgment of invalidity of the asserted patents, for declaratory judgment of unenforceability of the asserted patents due to inequitable conduct, and unfair competition under state and federal law.
WhileThe Company filed a motion to transfer the lawsuits to the United States District Court for the Northern District of California, which was granted and where the lawsuits have been consolidated and are now pending (“Consolidated Lawsuit”). On May 6, 2021, and pursuant to Court Order, AbCellera and UBC reduced, without prejudice, the asserted patents in the consolidated lawsuit to the following: US Patent Nos. 10,087,408, 10,421,936, 10,738,270, 10,697,962, 10,753,933, 10,775,376 and 10,775,378. On July 1, 2021, the court issued a
29
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Case Management Order that, among other things, requires AbCellera and UBC to further reduce the number of asserted patents to no more than two, and the total asserted patent claims to no more than four per patent prior to the trial.
In July 2021 and August 2021, the Company filed petitions for Inter Partes Review (“IPR”) with the Patent Trial and Appeal Board (“PTAB”) of the United States Patent & Trademark Office (“USPTO”), challenging the validity of various asserted claims of U.S. Patent No. 10,087,408 and all asserted claims of U.S. Patent Nos. 10,421,936 and 10,739,270. In August 2021, in response to a Motion to Stay filed by the Company, the court stayed the Consolidated Lawsuit pending the outcome of the IPR proceedings.
In January 2022, the PTAB of the USPTO issued a decision instituting IPR on U.S. Patent No. 10,087,408 (“408 Patent”) and a decision denying IPR on U.S. Patent No. 10,421,936. In February 2022, the PTAB issued a decision denying IPR on U.S. Patent No. 10,739,270. And in January 2023, the PTAB issued a final written decision declining to invalidate any challenged claim of the 408 Patent based on the grounds presented in the IPR. Subsequent to that decision, the Company filed a request for a rehearing of the 408 Patent IPR with the PTAB. In July 2023, following denial of the Company’s request for a rehearing, the Company appealed the PTAB’s final written decision on 408 Patent IPR to the U.S. Court of Appeals for the Federal Circuit. On August 4, 2023, the United States District Court for the Northern District of California issued an order lifting the stay in the litigation. The parties were directed to file a joint case management statement on August 22, 2023 and appear for a case management conference on August 29, 2023.
The Company believes that the patent assertions by AbCellera and UBC are without merit and it intends to defend itself vigorously, outcomesvigorously. The Company also intends to proceed with its claims and counterclaims against AbCellera and UBC. Outcomes in litigation can be uncertain and it is possible a court may disagree with the Company’s position. An adverse determination in this litigationthese lawsuits could subject the Company to significant liabilities, require it to seek licenses from or pay royalties to AbCellera and/or UBC, or prevent it from manufacturing, selling or using certain of itsthe Company’s products, any of which could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.
On August 24, 2020, the CompanySecurities Class Action
In December 2021, Victor J. Ng filed a securities class action complaint in federal court in the Northern District of California against AbCellera(“Securities Class Action”), which was amended on July 25, 2022. The Securities Class Action is on behalf of all persons who purchased or otherwise acquired: (a) Berkeley Lights common stock pursuant and/or traceable to certain July 2020 Initial Public Offering (“IPO”) offering documents and/or (b) securities of Berkeley Lights between July 17, 2020 and Lineage BioSciences, Inc., an entity previously acquired by AbCellera.January 5, 2022, inclusive. The complaint includes 2 countsalleges claims under §§10(b) and 20(a) of unfair competitionthe Securities Exchange Act of 1934, as amended (“Exchange Act”) and 1 countRule 10b-5 promulgated thereunder as well as §§11, 12(a)(2) and 15 of non-infringementthe Securities Act of U.S. Patent No. 10,053,839.1933. It names as defendants the Company, certain of the Company’s current and former senior executives and directors, the underwriter firms that sponsored the Company’s July 2020 IPO, and three firms that invested in the Company. The Company is seeking, among other things, damages and a judgment of non-infringement.
NaN provision has been made for patent-related litigation because the Company believes that the assertions in the Securities Class Action are without merit and intends to defend itself vigorously. The Company’s Motion to Dismiss is pending a decision from the court. Outcomes in litigation can be uncertain and it is not probablepossible a court may disagree with the Company’s positions. An adverse determination in the Securities Class Action could subject the Company to significant liabilities, which could have a material adverse effect on the Company’s business, financial condition, results of operations and prospects.
30
PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Derivative Action
In March 2022, Trung Nguyen filed a shareholder derivative complaint on behalf of nominal defendant Berkeley Lights, Inc., alleging that certain of the Company’s current and former directors and certain of the Company’s current and former senior executives breached their fiduciary duties to the Company. The complaint also alleged that certain of the Company’s current and former directors and former senior executives used material, non-public information to improperly profit from the sale of Company stock, and that certain of the Company’s current and former senior executives owe the Company contribution for violations of Sections 10(b) and 21D of the Exchange Act.
Trademark Infringement
The Company entered into a liability had been incurred as of June 30, 2020.non-financial settlement agreement which resolves a previously disclosed dispute filed by Phenomenex alleging trademark infringement.
The Company is not currently involved in any other claims or legal actions, nor is management aware of any potential claims or legal actions, for which the ultimate disposition could have a material adverse effect on the Company’s financial position, results of operations, or liquidity.
No provision has been made for litigation because the Company believes that it is not probable that a liability has been incurred as of June 30, 2023.
Purchase commitments
The Company has entered into various purchase agreements, including inventory-related agreements with its contract manufacturers. Once these orders are placed, they are generally cancelable by providing notice prior to the expected ship date, however such cancellations could result in the Company incurring certain charges depending on the timing. The Company had non-cancellable purchase obligations to contract manufacturers and other suppliers of $21.2 million on June 30, 2023.
Product Warranty
The Company generally provides a one year assurance-type warranty on its platforms and chip consumables. The table below represents the activity in the product warranty accrual included in accrued“Accrued expenses and other current liabilitiesliabilities” on the condensed consolidated balance sheets (in thousands):
Three months ended June 30,Six months ended June 30,Three months ended June 30,Six months ended June 30,
20202019202020192023202220232022
Balance, beginning of periodBalance, beginning of period$1,194 $739 $1,065 $601 Balance, beginning of period$788 $914 $749 $1,085 
Warranty accrual assumed in IsoPlexis MergerWarranty accrual assumed in IsoPlexis Merger— — 128 — 
Adjustments to existing warrantiesAdjustments to existing warranties(91)(41)(213)(105)Adjustments to existing warranties(236)(185)(349)(430)
Provision for new warrantiesProvision for new warranties220 220 550 550 Provision for new warranties161 179 294 342 
Settlement of pre-existing warrantiesSettlement of pre-existing warranties(139)(189)(218)(317)Settlement of pre-existing warranties(59)(156)(168)(245)
Balance, end of periodBalance, end of period$1,184 $729 $1,184 $729 Balance, end of period$654 $752 $654 $752 
(14)(18)Net Loss Attributable to Common Stockholders Per Share
Potentially issuable shares of common stock include shares issuable upon the exercise of outstanding employee stock option awards. Awards granted with performance conditions are excluded from the shares usedawards and unvested RSUs.

31
PhenomeX Inc.
Notes to compute diluted earnings per share until the performance conditions associated with the awards are met.Condensed Consolidated Financial Statements
(Unaudited)
The following table sets forth the computation of basic and diluted earnings per common share (in thousands, except share and per share data):
21
Berkeley Lights, Inc.
Three months ended June 30,Six months ended June 30,
2023202220232022
Numerator
Net loss attributable to common stockholders, basic and diluted$(50,245)$(25,747)$(73,664)$(47,173)
Denominator
Weighted-average shares used to compute net income per share, basic and diluted98,900,78067,985,66487,394,20167,842,372
Net loss per share
Net loss per share attributable to common stockholders, basic and diluted$(0.51)$(0.38)$(0.84)$(0.70)
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three months ended June 30,Six months ended June 30,
2020201920202019
Numerator
Net loss attributable to common stockholders$(12,430)$(6,185)$(20,855)$(10,390)
Cumulative undeclared dividends on Series D convertible preferred stock(797)(797)(1,594)(1,586)
Net loss attributable to common stockholders, basic and diluted$(13,227)$(6,982)$(22,449)$(11,976)
Denominator
Weighted-average shares used to compute net income per share, basic and diluted3,109,5452,872,1833,078,7562,795,290
Net loss per share
Net loss per share attributable to common stockholders, basic and diluted$(4.25)$(2.43)$(7.29)$(4.28)

Since the Company was in a loss position for all periods presented, basic net loss per share attributable to common stockholders is the same as diluted net loss per share attributable to common stockholders, as the inclusion of all potential shares of common stock outstanding would have been anti-dilutive. The following weighted-averageshares of common stock equivalents were excluded from the calculation of diluted net loss per share attributable to common stockholders for the periods presented as they had an anti-dilutive effect:
Three months ended June 30,Six months ended June 30,
2020201920202019
Convertible preferred stock (on an if-converted basis)50,462,272 50,462,272 50,462,272 50,462,272 
Options to purchase common stock10,223,870 8,003,580 10,223,870 8,003,580 
Restricted shares of common stock related to early exercise of options17,187 — 17,187 — 
Warrants to purchase Series C convertible preferred stock136,519 136,519 136,519 136,519 
Total60,839,848 58,602,371 60,839,848 58,602,371 

