Quantum-Si Inc.
03/03/2026 | Press release | Distributed by Public on 03/03/2026 15:44
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our consolidated results of operations and financial condition. The discussion should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in this Annual Report on Form 10-K. This discussion contains forward looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this Annual Report on Form 10-K. Actual results may differ materially from those contained in any forward-looking statements. For a discussion on forward-looking statements, see the information set forth in the introductory note to this Annual Report under the caption "Cautionary Note Regarding Forward Looking Statements," which information is incorporated herein by reference. Unless the context otherwise requires, references to "we", "us", "our", the "Company" or "Quantum-Si" are intended to mean the business and operations of Quantum-Si Incorporated and its consolidated subsidiaries. For discussion and analysis pertaining to the year ended December 31, 2024overview and highlights as compared to the year ended December 31, 2023, please refer to the Company's Annual Report on Form 10-K, as filed with the SEC on March 3, 2025.
Overview
We are a life sciences company focused on proteomics research, with the mission of transforming single-molecule analysis and democratizing its use by providing researchers and clinicians access to the proteome, the set of proteins expressed within a cell. We have developed a proprietary, universal, single-molecule detection platform that we are applying to proteomics to enable next-gen protein sequencing ("NGPS") to sequence proteins in a massively parallel fashion (rather than sequentially, one at a time), which can also be used for the study of nucleic acids. We believe in the ability to sequence proteins in a massively parallel fashion and offer a fast analysis time provides NGPS with the potential to unlock significant biological information through improved resolution and unbiased access to the proteome at a speed and scale not available today. Traditionally, proteomic workflows to sequence proteins required days or weeks to complete. Our current platform includes our Platinum®NGPS line of instruments, Platinum Analysis Software and consumable kits for use with our Platinum line of instruments. In 2021, we introduced our Platinum early access program to sites with participation from leading academic centers and key industry partners. The early access program introduced the Platinum single-molecule sequencing system to key opinion leaders across the globe for both expansion and development of applications and workflows. We began a controlled launch of the Platinum instrument and started to take orders in December 2022, subsequently began a controlled commercial launch of Platinum in January 2023 and then moved to a full commercial launch of Platinum beginning in the second quarter of 2024. In January 2025, we announced the launch of our Platinum Pro benchtop sequencer. First shipments of Platinum Pro occurred in March 2025.
We believe our platform offers a differentiated solution in a rapidly evolving proteomics tools market. Within our initial focus market of proteomics, our platform is designed to provide users a seamless opportunity to gain key insights into the immediate state of biological pathways and cell state. Our platform aims to address many of the key challenges and bottlenecks with legacy proteomic solutions, such as mass spectrometry ("MS"), which include high instrument costs both in terms of acquisition and ownership, and complexity with data analysis, which together limit broad adoption. We believe our platform, which is designed to streamline sequencing and data analysis at a lower instrument cost and with greater automation than legacy proteomic solutions, could allow our product to have wide utility across the study of the proteome. For example, our platform could be used for biomarker discovery and disease detection, pathway analysis, immune response, vaccine development, quality assurance and quality control, among other applications.
In November 2025, we presented an updated technology and product roadmap that we believe positions us to be a leader in proteomics, including instrumentation, consumable kits and software tools. We intend to continue to execute on this roadmap through a combination of internal development programs and external partnerships to bring to market the most comprehensive proteomics platform in our industry.
Most importantly, this roadmap includes the development of ProteusTM, our next-generation platform, which was announced in November 2024 and is anticipated to launch by the end of 2026. Proteus aims to provide single-molecule, amino acid level resolution while also providing anticipated significantly higher sequencing output per sample and increased sample throughout per run, automation of the sequencing workflow and automated data analysis as compared to Platinum Pro. The Proteus platform is being developed to be a modular, scalable system that allows for expansion in the overall platform, the number of consumables that can be processed concurrently and the overall output of sample data from the platform. The first generation of Proteus and associated sequencing consumables is anticipated to include motion control, liquid handling, and a new on-board single optical system with the ability to accept a new consumable chip that has
approximately 80 million features. We believe this new platform will provide much deeper insights while simplifying and significantly reducing the cost of the underlying consumable. In addition, during our presentation in November 2025, we provided data demonstrating the wide range of proteomics applications that are addressable with our proprietary, single-molecule, kinetic detection technology.
Global Developments
Although the U.S. Federal Reserve lowered interest rates slightly in 2024 and in the third and fourth quarters of 2025, it is not known whether additional action will be taken to lower interest rates and if this decrease, and any other decreases, will have an impact on inflation. While these rate fluctuations have not had a significant adverse impact on the Company to date, the impact of such rate fluctuations on the overall financial markets and the economy may adversely impact the Company in the future. In addition, the global economy has experienced and is continuing to experience high levels of inflation and global supply chain disruptions. The Company continues to monitor these supply chain, inflation and interest rate factors, as well as the uncertainty resulting from the overall economic environment.