 June 30,
20232022
Warrants to purchase common stock496,560 — 
Options to purchase common stock6,606,909 7,750,612 
Restricted stock awards290,774 — 
Restricted stock units8,636,618 4,241,025 
Total16,030,861 11,991,637 
(15)Equity Method Investment in Joint venture
In 2017 Berkeley Lights entered into agreements with the MD Anderson Cancer Center (“MDACC”) to form a joint venture, Optera Therapeutics Corp. (“Optera”), the purpose of which was, in part, to develop and standardize workflows and protocols to enable healthcare providers to implement proof of concept and/or clinical study protocols and cell processing to select and manipulate immune cells using the Company’s technology. Both Berkeley Lights and MDACC received 50% ownership of Optera in consideration for legal fees incurred to set up the new company.
The Company accounted for its investment and financial interests in Optera using the equity method of accounting and included the Company’s proportionate share of the net loss in its consolidated net loss in the condensed consolidated statement of operations and comprehensive loss. In May 2019, the Optera Board of Directors determined that Optera would cease operations effective immediately and begin the process of dissolution and winding up of the operations.
The total equity losses recorded under this arrangement were $0.2 million and $0.8 million, respectively, during the three and six months ended June 30, 2019, which are recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
(16)Convertible Note Receivable and Embedded Derivative
22
Berkeley Lights, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
In 2018, the Company entered into a note agreement with Optera. The Optera Note, which had an original maturity date in April 2019 and carries interest at 4.0%, was amended in December 2018 to extend the maturity date to October 2019. Total amounts issued under the Optera Note were $2.0 million through the year ended December 31, 2019.
These notes convert automatically into the equity securities issued in the next Optera equity financing round greater than $20.0 million at a 20% discount to the issuance price. Alternatively, upon change of control or IPO, at the option of the holder the notes will either a) become and due and payable in cash or b) convert into common shares. The balance of the notes receivable, which are reported as prepaid and other current assets in the condensed consolidated balance sheets, was $10,000 at June 30, 2020 and December 31, 2019, respectively.
The discounted conversion rate in the Optera Note is considered a redemption feature that is an embedded derivative requiring bifurcation and separate accounting at its estimated fair value. The estimated fair value of the embedded derivative upon issuance in April 2018 was an asset of $0.2 million. The estimated fair value of this derivative instrument was recognized as a note discount and as an embedded derivative asset on the condensed consolidated balance sheet upon issuance. The Company amortized the note discount into interest income using the effective interest method. Total amortization of the note discount was $40,000 and $60,000 for the three and six months ended June 30, 2019, respectively.
The embedded derivative requires periodic re-measurements to fair value while the instrument is still outstanding. The change in the estimated value is recorded in other income (expense), net in the condensed consolidated statement of operations and comprehensive loss. The total amount recorded for the change in fair value of the embedded derivative was $0.1 million for the six months ended June 30, 2019. Additionally, the Company recorded an impairment in the amount of $0.2 million in the three months ended June 30, 2019 for the full reduction in the fair value of the asset due to the resolution by the Optera Board of Directors to dissolve Optera (see Note 15 to these condensed consolidated financial statements).
(17)(19)Segments
Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker is its Chief Executive Officer. The Company has one business activity and there are no segment managers who are held accountable for operations. Accordingly, the Company has a single reportable segment structure.one operating segment. The IsoPlexis Merger on March 21, 2023 did not change the Company’s assessment about operating segments. The Company’s principal operations and decision-making functions are located in the United States.
The following table provides the Company’s revenues by geographical market based on the location where the services were provided or to which product was shipped (in thousands):
Three months ended June 30,Six months ended June 30,
2020201920202019
North America$5,669 $3,212 $14,150 $11,688 
Asia Pacific2,244 3,549 7,104 5,417 
Europe2,656 5,002 3,093 7,299 
$10,569 $11,763 $24,347 $24,404 
North America includes the United States and related territories. Asia Pacific also includes Australia.
2332
Berkeley Lights,PhenomeX Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Three months ended June 30,Six months ended June 30,
2023202220232022
North America$7,568 $9,891 $21,623 $23,585 
Asia Pacific (1)
1,584 7,201 4,731 12,236 
Europe4,910 2,058 6,224 3,535 
$14,062 $19,150 $32,578 $39,356 
(1) Asia Pacific includes Australia.

As of June 30, 20202023 and December 31, 2019,2022, substantially all of the Company’s long-lived assets were located in the United States of America..

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. TheseExamples of forward-looking statements include, but are not limitedamong others: our ability to statements about:
•estimatescontinue as a going concern; maintaining the listing of our addressable market, market growth, future revenue, key performance indicators, expenses,common stock on Nasdaq; the exploration, review and evaluation of a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value; our needs for additional financing;
•the implementation ofintention to improve operating cash flow by increasing our business modelrevenue and strategic plans forlowering our products, workflows and technologies;
•our ability to successfully implement alternative non-direct purchase channels, including subscription and partnership offerings and the design of any such alternatives;
•operational costs; our expectations regarding the ratedrivers of expected revenue growth, including new commercial leadership, geographic expansion, and degree of market acceptance of our platform;
•competitive companies and technologies and our industry;
•our ability to manage and grow our business by expanding our sales to existing customers or introducing our products and workflows to new customers;
•our ability to develop and commercialize new products and workflows;
•our ability to establish and maintain intellectual property protection for our products and workflows or avoid or defend claims of infringement, including with respect to our intellectual property litigation with AbCellera;
•the performance of third party manufacturers and suppliers;
•the potential effects of government regulation;
•our ability to hire and retain key personnel and to manage our future growth effectively;
•our ability to obtain additional financing in future offerings;
•the volatility of the trading price of our common stock;
•our ability to attract and retain key scientific and engineering personnel;
•a refined product roadmap; our expectations regarding the period during which we qualify as an emerging growth company undertiming to achieve our goal of generating positive operating cash flow in the JOBS Act;
•fourth quarter of 2024; our expectations regarding useanticipated returns on investment through increased focus and rigor on development initiatives; our strategy, plans and timing for acquisitions, growth, product development and expansion, the expected benefits of proceeds from our public offeringthe IsoPlexis Merger, including the estimated cost synergies of the combined company in July 2020;order to pursue profitability, lower operating expenses and
• advance the path to cash flow breakeven; our expectations about market trends.regarding the drivers of our expected cost synergies, including eliminating duplicative costs associated with maintaining the infrastructure needed by public companies, complementary R&D capabilities, marketing resources and sales operations, and manufacturing, supply chain, logistics and operations synergies; and other expectations, outlooks and forecasts on our future business, operational and financial performance.

Forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management’s beliefs and assumptions are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Furthermore, if the forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.

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In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read the following discussion of our financial condition and results of operations in conjunction with our unaudited condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the fiscal year ended December 31, 20192022 included in the final prospectus for our initial public offering dated as of July 16, 2020,Annual Report on Form 10-K and filed with the Securities
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and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended,(“SEC”) on July 17, 2020 (File No. 333-239487) (the “Prospectus”February 23, 2023 (“Annual Report”). Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in our Form S-1 Registration Statement filed with the SEC on July 16, 2020 as referred to in the section titledItem 1A. “Risk Factors” underof our Annual Report, Part II, Item 1A below.and elsewhere in this Quarterly Report on Form 10-Q, and our other reports filed with the SEC.

Overview
PhenomeX is the combination of two companies, Berkeley Lights and IsoPlexis. Berkeley Lights acquired IsoPlexis on March 21, 2023 (“IsoPlexis Merger”) and the newly combined company was rebranded as PhenomeX.
PhenomeX is a leading Digital Cell Biologylife sciences tools company focused on enabling and accelerating the rapid development and commercialization of biotherapeutics and other cell-based products. The Berkeley Lights Platform captures deep phenotypic, functional and genotypic information for thousands of single cells in parallel and can also deliver the live biology customers desire in the form of the best cells. This iswith a new way to capture and interpret the qualitative language of biology and translate it into single-cell specific digital information, referred to as Digital Cell Biology. We currently focus on enablingfunctional cell biology. Our products and services provide customers with, among other offerings, Optofluidic platforms such as the largeBeacon, Beacon Select and rapidly growing markets of antibody therapeutics, cell therapy and synthetic biology with our platform.
TheBeacon Quest (developed by Berkeley Lights Platform consists of advanced automated systems that analyze live cells using proprietary consumables and application and workflow software to deliver robust single cell data. Our platform first characterizes the performance of cells relevant to the desired cell-based product early in the process and then connects this phenotypic data to the genetic code for each cell. In contrast, current genomic technologies find sequences first and fail to deliver the functional information early in the process. Performing functional validation early means letting poorly performing cells fail early while rapidly advancing the best candidates forward, before incurring significant research and development expense. Our platform repeats this process of fail and advance many times throughout the process, delivering the best cells for what we believe will deliver the best product.
Our platform is a fully integrated, end-to-end solution, comprised of proprietary consumables, including our OptoSelect chips and reagent kits, advanced automation systems and advanced application and workflow software. Customers load onto our system their live cell samples,Lights) as well as mediaProteomic Barcoding platforms, such as the IsoLight System and reagents, then the cellsIsoSpark System (developed by IsoPlexis). These platforms provide scientists with opportunities to perform cell biology research through experiments using our proprietary consumables.
The mission of PhenomeX is to empower scientists to leverage the full potential of each cell and drive the next era of functional cell biology that will advance human health.

PhenomeX’s strategy is organized around the following five key pillars:

1.    Generate positive operating cash flow in the fourth quarter of 2024.

2.    Prioritize research and development’s return on investment through increased focus and rigor on development initiatives.

3.    Deliver consistent commercial execution through a new sales structure and enhanced product portfolio and pricing strategy.

4.    Build a world-class life sciences leadership team with a proven track record in profitably scaling life sciences tools companies.

5.    Evaluate merger and acquisition opportunities that will help us accelerate profitable growth and leverage our current cost structure.


Recent Developments
On July 7, 2023, we announced that we have launched a process to explore, review and evaluate a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value. There can be no assurance that any offers will be made or accepted, that any agreement will be executed, or that any transaction will be consummated, in connection with the strategic alternatives or capital raising processes.
On June 21, 2023, we received a notice (“Notice”) from The Nasdaq Stock Market (“Nasdaq”) that we are imported onto our OptoSelect chips where integrated workflows are performed to assess specific cell functions and attributes. Our platform captures and delivers rich single-cell data to findnot in compliance with Nasdaq’s Listing Rule 5450(a)(1) (the “Minimum Bid Price Rule”), because the best cells. Our platform leverages proprietary OptoElectro Positioning (“OEP”) technology, which enables deterministic positioning of living single cells and other micro-objects using light. OEP is a core technologyminimum bid price of our platform and allowscommon stock had been below $1.00 per share for 30 consecutive business days. We have 180 calendar days following receipt of the Notice, or until December 12, 2023, to regain compliance with the Minimum Bid Price Rule. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a high levelminimum of control over live single cells or other micro-objects throughout the functional characterization process.ten consecutive business days during this 180 calendar day grace period. The Notice
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has no immediate effect on the listing or trading of our common stock on The Nasdaq Global Select Market, subject to our compliance with other Nasdaq continued listing standards. We commercially launchedintend to monitor the closing bid price of our platformcommon stock and may, if appropriate, consider available options, including a reverse stock split, to regain compliance with the Minimum Bid Price Rule. For additional information, see “Risk Factors – An active, liquid trading market for our securities may not be sustained.”
Recent Trends
There are multiple broad based factors impacting our business:
1.Macroeconomic factors have resulted in December of 2016, which included the Beacon systemunfavorable global economic conditions, including increased inflation and interest rates, and may lead to a recession.
2.Global and domestic supply chains and the alpha versiontimely availability of raw materials and product as a result of the COVID-19 pandemic factory slowdowns or shutdowns, border closing and other measures have previously impacted our operational and financial performance and its impact in future periods remains uncertain.
3.Adverse developments affecting financial institutions and the financial services industry, including the government closure of Silicon Valley Bank, have affected certain of our Opto Cell Line Development 1.0 workflow, targetedvendors, suppliers, investors and customers and may lead to market-wide liquidity problems.

Our business has been impacted and will continue to be impacted by the antibody therapeutics market. Fromabove factors. To date, our production, shipping and customer service functions have remained operational to maintain a continuous supply of products both to our customers and for our internal research and development activities. Any manufacturing supply interruption of materials could adversely affect our ability to conduct ongoing and future activities. We continue to closely monitor global supply issues around materials, parts and components, including plastics and integrated circuit chips, and we have not experienced any material supply issue to date.

The ultimate impact of the initial launchforegoing factors on our operations and financial performance in future periods remains uncertain and will depend on many factors outside of our platform through July 31, 2020, we have commercially launched six workflows. In Junecontrol, including the timing, extent, trajectory, and duration of 2019, we launched our desktop Lightning system targeted for assay development and lower throughput workflows, and in early 2020 we launched the Culture Station instrument.
Historically, we have financed our operations primarily from the issuance and sale of convertible preferred stock, borrowings under our long-term debt agreement,pandemic as well as cash flows fromthe magnitude of any potential recession and related government actions to prevent and manage these issues, all of which are uncertain and cannot be predicted. While the overall impact of these matters is impossible to measure, they have resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity and, ultimately our business and operations. On July 21, 2020, we completed an initial public offering (the “IPO”),Refer to Part I, Item 1A of our Annual Report on Form 10-K and Part II, Item 1A in which we sold 9,315,000 sharesthis Quarterly Report on Form 10-Q under the heading “Risk Factors” for more information.

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Results of common stock (which included 1,215,000 shares that were offeredoperations
Comparison of the three and sold pursuantsix months ended June 30, 2023 and 2022
Revenue
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Platform$6,470 $6,426 $44 1 %$12,573 $13,830 $(1,257)(9)%
Recurring7,268 5,929 1,339 23 %12,431 11,372 1,059 9 %
Partnership, License and Other324 6,795 (6,471)(95)%7,574 14,154 (6,580)(46)%
Total revenue$14,062 $19,150 $(5,088)(27)%$32,578 $39,356 $(6,778)(17)%

See Note 6 to our condensed consolidated financial statements for additional information regarding how our product and service revenue is generated through our Platform, Recurring and Partnership, License and Other revenue streams.

Platform revenue was flat during the three months ended June 30, 2023, compared to the full exercisethree months ended June 30, 2022 and included $6.0 million of the IPO underwriters’ option to purchase additional shares) at a price to the publicOptofluidic sales and $0.5 million of $22 per share. We received aggregate net proceeds of $188.0Proteomic sales.

Recurring revenue increased by $1.3 million, after deducting, offering costs, underwriting discounts and commissions of $16.9 million.
Since our inception in 2011, we have incurred net losses in each year. Our net losses were $12.4 million and $6.2 millionor 23%, for the three months ended June 30, 20202023, compared to the three months ended June 30, 2022. The increase was primarily driven by $1.3 million of Proteomic consumable revenue during the three months ended June 30, 2023.

Partnership, License and 2019, respectively,Other revenue decreased by $6.5 million or 95% for the three months ended June 30, 2023 compared to the three months ended June 30, 2022 as a result of the completion and $20.9termination of the majority of our partnership and service engagements in the second half of 2022.

Platform revenue decreased by $1.3 million or 9% during the six months ended June 30, 2023, compared to the six months ended June 30, 2022, primarily due to a decrease in Optofluidic platform sales of $2.2 million, partially offset by $0.9 million of Proteomic platform sales, which we acquired through the IsoPlexis Merger in March 2023.

Recurring revenue increased by $1.1 million or 9% during the six months ended June 30, 2023, compared to the six months ended June 30, 2022 which was primarily driven by Proteomic recurring revenue of $1.8 million, \ partially offset by a decrease of $0.7 million of Optofluidic recurring revenue.

Partnership, License and $10.4Other revenue decreased by $6.6 million or 46% for the six months ended June 30, 2020 and 2019, respectively. As of2023 compared to the six months ended June 30, 2020, we had an accumulated deficit2022 as a result of $171.2 millionthe completion and cash and cash equivalents totaling $59.2 million. We expect to continue to incur significant expenses and operating losses fortermination of the foreseeable future.
Certainmajority of our financial resultspartnership and other key operational developmentsservice engagements in the second half of 2022, partially offset by $7.3 million of license revenue related to intellectual property acquired in the IsoPlexis Merger and licensed to a third party.

See below for details of our installed base. Note that the significant majority of our installed base relates to platform sales, with a much smaller percentage being provided under leasing programs.

37

Optofluidic PlatformsProteomic PlatformsTotal
Installed base on January 1, 2023135—135
Acquired in IsoPlexis Merger—287287
Q1 2023 Placements448
Installed base on March 31, 2023139291430
Q2 2023 Placements235
Installed base on June 30, 2023141294435


Cost of sales, gross profit and gross margin
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Cost of sales$8,019 $6,224 $1,795 29 %$13,107 $12,603 $504 4 %
Gross profit$6,043 $12,926 $(6,883)(53 %)$19,471 $26,753 $(7,282)(27 %)
Gross margin43 %67 %60 %68 %

Cost of sales for the three and six months ended June 30, 2020 include the following:
•Total revenue for2023 increased by $1.8 million and $0.5 million, respectively, compared to the three months ended June 30, 2020 was $10.6 million compared to $11.8 million for the same period in 2019. The decrease was primarily due to the reduction in revenue associated with milestone agreements and programs due to the timing of work performed under these arrangements, including the substantial completion of two existing arrangements in the first half of 2020. We also experienced a reduction in revenue associated with platform placements, which typically have a long sales cycle, as well as due to the impact of the COVID-19 pandemic, which impact began in the first quarter of 2020 and persisted through the second quarter of 2020. The impact negatively affected our ability to ship, install and train with some customers in certain geographies and locations, as well as resulted in delays to purchasing decisions and negotiations. Total revenue for the six months ended June 30, 20202022 primarily as a result of increased inventory reserves, idle manufacturing costs and 2019 was flat at $24.3 millionamortization expense related to the inventory purchase price adjustment and $24.4 million, respectively.the intangible assets acquired in the IsoPlexis Merger.

•Gross profit and gross margin for the three and six months ended June 30, 20202023 decreased from 67% to 43% and 68% to 60%, respectively, compared to the same periodsthree and six months ended June 30, 2022. The decrease was primarily a result of increased inventory reserves, idle manufacturing costs and amortization expense related to the inventory purchase price adjustment and the intangible assets acquired in 2019 primarily due to reduced margins on service revenues resulting from reduced revenues associated with our milestone agreements and programs driven by the substantial completion of two existing contracts inIsoPlexis Merger. Gross margin for the six months ended June 30, 2020,2023 was positively impacted by the revenue recognized from a License Agreement of $7.3 million, which did not have associated cost of sales.
Operating Expenses
Organizational and presentational changes
Starting in the third quarter of 2022, we made certain changes to our operating structure to align with our new business strategy. These changes included reorganizing our go-to-market efforts, employee terminations and additional organizational changes (see also Note 14 to our condensed consolidated financial statements for further information).
As part of these changes, our “service center,” a team of scientists and engineers who perform services for both our internal and external projects, is now part of our platform sales and support organization. The service center historically reported to our former Chief Product Officer.

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As a result of these changes, we now classify expenses associated with our service center as well as“Selling, general and administrative” instead of “Research and development” expenses on our condensed consolidated statements of operations starting in the costs incurred related tothird quarter of 2022. Service center expenses recorded in “Research and development” during the milestone agreementsthree and programs under which we provide services on a timesix months ended June 30, 2022 were $5.1 million and materials basis.$9.7 million, respectively. Service center expenses recorded in “Selling, general and administrative” during the three and six months ended June 30, 2023 were $4.8 million and $9.4 million, respectively.

Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Research and development$9,342 $18,178 $(8,836)(49 %)$17,763$35,751$(17,988)(50 %)
Selling, general and administrative26,258 20,295 5,963 29 %52,805 37,822 14,98340 %
Restructuring1,093 — 1,093 100 %2,383—2,383100 %
Loss on impairment of Goodwill16,557 — 16,557 NM16,557$—16,557NM
Total operating expenses$53,250 $38,473 $14,777 38 %$89,508$73,573$15,93522 %
•
Operating expenses for the three and six months ended June 30, 20202023 increased by $14.8 million, or 38% and $15.9 million or 22 %, respectively, compared to the same periods in 2019 duethree and six months ended June 30, 2022. The increase was
primarily related to the overall growthincreased size of the organization as a result of the IsoPlexis Merger, the goodwill impairment charge recorded during the second quarter of 2023, and restructuring charges, partially offset by a decrease in our business, including our continued investment in ongoing research and development activities relatedexpenses.
Research and development expense for the three and six months ended June 30, 2023 decreased by $8.8 million, or 49%, and $18.0 million, or 50%, respectively, compared to testingthe three and qualification materialssix months ended June 30, 2022. This decrease reflects the impact of the reclassification of the service center expenses discussed above. In addition, research and otherdevelopment expense decreased during both periods as a result of our strategy to prioritize the return on investment of development initiatives which resulted in workforce reductions and overall lowered spend.

Selling, general and administrative expense for the three and six months ended June 30, 2023 increased by $6.0 million, or 29%, and $15.0 million, or 40%, respectively, compared to the three and six months ended June 30, 2022. This increase reflects the impact of the reclassification of the service center expenses discussed above and costs relatedassociated with the operations of IsoPlexis. In addition, selling, general and administrative costs for the six months ended June 30, 2023 increased due to various projectstransaction costs associated with the IsoPlexis Merger of $3.5 million.

Restructuring expense for the three and six months ended June 30, 2023 primarily relate to develop and improve systems, workflows and assays, as well as the growth in our commercial organization.employee termination benefits.

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Interest expense
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Interest expense$1,632 $227 $1,405 619 %$2,016 $451 $1,565 347 %

Interest expense increased by $1.4 million and $1.6 million, respectively, for the three and six months ended June 30, 2023 compared to the three and six months ended June 30, 2022. The increase was primarily due to higher interest expense as a result of the refinancing of our Term Loan with EWB on March 21, 2023, which increased the loan amount from $20.0 million to $70.0 million and also increased the interest rate from 4.17% to the Prime Rate plus one-half of one percent (0.5%). On June 30, 2023, we repaid the outstanding loan amount of $70.0 million in full.
Interest income
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Interest income$694 $53 $641 1209 %$1,521 $87 $1,434 1648 %

Interest income increased by $0.6 million and $1.4 million during the three and six months ended June 30, 2023 as compared to the corresponding periods in 2022. These increases are primarily the result of higher yields received on our cash management program.