To date, the Company has not been materially affected by enacted tariffs either by the U.S. government or foreign retaliatory tariffs; however, the Company's finished goods and/or their components could become materially affected by changing tariffs in the future. If increased tariffs are imposed on the Company's finished goods and/or components, they may impact the business, financial condition, results of operations and cash flows.
Although the Company has not been significantly impacted by geopolitical conflicts throughout the world, the Company has experienced certain constraints in product and material availability and increasing costs required to obtain certain materials and supplies as a result of these conflicts on the global economy. To date, the business has not been materially impacted by these conflicts, however, as the conflicts continue or worsen, they may impact the business, financial condition, results of operations and cash flows.
Restructuring
In November 2024, we announced that we committed to an organizational restructuring program designed to streamline and focus our overall corporate resources, as well as align required resources to focus on future product development objectives, including our recently announced Proteus platform. As a result, we terminated approximately 23% of our 187 employee workforce. In connection with the restructuring, we recognized one-time cash charges related to severance and other benefits of approximately $2.3 million in the fourth quarter of 2024. Our restructuring activities were complete as of December 31, 2024 and, as of December 31, 2025, we do not expect to incur additional charges associated with these activities. For further information regarding our restructuring activities, please refer to Note 13. Restructuring in the accompanying notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Equity Transactions
At-the-Market Equity Offering Program
On September 26, 2025, we entered into a Sales Agreement (the "Sales Agreement") with Leerink Partners LLC ("Leerink"), pursuant to which we may offer and sell shares of our Class A common stock having an aggregate offering price of up to $100.0 million, from time to time through an "at-the-market" offering program under which Leerink will act as sales agent (the "2025 ATM Offering"). We have no obligation to sell any shares under the Sales Agreement and may at any time suspend solicitation and offers under the Sales Agreement. The 2025 ATM Offering is being made pursuant to a universal shelf registration statement on Form S-3, which we originally filed on September 26, 2025, and a sales agreement prospectus related to the 2025 ATM Offering. During the year ended December 31, 2025, there were no shares sold under the Sales Agreement.
Registered Direct Offerings and Pre-funded Warrants
On July 3, 2025, we entered into a securities purchase agreement with a certain institutional investor, pursuant to which we agreed to issue and sell, in a registered direct offering (the "July 2025 Registered Direct Offering"), an aggregate of (i) 18,200,000 shares of our Class A common stock at a price of $1.67 per share and (ii) pre-funded warrants to purchase 11,740,119 shares of Class A common stock (the "Pre-Funded Warrants"). The Pre-Funded Warrants were exercised in full on August 1, 2025 at the exercise price of 0.0001 for one share of Class A common stock per Pre-Funded Warrant. The gross proceeds from the July 2025 Registered Direct Offering were $50.0 million. After deducting estimated placement
agents' fees and other offering expenses payable by us, net proceeds as of December 31, 2025 were approximately $46.7 million.
In addition, in connection with the July 2025 Registered Direct Offering, we provided written notice, effective as of July 3, 2025, to Canaccord Genuity LLC ("Canaccord") of our election to terminate the equity distribution agreement dated December 11, 2024 for our at-the-market offering. At the time of termination, we had sold 23,425,650 shares of our Class A common stock under the equity distribution agreement for aggregate gross proceeds of $36.2 million.
On January 3, 2025, we entered into a securities purchase agreement with certain institutional investors pursuant to which we agreed to issue and sell, in a registered direct offering (the "January 2025 Registered Direct Offering," and together with the July 2025 Registered Direct Offering, the "Registered Direct Offerings") an aggregate of 15,625,000 shares of our Class A common stock at a price of $3.20 per share. The gross proceeds from the January 2025 Registered Direct Offering were $50.0 million. After deducting estimated placement agents' fees and other offering expenses payable by us, net proceeds recorded as of December 31, 2025 were approximately $46.8 million.
In connection with both Registered Direct Offerings, we entered into placement agency agreements with A.G.P./Alliance Global Partners ("AGP"), pursuant to which AGP agreed to serve as our sole placement agent on a reasonable best efforts basis. In connection with the Registered Direct Offerings, we agreed to pay AGP an aggregate cash fee equal to 6.0% of the gross proceeds received in the respective offering. The securities in both Registered Direct Offerings were sold pursuant to our universal shelf registration statement on Form S-3, which was originally filed with the SEC on August 11, 2023, and related base prospectuses and prospectus supplements dated July 3, 2025 and January 3, 2025, respectively, thereunder.