Other income (expense), net
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20232022Amount%20232022Amount%
Other income (expense), net$(2,049)$(22)$(2,027)9214 %$(3,061)$35 $(3,096)8846 %

Other income (expense), net for the three and six months ended June 30, 2023 included $1.8 million and $2.7 million, respectively, of debt extinguishment costs. On June 30, 2023 we fully repaid our debt with EWB, and on March 21, 2023 we refinanced our term loan with EWB. See Note 12 for further information.
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COVID-19 Update
In response to the COVID-19 pandemic and various resulting government directives, we took proactive measures to protect the health and safety of our employees, contractors, customers and visiting vendors and suppliers. We continue to monitor the implications of the COVID-19 pandemic on our business, as well as our customers’ and suppliers’ businesses. Some of our measures taken were as follows:
•During this pandemic, we moved quickly to place platforms and to provide reagents to researchers around the world working to understand COVID-19 and identify antibodies to support the development of therapies and cures for the disease with the aim to accelerate the discovery of neutralizing antibodies. Our platforms, assays and workflows are a critical tool for infectious disease research because they are able to be leveraged for antibody discovery using the blood of recovering patients as the foundation for therapeutics;
•Berkeley Lights has been designated an essential business that can continue operations during the COVID-19 pandemic. In early March, we promptly instituted protocols to have many personnel work remotely. At the same time, we have employees who are continuing to come on-site to our facility in Emeryville, California to undertake research and development activities that support essential operations to provide critical products to researchers and to support the important research and development being undertaken by our customers. For those employees coming on-site, we have implemented strict social distancing and other protective measures in order to ensure their health and safety. We have also restricted business travel and have closed our campus and other facilities to outside visitors. To date, these arrangements have not materially affected our ability to maintain our business operations, including the operation of financial reporting systems, internal control over financial reporting and disclosure controls and procedures;
•Our production, shipping and customer service functions remain operational to ensure we maintain a continuous supply of products to our customers and internally for our research and development activities. We are communicating regularly with our suppliers so that our supply chain remains intact and we have not yet experienced any material supply issues. Our customer service teams around the world are operating remotely and remain available to assist our customers and partners as needed;
•In July 2020, we began developing remote learning capabilities to help our customers and partners operate their Berkeley Lights platforms and reduce the number of customer/partner site visits our field application scientists and field support engineers need to take in view of certain travel restrictions and country-specific quarantine requirements; and
•We are actively reviewing and managing costs to navigate the current environment and to allow Berkeley Lights to remain in a strong financial and operating position until the pandemic is brought under control.
While the disruption is currently expected to be temporary, there is considerable uncertainty around its duration. We expect these disruptions to impact our operating results, however, the related financial impact and duration cannot be reasonably estimated at this time.
Components of results of operations
Revenue
Our revenue consists of both product and service revenue, which is generated through the following revenue streams: (i) direct platform, sales (advanced automation systems, fully-paid workflow license agreements and platform support), (ii) recurring revenue (annual workflow license agreements, workflow
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subscription agreements, consumables, service and warranty contracts), and (iii) partnership, license and other revenue. Platform revenue from partnerships related to our joint development agreements,consists of the sale of Optofluidic and to a lesser extent feasibility studies, and potential revenue from sales of, or royalties from the out-licensing of proprietary biological assets that we may develop for our customers. Sales of advanced automation systems, recurring revenue from consumables, workflow subscription agreements, and workflow licenses are defined as product revenue, and revenue from joint development agreements and partnerships, service and warranty contracts, feasibility studies and platform support are defined as service revenue in our results of operations.
Direct platform sales:Direct platform sales are comprised of our customers, distributors and dealer network directly purchasing our advanced automation systems, which includeProteomic platforms (including the Beacon, LightningBeacon Quest, IsoSpark and Culture Station instruments. These direct purchases included, during our early customer engagements, a fully paid workflow license to practice the desired workflow(s) in a specific field of use. In addition, we also offer platformIsoLight), associated software, fixed-term sales-type lease arrangements with qualified customers, as well as application support, to the extent customers require further systeminstallation and workflow optimization following platform implementation. Direct platform sales were as follows:
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Direct platform sales$7,519 $6,858 $661 10 %$16,966 $15,832 $1,134 7 %
Total revenue$10,569 $11,763 $(1,194)(10 %)$24,347 $24,404 $(57)(0 %)
Direct platform as % of total revenue71 %58 %13 %70 %65 %5 %
training. Recurring revenue:Each platform placement, depending on the chosen access model, drives various streams of recurring revenue. With each workflow, our customers require certainrevenue includes consumables such as our OptoSelect chips and reagent kits, to run their workflows. The OptoSelect chips can only be used with our platformquarterly workflow subscriptions, annual or multi-year subscriptions arrangements (e.g., Reagent Rental), and we believe there are no alternative after-market options that can be used as a substitute. Each OptoSelect chip is considered single-use and only used for one workflow. Consumables are sold without the right of return and revenue is recognized upon transfer of control. We also offer our customersfixed fee extended warranty and service programs for regular system maintenanceprograms. Partnership, license and system optimization. These services are provided primarily on a fixed fee basis. We recognizeother revenue from the saleconsists of an extended warranty contract over the respective coverage period. Warranty and service contracts are typically short-term in nature, generally covering a one-year period.
Recurring revenue may also include annually renewable workflow licensesstrategic partnerships, as well as quarterly workflow subscription payments from annual or multi-year subscription agreements. In late 2019, we piloted a subscription option for the antibody discovery and cell line development workflows. We are still in the early commercialization phase of assessing market acceptance of the subscription access model. Recurring revenue was as follows:
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Recurring revenue$2,922 $1,742 $1,180 68 %$5,401 $3,082 $2,319 75 %
Total revenue$10,569 $11,763 $(1,194)(10 %)$24,347 $24,404 $(57)(0 %)
Recurring revenue as % of total revenue28 %15 %13 %22 %13 %9 %
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Revenue from joint development and collaboration agreements and partnerships:Joint development agreements are arrangements wherebywhere we provide services for the development of new workflows, cell,cells or organism types, or deliver specific biological assetsrevenue from licenses of intellectual property, and other revenue. See Note 6 to meet specific customers’ needs. Such contracts generally include defined milestones associated with these development activities over extended periods of time, some in excess of twenty-four months. There are typically formal customer acceptance clauses as each milestoneour condensed consolidated financial statements for additional information regarding how our product and service revenue is completed,generated through our platform, recurring and an approval to proceed with the next milestone is generally required. Some development agreements may also include a prerequisite feasibility study to determine proof of concept before any milestone work is initiated. We recognizepartnerships, license and other revenue over time using an input measure of progress based on costs incurred to date as compared to the total estimated costs (i.e. percentage of completion). We periodically review and update our estimates which may adjust revenue recognized for the period. Milestone revenue can vary over time as different projects start and complete. On occasion, we also perform feasibility studies prior to a direct platform sale in the event customers require further platform validation prior to purchase. Milestone program and related revenue was as follows:streams.
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Milestone program and related revenue$128 $3,163 $(3,035)(96 %)$1,980 $5,490 $(3,510)(64 %)
Total revenue$10,569 $11,763 $(1,194)(10 %)$24,347 $24,404 $(57)(0 %)
Milestone program and related revenue as % of total revenue1 %27 %(26 %)8 %22 %(14 %)
CostsCost of sales, gross profit and gross margin
Product costCost of sales. Cost of sales associated with our products primarily consists ofincludes manufacturing related costs incurred in the production process, including personnel and related costs, costs of component materials, labor and overhead, packaging and delivery costs and allocated costs, including facilities and information technology.
Servicetechnology and amortization expense associated with intangible assets with finite useful lives and the step up in fair value of acquired inventory. Also included in cost of sales are the personnel and related costs. Cost of sales associated with our services, primarily consists of personnel and related costs, expenses related to the development of customized platforms and workflows, feasibility studies on our platforms and service and warranty costs to support our customers. We maintain continuous efforts to increase reliability and uptimealso include the costs associated with the standard assurance-type product warranty provided on our platforms, which are recorded at the time of our advanced automation systems. During the three and six months ended June 30, 2020 and 2019, we incurred service and warranty costs of $0.5 million and $0.8 million and $0.4 million and $0.7 million, respectively, for the support of our installed base.sale.

Gross profit and gross margin.Gross profit is calculated as revenue less cost of revenue.sales. Gross margin is gross profit expressed as a percentage of revenue. Our gross profit in future periods will depend on a variety of factors, including: market conditions that may impact our pricing; sales mix among platform access options;options, including the regional mix of sales; sales mix changes among consumables, advanced automation systemsplatforms and services; product mix changes between established products and new products; excess and obsolete inventories; our cost structure for manufacturing operations relative to volume; and product warranty obligations. We expect cost of sales to increase in absolute dollars in future periods as our revenue grows, and as we plan to hire additional employees to support our manufacturing, operations, service and support organizations.
Operating expenses
Research and development. development. Research and development costs primarily consist of salaries, benefits, incentive compensation, stock-based compensation, laboratory supplies, materials expenses and allocated
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facilities and IT costs for employees and contractors engaged in research and product development. We expense all research and development costs in the period in which they are incurred.
We plan to continue to invest in our research and development efforts, including hiring additional employees, to enhance existing products and develop new products. As a result, we expect that our research and development expenses will continue to increase in absolute dollars in future periods. We expect these expenses to vary from period to period as a percentage of revenue.
General
Selling, general and administrative.Our selling, general and administrative expenses primarily consist of costs related to the selling and marketing of our products and services and costs associated with our executive, finance, accounting, legal, human resources and administrative functions. These costs include salaries, benefits, sales commissions and stock-based compensation costs for employees in our executive, accounting and finance, legal and human resource functions,employees, as well as advertising and marketing costs and professional services fees, such as consulting, audit, tax and legal fees, general corporate costs and allocated overhead expenses. We expect that our general and administrative expenses will continue to increase in absolute dollars, primarily due to increased headcount to support anticipated growth in the business and due to incremental costs associated with operating as a public company. We expect these expenses to vary from period to period as a percentage of revenue.
Sales and marketing.
Restructuring. Our sales and marketing expenses consistrestructuring expense primarily consists of salaries,one-time cash severance benefits sales commissions and stock-based compensation costs for employees within our commercial sales functions, as well as marketing, travel expenses and allocatedassociated with the termination of certain employees. Restructuring expense can also include infrastructure charges to vacate facilities and ITcontract cancellation costs. We expectSee Note 14 to our sales and marketing expenses to increase in absolute dollars as we expand our commercial sales, marketing and business development teams, increase our presence globally and increase marketing activities to drive awareness and adoption of our platform. While these expenses may vary from period to period as a percentage of revenue, we expect these expenses to increase as a percent of sales in the short-term as we continue to grow our commercial organization to support anticipated growth in the business.condensed consolidated financial statements for additional information.
We expect our aggregate stock-based compensation to continue to increase in absolute dollar terms.
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Other income (expense)
Interest expense. Interest expense consists primarily of interest related to borrowings under our debt obligations.

Interest income. Interest income primarily consists of interest earned on our cash, and cash equivalents which are invested in cash deposits and in money market funds.short-term available-for-sale debt securities. We sold our short-term available-for-sale debt securities during March 2023.

Other income (expense), net. Other income (expense), net consists primarily of losses from our equity method investment and foreign currency exchange gains and losses. Foreign currency exchange gains and losses relate to transactions and asset and liability balances denominated in currencies other than the U.S. dollar, primarily related to our operations in the United Kingdom.Kingdom and China. We expect our foreign currency gains and losses to continue to fluctuate in the future due to changes in foreign currency exchange rates. During the three and six months ended June 30, 2023, other income (expense) also included debt refinancing and extinguishment costs.
Provision for income taxes
Our provision for income taxes consists primarily of foreign taxes and state minimum taxes in the United States. The Company maintains a full valuation allowance on its deferred tax assets and intends to do so until there is sufficient evidence to support the reversal of all or some portion of these allowances. As we expand the scale and scope of our international business activities, any changes in the United States and foreign taxation of such activities may increase our overall provision for income taxes in the future.
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Results of operations
The following tables set forth our results of operations for the periods presented:
Three months ended June 30,Six months ended June 30,
(in thousands)2020201920202019
Revenue:
Product revenue$9,107 $7,795 $19,790 $17,322 
Service revenue1,462 3,968 4,557 7,082 
Total revenue10,569 11,763 24,347 24,404 
Cost of sales:
Product cost of sales2,384 1,949 5,004 4,405 
Service cost of sales1,223 242 2,402 582 
Total cost of sales (1)
3,607 2,191 7,406 4,987 
Gross profit6,962 9,572 16,941 19,417 
Operating expenses:
Research and development (1)
11,843 9,642 22,819 18,385 
General and administrative (1)
4,193 3,080 8,190 5,722 
Sales and marketing (1)
3,076 2,452 6,310 4,289 
Total operating expenses19,112 15,174 37,319 28,396 
Loss from operations(12,150)(5,602)(20,378)(8,979)
Other income (expense):
Interest expense(356)(350)(713)(704)
Interest income47 270 198 502 
Other income (expense), net37 (488)62 (1,175)
Loss before income taxes(12,422)(6,170)(20,831)(10,356)
Provision for income taxes8 15 24 34 
Net loss and net comprehensive loss$(12,430)$(6,185)$(20,855)$(10,390)
(1)Amounts include stock-based compensation as follows:
Three months ended June 30,Six months ended June 30,
(in thousands)2020201920202019
Cost of sales$54 $— $60 $— 
Research and development553 432 1,064 830 
General and administrative586 446 1,115 770 
Sales and marketing159 71 292 163 
Total stock-based compensation expense$1,352 $949 $2,531 $1,763 
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Comparison of the three and six months ended June 30, 2020 and 2019
Revenue
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Product revenue$9,107 $7,795 $1,312 17 %$19,790 $17,322 $2,468 14 %
Service revenue1,462 3,968 (2,506)(63 %)4,557 7,082 $(2,525)(36 %)
Total revenue$10,569 $11,763 $(1,194)$24,347 $24,404 $(57)
Product revenue increased by $1.3 million, or 17%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The increase was primarily driven by an increase of $0.8 million in consumables sales driven by additional demand from our customers due to the increase in our installed base as well as increased activity by our customers related to the COVID-19 pandemic, an increase of $0.4 million in revenue from direct platform and system sales driven by regional mix of the platform placements during the three months ended June 30, 2020, including license arrangements related to our workflows, and an increase of $0.1 million in workflow subscription revenue. During both of the three months ended June 30, 2020 and 2019, we sold 4 platforms.
Service revenue decreased by $2.5 million, or 63%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The decrease was primarily driven by reduced revenue associated with milestone agreements and programs, including the substantial completion of two existing arrangements in the first half of 2020, as well as a decrease in revenue from feasibility studies resulting from the timing of such arrangements. These decreases were partially offset by an increase from sales in service warranty and application support arrangements.
Product revenue increased by $2.5 million, or 14%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was primarily driven by an increase of $1.6 million in consumables sales due to a larger customer base, an increase of $0.7 million in revenue from direct platform and system sales, including license arrangements related to our workflows, and an increase of $0.2 million in workflow subscription revenue. During the six months ended June 30, 2020 we sold 10 platforms compared to 9 platforms during the six months ended June 30, 2019. The increase in revenue from increased system placements in the six months ended June 30, 2020 was partially offset by the mix of system type placed as well as the regional mix of the platform placements.
Service revenue decreased by $2.5 million, or 36%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The decrease was primarily driven by reduced revenue associated with milestone agreements and programs, including the substantial completion of two existing arrangements in the first half of 2020, as well as a decrease in revenue from feasibility studies resulting from the timing of such arrangements, partially offset by an increase from sales in service warranty and application support arrangements.
Cost of sales, gross profit and gross margin
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Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Product cost of sales$2,384 $1,949 $435 22 %$5,004 $4,405 $599 14 %
Service cost of sales1,223 242 981 405 %2,402 582 1,820 313 %
Total cost of sales$3,607 $2,191 $1,416 65 %$7,406 $4,987 $2,419 49 %
Gross profit$6,962 $9,572 $(2,610)(27 %)$16,941 $19,417 $(2,476)(13 %)
Gross margin66 %81 %(15 %)70 %80 %(10 %)
Product cost of sales increased by $0.4 million, or 22%, and $0.6 million, or 14%, for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. The increase in product cost of sales was in line with revenue growth for consumables and platforms.
Service cost of sales increased by $1.0 million, or 405%, and $1.8 million, or 313%, for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. The increase was primarily due to costs incurred for milestone agreements and programs under which we provide services on a time and materials basis, as well as increased costs for extended warranty services as the installed base matured and customers renewed their service contracts and more customers purchased extended warranty as the standard warranty expired.
Gross profit decreased by $2.6 million, or 27%, and $2.5 million, or 13%, for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. Gross margin declined by 15% and 10% for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. The decline was driven by reduced margins on service revenues, primarily due to the timing of work performed and related revenue recognition on our milestone agreements and programs as well as the costs incurred related to the milestone agreements and programs under which we provide services on a time and materials basis, with such contract being in effect in the second half of 2019.
This reduction in margin for the three and six months ended June 30, 2020 was further increased by our election to buy-out one of the workflow programs that is being developed in collaboration with Ginkgo Bioworks (“Ginkgo”) under the terms of the existing relationship, such buy-out terminating Ginkgo’s exclusive rights on the related workflow. The amount of the buy-out, which was recorded as a revenue reduction in the three months ended June 30, 2020, was $0.7 million, calculated as 50% of the amount billed to Ginkgo on the related workflow through June 30, 2020.
Operating Expenses
Research and development
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Research and development$11,843 $9,642 $2,201 23 %$22,819 $18,385 $4,434 24 %
Research and development expense increased by $2.2 million, or 23%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The increase was due to a $0.9 million increase in personnel-related expenses, including a $0.1 million increase in stock-based compensation
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expense resulting from increased headcount and a $1.3 million increase in other costs, including testing and qualification materials and other costs related to various projects to develop and improve systems, workflow and assays.
Research and development expense increased by $4.4 million, or 24%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was due to a $2.3 million increase in personnel-related expenses, including a $0.2 million increase in stock-based compensation expense resulting from increased headcount and a $2.1 million increase in other costs, including testing and qualification materials and other costs related to various projects to develop and improve systems, workflow and assays.
General and administrative
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
General and administrative$4,193 $3,080 $1,113 36 %$8,190 $5,722 $2,468 43 %

General and administrative expense increased by $1.1 million, or 36%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The increase was due to a $0.6 million increase in personnel-related expenses, including a $0.1 million increase in stock-based compensation due to the growth of our operations, and a $0.5 million increase in other costs, including professional fees and other expenses related to outside legal, accounting, consulting and IT services to support our continued growth.

General and administrative expense increased by $2.5 million, or 43%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was due to a $1.4 million increase in personnel-related expenses, including a $0.3 million increase in stock-based compensation due to the growth of our operations, and a $1.1 million increase in other costs, including professional fees and other expenses related to outside legal, accounting, consulting and IT services to support our continued growth.
Sales and marketing
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Sales and marketing$3,076 $2,452 $624 25 %$6,310 $4,289 $2,021 47 %

Sales and marketing expense increased by $0.6 million, or 25%, for the three months ended June 30, 2020, compared to the three months ended June 30, 2019. The increase was due to a $0.5 million increase in personnel-related expenses, including a $0.1 million increase in stock-based compensation as a result of increased headcount, and a $0.4 million increase in marketing, advertising and other costs, offset by a reduction of $0.3 million in travel expenses as business travel, trade shows and other events were impacted by imposed restrictions due to the COVID-19 pandemic.
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Sales and marketing expense increased by $2.0 million, or 47%, for the six months ended June 30, 2020, compared to the six months ended June 30, 2019. The increase was due to a $1.1 million increase in personnel-related expenses, including a $0.1 million increase in stock-based compensation as a result of increased headcount, and a $1.1 million increase in marketing, advertising and other costs, offset by a reduction of $0.2 million in travel expenses as business travel, trade shows and other events were impacted by imposed restrictions due to the COVID-19 pandemic.
Interest expense
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Interest expense$356 $350 $6 2% %$713 $704 $9 1% %
Interest expense remained flat at $0.4 million and $0.7 million for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. Interest expense resulted primarily from interest incurred on our loan from East West Bank, which carries interest at a fixed rate of interest.
Interest income
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Interest income$47 $270 $(223)(83 %)$198 $502 $(304)(61 %)
Interest income decreased by $0.2 million, or 83%, and $0.3 million, or 61%, for the three and six months ended June 30, 2020, respectively, compared to the three and six months ended June 30, 2019. The decrease was primarily due to lower average cash balances and lower interest received on our cash and short-term deposits due to the continuing decline in interest rates.
Other income (expense), net
Three months ended June 30,Three month changeSix months ended June 30,Six month change
(in thousands, except percentages)20202019Amount%20202019Amount%
Other income (expense), net$37 $(488)$525 108 %$62 $(1,175)$1,237 105 %
Other income for the three and six months ended June 30, 2020 was mainly comprised of foreign exchange gains and losses and other miscellaneous income. Other expense for the three and six months ended June 30, 2019 primarily included losses associated with our equity method investment in Optera, which ceased operations during fiscal 2019.
Liquidity and capital resources
As of June 30, 2020,2023, we had approximately $59.2$31.0 million in cash, and cash equivalents(including marketable securities classified as cash equivalents), which were primarily held in U.S. short-term bank deposit accounts and money market funds. Restricted cash of $0.3
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$0.1 million serves as collateral for our corporateon June 30, 2023 relates to a letter of credit card program. with an international customer. We have generated negative cumulative cash flows from operations since inception through June 30, 2020.2023.