For further information regarding our equity transactions, please refer to the Liquidity Outlook section below.
Critical Accounting Policies and Significant Judgments and Estimates
Our management's discussion and analysis of our financial condition and results of operations is based on our Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of these Consolidated Financial Statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements, as well as expenses incurred during the reporting periods. Our estimates are based on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about items not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Revenue Recognition
Revenue is derived from sales of products and services. Product revenue is primarily generated from the sales of instruments and consumables used in protein sequencing and analysis. Service revenue is primarily generated from service maintenance contracts including access to analysis software and advanced training for instrument use. We recognize revenue when or as a customer obtains control of the promised goods and services. The amount of revenue recognized reflects the consideration to which we expect to be entitled in exchange for these goods 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, and recognizing revenue as the performance obligations have been satisfied. We have made the accounting policy election allowed for under ASC 606-10-32-2A to exclude all sales taxes from transaction price. Revenue recognition for contracts with multiple deliverables is based on the separate satisfaction of each distinct performance obligation within the contract. 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. We allocate transaction price to the performance obligations in a contract with a customer based on the relative standalone selling price of each performance obligation. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information and specific factors such as competitive positioning, internal costs, profit objectives, and internally approved pricing guidelines related to the performance obligation.
We consider performance obligation for sales of products satisfied upon shipment of the goods to the customer in accordance with the shipping terms (either upon shipment or delivery), which is when control of the product is deemed to
be transferred; this includes instruments and consumables. Customers generally do not have a right to return products, except for defective or damaged products during the warranty period or unless prior written consent is provided. In instances where right of payment or transfer of title is contingent upon the customer's acceptance of the product, revenue is deferred until all acceptance criteria have been met. Revenues for service maintenance contracts, which start after the first year of purchase and are considered as service type warranties that effectively extend the standard first-year service coverage at the customer's option are recognized ratably over the contract service period as these services are performed evenly over time. Revenues for advanced training is recognized at a point in time upon satisfaction of the underlying performance obligation. We typically provide a standard one-year warranty which covers defects in materials, workmanship and manufacturing or performance conditions under normal use and service. The first year of the warranty of the products is considered an assurance-type warranty and is recorded as Cost of revenue within the Consolidated Statements of Operations and Comprehensive Loss. We have determined this standard first-year warranty is not a distinct performance obligation.
Stock-based Compensation
Stock-based compensation expense for stock option grants with only service conditions is recognized on a straight-line basis over the requisite service period of the individual grants, which is generally the vesting period, based on the estimated grant date fair values. Stock-based compensation expense for stock option grants subject to non-financing event performance conditions on an accelerated basis is recognized as though each vesting portion of the award was, in substance, a separate award.
Prior to the Business Combination, the fair value of the shares of common stock underlying stock options had been determined by the Board, with input from management and contemporaneous third-party valuations, as there was no public market for the common stock. Given the absence of a public trading market for our common stock, the Board exercised reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of the fair value of our common stock at each option grant date.
After the completion of the Business Combination, we measure compensation expense for stock-based awards to employees, non-employees and directors based upon the awards' initial grant-date fair values. Stock-based compensation expense for stock options, restricted stock units and performance awards is recorded over the requisite service period. For awards with only a service condition, we expense stock-based compensation using the straight-line method over the requisite service period for the entire award. For awards with a market condition, we expense the grant date fair value at the target over the vesting period regardless of the value the award recipients ultimately receive. The fair value of restricted stock without a market condition is estimated using the current market price of our common stock on the date of grant. The fair value of stock option grants with a market condition is estimated at the date of grant using the Monte Carlo simulation model ("Monte Carlo"). The fair values of stock option grants with only a service condition are estimated as of the date of grant by applying the Black-Scholes option valuation model ("Black-Scholes model"). The Black-Scholes model and Monte Carlo models incorporate assumptions as to stock price volatility, the expected life of options or restricted stock, a risk-free interest rate and dividend yield. The effect of forfeiture in compensation costs is recognized based on actual forfeitures when they occur.
The Black-Scholes model is affected by the stock price on the date of the grant as well as assumptions regarding a number of variables. These variables include the expected term of the option, expected risk-free interest rate, the expected volatility of common stock, and expected dividend yield; each of which is described below. The assumptions for expected term of the option and expected volatility of common stock are the two assumptions that significantly affect the grant date fair value.
•Expected Term: The expected term is calculated using the weighted-average period that the stock options are expected to be outstanding prior to being exercised. We determine expected term based on historical exercise patterns and our expectation of the time that it will take for employees to exercise options still outstanding. We estimate non-employees' options based on the contractual term.
•Risk-free Interest Rate: The risk-free interest rate for periods within the expected term of the awards is based on the U.S. Treasury yield curve in effect at the time of the grant.
•Expected Stock Price Volatility: We determined expected annual equity volatility based on the combination of the historical volatility of our common stock and the historical volatility of the common stock comparable to our common stock.
•Dividend Yield: Because we have never paid a dividend and do not expect to begin doing so in the foreseeable future, we assume no dividend yield in valuing the stock-based awards.
•Exercise Price: The exercise price is taken directly from the grant notice issued to employees and non-employees.
Stock options granted to non-employees are accounted for based on their fair value on the measurement date using the Black-Scholes model. For further information regarding our stock-based compensation and equity incentive plans, please refer to Note 2. Summary of Significant Accounting Policiesand Note 10. Stock-based Compensationin the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Inventory
Inventory is stated at the lower of cost or net realizable value with cost determined using the first-in, first-out method. Materials that may be utilized for either commercial or, alternatively, for research and development purposes, are classified as inventory. Amounts in inventory used for research and development purposes are charged to research and development expense when the product enters the research and development process and can no longer be used for commercial purposes and, therefore, does not have an "alternative future use" as defined in authoritative guidance. During the years ended December 31, 2025, 2024 and 2023, we identified $1.6 million, $3.2 million and $3.4 million, respectively, of product that no longer had an alternative future use and therefore was included as part of research and development expense.
An assessment of the recoverability of capitalized inventory is performed during each reporting period and, if needed, we record a reserve for any excess and obsolete inventory to record inventory at its estimated net realizable value in the period it is identified. Inventory excess and obsolescence reserves related to cost of revenue were $0.7 million and $0.2 million for the years ended December 31, 2025 and 2024, respectively. Inventory excess and obsolescence reserves related to cost of revenue were immaterial for the year ended December 31, 2023.
For further information regarding our significant accounting policies and estimates, please refer to Note 2. Summary of Significant Accounting Policiesin the accompanying notes to our Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Warrant Liabilities
Outstanding warrants include Public Warrants which were issued as one-third of one redeemable warrant per unit during HighCape's initial public offering on September 9, 2020, and Private Warrants sold to the Sponsor. The Public Warrants and Private Warrants meet the definition of a derivative and we recorded these warrants as warrant liabilities on the Consolidated Balance Sheets at fair value upon the closing of the Business Combination, with subsequent changes in their respective fair values recognized in the Consolidated Statements of Operations and Comprehensive Loss at each reporting date. Both the Public Warrants and Private Warrants expire on June 10, 2026.For further information regarding our warrants, please refer to Note 11. Warrant Liabilitiesin the accompanying notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Recently Issued Accounting Pronouncements
For a discussion of recently adopted accounting pronouncements and accounting pronouncements pending adoption, please refer to Note 2. Summary of Significant Accounting Policiesin the accompanying notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Results of Operations for the Year Ended December 31, 2025as Compared to the Year Ended December 31, 2024
The following table summarizes the results of our operations for the years ended December 31, 2025and 2024(dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Product | $ | 2,286 | $ | 2,925 | $ | (639) | (21.8) | % | |||||||||||||||
| Service | 150 | 133 | 17 | 12.8 | % | ||||||||||||||||||
| Total revenue | 2,436 | 3,058 | (622) | (20.3) | % | ||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Product | 1,249 | 1,404 | (155) | (11.0) | % | ||||||||||||||||||
| Service | 34 | 54 | (20) | (37.0) | % | ||||||||||||||||||
| Total cost of revenue | 1,283 | 1,458 | (175) | (12.0) | % | ||||||||||||||||||
| Gross profit | 1,153 | 1,600 | (447) | (27.9) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Research and development | 53,759 | 59,641 | (5,882) | (9.9) | % | ||||||||||||||||||
| Selling, general and administrative | 44,754 | 50,535 | (5,781) | (11.4 | %) | ||||||||||||||||||
| Lease termination expense, net | 13,577 | - | 13,577 |
nm(1)
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| Legal settlement expense, net of insurance proceeds | 5,162 | - | 5,162 |
nm(1)
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| Total operating expenses | 117,252 | 110,176 | 7,076 | 6.4 | % | ||||||||||||||||||
| Loss from operations | (116,099) | (108,576) | (7,523) | 6.9 | % | ||||||||||||||||||
| Dividend income | 697 | 1,728 | (1,031) | (59.7 | %) | ||||||||||||||||||
| Interest income | 8,964 | 9,638 | (674) | (7.0) | % | ||||||||||||||||||
| Change in fair value of warrant liabilities | 4,202 | (3,722) | 7,924 | (212.9) | % | ||||||||||||||||||
| Other income (expense), net | 955 | (19) | 974 | (5126.3) | % | ||||||||||||||||||
| Loss before provision for income taxes | (101,281) | (100,951) | (330) | 0.3 | % | ||||||||||||||||||
| Provision for income taxes | (58) | (56) | (2) | 3.6 | % | ||||||||||||||||||
| Net loss | $ | (101,339) | $ | (101,007) | $ | (332) | 0.3 | % | |||||||||||||||
(1) "nm" indicates change is not meaningful.