We expect to incur additional operating losses in the foreseeable future as we continue to invest in the research and development of our product offerings, commercialize and launch platforms, and expand into new markets. Our future capital requirements will depend on many factors including our revenue, growth rate, research and development efforts, the impacts of the COVID-19 pandemic, the timing and extent of additional capital expenditures to invest in existing and new facilities as well as our manufacturing operations, the expansion of sales and marketing and the introduction of new products. Our future capital needs may also depend upon factors affecting the macroeconomic environment. We have implemented measures to reduce our costs to extend our cash runway, including conducting reductions in force.

As discussed in Note 1 to our condensed consolidated financial statements, certain factors raise substantial doubt about our ability to continue as a going concern within one year from the issuance of such financial statements. Management’s intent is to implement plans that will allow us to continue as a going concern. We intend to improve operating cash flow by increasing our revenue and may in the future enter into arrangements to acquire or invest in businesses, serviceslowering our operational costs. New commercial leadership, geographic expansion, and technologies, and any such acquisitions or investments could significantly increase our capital needs.
We currently anticipate making aggregate capital expenditures between approximately $3.0 million and $4.0 million during the next 12 months, which isa refined product roadmap are expected to primarily include equipmentdrive revenue growth, and significant cost synergies as a result of the IsoPlexis Merger and are expected to lower operating expenses. Cost synergies are expected to be used for manufacturing and research and development, as well as spendaccomplished by eliminating duplicative costs associated with maintaining the expansioninfrastructure needed by public companies, complementary R&D capabilities, marketing resources and sales operations, and manufacturing, supply chain, logistics and operations synergies. In addition, we have launched a process to explore, review and evaluate a range of our facilities.
Basedpotential strategic alternatives focused on our current business plan,addressing capital requirements and maximizing stockholder value. While management is focused on these efforts, there can be no assurance that we believe the net proceeds from the IPO, together with our existing cash and cash equivalents and anticipated cash flows from operations will be sufficient to meet our working capital and capital expenditure needs over at least the next 12 months.successful in doing so.


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Sources of liquidity
Since our inception, we have financed our operations primarily from the issuance and sale of our convertible preferred stock,equity securities, borrowings under long-term debt agreements, and to a lesser extent, cash flow from operations.generated by product and service sales. In July 2020, we completed our IPO, resulting in the receipt of aggregate proceeds of $188.0$187.9 million, net of offering costs, underwriter discounts and commissions of $16.9$17.0 million.
East West Bank Loan and Security Agreement
InOn May of23, 2018, we entered into a Loan and Security Agreement or the (“Loan Agreement,Agreement”) with East West Bank or(“EWB”) to provide a $20.0 million term loan facility (“Term Loan”). The loan facility was fully drawn as of May 23, 2018.

On June 30, 2021, we entered into an Amended and Restated Loan and Security Agreement (“Amended Loan Agreement”) with EWB. Pursuant to the Amended Loan Agreement, EWB provided a $20.0 million term loan (“Amended Term Loan”) which was subsequently amended in April of 2019 and March of 2020, providing us withused to refinance the ability to borrow up to $20.0 million. The full amount of the loan was funded in May of 2018, and $20.0 million of term loan borrowings wereTerm Loan outstanding as of June 30, 2020. Borrowings under the term loan mature on May 23, 2022 and accrue interest at a fixed rate of 6.73% per annum. We are required to make interest only payments on the term loan through May of 2021, after which equal monthly installments of principal and interest are due.
The Loan Agreement is collateralized by substantially all of our property, except for intellectual property, which is subject to a negative pledge. The Loan Agreement contains customary negative covenants that limit our ability to, among other things, incur additional indebtedness, grant liens, make investments, repurchase stock, pay dividends, transfer assets and merge or consolidate with any other entity or to acquire all or substantially all the capital stock or property of another entity. The Loan Agreement also contains customary affirmative covenants, including requirements to, among other things, deliver audited financial statements. In addition, the Loan Agreement contains financial covenants that require us to maintain a certain percentage of our total cash holdings in accounts with EWB as well as maintain certain ratios of cash to cash burn. If we default under the Loan Agreement dated May 23, 2018. The Amended Term Loan had a maturity of 48 months and a fixed interest rate of 4.17%. In addition, the Amended Term Loan had an initial interest-only period of 24 months, which could have been extended up to two times, each by an additional six months, if certain EBITDA tests as set forth in the default is not cured or waived, the lender could cause any amounts outstanding to be payable immediately. Under certain circumstances, the lender could also exercise its rightsAmended Loan Agreement are satisfied.

On March 21, 2023, we entered into a Second Amended and Restated Loan and Security Agreement (“Second Amended Loan Agreement”) with respectEWB. Pursuant to the collateral securing such loans. Moreover, any such default would limit our abilitySecond Amended Loan Agreement, EWB increased the existing Amended Term Loan amount of $20.0 million by $50.0 million to obtain additional financing, which may have an adverse effectaggregate outstanding principal of $70.0 million (“Second Amended Term Loan”). The Second Amended Loan Agreement had a maturity of 60 months and a variable interest rate per annum equal to (i) the greater of 6.25% or the variable rate of interest, per annum most recently announced by EWB as its prime rate, plus (ii) one-half of one percent (0.5%). We used the proceeds from the Second Amended Term Loan to repay $52.5 million of indebtedness (including prepayment premium and interest) with Perceptive held by IsoPlexis (“Perceptive Credit Agreement”). Associated with these transactions, a $0.2 million loss on extinguishment of debt and $0.7 million commitment fee associated with the Loan Agreement was recorded in Other expense, net on our cash flowcondensed consolidated statement of operations during the three months ended March 31, 2023.

On June 30, 2023, we repaid in full all outstanding indebtedness under the Second Amended Loan Agreement, and liquidity.upon such repayment, the Second Amended Loan Agreement and all related guarantees and loan documents were terminated and have no further force and effect. The Second Amended Loan Agreement payoff of $71.2 million included the principal amount of $70.0 million, accrued interest of $0.5 million, an early termination fee of $0.7 million plus other related fees and expenses, which satisfied all of the Company’s indebtedness obligations thereunder. Associated with this repayment, a $1.8 million loss on extinguishment of debt (including the write off of deferred issuance costs amounting to $1.1 million at the payoff date), was recorded in “Other expense, net” on the Company’s condensed consolidated statement of operations during the three months ended June 30, 2023.

In connection with the repayment of such outstanding indebtedness obligations by the Company, all security interests, liens, pledges, financing statements, mortgages and other charges of whatever nature against the collateral and other encumbrances held by East West Bank securing the obligations of any loan party under the Second Amended Loan Agreement were automatically and irrevocably terminated and released.

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We were in compliance with all covenants under the Loan Agreement as of June 30, 2020.
Cash flows
The following table summarizes our cash flows for the periods presented:
Six months ended June 30,Six months ended June 30,
(in thousands)(in thousands)20202019(in thousands)20232022
Net cash (used in) provided by:Net cash (used in) provided by:Net cash (used in) provided by:
Operating activitiesOperating activities$(20,979)$(5,839)Operating activities$(39,417)$(20,588)
Investing activitiesInvesting activities(1,316)(5,121)Investing activities5,692 (16,130)
Financing activitiesFinancing activities432 324 Financing activities(21,740)1,376 
Net decrease in cash and cash equivalents and restricted cash$(21,863)$(10,636)
Net increase (decrease) in cash, cash equivalents and restricted cashNet increase (decrease) in cash, cash equivalents and restricted cash$(55,465)$(35,342)
Operating activities

Net cash used in operating activities increased by $15.1 million to $21.0 million in the six months ended June 30, 2020 compared to $5.8 million in the six months ended June 30, 2019. The increase resulted primarily from a higher net loss during the six months ended June 30, 2020 and increased working capital requirements primarily related to an increase in inventory, accounts receivable and prepaid and other current assets as a result of continued growth of our business, offset by a reduction in deferred revenue due to the timing of recognition of revenue.
For the six months ended June 30, 2020, inventories increased by $4.5 million due to an increase in raw materials and finished goods to support revenue growth and anticipated demand, as well as due to the timing of shipments and revenue resulting from the impact of the COVID-19 pandemic on our ability to ship, install and train with customers in certain geographies. Accounts receivable increased by $0.9$39.4 million for the six months ended June 30, 20202023 was attributable to a net loss of $73.7 million and a net cash outflow of $3.6 million from changes in our operating assets and liabilities, partially offset by non-cash adjustments of $37.8 million, mainly consisting of goodwill impairment charges, stock-based compensation, equity awards issued for bonuses and depreciation and amortization expense.

Net cash used in operating activities of $20.6 million for the six months ended June 30, 2022 was attributable to a net loss of $47.2 million, partially offset by non-cash adjustments of $18.7 million, mainly consisting of stock-based compensation and depreciation expense, and a net cash inflow from changes in our operating assets and liabilities of $7.8 million, primarily due to an increasea decrease in revenue and the timing of invoicing.our accounts receivable.

Investing activities

Net cash used in investing activities of $5.7 million during the six months ended June 30, 2023 was primarily attributable to the net sale of $46.7 million of available-for-sale marketable securities during the first quarter of 2023, partially offset by $40.3 million in cash paid for the IsoPlexis Merger (net of cash acquired in the acquisition).