Revenue, Cost of Revenue and Gross Profit
Revenue is derived from sales of products and services. Product revenue is generated from the following sources: (i) sales of our Platinum line of instruments, (ii) consumables kits, including Library Preparation Kits, Sequencing Kit (which includes sequencing reagents and semiconductor chips), and other related reagent kits, and (iii) freight revenue, which is recognized upon shipment. Service revenue is generated from service maintenance contracts including Platinum Analysis Software access, and advanced training for instrument use.
Cost of revenue primarily consists of product and service costs including material costs, personnel costs and benefits, inbound and outbound freight, packaging, warranty replacement costs, royalty costs, facilities costs, depreciation and amortization expense, and inventory write-offs.
Revenue, Cost of revenue and Gross profit for the years ended December 31, 2025and 2024are as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| Product | $ | 2,286 | $ | 2,925 | $ | (639) | (21.8) | % | |||||||||||||||
| Service | 150 | 133 | 17 | 12.8 | % | ||||||||||||||||||
| Total revenue | 2,436 | 3,058 | (622) | (20.3) | % | ||||||||||||||||||
| Cost of revenue | |||||||||||||||||||||||
| Product | 1,249 | 1,404 | (155) | (11.0) | % | ||||||||||||||||||
| Service | 34 | 54 | (20) | (37.0) | % | ||||||||||||||||||
| Total cost of revenue | 1,283 | 1,458 | (175) | (12.0) | % | ||||||||||||||||||
| Gross profit | $ | 1,153 | $ | 1,600 | $ | (447) | (27.9) | % | |||||||||||||||
| Gross profit margin | 47.3 | % | 52.3 | % | |||||||||||||||||||
Total revenue for the sale of our Platinum line of instruments, related reagent kits and service maintenance contracts decreased by $0.6 million, or 20.3%for the yearended December 31, 2025as compared to the same period in 2024. During the year ended December 31, 2025, we experienced longer capital sales cycles, largely driven by low or no capital spend budgets at certain customers, primarily from actual and potential budget cuts from the National Institute of Health ("NIH").
Total cost of revenue decreased $0.2 million, or 12.0%, for the year ended December 31, 2025 as compared to the same period in 2024. The change in the cost of revenue is based on the relative volume and revenue decreases for the year ended December 31, 2025as compared to the prior year.
Gross profit decreased $0.4 million, or 27.9%for the year ended December 31, 2025 as compared to the same period in 2024.
Gross profit margin was 47.3% for the year ended December 31, 2025 as compared to 52.3%for the same period in 2024. This change in margin was primarily based on the mix of products sold during each period and the inventory utilization impacted by purchase price variance and other valuation adjustments for items carried at low or no value that predates the commercial launch of our Platinum line of instruments. We expect gross profit margin to fluctuate for the foreseeable future as we work through our continued commercialization efforts.
We began a controlled launch of the Platinum instrument and started to take orders in December 2022, and subsequently began a controlled commercial launch of Platinum in January 2023, and then moved to a full commercial launch of Platinum beginning in the second quarter of 2024. In January 2025, we announced the launch of our Platinum Pro benchtop sequencer. First shipments of Platinum Pro occurred in March 2025.
Research and Development Expenses
Research and development expenses primarily consist of personnel costs and benefits, stock-based compensation, lab supplies, consulting and professional services, fabrication services, charges related to product without an alternative future use, facilities costs, software, and other outsourced expenses. Research and development expenses are recognized as incurred. Our research and development expenses are primarily related to developing new products and services.
Research and development expenses for the years ended December 31, 2025and 2024are as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Research and development | $ | 53,759 | $ | 59,641 | $ | (5,882) | (9.9) | % | |||||||||||||||
Research and development expenses decreased by $5.9 million, or 9.9%, for the year ended December 31, 2025 as compared to the same period in 2024. This decrease was primarily driven by a $3.6 million decrease in payroll, payroll-related and other personnel costs resulting primarily from the reduction in headcount related to the November 2024 restructuring, a $2.4 million decrease in research and development expenses due to refundable tax credits, a $2.0 million decrease in laboratory supplies expense, a $0.9 million net decrease in excess and obsolete inventory with no alternative future use and a $0.4 million decrease in consulting expense. These decreases were partially offset by a $3.8 million increase in fabrication and outsourced services driven by efforts to support the development of our Proteus platform.
Selling, General and Administrative Expenses
Selling, general and administrative expenses primarily consist of personnel costs and benefits, stock-based compensation, patent and filing fees, consulting and professional services, legal and accounting services, facilities costs, depreciation and amortization expense, insurance and office expenses, product advertising and marketing.
Selling, general and administrative expenses for the years ended December 31, 2025and 2024are as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Selling, general and administrative | $ | 44,754 | $ | 50,535 | $ | (5,781) | (11.4 | %) | |||||||||||||||
Selling, general and administrative expenses decreased by $5.8 million, or 11.4%, for the year ended December 31, 2025 as compared to the same period in 2024. This decrease was primarily due to a $2.9 million decrease in legal fees, a $2.1 million decrease in payroll, payroll-related and other personnel costs, a $0.6 million decrease in non-income tax expense, a $0.5 million decrease in depreciation expense, a $0.5 million decrease in insurance expense due to lower premiums and a $0.9 million net decrease in other expenses. These decreases were partially offset by a $1.7 million increase in stock-based compensation expense.
Lease Termination Expense, Net
For the years ended December 31, 2025and 2024, Lease termination expense, net, is as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Lease termination expense, net | $ | 13,577 | $ | - | $ | 13,577 |
nm(1)
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(1) "nm" indicates change is not meaningful.
Lease termination expense, net, increased $13.6 million for the year ended December 31, 2025, when compared to the same period in 2024. This increase was due to a settlement agreement to terminate the New Haven, Connecticut lease. For further details regarding this settlement, please refer to Note 17. Commitments and Contingencies in the accompanying notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Legal Settlement Expense, Net of Proceeds
For the years ended December 31, 2025and 2024, Legal settlement expense, net of proceeds, is as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Legal settlement expense, net of insurance proceeds | $ | 5,162 | $ | - | $ | 5,162 |
nm(1)
|
||||||||||||||||
(1) "nm" indicates change is not meaningful.
Legal settlement expense, net of insurance proceeds, increased $5.2 million for the year ended December 31, 2025, as compared to the same period in 2024. This increase was due to a $3.4 million preliminary legal settlement being reached for the Delaware Stockholder Litigation in the second quarter of 2025 and a $1.8 million settlement being paid to the prior contract manufacturer that had manufactured the Platinum and Carbon instruments in the third quarter of 2025. For further
information on these settlements, please refer to Note 17. Commitments and Contingencies in the accompanying notes to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K.
Dividend Income and Interest Income
For the year ended December 31, 2025 and 2024, dividend income and interest income are derived primarily from fixed income securities and money market mutual funds, respectively.
Dividend income and interest income for the years ended December 31, 2025and 2024is as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Dividend income | $ | 697 | $ | 1,728 | $ | (1,031) | (59.7 | %) | |||||||||||||||
| Interest income | $ | 8,964 | $ | 9,638 | $ | (674) | (7.0 | %) | |||||||||||||||
Dividend income and interest income decreased by $1.0 million and $0.7 million, respectively, or 59.7% and 7.0%, respectively, for the year ended December 31, 2025 as compared to the same period in 2024. These decreases are a result of lower market interest rates on invested capital as well as relative lower invested balances during the year ended December 31, 2025.
Change in Fair Value of Warrant Liabilities
The warrant liabilities were recorded at fair value as part of the Business Combination. Change in fair value of warrant liabilities primarily consists of the change in the fair value of our Public Warrants and Private Warrants.
Change in warrant liabilities for the years ended December 31, 2025and 2024is as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Change in fair value of warrant liabilities | $ | 4,202 | $ | (3,722) | $ | 7,924 | (212.9) | % | |||||||||||||||
For the year ended December 31, 2025 we recognized $4.2 million of income from the decrease in the fair value of warrant liabilities as compared to $3.7 million of expense from the increase in fair value of warrant liabilities for the same period in 2024. These changes in the fair value of warrant liabilities were primarily driven by the change in the underlying trading price of our Class A common stock during the periods reported.
Other Expense, Net
Other expense, net, typically consists of currency revaluations and income from credit card cash rewards programs. Other expense, net, for the years ended December 31, 2025and 2024is as follows (dollars in thousands):
| 2025 | 2024 | $ Change | % Change | ||||||||||||||||||||
| Other income (expense), net | $ | 955 | $ | (19) | $ | 974 | (5126.3) | % | |||||||||||||||
Other (expense) income, net, increased by $1.0 million, or 5126.3%, for the year ended December 31, 2025 as compared to the same period in 2024. In addition to the items mentioned above, the year ended December 31, 2025 also includes a legal settlement payment received of $1.0 million.