Net cash used in investing activities was $1.3$16.1 million induring the six months ended June 30, 2020 compared2022. Net cash used was primarily driven by the purchase of $9.4 million of available-for-sale marketable securities during the second quarter of 2022 and $6.8 million of purchases of property, plant and equipment. Capital expenditures for the first six months of 2022 include the expansion of our BioFoundry laboratory operations to $5.1support current and planned programs as well as leasehold improvements related to our new offices in Boston, Massachusetts.
Financing activities
Net cash used in financing activities was $21.7 million induring the six months ended June 30, 2019. The decrease2023 and was primarily driven byrelated to the timingnet repayment of capital expenditures. In addition, net cash used in investing activities for the six months ended June 30, 2019 included the$22.0 million of our long-term debt with EWB (including debt issuance of a note receivable to our equity method investment, which ceased operations during fiscal 2019.
Financing activitiescosts and prepayment penalties).
Net cash provided by financing activities was $0.4$1.4 million forduring the six months ended June 30, 2020 compared to $0.3 million for the six months ended June 30, 2019. Net cash provided by financing activities2022 and primarily related to cash receiptsproceeds received from the issuance of common stock upon the exercise of stock options.options as well as proceeds received related to the issuance of common stock under our employee stock purchase plan.
Concentration of credit risk
Most of the Company’sour customers are located in the United States and Asia Pacific. For the three months ended June 30, 2023, three customers accounted for 12%, 11% and 10% of revenue. For the six months ended June 30, 2020, four2023, one customer accounted for 22% of revenue. For the three months ended June 30, 2022, three customers accounted for 18%
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20%, 18%11%, 17% and 16%10% of revenue and two customers accounted for 15% and 11% of revenue, respectively.revenue. For the three and six months ended June 30, 2019, five2022, three customers accounted for 16%, 15%, 15%, 15%11% and 14%10% of revenue and two customers accounted for 18% and 14% of revenue, respectively.revenue.
As of June 30, 2020, four2023, two customers comprised 19%, 18%, 17%16% and 17%10% of accounts receivable. As of December 31, 2022, two customers accounted for 24% and 11% of accounts receivable.
Contractual obligations and commitments
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On June 25, 2020, we entered into an operating lease for 34,789 square feet of additional space in Emeryville, California, as well as amendedThe following table summarizes our existing lease arrangementscommitments to vacate certain existing space and extend the terms of our remaining existing space in Emeryville. The lease for additional space commences October 1, 2020 and all of the leases now expire on March 31, 2028. See Note 8, “Leases,” in our Notes to the Unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Q for more information.
Other than the new lease agreement in Emeryville, California, there have been no material changes to oursettle contractual obligations as of June 30, 2020,2023:
Payments due by period
(in thousands)TotalLess than
1 year		1 - 3 years3 -5 yearsMore than
5 years
Debt obligations, including interest (1)$— $— $— $— $— 
Lease commitments (2)32,991 3,121 12,249 10,157 7,464 
Purchase Obligations (3)21,191 13,805 7,386 — — 
Total$54,182 $16,926 $19,635 $10,157 $7,464 
(1)The Company repaid the loan with EWB in full on June 30, 2023. See also Note 12 for further information.
(2)Represents commitments under our non-cancelable office and facility leases.
(3)Purchase obligations relate primarily to our contract manufacturer which manufactures our Optofluidic instruments and makes advance purchases of components based on our sales forecasts and the placement of property by us, as comparedwell as the commitments made to those disclosed incertain providers of components of our consumable manufacturing. To the Prospectus dated July 16, 2020extent components are purchased by the contract manufacturer on our behalf and filed withcannot be used by the SEC on July 17, 2020.contract manufacturer’s other customers, we are obligated to purchase such components.
Off-balance sheet arrangements
We do not have, and did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, including entities sometimes referred to as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical accounting policies and estimates
We have prepared our condensed consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S. GAAP”).principles. Our preparation of these condensed consolidated financial statements requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.
There have been no significant changes in our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in the section titled “Management’s Discussion and Analysis of Financial Condition and Operations” included in the Prospectus filed with the SEC on July 17, 2020.
Recent Accounting Pronouncements
See Note 2, “Summary of Significant Accounting” in our Notes to the Unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this QuarterlyAnnual Report on Form 10-Q10-K, with the exception of the following critical accounting policies and estimates related to the IsoPlexis Merger.



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Valuation of Goodwill
Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. The allocation of purchase consideration in a business combination requires us to make significant estimates and assumptions. Our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of the tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. We do not amortize goodwill rather, goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that it is more likely than not that the asset is impaired. These events or circumstances could include a discussion of recent accounting pronouncements.
JOBS Act accounting election
We are an “emerging growth company,” as definedsignificant change in the Jumpstart Our Business Startups Actbusiness climate, legal factors, operating performance indicators, including declines in historical or projected revenue, operating income or cash flows, sustained decreases in our stock price or market capitalization, competition, or sale or disposition of 2012, ora significant asset.
To determine whether goodwill is impaired, we perform a quantitative impairment test whereby we estimate the JOBS Act. Underfair values of our single reporting unit using a combination of an income and market approach. To determine the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequentfair value, we are required to make assumptions about a wide variety of internal and external factors. Significant assumptions used in the impairment analysis include the valuation methodology itself, as well as inputs to the enactmentvaluation model. We utilized a combination of an income and market approach to assess the fair value of the JOBS Act until such timereporting unit as those standards applyof June 30, 2023. The income approach considers the discounted cash flow model, considering projected future cash flows (including timing and profitability), discount rate reflecting the risk inherent in future cash flows, perpetual growth rate and projected future economic and market conditions while the guideline public company market approach considers marketplace earnings multiples from within a peer public company group.
To the extent the carrying amount of goodwill exceeds the implied goodwill, the difference is the amount of the goodwill impairment. We also complete a reconciliation between the implied equity valuation prepared and our market capitalization. The majority of the inputs used in the discounted cash flow model are unobservable and thus are considered to private companies. We have electedbe Level 3 inputs. The inputs for the market capitalization calculation are considered Level 1 inputs.

During the six months ended June 30, 2023, we experienced a decline in our market capitalization as a result of a sustained decrease in our stock price. This sustained decrease was considered to represent a triggering event requiring management to perform a quantitative goodwill impairment test as of June 30, 2023. As a result of the impairment test, we fully impaired our goodwill and recorded a loss on impairment of $16.6 million.

Long-Lived Assets
Long-lived assets, including property, plant and equipment and finite-lived intangible assets, are reviewed for impairment whenever facts or circumstances indicate that the carrying value of an asset may not be recoverable. Events or circumstances that could trigger an impairment review of a long-lived asset or asset group include, but are not limited to: (i) a significant decrease in the market price of the asset, (ii) a significant adverse change in the extent or manner that the asset is used or in its physical condition, (iii) a significant adverse change in legal factors or in the business climate that could affect the value of the asset, (iv) an accumulation of costs significantly in excess of original expectation for the acquisition or construction of the asset, (v) a current period operating or cash flow loss combined with a history of operating or cash flow losses or a forecast of continuing losses associated with the use of the asset and (vi) a more-likely-than-not expectation that the asset will be sold or disposed of significantly before the end of its previously estimated useful life. Should there be an indication of impairment, we first test for recoverability by comparing the estimated undiscounted future cash flows expected to result from the use this extended transition period. We intendof the asset group to relythe carrying amount of that asset group. If the carrying amount of the asset group is not recoverable on other exemptions provided by the JOBS Act, including without limitation, not beingan undiscounted cash flow basis, we are then required to comply withestimate the auditor attestation requirements of Section 404(b)fair value of the Sarbanes-Oxley Actasset or asset group. Any excess of 2002.the carrying value of the asset or asset group over its estimated fair value is recognized as an impairment loss.
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During the six months ended June 30, 2023, we experienced a decline in market capitalization resulting from a sustained decline in our stock price and also recorded a $16.6 million loss on impairment of goodwill. Management considered these events to be triggering events and reviewed its single asset group for realizability. When performing recoverability testing, we are required to identify the asset group’s primary asset and make judgements and estimates about the primary asset’s remaining useful life. The sum of undiscounted cash flows generated over the primary asset’s remaining useful life form the basis for recoverability testing and requires us to make judgments and assumptions regarding the future cash flows that are expected to arise as a direct result of the use and eventual disposition of the asset group. Because the sum of future undiscounted cash flows for our single asset group exceeded the carrying value, management concluded the asset group was recoverable and no impairment charge was recorded. If the asset group or its assets were for sale, our estimates of their values could be significantly different because of market conditions, specific transaction terms and a buyer’s perspective on future cash flows.


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Item 3.    Quantitative and Qualitative Disclosures about Market Risk.
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Interest rate risk
Customer financing exposure. We are indirectly exposedNot applicable to interest rate risk because manya “smaller reporting company” as defined in Rule 12b-2 of our customers depend on debt financings to purchase our platforms and systems. An increase in interest rates could make it challenging for our customers to obtain the capital necessary to make such purchases on favorable terms, or at all. Such factors could reduce demand or lower the price we can charge for our platforms and systems, thereby reducing our net sales and gross profit.
Fixed rate debt. In May 2018, we entered into a Loan and Security Agreement with East West Bank, which is due in May 2022, and carries a fixed interest rate of 6.73% per annum. If we refinance our loan agreement or enter into new debt arrangements, interest rates could increase and thereby increase our financing costs and increase our net loss. A hypothetical 100 basis point change in interest rates would have resulted in a $0.1 million increase in interest expense for the six months ended June 30, 2020.
Bank deposit, money market and note receivable exposure. As of June 30, 2020, we had cash and cash equivalents, including restricted cash, of $59.4 million, which consisted primarily of money market funds and bank deposits. The primary objective of our investment is to preserve principal and provide liquidity. These money market funds, and bank deposits generate interest income at variable rates below 1%. A hypothetical 100 basis point decrease in interest rates would have lowered our interest income for the six months ended June 30, 2020 by $0.2 million and increased our net loss by this amount.
Foreign currency risk
The majority of our revenue has been generated in the United States. Through June 30, 2020, we did not generate any revenue denominated in foreign currencies. As we expand our presence in international markets, to the extent we are required to enter into agreements denominated in a currency other than the US dollar, our results of operations and cash flows may increasingly be subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates. To date, we have not entered into any hedging arrangements with respect to foreign currency risk. As our international operations grow, we will continue to reassess our approach to manage our risk relating to fluctuations in currency rates.Exchange Act.
Item 4.    Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Due to the COVID 19 pandemic, a significant portion of our employees are now working from home, and are also under shelter-in-place orders or other restrictions. Business continuity plans were activated in order to mitigate the impact to our control environment, operating procedures, data and internal controls. The design of our processes and controls allow for remote execution with accessibility to secure data.
We carried out an evaluation, under the supervision and with the participation of management, including our ChiefPrincipal Executive Officer and ChiefPrincipal Financial Officer, of the effectiveness of our “disclosure controls and procedures” as defined in Exchange Act RuleRules 13a-15(e) and 15d-15(e). under the Exchange Act. Based on that evaluation, our Chief Executive Officerprincipal executive officer and Chief Financial Officerprincipal financial officer concluded that as of June 30, 20202023 our disclosure controls and procedures were effective at a reasonable assurance level to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act isrecorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officerprincipal executive officer and Chief Financial Officer,principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
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We also carried out an evaluation, underOn March 21, 2023, we completed the supervisionIsoPlexis Merger. This resulted in us implementing new processes and internal controls to assist us in the preparation and disclosure of financial information associated with the participationtransaction. Given the magnitude of management, includingthe IsoPlexis Merger and the complexity of the applicable systems and business processes, we have excluded IsoPlexis from our Chief Executive Officerassessment and Chief Financial Officer, of our “internal control over financial reporting” as defined in Exchange Act Rule 13a-15(f) and 15d-15(f) to determine whether any changes in ourreport on internal control over financial reporting occurred(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act), during the three months ended June 30, 2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no such changes in our internal control over financial reporting that occurred during the three months ended June 30, 2020 despite the fact that many of our associates are working remotely due to the COVID-19 pandemic. We continue to monitor and assess the COVID-19 situation on our internal controls to minimize potential impacts on their design and operating effectiveness.
CEO and CFO Certifications
We have attached as exhibits to this Quarterly Report on Form 10-Q the certifications of our Chief Executive Officer and Chief Financial Officer, which are required in accordance with the Exchange Act. We recommend that this Item 4. be read in conjunction with those certifications for a more complete understanding of the subject matter presented.most recently completed fiscal quarter.
Limitations on the Effectiveness of Controls
Control systems, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any system of controls must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. 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, if any, within our Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.
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Part II. OTHER INFORMATION.
Item 1.    Legal Proceedings.
See Note 13, “Commitments and Contingencies” under the heading “Legal Proceedings” in17 to our Notes to the Unaudited Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report on Form 10-Qcondensed consolidated financial statements for legal proceedings and related matters.
Item 1A. Risk Factors.
Factors that could cause or contribute to differences in our future financial and operating results include those discussed in the risk factors set forth in our Annual Report on Form S-1 Registration Statement10-K filed with the SEC on July 16, 2020.February 23, 2023. The risks described in our Form S-110-K and this Report are not the only risks that we face. Additional risks not presently known to us or that we do not currently consider significant may also have an adverse effect on the Company. If any of the risks actually occur, our business, results of operations, cash flows or financial condition could suffer.
An active, liquid trading market for our securities may not be sustained.
There can be no assurance that we will be able to maintain an active trading market for our common stock and warrants on Nasdaq or any other exchange. On June 21, 2023, we received a notice (“Notice”) from The Nasdaq Stock Market (“Nasdaq”) that we are not in compliance with Nasdaq’s Listing Rule 5450(a)(1) (the “Minimum Bid Price Rule”), because the minimum bid price of our common stock had been below $1.00 per share for 30 consecutive business days. We have 180 calendar days following receipt of the Notice, or until December 12, 2023, to regain compliance with the Minimum Bid Price Rule. To regain compliance, the closing bid price of our common stock must be at least $1.00 per share for a minimum of ten consecutive business days during this 180 calendar day grace period. The Notice has no immediate effect on the listing or trading of our common stock on The Nasdaq Global Select Market, subject to our compliance with other Nasdaq continued listing standards. We intend to monitor the closing bid price of our common stock and may, if appropriate, consider available options, including a reverse stock split, to regain compliance with the Minimum Bid Price Rule. If we are unable to regain compliance with Nasdaq’s listing standards, Nasdaq may delist our common stock. At that point, it is possible that our common stock could be quoted on the over-the-counter bulletin board or the pink sheets. This could have negative consequences, including negative publicity, a negative effect on the price of our common stock, reduced liquidity for stockholders, reduced trading levels for our common stock, limited availability of market quotations or analyst coverage of our securities, stricter trading rules for brokers trading our securities, diminished investor, supplier and employee confidence, and reduced access to financing alternatives for us. We also would be subject to greater state securities regulation if our common stock was no longer listed on a national securities exchange. In the event of a delisting, we can provide no assurance that any action taken by us to restore compliance with listing requirements would allow our common stock to become listed again, stabilize the market price or improve the liquidity of our common stock, or prevent future non-compliance with Nasdaq’s listing requirements.