Liquidity and Capital Resources
The following table presents a summary of our consolidated cash flows for operating, investing, and financing activities for the years ended December 31, 2025and 2024 (in thousands):
| 2025 | 2024 | ||||||||||
| Net cash (used in) provided by: | |||||||||||
| Net cash used in operating activities | $ | (94,717) | $ | (87,795) | |||||||
| Net cash used in investing activities | (28,320) | (32,675) | |||||||||
| Net cash provided by financing activities | 95,423 | 35,876 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 12 | (25) | |||||||||
| Net decrease in cash and cash equivalents | $ | (27,602) | $ | (84,619) | |||||||
Net cash used in operating activities
For the year ended December 31, 2025, net cash used in operating activities of $94.7 million was primarily due to a net loss of $101.3 million, resulting from continued spend on research and development and commercialization efforts, accretion on marketable securities of $8.0 million, net changes in operating assets and liabilities of $4.6 million and a change in fair value of warrant liabilities of $4.2 million, which was primarily driven by the change in the underlying trading price of our Class A common stock. This cash used in operating activities was partially offset by stock-based compensation of $10.8 million, depreciation and amortization of $4.5 million, a loss on lease termination of $2.3 million related to the New Haven, Connecticut lease, non-cash lease expense of $2.3 million, write-downs of inventory of $2.3 million and a $1.2 million write-off of construction in process related to the termination of the New Haven, Connecticut lease.
For the year ended December 31, 2024, net cash used in operating activities of $87.8 million was primarily due to a net loss of $101.0 million resulting from continued spend on research and development and commercialization efforts, accretion on marketable securities of $8.4 million and a $3.2 million write-down of inventory. This cash used in operating activities was partially offset by stock-based compensation of $8.9 million, a net increase in cash provided by operating assets and liabilities of $4.6 million due to timing of cash receipts and disbursements, depreciation and amortization of $4.6 million, a change in fair value of warrant liabilities of $3.7 million, and non-cash lease expense of $2.4 million.
Net cash used in investing activities
For the year ended December 31, 2025, net cash used in investing activities was $28.3 million as compared to $32.7 million for the same period in 2024. This decrease in cash used was primarily due to a $37.4 million increase in cash provided by proceeds from the sales and maturities of marketable securities anda $2.1 million decrease in purchases of property and equipment partially offset by a $35.1 million increase in cash used for purchases of marketable securities.
Net cash provided by financing activities
For the year ended December 31, 2025, net cash provided by financing activities was $95.4 million as compared to $35.9 million for the same period in 2024. This increase in cash provided was primarily due to $93.5 million of net proceeds from the issuance of common stock from net direct equity and pre-funded warrant offerings that occurred in January and July of 2025 and $1.9 million in proceeds from the exercise of stock options. Further information regarding the direct equity and pre-funded warrant offerings can be found below under the header Liquidity Outlook.
Liquidity Outlook
Since our inception, we have funded our operations primarily with proceeds from the issuance of equity to private investors, as well as with the proceeds received from the closing of the Business Combination. Additionally, we began to generate revenue during 2023 from commercial sales of our Platinum instrument. Our primary uses of liquidity have been operating expenses, capital expenditures and our acquisition of certain assets. Cash flows from operations have been historically negative as we continue to invest in the development of our technology in NGPS. Going forward, we anticipate debt or equity offerings will be the primary source of funds to support our operating needs and capital expenditures until we reach scale of our commercial operations. We expect to incur negative operating cash flows on an annual basis for the foreseeable future until such time that we can scale our revenue growth.
We expect our existing cash and cash equivalents and investments in marketable securities, together with revenue from the sale of our products and services, will be sufficient to meet our liquidity, capital expenditure, and anticipated working capital requirements and fund our operations for at least the next 12 months. We expect to use our cash and cash equivalents and investments in marketable securities and funds from revenue generated to invest in our continued
commercialization efforts, to further invest in research and development, for other operating expenses, business acquisitions and for working capital and general corporate purposes.
As of December 31, 2025, we had cash and cash equivalents and investments in marketable securities totaling $215.8 million. Our future capital requirements may vary from those currently planned and will depend on various factors including the pace and success of product commercialization.
Our ongoing commercialization of Platinum and Platinum Pro as well as our continuing research and development efforts to enhance our instruments may require an accelerated amount of spending to enhance the sales and marketing teams, continue to drive development, and build inventory. Other factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones, (ii) unforeseen capital expenditures and fabrication costs related to manufacturing for commercialization, (iii) changes we may make in our business or commercialization strategy, (iv) costs of running a public company, (v) other items affecting our forecasted level of expenditures and use of cash resources, including potential acquisitions, and (vi) increased product and service costs.
On August 11, 2023, we filed a universal shelf registration statement on Form S-3 (the "2023 Shelf Registration Statement") covering the offering of Class A common stock, preferred stock, debt securities, warrants, rights and units. After the closing of the July 2025 Registered Direct Offering, the remaining capacity of the 2023 Shelf Registration Statement was approximately $13.8 million. We filed a universal shelf registration statement on Form S-3 and a subsequent amendment to the Form S-3 (the "2025 Shelf Registration Statement"), on September 26, 2025 and October 9, 2025, respectively, covering the offering of Class A common stock, preferred stock, debt securities, warrants, rights and units.
On December 11, 2024, we entered into an Equity Distribution Agreement (the "Canaccord Sales Agreement") with Canaccord to sell shares of our Class A common stock having an aggregate offering price of up to $75.0 million, from time to time through an "at-the-market" offering program under which Canaccord acted as sales agent (the "2024 ATM Offering"). We had no obligation to sell any shares under the Canaccord Sales Agreement and could at any time suspend solicitation and offers under the Canaccord Sales Agreement. The 2024 ATM Offering was made pursuant to the 2023 Shelf Registration Statement and a prospectus supplement related to the 2024 ATM Offering dated December 11, 2024. During the year ended December 31, 2024, we sold and issued 23,425,650 shares of our Class A common stock under the 2024 ATM Offering, resulting in gross proceeds of $36.2 million. Net proceeds were $34.8 million after commissions and issuance costs of $1.4 million. We sold no shares of our Class A common stock under the 2024 ATM Offering during the year ended December 31, 2025. In connection with the July 2025 Registered Direct Offering, we provided written notice, effective as of July 3, 2025, to Canaccord of our election to terminate the Canaccord Sales Agreement for our at-the-market offering. At the time of termination, we had sold 23,425,650 shares of our Class A common stock under the Canaccord Sales Agreement for aggregate gross proceeds of $36.2 million.
On January 3, 2025, we entered into a securities purchase agreement with certain institutional investors in connection with the January 2025 Registered Direct Offering. The gross proceeds from the January 2025 Registered Direct Offering were $50.0 million. After deducting estimated placement agents' fees and other offering expenses payable by us, net proceeds recorded as of December 31, 2025were approximately $46.8 million.
On July 3, 2025, we entered into a securities purchase agreement with a certain institutional investor in connection with the July 2025 Registered Direct Offering. The Pre-Funded Warrants were exercised in full on August 1, 2025 at the exercise price of $0.0001 for one share of Class A common stock per Pre-Funded Warrant. The gross proceeds from the July 2025 Registered Direct Offering were $50.0 million. After deducting estimated placement agents' fees and other offering expenses payable by us, net proceeds as of December 31, 2025 were approximately $46.7 million.
On September 26, 2025, we entered into the Leerink Sales Agreement. We have no obligation to sell any shares under the Leerink Sales Agreement and may at any time suspend solicitation and offers under the Leerink Sales Agreement. The 2025 ATM Offering is being made pursuant to the 2025 Shelf Registration Statement and a prospectus supplement related to the 2025 ATM Offering. During the year ended December 31, 2025, there were no shares sold under the Leerink Sales Agreement. Shares offered and sold in the 2025 ATM Offering, if any, will be sold pursuant to the 2025 Shelf Registration Statement.
In the future, we may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition, operating results and cash flows.
Related Party Transactions
For a description of our related party transactions, please refer toNote 16. Related Party Transactionsin the accompanying notes to the Consolidated Financial Statements included elsewhere in the Annual Report on Form 10-K.
Capital Expenditures
During the year ended December 31, 2025, capital expenditures were $2.5 million. We forecast capital expenditures in order to execute on our business plan and maintain growth; however, the actual amount and timing of such capital expenditures will ultimately be determined by the volume of business. We currently anticipate our capital expenditures for the year ended December 31, 2026 will be approximately $5.0 million. We have funded and plan to continue funding these capital expenditures with cash and financing.
Contractual Obligations
Leases
We lease certain facilities and equipment under noncancellable lease agreements that expire at various dates through 2029. As of December 31, 2025, the future lease payments, before adjustments for tenant incentives, were approximately $4.6 million.
Licenses related to certain intellectual property
We license certain intellectual property, some of which may be utilized in our current or future product offerings. To preserve the right to use such intellectual property, we are required to make annual minimum fixed payments totaling approximately $0.2 million as well as royalties based on net sales if the royalties exceed annual minimum fixed payments.
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