There are uncertainties introduced by our announcement of our exploration, review and evaluation of strategic alternatives focused on addressing capital requirements and maximizing stockholder value.
On July 7, 2023, we announced that we have launched a process to explore, review and evaluate a range of potential strategic alternatives focused on addressing capital requirements and maximizing stockholder value. We do not intend to make further announcements about the strategic alternatives or capital raising processes unless and until our Board of Directors has approved a specific transaction or otherwise determines that further disclosure is appropriate or necessary.
There can be no assurance that any offers will be made or accepted, that any agreement will be executed, or that any transaction will be consummated, in connection with the strategic alternatives or capital raising processes. We may not be able to consummate such a transaction in a timely manner or at all or in a manner that would not adversely impact our business. Strategic transactions are complex and time-consuming to identify, evaluate,
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negotiate and consummate in compliance with applicable laws and Nasdaq requirements. We may also incur substantial costs in connection with the pursuit of strategic alternatives which are not ultimately consummated. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty. Additionally, such strategic transactions may not be favorable to investors nor deliver any anticipated benefits, and unexpected liabilities may result from such transaction and that the process of consummating or the effects of consummating such a transaction may cause interruption or slow down the operations of our existing or continuing businesses.

We need to obtain substantial funding in the near term in order to continue operations and our exploration of strategic alternatives.
We require significant capital resources in order to continue to operate our business and conduct our exploration of strategic alternatives, and our limited liquidity could materially and adversely affect our business operations. Cash and cash equivalents (including marketable securities classified as cash equivalents) were $31.0 million as of June 30, 2023, and are not anticipated to be sufficient to support our operations for at least 12 months from the date of the filing of this Quarterly Report on Form 10-Q unless we reduce our burn rate or increase our capital. Because we have no current source of committed financing, our current available cash and cash equivalents provide us with limited liquidity. Any required additional capital may not be available on reasonable terms, if at all, due to a variety of factors, including uncertainty about the future direction of the Company, as well as broader conditions in the economy and capital markets. The Company has already engaged in significant cost reductions, including our prior reductions in force, so our ability to further cut costs and extend our operating runway is limited. Without sufficient additional capital funding in the near term, we may be required, among other things, to seek bankruptcy protection.

Our negative cash flows and current lack of financial resources raise substantial doubt as to our ability to continue as a going concern. If we are unable to raise additional funding to meet our operational needs, we may be forced to limit or cease our operations and/or liquidate our assets.

Although our unaudited consolidated interim financial statements have been prepared assuming our company will continue as a going concern, our negative cash flows and current lack of financial resources raise substantial doubt as to our ability to satisfy our obligations as they become due within one year from the date of filing of this Quarterly Report on Form 10-Q. For the three months ended June 30, 2023, we had a consolidated net loss of $50.2 million and had an accumulated deficit of $435.3 million as of June 30, 2023. Cash and cash equivalents (including marketable securities classified as cash equivalents) were $31.0 million as of June 30, 2023. We expect to incur additional operating losses in the foreseeable future as we continue to invest in the research and development of our product offerings, commercialize and launch platforms, and expand into new markets. Although we intend to improve operating cash flow by increasing our revenue and lowering our operational costs, we may not succeed in driving revenue growth, including through new commercial leadership, geographic expansion or a refined product roadmap, or in lowering operating expenses, including through the cost synergies expected as a result of the IsoPlexis Merger by eliminating duplicative costs associated with maintaining the infrastructure needed by public companies, complementary R&D capabilities, marketing resources and sales operations, and manufacturing, supply chain, logistics and operations synergies. There can be no material changesassurance that any offers will be made or accepted, that any agreement will be executed, or that any transaction will be consummated, in connection with the strategic alternatives or capital raising processes. If at any time in the future we are unable to continue as a going concern, we may be forced to seek protection from our creditors through bankruptcy proceedings, discontinue operations, and liquidate our assets, and we may receive less than the value at which those assets are carried on our unaudited interim financial statements. Any of these outcomes could cause our stockholders to lose some or all of their investment.

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Even if we are able to raise significant additional capital necessary to continue our operations over the next year, if we are unable to obtain additional adequate financing on terms satisfactory to us, or at all, when we require it, our ability to continue to pursue our business objectives, develop our technology and products, and respond to business opportunities, challenges, unforeseen circumstances or developments could be significantly limited, and our business, financial condition, results of operations and prospects could be materially and adversely affected.

If we fail to innovate in response to rapidly evolving technological and market developments, including artificial intelligence, our competitive position and business prospects may be harmed.

Our future success depends, in part, on our ability to anticipate and respond effectively to the risk factors set forththreat and opportunity presented by new technology disruption and developments. These may include new software applications or related services based on artificial intelligence, machine learning or robotics. We may be exposed to competitive risks related to the adoption and application of new technologies by established market participants or new entrants, start-up companies and others.

We cannot predict the effect of technological changes on our business. Failure to keep pace with these technological developments or otherwise bring to market products that reflect these technologies could have a material adverse impact on our overall business and results of operations. We may not be successful in anticipating or responding to these developments on a timely and cost-effective basis. Additionally, the effort to gain technological expertise and develop new technologies in our Form S-1 Registration Statement filed with the SECbusiness requires us to incur significant expenses. If we cannot offer new technologies as quickly as our competitors, or if our competitors develop more cost-effective technologies or product offerings, we could experience a material adverse effect on July 16, 2020.our operating results, growth and financial condition.





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

Sale of Unregistered Securities
There were no unregistered sales of the Company'sCompany’s equity securities during the three and six months ended June 30, 2020.
Use of Proceeds from our IPO
On July 21, 2020, we closed our initial public offering, in which we issued and sold 9,315,000 shares of our common stock, including the full exercise of the underwriters’ over-allotment option, at a public offering price of $22 per share for aggregate offering proceeds of $204.9 million. All of the shares of common stock issued and sold in the offering were registered under the Securities Act of 1933, as amended (“Securities Act”) pursuant to a registration statement on Form S-1 (File No. 333-239487), which was declared effective by the SEC on July 16, 2020.
Cash used since the initial public offering is described elsewhere in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our periodic reports filed with the SEC. As of the date of this filing, there has been no material change in the planned use of proceeds from our initial public offering as described in our prospectus dated July 16, 2020 filed with the SEC on July 17, 2020 in connection with our initial public offering.2023.
Item 3.    Defaults Upon Senior Securities.
Not applicable.
Item 4.    Mine Safety Disclosures.
Not applicable.
Item 5.    Other Information.
None.
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Item 6. Exhibits.
The following exhibits are filed with this Quarterly Report on Form 10-Q:

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Incorporated by Reference
Exhibit NumberExhibit TitleFormFile No.ExhibitFiling DateFiled Herewith
8-K001-393883.17/21/2020
8-K001-393883.27/21/2020
4.1Reference is made to Exhibits 3.1 through 3.2.
S-1/A333-2394874.27/13/2020
S-1333-2394874.36/26/2020
S-1333-2394874.46/26/2020
X
X
X
X
101.INSXBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
Incorporated by Reference
Exhibit NumberExhibit TitleFormFile No.ExhibitFiling DateFiled Herewith
8-K001-393883.13/21/2023
8-K001-393883.23/21/2023
X
X
X
X
101.INSXBRL Instance Document.X
101.SCHXBRL Taxonomy Extension Schema Document.X
101.CALXBRL Taxonomy Extension Calculation Linkbase DocumentX
101.DEFXBRL Taxonomy Extension Definition Linkbase Document.X
101.LABXBRL Taxonomy Extension Label Linkbase Document.X
101.PREXBRL Taxonomy Extension Presentation Linkbase Document.X
104Cover Page Interactive Data File - formatted in Inline XBRL and included as Exhibit 101X
*This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.


filings
4353


Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf of the undersigned thereunto duly authorized.
Berkeley Lights,
PhenomeX Inc.



Date: August 25, 202014, 2023By: /s/ Shaun HoltMehul Joshi
Shaun Holt
Mehul Joshi
Chief Financial Officer

(Principal Financial and Accounting Officer)


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